| Wed 19 Apr 2006, 7:23 | | Wits Gold - Abridged Pre-Listing Statement |
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Wits Gold - Abridged Pre-Listing Statement
Witwatersrand Consolidated Gold Resources Limited
(formerly Basfour 2759 (Pty) Limited)
(Incorporated in South Africa)
Registration Number 2002/031365/06
JSE Code WGR
ISIN ZAE000079703
(`Wits Gold" or the `Company")
Listing of Wits Gold on the JSE Limited (`JSE")
INTRODUCTION
Shareholders are advised that the JSE has approved the listing of the
entire issued share capital of Witwatersrand Consolidated Gold Resources
Limited (`Wits Gold") with effect from the start of trading on the JSE on
24th April 2006 subject to Wits Gold meeting the requirements of the JSE in
respect of the requisite spread of ordinary shareholders. At the date of
listing Wits Gold"s authorised share capital will comprise 50 000 000
ordinary shares, having a par value of 1 cent each and an issued share
capital of 25 053 106 fully paid ordinary shares. Wits Gold will be listed
in the Mining `Mining-Gold" sector of the JSE under the abbreviated name
`Wits Gold". The main purposes of the listing are to:
provide an opportunity for South African residents to invest in Wits Gold
enhance public awareness of Wits Gold shares in order to promote liquidity
in the stock
provide Wits Gold with access to capital markets in the future
ADDITIONAL DETAILS OF THE OFFER
Opening Date of the Offer: 09:00 Tuesday, 18 April 2006
Closing Date of the Offer 16:00 Wednesday, 19 April 2006
Offer Price R20 per Offer Share
STRUCTURE OF THE COMPANY
Wits Gold is a Johannesburg based gold exploration company with substantial
resources in the Witwatersrand Basin. The Company currently has a 40%
Historically Disadvantaged South African (`HDSA") shareholding. The two
major HDSA shareholders are Continental Africa Gold Resources Consortium
(Pty) Ltd, a broad based group of shareholders and Tranter Kismet
Investments (Pty) Ltd, a group of South African HDSA professionals. In
addition, the Wits Gold Women"s Trust has been registered as a new
charitable organization with Dr Brigalia Bam as the Chairperson. The
Women"s Trust has been set up to fund training opportunities for South
African women within the mining industry. A Relationship Agreement between
the HDSA shareholders and Wits Gold has secured the 26% HDSA ownership
status of the Company in terms of the Mining Charter until 2014. Other
founding shareholders include the management and staff of the Company as
well as a range of institutional and private investors of both South
African and international origin.
HISTORY OF THE COMPANY
In 2003, following a geological review of the Witwatersrand Basin, Wits
Gold negotiated with the three major South African gold mining companies to
acquire their `old order" mineral rights in three priority target areas.
This resulted in the conclusion of agreements with AngloGold Ashanti
Limited (`AGL") and Gold Fields Limited (`GFL") in the Potchefstroom and
adjacent Klerksdorp Goldfields and with the Harmony-ARMGold-Freegold Joint
Venture (`Harmony JV") in the Southern Free State Goldfield. In terms of
the Minerals and Petroleum Resources Development Act No. 28 of 2002
(`MPRDA"), the Company as the legal titleholder of these mineral rights,
held the exclusive right until 30th April 2005 to apply for new form
prospecting rights. The Department of Minerals & Energy (`DME") has duly
granted prospecting rights for gold over six areas covering a total of 79
791 hectares as tabulated below.
Project DME Submitted Accepted Granted Registration Hectares
Reference by DME by DME
Southern Free State Goldfield
SOFS FS 76 PR 24.03.05 26.04.05 24.02.06 14 .03.06 12 055
Le Roux FS 247 PR 15.06.05 29.06.05 24.02.06 In progress 798
Potchefstroom Goldfield
Potchefstroom NW 370 PR 14.04.05 12.05.05 01.02.06 In progress 44 658
Carletonville GP 21 PR 20.04.05 04.05.05 01.11.05 02.02.06 8 592
Deelkraal GP 152 PR 18.07.05 26.07.05 15.12.05 28.02.06 1 616
Klerksdorp Goldfield
South Vaal FS 206 PR 12.04.05 13.05.05 24.02.06 14.03.06 12 072
In terms of the legal agreements with AGL, GFL and Harmony JV, Wits Gold
also acquired the historical exploration data for the areas covered by the
`old order" mineral rights. This includes borehole records and core from
203 boreholes, containing 526,464 metres of drilling and 2,882
intersections of Witwatersrand reefs, including deflections. According to
these agreements, where appropriate Wits Gold has undertaken to fund
exploration to the completion of bankable feasibility studies over these
areas. Once these investigations have been completed, the company that
originally contributed the relevant `old order" mineral rights will have a
once off opportunity to acquire up to a 40% interest in the future mining
venture.
