Wits Gold bids for Burnstone, decision expected next week

JOHANNESBURG – Witwatersrand Consolidated Gold Resources (Wits Gold) on Friday said that it had offered to buy embattled Great Basin Gold’s (GBG’s) suspended Burnstone gold operation, in Mpumalanga.

The TSX- and JSE-listed group aimed to deliver dividends to its shareholders and generate cash flow in the near term, as Wits Gold brought Burnstone into production.

“Moving to producer status will serve as a solid platform with which to start generating free cash flow for shareholders,” Wits Gold CEO Philip Kotze said, adding that the bid was in line with the company’s strategy of owning and developing shallow mines in South Africa.

Wits Gold would pay $7.25-million in cash towards GBG South African subsidiary Southgold Exploration’s debt, which was restructured and cut by 55% to $177.35-million.

Southgold would, from generated actual cash flow, repay the remaining $170.1-million liability.

Wits Gold would also advance a $100-million shareholder loan with an interest rate of 4%, which was also to be paid back on a preferential basis from Southgold’s operating cash flow.

The offer to buy the mine would be put to vote on July 11, but Wits Gold had signed irrevocable undertakings from the major creditors that its bid would be voted for to eliminate deal uncertainty.

Burnstone was put on care and maintenance in September, after several production setbacks and an inability to afford the mine’s required working capital to reach cash-flow breakeven forced the mine into business rescue.

Kotze noted that a new underground mining plan, which would allow for flexibility in the production approach, had been developed, after due diligence found the previous mine plan “far too ambitious”.

GBG’s mine plan had created market expectations, which had resulted in the team rapidly trying to deliver into high production, at 250 000 oz/y, without the required structures in place, he explained.

Burnstone, which started producing in 2010, encountered a geological fault that GBG did not find during exploration drilling, leading to the company having to revise its 2011 production guidance to 30 000 oz – which it missed by 6 000 oz – from the previous levels between 85 000 oz and 110 000 oz.

The mine’s production target – before suspension – for 2012 was 90 000 oz to 100 000 oz.

Wits Gold lowered production by 50%, with plans in place to potentially ramp up production in a gradual phased approach to a maximum 130 000 oz/y for a $100-million investment. First production is expected 12 months after the initial takeover.

“We have a number of options that require less capital for lower production or more for higher production [than the middle ground of 50 000 oz/y],” he said, noting the current Wits Gold plan for the mine required $50-million in capital expenditure and would enable production ramp-up to about 70 000 oz/y.

Wits Gold expected to take control of the operation – which has more than six-million ounces of gold in proven and probable reserves and a forecast life-of-mine upwards of 25 years – during the second half of 2014, after which the final mine plan would be decided on according to the market at the time.

Wits Gold aimed to initially focus on establishing the appropriate infrastructure for the relevant plan, and develop until enough ore reserve had been opened up for sustainable production.

The company would complete the footwall development in advance, and create a drilling platform to predetermine the geological structure and paychannels.

Wits Gold also planned a three-dimensional seismic survey, which would constrain the highly faulted underground structure and enable mine design optimisation.

Source: http://www.miningweekly.com/article/wits-gold-bids-for-burnstone-decision-expected-next-week-2013-07-05

The Complete Story Of How Gold Is Mined And Refined

south africa gold mine

Gold prices have tumbled since their $1,900 peak in 2011. The yellow metal slumped into a bear market in April, and now prices are just above $1,200.

Investors have warned that the correction in gold prices has meant that miners are producing gold at cost or are losing money.

Last year, CNBC‘s Bob Pisani traveled to South Africa to show us how gold goes from particles to gold bars.

He followed AngloGold Ashanti’s gold mining process from start to finish. Workers there pull up 5000 metric tons of earth per day, which yields as much as 1,700 ounces in gold.

Pisani also visited the Rand Refinery, which has refined nearly a third of the gold mined since 1920.

In light of the recent sell-off in gold, we decided to revisit Pisani’s tour of the gold mine and see just how complicated and dangerous the process is.\

Source: http://www.businessinsider.com/how-gold-is-mined-photos-2013-7

The Beginning Move Of The Gold End Game

Gold and Silver exchanges are going to be forced to become cash spot contract physical exchanges. Is this a market mistake, or a massive physical gold project of those who now own all the gold?

It is a project in my opinion that the knuckle draggers at the Comex are yet to figure out. If you are a successful knuckle dragger at the Comex you become a board member but remain a knuckle dragger intellectually.

The Comex will not wait until they have only one ounce left in the warehouse. They will once again change the rules of delivery and go to 100 percent margin. This is gold taking advantage of the premium of physical over Comex spot contract, their cash gold representation. I do not see this as a market accident but a well crafted plan to kill paper no gold contracts and emancipate physical to rise to prices once said here but never again.

Ask yourself these following questions again:

Where has all the gold gone?
Is this where all the gold in Morgan’s vault went?
Are the Gold Banks executing the Comex exchange?

Remember, sharks love to eat sharks until there is only one fast shark left.

This is the Death Rattle of the Comex exchange. It was originally falsely reported as scrap gold for refining. It is now more properly reported as follows:

“They added that it was likely that a client who had invested in the gold futures market had decided to take physical delivery of its gold bars in the US when the contract expired. The gold is most probably just passing through and bound for markets such as China or India. While there are refineries in North America, gold can be sent to different refineries around the world depending on prices or existing relationships.

One reason to refine the gold might be because there is a premium for a smaller bar sold in the retail industry in India and China.”

South Africa to refine $1.1 billion worth Gold for US
Tuesday, May 21st 05:42 PM IST

JOHANNESBURG(BullionStreet): South Africa’s largest gold refinery, Rand Refinery, also one of the biggest in the world, said it will refine huge quantities of gold from the US.

According to Rand Refinery’s chief executive, Howard Craig, the shipment of unusually large quantities of gold bound for the refinery (worth $1.1-billion) is just business as usual for the company.

He said it is nothing out of the ordinary as Rand Refinery does refining of gold and silver for Africa as well as the conversion of gold from various other countries, such as the US.

The company imports over 200 tonnes of gold per annum and its activities are not necessarily event or country specific,” although it does not source any metal deposits from conflict-affected areas, he added.

Craig said the company could not acknowledge or attest to any statistics or facts that had not been provided by the company itself.

The commodity movement was detected in recent United States trade data that showed South Africa’s $402-million trade surplus with the US in January had turned into a $689-million deficit by March.

Source: http://www.jsmineset.com/2013/05/23/the-beginning-move-of-the-gold-end-game/