Wits Gold announces operational review and abridged results for the year
ended 28 February 2010 and posting of annual report

    
    Witwatersrand Consolidated Gold Resources Limited
    ("Wits Gold" or "the Company")
    (Registration Number 2002/031365/06)
    JSE Share Code: WGR
    ISIN: ZAE000079703
    TSX Share Code: WGR
    CUSIP Number: S98297104
    

JOHANNESBURG, South Africa, May 28 /CNW/ - Witwatersrand Consolidated Gold Resources Ltd. ("Wits Gold" or the "Company") (TSX:GBG; JSE:WGR; OTC:WIWTY) is pleased to announce results for the fiscal year ended February 28, 2010. The complete annual report to shareholders including detailed financial statements will be posted on May 28, 2010 with an electronic version filed on www.sedar.com and the Company's website (www.witsgold.com). The following operational and financial review has been extracted from the abovementioned annual report to shareholders.

The exchange rates, based on the Bank of Canada mid-market noon rate, in effect as of 28 February 2010, 28 February 2009 were as follows:

    
    28 February 2010       CAD $1.00 = R7.70
    28 February 2009       CAD $1.00 = R7.95
    

Abridged results for the year ended 28 February 2010, extracted from the audited financial statements

All figures quoted in South African Rands unless otherwise stated

Statement of financial position as at 28 February 2010

    
                                                       2010          2009
                                                        R             R
    Assets
    Non-current assets                             107 170 733    86 751 487
    Current assets                                  86 713 462   118 571 960
                                                  ------------- -------------
    Total assets                                   193 884 195   205 323 447
                                                  ------------- -------------
                                                  ------------- -------------
    Equity and liabilities
    Capital and reserves                           187 045 642   192 999 070
    Current liabilities                              6 838 553    12 324 377
                                                  ------------- -------------
    Total equity and liabilities                   193 884 195   205 323 447
                                                  ------------- -------------
                                                  ------------- -------------
    

Statement of comprehensive income for the year ended 28 February 2010

    
                                                       2010          2009
                                                        R             R

    Revenue                                                  -             -
    Results from operating activities              (14 754 513)  (17 968 781)
    Net finance income                               7 078 523    15 376 822
                                                  ------------- -------------
    Loss before income tax                          (7 675 990)   (2 591 959)
    Income tax expense                                 (98 260)   (1 031 979)
                                                  ------------- -------------
    Loss from operations attributable to owners     (7 774 250)   (3 623 938)
    Other comprehensive income/(loss) net of
     income tax                                         66 399    (3 204 718)
                                                  ------------- -------------
    Total comprehensive loss attributable to
     owners of the Company                          (7 707 851)   (6 828 656)
                                                  ------------- -------------
                                                  ------------- -------------

    Basic  loss  per share (cents)                      (28.05)       (13.14)
    Diluted loss per share (cents)                      (45.02)       (20.26)
    

Statement of changes in equity for the year ended 28 February 2010

    
                                                     Equity-
                                                     settled
                        Ordinary                   share-based     Revalua-
                          share         Share        payment         tion
                         capital       premium       reserve       reserve
                            R             R             R

    Balance at 29
     February 2008         272 909   179 582 518    14 998 351     4 392 300

    Total
     comprehensive
     income/(loss)
     for the year                -        25 071             -    (3 204 718)
    Transactions with
     owners, recorded
     directly in
     equity                  6 000     6 364 000     2 851 506             -
                      -------------------------------------------------------
    Balance at 28
     February 2009         278 909   185 971 589    17 849 857     1 187 582
    Total
     comprehensive
     income/(loss)
     for the year                -             -             -        66 399
    Transactions with
     owners, recorded
     directly in
     equity                      -             -     1 754 423             -
                      -------------------------------------------------------
    Balance at 28
     February 2010         278 909   185 971 589    19 604 280     1 253 981
                      -------------------------------------------------------
                      -------------------------------------------------------


                       Accumulated  Total capital
                           loss     and reserves
                            R             R

