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Strikes halt 39% of South Africa's gold production

Section: Daily Dispatches

By Carli Cooke
Bloomberg News
Wednesday, September 26, 2012

JOHANNESBURG, South Africa -- South African mine strikes have halted about 39 percent of national gold output, including at AngloGold Ashanti Ltd. and Gold Fields Ltd., as unofficial walkouts spread in the country amid demands for above-inflation pay increases.

AngloGold, the world's third-largest gold producer, today said all its South African mines have been stopped. Gold Fields lost a metric ton, or about 32,000 ounces, of output because of strikes at its KDC and Beatrix sites.

Gold-mine workers have been encouraged by the pay increase prompted by a wildcat strike in the platinum industry. A six-week walkout at Lonmin Plc's Marikana mine erupted into violence that killed 46, including 34 shot by police last month. Workers won wage gains of as much as 22 percent, more than four times the August inflation rate, before returning on Sept. 20. Coal of Africa Ltd. employees and about 20,000 transport workers are also on strike.

... Dispatch continues below ...


Prophecy Platinum Intercepts Best Pt+Pd+Au Grades Yet
at Wellgreen Project in Yukon Territory: 5.36 g/t

Company Press Release
Tuesday, September 11, 2012

VANCOUVER, British Columbia -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) announces more results of its 2012 drill program on the company's fully-owned Wellgreen platinum group metals, nickel, and copper project in southwestern Yukon Territory, Canada. Four surface holes and four underground holes all intercepted significant mineralized widths, ranging from 28.5 meters (WS12-201) and up to 459.5 metres (WS12-193). Highlights include WU12-540, which returned 8.9 metres of 5.36 grams per tonne platinum, palladium, and gold; 1.73 percent copper; and 1.01 percent nickel within 304.5 meters of 0.66 g/t platinum-palladium-gold, 0.20 percent copper, and 0.27 percent nickel.

The surface drill program started in June and has completed 16 holes (assays pending for 12 holes) with two rigs now on site. The surface program continues to progress at a steady pace.

Prophecy Chairman John Lee commented: “Wellgreen is a very large nickel, copper, and platinum group metals project with near-surface high-grade zones. High-grade intercepts will be incorporated into resource modeling and mine planning in the pre-feasibility study. We expect further positive drill results from Wellgreen shortly.”

Wellgreen features a low 2.59-to-1 strip ratio, is situated at an altitude of 1,300 meters, and is only 15 kilometers from the two-lane paved Alaska Highway. Those factors significantly minimize the project's indirect costs.

For the complete company statement with full tabulation of the drilling results, please visit:

"Workers are now demanding wage increases according to the 'Lonmin settlement,'"David Davis, an SBG Securities Ltd. gold analyst, said in a note. "Strike action may well spread from other mines to Harmony's mines and to other industries." Harmony Gold Mining Co. said it's unaffected so far.

Direct action over wage demands has spread as workers sidelined traditional representatives for negotiating with management, such as the National Union of Mineworkers, a backer of the governing political party. At Lonmin workers appointed their own leaders. Julius Malema, a youth leader expelled by the ruling African National Congress, has called for disruption and state control at mine operations.

Gold companies may bring forward wage talks scheduled for next year, given "the urgency of the matter," Vusi Mabena, a stakeholder-relations executive at the Chamber of Mines, said Sept. 21. The chamber negotiates pay on behalf of AngloGold, Gold Fields, and Harmony, Africa's largest gold producers.

AngloGold fell 5.1 percent to 283.29 rand by the close of trading in Johannesburg. Gold Fields, the world's fourth-biggest producer, declined for a third day, losing 2.3 percent to 102.98 rand. Gold dropped 0.9 percent to $1,744.65 an ounce as of 4:22 p.m. in London.

AngloGold workers striking since Sept. 10 at the Kopanang mine were yesterday joined by staff at other operations, the Johannesburg-based company said today in a statement.

While the company received wage demands today from the strikers, it doesn't intend to negotiate directly with them, Alan Fine, a spokesman, said by mobile phone. "Wages are not something that's negotiated at company level, and won't be," he said. South Africa accounts for about 32 percent of the company's output of the precious metal.

Gold Fields is concerned that threats of violence against staff reporting for shifts are rising, said Sven Lunsche, a spokesman. A strike that started Sept. 9 at KDC West spread to Beatrix yesterday. Workers downed tools at KDC East this month.

There isn't any suggestion the Association of Mining and Construction Union, a rival to the NUM, is orchestrating the disruption at AngloGold's facilities, Fine said. The strikes were "obviously coordinated, but as to exactly how it was done, a lot of that is in the realm of speculation," he said.

Mining companies operating in South Africa have faced above-inflation increases in wage and electricity costs for each of the last three years at least. Power costs increased an average 26 percent last year and 25 percent in 2010. Mines are getting deeper and more difficult to operate as orebodies get depleted.

"The combination of declining production and unrelenting inflationary pressures suggests that almost all mature South African operations are likely to face downsizing within the next 12 to 36 months at best as an imperative and not as an option," SBG's Davis said of the gold industry.

AngloGold produced about 306,000 ounces in South Africa in the first quarter and Gold Fields' KDC West and Beatrix about 212,200 ounces. The nation's gold output was 1.35 million ounces in the quarter, the Chamber of Mines says. South Africa was the fifth-biggest gold producing nation in 2010, according to GFMS Ltd.

Anglo American Platinum Ltd., the largest producer of the metal, has lost about 20,000 ounces of output as workers refuse to report for duty at its Rustenburg operations, the company said today. It has issued a "final ultimatum" to them, Chief Executive Officer Chris Griffith said today.

The Rustenburg operations, where about 21,000 workers are on strike at four mines, were on review before the strike started, he said. Job losses are "inevitable" and the industry is "in crisis," he said.

Anglo American Plc said Feb. 17 it will review its platinum assets, given the outlook for continued weak prices for the metal, which had dropped 11 percent in the year prior to that date. Amplats, as the platinum company is known, declined 6.1 percent to 403.02 rand.

Impala Platinum Holdings Ltd., the second-largest producer, increased pay to halt a six-week strike in January and February at Rustenburg, the largest mine producing the metal. Workers have since made new demands, Johannesburg-based Impala said Sept. 11.

More than 20,000 freight transport workers are also on strike, demanding a wage increase of 12 percent, the South African Press Association said. Unions rejected an offer of a staggered increase of 8.5 percent effective next March followed by an additional 0.5 percent in September, SAPA said.

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