Village Main Reef on transformation path despite FY losses

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“Village has shown its mettle in what has been a trying year for the company, and for the mining industry as a whole, and we have constructed a framework for a sound future,” said Village CEO Ferdi Dippenaar in a media release.

Village reported a headline profit of 37.83 cents per share from continuing operations amid transformation plans into a diversified resources investment company.

As part of the company’s transformation, Village acquired a 16.34 per cent interest in the Australian-listed Continental Coal Limited (Conti).  

Total company revenue grew from 1.9 billion rand in the previous year to 2.5 billion rand for the year ended 30 June 2013.  

The company however made a loss on operating profit from 409.7 million rand in the previous year to 373.3 million rand. They also made a loss from continuing operations from 556.5 million rand in 2012 to 415.6 million rand in 2013.

In May this year, the gold mining company announced the intention to cease underground operations of its Buffelsfontein gold mine. By the end of June, all operations at Buffelsfontein were ceased and placed on care and maintenance.

Village also announced the closure of the Blyvooruitzicht Gold Mining Company Limited (Blyvoor) this year.

“During the period under review, Village has had to take many hard decisions and restructure the company for profitability. These have included the closure of Buffels and, post year-end, the closure of Blyvoor,” the group explained.

“Production at Buffels reached levels where the remaining ore body was not sufficient to justify the costs of developing and opening up new mining areas. In the case of Blyvoor, circumstances left Village with little option but to stem a growing cash haemorrhage.”

Gross profit for its Lesego mine in Limpopo grew from 3.2 million rand in 2012 to 3.7 million rand in 2013, and it’s other mine in Limpopo 19.5 million rand to 20.1 million rand.

Its North West Tau Lekoa mine however suffered a gross loss from 491.8 million rand to 479 million rand.

Gross profit for its Cons Murch mine increased from 19.5 million rand in 2012 to 20.1 million rand in 2013.

“We at Village have not been alone in our difficulties. Virtually all of our peers, particularly the smaller mining companies, have wrestled with similar problems. For some it has been a matter of sheer survival,” said Dippenaar.

“But where Village has, in my view, proved its worth has been in its ability not only to survive the rigours and to excise deadwood but also to initiate its transformation into a diversified resources investment company.”