More options on gold being offered

[] — AS BULLISH expectations over gold strengthen, two more companies are following the example of Witswatersrand Consolidated Gold Resources (Wits Gold) in setting themselves up as options on the gold price.

One is JSE-listed White Water Resources, which has bought two deep-level extensions to the closed ERPM mine from DRDGold, and the other is unlisted Singapore-based White Rivers Gold.

White Rivers Gold is the brainchild of Australian geologist Harry Mason, and this is his second go at developing a gold business in South Africa.

Mason is raising €50m from private investors to carry out initial geophysical and seismic work. He aims to list White Rivers Gold on “a European and an Asian stock market’ within about two years, and to raise another €200m through that listing.

Mason was the founding MD of the former Rand Quest Syndicate (RQS) and, with geologist twin brothers Richard and Morris Viljoen, set about looking at reopening a number of the old gold mines on the Central Witwatersrand.

RQS morphed into Central Rand Gold (CRG), one of the biggest dogs on the JSE – and one Mason is quick to distance himself from.

He told Miningmx: “I was forced out in 2006 in a boardroom coup organised by Greg James.

“It was all very unsavoury and very nasty, and I eventually sold off all my shares in the company by 2008 because I did not like the way things were going. Since then I have not been a shareholder and I have had nothing to do with them.’

James resigned as CEO at the beginning of 2009. Over the past 18 months, the CRG share price has collapsed because of serious non-delivery against the mining and business plans set out for it.

Mason said White River Gold had made 31 applications for prospecting rights over a number of areas on the Witwatersrand gold fields, with key prospects near the existing Beisa mine in the Free State as well as the towns of Kroonstad, Ventersburg and Bothaville and around the Vredefort Dome region.

Despite having been mined continuously since its discovery in 1886, Mason said: “We still don’t think the Wits has been properly explored. We think there could be another five gold fields to be found in the region.

“We also think exploration on the Wits has become a lost art. Right now, there are very few people left who know how to explore on the Wits.’

Mason readily acknowledged the pioneering role played by Wits Gold in continuing with exploration work on the Wits.

He said: “Wits Gold has done a good job. They have shown the way. We are behind them, but I think we are still in front of the herd.’

He indicated that, should his efforts on any of the prospects bear fruit, actual mining would be done through bringing in a major gold miner as a partner.

Mason said: “We are not idiots. Look at what happened at CRG. It’s one thing to be a good explorer; it’s another to be a good miner.’

White Water Resources CEO Waron Mann said his company would be an option on the gold price for at least the next three years while it carried out the initial studies on the two ERPM extensions it had acquired.

In terms of the deal, White Water Resources will issue up to 74 million shares to DRDGold’s 76%-held subsidiary ERPM. This will give ERPM a 19% stake in White Water Resources.

Mann said the ERPM extension one area had an inferred resource of about 9 million ounces (m oz) of gold, and extension two inferred resources of about 8m oz.

He added the grade in both extensions was about 8.5 grams per tonne on average, but the orebody is deep and estimated to be between 2,500m and 3,000m below surface.

Mann said: “It is by no means certain that this project will be a go. We have to see if it can be turned to account. The first step is to take the inferred resource to a measured resource.

“It’s risky and a decision to mine it will mean big figure investments and, of course, the market does not know us. “

Mann said White Water Resources would be looking for partners both to provide capital and to mine the deposits if the bankable feasibility study to be carried out gave a favourable outcome.

Mann dismissed the “emphasis of matter’ in the company’s latest financial accounts as “not serious’.

The auditors pointed out the directors’ report indicated the existence of a “material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern’.

He said: “It’s a technicality, given the nature of our business. We have R25m in the bank and our costs are running at about R4m a year because we run a lean, mean ship.’