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GDO
GDO
GDO - Gold One International Limited - Quarterly activities report - quarter
ended 30 September 2010
Gold One International Limited
Registered in Western Australia under the Corporations Act, 2001 (Cth)
Registration number ACN: 094 265 746
Registered as an external company in the Republic of South Africa
Registration number: 2009/000032/10
Share code on the ASX/JSE: GDO
OTCQX International: GLDZY
ISIN: AU000000GDO5
("Gold One" or the "company")
QUARTERLY ACTIVITIES REPORT - QUARTER ENDED 30 SEPTEMBER 2010
For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za
September 2010 Quarterly Highlights
- Excellent safety performance continued with a progressive lost-time injury
frequency rate of 0.35 per 200,000 hours for 2010
- 19,470 ounces produced, a 58% increase on the June 2010 quarter
- Operating cash flow of US$13.4-million
- Modder East quarterly cash costs were steady at US$483/oz despite further
strengthening of the South African rand
- Resource upgraded to 20.42-million ounces
- US$65-million debt facility credit approved
- Creation of Goliath Gold, with a +12-million ounce resource base
September 2010 Key Performance Data
(Average Exchange Rate of ZAR7.33/US$1)
Sep 2010 Modder
Quarter East Sub Total June 2010
Nigel Quarter
Ore Mined 85,769 t 13,024 98,793 t 63,065 t
Underground t
Mined Grade 7.67 g/t 3.47 7.12 g/t 7.10 g/t
g/t
Milled Tonnes 83,726 t 15,338 99,064 t 65,456 t
t
Recovered Grade 6.76 g/t 2.61 6.12 g/t 5.84 g/t
g/t
Gold Recovery 96.5% 92% 96.1% 96.4%
Gold Produced 18,185 oz 1,285 19,470 12,287 oz
oz oz
Modder East Cash US$483/oz - - US$488/oz
Cost
Group Development US$8.48-million US$8.3-
and Capex million
Group Gold Revenue US$23.5-million US$14.8-
million
Average Price US$1,235/oz US$1,202/oz
Received
1 CEO`s Review
After a difficult second quarter, where the company endured a five week-long
wage strike, I am pleased to report that the results for the third quarter have
begun to demonstrate the potential of the assets in Gold One. Not only has
production from Modder East undergone a quantum leap in the third quarter, but
the company has also made significant strides in terms of advancing its
exploration projects, commencing with the implementation of the Megamine
strategy and the creation of Goliath Gold. During the quarter, good progress
was made on restructuring the balance sheet through a credit approved debt
facility to refinance Gold One`s convertible bonds should some or all of the
bondholders exercise their once-off put option in December 2010.
At Modder East, due to a slower than expected start up of the new Raise Line 2,
production ramp up in July was less than anticipated. It is, however, pleasing
to report that mining activities in this area have been successfully
established, resulting in record production months in August 2010 (6,471 group
ounces) and September 2010 (7,482 group ounces). Gold One produced a total of
19,470 ounces for the September 2010 quarter. Based on September`s production,
an annualised production rate of approximately 90,000 ounces has been being
achieved.
Despite a 5% strengthening of the South African rand to ZAR7.33/US$1, Modder
East`s cash costs remained steady for the quarter at US$483/oz (compared to
US$488/oz for the second quarter). At budgeted exchange rates of ZAR8.41/US$1,
cash costs would have been US$419/oz, which is marginally higher than the
company`s target of US$400/oz for this year. Unit costs in South African rands
for the quarter decreased by 4.3% from ZAR3,699/oz in the June quarter, to ZAR
3,540/oz in the quarter under review. These unit costs are anticipated to
continue to decline as production volumes increase.
This achievement needs to be placed in the context of Gold One`s continued
excellent safety record, which saw the company`s progressive lost-time injury
frequency rate (LTIFR) at 0.35 per 200,000 hours, well below the Australian
benchmark of one lost-time injury per 200,000 hours.
(For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za)
Also pleasing to report is that the company showed a 59% improvement in revenue
to US$23.5-million, which, when deducting cash operating costs and development
and capital expenditure, resulted in a net US$4.9-million positive cash flow
from the Modder East and Sub Nigel projects, compared to break-even net cash
flow in the previous quarter.
On the corporate front Gold One made significant headway with the debt facility,
announcing on 7 October 2010 that the company had received credit approval for a
US$65-million loan from two leading international banks, namely Absa Capital (a
division of Absa Bank Limited) and BNP Paribas. Gold One believes that a debt
facility presents the best bond refinancing option for existing shareholders and
that it will ensure the company has the capacity to refinance all of its
convertible bonds in December 2010, should bondholders exercise their once-off
put option.
More recently, the company has commenced its stated strategy of spinning out its
Megamine assets, such that these may be developed in a manner most beneficial to
Gold One shareholders. Gold One will acquire control of investment holding
company White Water Resources (JSE:WWR) through the sale of Megamine to White
Water Resources, creating Goliath Gold. The immediate implication of this
acquisition is the crystallisation of over A$38-million (ZAR260-million) in
value for Gold One from the Megamine assets. In addition, these resources will
be fully developed through Goliath Gold without detracting from Gold One`s
future strong cash flow status and stated strategy of developing shallow
projects.
