Gold One achieves important milestone in hiving off its deeper gold resources into White Water Resources.
ALLAN SECCOMBE Published: 2011/03/23 08:03:45 AM
GOLD One achieved an important milestone yesterday in hiving off its deeper, arguably more risky, gold resources into White Water Resources, securing a listing for these ounces and possibly creating a vehicle for consolidation of East Rand gold mining assets owned by other parties.
Sydney and Johannesburg listed Gold One has the newly built and shallow Modder East mine, near Springs in Gauteng, and is exploring the Ventersburg deposit in the Free State with a view to making that its next mine.
The additional properties near Modder East were attributed no value by Gold One shareholders and the company wished to ring-fence cash from the mine to explore Ventersburg and begin paying a dividend, Gold One CEO Neal Froneman said yesterday.
White Water Resources shareholders voted in favour of a deal that would see the company issuing shares to Gold One in exchange for these deeper gold deposits. Gold One will own 71% of White Water Resources, which will be renamed Goliath Gold.
A new board has been put in place and will assume its duties today. The CEO is Mr Froneman and Gold One chief financial officer Christopher Chadwick will take on the same role at Goliath. Mark Wheatley is nonexecutive chairman at both companies.
White Water has some assets, mainly prospecting rights, and about R10m in cash. The new board will let some of these prospecting rights lapse and is investigating options on a mineral sands prospect near Exxaro's Namakwa Sands mine and a relatively deep and small platinum deposit, Mr Froneman said.
"The real asset was the listing," he said. Harmony wanted to separately list its Evander mine but the cost involved in establishing a new listing scuppered those plans. Gold One received advice that the best way to hive off the deeper assets would be reversing them into an existing listed company.
White Water brings two old mining areas contiguous to what Gold One calls the Megamine assets and which have existing shafts and tunnels that may expedite bringing the area into production.
There are a host of mining properties lying between Modder East and the Megamine project, with most of them owned by the liquidators of Pamodzi Gold and managed by Aurora Empowerment Systems.
If the proposed 100m buyout of these closed mines by a Chinese group does not materialise, it is highly likely that Goliath may make a bid for these assets, largely tying up the East Rand gold belt. DRDGold's defunct ERPM mine is also adjacent to the Megamine assets and could come into play too.
Gold One will dilute its stake in Goliath, possibly through a dividend in specie, distributing shares to its shareholders and improving liquidity in Goliath. Gold One wants to remain in control of the company until it finishes a feasibility study into a mine and needs to raise capital, at which time a new CEO and financial officer will be found.
Mining group Gold One says the acquisition of a controlling interest in the newly renamed Goliath Gold Mining presents it with an opportunity to get exposure to deep-level gold resources without necessarily diluting the group's focus on shallow, low technical risk projects. Articles
Gold One assets sale leads to new entity Gold One will acquire 71% stake in Goliath Gold - the enlarged White Water Resources (WWR) - following the sale of its Megamine assets to White Water Resources in exchange for about 1.04 billion White Water Resources shares valued at 25 cents each.
Gold One CE Neal Froneman, who is also the new Goliath Gold CE, said: "I am delighted that we have received such strong White Water Resources shareholder support for the transaction. The formation of Goliath Gold presents a win-win situation for both Gold One and White Water Resources' shareholders.
"We have already started our first phase of surface exploration drilling, aimed at firming up Megamine's already substantial resource base."
Gold One, whose flagship operation is the newly built shallow Modder East mine on the East Rand, is listed on both the JSE and Australian Securities Exchange. Gold One's other projects and targets include Ventersburg in the Free State Goldfields, the Tulo concession in Mozambique and the Etendeka greenfield project in Namibia.
Following the completion of the transaction and based on the closing share price on March 18 2011, Goliath Gold will have a market capitalisation of about 646 million rand.
The transaction would allow Gold One's medium-depth resources to be fully developed through Goliath Gold, the company said. The transaction has crystallised 450 million rand of value in Megamine for Gold One shareholders.
Megamine, located east of Johannesburg, comprises Gold One's operating SubNigel mine and the Vlakfontein, West Vlakfontein and Spaarwater prospecting areas, totalling 16,056 hectares.
Gold One ended 10 cents or 3.80% down at 2.53 rand on the JSE on Tuesday.
GDO Price at posting:
37.5¢ Sentiment: Buy Disclosure: Held
