[miningmx.com] — VILLAGE Main Reef has missed its production target
for a second quarter in a row, but the strong rand gold price should enable the
company to continue delivering sufficient cash flows.
Posting production figures for the quarter to end-March on Thursday, Village’s output
during the period was around 5% short of guidance, producing 38,508 ounces of gold
(guidance: 40,530 oz).
Simmer & Jack’s former Buffelsfontein mine was the biggest underperformer, missing
target by 18% with figures of 9,433 oz, while Cons Murch also under-delivered by 6%
(output: 2,219 oz).
Tau Lekoa met guidance with figures of 28,773 oz; 1% more than what was promised.
“At Tau Lekoa, we have started to witness the rewards of the optimisation project
which positively impacted production, notwithstanding the effect of the Christmas
break,’ read comment by CEO Bernard Swanepoel.
“At Buffelsfontein and Cons Murch, additional challenges were experienced, which
affected our production volumes. We have taken the necessary steps and anticipate
that production at these operations will return to normalised levels during the June
quarter.’
When pulsed on Buffelsfontein and Cons Murch’s “additional challenges’, Swanepoel
told Miningmx that the company was still fine-tuning the development of high
grade areas in the mine.
“The emphasis remains on grade, but the development [of high grade areas] needs
to keep up,’ Swanepoel said. “We don’t yet have sufficient flexibility.’
Antimony production at Cons Murch amounted to 837 tonnes, 24% under guidance.
After reporting a strong performance in 2011’s September-quarter – the first period
following Village’s takeover of Simmers’ assets – Village has now under-delivered on
its own targets for two quarters in a row.
The latest period’s production figures imply a 15% quarter-on-quarter decline. An
analyst told Miningmx he expected Village to post a net profit of around
R100m for the period, compared to the R149m reported for the December-quarter.
Gold continues to trade above R400,000/kg, a long way above Swanepoel’s earlier
“profitability benchmark’ of R350,000/kg.
He told Miningmx in November: “At a gold price below R350,000/kg at today’s
operational levels we would be in the dwang.
“At R350,000/kg you would not buy Blyvoor [the asset that Village is acquiring from
DRDGold]. Tau Lekoa is fine at R300,000/kg, but it would not make money. Buffels is
fine at R350,000/kg but it also would not make money.’
