[miningmx.com] — GOLD ONE INTERNATIONAL LIMITED on Wednesday talked up the potential of its Megamine prospecting project, saying extensive data collection has confirmed the existence of a significant mining target.
This came as the company announced its intention to offload Megamine into Goliath Gold – a new entity to be created through the reverse take-over of White Water Resources.
Located in the east of Johannesburg, Megamine comprises the Sub Nigel mine and the Vlakfontein, West Vlakfontein and Spaarwater prospecting areas, totalling 16,056 hectares. Gold One issued a resources update for the project on Monday, stating audited resources of 12.65 million ounces.
“This is not smoke and mirrors, but mining potential which is underpinned by good quality information,” said Gold One CEO and President Neal Froneman, who would also head Goliath Gold with the rest of Gold One’s management team.
The East Rand gold fields have historically been mined by major gold miners, but most have discarded their properties in the area. Froneman, however, said the consolidation of properties brought new opportunities, as mining operations wouldn’t be constrained by previous farm boundaries.
“Production in the East Rand ceased mainly due to better opportunities in the West Rand goldfield,” said Froneman. “At the time, the West Rand had similar depths but higher grade deposits. Today, depths are significantly greater in the West Rand.”
The majority of Megamine’s resource (83%) comprises the main reef, estimated at a maximum depth of approximately 2,500 metres below surface, while the balance includes the Big Pebble Marker reef, which is estimated between depths of approximately 500 metres and 1,200 metres below surface.
Froneman also said Megamine properties are contiguous to some of the largest historic producers of the East Rand Basin, while its resources database was founded on the collation of various databases, including around 150,000 data points for an “holistic modelling” of the East Rand.
Imara SP Reid analyst Percy Takunda said he agreed the consolidation of mining areas were offering new opportunities.
However, “it would be a very long-term project,” he said. “You’re looking at probably four years before you would begin mining, and a lot of money would need to be invested further down.”
He said given the economics of this project, he wouldn’t be surprised if it cost more than R5bn before mining production could start.
The markets on Wednesday responded positively to the reverse takeover announcement, with Gold One’s shares closing at 258c, up 9.79%. White Water Resources closed higher 29.4% at 22c.