In December 2004, Wits Gold was successful in the private placement of 4
653 106 shares at a price of R6.37 per share. This exercise raised R29 640
285 to provide sufficient capital for the next stage of the development of
the Company, including a public listing on the JSE. In addition to the
successful application for prospecting rights, this has also included the
compilation of an independent competent person"s report by Snowden Mining
Industry Consultants Pty Ltd (`Snowden"), based in Perth, Western
Australia. According to this report, the resource contained within the six
prospecting rights has been classified according to the SAMREC code and
comprises a total inferred resource of 142Moz of gold and 134Mlb of
uranium.
COMPANY STRATEGY
Wits Gold was originally formed to acquire and secure substantial mineral
rights in the Witwatersrand Basin. The first stage of this process has been
achieved through the granting of `new order" prospecting rights by the DME.
The Company now intends to undertake an active exploration programme to
improve the definition of the contained mineral resources. Following the
delineation of appropriate mineralisation and the completion of a
successful feasibility study or studies Wits Gold will seek to maximise the
value of any economic resources. This may occur through a joint venture
with the gold major that originally contributed the relevant `old order"
mineral rights, a partnership with another major gold mining company, or
through a sale of the prospecting rights to a third party. In the case of
the development and mining of such a gold resource, Wits Gold is likely to
retain an equity interest in such a newly formed mining company.
OVERVIEW OF ASSETS
Introduction
Gold was first discovered in Witwatersrand conglomerate reefs in 1886 and
since then, some 1.5 billion oz have been produced from seven major
goldfields within the Basin, equivalent to 35% of all historically mined
gold in the world. The United States Geological Survey (2004) estimated
that a similar size resource still remains unexploited in Witwatersrand
rocks. In 2003, Wits Gold completed a regional review of Witwatersrand
mineralisation in order to identify selected gold resources above a cut-off
value of 300cm.g/t Au and situated at a depth of less than 5000 metres
below surface. Principal target areas were recognised around the
northwestern and western periphery of the Basin, adjacent to the present
mining operations in the Southern Free State, Potchefstroom and Klerksdorp
Goldfields. The Company believed that, provided a sufficiently large
resource could be secured, these assets would represent a highly leveraged
option on future moves in the gold price and the South African Rand
exchange rate. Subsequent negotiations with AGL, GFL and Harmony JV
ultimately resulted in the Company securing `new order" prospecting rights
in these three key areas.
Southern Free State Goldfield
The prospecting rights granted to Wits Gold cover an area of 128.5km2
situated to the south of the Sand River. In this southern closure of the
Witwatersrand Basin, the economically important Central Rand Group thins
significantly due to the mutually erosive nature of unconformities and
their related conglomerate reefs. Consequently, although the Basal Reef
subcrops to the north of the Sand River, eight prospective reefs are
developed at depths of 500-2500 metres below surface in the Wits Gold
prospecting rights. Two of these reefs, the Beatrix and the Kalkoenkrans
are currently being exploited at the adjacent Beatrix and Joel Mines. A
total of 98 boreholes have already been drilled in the Wits Gold
prospecting rights in this area where, based on the regional geology, four
projects have been delineated.
De Bron Project
Situated on the eastern up-thrown side of the De Bron Fault, there are five
prospective reefs in the Central Rand Group that are developed within a 20
to 40 metre stratigraphic interval. These conglomerate reefs are preserved
at depths of 600 to 1200 metres below surface to the immediate south of
Harmony Gold Mine. Past drilling results have indicated that the most
continuous gold grades in excess of 300cm.g/t occur in the VS5 and
Kalkoenkrans Reefs.
Robijn Project
The principle exploration target is the Beatrix Reef that is preserved in a
down-faulted outlier of the Central Rand Group. Towards the southeast, the
reef subcrops at a depth of some 550 metres below surface against the Karoo
Supergoup and dips northwestwards towards the bounding Virginia Fault where
it occurs at depths of up to 2000 metres below surface. Elevated gold
grades in excess of 300cm.g/t have previously been intersected towards the
southwestern extreme of the Robijn area, where they are usually associated
with an increase in pyrite and flyspeck carbon.
