FIJI’S EMPEROR MINES REPORTS POOR QUARTER

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FIJI’S EMPEROR MINES REPORTS POOR QUARTER

SUVA, Fiji (Fijilive, Jan. 28) – Emperor Mines suffered a number of setbacks at its Vatukoula goldmine in Fiji during the December quarter.

In a quarterly report released yesterday, Emperor said output fell 18 per cent to 20,000 ounces in three months to December 31.

And although the gold price is hovering at 25-year highs, the mine's cash costs rose to US$556 an ounce during the period, meaning it continues to lose money.

The Sydney Morning Herald reports additionally, two mineworkers were killed in separate ground fall incidents that are being investigated by local authorities.

"It's an unhappy story," said ABN Amro Morgan analyst Chris Brown. "There's always some reason why they under perform."

Rising fuel costs have hit the company particularly hard, because hot weather in the country forces it to use a lot of power to ventilate its deep mine shafts.

Emperor managing director Mark Wellesley-Wood, who also heads DRD Gold, said it was looking at new fuel sources, such as sugar cane waste, to lower costs.

He added production should improve in the coming months when the company depleted the deteriorating Smith shaft and switched to mining higher-grade material at the Philip shaft.

"It would now seem that the Smith shaft, where the previous management put a lot of capital, is far too far away from the source mineralization," Wellesley-Wood said. "That's why the costs are over kilter."

Processing material with grades as high as 117 grams of gold per ton at the Philip shaft could substantially improve the mine's output.

Emperor's financial situation should also improve once DRD Gold's Papua New Guinea assets - including a 20 per cent interest in the Porgera mine and 100 per cent interest in the Tolukuma mine - are folded into it.

Emperor shareholders will vote on the deal on February 20, with financial close expected in March.

January 30, 2006

Fijilive: http://www.fijilive.com

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