Village Main Reef suffered a significant slump in profit in the half year to last December, the junior gold producer reported yesterday, as output fell following an unprotected strike at its Blyvoor operation.
The JSE-listed company posted a 64 percent decline in basic earnings a share to 5.92c from 16.57c in the six months to December 2011.
The Blyvoor strike resulted in an 86 percent reduction in production at the mine, while output at Tau Lekoa, the most profitable operation at Village, declined by 14 percent, the company said. This had a material impact on profitability.
Gold production excluding Blyvoor fell to 2 602kg from 2 817kg in the six months to December 2011. Total production including Blyvoor was 3 434kg.
Antimony production improved by 19 percent to 2 728 tons.
The industrial action at Blyvoor in October and safety-related stoppages reduced gold production by an estimated 360kg over the six months.
To improve production, the company planned to revamp the operational culture, which in turn was expected to improve safety at the operations.
“If we can decrease the safety-related stoppages, production should improve,” the company said. “We also continue to focus on creating ore body flexibility and to reduce our absolute costs at each of the operations.”
“The group also accounted for a once-off depreciation adjustment of R51 million during the December quarter,” Village said. However, “costs were well controlled”.
Village gained 1c to close at R1.09 on the JSE yesterday.
The share price remained under pressure in the half year to December, the company said.
“Village shareholders, however, did approve a general share buy-back and Village has repurchased some 52 million shares during the period.
“The board remains of the view that repurchasing the Village shares at these price levels is a good investment.”
The company recently initiated retrenchment plans at Blyvoor, invoking section 189 of the Labour Relations Act,.
Referring to the planned reduction in the workforce, it said: “We expect to the see the positive impact on the Blyvoor cost base from March onwards.”
Labour relations at Blyvoor had stabilised since the industrial action in October last year, the company said.
Village said it had recognised the Association of Mineworkers and Construction Union, along with other representative organisations such as the National Union of Mineworkers, Uasa and Solidarity.