It was most pleasing to see Gold One increase its resource base to in excess of
20-million ounces in the third quarter. This increase has highlighted the
extent of Gold One`s project pipeline as well as the growth opportunities that
the company has in turning these ounces to account.
After due consideration for the disruptive December festive season, production
for the fourth quarter is estimated at between 20,000 and 22,000 ounces.
With continuing ramp up in production, progressing of the debt facility, and the
anticipation of updated resources for Modder East and Ventersburg, the final
quarter of 2010 promises to be a strong one for Gold One.
2 Operational Review
2.1. Overview
Gold One produced 19,470 ounces of gold in the September quarter, of which
18,989 ounces were sold in the period, including 717 ounces of inventory from
the second quarter. This represents a 58% increase in production relative to
the 12,287 ounces produced in the June 2010 quarter. Production from Modder East
provided 18,185 ounces, while the training centre at Sub Nigel contributed 1,285
ounces.
Despite a 5% strengthening of the South African rand against the US dollar from
ZAR7.58:US$1 to ZAR7.33:US$1 quarter on quarter, Gold One managed to maintain
Modder East`s operating costs at US$483/oz. At the budgeted exchange rate of
R8.41:US$1, the equivalent cash costs for the quarter would have been US$419/oz;
marginally above the company`s stated objective of achieving below US$400/oz for
the year.
2.2. Modder East
The 18,185 ounces produced at Modder East during the September 2010 quarter
represent a 57% increase in production compared to the June 2010 quarter. As
discussed in the August 2010 operational update, production at the start of the
third quarter was slower than anticipated resulting from delays in commencing
stoping operations in the new Raise Line 2. This, however, was a temporary
delay and production from this raise line ramped up significantly during August
and September. The 57% increase in produced ounces was largely a result of the
additional mining panels and associated increase in volume output that became
available from the Raise Line 2.
Modder East
September 2010 Quarter June 2010
Quarter
Ore mined underground 85,769 t 53,883 t
Mined Grade 7.67 g/t 7.57 g/t
Milled Tonnes 83,726 t 55,857 t
Recovered Grade 6.76 g/t 6.44 g/t
Gold Recovery 96.5% 96.7%
Gold Produced 18,185 oz 11,565 oz
Modder East Cash Cost US$483/oz US$488/oz
(For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za)
Raise Line 3 represents the next significant mining area from which future
production will be derived. Reef was intersected in this raise line during
September 2010, when on-reef development commenced. Stoping in Raise Line 3 is
planned to commence only in the second quarter of 2011. Any mining faces from
this area available prior to such time will provide additional mining
flexibility.
(For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za)
Average mined in-situ grades for the Buckshot Pyrite Leader Zone (BPLZ) of the
Black Reef remained in line with expectations at 12.8 grams per tonne over a
reef width of 123 cm. In certain portions of the orebody where economic grades
were encountered in the immediate footwall to the BPLZ, those areas were mined
at wider stope widths to extract the additional economically viable gold
content. As a result, the stope grade mined for the quarter was 9.4 grams per
tonne over an average stope width of 153 cm. Final mined grade (including
dilution associated with reef development) was 7.67 grams per tonne for the
quarter.
On-reef development completed during the quarter represents the next areas
planned to be mined in the near future. Assay values over a total of 329 m of
sampled on-reef development were obtained during the quarter at an average grade
of 11.35 grams per tonne over a channel width of 128 cm. This has provided
further confidence in the grade continuity of the BPLZ. In addition, the
exposed portion of the underlying Blanket Facies was sampled at an average grade
of 0.83 grams per tonne.
A milestone achieved at Modder East during August 2010 was the full
incorporation of the vertical shaft into the transport of underground personnel,
which has been in full use since 23 August 2010. This has not only significantly
improved production face time by some 25%, but has also decongested the decline
for improved ore and waste rock transport and reduced associated safety risks.
2.2.1. Development
Since April 2010, total development rates have increased significantly. During
the September 2010 quarter a total of 483 m of primary reef development was
achieved. This increase in reef development has predominantly been due to the
increase in the number of available ends to mine. As development has continued
to open the orebody, increased end availability and reduced mining congestion
have increased overall equipment productivity.
A total of 570 m of off-reef development (including 362 m of primary footwall
development) was completed during the quarter. As described in detail in the
2010 June quarterly report, a total of 60 m2 of reserves have been generated per
primary off-reef development metre, while 156 m2 of reserves have been generated
per reef development metre. At current mining widths, 1 m2 generates
approximately 4.6 tonnes of ore. The increased development rates during the
September quarter underpin the planned ramp up at Modder East.
The increasing number of available development ends has also allowed for
prioritisation of development, with priority in August and September having been
given to opening up additional reef development in the Raise Line 2 area to
support the continued ramp up in production.
(For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za)
2.2.2. Ledging and Stoping
At steady state production, Gold One has targeted to have approximately 85
panels available for mining. During the September 2010 quarter, the number of
panels mined increased from 26 panels at the end of June, to 37 panels at the
end of September. A total of 12 new panels have also been established in Raise
Line 2. The build up in the number of panels mined and the associated increase
in area mined from Raise Line 2 is illustrated in the graphs below. While a few
panels have represented replacement mining for Raise Line 1 panels that have
mined up against the shoreline and since been stopped, the majority have
contributed towards the planned ramp up in production. This growth is
anticipated to continue into the fourth quarter of 2010 - an additional nine new
panels are planned by year-end.
