response to questions about announcement today

Below is a response to some questions I asked of West Wits. I am not prepared though to advertise the questions I asked, only the response and also I am not prepared to give the contact details of the person that responded.


Again, thank you for your continued interest and support in West Wits.
In short, this is a far better option than trying to finalise our own processing arrangements for this small project. There are two primary reasons why this transaction is better than the previous one, firstly because of cost and secondly because of time. West Wits undertook a detailed due diligence investigation on the assets and concluded that additional capex, above the agreed purchase price, associated with commissioning the plant will be too high to justify completing the acquisition. If the acquisition was to proceed a significant amount of new capital would have needed to be raised. What also became apparent was timelines to secure all necessary approvals to enable commissioning of the relocated plant was going to severely impact when the operation could begin.
This new JV agreement means that the Company no longer needs to build a processing team, spend capex on purchasing processing infrastructure, spend capex on commissioning a processing facility or fulfill the required regulatory obligations before being allowed to commission a processing facility. West Wits now only requires the approval to mine from the Department of Mineral Resources (DMR) before beginning mining operations at the Emerald Gold Project, as Mintails already holds all regulatory approvals required to run a gold processing facility. Mintails has also offered the expertise of its regulatory division to provide assistance in securing the required mining approval from the DMR for the extraction of ore from the Emerald Gold Project, and subsequent transporting and milling of the ore.
Whilst a 50:50 agreement may seem high, and I should point out this is only for this initial 59,000 ounces from the Emerald Gold Project, the cost to set up our own facility for a 59,000 ounce project could not be justified. This agreement allows the Company to get into production and develop some cashflow and get back the reason it was established in the first place and that is to unlock the substantial mineralisation in these leases. Once the Companys resource statement is in a more substantial situation the Company will then look at establishing its own processing facility.
If you have further questions in relation to this agreement please dont hesitate to call.