Bloemhoek Project
The prospective potential is dominated by the southward on-lapping
arrangement of three superimposed conglomerates represented by the Leader,
Kalkoenkrans and VS5 Reefs. They are presently situated at depths of the
order of 1600 to 2200 metres below surface where mutually erosive
relationships produce a virtual continuum of gold mineralisation in excess
of 300cm.g/t. The most southerly of these targets is the Kalkoenkrans Reef
that until recently was thought to be preserved as an isolated inlier below
the VS5 unconformity. However, based on underground mining and development
results published by GFL, it appears that the Kalkoenkrans Reef may be more
continuous between Bloemhoek and the Beatrix No. 4 Shaft workings.
Hakkies Project
The principal exploration targets are the Leader and Upper Leader Reefs
that occur at depths of between 1350 and 2200 metres below surface. The
gold distribution in these reefs is thought to be a function of three
interacting fluvial systems that converge in the Hakkies area. The A Reef
is developed in a discrete belt that strikes northwest-southeast through
the area.
Potchefstroom Goldfield
Prior to Wits Gold acquiring the drilling information for this area between
the Carletonville Goldfield and Potchefstroom town, the geological models
were poorly constrained due to the competitive nature of historical
exploration. Consequently, it was necessary for Wits Gold to recompile and
for the first time, consolidate the two separate sets of exploration
results that formerly belonged to AGL and GFL. This exercise has resulted
in an improved appreciation of the various reefs that are developed as well
as the related gold distribution.
Boskop Project
This comprises a 7 km north-south elongate block that is situated on the
western up-thrown side of the Jersey Fault System. Only the lower
stratigraphy of the Central Rand Group is preserved, where the Main
Conglomerate Formation occurs at depths of 1000 to 1500 metres below
surface. Only limited drilling has been completed in the north of this
area; however, results from the Carbon Leader, indicate that gold grades
increase systematically in a southerly direction, towards Potchefstroom.
Kleinfontein Project
This represents the western extension of the Carletonville Goldfield and
contains at least three prospective reefs. The two priority targets
comprise the Carbon Leader and Middelvlei Reefs that occur at less than
2750 metres below surface. Both these reefs are currently being exploited
at the adjoining Blyvooruitzicht Gold Mine. Elevated gold values in excess
of 300cm.g/t occur in the Carbon Leader in this area where the reef is
characterised by disseminated flyspeck carbon, particularly along the basal
unconformity.
Kleinfontein Deeps Project
This area is situated to the immediate south of the Kleinfontein Project,
where historical drilling results indicate that gold values in excess of
300cm.g/t occur predominantly in the Carbon Leader. The Carbon Leader in
this area occurs in the depth range of 2750 to 4000 metres below surface.
Other reefs that occur within this project area are the Middelvlei and
North Leader.
Potchefstroom Deeps Project
This area contains the largest, but also the deepest gold resources in the
Potchefstroom Goldfield. It covers some 160 km2 with a strike length of
16 km and a west-east dimension of up to 10 km in contrast to the 25 km2 of
a typical Witwatersrand mine lease. The prospective reefs in this area
include the Carbon Leader, the Vaal Reef and the Cobble Reefs, all of which
occur at depths of the order of 3000 to 5000 metres below surface.
Deelkraal South Project
The VCR occurs at a depth of 3000 to 4000 metres below surface, where it
was deposited as a series of channel conglomerates. In a previous
evaluation of this area that was not SAMREC compliant, GFL estimated an
unclassified resource of 23.8 Mt at an average grade of 10.88 g/t Au
(8.05Moz). On the strength of this estimate, sinking of the Deelkraal No.
3 Shaft commenced within the project area, but work was suspended at a
depth of 1326 metres below surface.
Livingstone Reef Project
The presence of gold values in excess of 1000cm.g/t in the Livingstone
Reefs within this project area attract attention, partly due to their
shallow occurrence in the depth range 1000 to 1400 metres below surface. A
cluster of five boreholes in the northwestern sector of the Potchefstroom
Goldfield intersected elevated values in these reefs, suggesting at least
some lateral continuity of the mineralised system if not of individual
conglomerates.
