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September 2012 Quarterly Results
GOLD ONE INTERNATIONAL LIMITED
Registered in Western Australia under the Corporations Act 2001 (Cth)
Registration number ACN: 094 265 746
Registered as an external company in the Republic of South Africa
Registration number: 2009/000032/10
Share code on the ASX/JSE: GDO
ISIN: AU000000GDO5
OTCQX International: GLDZY
("Gold One")
September 2012 Quarterly Results
- 59,642 ounces gold production
- Negative cashflow from operations of US$ 9.19 million
- Group operating cashflow of US$ 7.81 million
- Group cash balance increased by 28% primarily due to a US$ 25 million shareholder loan
- Group cash costs of US$ 1,318/oz
- Gold Fields and Gold One West Rand Tailings Joint Venture scoping study to be progressed to pre-
feasibility study
Gold One International Limited is pleased to announce company’s September 2012 quarter results, in which
a total of 59,642 ounces of gold was produced for the Gold One group. This reflects a 5% decrease on the June 2012
quarter’s production primarily as a result of the ongoing production build up at Modder East post the unprotected industrial
action that took place at the operation in June.
Safety for the group, measured according to the lost-time injury rate per 200,000 hours worked (“LTIFR”)
and inclusive of the recently acquired Cooke 4 (Ezulwini mine), was 1.22 for the September 2012 quarter.
This is an improvement on the June 2012 quarter’s LTIFR of 1.30 but remains above the group’s benchmark
of 1.0.
The ramp up in production at Modder East following the unprotected strike action and the subsequent
dismissal of a large majority of the operation’s workforce during June progressed during the quarter but was
slower than expected, largely due to ongoing intimidation of loyal employees. Production at the operation
more than doubled from 3,409 ounces for July to 6,962 ounces for August, and amounted to 6,766 ounces
for September. Modder East’s ramp up is anticipated to continue throughout the December 2012 quarter
and pre-strike production levels are expected to be achieved by year-end.
With Modder East’s three year wage agreement signed with the National Union of Mineworkers (“NUM”),
coming to an end in December 2012 management has used the current disruptive period to successfully
negotiate a new two year wage agreement. The two year wage agreement will be effective for the period
from 1 January 2013 to 31 December 2014 and will apply to all Paterson band A and B employees, regardless
of union affiliation. Salaries will be increased by 10% for Category A and B Lower Employees and 8% for B
Upper Employees in 2013 and in 2014. Following the transition of Modder East as it ramps up from
development status to full production, substantial increases to minimum wages for surface and
underground categories will also be implemented to bring the operation in line with the industry. Newly
introduced terms include a maternity leave provision, physical transport provided by the company, a
medical allowance, and the issuing of a 13th cheque dependent on the achievement of an annual production
target. The agreement further provides for increases to: basic salaries; critical skills salaries; monthly living
out allowances; and company provident fund contributions.
During the previous quarter the company reported that the High Court had granted costs against the
Professional Transport and Allied Workers Union (“PTAWU”), which led violent illegal industrial action and
protest at the Modder East Operation during June. A compensation claim against PTAWU for production
losses suffered during 4 and 5 June of the illegal strike was submitted to the Labour Court on 19 September
2012 in terms of Section 68(1)(b) of the Labour Relations Act 66 of 1995. The company is seeking
compensation to the value of ZAR 9,888,564 (US$ 1.2 million). PTAWU has not opposed the application and
Gold One is currently waiting for the Court to set a date upon which the matter will be heard.
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Amidst South Africa’s recent and ongoing wildcat strikes in the platinum and gold sectors, Gold One has also
suffered an illegal strike at Cooke 4, which the company acquired during mid-2012 from the First Uranium
Corporation (“First Uranium”). The illegal industrial action began with the 1 October night shift and was
subsequently interdicted by the Labour Court of South Africa on 2 October 2012. On 3 October, workers who
participated in the illegal strike were suspended pending disciplinary hearings for which representations and
appeals against dismissal were concluded on 5 and 15 October, respectively. In almost all cases
Management concluded that there were insufficient mitigating factors against the sanction of dismissal,
resulting in 1,417 of the operation’s 1,900 workers being dismissed.
