A fourth-quarter recovery lifted junior miner Western Areas’ year-end results into the black for the 12 months ended December.
The group said on Tuesday that substantial revaluation gains of R307-million on dollar liabilities (in accordance with AC133) boosted the results of Western Areas for the fourth quarter, allowing the company to report a modest year-end after-tax profit of R13,5-million from a year-to-date loss of R176,4-million in September.
Fourth-quarter profit for the company was R189,9-million (171,8 cents/share), inclusive of R9,8-million of severance costs, compared with a loss of R158,4-million (148,2 cents/share) for the previous quarter.
The results for the year reflect the impact of the further appreciation of the rand relative to the dollar, and the sustained positive trend in the gold price, although the impact was offset by the call options sold in the derivative structure, in the order of R192,2-million.
Year-on-year profit declined from R460,7-million to R13,5-million as a consequence of the lower gold revenue stemming from the negative impact of the call options sold, increased cost pressures at South Deep, the absence of abnormal profits from the sale of investments (R207-million in 2003) and a lesser appreciation in the rand, resulting in revaluation gains of R302,4-million compared with R713,2-million in 2004.
Gold production for the year of 6 781kg was slightly up on the forecast of 6 600kg. However, production decreased by 3% from 6 974kg relative to 2003.
Tonnes milled for the year was 1 119 000 (2003: 995 000) — of which 788 500 tonnes was from underground — against a forecast throughput of 1 055 000 tonnes.
The yield achieved was 6,06g/t relative to the forecast of 6,25g/t. The lower yield was primarily due to the increased treatment of low-grade surface material to use the metallurgical plant capacity more fully.
Excluding hedging losses, gold revenue decreased from R619,9-million in 2003 to R573,6-million in 2004, and including hedging losses, from R582,4-million in 2003 to R381,4-million in 2004.
Cash costs per kilogram produced increased from R69 861/kg to R77 873/kg.
“The average dollar spot gold price (excluding hedging) achieved increased from $363/oz in 2003 to $398/oz in 2004. The benefit of the improved gold price was offset by the strengthening of the rand, from an average of R7,5735/$ in 2003 to R6,490/$ in 2004, translating into R88 300/kg for 2003 and R82 989/kg for 2004.
“Countering the higher gold price were the sold call options in the derivative structure, reducing the average gold price (including hedging) achieved to $298/oz compared to $315/oz in 2003,” the mining company said. — I-Net Bridge