🕐07.05.12 - 08:54 Uhr

VILLAGE ANNOUNCES REPORT FOR QUARTER ENDED 31 MARCH 2012



Village Main Reef press announcement
Report for the quarter ended 31 March 2012
[Please note conference call details below for 3pm CAT time today ] Key Features
- Earnings per share of 7.19 cents for Q3 compared to 16.57 cents for Q2 - Net cash flow from operations of R73.2m, a 58.2% from R175.1 million in Q2 - Realised average gold price R419 810/kg in Q3 down from R 435 677/kg in Q2 - Gold production of 1 237kg, down from 1 388kg Q2 - Cash costs per kg reduced by 5.4% to R236,734/kg at Tau - Antimony production of 909 tons achieved in Q3, up 8.6% from Q2 - A good quarter from a safety perspective with overall improvements - Filed all required Competition Commission documentation in relation to the potential acquisition of Blyvooruitzicht Gold Mining Company from DRD - Current CFO Marius Saaiman appointed as joint CEO and appointment of new CFO - Received a R85m conditional offer for Weltevreden project.


CEO, Bernard Swanepoel comments: �The Group�s continued focus during this seasonally weak production quarter was on reducing costs whilst creating ore body flexibility at our operations.

This we did by investing in development and opening up pay areas.

These initiatives will assist us to build sustainable mines and mitigate some of the risks associated in a commodity price downturn.

Looking ahead, we are confident that combined with our investment in the business optimisation process, we should see higher volumes from all our operations for the rest of the year.


I am personally very proud of and pleased with the appointment of Marius Saaiman as joint CEO and also with the appointment of Sandeep Ghandi as CFO. Both of these individuals strengthen our board and management team with appropriate skill and experience.�
� - excludes gold credits
Q3 vs Q2 operational profit variance analysis
Prospects Production volumes are traditionally higher during the June quarter than those achieved during the March quarter, and we expect all our operations to follow this trend.

Together with our continued investment into our mines our expectations are that production volumes for June will be more in line with volumes achieved during the December 2011 quarter.

Costs during the June quarter are usually higher than those achieved during the summer quarters as a result of the increased electricity tariffs during the winter months.

That being said, we anticipate that unit costs at Tau will remain at current levels.


Management is pleased that the Blyvoor acquisition is still on track for Part A completion during Q4.

As indicated above, the competition submission was filed at the end of March 2012.

Both Village and DRD agreed to waive all remaining conditions to the transaction on 4 May 2012, resulting in certainty of deal completion subject to receiving Competition approval on terms acceptable to both parties. First Uranium Corporation (�FIU�) has indicated that the shareholders meeting in relation to the proposed disposal by FIU of its Ezulwini operations to GoldOne Limited and its Mine Waste Solutions (Pty) Ltd (�MWS�) operations to AngloGold Ashanti is set for 13 June 2012.

Should FIU shareholders approve the proposed transactions, Village will receive some R393 million in lieu of its investment in Mine Waste Solutions Rand Denominated Secured Convertible Notes, as well as approximately R20m for its remaining 5.7% equity interest in FIU.

Village has consistently indicated that the bulk of these funds will be returned to its shareholders.


Village has consulted with its legal advisors who have confirmed that the MWS Rand Notes are well secured over the assets of FIU in case shareholders block the proposed transactions.


Village received an unsolicited binding offer for its Tau operations, from the Tannous Investment Group to the value of R1 billion (R1 000 000 000). Village is in the process of appointing an independent financial advisor to evaluate the offer.

Based on the financial performance of Tau since acquisition, the view of the Village Board is that the amount offered for Tau is well short of the Company� own valuation of Tau .


Village also received a non binding offer of R85 million (R85 000 000) for its Weltevreden assets.

This offer remains subject to the completion of a due diligence and other conditions customary to transactions of this nature. The board has previously indicated its support for the disposal of this project.
Appointment of joint Chief Executive Officer, Chief Financial Officer and Company Secretary
Village is pleased to announce that in line with its statements to all stakeholders since the acquisition of the Simmers assets in June 2011, the Board has confirmed the appointment of Mr Marius Saaiman as joint CEO, with Mr Bernard Swanepoel.

Mr Saaiman resigned as Chief Financial Officer with effect from 4 May 2012 and Mr Sandeep Gandhi, a qualified chartered accountant, was appointed CFO, effective the same day.

Mr Gandhi joined Village from Johnson Matthey in March 2012.


Mr Saaiman will focus on the strategic issues like acquisitions and disposals, shareholder relations as well as all other corporate matters, enabling Mr Swanepoel to apply his extensive operational skills on the integration of our recently acquired operations.


In addition, Ms Charlene Venter was appointed to the position of Company Secretary..

Ms Venter was previously with AngloGold Ashanti and prior to that with Harmony.


