Village aims at Buffelsfontein breakeven
CEO says main task for Village is to bring the Buffelsfontein gold mine to a break even position after five years of losses
ALLAN SECCOMBE
Published: 2011/06/30 07:32:18 AM
VILLAGE Main Reef’s first task with the newly acquired Simmer & Jack mines was to bring the Buffelsfontein gold mine to a breakeven position after five years of losses, CEO Bernard Swanepoel said yesterday .
Village was providing an operational update to shareholders after its merger with Simmers .
Village, which had bought the Consolidated Murchison antimony and gold mine from Metorex for R30m, was making a profit from that mine and would be willing to part with it if it could realise a substantial profit for it, Mr Swanepoel said.
The Buffelsfontein mine would retrench about 1200 people, or a third of its workforce, to bring costs in line with what the mine was capable of producing, in a bid to stem losses, he said.
Included in the Simmers assets was the nearby Tau Lekoa mine, where Village planned to strip out as much of its costs as possible.
"Buffels had the potential to bleed the combined assets to death and we couldn’t allow that to happen," Mr Swanepoel said.
"Our first stop would be to restore the mine to breakeven."
There is potential to move into a higher-grade part of the mine through 6 Shaft, but that option is months away and will need capital the operation cannot afford at this stage. Village would advance the project as fast as it would within those constraints, he said.
One shareholder said he welcomed Simmers’ assets going into Village after a hefty fall in the Simmers’ share price in recent years. "After a number of years, I can say there is some light at the end of the tunnel," he said.
Village is looking for a buyer for its 26% stake in Toronto- and JSE -listed First Uranium, failing which it could distribute the shares to shareholders.
It is looking for a buyer of debt instruments it holds in First Uranium’s Mine Waste Solutions business. This alone would be more than enough to clear debt off Village’s balance sheet and give it cash for its needs . The remainder would be paid to Village shareholders, Mr Swanepoel said.
The combined value of the shares and debt instruments were about R610m, or 67c per Village Main share.
"We are not going to be long-term holders of First Uranium. It doesn’t make logical sense and … we will act responsibly," he said.
seccombea@bdfm.co.za
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