WITS GOLD TO CONSOLIDATE MINERAL HOLDINGS IN THE SOUTHERN FREE STATE
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Highlights
- Wits Gold to acquire Harmony's Merriespruit South area for R61 million in cash;
- Wits Gold to commence drilling at Merriespruit South to confirm high grade extensions of gold mineralisation already delineated in the adjacent De Bron area;
- Wits Gold to acquire Harmony's 40% option over Wits Gold's southern Free State assets for R275 million, which can be satisfied through the issue of Wits Gold shares;
- Wits Gold southern Free State properties contain gold resources in excess of 34Moz and gold reserves of 5.4Moz; and
- Wits Gold establishes 100% control over its more advanced Bloemhoek and De Bron projects.
JOHANNESBURG, South Africa, Sept. 7 /CNW/ - Witwatersrand Consolidated Gold Resources Limited (Wits Gold) is pleased to announce that it has agreed with Harmony Gold Mining Company Limited (Harmony) to purchase the Merriespruit South area, which currently forms part of Harmony's mining right known as Virginia Operations. This area is contiguous with Wits Gold's existing De Bron project.
Wits Gold has also signed a second agreement with the Armgold/Harmony Freegold Joint Venture Company (Proprietary) Limited, a wholly owned subsidiary of Harmony (Freegold JV), to purchase the Freegold JV's option to acquire up to a 40% interest in any mine or mines established on certain prospecting rights held by Wits Gold in the southern Free State, South Africa.
Marc Watchorn, CEO of Wits Gold said: "These transactions have the potential to deliver significant value to Wits Gold. Our exploration work on the De Bron project together with our regional geological understanding leads us to believe that the Merriespruit South area is likely to contain significant gold mineralisation. Combined with our De Bron project, this could create a shallow, medium to high grade mine with substantially enhanced economics. We expect to commence an exploration programme immediately and are excited by the prospects of achieving positive results. We also are delighted to have reached agreement with Harmony to acquire its 40% option over our assets in the southern Free State. We look forward to advancing our key projects in the knowledge that Wits Gold shareholders will now receive 100% of the value we are able to create and we welcome Harmony as future shareholders. "
Graham Briggs, CEO of Harmony said: "These transactions are in line with Harmony's strategy to focus on our growth projects in South Africa. The Merriespruit South area and the Freegold option do not fit into our portfolio. This is an exciting opportunity for Wits Gold and will unlock value for our shareholders."
The purchase consideration for the acquisition of a prospecting right over the Merriespruit South area is R61 million and is subject to the fulfilment of certain conditions precedent, including Wits Gold obtaining funding to an amount of at least R61 million, not later than 31 May 2011.
The acquisition is also subject to the Department of Mineral Resources agreeing to add the Merriespruit South area to Wits Gold's existing prospecting right by not later than 31 October 2011.
Concurrent with the Merriespruit South transaction, Wits Gold has also entered into an option cancellation agreement with Freegold JV. This will result in the cancellation of the option for a consideration of R275 million, subject to the fulfilment and/or waiver of certain conditions precedent.
Wits Gold has the option to settle the consideration either in cash or by the issue to the Freegold JV of up to 4,376,194 ordinary shares in Wits Gold (calculated using a volume weighted share price of R62.85) or a combination of cash and Wits Gold shares and Harmony has agreed to certain lock up provisions. In addition, as part of the agreement, Harmony has agreed to waive any participation rights that its subsidiaries currently hold over the Mineral Rights.
Marc Watchorn added: "Together these two transactions will consolidate Wits Gold's mineral holdings in the southern Free State and allow Wits Gold to independently develop the key Bloemhoek and De Bron projects in the best interests of the Company's shareholders".
Ends
BACKGROUND NOTE TO EDITORS:
A regional geological model for the southern Free State has been compiled by Wits Gold, which is based on exploration undertaken in the region since 2004. This suggests that enhanced gold grades in the Beatrix and Leader Reefs are the product of subtle subcrop relationships between older reefs and overlying unconformity surfaces. Using available drill core, such subcrop relationships have been observed in the vicinity of the boundary between Merriespruit South and De Bron. Subject to completion of the Merriespruit South transaction and a successful confirmatory drilling programme, Wits Gold believes a combined Merriespruit South-De Bron project presents an opportunity to create a larger, shallow resource. This is likely to have a positive impact on the economics of a combined project.
The Mineral Rights originally acquired from the Freegold JV contain Indicated Resources of 103.3Mt at 6.0g/t gold (19.9Moz) and Inferred Resources of 83.7Mt at 5.6g/t gold (15.0Moz). The acquisition of Freegold JV's 40% option to participate in the future development of these assets is considered by Wits Gold to represent a strategically important step. This is particularly evident in the combined De Bron-Merriespruit South area where drilling has already identified extensive, shallow Beatrix and Leader Reefs, but also at Bloemhoek, where a pre-feasibility study has outlined an estimated Probable Reserve of 31.6Mt at a grade of 5.3g/t Au (5.4Moz). Following the cancellation of the option, Wits Gold will be in a position to progress these projects towards a development decision without being restricted to a single strategic partner. Consequently, any additional value that is added to these projects will accrue fully to Wits Gold shareholders.
The complete announcement containing full details of the transactions is available on SENS and www.sedar.com, as well as www.witsgold.com.
Forward-Looking Information
Certain statements in this news 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 anticipated events or results, and may include statements or information regarding the expected benefits of the transactions disclosed herein, the gold mineralisation of the Merriespruit South area and the future potential of exploration sites. 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; labor disruptions; changes in laws and government regulations; and macro-economic factors. These forward-looking statements speak only as of the date of this document.
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 document or to reflect the occurrence of unanticipated events except where required by applicable laws.
For further information:
Dr. Marc Watchorn Chief Executive Officer Tel: +27 11 832 1749 Email: [email protected] |
Mr. Hethen Hira Investor Relations Tel: +27 11 832 1749 Email: [email protected] |
www.witsgold.com |
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