30/08/2013 - 13:24

Gold miners look for cost savings

30/08/2013 - 13:24

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Drilling crew at Ampella Mining's Batie West project in Burkina Faso.

Gold sector players Evolution Mining and Ampella Mining have revealed additional cost-cutting initiatives to deal with the impact of low spot prices for the precious metal.

Evolution today booked a net loss of $307 million, with its result driven down by impairments of $384.3 million, initially flagged in June.

The company’s operating profit came in at $44.4 million, Evolution said.

Revenue from gold and silver sales increased 29 per cent to $605 million.

Evolution will pay a final dividend of 1 cent per share.

Chairman Jake Klein said he would forego his bonus of $345,600 in the wake of the result.

Nevertheless, Mr Klein said the company remained in a strong financial position and was confident of achieving cost and production guidance over FY2014.

The company is forecasting production of between 400,000 and 450,000 ounces for the 2014 financial year, with cash costs expected to be in the range of $770/oz to $820/oz.

Evolution has between $160 million and $185 million of capital expenditure planned for FY2014.

“Accordingly, we have agreed to pay a maiden dividend and look forward to continuing to return funds to our shareholders according to our gold-linked royalty style dividend policy – based on 2 per cent of our revenue from gold equivalent production,” Mr Klein said in a statement.

Also today, Ampella Mining unveiled a suite of savings measures, including slashing its managing director’s and non-executive directors’ fees by 20 per cent, and reducing its offshore staff by 33 per cent.

Ampella said it would also cut exploration spending by 50 per cent, and reduce key executive salary by 18 per cent.

Managing director Paul Kitto said the company remained focused on the development of its Napelapera prospect, which is part of its Batie West gold tenements in Burkina Faso.

The company today reported encouraging assay results at the Napelapera project, with drilling identifying a continuous zone of strong gold mineralisation across a strike length of 1.5 kilometres.

“We have invested substantially in Burkina Faso and our focus remains on the long-term development and commercialisation of the Batie West project,” Dr Kitto said in a statement.

“We are continuing with an existing highly targeted exploration program up to and during at least part of the wet season.”

Meanwhile, Perseus Mining’s net profit fell in FY2013, despite the company initiating a raft of company-wide cost-cutting efforts, including reducing its directors’ fees by 15 per cent.

The company’s net profit came in at $41.4 million for FY2013, down from $52.4 million in the previous 12 months.

Revenue was more than twice that of FY2012, coming in at $293.7 million, up from $145.7 million a year earlier.

Managing director Jeff Quartermaine said the company’s performance was solid considering the recent volatility in the gold price and technical challenges at its flagship operation, the Edikan gold mine in Ghana.

“Our focus for FY2014 will be building on our FY2013 performance by improving operational efficiency as a means of maximising the cash margin at Edikan,” Mr Quartermaine said in a statement.

At 1:10PM, WST, Evolution Mining shares were up nearly 4 per cent, at 93.5 cents, Perseus stock was up 12.7 per cent at 80 cents, while Ampella shares were steady at 16 cents. 

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