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Simmers Q1 gold production down 27%
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24th August 2010
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JOHANNESBURG (miningweekly.com) – Gold output by South African miner Simmer & Jack Mines (Simmers) fell 27% to 17 879 oz in the quarter ended June 30, 2010, mainly as a result of a 19-day safety closure at its Buffelsfontein mine.

This was compared with the 24 541 oz of gold produced in the fourth quarter of the 2010 financial year.

The Buffelsfontein mine had seen a 24% decline in output to 17 599 oz in the first quarter of the 2011 financial year, down from the 23 011 oz produced in the fourth quarter of the previous financial year.

Interim CEO Nico Schoeman said that the May 4 accident, in which two employees died, had set the company back significantly.

The company reported that it had allocated R12-milion in additional spending on safety-related capital expenditure to improve safety levels, specifically in access ways and travelling ways.

Simmers’ Transvaal Gold Mining Estate operation had also been on care and maintenance for the full quarter, further impacting on overall output.

Subsequently, gold revenues declined to R161-million in the first quarter of the new financial year, down 21% on the R204-million earned in the previous quarter.

The lower production had also resulted in the miner’s unit cash costs increasing by 24% quarter-on-quarter to R388 557/kg of gold, compared with costs of R295 113/kg of gold produced in the previous quarter.

At Buffelsfontein, cash costs increased by 3% as a result of lower production, higher labour costs and higher electricity costs. Revenues from the mine also declined by 17% to R158-million in the quarter, resulting in the mine’s cash operating loss increasing to R52,7-million, compared with the previous loss of R12,8-million.

Schoeman noted that the R100-million in estimated benefits of shared metallurgical processing and services costs, which would come about as a result of integrating the Tau Lekoa mine into the Buffelsfontein mine, would contribute significantly to returning Buffelsfontein to profitability.

Simmers had bought Tau Lekoa from AngloGold Ashanti, with the mining rights finally having been transferred to Simmers in June.

Meanwhile, the company was expecting output at Buffelsfontein to improve over the remainder of the 2011 financial year.

Schoeman noted that production at the mine would steadily increase over the next two quarters, and that the mine was expected to reach the 75 000 oz gold production target by the fourth quarter of the financial year, by which time Simmers was also expecting unit cash costs to stabilise at about R260 000/kg.

Tau Lekoa would be incorporated into the second-quarter results for two months, during which time it would contribute about 17 000 oz of gold production.

Further, Simmers highlighted that good progress was being made in terms of accessing the North West Block project, which formed part of the growth plans for Buffelsfontein.

The project entails the repair of the No 6 shaft between the 69 and 71 level, which was on schedule.

The No 1 man winder was also recommissioned during the first quarter of this year, while shaft steelwork repairs would be completed by October.

The first stoping work would be undertaken in the fourth quarter of the 2011 financial year.

Simmers stated that it was still assessing the viability of installing a third 65 000-t/m mill at the Buffelsfontein mine’s south plant to provide extra milling capacity to treat surface rock dump material.

The mill was estimated to cost about R49-million and, if installed, would enable the plant to recover an additional 38 kg of gold, while also reducing the mine’s operating costs.                    

The installation of an additional R23-million four-stage carbon-in-leach circuit (CIL) at the plant was also being investigated. The CIL could potentially increase gold recovery by 4,5%, resulting in an additional 10 kg/m of gold output.

Edited by: Mariaan Webb

 

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Simmers interim CEO Nico Schoeman
 
Picture by: Duane Daws
Simmers interim CEO Nico Schoeman