| Wed 18 Apr 2012, 9:35 | | GDO/GGM - Gold One / Goliath Gold - Gold One and Goliath Gold to Acquire the |
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GDO GGM
GDO GGM
GDO/GGM - Gold One / Goliath Gold - Gold One and Goliath Gold to Acquire the
Pamodzi East Rand Underground Deposits and Selected Assets for ZAR 70 million
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
ISIN: AU000000GDO5
OTCQX International: GLDZY
("Gold One")
GOLIATH GOLD MINING LIMITED
(Formerly White Water Resources Limited)
Incorporated in the Republic of South Africa
(Registration number 1933/004523/06)
Share code: GGM
ISIN: ZAE000154753
("Goliath Gold")
Gold One and Goliath Gold to Acquire the Pamodzi East Rand Underground Deposits
and Selected Assets for ZAR 70 million
- Gold One and Goliath Gold to acquire control over the underground deposits
of Grootvlei Proprietary Mines, Consolidated Modderfontein Mines and Nigel
Gold Mining Company
- Gold One to obtain the prospecting rights to the down-dip extensions to the
Modder East Mine and acquire the Grootvlei treatment plant, the Number 4
Shaft Infrastructure and the Main Office complex for ZAR 65 million
- Goliath Gold to obtain prospecting rights and acquire historical mining and
geological data over the remaining Pamodzi Gold East Rand Operations for
ZAR 5 million
- As holders of prospecting rights, Gold One and Goliath Gold will limit
exposure to historical rehabilitation liabilities to an amount estimated
at ZAR 10 million
Gold One through its wholly owned subsidiary New Kleinfontein Goldmine
Proprietary Limited ("NKGM"), and Goliath Gold, formerly known as White Water
Resources Limited, hereafter collectively referred to as the "Purchasers", are
pleased to announce that they have entered into an acquisition agreement (the
"Acquisition Agreement") with the Joint Provisional Liquidators representing
Pamodzi Gold East Rand Proprietary Limited ("Pamodzi East Rand") and its
subsidiaries, hereafter referred to as the "Sellers". In terms of the
Acquisition Agreement, NKGM will purchase selected surface assets of Grootvlei
Proprietary Mines Limited ("Grootvlei") ("Surface Assets"), while Goliath Gold
will purchase historical mining and technical data from Consolidated
Modderfontein Mines 1979 Limited ("Modderfontein 1979"), Consolidated
Modderfontein Mines Limited ("Modderfontein"), Nigel Gold Mining Company
Proprietary Limited ("Nigel") and Grootvlei ("Mining Data"), collectively
referred to as the Pamodzi East Rand Operations ("PERO"). The total purchase
consideration is ZAR 70 million. In addition, the Acquisition Agreement
provides for the withdrawal by the Sellers of their conversion applications in
respect of their existing old order mining rights, and for the Purchasers to
simultaneously lodge applications for prospecting rights over the areas covered
by the existing mining rights. The Acquisition Agreement with the Sellers is
subject to certain conditions precedent as detailed in paragraph 7 below,
including the approval by the South African Department of Mineral Resources
("DMR") of the grant of new order prospecting rights to the Purchasers.
1. Transaction Rationale
The East Rand Basin represents one of the largest mining districts of the
Witwatersrand Basin in South Africa, having historically produced in excess of
320 million ounces of gold primarily derived from the Main Reef orebody. Mining
of this orebody declined during the 1960s and 1970s following the establishment
of operations in the West Rand and Far West Rand goldfields. Mining in the
remainder of the East Rand over the past three decades has largely focused on
"Secondary Reef" horizons and has been conducted utilising old and often
inefficient infrastructure. By utilising old and interconnected underground
infrastructure, the PERO assets were burdened with significant ongoing pumping
costs, which ultimately contributed to the business being placed in provisional
liquidation. In contrast, Gold One`s successful Modder East Operation, which
commenced construction in 2006 and is the first new mine to be built on the East
Rand in some 30 years, is also focused on "Secondary Reefs" but has modern and
efficient access methods and technologies. The Modder East Operation has been
specifically designed to be isolated from historical infrastructure and flooded
workings so as not to be burdened with legacy water pumping problems. In
addition, the Modder East Operation has been designed with cognisance of modern
and sustainable environmental practices such as a zero water discharge site,
thereby not contributing to the East Rand`s water problems.