(For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za)
As illustrated in the graph below, many of the panels currently being mined are
still in the ledging stage. Ledging panels refer to new faces being established
for mining, which are planned at lower face advances; commonly advances are
considered over a portion of the month only. As a result of the high proportion
of ledging and newly established panels in Raise Line 2, average face advances
achieved during the quarter decreased slightly. Production is anticipated to
increase during the fourth quarter as the proportion and number of established
mining panels increase.
(For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za)
2.2.3. Modder East Processing Plant
The metallurgical plant maintained excellent recoveries in excess of 96% for the
third consecutive quarter. The consistency in plant recoveries has provided
high levels of confidence for future forecasting purposes. The gravity circuit
has been installed and will be fully commissioned during November. It is
anticipated that, with the introduction of this circuit, recoveries of above 90%
can be maintained as volume increases.
The secondary crusher, required to increase the plant`s current capacity from
70,000 tonnes per month to 100,000 tonnes per month, has been installed and cold
commissioned well ahead of schedule. The required upgraded crushing capacity is
expected for the middle of 2011.
2.3. Sub Nigel
Although the primary purpose and focus of the Sub Nigel operation has remained
as a training facility for Modder East, the September 2010 quarter produced
record production for the operation. This was achieved through the continued
mining of higher grade areas exposed during the previous quarter. Gold
production from Sub Nigel amounted to 1,285 ounces for the quarter under review.
A total of six teams were placed at Modder East from the Sub Nigel training
centre during the September 2010 quarter.
Sep 2010 Quarter Sub Nigel
Ore Mined Underground 13,024 t
Mined Grade 3.47 g/t
Milled Tonnes 15,338 t
Recovered Grade 2.61 g/t
Gold Recovery 92%
Gold Produced 1,285 oz
As discussed in detail in Section 5, the Sub Nigel operation will form part of
Goliath Gold. It will, however, continue to provide training facilities for
Modder East to facilitate a smooth production ramp up, until such time as this
is deemed no longer necessary.
3 Exploration and Projects
3.1. Modder East
As described in the June 2010 quarterly report, a decision was taken to drill
three surface boreholes at Modder East to refine the shoreline position in areas
planned to be mined during 2011 and 2012. The shoreline area represents the
highest grade area of the BPLZ Facies of the Black Reef. The boreholes were
sited based on updated geological modelling and projected shoreline positions.
Drilling commenced in June 2010 and by August the three boreholes (indicated as
DD65, DD66 and DD67 in the figure below) had been completed. During the third
quarter, a total of 963 m were drilled at a total cost of ZAR1.4-million.
The first borehole (DD67) intersected what is locally referred to as the
"boulder bed". This geological facies occurs on and immediately behind the BPLZ
shoreline. Although a boulder was intersected in the borehole (and assays
grades are thus not considered representative of the surrounding reef), it has
provided confidence that the shoreline extends to the position of the borehole,
and has confirmed the projected extension of the shoreline position in this
area.
DD65 was drilled and intersected a thin, poorly developed BPLZ Facies of the
Black Reef, which has been interpreted as a palaeohigh (localised area of poor
reef development). This drilling was followed by DD66, which intersected well
mineralised BPLZ Facies. The grade in the original intersection included 22.7
grams per tonne over a channel width (true thickness) of 47 cm, and a second
deflection of 19.7 grams per tonne over a channel width of 42 cm (refer to table
below). This intersection suggested the continuation of the higher grade BPLZ
shoreline east of the interpreted palaeohigh position. In addition to the
primary BPLZ target, the underlying Channel Facies has also been well
mineralised. The Channel Facies in the original intersection graded at 4.65
grams per tonne over a channel width of 516 cm, while the second intersection
graded at 4.25 grams per tonne over a channel width of 569 cm.
Given the successful intersection of DD66, two further boreholes (DD68 and DD69)
were drilled during September and October 2010. Both of these boreholes
intersected well developed and mineralised BPLZ Facies, confirming the findings
of DD66 that the BPLZ shoreline is present east of the palaeohigh and has not
terminated on this feature as previously interpreted. Assay results from these
two boreholes are still outstanding.
In summary, the drilling of DD65 to DD69 has confirmed projected extensions of
the shoreline with the palaeohigh intersected in DD65 likely to be a localised
feature. A continuation exploration programme is currently being planned to
confirm the extent of the shoreline extension east of the palaeohigh.
The results from the drilling of DD65 to DD67 have been utilised to update
geological models and have been considered in the revised resource estimate.
The updated resource estimate is currently under review by an independent party,
SRK Consulting, and will be published during the fourth quarter of 2010.
