Gold One issues output forecast

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IOL BR mining PIC001 Reuters.

Gold One International (GDO) said on Monday that despite the recent events at Modder East‚ it expects to deliver 53‚600 ounces for the September 2012 quarter compared to guidance of 55‚000 gold ounces.

In addition the Cooke 4 Shaft (previously known as Ezulwini) is forecast to produce an additional 6‚000oz for the months of August and September.

Total forecast production for the September 2012 quarter thus amounts to approximately 59‚600oz.

The company said following the illegal gathering of previously dismissed employees at the Modder East Operation on 3 September‚ no further protests have occurred and the operation is continuing as normal.

The South African Police Service (SAPS) is‚ however‚ maintaining a strong presence at Modder East and is assisting the company in protecting current employees following reports of ongoing intimidation.

“Gold One commends the SAPS for its previous and continuing support in this regard. Absenteeism at Modder East has remained low and the company also expresses its thanks to employees and management at the operation who have remained dedicated to their work despite difficult circumstances. The company has been made aware that towards the end of last week current employees took a strong stance against a group of intimidators‚ which unfortunately resulted in some of the intimidators sustaining injuries‚” it said.

The company said the ramp up in production at Modder East‚ following the unprotected strike action during June and subsequent dismissal of a large majority of the operation´s workforce‚ has progressed in line with expectations.

During August production at the operation more than doubled from approximately 3‚300oz in July 2012 to 6‚800oz.

As previously announced the company has engaged Jongingozi Mining‚ a contract mining company‚ to assist in normalising Modder East´s production and this plan has seen a systematic build up towards pre-strike levels comprising approximately three mining teams per week into the stoping and development operations.

These mining and development teams are predominantly staffed by individuals who were previously dismissed from Modder East but who thereafter availed themselves for interviews. By the end of August‚ 20 mining teams had been employed at Modder East‚ equating to one third of the number employed prior to the strike. The ramp up is anticipated to continue throughout September.

The Randfontein Surface Operations have continued to deliver in line with expectations‚ having produced approximately 6‚400oz during the quarter to end August‚ consistently producing in excess of the forecasted 3‚000oz per month.

The Cooke Underground Operations´ two year turnaround programme is continuing. The primary focus remains on reducing costs and increasing development to ensure an increase in mining flexibility‚ which is expected to have a positive impact from early 2013. The initial integration of the Cooke 4 Shaft (Ezulwini) into the Cooke Underground Operations is proceeding well. A turnaround programme focussed on enhancing revenue and reducing costs at Cooke 4 is also currently being implemented‚ with initial savings in overhead costs already having been realised with the removal of the Ezulwini corporate overheads and the implementation of common services across the Cooke complex.

Although Modder East was able to maintain profitable production during the strike period‚ the ongoing build up back to pre-strike levels will negatively impact the September 2012 quarter´s results‚ it said.

The current marginal Modder East profits are not sufficient to offset the negative cashflows from the Cooke Underground Operations given the investment in development and the original Rand Uranium hedge commitments.

Cashflows will recover as Modder East moves back to full production towards the end of September 2012.

The group’s gold revenue for the September 2012 quarter is likely to amount to US$87 million from the sale of 59‚600oz at an implied average price of US$1‚463/oz. The hedge commitment for the September 2012 quarter is 25‚269oz at a selling price of R315‚720/kg.

Gold One President and CEO Neal Froneman commented “I am extremely proud of what our Modder East employees have achieved in the last few months and thank the teams for their dedication during difficult times. While it is pleasing that we are achieving our planned Modder East production build up‚ this continued success is highly dependent on the situation remaining stable and continued reports of intimidation against our employees remain a serious concern to us.

“I also commend the SAPS for their strong presence and the stability they have brought to our operational area. Although the disruptions over the past few months have negatively impacted our business in the short term‚ we remain confident that the difficult decisions and robust stance we have taken will ensure the company is well positioned in the longer term. Our immediate focus is restoring Modder East to pre-strike production levels‚” he said. - I-Net Bridge


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