Modder East was extensively and systematically explored, modelled and engineered
prior to construction and development. This facilitated the construction of a
low capital cost (US$ 108 million) operation that was efficiently developed in
just over three years. A positive cash flow status was attained six months
after the first gold pour and the operation now employs approximately 1,800
people. In contrast, extensive and systematic exploration of the PERO assets
has been largely neglected over the past decades; a period that represents the
most significant gold bull market in history. This reflects a very significant
opportunity for both Gold One and Goliath Gold. Without historical inefficient
production constraints and the ongoing pumping liability, both Gold One and
Goliath Gold are to embark on exploration activities in previously unmined
areas. Gold One will focus on exploring and delineating the well-known down-dip
extension to Modder East, while Goliath Gold is to focus on shallow exploration
opportunities over the remainder of the PERO assets, as described below.
The withdrawal of the conversion applications in respect of the existing mining
rights by the Sellers and the subsequent application for prospecting rights by
NKGM and Goliath Gold underpins the transaction structure. The successful
awarding of new order prospecting rights to NKGM and Goliath Gold over the
historic PERO assets will limit the associated environmental rehabilitation
liabilities to the surface area on which the acquired surface assets are
situated and to future prospecting activities. Gold One and Goliath Gold will
not be held liable for any historical environmental mining liabilities or
liabilities associated with water pumping or acid mine drainage.
NKGM will apply for prospecting rights covering the area that is immediately
down-dip and contiguous to its existing Modder East Mine. This largely unmined
area is highly prospective with surrounding mining data suggesting continuity of
the UK9a orebody. The UK9a currently comprises some 26% of Modder East`s
existing mineral reserve. This down-dip extension has the potential to
substantially increase Modder East`s current mine life of 10 years.
Furthermore, this area can be accessed utilising Modder East`s existing
infrastructure and remains disconnected from the flooded historical mine voids.
Gold One intends confirming this down-dip extension through a surface
exploration drilling programme.
Goliath Gold will apply for prospecting rights over the remaining PERO assets.
In addition, as part of the Acquisition Agreement, Goliath Gold will purchase
the extensive historical mining and geological data that has been acquired by
the Sellers over the past century of mining in the East Rand. To date, Goliath
Gold has already undertaken extensive regional geological modelling at its
Megamine project. This exploration work has considered the incorporation in
excess of 160,000 data points, including on-reef survey pegs for defining
detailed three-dimensional structural models, underground sampling points,
historical and current surface exploration drilling, and underground mapping.
This arguably represents the most extensive holistic and regional modelling
approach undertaken in the East Rand and has facilitated the development of
confident geological and associated grade models. This modelling, combined with
Gold One`s geological knowledge from the Modder East Operation, will be
extrapolated into the area considered by the PERO assets. The combination of
these existing models and the vast historic PERO database will facilitate the
identification of priority exploration targets and fast-track target
development.
Gold One and Goliath Gold`s current exploration activities at their respective
Modder North and Megamine projects have demonstrated the highly prospective
nature of the unmined East Rand deposits. Prior to the Sellers being placed in
provisional liquidation, the PERO assets had a South African Code for Reporting
of Mineral Resources and Mineral Reserves ("SAMREC Code") compliant mineral
resource of 7.48 million ounces (including 4.16 million ounces in the measured
category grading at 3.94 grams per tonne, 0.68 million ounces in the indicated
resource category grading at 4.23 grams per tonne, and 2.64 million ounces in
the inferred category grading at 4.12 grams per tonne). Although the aforesaid
mineral resources can no longer be regarded as being SAMREC Code compliant by
reason of the fact that the underground workings of the PERO assets were flooded
post the Sellers being placed in provisional liquidation, this historic
resource, which was largely constrained to "Secondary Reefs" in the areas of
active mining at the time, nevertheless demonstrates the remaining potential
of the greater East Rand Basin and in particular the significant "Secondary
Reef" opportunities.
The consolidation of the PERO assets together with Gold One and Goliath Gold`s
current properties will create a substantial continuous brownfield exploration
property in the most prolific historic gold producing region of South Africa.
Once consolidated the exploration area, which includes in excess of 10
previously mined reef horizons extending from surface to depths of 2,500 meters
below surface and measuring some 45 kilometres by 20 kilometres, can be
reconsidered using a holistic modelling approach. The opportunity to explore and
develop such assets without the associated legacy of pumping and environmental
liabilities is critical to the successful execution of Gold One and Goliath
Gold`s strategy to extending the life of gold mining in the East Rand. In
further support of advancing sustainable mining in the East Rand, Gold One and
Goliath Gold have also consulted extensively with all relevant stakeholders
relating to the transaction, having conferred with the Solidarity trade union on
a national level as well as with The National Union of Mineworkers on both the
national and regional levels.
In addition to the Mining Data being acquired by Goliath Gold, NKGM is also
acquiring selected surface assets from Grootvlei including the general offices
and the Grootvlei Number 4 Shaft complex, which include the historical gold
treatment plant. These areas are considered to have significant strategic value
in the event that new mining operations commence. Options exist to undertake
either the refurbishment of the existing gold plant or, alternatively, to
construct a new plant on a historically disturbed site.
