🕐21.08.12 - 08:54 Uhr
VILLAGE MAIN REEF ANNOUNCEMENT: Q4 RESULTS AND CONFERENCE CALL DETAILS
Press announcement
21 August 2012
Report for the quarter ended 30 June 2012
Key Features
- Earnings per share of 9.81 cents for Q4 compared to 7.19 cents for
Q3.
- Improved realised average gold price R423 872/kg in Q4 compared to
R 419 810/kg in Q3.
- Steady gold production of 1 228kg (39 480oz) from the three
operations Buffelsfontein (Buffels), Tau Lekoa (Tau), and Cons Murch,
compared to 1 237kg (39 770oz) in Q3.
- Antimony production increased 58% to 1 436 tons in Q4, compared to
909 tons produced in Q3.
- Part A closure of the Blyvooruitzicht Gold Mining Company Limited
(Blyvoor) acquisition successfully concluded and Blyvoor consolidated with
effect from 1 June 2012.
- Blyvoor contributes R5.6m towards operating profit in the first
month under Village ownership.
- Secured Convertible Rand Denominated Mine Waste Solution Rand Notes
(MWS Notes) redeemed in full enabling Village to declare a special
dividend of 30c per share.
Joint CEO, Marius Saaiman commented: We have made great progress in
strengthening our balance sheet over the last 12 months.
The most
significant event being the successful exit from our investments in First
Uranium Corporation which resulted in some R600 million being realised.
We
paid our first special dividend of 30 cents per share to shareholders,
delivering on our promise to return excess cash to our shareholders.
We are
also very pleased that Part A closure in relation to the Blyvoor acquisition
was concluded during the quarter, providing Village with full management
control of the operations from 1 June 2012.
Quarterly performance data
GOLD
Jun Quarter 2012
Mar Quarter 2012
ANTIMONY
Jun Quarter 2012
Mar Quarter 2012
Blyvoor (Jun)
Tau Lekoa
Buffels
TOTAL
TOTAL
Cons Murch
Cons Murch
Tons milled - Surface
273 376
-
-
273 376
Tons milled - underground
33 315
259 217
82 144
374 676
369 612
Tons milled
66 405
54 670
Recovered grade - Au g/t
5.6
3.1
3.5
3.3
3.2
Recovered grade - Au g/t
1.2
1.5
Gold produced underground - kg
149
858
287
1 294
1 169
Gold produced surface - kg
68
-
-
68
-
Recovered grade - Sb %
1.3
1.0
Gold produced - total oz
6 944
27 585
9 227
43 756
37 590
Gold produced - oz
2 668
2 212
Gold produced - total Kg
216
858
287
1 361
1 169
Antimony produced - tonnes
1 436
909
Realised gold price - R/kg
430 030
422 496
422 496
423 872
419 810
Realised antimony price - R/t
42 989
38 460
Cash cost - R/kg
498 017
245 511
565 080
353 016
293 543
Cash cost - R/ton
1 228
1 033
Notional cost - R/kg
524 276
249 442
638 237
375 069
315 832
Notional cost - R/ton
1 487
1 255
1 - Excludes gold revenue credits
Variance analysis of revenue and cash costs at operations Q4 vs Q3
Tau
Buffels
Cons
Total
Volume
(3)
(7)
26
16
Price
3
1
2
6
Working costs
(6)
(23)
(2)
(31)
Total impact on profits
(6)
(29)
26
(9)
Prospects
Production volumes are traditionally higher during the September quarter
than those achieved during the June quarter, and we expect all our
operations to follow this trend.
However, costs are also significantly
higher during the September quarter than those achieved during the previous
quarter as a result of the increased electricity tariffs during the winter
months.
Statement by Chief Executive Officer
Village delivered earnings per share of 9.8 cents for the quarter, operating
profit of R114.4m and free cash flow from operations of R62.7 million.
We
successfully exited from our investments in FIU, and were delighted to
declare a special dividend of 30c per share to shareholders, which was
distributed on 6 August 2012.
Village achieved total gold production of 1 444kg (46 424oz) in the June
2012 quarter.
Gold production for the fourth quarter, on a like for like
basis, excluding gold produced by Blyvoor was 0.73% or 9kg (289oz) lower
than the third quarter ending 31 March 2012.
