To view the PDF file, sign up for a MySharenet subscription.

GOLD ONE INTERNATIONAL LIMITED - September Quarter Guidance and Operational Update

Release Date: 10/09/2012 08:40
Code(s): GDO     PDF:  
Wrap Text
September Quarter Guidance and Operational Update

Gold One International Limited
Registered in Western Australia under the Corporations Act, 2001 (Cth) with registration number ACN: 094 265 746
(Registered in South Africa as an external company with registration number 2009/000032/10)
ISIN: AU000000GDO5
Share Code on the ASX/JSE: GDO
OTCQX International: GLDZY
("Gold One" or the “Company”) 



                                                                                              Media Release
                  September Quarter Guidance and Operational Update

Gold One (ASX and JSE: GDO) is pleased to advise that following the illegal gathering of previously dismissed employees at the Modder East Operation
on 3 September 2012, 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.

Despite recent events at Modder East, the company advises that 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 6,000 ounces for the months of August
and September. Total forecast production for the September 2012 quarter thus amounts to approximately
59,600 ounces made up as indicated below.

                                    September 2012          September 2012
                                                                                         Variance
                                  Quarter Forecast (oz)   Quarter Guidance (oz)
Modder East Operation                    17,000                   16,000             1,000          6%
Cooke Underground Operations
                                         33,200                   36,000             -2,800        -8%
including Cooke 4 (Ezulwini)
Randfontein Surface Operations           9,400                    9,000               400           4%
Total                                    59,600                   61,000             -1,400        -2%

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 3,300
ounces in July 2012 to 6,800 ounces. As previously announced the company has engaged Jongingozi Mining,
a contrct 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 6,400 ounces during the quarter to end August, consistently producing in excess of the
forecasted 3,000 ounces 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

                                                                                                    Page | 1
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. 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 table below sets out anticipated cashflow from the operations.

                                                                                                Total
                         Modder                                                  Cooke 4      September         Total
                                             Cooke              Randfontein
  Cashflow                East                                                  (Ezulwini)    (Forecast)      June 2012
                                          Underground             Surface
 (Unaudited)              (US$                                                     (US$          2012          Quarter
                                          (US$ Million)         (US$ Million)
                         Million)                                                Million)      Quarter       (US$ Million)
                                                                                             (US$ Million)
Gold Sales                24.72                38.83                 13.64       10.04          87.23           87.82
Payment to
Operating
                         (12.92)              (41.00)              (11.75)       (12,75)       (78.42)         (63.62)
Suppliers and
Employees
Operating
                          11.80                (2.17)                1.89        (2.71)          8.81           24.20
Cashflow
Development
and Capital               (6.24)               (7.31)               (1.65)       (1.65)        (16.85)         (15.46)
Expenditure
Cashflow from
                           5.56                (9.48)                0.24        (4.36)         (8.04)           8.74
Operations
Forecasted ZAR/US$ exchange rates average ZAR 8.252 = US$ 1 for the quarter.


The group gold revenue for the September 2012 quarter is likely to amount to US$ 87 million from the sale
of 59,600 ounces at an implied average price of US$ 1,463/oz. The hedge commitment for the September
2012 quarter is 25,269 ounces at a selling price of ZAR 315,720/kg.

In the interim capital expenditure has been minimised until production at Modder East has been normalised.
Capital expenditure will be marginally higher than the US$ 15,46 million incurred in the June 2012 quarter
due to the inclusion of Cooke 4 Shaft (Ezulwini). Cashflow from operations, which is measured after capital
expenditure, is expected to be an outflow of approximately US$ 8 million, which will be funded from current
cash resources.

During the current quarter US$ 60.7 million was drawn from the Investec facility to fund the final payment
for the Ezulwini acqusition. The US$ 10 million working capital loan provided to First Uranium was repaid to
Gold One upon the close of the transaction. Gold One will have approximately US$ 90 million in approved
Investec undrawn facilities at the end of the quarter.

The overall cash position and receivables position for the group is forecast to decrease from the June 2012
quarter end balance of US$ 75.99 million to US$ 49 million. Detailed operational and financial details will be
provided in the company’s September 2012 quarterly report, due at the end of October 2012.
Gold One President and CEO Neal Froneman comments: “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.”