Gold One President and CEO Neal Froneman comments: "I am delighted that we have
reached agreement with the Sellers on the purchase of the PERO assets. We have
spent a considerable amount of time evaluating the substantial remaining
prospects on the East Rand and the best strategy with which to maximise the
sustainable development of these assets.
"Together, Gold One and Goliath Gold will have access to explore one of the
largest brownfield exploration properties in the world that still hosts
significant potential resources, particularly those associated with "Secondary
Reefs". We believe that there is potential for another three to four operations
within the East Rand Basin all of similar scale to Modder East, and we plan to
follow the successful development philosophy employed at our Modder East
Operation. This clean sheet approach considers targeting unmined areas with
modern and appropriate infrastructure, without the consequence of historical
rehabilitation and underground water legacy issues.
"This acquisition further enforces our commitment to the continued growth of
responsible and sustainable mining, not only in the East Rand but in South
Africa as a whole."
2. Background to the PERO Assets
Gold production in the East Rand Goldfield commenced in 1888, when the Nigel
Gold Mine began extensive mining of the Main Reef. Later, mining was primarily
concentrated on the Secondary Black and Kimberley Reefs. During the first 80
years of mining in the area approximately 28 mines were in operation,
contributing to a legacy of various mine owners and mine boundaries. Between
1979 and 2006, several phases of separate mine consolidations were undertaken,
culminating in the Pamodzi Gold East Rand Operations. Pamodzi Gold was placed
in provisional liquidation in March 2009 for reasons that have been well
documented in the media.
3. Location of the PERO Assets
The PERO Assets are located contiguous to Gold One and Goliath Gold`s respective
assets in the East Rand Basin.
To view the location of the PERO Assets schematically, please refer to the
company`s website hosted at www.gold1.co.za
4. Gold One and Goliath Gold
As per the announcement made by Gold One and Goliath Gold on the JSE Limited`s
Securities Exchange News Service ("SENS") on Tuesday, 20 March 2012, all the
conditions precedent regarding Goliath Gold`s acquisition of Gold One`s Megamine
assets have been fulfilled or waived. On 28 March 2012, Goliath Gold acquired
Megamine for an acquisition consideration of ZAR 262,229,868. This
consideration was settled by the way of issue of 104,891,947 Goliath Gold
ordinary shares resulting in Gold One, through an empowered subsidiary, now
holding a controlling interest of approximately 71% in Goliath Gold. The
increase in the issued share capital of Goliath Gold to 147,354,905 ordinary
shares increased the market capitalisation of Goliath Gold to over ZAR 600
million from just under ZAR 200 million.
5. The Acquisition Agreement
The Sellers and the Purchasers have entered into the Acquisition Agreement for
the acquisition of selected Surface Assets of Grootvlei and the Mining Data of
Grootvlei, Modderfontein 1979, and Nigel. Pursuant to the Acquisition
Agreement, Goliath Gold will secure access to the Mining Data and Gold One,
through its 100% owned subsidiary NKGM, will acquire the following Surface
Assets:
- The metallurgical plant/reduction works situated on the Grootvlei property;
- The Number 4 Shaft complex situated on the Grootvlei property; and
- The separate property on which the Grootvlei general offices are situated.
In consideration for the purchase, Goliath Gold will pay the sum of ZAR 5
million for the Mining Data, and NKGM the sum of ZAR 65 million for the Surface
Assets,respectively. On the signing of the Acquisition Agreement, Goliath Gold
and NKGM will pay deposits of ZAR 500,000 and ZAR 6.5 million, respectively. The
balance of the purchase price will be due on granting of the new order
prospecting rights and the delivery of the Surface Assets concerned, which will
be given by the Sellers at the earliest possible date that transfer can be given
after all conditions precedent have been fulfilled.
Modderfontein, Nigel and Grootvlei applied to the DMR previously for the
conversion of their respective old order mining rights into new order rights,
which applications have not yet been granted. As part of the transaction, the
relevant Pamodzi subsidiaries will withdraw their conversion applications with
the effect that the old order mining rights will cease to exist. Simultaneously
with the withdrawal of the conversion applications, Goliath Gold and NKGM will
lodge applications for prospecting rights for the areas over which Pamodzi
subsidiaries` rights have ceased.
Gold One, through its subsidiary NKGM, will not be liable for any rehabilitation
liabilities in respect of the Sale Assets other than specific surface
rehabilitation liabilities related to the surface assets acquired under the
Acquisition Agreement. This assumption of liability will only come into effect
after all conditions precedent have been fulfilled or waived.