Owing to Cooke 4’s status as a marginal underground operation and the continuing labour unrest in South
Africa’s mining industry, the company announced on 16 October 2012 that the underground operations at
Cooke 4 would be suspended for 30 days to ensure the safety and security of employees and assets. This
will also provide the company an opportunity to review its options regarding the underground operations.
The recent labour unrest in South Africa has also contributed to a significant decline in investor sentiment
and as a result the company is reviewing the timing of its listing on the Hong Kong Stock Exchange. In the
interim, the group will focus on building up the Modder East Operation to full production of 100,000 tonnes
per month, completing the two year turnaround at the Cooke Underground Operations, integrating Cooke 4,
and growing production at the Randfontein Surface Operation.
Although the Cooke Underground Operations’ September 2012 quarter production of 25,701 ounces was
only marginally below forecasts it was disappointing that a significant proportion of this production was
derived from low grade mining areas, below the pay limit, resulting in significant losses. Mining below the
pay limit occurred mainly due to a lack of current mining flexibility, an increase in unit mining costs and poor
management controls. Flexibility in the longer term is being addressed through the systematic increase and
targeting of development. Leading indicators are positive with current development sampling across all
three shafts confirming the intersection of grades above current mining pay limits, specifically associated
with the Upper Elsburg Reef (“UE1A”), Ventersdorp Contact Reed (“VCR”) and selected Kimberley Reef
horizons. Over the next 12 months 32 raises will be completed, generating an estimated 140,000 square
metres of payable mining ground.
In the shorter term the pay limit is being addressed through a restructuring of the operations, which will
result in a decrease in volume of approximately 25,000 tonnes per month relative to original planning of
100,000 tonnes per month. This reduction in volume will unfortunately be associated with a reduction in
employees, which is currently estimated at approximately 1,300 persons. Management changes have also
been implemented to ensure that the quality of mining improves.
As a result of the change in ramp up at Modder East, the revised planning at the Cooke Underground
Operations and the illegal strike at Cooke 4, the next quarter’s production objectives have been reviewed
and it is envisaged that the group will achieve a 59,000 ounce output for the December 2012 quarter. This
will provide a revised outlook of 243,171 ounces for 2012, including the contribution from Cooke 4.
Group gold revenue for the September 2012 quarter amounted to US$ 87.89 million from the sale of 55,995
ounces at an average price of US$ 1,570/oz. This comprised 36,150 ounces of gold sold into the spot market
at an average price of US$ 1,662/oz and 19,845 ounces delivered into the hedge book at an implied average
price of US$ 1 166/oz. A possible restructuring or cash settlement of the ex-Rand Uranium (Pty) Limited
(“Rand Uranium”) hedge was considered during the quarter under review to improve the Cooke
Underground Operations’ profitability in the short term. It was, however, decided that, at this stage, it would
be optimal to continue delivering into the hedge as the monthly commitments become due. This will carry
on through to the end of the hedge commitments in June 2013.
Cash cost for the quarter increased to US$ 1,381/oz from US$ 1,007/oz, eroding the gross cash margin by
47% to US$ 189/oz. The increase in cash cost can be attributed to the lower gold production following the
illegal strikes at Modder East and increased total working costs at the Cooke Underground Operations.
Capital expenditure for the quarter was US$ 18.48 million (US$ 311/oz), of which US$ 10.4 million was spent
on orebody development and equipping. Cashflow from operations, which is measured after capital
expenditure, is an outflow of US$ 9.19 million and will be funded from current cash resources.
Gold One ended the quarter with a cash balance of US$ 97.57 million (including restricted cash of US$ 30.76
million) excluding gold receivables amounting to US$ 11.84 million. The company also received a further
shareholder loan shortly before the end of the quarter, which boosted the quarter end cash balance. This
compares to a cash balance of US$ 75.99 million (including restricted cash of US$ 30.12 million) and gold
receivables of US$ 6.09 million at the end of the June 2012 quarter, reflecting a 28% quarter-on-quarter
increase in the cash balance.
