JOHANNESBURG (miningweekly.com) – JSE-listed Village Main Reef on Thursday reported an increase in operating profit from continuing operations to R113-million for the three months ended June 30, up from R49-million in the prior quarter, as production at its Tau Lekoa operation, in the North West, increased in line with the mine plan.
Headline earnings a share from continuing operations for the fourth quarter of the 2014 financial year amounted to 8.74c, up from 1.67c in the third quarter.

“The past quarter can be summarised as [having seen] a strong performance from our Tau Lekoa operations following a March quarter influenced by a slow start-up following the Christmas break, but, more importantly, [also] a number of Section 54 [stoppages],” Village CEO Ferdi Dippenaar said during a conference call on Thursday.

He added that it seemed that the time and money spent to retrain the mining teams at the operation had paid off, with the company now expecting to see a high level of consistency in the mine’s operational performance.

“If that is achieved, there should be no reason why Tau Lekoa can’t improve on its 2014 [financial year] performance,” Dippenaar said.

Village’s total gold production for the quarter totalled 1 009 kg, up 42% quarter-on-quarter, with Tau Lekoa having produced 869 kg, an increase of 34% on the 647 kg produced in the prior quarter.

Pre-tax profit at Tau Lekoa increased from R19-million to R65-million during the quarter.
Village Main added that the realised gold price was R435 314/kg, reflecting a 3% quarter-on-quarter decline, while the all-in cost at Tau Lekoa on a per unit basis fell 17%, from R424 893/kg to R353 560/kg, mainly owing to the higher production volumes.

Further, Dippenaar noted that a drilling programme had been initiated at Tau Lekoa, aimed at extending the mine life.

The drilling project, at a cost of R9-million, was aimed at improving confidence in blocks of ground on the northern and southern portions of the mine, with Dippenaar stating that, should the results of the drilling programme be favourable, development of these areas was expected to start next year.

He stated that Tau Lekoa still had a significant resource, adding that the company estimated a seven to eight year life-of-mine once the extensions had been implemented.

Meanwhile, Dippenaar noted that the company’s Limpopo-based Consolidated Murchison (Cons Murch) antimony/gold mine had continued to struggle during the quarter under review.

“Cons Murch now suffers from all the impacts of a disposal process and the historical undercapitalisation of the operation, and that is mainly owing to the lack of available cash. Due to the various statutory and legal processes associated with the disposal of an asset it typically starts having an impact on the operations,” he said.

During the three-month period, Cons Murch’s antimony production decreased 38% quarter-on-quarter from 671 t to 419 t, while gold production declined 30% from 49 kg to 43 kg.

However, plans were in place to improve the operation’s interim performance.

Dippenaar noted that improvements were expected over the next two quarters following the acquisiton of a new Knelson concentrator, carbon-in-pulp cells for the metallurgical plant and the delivery of new underground mechanised equipment during the June quarter.

“This mine requires a sizable capital investment [to] complete the transition to a more mechanised operation, allowing it optimal access to the remaining resources,” he stated.

He added that good progress was being made in terms of meeting the remaining conditions precedent to the sale of shares agreement with Stibium Mining, which should see the sale of Cons Murch being put to shareholder vote by the end September.

Meanwhile, Village’s Buffelsfontein (Buffels) mine, in the North West, continued to make good progress with the rehabilitation of its surface area, he said.

In the June quarter, Buffels realised a cash operating profit of R9-million, compared with a cash operating loss of R14-million in the third quarter.

This occurred after the reversal of certain provisions for underground water pumping costs, which Buffels should not have incurred, as well as the settlement agreement reached between Harmony and Buffels, in terms of which Buffels received R24-million in July.

Buffels continued to treat surface material, which contributed to offsetting the carrying cost of the operation while rehabilitation activities were under way.

During the fourth quarter, 106 kg of gold was produced from surface operations, at an all in cost of R424 893/kg.

“The processing of surface tonnages is contributing positively to the carrying cost of Buffels being much lower than what was planned. We have engaged the other operators in the region to evaluate and consolidate ideas on dealing with the future pumping of underground water in the region,” Dippenaar said.