JOHANNESBURG (miningweekly.com) – Unlisted Australian company Stibium Resources, which is focused on becoming a major producer of antimony, has bought JSE-listed Village Main Reef’s 76.6% in Cons Murch antimony/gold mine in Limpopo province for $15-million (R150-million).

Stibium is headed by CEO Kirk Adams, who has worked in South Africa and who was at the Cons Murch mine communicating with the workforce at the time that Mining Weekly Online attempted to reach him.

Village Main said on Wednesday, when it posted a loss of R31.6-milllion for the three months to March 31, that the troubled Cons Murch operation, located near Gravelotte, 50 km from Phalaborwa, saw quarter-on-quarter antimony output fall by 5% to 671 t and gold output fall by 25% to 1 575 oz in the period, owing to technical problems.

Sydney-based Stibium will assume 49% ownership and management control of Cons Murch as part of a staged acquisition of 76.6% of the asset, which Village is exiting as part of its strategy to elevate itself towards resources investment rather than diversified small mine operation.

The remaining 23.4% of the shares in Cons Murch, which Village bought three years ago, are in the hands of the Cons Murch employee trust.

Stibium – already the owner of all of the rights to the Neardie antimony/gold mine in Queensland, Australia, and 90% of a licence in the Dardana area of Kosovo – foresees antimony, which is used for increased metal hardness, entering a period of supply deficit in the future.

Regulatory and shareholder approval will trigger an initial payment of $8.4-million to Village, with the remaining $6.6-million paid once written Ministerial consent is obtained for the transfer of ownership to Stibium, under Section 11 of South Africa’s Mineral and Petroleum Resources Development Act.

Stibium will also fund the first $2-million rehabilitation shortfall and Village the rest.

New capital investment will be required in Cons Murch, which suffered drill-rig, load-haul-dumper and crushing unit breakdown in the period.

Revenue fell 19% to R44-million and cash cost a ton rose 9% to R1 574/t.

Cons Murch – previously in the Johannesburg Consolidated Investments and Metorex stables – is in the antimony line of the Archaean Murchison greenstone belt, with reserves of 26 547 t antimony and 96 000 oz gold in relatively shallow orebodies.

TAU LEKOA PROFIT FALL

Pretax profit at Village’s Tau Lekoa mine, near Orkney, fell to R19-million in the three months to March 31, from R40-million in the prior quarter, after unit costs rose to R424 893/kg ($1 219/oz) owing to lower production volumes.

The company said that the Buffels Rehabilitation Trust Fund would likely cover the company’s rehabilitation liability at the now-closed Buffels gold mine, near Klerksdorp, which suffered a R14-million loss in the quarter.

Of Village’s R130-million cash in hand, R81-million is frozen for rehabilitation.

The Buffels carrying cost has been cut to R4-million a month from a previous R7-million a month, and underground-water carrying cost to R5-million a month following the introduction of minimising initiatives.

Cash operating profit from continuing mining operations fell to R49-million from R82-million, after Tau Lekoa managed only 22 376 oz in the March quarter from 28 807 oz in the prior quarter.

Village’s headline earnings a share fell from 1.99c a share to 1.67c a share in the current quarter.

“We have made good progress with the planning around the rehabilitation and closure of Buffels,” said Village CEO Ferdi Dippenaar, who added that contractors had begun demolishing the North Plant and Four Shaft.

Current Buffels rehabilitation estimates are expected to be further reduced with the transfer of a R115-million slimes-dam rehabilitation liability to AngloGold Ashanti’s Mine Waste Solutions.

LESEGO PLATINUM PROJECT

Village’s Lesego platinum project, on the eastern limb of the Bushveld Complex, near Lydenburg, has completed a preliminary economic assessment focused on initially mining only the upper portion of the Merensky reef and upper group two orebodies, from a depth of 350 m to 1 200 m below surface, with a mill feed of 100 000 t a month.

This portion of the resource amounts to a total plant feed of 21-million tons at a weighted grade of 3.94 g/t of platinum-group metals and gold, giving a life-of-mine (LoM) for the upper portion of the orebody of 23 years.

It is estimated that it will take three years to reach first production, and full production is achieved in year seven of the operation, allowing for 13 years at steady-state production.

Total capital requirements over the 23-year LoM are expected to be R5.1-billion, which is calculated to yield an internal rate of return of 15.22% and a net present value of of R710-million at a discount rate of 10%, using an exchange rate of R10.50 to the dollar.