ASA reports progress in business reorganisation

JOHANNESBURG (miningweekly.com) – Aim-listed ASA Resource Group on Monday said it has emerged from an “encouraging” second quarter that has set the pace for stronger improvements during the second half of the 2017 financial year.

The three months to September 30 saw the continuation of the company’s reorganisation, with the streamlining of functions, the centralising of procurement and the eradication of duplication well under way.

ASA had shifted certain responsibilities from mine level to corporate level and the reverse, resulting in a “pooling of responsibilities and a more agile management structure”, while the process of rationalising subsidiaries into defined commodity groups is well advanced.

“We continue to optimise our gold and nickel operations, focusing on short-term cost management actions, as well as accelerating our longer-term strategy,” ASA CEO Yat Hoi Ning said in an update to shareholders.

The group is nearing the completion of the streamlining of the UK and Hong Kong offices, while the Johannesburg and Harare offices were closed during the quarter under review to bring important duties closer to operating mines in Bindura.

ASA reported an all-time historical low of corporate overheads at $3-million a year, excluding project exploration and licensing fees, and the reorganisation had helped drive down costs at mine level.

PRODUCTION
During the second quarter of the year, ASA’s Freda Rebecca gold mine, in Zimbabwe, posted a steady performance, with 10% higher gold sales of 15 904 oz in the second quarter, compared with the first-quarter sales of 14 463 oz, at a 5% higher average gold price at $1 341/oz.

The operation’s tonnes mined increased 13% to 363 082 t and the tonnes milled decreased 4% to 262 633 t.

The mine delivered a 16.3% increase in average head grade to 2.28 g/t, while the recovery rate increased 2% to 84%.

Freda’s gold sales are expected to improve slightly in the third quarter and significantly improve in the fourth quarter.

“When gold output returns to its target of 17 500/oz or higher later in this financial year, Freda Rebecca should reach its all-in sustaining cost, and all-important, target of $1 000/oz,” the company pointed out.

The mine’s C1 cash costs were 5% lower quarter-on-quarter at $944/oz, while all-in sustaining C3 costs decreased 3% quarter-on-quarter to $1 115/oz.

At the Trojan nickel mine, also in Zimbabwe, production of nickel-in-concentrate increased 20% in the second quarter to 1 866 t, mostly owing to an increase in average head grade and recoveries.

Head grade was 15% higher at 2.016% and recovery was 2% higher at 89.1%.

Nickel sales surged 32% to 1 971 t at $6 668/t in the second quarter.

The C1 cash costs for nickel-in-concentrate decreased 17% to $4 782/t, with all-in sustaining C3 costs of nickel-in-concentrate decreasing 21% to $5 151/t.

Meanwhile, diamond sales from ASA’s Klipspringer diamond operation, in South Africa, increased by 21% to 36 282 ct in the second quarter, from the 29 872 ct in the first quarter of the year.

The average realised fine diamonds sale price was down 14% to $18.53/ct in the quarter under review, compared with $21.48/ct in the preceding quarter.

The second quarter average realised fine diamonds production cost reduced 18% to $8.88/ct from the previous quarter of $10.80/ct.