JOHANNESBURG (miningweekly.com) – The share price of Village Main Reef jumped 15% by mid-afternoon on Wednesday after the embattled diversified miner released its first-quarter report.

Village CEO Ferdi Dippenaar said the group’s gold output for the quarter ended September 30 had increased 27% quarter-on-quarter and that, despite the discontinued operations holding back first-quarter performance, he believed that the challenges had mostly been dealt with.

Gold production from continuing operations totalled 36 439 oz during the September quarter, compared with the 28 581 oz produced in the June quarter, mainly as a result of record production from the Tau Lekoa operation.

“From an operational perspective, Village is pleased with the production achieved at our flagship Tau Lekoa mine, which showed further improvements on the June quarter. Our challenge will be to maintain the momentum going into what is normally a difficult time of the year,” said Dippenaar.

Tau Lekoa’s output soared 33% quarter-on-quarter, from 26 267oz in the June quarter, to a record 35 044 oz in the three months ended September 30.

However, labour action at the Consolidated Murchison (Cons Murch) gold and antimony mine resulted in a 50% decline in output to 582 t of antimony for the quarter under review. Production was expected to return to planned levels by the end of October.

Village pointed out that gold production costs from continuing operations decreased 11%, from R317 320/kg in the June quarter, to R285 082/kg by September.

However, the increase in the cash generated by Tau Lekoa during the three months to September – from R96-million in the previous quarter to R156-million – had been offset by the cash losses sustained at the discontinued Blyvooruitzicht (Blyvoor) mine and the Buffelsfontein (Buffels) operations, as well as operating losses at Cons Murch resulting from lower production, leaving the company in a cash neutral position from a cash generation perspective.

Cons Murch reported a cash loss of R30-million in the September quarter, compared with a R9-million cash loss in the previous quarter.

Buffels, which was idled in August, still incurred substantial costs, reaching R60-million in the quarter under review, mostly owing to electrical power costs of R27-million and R20-million in salary costs before the retrenchment process was concluded.

However, the costs incurred at Buffels had steadily reduced to R7-million a month as part of the care-and-maintenance programme.

Village expected the costs to stabilise at this level going forward as Buffels was prepared for closure.

Blyvoor, which remained fully operational during July prior to the granting of a provisional liquidation order, incurred a loss of R46-million.

Village said cost pressures would stabilise as the losses from both Blyvoor and Buffels had been dealt with and Cons Murch was returning to normalised operational levels.