JOHANNESBURG (miningweekly.com) – Aim-listed ASA Resource Group on Friday reported an increase in earnings before interest, taxes, depreciation and amortisation to $20.5-million for the fourth quarter ended March 31, against a loss of $300 000 in the three months to March 31, 2016.
This improvement came despite lower production at its Freda Rebecca gold mine, in Zimbabwe, where production reduced from 15 365 oz in the December 2016 quarter to 12 462 oz for the quarter under review.
However, the average gold price received of $1 241/oz was higher than the third quarter’s $1 195/oz.
ASA chairperson David Murangari noted that while the price of gold increased steadily during the quarter, major challenges arose owing to low availability of hauling units as a result of the mismanagement of Freda Rebecca's working capital.
“This resulted in contractors not being paid and staff threatening to strike. [However], meetings with the workers’ council and key contractors were convened and, after giving reassurances, staff morale improved quickly and contractors returned to site. We can confirm that operations are slowly being normalised,” he said.
The impact was a fall in tonnes milled, down 27% to 231 739 t, a 16% drop in revenues to $15.5-million and the 19% reduction in gold produced.
“All-in-sustaining costs (AISC) were on a positive downward trend up until this quarter [when it rose 22% to $1 291/oz] and, once mill capacity and contractors' issues are fully addressed, we remain confident of reaching our AISC target of $1 000/oz this year.
“With a gold price of over $1 200/oz and higher production, Freda Rebecca's margins and sales will become more sustainable. It is worth reminding shareholders that in third quarter last year, Freda Rebecca reported gold production of 18 506/oz with AISC of $988/oz,” Murangari added.
The miner also reported a significant decline in its cash balance to $2.1-million, from $7.4-million, owing mainly to the mismanagement of cash flows.
Meanwhile, the company’s Trojan nickel mine, also in Zimbabwe, delivered higher nickel-in-concentrate output of 1 771 t, a 13% quarter-on-quarter change.