Our Antimony production was
1436 tons in Q4 which was a significant 58% or 527 tons improvement on the
March 2012 quarter and more in line with our expectations from this
operation.
Revenue was positively impacted as a result of a higher realised gold price
over the quarter of R423 872/kg compared to R419 810/kg over the March
quarter.
Costs were well controlled at all operations, although the impact
of winter electricity tariffs added some R30 million to the cost of all
operations during June 2012.
Notwithstanding the fact that gold production at our operations was similar
to that achieved in Q3, production could have been higher.
Safety related
stoppages resulted in a loss of 107kg of gold and 53 tons of antimony
production during the quarter, a loss of some R47.7 million in revenue.
As a
management team we continue to enforce and improve rigorous safety systems
and operating procedures at our operations to ensure that we mine safely and
that similar disruptions are minimised in future.
We are also working
closely with the relevant regulators and industry forums to ensure that the
impact of mine wide stoppages under Section 54 of the Mine Health and Safety
Act are fair and clear and that all parties engage on a collaborative basis.
Village welcomed Blyvoor into our operational fold during the quarter.
We
are excited about the addition of Blyvoor to the Village portfolio and
especially pleased that the mine contributed R5.6m of operating profit
during the first month under Village management, notwithstanding the
negative impact of winter electricity tariffs on the Blyvoor cost base.
Overall performance at the Buffels operation remains below expectation, with
both production and costs outside the parameters of the business plan.
Performance at Buffels was adversely impacted by Section 54 safety related
work stoppages and this combined with higher costs has resulted in losses at
Buffels.
Executive management has embarked on a review of the current
business and life of mine plans to evaluate the viability of Buffels, given
the impact of regular work stoppages and the impact of above inflationary
cost increases at the operations.
Financial review
The table below sets out the unaudited results of the operations for the
quarter ended 30 June 2012
VILLAGE MAIN REEF LIMITED
SELECTED FINANCIAL INFORMATION
Q4
FY2012
R000
Q3
FY2012
R000
Variance
Q4 2012 vs.
Q3 2012
%
Blyvoor Q4
Q4
FY2012
R000 excl Blyvoor
Variance
Q4 2012 excl Blyvoor vs Q3 2012
%
Statement of Comprehensive Income
Continuing operations
Revenue
676 739
543 289
25%
109 976
566 763
4%
Total cash cost1
(534 837)
(399 289)
34%
(107 671)
(427 166)
7%
Total cash operating profit / (loss)
141 902
144 000
(1%)
2 305
139 597
(3%)
Production-related depreciation
(31 531)
(30 628)
3%
(638)
(30 894)
1%
Rehabilitation expenses
3 736
(712)
(625%)
-
3 736
119%
Operating profit / (loss) from mining activities
114 107
112 660
1%
1 667
112 440
(0%)
Non-production related depreciation
(1 644)
(1 542)
7%
-
(1 644)
6%
Other income
7 513
8 728
(14%)
4 016
3 497
(150%)
Share option costs
(4 556)
(5 261)
(13%)
-
(4 556)
(15%)
Head office costs2
(8 098)
(20 890)
(61%)
-
(8 098)
(158%)
General administrative and overhead expenditure3
(30 797)
(25 706)
20%
-
(30 797)
17%
Profit / (loss) from operations before interest and taxation
76 525
67 990
13%
5 683
70 842
4%
Fair value adjustments4
34 454
16 019
115%
-
34 454
54%
Impairment of assets & loans & movement in environmental rehab liability5
(2 219)
(1 909)
16%
-
(2 219)
14%
Profit/(Loss) from equity-accounted investment
-
-
0%
-
-
0%
Profit from partial disposal of investment in associate
-
-
0%
-
-
0%
Restructuring costs
(3 077)
(1 463)
110%
-
(3 077)
52%
Loss on sale of investment
-
-
0
-
(Loss) / gain on non-current assets held for sale
-
-
0%
-
-
0%
Realisation of foreign currency translation reserve
-
-
0%
-
-
0%
Gain on bargain purchase
-
-
0%
-
-
0%
Foreign exchange gains / (losses)
(5 323)
76
(7149%)
-
(5 323)
101%
Business optimisation project6
(10 000)
(28 000)
(64%)
-
(10 000)
(180%)
Aberdeen dispute settlement expense
-
-
0%
-
-
0%
Net finance income / (charges)
2 407
12 140
(80%)
( 42)
2 449
(396%)
Profit / (loss) before taxation from continuing operations
92 766
64 853
43%
5 641
87 125
26%
Loss from discontinuing operations
-
-
0%
-
-
0%
Profit / (loss) before taxation
92 766
64 853
43%
5 641
87 125
26%
Statement of Financial Position
Total assets
4 139 544
2 963 191
40%
1 068 416
3 071 128
4%
Cash and equivalents
265 907
309 600
(14%)
-
265 907
(16%)
Financial assets
448 874
390 047
15%
9
448 865
13%
Current liabilities
(571 357)
(514 647)
11%
(206 386)
(364 971)
(41%)
Non-current liabilities
(579 491)
(478 234)
21%
(75 083)
(504 408)
5%
Total equity
(2 988 696)
(1 970 310)
52%
(786 956)
(2 201 740)
11%
Comments
Total cash costs are costs directly related to the physical activities
of producing gold and include mining costs, administrative costs, royalties,
on-mine drilling expenditures that are related to production and other
direct costs.
