An updated definitive feasibility study (DFS) on ASX-listed West Wits Mining’s Qala Shallows project – part of the broader Witwatersrand Basin project (WBP) – has delivered a “compelling outcome”, says MD Rudi Deysel.

He adds that the updated DFS, which was undertaken by independent mining engineers Bara Consulting, reinforces the project’s robust value and strong economic fundamentals.

“Notably, the peak funding requirement and payback period have reduced, while free cash flow has surged by $461-million – an 88% uplift – bringing total projected free cash flow to $983-million,” Deysel comments.

The updated study provides an update on the DFS published in July 2023, which was based on a base gold price of $1 850/oz.

The updated DFS included a new gold price assumption of $2 850/oz, revised capital and operational expenditure figures and an updated mine plan based on a 1.31 g/t cutoff grade.

The updated mining plan has resulted in an increase in the ore reserve of about 600 000 t and 33 000 oz of gold. This has resulted in a subsequent improvement in the financial outcomes of the project with the post-tax net present value (NPV) increasing to $500-million and the internal rate of return (IRR) increasing to 81%.

That compares with a post-tax NPV of $255-million and a post-tax IRR of 53% set out in the 2023 DFS.

Peak funding has decreased to $44-million, or about R800-million, in the latest DFS, compared with $54-million estimated in the 2023 study.

The updated DFS estimates total revenue of $2.7-billion, compared with total revenue of $1.7-billion as set out in the previous DFS.

The latest study puts steady-state production at 70 000 oz/y for a 12-year period, compared with 70 000 oz/y over nine years as detailed in the 2023 study.

Gold production over a 16.8-year mine life is expected to total 944 000 oz.

“With the benefit of a stronger gold price environment, the project’s valuation continues to strengthen, providing shareholders with increased confidence in Qala Shallows’ capacity to deliver strong sustained returns.

“We remain focused on advancing the WBP and unlocking its full potential,” Deysel says.

The WBP is located about 15 km from the Johannesburg central business district, in South Africa’s Gauteng province.

West Wits in June secured an R875-million, or about $50-million, loan facility with South Africa’s Industrial Development Corporation and Absa Corporate and Investment Banking, which will provide about 55% of the funding required for the Qala Shallows project. The remainder of the project funding will come from equity contributions and early operational revenues.

The company notes that it will now focus its attention on securing the balance of project funding needed and continuing equipment purchases and the mobilisation of contractors.