BH_ID Reef Depth Dip Corrected Remarks
Intersected
(m) cm g/t cmg/t
DD65_D0 BPLZ 265.26 28 0.16 4 Intersected
palaeohigh
DD65_D1 BPLZ 266.10 28 0.25 7 Intersected
palaeohigh
DD66_D0 BPLZ 262.38 47 22.69 1,066
DD66_D0 Channel 262.85 516 4.65 2,399
Facies
DD66_D1 BPLZ 261.73 42 19.67 826
DD66_D1 Channel 262.15 569 4.25 2,418
Facies
DD67_D0 BPLZ 308.05 205 0.08 16 Intersected
Boulder
DD67_D0 Channel 309.16 210 0.45 94
Facies
DD67_D1 BPLZ 308.54 203 0.12 24 Intersected
Boulder
DD67_D1 Channel 310.63 198 1.12 222
Facies
DD67_D2 BPLZ 309.62 200 0.92 184 Intersected
Boulder
DD67_D2 Channel 311.68 177 0.23 41
Facies
(For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za)
3.2. Ventersburg
Drilling at Ventersburg has continued during the third quarter with a total of
1,661 m drilled and a total exploration expenditure of ZAR2.6-million.
Drilling included the completion of two additional boreholes, bringing the
number of boreholes completed during the 2010 drilling campaign to seven. These
boreholes, combined with boreholes from the latter half of 2009, have been
utilised to update existing geological models and resource estimations. These
updated resources are currently under review by SRK Consulting and will be
published during the fourth quarter of 2010.
Drilling will continue during the fourth quarter and will target the south-
easterly extensions of the identified higher grade channelised (payshoot) areas
specifically. In addition, the upgraded resources have been considered during
the pre-feasibility study being undertaken currently on Ventersburg by Turgis
Consulting. The prefeasibility study will be completed during the first quarter
of 2011.
(For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za)
3.3. Megamine
The Megamine project comprises Gold One`s operating Sub Nigel mine and the
Vlakfontein, West Vlakfontein and Spaarwater prospecting areas. A resource
upgrade of the Megamine portfolio was announced in early October. Indicated
resources have increased from 0.31-million ounces (2.98-million tonnes at 3.21
grams per tonne), to 3.02-million ounces (21.55-million tonnes at 4.36 grams per
tonne), while inferred resources have increased from 5.58-million ounces (50.64-
million tonnes at 3.46 grams per tonne) to 9.63-million ounces (64.62-million
tonnes at 4.64 grams per tonne). The detailed resource declaration is contained
in the table below.
Tonnes Grade Gold
Content
(Mt) (g/t) (Moz)
Indicated Sub Nigel: Main Reef 1 2.91 3.25 0.30
West 18.64 4.53 2.71
Vlakfontein/Spaarwater:
Main Reef 2
Total Indicated3: 21.55 4.36 3.02
Inferred Sub Nigel: Main Reef 1 1.64 4.39 0.23
West 47.42 4.77 7.28
Vlakfontein/Spaarwater:
Main Reef 2
West 15.56 4.25 2.12
Vlakfontein/Vlakfontein:
Big Pebble Marker 2
Total Inferred3: 64.62 4.64 9.63
Total Indicated and Inferred3: 86.17 4.57 12.65
1 Signed-off by Minxcon, independent resource consultants to Gold
One
Audited by SRK
Depletion undertaken by Gold One
Quoted at a cut-off of 160 cmg/t
2 Signed-off by Dr I.C. Lemmer, independent resource consultant to
Gold One
Audited by SRK
Quoted at a cut-off of 250 cmg/t
3Total resources may not appear additive due to rounding
The majority of the Megamine resource (83%) comprises the Main Reef, estimated
to a maximum depth of approximately 2,500 m below surface, while the balance
includes the Big Pebble Marker Reef (BPM Reef), estimated between depths of
approximately 500 m and 1,200 m below surface. The Main Reef has been
extensively mined throughout the East Rand Goldfield and is currently being
extracted at Gold One`s Sub Nigel operation. The defined Main Reef resources
represent the strike and down-dip extensions to the previously mined Vlakfontein
and Sub Nigel operations. The BPM Reef, part of the Kimberley Reef Horizons,
has been mined previously in other parts of the Witwatersrand Basin but not in
the East Rand. These resources have been defined on the basis of surface
exploration boreholes only. The extension of the BPM Reef resource is projected
to surface within the Megamine prospecting and mining area and represents a
substantial exploration target.
In addition to the Main Reef and BPM Reef, the UK9a Reef (occurring some 30 m
above the BPM Reef), which has been mined extensively in the eastern portions of
the East Rand, has also been modelled and recognised as a significant
exploration target. This exploration target occurs from surface level to depths
in excess of 1,000 m.
A scoping study based on the updated Megamine resources has commenced. This
study will essentially consider three aspects of the project including:
1 Increasing production at the Sub Nigel operation
2 Potential for utilising existing shaft infrastructure to access shallow
Kimberley orebodies (BPM and UK9a reefs)
3 Conceptual design for accessing the deeper Main Reef.
3.4. East Rand Boundary Project
The East Rand Boundary Project (ERBP) includes the shallow portions (less than
500 m below surface) of Gold One`s New Kleinfontein, Turnbridge and Modder North
properties. The Main Reef has been selectively mined on these properties
previously and the project is aimed at evaluating remaining unmined areas.
