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BLOEMHOEK PROJECTIn October 2009 Wits Gold received a
positive Pre-Feasibility Study (PFS) on its flagship Bloemhoek
Project situated between the active mines at Merriespruit, Beatrix
and Joel in the southern Free State Goldfield. The results of the
PFS have indicated that mining is both technically and economically
viable.
Merged Beatrix and Kalkoenkrans Reef Block model showing uniform conditioned
cm.g/t gold for Indicated Resources
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.
A three dimensional geological model of the Bloemhoek area
illustrates that this mining horizon ranges in depth between 1300
metres and 2400 metres below surface. Applying the geological model,
the PFS considered a number of alternative shaft positions, mine
designs and production profiles. The results from these production
schedules were subsequently input into a series of financial models
in order to compare the potential returns from each of these
options. Based on this approach, the optimum result envisages the
sinking of a twin shaft system to 1951 metres with the deeper areas
being accessed by systems of declines. A remote vertical ventilation
shaft has been included in the schedule to reduce underground
development to remote blocks of reef. Similar to other standard
mining operations in South Africa, the layout comprises a system of
footwall haulages, cross-cuts to reef at 180 metre intervals, inter
level reef raises and breast stoping by conventional means.
Significant mechanisation of the operation is not considered
suitable due to the narrow mining width of 100 to 150cm. All aspects
of the proposed mine design are based on well established current
mining practice for neighbouring and similar orebodies.
3D Geological model of the Bloemhoek Project area
The conversion of Indicated Resources to Probable Reserves results
from the application of appropriate modifying factors for the mining
method selected. These take into account dilution and losses
relating to all aspects of the mining process and inter alia,
include allowances for low grade reef development, a minimum mining
width of 115cm, waste from in-stope gullies, minor geological losses
and an expected Mine Call Factor. This process resulted in the
definition of an estimated Probable Reserve of 31.6Mt at a plant
head grade of 5.33g/t Au, containing 5.4Moz of gold. No Inferred
Resources were included in the conversion of Resources to Reserves.
This Reserve calculation is based on an underground mine layout for
Bloemhoek that will require a total life of mine capital expenditure
of R7 664 million. At an exchange rate of R8.00: US$, this equates
to approximately US$958 million including R320 million (US$40
million) for sustaining capital. However, initial or peak funding
will be considerably lower at R3 528 million (US$441 million). It is
estimated that operating costs will be R529/tonne (US$66/tonne),
whilst first reef production could be achieved 48 months after the
commencement of shaft sinking, as a result of mid-shaft loading from
the upper levels during shaft sinking.
The ore will be delivered to an on-site Carbon In Leach gold
recovery plant that will recover 95% of the contained gold delivered
to the plant (based on the achieved plant performance from
neighbouring mines). Including a five year ramp up period, the mine
is expected to operate for 23 years with an average annual
production in excess of 220 000oz of gold and cash costs estimated
at US$406/oz.
A number of financial alternatives have been estimated for the
Pre-Feasibility Study based on different gold price scenarios. The
results of this exercise are as follows:
| Gold Price |
US$800 |
US$975 |
US$1250 |
US$1500 |
| Pre-Tax IRR |
12.2% |
19.1% |
27.1% |
32.9% |
| NPV (5%) |
R2 584m
(US$323m) |
R5 957m
(US$745m) |
R11 255m
(US$1 407m) |
R16 073m
(US$2 009m) |
At a gold price of $975/oz, an exchange rate of R8.00 per US$ and a
State Royalty of 1.5% on revenue, the Project has an IRR of 19.1%
and the NPV (5%) is R5 957 million (US$745 million).
A sensitivity analysis of the major input variables as shown below
indicates that the financial model for Bloemhoek is most sensitive
to gold price and grade.
SCOPING INVESTIGATION
In addition to the Pre-Feasibility Study, a Scoping level
investigation was completed to evaluate the impact of upgrading the
Inferred Resources into an Indicated category. The Scoping level
investigation has suggested that such an upgrade could increase the
Mineable Tonnage to 32.2Mt at an average grade of 5.72g/t containing
5.9Moz at a cut-off gold value of 300cm.g/t. At a gold price of
$975/oz, an exchange rate of R8.00 per US$ and a State Royalty of
1.5% on revenue, this would have the effect of increasing the IRR to
22.8% and the NPV (5%) to R7 753 million (US$969 million).
The expected production rate will be 155 000 tonnes per month of
reef plus operating cost waste production of 40 000 tonnes per
month. Bloemhoek mine is expected to produce a maximum of 13 266 kg
of gold per annum in doré (420 000 oz Au) and an average of 220 000
ounces over the life of the mine.
The Pre-Feasibility Study was undertaken by the independent
consultant, Gordon Cunningham and Tim Spindler (the “Qualified
Persons”) from Turnberry Projects and Dirk Muntingh from
Witwatersrand Consolidated Gold Resources Limited, with the
assistance of a number of other independent consultants. The full
technical report by Turnberry Projects dated 20 October 2009 is
available on the Wits Gold website and is filed at
www.sedar.comm.
The SOFS resource is classified by Snowden according to the Canadian Institute of Mining (CIM) Definition Standards and is reported by reef within projects at a gold cut-off of 300 cm.g/t in the table below. The mineral resource classification is a function of the confidence of the whole process from drilling, sampling, geological understanding, and grade continuity and geostatistical relationships.
Uranium is only reported for areas where the gold cut-off exceeds 300 cm.g/t. Uranium is considered a secondary product of the gold mining, and so prospective areas are currently defined by the potential for economic extraction of their gold content. The uranium resource is reported separately.
