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South Africa’s gold production
declined 7.5 percent

16/09/07. South Africa’s gold production declined 7.5 percent to 63,517
kilograms in the second quarter of 2007, the South African Chamber of
Mines reported September 3, 2007.

Compared with the first quarter of 2007, the country’s gold production
rose by 1.1 percent, the chamber stated.

Among the chamber’s gold mine members, production fell 7.1 percent,
from the second quarter of 2006, to 54,348 kilograms in 2007. That was 0.2
percent lower than the first quarter’s production.

Capital expenditure rose 54 percent on a year-on-year basis to ZAR 2.2
billion (about $305.71 million) in the second quarter, as the industry
attempts to catch-up with capital expenditure from 2004 and 2005 and to
develop new areas for mining going forward, the chamber reported.

“While there is a delay between capital expenditure and actual mining, it is
encouraging to see increased capital expenditure flowing through to a 2.4
percent year-on-year increase in development meters underground. This
in turn should feed through to an improvement in meters stopped
underground in the future,” a chamber statement read.

The chamber noted that the tons of ore processed through South African
mills rose by 1.5 percent year-on-year to 12.9 million tons in the second
quarter of 2007. “However, the 8.4 percent decline in average grade mined
to 4.2 grams per ton meant that actual kilograms of gold produced
declined by 7.1 percent,” the chamber explained.

This decline in the average grade mined to 4.2 grams per ton was
facilitated by the 17.3 percent increase in the rand gold price received by
the mining companies to ZAR 144,254 ($20,047) per kilogram. “This in turn
allowed mining companies to mine lower grade ores that had previously
been uneconomic to mine,” the chamber added.