Resampling at the Turnbridge property has been completed with in excess of 2,000
samples being collected for 567 complete sample sections in historic underground
workings. This information has been used to update geological models and
resource estimates. The resource estimate has been completed and will be
audited by SRK Consulting during the fourth quarter of 2010. On the basis of
the updated resource, a pre-feasibility study is currently being completed on
the Turnbridge property, which will also be used to lodge an application for a
mining right over this area.
At Modder North, 1,503 samples have been collected from the historic underground
workings. These have been utilised to verify historic sampling results and
refine existing geological models. During the fourth quarter of 2010, this data
will be utilised to determine resources for the Modder North property. This
resource will represent the first resource declared over Modder North by Gold
One.
The total exploration expenditure on this project during the third quarter
amounted to ZAR1.2-million, which included the underground sampling at Modder
North and consultants fees associated with the resource estimation for
Turnbridge.
4 Resources and Reserves
Following the Megamine resource upgrade, Gold One`s total resource base has
increased to 20.42-million ounces, including 7.08-million ounces (59.11-million
tonnes at 3.73 grams per tonne) in the indicated category and 13.34-million
ounces (97.34-million tonnes at 4.26 grams per tonne) in the inferred category.
Gold One International Consolidated Mineral Resource Statement
Tonnes Grade Gold
content
Indicated (Mt) (g/t) (Moz)
Modder East 1,2 28.83 2.84 2.63
Megamine 3 21.55 4.36 3.02
Ventersburg 4 8.73 5.12 1.44
Total Indicated: 59.11 3.73 7.08
Inferred
Modder East 2 14.98 2.16 1.04
New Kleinfontein and 4.27 6.00 0.83
Turnbridge 5
Ventersburg 4 13.48 4.24 1.84
Megamine 3 64.62 4.64 9.63
Total Inferred: 97.34 4.26 13.34
Total Indicated and Inferred: 6 156.46 4.06 20.42
1 Mineral Resources are quoted inclusive of ore reserves
2 Signed-off by Minxcon, independent resource consultants to Gold
One, audited by SRK
3 Signed-off by Dr I.C. Lemmer and Minxcon, independent resource
consultants to Gold One, audited by SRK
4 Signed-off by Minxcon, independent resource consultants to Gold
One
5 Signed-off by Camden Geoserve, independent resource consultants
to Gold One, audited by SRK
6 Resources are reported in accordance with SAMREC guidelines
(estimates would be identical if reported in accordance with JORC
standards)
Gold One International Mineral (Ore) Reserve Statement 1
Tonnes Grade Gold
content
Probable Modder East (Mt) (g/t) (Moz)
BPLZ 5.39 6.09 1.06
UK9a 2.26 4.13 0.30
Total Probable: 7.65 5.51 1.36
1 ZAR6.585/US$1, gold price = USD629/oz
2 Reserves are reported in accordance with SAMREC guidelines
(estimates would be identical if reported in accordance with JORC
standards)
5 Goliath Gold Mining Limited
On 13 October 2010, Gold One announced the creation of Goliath Gold Mining
Limited*, a gold focused exploration and development company. Goliath Gold will
be formed through the reverse acquisition of White Water Resources Limited*, an
investment holding company, which will house Gold One`s Megamine portfolio. Gold
One will crystallise A$38.6-million (ZAR260-million) of value for Megamine as
part of the transaction. Following the completion of the deal in 2011, Gold One
will hold a minimum of 74% of Goliath Gold and will account for its holding on a
consolidated basis; allowing Gold One shareholders to retain exposure to the
over 12-million ounce portfolio as the majority shareholder in Goliath Gold.
Goliath Gold represents a vehicle through which Gold One will continue to
develop its medium-depth resources without detracting from the Gold One`s stated
strategy of developing shallow projects, and will ensure that the future strong
cash flow status from Modder East remains ring fenced for Gold One shareholders.
In addition to the existing JORC Code- and SAMREC Code-compliant resource base
of 12.65-million ounces (refer to table in Section 3.3. of this report), the
newly formed entity will own the operating Sub Nigel 1 Shaft. This shaft was
recommisioned by Gold One in 2008/2009, with the primary objective of being
utilised as a training facility for Modder East. As such, mining activities
undertaken at Sub Nigel to date have not had a strong economic focus and
production volumes have seldom exceeded 5,000 tonnes per month. A scoping study
undertaken for the Sub Nigel 1 Shaft in 2007 suggested a potential shaft
hoisting capacity of 20,000 tonnes per month. As part of the newly formed
Goliath Gold, this scoping study will be being revisited, with a view to
determine opportunities of short term production volume increases at the Sub
Nigel 1 Shaft. As part of this study, the viability of constructing a new
processing plant will also be considered, however in the short term, the
opportunity exists to process mined ore at Gold One`s Modder East plant through
a toll treating arrangement.
Although the majority of Goliath Gold`s resource base comprises the Main Reef,
geological modelling has identified significant exploration targets in the BPM
and UK9a Kimberley Reefs. These orebodies occur from surface to depths in
excess of 1,000 m within Goliath Gold`s prospecting and mining rights areas. In
the shallower areas (at depths of approximately less than 600 m below surface)
opportunities exist to utilise existing shaft infrastructure to gain rapid
access to these orebodies. This represents an immediate exploration
opportunity, and surface exploration drilling is planned to commence during 2011
to determine the economic viability of the BPM and UK9a reefs in the proximity
of existing shaft infrastructure.
