Village Main Reef : Annual Results for the Year Ended 30 June 2014

Village Main Reef Limited (formerly Village Main Reef Gold Mining Company (1934) Limited) Incorporated in the Republic of South Africa

Registration number 1934/005703/06

JSE code: VIL ISIN: ZAE000154761

("Village" or "the Company" or "the Group")

For immediate release
01 October 2014
91/2014-jk

ANNUAL RESULTS FOR THE YEAR ENDED 30 JUNE 2014

Village Main Reef reports headline earnings of 26.12 cents per share from continuing operations, moves to bolster shareholder and investor confidence

 Revenue, amounting to R 1.5 billion, from continuing operations remained consistent year on year despite the lower gold price;

 Earnings per share from continuing operations

o ▼ by 34.9% to 22.40 cents (2013: 34.46 cents);

 Loss per share from discontinued operations

o ▼by 96.7% to 3.59 cents (2013: 109.70 cents);

 Headline earnings per share from continuing operations

o ▼ by 34.7% at 26.12 cents (2013: 40.00 cents);

 Headline loss per share from discontinuing operations;

o ▲ by 81.4% at 33.36 cents (2013: 18.39 cents);

 Operating profit from continuing operations

o ▼ by 19.6% at 236 million (2013: 293 million);

 Net asset value per share

o ▲ by 50.3% to 119.99 cents (2013: 79.85 cents).

Says Ferdi Dippenaar, Village Main Reef's CEO, "The highlight of our year has been the restructuring and strengthening of our balance sheet, which culminated in the NAV per share increasing by 50% from 80 cents to 120 cents per share. This positions Village Main to transform itself into a resources investment holding company. We focused on the most pressing issues - setting our position straight at Blyvoor, starting closure procedures at Buffelsfontein following our placing the mine on care and maintenance in August 2013 and initiating the sales process at Cons Murch.
"The restructuring that Village has undergone in the past 12 months has been significant and would arguably have taken other companies longer to achieve. Going forward, it is our intention to further restructure our asset portfolio. We have previously referred to the potential disposal of Lesego. Our focus is on extracting optimal value for our shareholders, which could include the acquisition of value-enhancing assets. Furthermore, should it result in the disposal of Tau Lekoa or even of Village itself as a going concern, so be it. As we move into the future, Village's asset portfolio will be different from its present one. "
Included in the financial results are significant costs associated with the restructuring of
Buffels and losses from the Cons Murch operations.
Tau Lekoa produced 3,436kg (110,470 oz) of gold during FY2014, which is a 4% increase on production in FY2013. All-in-sustainable costs per Au kg were well controlled and increased by 6% year-on-year, which is mainly attributable to structural changes within the Company, subsequent to the closure of Buffels gold mine. Tau Lekoa reported a 25% increase in mineral resources, up from 3.83 Moz to 4.78 Moz. Mineral reserves at Tau, however, decreased approximately 2% from 1.2 Moz to 1.17 Moz, mainly due to depletion.
"As part of our current strategy, drilling is underway that could confirm our confidence to increase our estimate of the life of mine to seven or eight years," says Ferdi.
"At Blyvoor we had to enforce the fact that our putative purchase of the mine had not been legally completed and that, therefore, Village had no responsibility, financial or otherwise, for the property's closure.
"At Buffels, which has been producing gold since 1954, the mine's closure was inescapable following the extraction of the last remaining economically mineable reserves. We have made progress with the rehabilitation of this vast surface mining area and believe that we have sufficient cash resources in the rehabilitation trust fund to complete closure activities. During the financial year we finally initiated the process to transfer the slimes dams to AngloGold Ashanti's Mine Waste Solutions in terms of the agreement entered into in 2006. This allowed for the transfer of R115 million of rehabilitation liabilities associated with the closure of Buffels to Mine Waste Solutions. We have also made good progress in dealing with the pumping of underground water at Buffels and are in discussions with neighbouring mining companies on finding an affordable long-term solution on pumping costs and responsibilities.
"Though the sale of Cons Murch had been considered before the start of the year under review, there are always imponderables when the 'For Sale' sign is put up, particularly among employees who can, understandably, be worried about their jobs. After a strike of almost a month in July 2013 the operation has not reached its pre-strike production levels."
Following approval of the Cons Murch disposal by Village's shareholders on 19 September, the property's sale to Stibium will be completed in two tranches with US$8.4 million being due in Q2 FY2015 and the remaining US$6.6 million when the transfer of mining rights has been approved by the Department of Mineral Resources (DMR). In the interim, Village remains responsible for the necessary working and capital expenditure to sustain operations while, once the sale has been completed, Stibium is committed to a capital spend of US$10 million to recapitalise the mine so as to refurbish or replace ageing infrastructure, undertake the necessary underground development and gain access to extensions to the Gravelotte ore body.
"The question many shareholders might be asking is whether we are planning further sales," says Ferdi. "However, though we intend to go on operating Tau Lekoa, it is inconceivable that we shall entertain any other deep-level mining ventures. During the past year we carefully evaluated our Lesego platinum project and have completed a definitive feasibility study (DFS) based on a large-scale mine. We have also completed a preliminary economic assessment (PEA) and a process to complete a DFS for a small mine option is underway. The DFS and PEA both indicated that developing a mine would be financially attractive, but
we have approached this project realistically. Village alone has neither the technical skills nor the financial capacity to manage such a project without partners. Our present intention, then, is either to dispose of the asset or to find a development partner for this comparatively shallow and, therefore, attractive quality deposit," concludes Ferdi.

The provisional results for the year ended 30 June 2014 are available on the Company's

website: www.villagemainreef.co.za

Contacts:

Ferdi Dippenaar

CEO

Email: [e-mail]

Mobile: [phone]

Clinton Halsey

CFO

Email: [e-mail]

Mobile: [phone]

Issued by:

Russell and Associates

Email: [e-mail]/[e-mail]

Tel: [phone]