File image: Reuters

Gold One International (GDO)‚ the Australian and JSE-listed mid-tier mining group with gold operations and gold and uranium prospects across Southern Africa‚ has reported a loss of Aus $4.06 million for the six months ended June 2012 from a net profit of A$10.64 million a year ago.

Revenue from continuing operations was up 152% to $189.2 million.

The company said revenue increased as a result of incorporating production from the Cooke Underground and Randfontein Surface Operations. However‚ the operations were negatively impacted by a strike at the Modder East operations and although the turnaround initiatives at the Cooke Operations are well advanced they are not yet having a material positive impact on gross profit‚ it said.

Revenue and gross profit included the non-cash positive effect of A$24.25 million as a result of accounting for the 65‚235 ounces of gold delivered into the gold forward sales contracts by the Cooke Underground and Randfontein Surface Operations at spot prices.

The group incurred negative cash flows from operations of A$15.17 million during the reporting period compared to cash generated from operations of A$33.02 million for the comparative period.

The negative cash flows were impacted by the operating results and by working capital movements during the acquisition of the Cooke Operations.

Gold One has changed the primary focus of the Cooke Underground Operations from uranium back to gold mining. It is currently introducing a uranium co-product strategy‚ which will enable Cooke to reduce the cost of producing gold to bring it more in line with the industry leading Modder East gold mine.

The Cooke Underground Operations are subject to a two year turnaround strategy which will see it sustainably reduce costs and enhance efficiencies of A$60 million per annum. Approximately A$24 million of annualised turnaround has been realised during the first half of the financial year and sustainable improvements are expected for the balance of the year and through 2013.

Modder East production was adversely affected by illegal strike action. The loss of production and the subsequent dismissal of a large majority of Modder East's workforce was highly disruptive and impacted negatively on the operating results for the period.

A final interdict was issued by the South Gauteng High Court on 26 June 2012‚ interdicting violence and intimidation at Modder East. The High Court also granted costs against the Professional Transport Allied Workers Union (PTAWU)‚ under whose auspices the violence occurred.

A short term plan‚ which includes the controlled engagement of contractors‚ has been developed to normalise production. With the controlled phasing in of contract mining‚ the company expects production to return to pre-strike rates by the end of September.

Despite lower production of 57‚621 ounces compared to the target of 68‚000 ounces‚ Modder East still achieved a healthy margin of US$841 per ounce for the period. - I-Net Bridge