Statement by Chief Executive Officer
Village�s operating performance over the third quarter of FY2012 was marginally lower than we anticipated, largely as a result of lower production at our Buffels and Cons Murch operations.

Notwithstanding this, we have delivered an operating profit of R65 million, which equates to 7.19 cent per share and cash of R73.2 million from operations, in what is historically a challenging quarter for the gold mining industry, due to the down time in production over Christmas and New Year.
We produced 1 169kg (37 583oz) of gold in Q3 from our two gold operations, Buffels and Tau which was 11% lower than the previous quarter.

The combined effect of a slow start up after the Christmas break and the hoisting problems experienced at the high grade 2 shaft at Buffels contributed to the lower volumes during the quarter and also resulted in an overall reduction in gold yield.

The hoisting problems have been addressed and we should see volumes at 2 shaft, as well as overall gold yield at Buffels improve.


At Tau we have benefited from cost control initiatives with a cash cost per kg reduction of 5.4% quarter on quarter.

Overall performance at Tau was in line with our forecast.

The business improvement programme implemented at Tau should also see the current gold per kilogram cash costs sustained.

Gold revenue was lower due to a more subdued gold price with the realised gold price during the March quarter reducing by some R15 867/kg compared to the record highs from the previous quarter.


At Cons Murch, production of antimony was 8.6% higher at 909 tons in Q3 compared to 837 tons in Q2.

Production was however affected by a winder breakdown at our high grade Athens shaft and mine wide safety stoppages midway through the quarter.

Our shaft deepening development activities at both the Monarch and Athens shafts have intersected the antimony reefs which will result in improved volumes and mine flexibility.

Our new surface decline project (Gravelotte decline) will give us access to a shallow antimony-rich ore body.

Site establishment and Geotechnical drilling is completed and the box cut excavation is in progress.

We expect Gravelotte to contribute to production by December 2012.

Gold, a by-product from the antimony production was stable quarter on quarter at 69kg (2 218oz).


At our Lesego platinum project, the definitive feasibility study is progressing well.

We are awaiting final assay results from the shallow and confirmative drilling program and expect to provide the market with an updated resource statement by end of May 2012.


Safety remains a key focus of management and we are very pleased to report an improved safety performance over the March quarter.


We remain confident that our communicated strategy of creating self sustainable operations in a socially responsible manner through the acquisition of higher cost assets and positively impacting on the cost base of these operations will create significant value for all our stakeholders. We continue to focus on creating ore body flexibility, mining only profitable ounces from all our operations and to engage pro-actively with all our stakeholders.


Financial review
The table below sets out the unaudited results of the operations for the quarter ended 31 March 2012
Group revenue for the quarter was R543 million, whilst group cash costs were R399 million.

After capital expenditure amounting to R37.5 million in Q3 the group generated net cash flow from operations of R73.2 million which is 58.2% lower than the December quarter�s net cash flow from operations of R175.1 million.

Cash generated from operations reduced in Q3 due to lower gold revenue and volumes as compared to Q2.

Significant cash payments made in Q3 comprised of R36 million in respect of the Deutsche Bank gold loan, payment in relation to the Tau improvement project of R28 million as well as working capital movements amounting to R21 million.


Operational review
Tau Total gold produced at Tau was 865kg (27 809oz) in Q3, which was 30kg (965oz) lower than the 895kg (31 668oz) produced during Q2.

The decrease is attributable to a decline in overall gold yield to 3.27 g/t in Q3 from 3.54 g/t achieved during Q2.

This was mainly due to a significant portion of mining being moved on a temporary basis for rock engineering requirements to an area where a drop in grade was expected.

The effect of the slow start�up after the Christmas break also impacted negatively on production volumes. Tau�s gold revenue decreased by 7% to R364 million in Q3 from R390 million in Q2.

The decrease is attributed to the lower realised gold price achieved during the quarter, of R419,810/kg compared to R435,677/kg during Q2.

The lower realised gold price accounted for R13 million of the lower revenue while lower gold production volumes also accounted for R13 million. Pleasingly, the management team succeeded in reducing the total cash costs quarter on quarter to R205m in Q3 from R224m in Q2.

The cash cost per kg costs were also decreased to R236,734/kg in Q3 from R250,347/kg in Q2.

The reduction in unit costs at Tau is mainly due to stringent cost control measures and positive results from the initiatives implemented as part of the business improvement programme at Tau.

The team are confident that the reductions in costs achieved are sustainable.

Cash operating profit at Tau was 4% lower quarter on quarter at R158.6 million in Q3 compared to R165.8m in Q2. Tau remains a substantial contributor to the company and continues to receive intensive management focus from the executive team, with various on-going productivity improvement initiatives underway.

Buffels Total gold production from Buffels was 303kg (9 741oz) in Q3 which was lower than the 424kg (13 632oz) produced during Q2.

