Wits Gold opts for De Bron

[miningmx.com] — WITWATERSRAND Consolidated Gold Resources (Wits Gold) has opted for the De Bron project in the southern Free State as its top development priority.

That’s the bottom-line to the deal announced on Tuesday, through which Wits Gold will purchase Harmony’s Merriespruit South area for R61m and also buy out Harmony’s 40% participation in Wits Gold’s southern Free State projects for R275m.

That gives Wits Gold 100% control over its two most advanced projects, De Bron and Bloemhoek, and opens up its options in terms of finding a strategic partner to actually build a mine.

Wits Gold CEO Marc Watchorn said: “Up until now we had focused on Bloemhoek, where the gold reefs sit at depths of 1,300m to 2,000m, but we have come to the conclusion that is probably a “bridge too far’ in terms of attracting a strategic partner.

“So we focused instead on the shallower resources at De Bron, where we have an indicated resource of 1.8 million ounces (m oz) of gold – but the problem is that De Bron is just not large enough by itself.

“De Bron sits alongside Merriespruit South and our assessment of historic drilling carried out there indicates that the Beatrix and Leader Reef display similar characteristics and grade in the Merriespruit South area as in De Bron.

“We will now carry out a drilling programme to define a shallow resource at Merriespruit South, and I would be very disappointed if we do not double the resource figure at De Bron.’

Watchorn said the plan was to have a scoping study completed within six to nine months, after which a banking feasibility study (BFS) would be carried out.

He added Wits Gold was sticking to its original business strategy that it would not do the actual mining on any project that was developed.

He said there were three main options to be considered once the BFS was completed.

These were to spin De Bron out of Wits Gold through a separate initial public offering; bring in a strategic partner to develop the mine or sell off the project outright.

“The fact that we now have 100% control of the project means that a strategic partner could be found anywhere in the world,’ he said.

Asked about the likely capital cost, Watchorn said it was too early to give any precise estimate but a “first pass’ number was about R2bn for a mine to be built on the combined De Bron/Merriespruit South project.

Harmony CEO Graham Briggs said: “The Merrispruit South Area and the Freegold option do not fit into our portfolio. Therefore, these transactions are in line with Harmony’s strategy to focus on our growth projects in South Africa.

“This is an exciting opportunity for Wits Gold and will unlock value for our shareholders.’