6. Occupation
As of the Acquisition Agreement`s signature date, Gold One, through its
subsidiary NKGM, will take occupation of the Surface Assets (excluding the
surface right permits). As part of the Acquisition Agreement, NKGM shall
safeguard the relevant assets and provide the necessary security services. The
Sellers will remain the legal owners of the assets until all conditions have
been fulfilled.
7. Conditions Precedent
The Acquisition Agreement is subject to and conditional upon the fulfillment or
waiver (if applicable) of the following conditions precedent:
- Gold One, Goliath Gold and NKGM receive all necessary approvals for the
Acquisition from their respective boards;
- The Pamodzi liquidators procure the reinstatement of Grootvlei`s company
registration by the Companies and Intellectual Property Commission;
- Goliath Gold and NKGM are granted their respective planned prospecting
rights applications on terms reasonably acceptable to the Sellers and the
Purchasers;
- The North Gauteng High Court approves the acquisition pursuant to an
application for such approval made by the Pamodzi liquidators at their
cost. This approval must include a confirmation that the Sale Assets are to
be sold to the Purchasers free of all and any security over those assets;
and
- The Sellers obtain written approval from UniCredit(1) for the acquisition.
Gold One is of the opinion that the aforementioned conditions precedent can be
fulfilled in a timely and efficient manner.
(1)UniCredit Bank AG, a bank organised under the Laws of the Federal Republic of
Germany and a creditor of the Sellers.
Jointly issued by Gold One and by Goliath Gold.
18 April 2012
Transaction Sponsor and JSE Sponsor:
Macquarie First South Capital (Pty) Limited
For further information contact:
On behalf of Gold One:
Transaction Sponsor and JSE Sponsor:
Macquarie First South Capital
South African Legal Advisor:
Edward Nathan Sonnenbergs
Corporate Advisor:
Qinisele Resources
Australian Corporate Advisor:
Hartleys
Australian Legal Counsel:
Ashurst Australia
Canadian Legal Counsel:
Stikeman Elliott
On behalf of Goliath Gold:
Transaction Sponsor and JSE Sponsor:
Merchantec Capital
South African Legal Advisor:
Edward Nathan Sonnenbergs
Corporate Advisor:
Qinisele Resources
Neal Froneman President and CEO
+27 11 726 1047 (office)
+27 83 628 0226 (mobile)
neal.froneman@gold1.co.za
Grant Stuart
Investor Relations
+27 10 591 5219 (office)
+27 82 602 5992 (mobile)
grant.stuart@gold1.co.za
Carol Smith
Investor Relations
+27 11 726 1047 (office)
+27 82 338 2228 (mobile)
carol.smith@gold1.co.za
Derek Besier
Farrington National Sydney
+61 2 9332 4448 (office)
+61 421 768 224 (mobile)
derek.besier@farrington.com.au
About Gold One
Gold One is a dual listed mid-tier mining group with gold operations and gold
and uranium prospects across Southern Africa. Gold One remains focused on
developing and mining low technical risk, high margin precious metal resources
in diversified jurisdictions. The company`s flagship Modder East gold mine,
commissioned in 2009, distinguishes itself from most other gold mines in South
Africa owing to its shallow nature (300 to 500 metres below surface) and
continues to ramp up production, having produced 123,179 ounces in 2011.
At the beginning of 2012, the group expanded further with the acquisition of
Rand Uranium (Pty) Limited consisting of the Cooke Underground Operations and
the Randfontein Surface Operations located in the West Rand, 30 kilometres from
Johannesburg. The Cooke underground operations continue to deliver in line with
expectations and are currently the subject of a turnaround intervention.
Through Gold One`s purchase of Rand Uranium (Pty) Limited, the group has also
acquired one of the world`s most advanced uranium projects, which envisages
recovering uranium, gold and sulphur from the Cooke Tailings Dam and underground
ores.
The Gold One group is majority-owned by a consortium comprising Baiyin Non-
Ferrous Group Co. Limited, the China-Africa Development Fund, and Long March
Capital Limited and has an issued share capital of 1,415,302,711 shares.
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.
About Goliath Gold
Goliath Gold is a South African gold explorer and developer listed on the JSE
Limited, issuer code GGM, and is the company formerly known as White Water
Resources Limited. Gold One, through a wholly owned subsidiary, has now acquired
a controlling interest of at least 71% in Goliath Gold. Goliath Gold now
comprises the Sub Nigel mining right, Vlakfontein, West Vlakfontein, Spaarwater
and Wit Nigel prospecting rights and collectively has an established resource
base of over 12 million resource ounces, compliant with the South African Code
for Reporting of Exploration Results, Mineral Resources and Mineral Reserves
(SAMREC Code).
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.
Date: 18/04/2012 09:35:01 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.