The overall gold production was affected by both volume and grade issues experienced during the quarter. Underground gold grade at 3.32 g/t in Q3 was lower than the 3.85 g/t achieved during Q2.

The gold grade was negatively impacted due to hoisting problems experienced at the high grade Buffels 2 shaft, which resulted in 2 shaft contributing lower volumes than planned for.

The hoisting issue at 2 shaft has been addressed.

Production volumes were further impacted by grade related stoppages at some of the panels at 7 shaft.

Management have subsequently taken the necessary steps to address these challenges with attention and focus being given to development and opening up pay areas to improve mining flexibility.

Gold revenue decreased by 31% to R127 million in Q3 compared to R185 million in Q2.

The decrease in revenue is mostly attributed to lower production, which accounted for R 54 million with the reduction in gold price accounting for R4 million of the decrease.

Total cash costs were reduced quarter on quarter by 7% to R139 million in Q3 from R149 million in Q2.

Despite this, unit cash cost increased to R459,585/kg in Q3 from R331,834/kg in Q2.

Subsequently, Buffels reported a cash operating loss of R12 million in Q3, compared to a cash operating profit of R36 million during Q2. These challenges are being addressed by the management team and we expect some improvement in the next quarter.

South Plant (Buffels plant)
Recoveries at South Plant decreased slightly during the quarter to an average of 93% in Q3 from 94% in Q2.

This was attributed to a feed of low grade surface material during the Christmas break.

South plant continues to operate well and some initiatives are underway to further reduce operating unit costs.
Cons Murch Antimony production quarter on quarter was 8.6% higher at 909 tons in Q3 compared to 837 tons in Q2.

Cons Murch produces gold as a by-product.

Gold production for the quarter remained stable at 69kg (2 218oz) for Q3.

Antimony production was negatively impacted by lower volumes from the high grade antimony shaft (Athens shafts) due to a winder breakdown at that shaft.

This was exacerbated by some mine-wide safety stoppages mid-way through the quarter.

All of the issues have been addressed and we believe that antimony production will stabilise during Q4. We are pleased to report that the on-going shaft deepening and secondary development activities at both Monarch and Athens shafts have intersected reef, which should positively impact on volumes and assist to create the mining flexibility which has always been a key focus at Cons Murch.

In addition, a new underground dump truck and an additional remote controlled loader were commissioned at Cons Murch which will improve mined volumes from underground.

We remain excited about our new Gravelotte surface decline project which is targeting a shallow antimony-rich ore body.

We completed a number of key activities, including site establishment, geotechnical drilling and support design and excavation of the box cut during the quarter.

The first blast of the portal for the Gravelotte is planned for the June 2012 quarter.

Lesego
Q3 saw the near completion of the final phase of drilling related the Lesego Feasibility Study, as well as the incorporation of the results from the shallow drilling programme into the resource.

The Shallow Drilling programme resulted in numerous Merensky Reef and UG2 Chromitite intersections at shallower depths than previously stated allowing for the definition of a resource between the depths of 350 m and 700 m.

Additional drilling has resulted in 24% of the resource classified in Measured, 43% in Indicated and 33% in Inferred Resource Category.

This resource includes the improvement on the previous declaration from a depth of 700 m to 2,300 m.
The definitive feasibility study is progressing well and is scheduled for completion in early 2013.
Sufficient information has been garnered to allow for the submission of a Mining Right Application during this quarter, along with Lesego�s Social and Labour Plan.

An initiative to assist schools in the area is underway.

The renovation of Gwaragwara School using local labour and resources, in Nkotokwane, which will in all likelihood be the mine�s nearest neighbour, is complete. In Q3 2012 a total of R11.3 million was spent on feasibility activities compared to R16.5 million during the previous quarter.
These costs continue to be capitalised to the project.
ENDS
Contacts
Village CEO : Bernard Swanepoel; ; 082 303 9922 Media and Investor Relations; Louise Brugman ; ; 083 504 1186 North American Media and Investor Relations; ; +1 (231) 421-8441
CEO Tele-conference call 7 May 2012 15h00 [GMT+1]
Live Call Access Numbers South Africa - Johannesburg 011 535 3600 UK (Toll-Free) 0 800 917 7042 South Africa � Johannesburg alternate 010 201 6616 South Africa - Cape Town 021 819 0900 South Africa (Toll-Free) 0 800 200 648 Other Countries (Intl Toll) +27 11 535 3600 USA 1 800 860 2442
Playback Access Numbers code � 20532# South Africa 011 305 2030 Other countries + 27 11 305 2030 UK (Toll Free) 0 808 234 6771 Canada and US 1-412-317-0088
Please note that a recording on the conference call will also be made available on www.villagemainreef.co.za after the call.


Logo_sharper02 media & investor relations
louise brugman managing director Tel: +27 (0) 11 787 3015 Cell: +27 (0) 83 504 1186 skype louise.brugman Email: Web: www.vestor.co.za



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