Klerksdorp Goldfield
The principal objective in this area is to explore for potential extensions
of high-grade Vaal Reef within the Jersey Fault Zone. A direct analogy of
this situation occurs at the adjacent Moab Khotsong Mine belonging to AGL,
where the orebody is preserved at depths of the order of 3000 to 3500
metres below surface. There are preliminary indications that similar
geological conditions may exist in the area immediately to the east of the
currently defined Klerksdorp Goldfield where a limited number of boreholes
have intersected the Vaal Reef.
Cyfervlei Project
The geological setting of this area is similar to that of the Moab Khotsong
Gold Mine situated to the immediate southwest of the project area, where
the Vaal Reef is preserved as a structural remnant in the Jersey Fault
Zone. During 1986, a series of boreholes were drilled into the Cyfervlei
Project from a prospecting haulage that was specially developed to evaluate
this area from the Strathmore Shaft at the Buffelsfontein Gold Mine.
Sufficient information was obtained for Gencor, the operators of the mine,
to outline a non-SAMREC compliant resource of the order of 20 to 30 Mt.
This resource was interpreted within seven structural blocks where the Vaal
Reef is preserved at depths of 4200 to 4900 metres.
Kromdraai Project
This area is situated to the east of the Paradys Anticline, the geological
structure that separates the southern extension of the Potchefstroom
Goldfield from the Klerksdorp Goldfield. Although only limited drilling has
been undertaken in this area, borehole UC1962 was successful in
intersecting the Vaal Reef, returning a best grade of 19.7 g/t Au over
96.9 cm (1,909 cm.g/t). This suggests the possibility of a substantial Vaal
Reef resource at depths in excess of 3500 metres below surface.
Groenfontein Project
Covers an area of some 105 km2 to the east and southeast of the Moab
Khotsong Gold Mine, from which it is separated by a splay of the Jersey
Fault Zone. Based on historical drilling, most of which has stopped in the
younger cover sequences, the current structural interpretation suggests
that the Vaal Reef is likely to be located at depths in excess of 5,000
metres below surface. However, it is apparent from some of the boreholes
that blocks of Vaal Reef may be preserved at shallower elevations in the
northwestern sector of this area.
Estimated mineral resources for the Southern Free State, Potchefstroom and
Klerksdorp Goldfields
Within the six prospecting rights granted to Wits Gold, the total contained
resource has been estimated by Snowden to a maximum depth of 5000 metres. A
gold cut-off of 300cm.g/t has been applied for narrow reefs and 600cm.g/t
gold cut-off for the wider Cobble Reef in the Potchefstroom Goldfield. The
total resource as summarised in the table below has been classified
according to the SAMREC Code.
Classification Indicated Inferred
Area Mt Au(g/t) U3O8(kg/t) Mt Au(g/t) U3O8(kg/t)
Southern Free
State 23.3 5.2 0.327 239.5 5.1 0.224
Potchefstroom 276.7 7.3 -
Klerksdorp 74.1 14 -
Total 23.3 5.2 590.3 7.2
Total Au U3O8
Moz Mlb
Mt Au U3O8
(g/t) (kg/t)
262.8 5.1 0.233 43.5 134.7
276.7 7.3 - 65.2 -
74.1 14 - 33.3 -
613.6 7.2 142.0 134.7
FUTURE EXPLORATION PROGRAMME
The immediate exploration strategy for Wits Gold is to add value through
improved resource definition. This will be achieved by a combination of
refining geological models and selective diamond drilling. Initially this
drilling will target four of the shallower areas, specifically in the
Bloemhoek, De Bron and Robijn Projects in the Southern Free State Goldfield
and in the Boskop Project in the Potchefstroom Goldfield. The objective of
this future programme will be to progress at least one of these projects to
the pre-feasibility stage within the next three years. This exploration
will permit the refined resources to be elevated to the Indicated and
Measured levels and allow the construction of financial models with some
degree of confidence.
The deeper resources, particularly where the reefs occur at depths in
excess of 2500 metres below surface, will be subjected to an initial
geological review in order to optimise future deep hole drilling. This
exercise is intended to prioritise discrete areas that display the
potential to support long life Witwatersrand mines. These areas will be
targeted for diamond drilling to refine the declared resources and to
maintain the good standing of the prospecting rights.
The total proposed exploration budget for the combined areas in the
Southern Free State, Potchefstroom and Klerksdorp Goldfields over the
period 2006 to 2010 is R43.08 million, equivalent to US$7.18 million at an
exchange rate of R6.00/US$.