    Balance at 29
     February 2008      (8 664 929)  190 581 149

    Total
     comprehensive
     income/(loss)
     for the year       (3 623 938)   (6 803 585)
    Transactions with
     owners, recorded
     directly in
     equity                      -     9 221 506
                      ---------------------------
    Balance at 28
     February 2009     (12 288 867)  192 999 070
    Total
     comprehensive
     income/(loss)
     for the year       (7 774 250)   (7 707 851)
    Transactions with
     owners, recorded
     directly in
     equity                      -     1 754 423
                      ---------------------------
    Balance at 28
     February 2010     (20 063 117)  187 045 642
                      ---------------------------
                      ---------------------------
    

Statement of cash flows for the year ended 28 February 2010

    
                                                       2010          2009
                                                        R             R

    Cash flows from operating activities
    Net cash (utilised)/generated by operating
     activities                                    (10 527 400)       26 791
    Cash flows from investing activities
    Net cash utilised in investing activities      (20 856 408)  (25 426 796)
    Cash flows from financing activities
    Net cash generated by financing activities               -     6 395 071
                                                  ------------- -------------
    Decrease in cash and cash equivalents          (31 383 808)  (19 004 934)
    Cash and cash equivalents at beginning of
     the year                                      117 063 136   136 068 070
                                                  ------------- -------------
    Cash and cash equivalents at end of the year    85 679 328   117 063 136
                                                  ------------- -------------
                                                  ------------- -------------
    

Nature of business

Witwatersrand Consolidated Gold Resources Limited is a company domiciled in the Republic of South Africa. The Company's shares are publicly traded on the JSE Limited and on the Toronto Stock Exchanges. The Company carries on the business of acquiring, preserving, evaluating, trading and developing Prospecting Rights for exploration and investment purposes.

The Company is involved in the mineral exploration industry and it has not, and does not in the near future, expect to generate any operating income. Mineral exploration is highly speculative due to a number of significant risks, including the possible failure to discover mineral deposits that are sufficient in quantity and quality to justify the completion of feasibility studies. Significant additional work will be required in order to determine if any economic deposits occur on any of the Company's properties.

Operational review

Exploration activities

Wits Gold is focused on evaluating palaeoplacer gold-uranium mineralisation in the Witwatersrand Basin. The Company has maintained the good standing of its assets by conducting exploration drilling in all three regions where it holds Prospecting Rights, namely the southern Free State, Potchefstroom and Klerksdorp goldfields. A total of fourteen Prospecting Rights have been granted to the Company by the Department of Mineral Resources (DMR), all of which are currently valid. Total exploration expenditure during the period under review has been R20.8 million (US$2.7 million).

Bloemhoek pre-feasibility study

On 20 October 2009, the Company announced a positive result following a pre-feasibility study (PFS) on the Bloemhoek Project adjacent to Beatrix Gold Mine in the southern Free State. The study evaluated the financial and technical implications of a number of alternative shaft positions. The estimated life of mine capital expenditure to develop a mine amounts to R7 664 million (US$958 million), with peak funding of R3 528 million (US$441 million). Reef is scheduled to be intersected in development four years after commencing shaft sinking. Average production will be 224 000oz/year over the 23 years life of mine at an average cash cost of US$406/oz. The viability of mining as indicated by this PFS, together with the application of appropriate modifying factors, has resulted in the definition of an estimated Probable Mineral Reserve of 31.6Mt at a plant head grade of 5.3g/t Au containing 5.4Moz of gold. The conversion process of Indicated Resource results in a Probable Reserve of 31.6Mt at an average plant head grade of 5.3g/t Au containing 5.4Moz of gold.

Following the PFS, a preliminary assessment of the Bloemhoek area at scoping level suggested that an upgrade of selected Inferred Mineral Resources to Indicated Mineral Resources could increase the Probable Mineral Reserve to 32.2Mt at an average plant head grade of 5.7g/t, containing 5.9Moz. At a gold price of US$975/oz, an exchange rate of R8.00/US$1, and a State royalty of 1.5% on revenue, this would have the effect of increasing the Internal Rate of Return (IRR) to 22.8% and the Net Present Value (NPV) (5%) to R7 753 million (US$ 969 million).