The longer term target for Goliath Gold will be the Main Reef. This orebody
occurs at depths of between approximately 1,000 m and 2,500 m below surface.
Importantly, these resources are disconnected from historical workings in the
East Rand Basin and therefore are not linked to the current underground flooded
workings. Future exploration through surface drilling will be aimed at
confidently delineating higher grade channelised areas that will form the
initial targeted production of the Main Reef. On the basis of these exploration
results, economic scoping and pre-feasibility studies will be undertaken. The
fact that this area has not been reliant on extensive historic mine
infrastructure provides an opportunity for these studies to consider the use of
appropriate and modern technologies and mining methods, to optimise efficiencies
and minimise costs.
Goliath Gold represents a project that has short, medium and longer term growth
potential, which will be investigated and advanced through the current scoping
studies and planned exploration activities.
For full details of the transaction please visit www.goliathgold.co.za.
*Proposed acquisition of the deeper level assets of Gold One Africa Limited by
White Water Resources Limited resulting in a reverse acquisition of White Water
Resources by Gold One Africa, subsequent mandatory offer by Gold One Africa to
White Water Resources shareholders, and renewal of cautionary announcement by
White Water Resources as announced on 13 October 2010.
6 Financial Review
6.1. Overview
Revenue for the quarter increased by 59% to US$23.5-million and group cash
operating costs were US$10.1-million, resulting in a 63% increase in operating
cash flow of US$13.4-million. Development and capital expenditure for the
quarter across the Modder East and Sub Nigel projects was US$8.5-million,
resulting in a net US$ 4.9-million positive cash flow from the Modder East and
Sub Nigel projects.
Gold One ended the third quarter of 2010 with US$9.2-million of cash on hand and
receivables (received from the Rand Refinery on 1 October 2010), compared to an
end of June 2010 quarter cash on hand and receivables balance of US$8.6-million.
The quarterly interest payment of US$1.27-million on the company`s 501
convertible bonds was made in September 2010.
6.2. Refinancing of the Convertible Bonds
On 7 October 2010, Gold One notified the market that it had received credit
approval from two leading international banks - Absa Capital (a division of Absa
Bank Limited) and BNP Paribas - for a US$65-million loan facility. This facility
will ensure Gold One has the capacity to refinance all of its convertible bonds,
should some or all of the bondholders exercise their once-off put option in
December 2010.
The facility has a maximum term of four-and-a-half-years with interest and
capital payments only commencing in June 2011. Capital payments will be
structured to take into account the ramp up of production at Modder East. The
facility will bear interest at a market related rate based on the US dollar
London Interbank Offered Rate, which is currently around 0.3%. Gold One will
enter into a hedging programme typical for a facility of this nature. The
advance of the facility is subject to conclusion of legal documentation and the
fulfillment of certain conditions precedent.
Key outstanding conditions precedents include the amendment of and obtaining of
consent for the cession of several agreements of the Modder East mine and the
obtaining of certain additional insurances commonly required for a project
finance facility both of which are well on track. Exchange control approval from
the South African Reserve Bank for a US dollar denominated loan has also been
received.
7 Outlook
With the successful establishment of mining in the Raise Line 2 area, production
build up is anticipated to continue into the fourth quarter of 2010. As the
festive season is traditionally disruptive due to the number of holidays,
production has been forecast as between 20,000 and 22,000 ounces for the
December 2010 quarter.
A key milestone to be attained during the fourth quarter will be the execution
of the agreement with Absa Capital and BNP Paribas relating to the US$65-million
debt facility, allowing Gold One to draw down on the debt facility to refinance
all of the convertible bonds in December 2010, should some or all of the
company`s bondholders exercise their once-off put option.
In addition, the company will progress with the implementation of the Goliath
Gold transaction including the signing of transaction agreements, the release of
financial effects and the publication of circulars. The proposed date for the
shareholders meeting is still to be finalised.
Resources and reserves have been updated for Modder East on the basis of newly
acquired underground information and surface drillhole intersections. In
addition, the resources for Ventersburg have been updated having considered
drilling undertaken in the latter half of 2009 and 2010. Both these resources
are being currently audited by SRK Consulting and will be published once this
audit process is completed. The ERBP resources will also be completed during
the fourth quarter. Production guidance for 2011 will be provided after the
annual planning and budgeting cycle for 2011 has been completed in December
2010.
8 Capital Structure
As at 30 September 2010, Gold One had 806,268,333 shares in issue of which
428,740,533 (53%) were held on the Australian register and 377,527,800 (47%)
were on the South African register.
