Material Transactions

Acquisition of Tau Lekoa Mine

On February 17, 2009 the Company entered into an agreement with AngloGold Ashanti Limited (AngloGold Ashanti) to acquire, as a going concern, the Tau Lekoa Mine for ZAR600 million, of which ZAR450 million is payable in cash and ZAR150 million may be off-set by free cash flow generated by Tau Lekoa in calendar year 2009. The sale also includes the Weltevreden and Goedgenoeg properties which are located to the east and west of Tau Lekoa respectively and offer the possibility of further upside.

In the event that Tau Lekoa generates less than ZAR150 million in free cash flow during calendar year 2009, Simmer & Jack may issue to AngloGold Ashanti ordinary shares in Simmer & Jack up to a maximum value of ZAR150 million at the 10 day volume weighted average trading price on the JSE immediately prior to the issue date of the shares with the remainder payable in cash.

The effective date of the transaction is January 1, 2010 and the Acquisition will be made through BGM.

Following the effective date, Simmer & Jack will treat all ores produced from the sale assets at its own processing facilities.

Simmer & Jack has agreed to pay a 3% gross revenue royalty to AngloGold Ashanti on a quarterly basis which is payable on all gold produced by the Sale Assets and sold at an average price exceeding ZAR180 000/kg per quarter from 1 January 2010. The royalty will not apply to gold sold at an average price below R180 000/kg per quarter and will cease to apply once it has been paid in respect of 1.5 million ounces of gold produced by the Sale Assets.

Tau Lekoa transforms Simmer & Jack from a junior miner to a mid-tier producer (the fourth largest in South Africa). In addition to providing critical scale to Simmer & Jack’ gold business, it also provides the ideal opportunity for regional consolidation being only 12 kilometres away from BGM. This arrangement will allow BGM and Tau Lekoa to benefit from regional synergies and economies of scale, while allowing BGM to optimise its existing plant capacity with high-grade, relatively low-cost ounces from Tau Lekoa, while Tau Lekoa’s ability to produce robust cash flows in the first three years substantially reduces BGM’s risk profile as it builds up to peak production levels. As per AngloGold Ashanti’s plan in the current year, Tau Lekoa is expected to produce 150 000 ounces at cash costs of between $455 and $475 per ounce, compared to BGM’s forecast for FY2010 of around 144 000 ounces at $650 per ounce.

There is also additional up-side potential from the development of Weltevreden and Goedgenoeg. To this end, Simmer & Jack has commissioned a feasibility study on Phase 1 of the Weltevreden project with the aim of fast-tracking production from this shallow deposit to supplement declining production at Tau Lekoa. This is expected to be completed by December 2009.

Q4 FY2009

For Q4 FY2009 the Group produced 48 298 ounces (1 502 kilograms) of gold compared to 51,879 ounces (1 614 kilograms) in Q3 FY2009 which was sold at an average price of ZAR275 587/kg; or $861/oz (Q3: ZAR250 269/kg or $782/oz ) ). This translated into gold revenue of ZAR372 million for the quarter, compared to ZAR401 million in Q3.

Of the 48 298 ounces (1 502 kilograms) produced in the quarter, 41 194 ounces (1 281 kilograms) is attributable to Simmer & Jack. This is compared to 44 733 ounces (1 391 kilograms) in the third quarter of FY2009. The 8% reduction in attributable production is as a result of Simmer & Jack’ shareholding in First Uranium reducing from 62.3% to 41.0% during the quarter.

Fiscal Year 2009

The group produced 183 036 ounces in FY2009 (5 693kg), creating revenue of ZAR1.3 billion, a 56% improvement on ZAR854.9 million in FY 2008. Production for the group rose 9% year on year.

Total cash costs

FY2009

Total cash costs increased year on year by 27% to ZAR809 million ($770/oz) from ZAR639 million ($727/oz) in FY2008, an increase of ZAR170 million. The bulk of the increase was due to higher unit costs which were affected by increases in reagent, steel, electricity and other commodity costs above CPI and increased tonnes milled.

BGM’s capital expenditure decreased from ZAR139 million in FY2008 to ZAR95 million in FY2009. This is primarily comprised of ZAR19.3 million for development and opening-up to increase flexibility of mineable face length; ZAR19.5 million toward the refurbishment of Number Five shaft with a further ZAR3.07 million on Number Five shaft refrigeration plant; ZAR7.6 million on the Number Ten shaft pumping project; ZAR4.9 million on winder ropes and equipment, and ZAR3.8 million on shaft compressors.

There was no increase in rehabilitation liability or any impairment on fixed assets during the FY2009 financial year.

Simmer & Jack is a gold and uranium company with operations in South Africa’s Gauteng, North West and Mpumalanga provinces.