De Bron scoping study

The results of the De Bron scoping study are contained in a National Instrument 43-101 report dated May 2010 that is available on www.sedar.com. This report considers two alternative mining scenarios. One is a medium sized 62.5kt/month operation based on a selected Indicated Mineral Resource of 8.7Mt at 6.4g/t Au (1.8Moz) using a 4g/t cutoff. This mine will produce its first reef 35 months after inception and achieve peak production of 118 000oz annually at a yield of 4.4g/t Au. During a 16 year life, the mine will produce 1.4Moz Au. The total capital required to develop the mine is estimated at R2 850 million (US$356 million), with peak funding of R1 994 million (US$249 million). The projected operating costs for the life of mine will be R495/tonne milled. Using a gold price of US$975/oz and an exchange rate of R8/US$1 (R250 000/kg), a discounted cash flow model produces an IRR of 12.8% and an NPV at a 5% discount rate of R1 192 million (US$149 million).

As an alternative scenario, a smaller high grade operation was modeled with a throughput of 30kt/month. This mine was designed to exploit only a higher grade mineralisation in the northern sector of De Bron that contains an Indicated Mineral Resource of 4.6Mt at an grade of 7.0g/t Au (1.0Moz), using a 4g/t Au cutoff. It is envisaged that this mine could produce its first gold 27 months after initiating shaft sinking. Average peak production will be 53 500oz annually at a yield of 4.8g/t Au. Total gold production during the 16 year life is anticipated to be 0.8Moz, whilst the capital required is estimated at R1 793 million (US$224 million), with peak funding of R1 147 million (US$143 million). The projected operating costs for the life of mine will be R524/tonne milled. Using a gold price of US$975/oz and an exchange rate of R8/US$1 (R250 000/kg), a discounted cash flow model produces an IRR of 11.1% and an NPV (5%) of R581 million (US$73 million).

Sensitivity analyses on both the 62.5kt/month and the 30kt/month options illustrate strong gearing to changes in gold grade and price. These suggest that a 20% increase in either the gold grade or price will have the effect of increasing the IRR to 19.4% and 17.6% respectively. Under these circumstances, additional drilling has been recommended, particularly in the high grade area situated in the northern part of De Bron.

Mineral Resources and Reserves

The Company's declared Mineral Resources are estimated by qualified independent geologists or Competent Persons. These Resource Estimates are dependent on geological interpretation and statistical inferences drawn from drilling and sampling that may prove to be unreliable. The Inferred or Indicated Resources outlined in the Company's properties have been calculated from widely-spaced borehole data. No assurance can be given that future exploration will be successful in the improvement of the confidence levels or that any particular level of recovery of minerals will in fact be realised. It is uncertain whether the identified Mineral Resources will ever qualify as a viable orebody that can be legally or economically exploited. In addition, the grade and tonnages of any orebody that is ultimately mined may differ from the Mineral Resources currently estimated and such differences could be material. During the past financial year the Company has commissioned a number of independent assessments of its Mineral Resources. These include the following:

The technical reports for these studies are filed on the website www.sedar.com and contain Mineral Resource estimates that are compliant with the National Instrument 43-101 and SAMREC reporting codes. A summary of the Company's Mineral Reserves and Resources is tabulated below. The Indicated Mineral Resources are inclusive of the Company's Mineral Reserves.

    
    Reserves (National Instrument 43-101 and SAMREC compliant)
    -------------------------------------------------------------------------
                         Probable (gold)                Proved (gold)
    -------------------------------------------------------------------------
    Project        Tonnes     Grade      Au      Tonnes     Grade      Au
                 (millions) (g/t) Au    (Moz)  (millions) (g/t) Au    (Moz)
    -------------------------------------------------------------------------
    Bloemhoek(1)      31.6       5.3       5.4         -         -         -
    -------------------------------------------------------------------------



    Resources (National Instrument 43-101 and SAMREC compliant)
    -------------------------------------------------------------------------
                         Indicated (gold)              Inferred (gold)
    -------------------------------------------------------------------------
    Goldfield      Tonnes     Grade      Au      Tonnes     Grade      Au
                 (millions) (g/t) Au    (Moz)  (millions) (g/t) Au    (Moz)
    -------------------------------------------------------------------------
    SOFS(2)          103.3       6.0      19.9     111.6       4.6      16.5
    -------------------------------------------------------------------------
    Potchef-
     stroom(3)           -         -         -     333.6       7.1      75.8
    -------------------------------------------------------------------------
    Klerksdorp(4)        -         -         -      85.1      14.5      39.5
    -------------------------------------------------------------------------
    Total            103.3       6.0      19.9     530.3       7.8     131.8
    -------------------------------------------------------------------------