(For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za)
Issued by Gold One International Limited
Website: www.gold1.co.za
Parktown, Johannesburg
28 October 2009
MACQUARIE FIRST SOUTH ADVISERS (PTY) LIMITED
JSE Sponsor
For further information contact:
Neal Froneman Ilja Graulich
President and CEO Investor Relations
+27 11 726 1047 (office) +27 11 726 1047 (office)
+27 83 628 0226 (mobile) +27 83 604 0820 (mobile)
neal.froneman@gold1.co.za ilja.graulich@gold1.co.za
Carol Smith Derek Besier
Investor Relations Farrington National Sydney
+27 11 726 1047 (office) +61 2 9332 4448 (office)
+27 82 338 2228 (mobile) +61 421 768 224 (mobile)
carol.smith@gold1.co.za derek.besier@farrington.com.au
About Gold One:
Gold One is a gold producer listed on the financial markets operated by the ASX
Limited and the JSE Limited, issuer code GDO. Its flagship operation is the
newly built shallow Modder East mine on the East Rand, some 30 km from
Johannesburg.
Modder East is the first new mine to be built in the region in 28 years and
distinguishes itself from most of the other gold mines in South Africa owing to
its shallow nature (300 m to 500 m below surface). To date Modder East has
provided direct employment opportunities for over 1,100 people. Gold One also
owns the nearby existing Sub Nigel mine, which is used primarily as a training
centre in the build-up of Modder East to full production. Gold One`s other
projects and targets include Ventersburg in the Free State Goldfields, the Tulo
concession in Mozambique and the Etendeka greenfield project in Namibia. Gold
One has an issued share capital of 806,307,667 shares.
Office details:
Sydney Head Office
Level 3, 100 Mount Street North Sydney NSW 2060
PO Box 1244 North Sydney NSW 2059
Telephone: +61 2 9963 6400
Fax: +61 2 9963 6499
Johannesburg Corporate Office
45 Empire Road, First Floor
Parktown, 2193
Gauteng, South Africa
Telephone: +27 11 726 1047
Fax: +27 11 726 1087
Issued capital:
806,307,667 shares in issues
Options (listed and unlisted: 85,806,927)
ADR ratio 1:10
Stock Exchange Listings:
ASX /JSE Limited: GDO
OTCQX International: GLDZY
Directors:
NJ Froneman (President and CEO)
CD Chadwick (Chief Financial Officer)
MK Wheatley (Non-Executive Chairman)
BE Davison (Non-Executive Director)
KV Dicks (Non-Executive Director)
WB Harris (Non-Executive Director)
S Swana (Non-Executive Director)
KJ Winters (Non-Executive Director)
PB Kruger (Company Secretary)
Registrars:
Registries Limited
Level 7
207 Kent Street
Sydney
NSW
Australia
2000
Tel: +61 2 9290 9600
South African Transfer Secretaries:
Computershare Investor Services
70 Marshall Street
Johannesburg
2001
Level 1 ADR sponsor:
The Bank of New York Mellon
Depositary Receipts Division
101 Barclay St, 22nd Floor
New York, New York 10286 USA
Tel: +1 212 815 3700
Fax: +1 212 571 3050
Auditors:
PricewaterhouseCoopers
201 Sussex Street
Sydney, New South Wales 1171
Australia
Telephone: +61 2 8266 0000
This news release does not constitute investment advice. Neither this news
release nor the information contained in it constitutes an offer, invitation,
solicitation or recommendation in relation to the purchase or sale of securities
in any jurisdiction.
FORWARD-LOOKING STATEMENT:
This release includes certain forward-looking statements and forward-looking
information. All statements other than statements of historical fact included in
this release including, without limitation, statements regarding future plans
and objectives of Gold One International Limited are forward-looking statements
(or forward-looking information) that involve various risks, assumptions and
uncertainties. There can be no assurance that such statements will prove to be
accurate and actual values, results and future events could differ materially
from those anticipated in such statements. Important factors could cause actual
results to differ materially from Gold One`s expectations. Such factors include,
among others: the actual results of exploration activities; actual results of
reclamation activities; the estimation or realisation of mineral reserves and
resources; the timing and amount of estimated future production; costs of
production; capital expenditures; costs and timing of the development of Modder
East and new deposits; availability of capital required to place Gold One`s
properties into production; the ability to obtain or maintain a listing in South
Africa, Australia, Europe or North America; conclusions of economic evaluations;
changes in project parameters as plans continue to be refined; future prices of
gold and other commodities; possible variations in ore grade or recovery rates;
failure of plant, equipment or processes to operate as anticipated; accidents;
labour disputes and other risks of the mining industry; delays in obtaining
governmental approvals, permits or financing or in the completion of development
or construction activities, economic and financial market conditions; political
risks; Gold One`s hedging practices; currency fluctuations; title disputes or
claims limitations on insurance coverage. Although Gold One has attempted to
identify important factors that could cause actual results to differ materially,
there may be other factors that cause results not to be as anticipated,
estimated or intended.
Any forward-looking statements in this release speak only at the time of issue.
There can be no assurance that such statements will prove to be accurate as
actual values, results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not place undue
reliance on forward-looking statements. Gold One does not undertake to update
any forward-looking statements that are included herein, or revise any changes
in events, conditions or circumstances on which any such statement is based,
except in accordance with applicable securities laws and stock exchange listing
requirements.
