Johannesburg - Avgold, Anglovaal Mining's gold company, pulled down an old gold processing plant and struck the jackpot when it found 515kg of gold that had accumulated in old machines, pipes and the floor, allowing it to report its first profitable quarter since March last year.
Earnings rose to R19 million after a loss of R6 million the previous quarter.
But if the gold recovered in the Loraine shut-down and clean-up operations is excluded, the company made a loss of R11 million for the quarter.
Operations continued to improve at Hartebeestfontein, the ageing low-grade mine producing the bulk of Avgold's gold, with an operating profit of R13 million from a R13 million loss the previous quarter.
"Hartebeestfontein is back to respectable margins and we believe that is sustainable," Jurie Geldenhuys, the managing director, said yesterday.
Behind the turnaround was a tough restructuring exercise that cut staff by nearly half. In the latest quarter it cut cash costs to R48 240 for each kilo of gold sold, from R52 966 the previous quarter. The mine's hedge book also allowed it to sell gold at a premium of R4 000 to the average spot price.
Costs at the ETC mines slipped to R50 506 a kilogram from R45 924 the previous quarter, and could push management to shut down the Agnes mine and Consort roaster earlier than expected. This could cost R8 million to R10 million in retrenchments and 1 000 jobs.
Although many of Avgold's mining operations are winding down, the company said it had now reached ore-bearing rock on its Target project.
The Target mine, hailed as one of the most attractive ore bodies in the world, will produce about a third of a million ounces a year once it is in full production early in the new millennium.
Geldenhuys said further drilling had indicated that the mine would produce gold at below $200 an ounce.