    -------------------------------------------
                        Inferred (uranium)
    -------------------------------------------
    Goldfield                 Grade
                   Tonnes     (kg/t)   U(3)0(8)
                 (millions)     Au      (Mlb)
    -------------------------------------------
    SOFS(2)          211.1     0.225     104.5
    -------------------------------------------
    Potchef-
     stroom(3)       250.0     0.300     163.6
    -------------------------------------------
    Klerksdorp(4)        -         -         -
    -------------------------------------------
    Total            461.1     0.265     268.1
    -------------------------------------------
    (1) Technical Report on the Pre-feasibility Study for the Bloemhoek
        Project. Turnberry, 20 October 2009.
    (2) Mineral Properties in the SOFS Goldfield. Snowden, May 2009 and
        Technical Report on the Resource Estimate for the Beisa North Project
        Area. ExplorMine, June 2009.
    (3) Mineral Properties in the Potchefstroom Goldfield. Snowden, 20
        October 2009.
    (4) Mineral Properties in the Southern Free State, Potchefstroom and
        Klerksdorp Goldfields, South Africa. Snowden, October 2009.
    

Financial review

Results from operating activities

The loss from operating activities for the year under review reduced by R3.2 million compared to the prior year. This reduction results mainly from reductions in respect of consulting fees (R1.2 million), investor relations expenditure (R0.9 million) and employment related expenditure (R1.5 million).

Loss before income tax

The net finance income has reduced by R8.3 million compared to the previous year, due mainly to the natural declining balances of funds invested, as well as the reduction of actual interest rates applicable to those investments. The combination of the above and the results from operating activities has caused the loss before taxation to increase by R5.1 million.

Non-current assets

During the year, the Company incurred direct exploration expenditure in the amount of R20.8 million (2009: R39.1 million) which has been capitalised to intangible exploration and evaluation assets.

Commitments

The Company has committed to spend an additional amount of approximately R0.7 million (2009: R7 million) on professional consultants and R 0.2 million (2009: R0.4 million) on an operating lease during the next five years. Furthermore the Company has also committed to spend R27.0 million (2009: R26.1 million) on exploration activities during the next five years. All of these commitments will be funded out of existing cash resources.

Annual general meeting

The annual general meeting of the Company's shareholders will take place at 14:00 hours on 10 September 2010, at the Wanderers Club, 21 North Road, Illovo Johannesburg.

The complete abridged results for the year ended 28 February 2010 extracted from the audited financial statements have been filed on www.sedar.com.

Forward-Looking Information

Certain statements in this release may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by use of terms such as "may", "will", "should", "expect", "believe", "plan", "scheduled", "intend", "estimate", "forecast", "predict", "potential", "continue", "anticipate" or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management's future outlook and anticipated events or results, and may include statements or information regarding the future plans or prospects of the Company. Without limitation, statements about future drilling plans, exploration results, the ability of the Company to manage its business risks, the sufficiency of capital to cover exploration and operating expenses and other related statements are forward-looking statements.

Forward-looking information involves known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to be materially different from the future results, performance or achievements expressed or implied by such forward-looking information. Such risks, uncertainties and other important factors include among others: economic, business and political conditions in South Africa; decreases in the market price of gold; hazards associated with underground and surface gold mining; the ability to attract and retain qualified personnel; labour disruptions; changes in laws and Government regulations, particularly environmental regulations and Mineral Rights legislation including risks relating to the acquisition of the necessary licences and permits; changes in exchange rates; currency devaluations and inflation and other macro-economic factors; risks of changes in capital and operating costs, financing, capitalisation and liquidity risks, including the risk that the financing required to fund all currently planned exploration and related activities may not be available on satisfactory terms, or at all; the ability to maximise the value of any economic resources. These forward-looking statements speak only as of the date of this release.

You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. The Company undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events except where required by applicable laws.

    
    For and on behalf of the Board
    MB Watchorn                       DM Urquhart
    Chief executive officer           Chief financial officer
    28 May 2010
    Sponsor
    PricewaterhouseCoopers Corporate Finance (Pty) Ltd
    

SOURCE Wits Gold

For further information: For further information: Dr. Marc Watchorn, Chief Executive Officer, Tel: +27 11 832 1749; Mr. Hethen Hira, Investor Relations Manager, Tel: +27 11 832 1749, Johannesburg

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