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Thu 29 Jul 2010
Close: 102c 
Day's move: 6c (6.25%)
Volume: 1 338 713
Trades: 118
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Revenue for the year decreased to R940 767 million (2009: R1.2 billion) . A gross loss of R112 243 million was recorded compared to a profit of R91 789 million in the previous period. Operating loss widened to R274 827 million (2009: R255 651 million). Total comprehensive loss attributable to owners of the parent was R638 940 million. Furthermore, headline loss per share was higher at 40.90cps (2009: 38.71cps) .
Dividend
No dividend has been declared.
Prospects
Buffelsfontein gold mine expects to produce in the order of 75 000oz (2 333 kg) of gold and is targeting cash costs of approximately USD1 050/oz assuming an exchange rate of R7.68/USD, or R260 000/kg by Q4 FY2011. This is notwithstanding the fatal accident at the mine's number five shaft on 4 May 2010 which resulted in closure of the mine for a total of 19 days. Normal production volumes are only expected to resume by Q3 FY2011. Growth prospects include the development of the North West Block, a reserve of some 570 377 square meters, estimated to contain some 14 169 kg of gold; the installation of a third mill to provide extra milling capacity to continue treating the mine's lucrative surface rock dump material post the acquisition of Tau Lekoa and the conversion of the existing leach and Carbon in Pulp (CIP) circuits in the South plant to a four stage Carbon in Leach (CIL) circuit, which is expected to increase gold recovery by 4.5%. These growth projects are subject to board approval. As soon as the registration of the Tau Lekoa mining right takes place, Buffelsfontein gold mine will begin treating ore from Tau Lekoa at its plant with immediate effect. The full benefit in terms of free cash flow will only be evident from the second month onwards given the need to account for a gold lock- up in the first month due to the change in grade of the material being put through the plant. Tau Lekoa is expected to produce in the order of 125 000 oz (3 888 kg) in the 2011 financial year at a total cash cost of around USD815/oz or R200 000/kg. This is expected to generate an average, annualised free cash flow of R150 million. The acquisition of Tau Lekoa also includes the Weltevreden resource, a shallow, up-dip extension of Tau Lekoa lying between 80 and 300 metres below surface. Development of this 2.3 million ounce resource could significantly extend the life of the Tau Lekoa operation. This is currently the subject of a pre-feasibility study which is expected to be complete by Q3 FY2011. TGME will remain on care and maintenance for the foreseeable future. The operation will continue to incur costs during FY2011 with care and maintenance costs expected to settle on approximately R500 000 per month. At a sustainable gold price of above R300 000/kg TGME has considerable option value and the board will continue to consider its alternatives in this regard.
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| Closing price data source: JSE Ltd. All other statistics calculated by ProfileData. |
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