Sales of by-product metals are deducted from the above in
computing cash costs.
Cash costs exclude depreciation, depletion and
amortisation, exploration costs, finance charges, and pre-feasibility costs
and accruals for mine reclamation but include central costs such as human
resources and technical services.
2 Head office costs represent the costs incurred in relation to the
running of the Village Head Office and is mostly related to salaries of the
executive directors and related costs to maintain the listing of Village,
included in this number was salary costs (R4.1 million), these costs are
similar to that incurred during Q3
3 Amounts included in General and Administration fees related to Head
office salary costs (R 4,1 million), consultant costs (R 3,1 million)and
other corporate overhead costs (R 1 million).
In the previous quarter
certain working costs were included in General and Admin costs and has been
corrected in Q4.
On a like for like basis the Q3 General and Admin costs
amounted to R 20,8 million of which R 10 million was paid as consulting
retainer fees.
4 Fair value adjustments relate to the 1% perpetual liability payable to
Aberdeen from all gold produced at Buffels, R29.4 million fair value loss; a
write up in the value of the Mine Waste Solution Rand Notes of R40.9 million
to account for the Notes as to show at face value, reduced period to
maturity; a gain in the Deutsche Bank Gold Forward liability of
R13.6million; a mark to market gain in relation to the remaining equity
investment in First Uranium Corporation of R10 million.
5 This relates to the provision for rehabilitation liabilities over the
quarter at all of the Village operations
6 Village has embarked on a business optimisation process at Tau.
The
process is aimed at increasing gold production.
This project is now
complete.
The Group generated revenue of R676 million for the quarter, whilst cash
costs of R566 million were incurred.
Net cash flow from operations of R62.7
million was generated which was 14% lower than March quarters net cash from
operations of R73.2 million.
This was due to increased capital expenditure
of R47 million, compared to R37 million spent in Q3.
Significant cash
payments made in Q4 included R36 million in respect of the Deutsche Bank
gold loan and payment in relation to the Tau improvement project of R10
million.
Operational review
Tau
Total gold produced at Tau was 858kg (27 585oz) in Q4, which was 8kg (257oz)
lower than the 866kg (27 842oz) produced during Q3.
Gold revenue of R364 million in Q4 was similar to the R363 million earned in
Q3.
The realised Rand per kilogram gold price achieved during the quarter,
of R422 496/kg was slightly higher than the R419 810/kg achieved during Q3
and compensated for the marginally lower production from Tau.
Cash costs for
Tau increased by 3% to R211m in Q4 from R205m in Q3.
The increase in power
costs of R5 million was attributed to the higher winter tariffs.
The cash
cost per kg increased to R245 511/kg in Q4 from R236, 734 in Q3.
The cash
generated from operations was a positive R153m for the quarter.
Production volumes at Tau were much improved during most of the quarter
showing positive results from the business improvement program initiated
during the latter part of Q2.
The tragic loss of life resulting from a
blasting related accident and the related work stoppage negatively impacted
on the positive production momentum.
Management is confident that the
positive improvements at Tau will manifest during the coming quarter.
Buffels
Total gold production from Buffels was 287kg (9 227oz) in Q4 which was lower
than the 303kg (9 741oz) produced during Q3.
Gold revenue decreased by 5% to R121 million in Q4 compared to R127 million
in Q3.
