Johannesburg — JUNIOR gold miner Simmer & Jack yesterday posted a R65m operating loss for the six months to September, mainly due to mounting operating cash costs.

Its share price, which has performed poorly in the past 18 months, shed more than 7% after the release of the results.

Simmers reported a loss despite a 5% increase in gold production, as costs rose 17% due to above-inflation increases in the costs of power, labour, contractors and mining consumables.

CEO Gordon Miller said costs could rise further in the second half because of proposed electricity tariff hikes, while the strong rand was expected to continue to put margins under pressure.

"The first six months were characterised by further dramatic increases in the costs of power and mining consumables and a volatile gold price. The group remains vulnerable to high cash costs by virtue of being in a development cycle and not yet at steady-state production levels," Miller said.

The focus for the second half would be "on controlling costs and preserving capital in the face of an increasingly volatile operating environment".

Gold production was up 5%, from 62880oz to 66295oz, which translated into a 16% rise in revenue from R428m to R499m. Cash costs rose 17% from R464m to R542m and the headline loss narrowed from 14,23c per share to 12,81c.

Miller said restructuring at the company's Buffelsfontein Gold Mine in North West and Transvaal Gold Mining Estates in Mpumalanga, which was started in June, had been completed.

"Rationalisation programmes were instituted at both Buffelsfontein Gold Mine and Transvaal Gold Mining Estates to control costs and work our way down the cost curve until such time as the increased volumes which we expect out of these development operations are forthcoming," Miller said.

Simmers said it was still reviewing a notice by empowerment partner Vulisango requesting an extraordinary general meeting at which it seeks to replace board members.