The De Bron and Bloemhoek projects are situated between Harmony’s Merriespruit and Joel Mines in the southern Free State goldfield. The De Bron area contains three principal conglomerates, the Beatrix, B and Leader Reefs situated at depths of the order of 500-1200 metres below surface. These reefs occur within 50 vertical metres of one another and are separated from the Company’s adjacent Bloemhoek project by the De Bron Fault.

Following the definition of an Indicated Mineral Resource at De Bron, the Company commissioned Turnberry Projects (Pty) Limited to conduct a preliminary assessment or scoping study to investigate the establishment of a shallow (500m to 1 200m) multi-reef mining operation to the east of the De Bron Fault. This study (published on 2 May 2010) used a block model based on a probability-weighted simulated resource that was not materially different to that previously disclosed in the National Instrument 43-101 technical report titled “Witwatersrand Consolidated Gold Resources Limited: Mineral Proper ties in the SOFS Goldfield, South Africa”, prepared by George Gilchrist and Shaun Hackett of Snowden Mining Industry Consultants dated May, 2009. This report is available in the reports section of the Wits Gold website and www.sedar.com. The study was based on Indicated Resources alone and excludes the Inferred Resources for De Bron.

The results of the De Bron scoping study are contained in a National Instrument 43-101 report dated May 2010 that is available on the Wits Gold website and www.sedar.com. This report considers two alternative mining scenarios.

One is a medium sized 62.5kt/month operation with a conventional system of footwall haulages and box holes linked to raises. This design is based on a selected Indicated Mineral Resource of 8.7Mt at 6.4g/t Au (1.8Moz) using a 4g/t cutoff that is planned to exploit the higher grade zones. 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 and include the recently announced Eskom tariff increases. 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 modelled with a throughput of 30kt/month. This mine was designed to exploit only the highest grade mineralisation in the northern sector of De Bron that contains an Indicated Mineral Resource of 4.6Mt at a 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 using reef drives from the shaft position. 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, including the Eskom tariff increases. 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 par t of De Bron. Two boreholes were in progress during July 2010.
 

The Bloemhoek and De Bron projects are situated between Harmony's Merriespruit and Joel Mines in the southern Free State goldfield. Four gold-bearing conglomerate reefs on the Bloemhoek property are preserved at depths of between 1300 metres and 2400 metres below surface, within part of a northerly plunging syncline that forms the southern limit of the economically important Central Rand Group of the Witwatersrand Basin. North-northeast to south-southwest trending normal faults subdivide Bloemhoek into 13 major fault blocks, within which the reefs are gently dipping at between 10 and 20 degrees. The Beatrix and Kalkoenkrans Reefs constitute the principal economic orebody, while the less extensive Leader and B Reefs are regarded as up-side potential for the Project.

Postive Results

In 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. This PFS, completed by Turnberry Projects (Pty) Limited, is detailed in a National Instrument 43-101 technical report available in the reports section of the Wits Gold website and filed on www.sedar.com. The study evaluated the financial and technical implications of a number of alternative shaft positions and mine sizes to exploit the Beatrix and Kalkoenkrans Reefs, containing a combined Indicated Mineral Resource of 39.9Mt at a grade of 7.2g/t Au (9.2Moz). Inferred Resources were excluded for the purpose of this study.

Twin Shaft System

Economically, the most attractive option to mine this orebody, occurring at depths of between 1300m and 2400m below surface, involves the sinking of a twin shaft system to 1 951m with the deeper areas accessed by declines. A three-dimensional mine plan was designed, comprising a system of footwall haulages, cross-cuts to reef followed by conventional breast stoping. This narrow reef layout is consistent with established practices utilised by gold mines of similar depths in the Witwatersrand Basin.

Mine Life Span

The life of mine capital expenditure to develop this mine is estimated at 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.

Prefeasibility Study

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 to Probable Reserve was calculated as follows:

IRR & NPV

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).

The results of the PFS and related scoping study at Bloemhoek illustrated the potential benefit of converting Inferred Mineral Resources to Indicated Mineral Resources. Accordingly, borehole DWN28 was started in December 2009, however the mother hole intersected a fault. Deflection drilling was then undertaken and successfully intersected reef in the footwall block.