With funding now in place through the finalisation of its recently announced $14-million placement, ASX-listed West Wits Mining is moving quickly to execute the development of the Qala Shallows gold project in Gauteng.

The Qala Shallows project is the first stage of the company's Witwatersrand Basin project (WBP), focusing on developing the Kimberley reef, a gold-bearing orebody in the Witwatersrand basin.

This capital raising critically provides funding for key activities West Wits has identified to bring the project into production.

It has also brought onto the share register several resource-focused institutional investment funds, family offices and new sophisticated and professional investors.

According to the company, the recruitment of these new cornerstone investors provides a more solid platform to finance, over the longer term, the further expansion plans being developed for the Qala Shallows gold project and the overall WBP.

“It is with great excitement that we kick off the Qala Shallows project. The West Wits team undertook extensive preparatory work to ensure that the project will be delivered as a safe, productive and within-budget operation.

“Service supplier agreements have now been executed, with initial orders placed and the first piece of equipment to be delivered this week. As West Wits advances to becoming a gold producer, we will continue to focus on ways to realise the potential of the stunning WBP to further grow the business,” West Wits CEO Rudi Deysel said on June 23.

WEST WITS SA BUY-BACK

West Wits Mining has executed an agreement with the 10% minority holder of West Wits SA (WWSA) for WWSA to buy back their entire holding, thereby increasing the holding of West Wits Mining in WWSA to 100%. This increases the company’s ownership of Qala Shallows and WBP from 66.6% to 74%.

The transaction will be facilitated through an advance of about $5-million from West Wits to WWSA, which will be credited to the existing intercompany loan and ultimately repaid through the proceeds of operating the Qala Shallows gold mine.

The buy-back will likely be implemented in mid to late July.

OPTIMISED DEFINITIVE FEASIBILITY STUDY 

West Wits Mining said instructions have been issued to Bara Consulting to begin the review and updating of the Qala Shallows defintive feasibility study (DFS), which was initially published in July 2023.

At that time, the consensus base case gold price used was $1 850/oz, and the cutoff grades for the extraction of ore were 2 g/t, based on an even lower gold price of $1 750/oz.

A key component of the updated DFS will be the inclusion of new gold price and foreign currency assumptions based on current consensus forecasts. With current spot gold prices of over $3 300/oz, the gold price assumption for the updated DFS will be a substantial increase on that previously used and is expected to have a material positive impact.

The DFS will also incorporate revised capital expenditure and operating expenditure numbers, reflecting the supplier contracts that have now been finalised, as opposed to industry estimates. Using actual contracted numbers will improve the accuracy of the DFS outcomes.

The updated DFS will also include an updated mine plan based on a lower cut-off grade, which is warranted given the higher gold price environment compared to when the DFS was released.

The higher gold price allows for the mining of ore previously not included in the mine plan, which is expected to facilitate an increase in the ore reserves, as well as accelerate and increase the production profile as more ore is available for inclusion.

The key outcomes of the revised DFS are expected to lower peak funding requirements, shorten the payback period and lift net present value estimates, West Wits said.

MOBILISATION TO SITE

The initial phase of mobilisation to site has begun. The first haulage equipment, in the form of a load haul dump truck, is moving to site this week. Diesel generators are also being installed, while mining contractor Modi Mining is beginning preparation work for production.

Other critical equipment, such as the hydropower system to run underground mining equipment, has also been ordered and is on the way, the company said.

Initial works scheduled over the next few months include the construction of boxcut concrete roadway and ancillary preparation work on the decline; finalising the design for electrical system installation; storehouse and workshop completion; underground survey work, and sliping and associated work around stopes to prepare for ore extraction.

These works will prepare Qala Shallows for the start of ore extraction as part of the mine development works as specified in the DFS.

PROJECT 200

West Wits said its vision includes the growth of the WBP, considering the availability of the additional orebodies in the Main reef and Bird reef.

With the imminent execution of prospecting right PR 10730 and pending approval of PR 10839, the company aims to include additional mineral resources in its Project 200 scope.

Previously, a trade-off study was done to determine the potential capacity of the WBP and the scope of work to expand the production profile from 70 000 oz/y to 200 000 oz/y.

The next step, with the kick-off of the Qala Shallows project, will be to activate the start of a prefeasibility study to define Project 200, as well as to increase the ore reserve base in the total mining right footprint, the company said.