Marc Watchorn, CEO, Wits Gold
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» Wits Gold to tap shareholders R50m
» Wits Gold North American listing delayed
» Wits Gold to seek funds in 2007

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Wits Gold switches to TSX
David McKay
Posted: Tue, 16 Oct 2007

[miningmx.com] -- RED tape has forced Johannesburg gold exploration firm Witwatersrand Consolidated Gold Resources (Wits Gold) to switch its proposed secondary listing to Toronto, Marc Watchorn, the company’s CEO has confirmed.

Wits Gold has been preparing for a full NASDAQ listing since early this year. News of the change in plan was made by chairman Adam Fleming at the company’s annual general meeting in Johannesburg on October 12.

Said Watchorn: “We have encountered difficulties in complying with Sarbanes Oxley (SOX) mainly owing to the small size of the company”. It’s thought costs of $2m to $3m could be racked up per year meeting the various bureaucratic demands of a NASDAQ listing. Wits Gold has a level one American Depository Receipt programme backed by the Bank of New York in the US.

SOX, which was passed into law in the US in 2002, is aimed at improving the disclosure practices of public companies. It followed a rash of corporate scandals including those affecting Enron and WorldCom.

Wits Gold said company funds could be better used elsewhere in the business. It recently raised $12m - of which $8m was from North American institutions – taking total cash in the bank to about $15m – enough for exploration until 2009, said Watchorn.

The Toronto Stock Exchange is a haven for small mining companies but Wits Gold was seeking to profile itself on NASDAQ for visibility purposes. “We thought we may get lost in Toronto. But that was at a time when our market cap was half of what it is today,” said Watchorn in an interview.

Wits Gold was last quoted at R155/share, but it’s worth remembering it listed in Johannesburg on April 24, 2006 at a price of R20/share. The share has been sharply up since August when it was trading at around R92/share.

Toronto is also more tolerant of how mining companies disclose their assets because it allows resource statements of estimated gold in the ground whereas New York requires reserve statements. “So there were concerns we couldn’t disclose the full assets of the company,” Watchorn said.

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He added, however, that Wits Gold was working towards converting resources into probable reserves which is a more accurate measure of an exploration company’s assets.

Wits Gold has total inferred resources of gold in the three goldfields where it has prospecting rights of some 159.7 million oz. Some of the deposits require a high gold price to underpin their economic feasibility but the attraction of the share is that it’s a proxy on the gold price, currently at 28-year highs.

Wits Gold told Business Day, a newspaper, that it owned the 10th largest undeveloped gold deposit. Its Bloemhok property in South Africa’s Free State province potentially contains 10 million to 15 million ounces of gold grading at 6g/t. The deposit was accessible at a depth of 500m to 1.5km.