A R56-million foreign exchange loss contributed to the 6.6 percent quarter-on-quarter widening of South African black-owned junior miner Pamodzi Gold's net loss.

The company on Monday reported a net loss for the three months to end March of R103.9-million against the December quarter new loss of R97.5-million.

But the higher gold price and a 35 percent increase in gold production allowed the gold producer to pose a 99 percent revenue improvement, with sales bringing in R191.6-million in the March quarter compared with R96.3-million the quarter before.

An operating profit for the quarter of R17.6-million showed a 71 percent improvement on the operating loss of R24.4-million reported for the December quarter.

Basic and headline loss per share of 166 cents for the March quarter was 25.9 percent narrower than the 224 cents reported the quarter before.

Increased gold production at 33 805 ounces for the quarter helped to further dilute Pamodzi Gold's hedge by reducing the percentage of its hedged production by almost 10 percent from 36 percent for the December 2007 quarter to 27 percent for the March 2008 quarter.

Pamodzi inherited gold forward contracts totalling 171 000 ounces when it acquired the Petrex mine from previous owners Bema Gold South Africa in October 2006.

These contracts have a strike price of US$350/oz and run up to June 2012.

Pamodzi Gold said gold sold at spot price brought in R233.7-million.

Peter Steenkamp, CEO of Pamodzi Gold said the company's turnaround strategy involving its recent acquisition of President Steyn Gold Mines from Thistle Mining and the Orkney assets from Harmony Gold Mining was behind the improved production and would ensure that it meets its one million ounce target in the next two years.

Speaking from the opening of the Ndlovu Shaft, at its Consolidated Modderfontein operation on Johannesburg's East Rand, Steenkamp said the acquisitions as well as the new production from Ndlovu Shaft were expected to boost the company's gold production output to between 360 000 ounces and 373 000 ounces from the current 135 000 ounces per annum.

The company is looking to capital expenditure of between R343-million and R360-million to help it achieve its production target.

"We have continued in this quarter to focus on meeting our deliverables, driving growth, development, profitability and safety for our operations which remains at the core of the company's mining ethos," said Pamodzi Gold Chairperson Ndaba Ntsele.

At 1.05pm shares in Pamodzi were unchanged at 8.50 rand on the JSE.

I-Net Bridge