PRICE TO BEN­E­FIT FROM MID-TIER STA­TUS

Finweek English Edition - - Companies & Markets -

JU­NIOR GOLD MINER Sim­mer & Jack Mines is on track to be­com­ing a mid-tier pro­ducer af­ter ac­quir­ing the com­pa­ny­trans­form­ing Tau Lekoa gold mine as­set ear­lier this year. Once Tau Lekoa con­trib­utes its es­ti­mated pro­duc­tion of 150 000oz/ year, Sim­mers will be con­sid­ered a mid-tier pro­ducer. It cur­rently pro­duces 180 000oz/year and will be­come a mid-tier pro­ducer once in breaks the 200 000oz/year mark.

That’s a pro­duc­tion tar­get not many listed min­ers find them­selves in, says Sim­mers CEO Gor­don Miller. “Our strat­egy is to fill the void be­tween ju­nior and ma­jor gold pro­duc­ers that’s de­vel­oped over many years.” Miller says that makes Sim­mers a much more at­trac­tive in­vest­ment ve­hi­cle.

Tau Lekoa was ac­quired in Fe­bru­ary 2009 from An­gloGold Ashanti for R600m, of which R150m can be off­set by un-hedged free cash flow gen­er­ated by Tau Lekoa this year, in ac­cor­dance with the sale agree­ment. Sim­mers fi­nanced the re­main­ing por­tion of the ac­qui­si­tion by sell­ing its con­trol­ling shares in First Ura­nium.

Sim­mers has pro­vided the fi­nan­cial guar­an­tee re­quired by An­gloGold and an in­te­gra­tion com­mit­tee to fa­cil­i­tate the in­te­gra­tion of Tau Lekoa into its flag­ship Buf­fels­fontein gold mine in Jo­han­nes­burg.

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