JOHANNESBURG (miningweekly.com) – JSE-listed Village Main Reef’s gold production declined by 21% quarter-on-quarter, to 696 kg, during the three months ended March 31, as a result of lower production output at its Tau Lekoa mine, in the North West, which was affected by safety stoppages.

During the quarter, 16 shifts, or the equivalent of 140 kg of gold, had been lost following Section 54 safety stoppages and a fatal accident at Tau Lekoa. This, combined with a slow start-up following the December seasonal break, had led to the mine’s production decreasing by 22% to 647 kg from 831 kg, during the prior quarter.

“The mine has, subsequently, implemented a safety training programme which will assist in aligning the operations with the constantly changing increased industry safety standards. Production levels during April recovered to planned levels and this performance is expected to continue for the remainder of the June quarter,” Village CEO Ferdi Dippenaar commented.

However, as a result of the lower production, cash operating profit from Village’s continuing mining operations declined by 40% during the quarter to R49-million from R82-million for the previous quarter.

Headline earnings a share also declined from 1.99c in the December quarter to 1.67c in the quarter ended March.

The Village cash balance at March 31 was R130-million, of which R81-million was restricted to cover rehabilitation guarantees.

The group used R28-million of cash during the quarter, as opposed to the previous quarter when the company generated R55-million in cash from operations.

The variance was owing to the lower Tau Lekoa production, which accounted for R21-million of the cash generated in the December quarter.

In addition, the Cons Murch antimony and gold mine, in Limpopo, generated a cash loss of R19-million in the March quarter compared with a cash profit of R4-million in the December quarter, while the Buffelsfontein gold mine, in the North West, made a cash loss of R14-million compared with breaking even in the previous quarter, the company said.

“Cons Murch continues to struggle from the impact of ageing infrastructure and underground equipment which resulted in lower production levels. This operation requires capital expenditure to improve its operating efficiencies and, depending on the outcome of the Cons Murch disposal process currently under way, a proposal to address this situation is being prepared for board consideration,” Dippenaar said.

He added that the company was making good progress with regard to reducing the carrying cost of the Buffelsfontein operation, which had already been decreased from R7-million to R4-million a month.

“Indications are that our rehabilitation liability will be covered by the funding available in the Buffels Rehabilitation Trust Fund. The outstanding issue of the pumping of underground water on behalf of other operators in the region is receiving attention and we hope to see this situation change in the near term,” Dippenaar said.