South African gold-miner and explorer Simmer & Jack Mines (Simmers) says, as a key means to reduce its financial risk profile, its First Uranium Corporation has updated its technical reports.

“We changed our mine plan to optimise our long-term capital, production and cost profiles. “While some may be surprised that we chose to downgrade production guidance for uranium, while upgrading gold production, the fact is that it makes economic sense and improves our returns,” says COO Syd Caddy.

“By so doing, we remain focused on reducing our financial risk profile, while optimising returns on equity without compromising value. “We are in the fortunate position of having robust dual-commodity orebodies that allow us to suspend mining areas of the deposits that we deem marginal, while maintaining the option value of those areas that we need to maximise their advantage to the fullest to maintain our status as a low-cost producer,” says Caddy.

He points out that at the Mine Waste Solutions (MWS) tailings recovery project, for the next three years, the company has set the operating profit margin for gold and uranium at 60%, increasing to 70% as the production rate increases.

MWS is a wholly owned subsidiary of First Uranium. It is located at Stilfontein, about 160 km from Johannesburg, in the western portion of the Witwatersrand Basin.

“At Ezulwini, we have set the operating margins at 40%, increasing to 60% as mining flexibility improves, as a result of the developments in the high-grade portion of the orebodies.

“In addition to taking control of the parameters that we can manage, such as capital cost and margins, we have taken a proactive stance to manage external risks. In terms of the current environment, financial flexibility will be the key to any company’s ability to survive.”

Caddy adds that the company is happy to have entered into two deals, which gave it “plenty of comfort in that regard”.

“We are now in advanced negotiations with a local bank to establish additional access to debt capital of about R900-million. We also plan to raise $125-million through a gold stream transaction.”

He notes that developmental companies are vulnerable to power crises, and that the company has ensured that a lack of electricity will not be the reason to stop it from meeting its production targets.

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