Cash costs for Buffels increased quarter on quarter by 16% to R162 million
in Q4 from R139m in Q3.
The increase in costs is largely attributed to an
increase in electricity charges due to winter tariffs (R15.4m) and an
adjustment to working costs as a result of movements in gold inventory
(R7m).
The increased costs combined with lower production increased cash
cost per kg to R565 080/kg in Q4 from R459 585/kg in Q3.
Buffels reported a
cash operating loss of R41 million in Q4, compared to a cash operating loss
of R20 million during Q3.
South Plant (Buffels plant)
Recoveries at South plant increased significantly during the quarter to an
average of 96% in Q4 from 93% in Q3.
The increase in overall recovery at the
plant is partly attributed to higher grade feed from Blyvoor underground and
also other efficiency improvements in the leaching circuit.
All Blyvoor
underground ore is trucked to and treated at South Plant, where achieved
gold recoveries are materially higher than recoveries previously achieved at
the Blyvoor gold plant.
All surface gold material continues to be processed
through the surface plant and related facilities at Blyvoor.
Blyvoor
Blyvoor recorded total gold production of 216kg during the month of June
2012, of which 149kg and 68kg was from underground and surface operations
respectively.
A profit of R5.6 million was generated of which R1.6 million
was from mining operations and R4 million from the sale of Rand Refinery
shares.
Cash generated from operations for the month of June 2012 was R2.3m.
Village appointed independent competent persons to review the stated mineral
resources and reserves at Blyvoor for inclusion in the annual report.
No
issues were found in the mineral resources estimation, of 30.39 Moz.
However, the mineral reserves portion was found to be non-SAMREC compliant
as the life of mine plan is currently being updated.
The revision has led to
the mineral reserve estimate being restated as 828 koz (based on a 5 year
life of mine plan) from the previous estimate of 7 Moz.
The completion of
the life of mine planning process could lead to an increase of the mineral
reserves in future.
Cons Murch
Antimony production quarter on quarter was 58% higher at 1436 tons in Q4
compared to 909 tons in Q3.
Cons Murch produces gold as a by-product from
its core antimony production.
Gold production in the June quarter of 83kg (2
668oz) was a significant improvement on the 68kg (2 186oz) produced in the
March quarter.
Cash operating profit was R11.6 million for the June 2012 quarter compared
to a cash operating loss of R17.6 million for Q3.
Antimony production benefitted from better grade control and the successful
commissioning of additional trackless machinery.
Lesego
As reported in our SENS announcement on 12 June 2012, we have completed the
independent pre-feasibility study which reveals a robust mining case with an
IRR of 18.7% and an NPV of R6.7 billion.
There is greater confidence in the
ore body after completion of the drilling programme which transferred 65% of
the ore body into the Measured and Indicated Categories.
It is very
encouraging to note that the Ore body defined is from 300m below surface.
We
also have a total resource of 204 Mt at an average grade of 5.95 g/t over a
width of 1.23 m after applying 17% for geological losses.
In Q4 2012 a total of R15 million was spent on feasibility activities
compared to R11.3 million during the previous quarter.
These costs continue
to be capitalised to the project.
Contacts
Village Joint CEO | Marius Saaiman | | 082
458 3420
Vestor | Media and Investor Relations | Louise Brugman |
| 011 787 3015 | 083 504 1186
Riverside Energy partners | North American Media and Investor Relations |
| +1 (231) 421 8441
CEO Tele-conference call
21 August 2012
15h00 [GMT+1]
Live Call Access Numbers
South Africa - Johannesburg 011 535 3600
UK (Toll-Free) 0
800 917 7042
South Africa Johannesburg alternate 010 201 6616
South Africa - Cape Town 021 819 0900
South Africa (Toll-Free) 0 800
200 648
Other Countries (Intl Toll) +27 11
535 3600
USA
1 800 860 2442
Playback Access Numbers code 21892#
South Africa
011 305 2030
Other countries +27
11 305 2030
UK (Toll Free) 0
808 234 6771
Canada and US
1-412-317-0088
Please note that a recording on the conference call will also be made
available on www.villagemainreef.co.za
after the call.
Logo_sharper02
media & investor relations
louise brugman
managing director
Tel: +27 (0) 11 787 3015
Cell: +27 (0) 83 504 1186
skype louise.brugman
Email:
Web: www.vestor.co.za