ENDS

10 September 2012

Sponsor
Macquarie First South Capital (Pty) Limited




                                                    Issued by Gold One International Limited
                                                               www.gold1.co.za

Neal Froneman          President and CEO               +27 11 726 1047 (office) +27 83 628 0226 (mobile)   neal.froneman@gold1.co.za

Grant Stuart           VP Investor Relations           +27 11 726 1047 (office) +27 82 602 5992 (mobile)   grant.stuart@gold1.co.za

Carol Smith            Investor Relations              +27 11 726 1047 (office) +27 82 338 2228 (mobile)   carol.smith@gold1.co.za

Derek Besier           Farrington National Sydney      +61 2 9332 4448 (office) +61 421 768 224 (mobile)   derek.besier@farrington.com.au




About Gold One
Gold One International Limited is a dual listed (ASX/JSE: GDO) mid-tier mining group with gold operations and gold and uranium
prospects across Southern Africa. Gold One remains focused on developing and mining low technical risk, high margin precious
metal resources in diversified jurisdictions. The company’s flagship Modder East gold mine, commissioned in 2009, distinguishes
itself from most other gold mines in South Africa owing to its shallow nature (300 to 500 metres below surface) and continues to
ramp up production, having produced 123,179 ounces in 2011.

At the beginning of 2012, the group expanded further with the acquisition of the Cooke 1,2 and 3 Underground Operations and the
Cooke surface assets (Randfontein Surface Operations) located in the West Rand, 30 kilometers from Johannesburg. The Cooke
underground operations continue to deliver in line with expectations and are currently the subject of a turnaround intervention.
Through Gold One’s purchase of Rand Uranium (Pty) Limited, the group has also acquired one of the world’s most advanced
uranium projects, which envisages recovering uranium, gold and sulphur from the Cooke Tailings Dam and underground ores.

During mid-2012 Gold One also completed its transaction with First Uranium Corporation and acquired 100% of the Ezulwini Mining
Company (Pty) Limited, giving the company access to gold and uranium processing plants with nameplate capacities of 200,000 and
100,000 tonnes per month respectively. Ezulwini is contiguous to the company’s Cooke Underground and Randfontein Surface
operations. Access to the uranium production facility will allow for near term production of uranium from underground ore mined at
Cooke. In addition, the sharing of services between Ezulwini and the Cooke Underground Operations will facilitate a reduction
in operating costs. An integrated plan has been developed which will see Ezulwini being incorporated into the greater Cooke
Underground Operations as Cooke 4 Shaft.

The Gold One group is majority-owned by a consortium comprising Baiyin Non-Ferrous Group Co. Limited, the China-Africa
Development Fund, and Long March Capital Limited, and has an issued share capital of 1,416,315,461 shares.

This news release does not constitute investment advice. Neither this news release nor the information contained in it constitutes an
offer, invitation, solicitation or recommendation in relation to the purchase or sale of securities in any jurisdiction.

Forward-Looking Statement
This release includes certain forward-looking statements and forard-looking information. All statements other than statements of
historical fact included in this release including, without limitation, statements regarding future plans and objectives of Gold One
International Limited are forward-looking statements (or forward-looking information) that involve various risks, assumptions and
uncertainties. There can be no assurance that such statements will prove to be accurate and actual values, results and future events
could differ materially from those anticipated in such statements. Important factors could cause actual results to differ materially
from Gold One’s expectations. Such factors include, among others: the actual results of exploration activities; actual results of
reclamation activities; the estimation or realisation of mineral reserves and resources; the timing and amount of estimated future
production; costs of production; capital expenditures; costs and timing of the development of Modder East and new deposits;
availability of capital required to place Gold One’s properties into production; the ability to obtain or maintain a listing in South
Africa, Australia, Europe or North America; conclusions of economic evaluations; changes in project parameters as plans continue to
be refined; future prices of gold and other commodities; possible variations in ore grade or recovery rates; failure of plant,
equipment or processes to operate as anticipated; accidents; labour disputes and other risks of the mining industry; delays in
obtaining governmental approvals, permits or financing or in the completion of development or construction activities, economic
and financial market conditions; political risks; Gold One’s hedging practices; currency fluctuations; title disputes or claims
limitations on insurance coverage. Although Gold One has attempted to identify important factors that could cause actual results to
differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended.

Any forward-looking statements in this release speak only at the time of issue. There can be no assurance that such statements will
prove to be accurate as actual values, results and future events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking statements. Gold One does not undertake to update any
forward-looking statements that are included herein, or revise any changes in events, conditions or circumstances on which any such
statement is based, except in accordance with applicable securities laws and stock exchange listing requirements.

Date: 10/09/2012 08:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Share This Story