JOHANNESBURG (miningweekly.com) - Gold exploration company Witwatersrand Consolidated Gold Resources (Wits Gold) said on Monday that it would advance its De Bron asset in South Africa's Free State province into development stage in the near future.
Wits Gold investor relations manager Hethen Hira told Mining Weekly Online that it had decided to focus on advancing this shallower resource, as it could be taken into production much quicker than some of its other projects.
Hira noted that Wits Gold had recently completed a scoping study on the De Bron project that showed that it was sensitive to the gold price in grade.
"To progress to prefeasibility and then bankable feasibility stage, the company is planning to increase its infill drilling at the site to get a better idea of the grades, and to upgrade the current resource."
Wits Gold would now focus on an intensive six-hole drilling programme and hoped to complete a prefeasibility study at the De Bron project before the end of the year.
The company was considering two possible mine designs within the De Bron area, which contained three principal conglomerates.
The first design was a medium-sized 62 500-t/m operation with a conventional system of footwall haulages and box holes linked to raises.
The design was based on a selected on-site indicated resource of 8,7-million tons, at 6,4 g/t gold. The design would exploit the higher-grade zones situated to the east of the De Bron fault.
It was anticipated that the mine would produce its first gold 35 months after starting shaft sinking and would achieve a peak production of 118 000 oz/y at a yield of 4,4 g/t gold.
It was estimated that the development of the mine design would require about $356-million. Operating costs would include the recently announced Eskom tariff increases.
An alternative design for a possible future mine at De Bron would model a smaller high-grade operation with a throughput of 30 000 t/m.
The mine would be designed to exploit the higher-grade mineralisation in the northern sector of De Bron that contained an indicated resource of 4,6-million tons, at 7 g/t gold.
It was envisaged that the mine design could produce its first gold 27 months after initiating shaft sinking using reef drives from the shaft position.
Peak production was estimated at around 53 500 oz/y, with a total gold production during the 16-year life anticipated to be 800 000 oz, while capital required was estimated at $224-million.
The company said that sensitivity analyses on both of the options illustrated strong gearing to changes in gold grade and price, as well as an increase in the size of the shallow, high-grade resource.
Hira said that currently Wits Gold had about R80-million in the bank that could run operations for the next two years at current rates.
"However, if we decide to start development of the project sooner, I am sure that we could raise funding for that from investors, based on the drilling results that would come from our current drilling programme and the resource that has been outlined at the De Bron project."
Further, Hira pointed out that Wits Gold did not necessarily plan to mine on its own, and that it would consider a spin-off with another mining company to mine the De Bron project, while keeping a sufficient stake in the spin-off company to add value to shareholders.
"We also have the large, high-grade Bloemhoek project next door to the De Bron project, and together, these projects would create an ideal platform to raise money and to move forward to the next phase."
Wits Gold recently completed a prefeasibility study at Bloemhoek, based on an estimated indicated mineral resource of around 39,9-million tons at an average grade of 7,17 g/t gold, containing 9,2-million ounces of gold.
Should the company complete bankable feasibility studies at the De Bron and Bloemhoek projects, gold-mining major Harmony Gold had a 40% clawback option on both the projects.
"We want to see new mines being developed in the Wits basin, which has been ignored for too long," concluded Hira.