COMPETENT PERSON
The information in this release that relates to exploration results, mineral
resources or ore reserves is based on information compiled by Dr Richard
Stewart, who has a doctorate in geology and who is a professional natural
scientist registered with the South African Council for Natural Scientific
Professions (SACNASP), membership number 400051/04. Dr Stewart is also a member
of the Geological Society of South Africa (GSSA) and the vice president of
geology for Gold One, with which he is a full-time employee. He has 10 years`
experience which is relevant to the style of mineralisation and type of deposit
under consideration, and to the activity which he is undertaking, to qualify as
a Competent Person for the purposes of both the 2004 Edition of the Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves
(JORC Code) and the 2007 Edition of the South African Code for Reporting of
Exploration Results, Mineral Resources and Mineral Reserves (SAMREC Code). Dr
Stewart consents to the inclusion in this release of the matters based on
information compiled by Gold One employees and it`s consultants in the form and
context in which they appear. Further information on Gold One`s resource
statement is available in the pre-listing statement of Gold One International
Limited issued on 19 December 2008 and in the resource statements released by
Gold One on the Stock Exchange News Service (SENS) on 11 and 13 October 2010
concerning the company`s Megamine and Goliath Gold Mining Limited respectively.
SAMREC AND JORC TERMINOLOGY
In addition, this release uses the terms `indicated resources` and `inferred
resources` as defined in accordance with the SAMREC Code, prepared by the South
African Mineral Resource Committee (SAMREC), under the auspices of the South
African Institute of Mining and Metallurgy (SAIMM), effective March 2000 or as
amended from time to time and where indicated in accordance with the Canadian
National Instrument 43-101 - Standards for Disclosure for Mineral Projects. The
terms `indicated resources` and `inferred resources` are also defined in the
2004 Edition of the JORC Code, prepared by the Joint Ore Reserves Committee
(JORC) of the Australasian Institute of Mining and Metallurgy (AusIMM), the
Australian Institute of Geoscientists (AIG) and the Minerals Council of
Australia (MCA). (The use of these terms in this release is consistent with the
definitions of both the SAMREC Code and the JORC Code.)
A mineral reserve (or `ore reserve` in the JORC Code) is the economically
mineable part of a measured or indicated resource demonstrated by at least a
preliminary feasibility study. This study must include adequate information on
mining, processing, metallurgical, economic and other relevant factors that
demonstrate at the time of reporting that economic extraction can be justified.
A mineral reserve includes diluting materials and allows for losses that may
occur when the material is mined. A proven mineral reserve (or `proved ore
reserve` in the JORC Code) is the economically mineable part of a measured
resource for which quantity, grade or quality, densities, shape and physical
characteristics are so well established that they can be estimated with
confidence sufficient to allow the appropriate application of technical and
economic parameters to support production planning and evaluation of the
economic viability of the deposit. A probable mineral reserve (or `probable ore
reserve` in the JORC Code) is the economically mineable part of an indicated
mineral resource for which quantity, grade or quality, densities, shape and
physical characteristics can be estimated with a level of confidence sufficient
to allow the appropriate application of technical and economic parameters to
support mine planning and evaluation of the economic viability of the deposit.
A mineral resource is a concentration or occurrence of natural, solid, inorganic
or fossilised organic material in or on the earth`s crust in such form and
quantity and of such a grade or quality that it has reasonable prospects for
economic extraction. The location, quantity, grade, geological characteristics
and continuity of a mineral resource are known, estimated or interpreted from
specific geological evidence and knowledge. A measured mineral resource is that
part of a mineral resource for which quantity, grade or quality, densities,
shape and physical characteristics can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and economic
parameters to support mine planning and evaluation of the economic viability of
the deposit. The estimate is based on detailed and reliable exploration,
sampling and testing information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drillholes that are
spaced closely enough to confirm both geological and grade continuity. An
indicated mineral resource is that part of a mineral resource for which
quantity, grade or quality, densities, shape and physical characteristics can be
estimated with a level of confidence sufficient to allow the appropriate
application of technical and economic parameters to support mine planning and
evaluation of the economic viability of the deposit. The estimate is based on
detailed and reliable exploration and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings
and drillholes that are spaced closely enough for geological and grade
continuity to be reasonably assumed. An inferred mineral resource is that part
of a mineral resource for which quantity and grade or quality can be estimated
on the basis of geological evidence and limited sampling and reasonably assumed,
but not verified, geological and grade continuity. The estimate is based on
limited exploration and sampling gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drillholes. Mineral
resources which are not mineral reserves do not have demonstrated economic
viability. Investors are cautioned not to assume that all or any part of the
mineral deposits in the measured and indicated resource categories will ever be
converted into reserves. In addition, "inferred resources" have a great amount
of uncertainty as to their existence and economic and legal feasibility. It
cannot be assumed that all or any part of an inferred mineral resource will be
ever be upgraded to a higher category. Under South African and Australian rules,
estimates of inferred mineral resources may not form the basis of feasibility or
pre-feasibility studies or economic studies except under conditions noted in the
SAMREC Code and the JORC Code, respectively.
Investors are cautioned not to assume that all or any part of an inferred
resource exists or is economically or legally mineable. Exploration data is
acquired by Gold One and its consultants under strict quality assurance and
quality control protocols.
No stock exchange, securities commission or other regulatory authority has
approved or disapproved the information contained herein.
Date: 28/10/2010 07:15:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