The borehole spacing within the Wits Gold prospecting rights is typically 500 m by 500 m, but it can be considerably wider in places. Areas of the reef delineated with 500 m by 500 m drilling and have a high degree of confidence in the geological continuity of the reef have been assigned an indicated resource classification. The Inferred category delineates areas where the borehole spacing is close to or beyond the range of the variogram. Where the geological continuity of the reef is uncertain due to an interpreted high degree of channelisation or shallow contacts with the subcrop, an inferred classification has been applied. Areas close to the lease boundaries have also been classified as Inferred as historic drillholes outside of the lease area have been used for estimation but the accuracy of the location of these drillholes is not known. All uranium estimates are considered to be inferred.
SOFS Goldfield gold grade estimate (Snowden, May 2009) above 300 cm.g/t cut-off
|
SOFS |
Project |
Hakkies |
Bloemhoek |
De Bron |
Robijn |
Total |
Contained Metal |
Gold
Classification |
Reef |
Mt |
Au
(g/t) |
Mt |
Au
(g/t) |
Mt |
Au
(g/t) |
Mt |
Au
(g/t) |
Mt |
Au
(g/t) |
Au
Moz |
|
Indicated
|
VS5/Beatrix |
8.8 |
4.8 |
24.5 |
5.9 |
9.5 |
5.7 |
13.6 |
5.8 |
56.4 |
5.7 |
10.3 |
|
Kalkoenkrans |
|
|
15.4 |
9.2 |
1.4 |
6.6 |
|
|
16.8 |
9.0 |
4.9 |
|
B Reef |
|
|
|
|
6.0 |
4.7 |
|
|
6.0 |
4.7 |
0.9 |
|
Upper Leader |
|
|
|
|
|
|
|
|
|
|
|
|
Intermediate |
|
|
|
|
|
|
|
|
|
|
|
|
Leader |
9.9 |
4.8 |
7.9 |
5.5 |
6.3 |
4.5 |
|
|
24.1 |
5.0 |
3.8 |
|
Total |
18.7 |
4.8 |
47.8 |
6.9 |
23.2 |
5.2 |
13.6 |
5.8 |
103.3 |
6.0 |
19.9 |
|
Inferred
|
VS5/Beatrix |
2.0 |
4.8 |
5.7 |
6.1 |
3.7 |
5.6 |
9.0 |
5.7 |
20.4 |
5.7 |
3.7 |
|
Kalkoenkrans |
0.1 |
3.0 |
4.2 |
10.0 |
0.7 |
6.9 |
|
|
5.0 |
9.4 |
1.5 |
|
B Reef |
11.8 |
5.9 |
0.9 |
6.4 |
2.5 |
5.0 |
|
|
15.2 |
5.8 |
2.8 |
|
Upper Leader |
15.7 |
3.9 |
0.8 |
4.5 |
0.1 |
3.6 |
|
|
16.6 |
3.9 |
2.1 |
|
Intermediate |
9.7 |
7.5 |
|
|
|
|
|
|
9.7 |
7.5 |
2.3 |
|
Leader |
10.7 |
4.8 |
3.7 |
5.3 |
2.4 |
4.6 |
|
|
16.8 |
4.9 |
2.6 |
|
Total |
50.0 |
5.3 |
15.3 |
6.9 |
9.4 |
5.3 |
9.0 |
5.7 |
83.7 |
5.6 |
15.0 |
SOFS Goldfield uranium estimate (Snowden, May 2009) above 300 cm.g/t Au cut-off
BEISA NORTH RESOURCE ESTIMATE
In June 2009 ExploreMine Consultants completed an independent Canadian NI43-101 compliant technical report on the Company’s mineral resources in the Beisa North Project, situated in the Free State goldfield. The Beisa North project borders the Beisa Uranium Mine, where between 1982 and 1984 Gencor mined 2.4 Mt of ore at an average grade of 0.47kg/t U3O8 (2.5 Mlbs) and 1.45 g/t Au (0.1 Moz).
The Resource Estimate for Beisa North is also
SAMREC compliant and was undertaken using a
cut-off grade of 0.50kg/t U3O8 to a maximum
depth of 2500 metres below surface. It was based
on historical drilling information and
geological reports that the Company previously
purchased from AngloGold Ashanti Limited.
At Beisa North the Ada May Reef is preserved in a large synclinal fold that characterises the western margin of the Free State goldfield. Wits Gold will concentrate on extending the shallower part of the Beisa North mineralisation which to a depth of 1 000 metres below surface contains an Inferred Resource of 13.8Mt at 0.80kg/t (24.2Mlbs) and 1.72g/t Au (0.76Moz).
Mineral resource estimate for the Ada May Reef at the Beisa North Project to a depth of 2500m below surface. A U3O8 cut-off of 50cm.kg/t has been applied. (Values have been rounded-off to the appropriate level of accuracy.)
| |
|
|
Gold |
Uranium |
|
Area |
Mineral Resources Category |
Tonnes |
Grade
gt |
Gold
Kg's |
Gold OZ'S
(Million) |
Grade
Kg/t |
Uranium Tonnes |
Uranium Pounds
(Million) |
|
Total Beisa North Project |
Measured
Indicated
Inferred |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
| 27.913.00 |
1.72 |
48,100 |
1.546 |
0.78 |
21.700 |
47.840 |
Total Inferred Mineral
Resources |
27.913.00 |
1.72 |
48,100 |
1.546 |
0.78 |
21.700 |
47.840 |
Total Measured and
Indicated Mineral Resources |
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