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Wits Gold sizes up Free State mine
Julie Bain
Posted: Fri, 25 Apr 2008
[miningmx.com] -- WITS GOLD is considering development of a new, deep-level gold mine in the Free State at a cost of R8bn but, if proved viable, production will only start in about 12 years time.
The company plans to have a pre-feasibility study on its Bloemhoek gold deposit completed by the end of the year. The deposit sits adjacent Gold Fields’ existing Beatrix mine.
The independent scoping study which estimated the cost at R8bn was based on an indicated resource of 52.3Mt of ore at an average grade of 6.7g/t providing an indicated resource of 11.3m ounces of gold.
"A five year production ramp up period has been estimated and the mine will operate at full production for 23 years with an annual production of 380,000 ounces of gold. Total gold production is estimated to be 9.6m ounces," said a Wits Gold statement.
Wits Gold CEO Marc Watchorn said it was
too early to say how the R8bn would be raised.
"We are not even at the stage of worrying about financing. The first thing is really to assess the technicalities and financial implications of the ore body,” he commented.
Watchorn said the company hoped to have completed the pre-feasibility study by the end of the year and that would include options on how best to exploit the ore body.
Watchorn does not believe that 2,400 metres is a particularly deep level mine in the South African context.
"Personally, I believe the average gold production in the mines of the Witwatersrand basin] is being carried out beyond 2,000m.
“We believe - and certainly talking to investors there is no doubt about it that they believe - there is a long term bull trend for gold," said Watchorn.
He pointed out very few significant gold deposits had been found in the last few years.
Asked whether any major gold companies might be
interested in Bloemhoek he said: "We believe these companies that are mining 3m-5m ounces a year are going to be looking elsewhere to replace reserves.
“We don't need to make that decision at the moment as to whether we would allow a major to mine this."
Wits Gold acquired the rights to Bloemhoek from Harmony in 2004. Harmony still holds the option to take a 40% stake in Bloemhoek after Wits Gold has taken the project to the next phase.
Harmony could earn a 40% interest if it agreed to pay 40% of the historical costs of the project and put up 40% of the finance needed to develop the mine.
Watchorn added that Wit Gold's geological model is significantly different to ones used previously in the Free State.
According to the company statement, a geological model indicating a single reef package at a consistent dip of 20 degrees has been used in the scoping study. No detailed mine planning nor scheduling for individual blocks has
been carried out.
If the prefeasibility study indicates Bloemhoek is viable then a bankable feasibility study will follow.
The studies may take two years to complete and development of the mine could take more than a decade. Wits Gold estimated the first gold would be produced by Bloemhoek around 2020 to 2024.
Wits Gold also said the project is "most sensitive to gold prices and grade" and that mining a smaller but higher-grade deposit would be one of the options to be evaluated by the pre-feasibility study.
But Watchhorn said if this development option were followed Wits would still need to sink two shafts to access the deposits.
"It is possible these would be smaller scale shafts and perhaps the capital expenditure would not be the same," he added.
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