FINANCIAL INFORMATION
The unaudited pro forma balance sheet of Wits Gold before and after the
Offer is set out below. The directors of Wits Gold are responsible for the
preparation of the unaudited pro forma financial information. It is
presented for illustrative purposes only and because of its nature may not
give a fair reflection of Wits Gold"s financial position and changes in
equity after the Offer. It has been assumed for purposes of the pro forma
financial information that the rights offer took place with effect from
28th February 2006.
Assumptions: It has been assumed that the Offer will be subscribed for in
full and 400 000 shares represents the minimum subscription.
Unaudited pro forma balance sheet
Before1 Adjustmen After the
Audited ts2 Offer Pro
R forma
R R
ASSETS
Non-current assets 18 521 734 - 18 521 734
Equipment 296 720 - 296 720
Intangible assets 18 225 014 - 18 225 014
Current assets 26 156 486 5 900 000 32 056 486
Trade and other
receivables 63 310 - 63 310
Cash and cash
equivalents3 26 093 176 5 900 000 31 993 176
Total assets 44 678 220 5 900 000 50 578 220
EQUITY AND
LIABILITIES
Capital reserves 43 912 855 5 900 000 49 812 855
Ordinary share
capital 246 531 4 000 250 531
Share premium 47 092 879 5 896 000 52 988 879
Share based payment -
reserve 2 534 380 - 2 534 380
Accumulated loss (5 960 935) ( 5 960 935)
Current Liabilities 765 365 - 765 365
Shareholders" loan - - -
Directors" loan - - -
Trade and other
payables 659 563 - 659 563
Provisions 105 802 - 105 802
Total equity and
liabilities 44 678 220 5 900 000 50 578 220
Number of Shares in
issue 24 653 106 400 000 25 053 106
Net asset value per
share (cents) 178.12 - 198.83
Net tangible asset
value per share 104.20 - 126.08
(cents)
Notes:
The `Before" balance sheet is based on Wits Gold"s audited balance sheet as
at 28 February 2006.
Share capital and share premium have been adjusted to include the issue of
the 400 000 shares in terms of the Offer at R20 per share less share the
estimated transaction costs of R2.1 million that have been written off
against share premium.
Cash and cash equivalents has been adjusted to include the cash received as
a result of the Offer and to reflect the payment of the estimated cash
transaction costs amounting to R2.1 million.
DIRECTORS
The board of the Company presently comprises five directors, three of whom
are non-executive. Two of the non-executive directors are also independent.
The Company is currently being operated by the following managers and
directors of the Company:
Name and Business Occupation / Date of
nationality address function appointment
as Director
Non-executives
Mr Adam 12th Floor Chairperson 1 June 2003
Richard 70 Fox Street
Fleming* Johannesburg
South African
Prof. Taole Kalafong Deputy 7 June 2004
Retsetselemang Hospital Chairperson
Mokoena** Pretoria West
South African
Dr Humphrey 3rd Floor UCB Director 7 June 2004
Lawrence House
Mbendeni 18 Main
Mathe** South Street
African Johannesburg
Executives
Dr Marcus 12th Floor Chief 1 June 2003
Barrie 70 Fox Street Executive
Watchorn Johannesburg Officer
South African
Mr Derek 12th Floor Chief 30 March
Macdonald 70 Fox Street Financial 2005
Urquhart Johannesburg Officer
South African
Management
Mr Hethendra 12th Floor Investor N/A
Gangaram Hira 70 Fox Street Relations
South African Johannesburg Manager
Mr Dirk 12th Floor Exploration N/A
Jacobus 70 Fox Street Manager
Muntingh Johannesburg
South African
* Adam Fleming has an indirect beneficial interest in the Company"s office
lease, precluding him from being regarded as an independent director in
terms of the Listings Requirements
** Indicates Independent
This announcement is not a full pre-listing statement or prospectus.
Copies of the prospectus can be obtained during normal business hours from
18th April 2006 until 28th April 2006 from the offices of Wits Gold at 12th
Floor, 70 Fox Street, Johannesburg or at J.P.Morgan at No 1 Fricker Road,
Illovo, Johannesburg.
Johannesburg
18 April 2006
Sponsor :J.P.Morgan Equities Limited
Date: 19/04/2006 07:24:10 AM Produced by the JSE SENS Department
