| Fri 19 Mar 2010, 15:23 | | WGR - Wits Gold Completes A Scoping Study On The De Bron Project In The |
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WGR
WGR
WGR - Wits Gold Completes A Scoping Study On The De Bron Project In The
Southern Free State Goldfield
Witwatersrand Consolidated Gold Resources Limited
(Incorporated in the Republic of South Africa)
("Wits Gold" or "the Company")
Registration Number 2002/031365/06
JSE Code: WGR
ISIN: ZAE000079703
TSX Code: WGR
CUSIP Number: S98297104
Wits Gold is pleased to announce that the Company has received positive results
from an independent scoping study on its De Bron project, situated between
Harmony`s Merriespruit and Joel Mines in the southern Free State goldfield. A
National Instrument 43-101 report summarizing the results of the scoping study
will be filed on SEDAR within 45 days of this press release. The De Bron area
contains three principal conglomerates, the Beatrix, B and Leader Reefs situated
at depths of the order of 500-1200 metres below surface. These reefs occur
within 50 vertical metres of one another and are separated from the Company`s
adjacent Bloemhoek project by the De Bron Fault. A pre-feasibility study
completed at Bloemhoek, titled "Technical Report on the Pre Feasibility Study
for the Bloemhoek Project, Southern Free State Goldfield, South Africa" and
dated October 2009 defined a Probable Reserve of 31.6Mt with a plant head grade
of 5.3g/t Au (5.4Moz). This report was undertaken by Gordon Cunningham and Tim
Spindler (the "Qualified Persons") from Turnberry Projects, both of whom are
independent of Wits Gold. Due to the 800 - 1000 metres of throw on the De Bron
Fault, it has been assumed for the sake of this scoping study that the Bloemhoek
and De Bron projects represent two standalone opportunities.
The De Bron scoping study has also been undertaken by the same Qualified Persons
and considers two alternative mine designs. The first design is a medium sized
62.5kt/month operation with a conventional system of footwall haulages and box
holes linked to raises. This design is based on a selected in situ Indicated
Resource of 8.7Mt at 6.4g/t Au (1.8Moz) using a 4g/t cutoff and is planned to
exploit the higher grade zones situated to the east of the De Bron Fault. The
mineral resources discussed in this report are based upon a probability-weighted
simulated resource not materially different from those previously disclosed in
the National Instrument 43-101 technical report titled "Witwatersrand
Consolidated Gold Resources Limited: Mineral Properties in the SOFS Goldfield,
South Africa". This technical report was prepared by George Gilchrist and Shaun
Hackett of Snowden Mining Industry Consultants dated May, 2009. Indicated
mineral resources are not mineral reserves and do not have demonstrated economic
viability. The samples from the De Bron drilling programme were assayed at Anglo
American Research Laboratories, an ISO 17025 accredited laboratory.
It is anticipated that this mine will produce its first reef from development 35
months after commencing shaft sinking and achieve peak production of 118 000oz
annually at a yield of 4.4g/t Au. During a 16 year life, the mine will produce
1.4Moz Au. The total capital required to develop the mine is estimated at R2 850
million (US$356 million at R8/US$), with peak funding of R1 994 million (US$249
million). The projected operating costs for the life of mine will be R495/tonne
milled and include the recently announced Eskom tariff increases. Using a gold
price of US$975/oz and an exchange rate of R8/US$ (R250 000/kg), a discounted
cash flow model produces an Internal Rate of Return ("IRR") of 12.8% and a Net
Present Value ("NPV") at a 5% discount rate of R1 192 million (US$149 million).
As an alternative for a possible future mine at De Bron, the Qualified Persons
modelled a smaller high grade operation with a throughput of 30kt/month. This
mine was designed to exploit the higher grade mineralisation in the northern
sector of De Bron that contains an Indicated Resource of 4.6Mt at 7.0/t Au
(1.0Moz), using a 4g/t Au cutoff. It is envisaged that this mine could produce
its first gold 27 months after initiating shaft sinking using reef drives from
the shaft position. Peak production will be 53 500oz annually at a yield of
4.8g/t Au. Total gold production during the 16 year life is anticipated to be
0.8Moz, whilst capital required is estimated at R1 793 million (US$224 million
at R8/US$), with peak funding of R1 147 million (US$143 million). The projected
operating costs for the life of mine will be R524/tonne milled, including the
Eskom tariff increases. Using a gold price of US$975/oz and an exchange rate of
R8/US$ (R250 000/kg), a discounted cash flow model produces an IRR of 11.1% and
an NPV (5%) of R581 million (US$73 million).
Sensitivity analyses on both of these options illustrate strong gearing to
changes in gold grade and price as well as an increase in the size of the
shallow, high grade resource. The analyses suggest that a 20% increase in either
the gold grade or price, will have the effect of increasing the IRR`s to 19.4%
and 17.6% respectively. Under these circumstances, additional drilling has been
recommended, particularly in the high grade area situated in the northern part
of De Bron.
Certain statements in this news release may constitute forward-looking
information within the meaning of securities laws. In some cases, forward-
looking information can be identified by use of terms such as "may", "will",
"should", "expect", "believe", "plan", "scheduled", "intend", "estimate",
"forecast", "predict", "potential", "continue", "anticipate" or other similar
expressions concerning matters that are not historical facts. Forward-looking
information may relate to management`s future outlook and anticipated events or
results, and may include statements or information regarding the future plans or
prospects of the Company. Without limitation, statements about the development
of the mine at De Bron, required capital expenditures, the time required for the
mine at De Bron to enter production, the length of time the mine at De Bron will
operate at full production, the annual production of gold at the De Bron mine
and other related statements are forward-looking information.
Forward-looking information involves known and unknown risks, uncertainties and
other important factors that could cause the actual results, performance or
achievements of the Company to be materially different from the future results,
performance or achievements expressed or implied by such forward looking
information. Such risks, uncertainties and other important factors include
among others: economic, business and political conditions in South Africa;
fluctuations in the market price of gold; hazards associated with underground
and surface gold mining; the ability to attract and retain qualified personnel;
labor disruptions; changes in laws and government regulations, particularly
environmental regulations and mineral rights legislation including risks
relating to the acquisition of the necessary licences and permits; changes in
current exchange rates; inflation and other macro-economic factors; risk of
changes in capital and operating costs, financing, capitalization and liquidity
risks, including the risk that the financing required to fund all currently
planned exploration and related activities may not be available on satisfactory
terms, or at all; the ability to maximize the value of any economic resources.
These forward-looking statements speak only as of the date of this document.
You should not place undue importance on forward-looking information and should
not rely upon this information as of any other date. The Company undertakes no
obligation to update publicly or release any revisions to these forward-looking
statements to reflect events or circumstances after the date of this document or
to reflect the occurrence of unanticipated events except where required by
applicable laws.
For further information please contact:
Dr. Marc Watchorn
Chief Executive Officer
Tel: +27 11 832 1749
Mr. Hethen Hira
Investor Relations
Tel: +27 11 832 1749
Johannesburg
19 March 2010
Date: 19/03/2010 15:23:08 Produced by the JSE SENS Department.
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