At quarter-end Gold One reflected debt of US$ 219.95 million (principal amount of US$ 213.79 million and
interest of US$ 6.16 million). This debt is made up of the shareholder loans received during the March and
September 2012 quarters, amounting to US$ 104 million, and the Investec facility, amounting to US$ 115.95
million. The shareholder loan was used, in part, to reduce the capital owing under the Investec facility. This
repayment was made during early October, reducing the Investec facility by US$ 12.58 million.
During the quarter an additional US$ 60 million drawdown of the Investec facility took place in order to fund
the remaining portion of the purchase price for Ezulwini Mining Company (Pty) Limited (“Ezulwini”) (Cooke
4). As at the end of the quarter, Gold One has access to US$ 96.21 million in undrawn Investec facilities.
Corporate Development
In January 2012, Gold One and Gold Fields Limited (“Gold Fields”) initiated a study investigating the
feasibility of a joint venture into which both parties will contribute surface assets for retreatment. The
intention is to reclaim and retreat the historical and current tailings material to recover residual gold,
uranium and sulphur. A further objective of the project is to address the redeposition of the residues in
accordance with modern sustainable deposition practices.
During the quarter the West Rand Tailings Joint Venture scoping study was successfully concluded. The
study has shown extensive value and risk reduction synergies, which underpin a significant opportunity to
extract value from the parties’ surface resources that is not inherent in either company’s share price.
The positive scoping study outcome and the significant amounts of technical and economic work already
undertaken by the companies have facilitated fast-tracking to a joint pre-feasibility assessment and a
positive decision has been taken in this regard. During the pre-feasibility assessment a comprehensive
metallurgical test work programme will be carried out on Gold One’s Millsite and Old 4 Dam tailings
facilities. Further strategic phasing of capital and scheduling of available feed material will also be optimised
during the pre-feasibility study. The outcome of the pre-feasibility study is expected by the end of the June
2013 quarter.
On 17 April 2012 Gold One announced that the company had entered into an acquisition agreement through
its wholly owned subsidiary New Kleinfontein Mining Company Limited (“NKMC”) and with Goliath Gold
Mining Limited (“Goliath Gold”) to acquire control over the underground deposits of Grootvlei (Pty) Mines
Limited, Consolidated Modderfontein Mines 1979 Limited and Nigel Gold Mining Company (Pty) Limited
(“the Pamodzi East Rand Operations”) for a total of ZAR 70 million. This strategic transaction essentially gives
Gold One and Goliath Gold access to explore one of the largest brownfield exploration properties in the
world that still hosts significant potential resources. Specifically, Gold One will have access to exploring and
delineating the down dip extension contiguous to Modder East. This largely unmined area is highly
prospective with regards to the UK9a (Kimberly Reef) orebody. The UK9a currently comprises some 26% of
Modder East’s existing mineral reserve and the down dip extension has the potential to substantially
increase Modder East’s current 10 year life of mine.
The anticipated completion of all conditions precedent to the acquisition of the Pamodzi East Rand
Operations has been extended to 14 December 2012 by mutual agreement from both parties, and can be
extended further by mutual agreement.
Gold One President and CEO Neal Froneman comments: “Despite the challenges that the Gold One group
has faced during the September quarter, I am pleased with the headway we have made in driving long term
safe, productive and stable operations. With the successful conclusion of the Modder East two year wage
agreement, the progress made in the restructuring of the Cooke Underground Operations and the continued
growth of the company’s substantial surface retreatment business, Gold One is well positioned for solid
performance in 2013.”
Johannesburg
31 October 2012
JSE Sponsor
Macquarie First South Capital (Pty) Ltd
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 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 kilometres 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 1,416,538,989 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 forward-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: 31/10/2012 08:34:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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