[miningmx.com] – WITWATERSRAND Gold Resources (Wits Gold) was confident it could finance an acquisition with shareholder funds, and added that the current slow-down in economic activity had sent target assets to “reasonable prices”.
Writing in the company’s annual report that was published on Tuesday (May 28), Philip Kotze, CEO of Wits Gold, said that discounts placed on gold companies were greater than at any time in his career. He also believed that South Africa’s international reputation was at an all-time low. However, the decline in the gold price would create acquisition opportunities.
“Our shareholders have indicated their support for our strategy with a significant portion of them wanting to follow their rights if we present the right acquisition to them,” said Kotze. “We therefore remain confident that we will be able to raise the required capital when the right acquisition opportunity presents itself,” he said.
Shares in Wits Gold have been panelled recently, however. The stock is trading at more than half its level in January, a sell-off that Kotze said was related to investors taking a decision to write-down their losses for the tax benefit.
“Most recently some European investors took the opportunity of writing off losses against the gains they made in their portfolios at the end of their respective tax year,” said Kotze. “During this process we saw a significant drop in our share price as investors sold our stock to get the benefit of the loss.”
Wits Gold has been connected with potential bids for the Burnstone mine in South Africa’s Mpumalanga province, and Navachab, a mine in Namibia that has been identified by the current owner, AngloGold Ashanti, as a non-core asset. Kotze said in March that his company could make “a real success” of Burnstone, previously owned by Great Basin Gold, if it was bought “at the right price”. Liquidators for Great Basin Gold recently sold its US-based Hollister mine for $15m.
Commenting in the annual report, Kotze said: “We are actively involved in pursuring these acquisition opportunities [recently discounted assets, not necessarily Navachab or Burnstone], and the fact that we have not made an acquisition yet is not a reflection of our lack of effort, but rather that we have not been successful with the right asset yet”.
In its last financial year, Wits Gold took a R40m bridging finance loan from the Joburg Trust, a related party thought to be linked to Wits Gold chairperson, and life-long gold bull, Adam Fleming. It is repayable by December 31 in 2014.
Wits Gold reported in March that cash and cash equivalents fell to R15m as of December 31 from R111.6m at the end of the previous financial year.
For the longer term, Wits Gold is building the DBM Project, a proposed gold mine in the southern Free State gold fields. The project, currently the subject of a detailed feasibility study, is expected to produce 200,000 ounces of gold a year, and descends to a depth of 1,000 metres in its first phase – a relatively shallow depth set against other South African gold mines.
