[miningmx.com] — A 32% jump in recovered grade plus a higher gold price sent Village Main Reef’s operating profit soaring more than fourfold to R146m (June quarter: R33.4m) for the September quarter.
This is the first quarter that the Tau Lekoa and Buffelsfontein (Buffels) mines acquired from Simmer and Jack Mines (Simmers) have been under the new management led by Village CEO Bernard Swanepoel.
The numbers show good improvements in all the key metrics of which Swanepoel declared “we are proud of our achievements during this period’.
The gold price received by the two mines averaged R390,593/kg (R326,817/kg) and has averaged R420,000/kg over the first six weeks of the current December quarter.
But the driving force behind the September quarter numbers was the massive jump in grade and the key question is whether this is sustainable.
Swanepoel would not commit himself on the grade issue preferring to talk in terms of overall gold production.
“I am reasonably confident that the overall level of gold production attained is achievable,” he said.
He added the jump in grade was the result of stopping the processing of low-grade surface material through the gold plant, along with a closer focus on grade in the mining operations.
“We also got lucky at Buffels where the grade was slightly above what we had expected,’ he said.
The overall gold yield at Tau Lekoa rose 24% to 3.67/g/t (2.96g/t) while at Buffels the underground grade went up 29% to 3.89g/t (3.02g/t).
Swanepoel made it clear Village management had made drastic changes to the mining plan at Tau Lekoa.
“When AngloGold Ashanti sold Tau Lekoa it was a profitable operation that had a remaining economic life of about three years,” he said.
“Simmers management changed this into an operation which would have an extended life of 14 years during which it would break even and make no profits.
“We have instead changed the operation back to a mine with a life of about four to five years but which will make profits during that period.”
Swanepoel did not spell it out but the key variable between those two life-of-mine scenarios is the grade of the ore to be mined.
Swanepoel said Village had received “one serious expression of interest” in the Weltevreden deposit acquired from Simmers which Village was now looking to sell.
But he pointed out selling Weltevreden required implementation of the changes to the mining legislation promised by Minister of Mineral Resources Susan Shabangu, which would allow portions of existing mining rights to be split off separately.
“Weltevreden is part of Tau Lekoa. We need a legal framework within which selling it would be do-able.”
Swanepoel added that there had been no offers for the much deeper Strathmore operation.
Village was also still looking to sell its remaining equity stake in First Uranium and the associated Mine Waste Solutions (MWS) notes it held worth some R400m.
“Over the next six to 12 months it would serve our shareholders well if we could release that money and return it to them so we remain very interested in whatever happens at First Uranium,” he said.
