Issuu on Google+

W I T S

G O L D

FEATURE


NEW SHALLOW

IN

OFFERINNG

Joburg-based Wits Gold is confident that it has a new gold mine after drawing resources at its shallow De BronMerriespruit South project in the Free State. By Colin Chinery

2

www.southafricamag.com


Wits Gold FEATURE

C

Results of a scoping study are due in April alifornia bags the best gold and a bankable feasibility study should be rush songs but South Africa has completed in the third quarter of next year. “I produced the most gold - a third ever mined, all but a fraction from really think we’ve got a new mine here,” says the Witwatersrand Basin reaching from east of Wits Gold CEO Marc Watchorn. The average gold production in the Johannesburg down through the Free State. Witwatersrand basin occurs beyond 2km, But it doesn’t come easily. South Africa while this deposit is relatively shallow, starting mines at the world’s furthest depths, and the at 500m below surface and going down to deeper you go the richer the ore uncovered. about 1.25km. And for the first time, Wits has And while the Wits Basin still has enormous reserves, development has been hampered by declared a uranium resource at the project, the costs of accessing the ore bodies generally where it has an indicated 6.1-million pounds of U3O8. located at depths greater than 3km. Indications are that all the higher Even so, with few new gold strikes around grades of gold are close to the 500m sub the world that can be turned into profitable crop, and good grades at mines, South Africa’s gold shallow depths is music miners are planning to dig to investor’s ears, with the deeper than ever before to get potential for early capital access to rich veins. repayment. Two shallow But deep mining is dark South African gold mines like a journey to the centre of that have been successful the Earth. At 3,461 meters, recently are the ASX and the depth of AngloGold JSE-listed Gold One’s Ashanti’s Mponeng mine in Modder East mine on the the West Wits area is 11 times WITS GOLD CEO MARC WATCHORN East Rand, and the TSX the height of the Eifel Tower. and JSE-listed Great Basin Rock temperatures can reach Gold’s Burnstone mine in Mpumalanga. 65 degrees centigrade. It is also dangerous – Wits Gold’s De Bron-Merriespruit (DBM) an average of 11 deaths every month project has similar geometries to Modder and costly. East, which although shallower, is not as But now Joburg-based Wits Gold is large as DBM‘s 2.5-million ounces at 8 g/t. confident that it has a new gold mine after Although it must be kept in mind that the DBM drawing resources at its shallow De Bronproject has a total indicated resource of nearly Merriespruit South project in the Free State, 6 million ounces. And while the Burnstone increasing its total indicated resource at the resource might be larger, its reef is narrower project by 52 percent to 5.9-million ounces. Within this the JSE and TSX- listed gold and than the DBM reef which has multiple superimposed layers that offer flexibility. uranium explorer has identified a shallow, It was a year ago that Wits Gold discovered high-grade part of the ore body, delineating that its De Bron project had the makings of an indicated resource of 2.4 million ounces a shallow mine, but lacking critical mass it with a grade of 8g/ton, with a further 1.7 made a deal with Harmony Gold’s Merriespruit million inferred ounces at a similar grade. (The difference between indicated and inferred south. Wits bought Harmony’s 40 percent in the De Bron project for R275m, paid for in ounces is the degree of confidence that those shares, along with a R10m deposit to secure ounces are there - with the latter the lowest access to Harmony’s Merriespruit property. level of certainty).

I really think we’ve got a new mine here

www.southafricamag.com

3


Wits Gold FEATURE

Wits will pay Harmony R51m in May for ownership of the property which features heavily in the upgraded resources Wits Gold began in 2005 when it acquired mineral rights on the three major gold mining companies; AngloGold Ashanti, Gold Fields and Harmony in different areas of the Wits Basin adjacent to their mining leases. “We are an exploration company,” says Wits Gold’s Investor Relations Manager Hethen Hira. “After we acquired the data we put together geological models 4

www.southafricamag.com

Wits Gold’s defining feature is that we have mineable shallow resources that can be brought to account in a short time frame WITS GOLD’S INVESTOR RELATIONS MANAGER HETHEN HIRA

and identified project areas. These are multi million ounce underground areas, and we prioritise them based on their depth. And that’s where we are with the DBM project - between 500 and 1,000 metres below surface. Our key project will be up and running in three years time. Wits Gold’s defining feature is that we have mineable shallow resources that can be brought to account in a short time frame.” With the long-term decline of South Africa’s gold production seeing output fall from 427,981 kg in 2000 to 204,923 kg in


2009, what are the job implications for the De Bron-Merriespruit South project? “We had a discussion at the recent Mining Indaba in Cape Town. We were talking to a group that sank 1,000 metre shafts who estimated it would take about one- to two-years’ to sink the shaft and in the process employ about 400. Mining itself would depend on the resource blocks, but we could safely say direct 1,000 jobs. And as mature mines close, skilled labour becomes available.” In mining, investment is substantial and lead times long. “It’s mainly timing. It takes time to drill boreholes, evaluate the data, do prefeasibility studies and get resource statements out. Environmental work can take over a year. “There will always be a demand for gold, with a likely increase in investment here and in the platinum sector. We are targeting our shallow projects, which will get to production

0 $ 5 . ( 7  6 ( 5 9 , & ( 6

A leading premium provider of · share registry services · share and option plan services · value-added services

Contact: Telephone: +27 (0)11 630 0800 E-mail: info @ linkmarketservices.co.za

quicker after the feasibility stage, and as there is going to be increased investment, especially where the resources are known to exist.” Might investment be deterred by periodic threats of nationalisation from within sections of the ruling ANC? “The nationalisation call is rhetoric put out by people who want to get attention. The country sticks by its constitution, and this says that if property rights are taken away the owner must be compensated. The Government so far has stuck to its constitution and I don’t think it has the means to compensate. So we don’t see it as a threat at this stage.” In Wits Gold’s 2010 annual report, chairman Adam Fleming said much of the painstaking work of an exploration company happened behind the scenes, with little to get investors excited about. “Scanning for non-existent press releases from Wits Gold,” said Fleming,”is about as much fun as watching paint dry.” Well now the paint is drying, and patient investors like what they are seeing. END www.southafricamag.com

5


South Africa Magazine, Suite 9 and 10, The Royal, Bank Plain, Norwich, Norfolk, UK. NR2 4SF TNT Magazine, 14-15 Child’s Place, Earl’s Court, London, UK. SW5 9RX ENQUIRIES Telephone: 0044 (0)1603 343267 Fax: 0044 (0)1603 283602 emailus@southafricamag.com SUBSCRIPTIONS Call: 00441603 283573 subscriptions@southafricamag.com

www.southafricamag.com

12th Floor, 70 Fox Street, Johannesburg, South Africa Tel: +27 11 832 1749 Fax: +27 11 838 3208 Email: hethenh@witsgold.com

www.witsgold.com


WITS GOLD FEATURE