1 week ago
3
To grease the wheels, West Wits will also issue options with a four-year expiry date to Nebari equal to 35 per cent of the loan amount. These warrants let the US backer buy West Wits shares at a 30 per cent premium to either the lower of the 20-day average share price before the drawdown notice or today’s closing price.
The Witwatersrand Basin project sits on hallowed ground, with its surrounding goldfields yielding a staggering 62,000 tonnes of gold since the early 1900s.
Legendary names such as Rand Mines and Durban Roodepoort Deep once ruled these reefs, carving out what remains the richest goldfield on Earth. To this day, the basin holds its crown, having produced more than 40 per cent of all the gold ever mined in human history.
After being mothballed for 20 years - during which time the gold price has seen a significant re-rate - West Wits was awarded the opportunity to reopen the historic Witwatersrand Basin for mine development in 2018 by the South African Department of Mineral Resources and Energy.
Sitting on the immediate outskirts of a residential part of Johannesburg, the project has had to navigate some tricky environmental concerns. However, with a new set of guidelines and a tick of approval from the mines department, the company wasted no time in going to work.
Scoping studies and feasibility work were conducted across the project area between 2021 and 2023 and defined a global resource of 5.025 million ounces grading 4.66 grams per tonne (g/t). With its easy access to immediate ounces, the Qala Shallows deposit was soon pinpointed as a starting point for development. It has an existing resource of 10.7Mt grading 2.98g/t for 1.026 million ounces of gold.
An existing adit, decline and shaft added to the appeal of the underground resource and were quickly rehabilitated to allow early access for sampling and surveying. This included picking up a 150-kilogram sample from old workings to confirm grades.
Two months ago, West Wits released a long-awaited definitive study, which highlighted an astonishing set of economics. The findings forecast a net present value of US$500 million (A$764 million) using a 7.5 per cent discount rate and a huge post-tax internal rate of return of 81 per cent.
The mine is expected to produce 70,000 ounces of gold per year to deliver a total free cash flow after tax of US$983 million (A$1.5 billion) over a 12-year mine life using an assumed gold price of US$2850 (A$4360) per ounce. Impressively, the all-in sustaining cost of production is forecast to average just US$1289 (A$1970) per ounce, placing the project firmly in the lowest quartile of global producers.
The best news has been kept for last. Since West Wits is reopening an old mine, much of the underground infrastructure still exists and has been rehabilitated. The project’s price tag is remarkably modest, with total capital costs estimated at just US$60 million (A$93 million).
Even better, peak funding is capped at US$44 million (A$67 million), which is comfortably within the quantum of loan facilities already approved by its lenders, giving West Wits plenty of financial breathing room.
Operationally, stage one of mining development is racing ahead. The new funding has allowed West Wits to order in underground mining equipment. Blasting drill rigs and underground dump trucks are on order and scheduled for delivery in October.
When installed, the new machinery will be put straight to work stockpiling ore ahead of the all-important first gold pour in the first quarter of 2026. Processing is likely to take place through toll-treatment agreements at neighbouring gold plants until the company installs its own processing capacity.
Hydropower drilling rigs are already running on site, speeding up the decline work and making it safer. At the same time, geotechnical drilling is checking ground conditions to keep things on track.
Above ground, West Wits and its EPCM contractor are pushing ahead with building key infrastructure as the company gets ready to ramp up to a steady 65,000t of ore each month.
The punters have already enjoyed a stellar rise in fortunes recently, seeing the share price more than double to 4.6 cents a share in the past two months, and will no doubt be watching closely as the countdown to first pour ticks down.
With funding in place, equipment on the way, and mobilisation accelerating, West Wits is lining up what could be a glittering new chapter in one of the planet’s most storied goldfields.
Is your ASX-listed company doing something interesting? Contact: [email protected]
