Simmers Q1 production falls 27pct

[] — Shares in Simmers & Jack Mines fell more than 3 percent as the South African gold miner posted a 27 percent decline in first-quarter gold production to 556kg in the quarter ended June from 763kg.

Simmers attributed the drop in output to the closing of its Buffelsfontein mine for 19 days in May after a mine accident killed three workers. Simmers shares earlier traded at 3.26 percent lower at 89 cents.

Total cash costs were down 4% to R216.1m from R225.3m.

Revenue was 21% lower at R161m from R204m and the company reported a cash operating loss of R55.2m compared with R21.3m in Q4 2010.

Following the accident the mine introduced a task team to reduce the number of section 54 notices issued by the DMR for transgressions relating to health and safety issues.

Post the accident, 16 inspections were conducted by the DMR resulting in only two section 54 notices being issued, neither of which affected production, Simmers said.

The company said the highlight of the quarter was the execution of the Tau Lekoa mining rights on 3 June, followed, post-quarter-end, by the registration of the mining rights from AngloGold Ashanti to Buffelsfontein Gold Mine.

The conclusion of the acquisition, which has been some 15 months in the pipeline, is the first step in creating a stable platform from which to consolidate and grow the Company into a mid-tier gold miner.

Simmers said production at Buffelsfontein Gold Mine was expected to continue to improve over the next three quarters, with Q2 for 2011 showing an improvement on the 17 879 ounces produced in Q1.

Tau Lekoa would be consolidated into the Buffelsfontein results for 2 months during the second quarter of 2011 period. Tau Lekoa is expected to contribute some 17 000oz for the two month period at a cash cost substantially lower than that of Buffelsfontein.