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Theta Gold Mines Ltd

Stonewall Resources on track for open-cut production from Theta Hill gold project in South Africa

The company is funded to finish a feasibility study for the near-term, open-cut mining opportunity.

Map of Theta Hill site
Theta Hill is 1.5 kilometres uphill from a plant that could be refurbished for modern gold mining

Stonewall Resources Ltd (ASX:SWJ) is on track to start construction at its flagship Theta Hill open-pit gold project in South Africa next year with the aim of beginning production in 2020.

The company has signalled its commitment to the project and plans a name change to Theta Gold Mines (ASX:TGM).

Investors will vote on the proposal to change its name to align with its flagship project at its annual general meeting in Sydney on Friday, November 30.

READ: Stonewall Resources gets support from Chinese billionaire to raise $6 million from private placement

A positive scoping study has been prepared for the open‐cut project, with a fully-funded feasibility study in the works.

Stonewall chairman Bill Guy told Proactive Investors the company hoped to release a feasibility study for the project in the March 2019 financial quarter.

Two private placements worth $6 million were completed earlier this month to fully-fund the study for the project which has its origins in the company’s larger TGME Gold Project.

A map of Stonewall’s historic goldfield that hosts the TGME and Theta Hill gold projects in South Africa

A map of Stonewall’s historic goldfield that hosts the TGME and Theta Hill gold projects in South Africa

Major shareholder Fineway Creation Limited subscribed for $1.5 million of shares while Hong Kong-based billionaire business magnate Mingliang Zhu subscribed for $4.5 million of shares.

In August 2010 Stonewall picked up the historic mining company TGME, established in 1883 and once called Transvaal Gold Mining Estates Ltd.

The company also grabbed TGME’s long-time subsidiary Sabi Mining (Ptd) Ltd (formerly Glynn’s Lydenburg Ltd.) which was established in 1898.

READ: Stonewall Resources to consolidate shares and change its name to Theta Gold Mines

Stonewall’s TGME project is near the heritage town of Pilgrim’s Rest and forestry town of Sabie in Mpumalanga Province, 370 kilometres northeast of Johannesburg.

The company has reduced debt in the past 12 months by $4.9 million, retiring convertible note securities as reported in the most recent quarterly.

A scoping study for Theta Hill gold project released on October 15, 2018

A scoping study for Theta Hill gold project released on October 15, 2018

A scoping study for Theta Hill released in mid-October 2018 delivered a positive result for the shallow, high-grade resource which features 4.5 million tonnes grading 4.14 g/t gold for 600,000 ounces.

The updated resource has been estimated within the confines of an open-pit shell with a maximum depth of 100 metres.

 

The scoping study models a 7.6-year, 67,000-ounce-a-year mine operation where 92% of ore is recovered.

Theta Hill mine would take about 10 months to build and 7.4 months to pay back initial capital costs.

Peak capital requirement would be US$16 million, valuing the project at US$152 million, using an after-tax net present value (NPV) calculated with a real 7.5% discount.

The internal rate of return is 132%, with life-of-mine all-in sustaining costs of US$569 an ounce.

The company hopes to make its final investment decision after receiving its feasibility study due in the March 2019 quarter and start building in the June 2019 half, so it can produce gold within nine months.

READ: Stonewall Resources Theta Hill scoping study supports open-cut gold mine

Stonewall chairman Bill Guy and managing director Rob Thomson spoke to Proactive Investors last month about the project and its location in the gold-mining nation of South Africa.

Chairman Guy said: “It’s been a fantastic year for Stonewall, essentially this year we’ve increased the resource space by over 2-million ounces, we’ve come out with a positive scoping study.

“We’re moving now into a feasibility stage, we’re garnishing support in the market, it’s all very rosy.”

Stonewall’s managing director signalled the company was undergoing transformative change.

Thomson said: “For people who have followed us, look at the scoping studies, look at our announcements (of the second half of October), you’ll see the change of the company that’s happening right now and we’re seriously excited.”

The old TGME plant downhill from Theta Hill project

The old TGME plant downhill from Theta Hill project

Both Guy and Thomson praised the quality of South Africa, where Theta Hill project is located, calling the nation a gold-mining jurisdiction.

Thomson said: “South Africa is a fantastic gold nation (and) the company has a history there.

“It’s operated … the TGME gold plant (which) is connected to water power, ready to go with some really modest capital refurbishment.”

The carbon-in leach plant is about 1.5 kilometres from Theta Hill and would cost about $11 million to refurbish, according to company estimates.

Chairman Guy noted South Africa was still among the world’s top 10 gold-producing nations.

The long-term pipeline strategy

Stonewall’s Theta Hill study has affirmed people’s belief the historical mines on its 620 square kilometre goldfield could have open-cut oxide gold fundamentals.

Some have called the goldfield South Africa’s “new” gold province.

The TGME field that is 100% Stonewall acreage takes in the Sabie Mines/Pilgrim’s Rest area and runs 75 metres north-to-south and 25 kilometres east-to-west.

Stonewall chairman Guy noted in days gone past it was a prolific, producing field that returned high grades.

Guy said: “This field itself has produced more than 6 million ounces already, historically, and really all we’re doing is looking for the open-cut potential as part of that process.

“The team came up with the concept well why isn’t it at the surface, why can’t you open-cut this instead of going underground?”

The engineering team’s efforts were successful, finding the field project could also be open-cut.

Thomson said: “Very interestingly, our neighbour company, Pan African, very successful, is doing exactly the same on its underground operations, with also great success.”

Forty-three highlighted operations, including four Pan African Resources sites

Forty-three highlighted operations, including four Pan African Resources plc sites

Shareholders visited the site last month, expressing their support for the company’s project.

MD Thomson said: “We’ve got everyone focused on delivering what we’ve been looking for.

“We went looking for this new concept, open cut, we’ve found it, now we've got to deliver.”

Stonewall also has dozens more projects it could apply a similar approach to, acknowledges the company’s chairman.

Guy said: “Theta really is a proof-of-concept for us, so now we can take that model, the exploration, and the evaluation approach to the other 43 historical mines on our ground.”

Stonewall is calling the project its long-term pipeline strategy.

The company holds the entire Transvaal gold belt and has a current global JORC resource of 5.75 million ounces, contained in 39.15 million tonnes grading 4.6 g/t gold.

The Rietfontein mine in the southern part of TGME contains a JORC resource of 2.55 million tonnes grading 11 g/t for 905,000 ounces of gold.

The specifics of a share consolidation investors will vote on this week at the company’s AGM

The specifics of a share consolidation investors will vote on this week at the company’s AGM

A completed scoping study indicated a potentially low-cost, 60,000 ounces a year underground development with a net direct (C1) cash cost of US$417 an ounce.

The goldfield was the site of South Africa’s very first gold rush after the first payable goldfield was discovered in the Sabie area on what’s now known as South Africa’s Eastern Gold-Fields, 300 kilometres from what would become Witwatersrand.

Historically, 6 million ounces were produced on the gold belt, mostly before World War II.

Thomson acknowledged the company could take its open-cut approach to other projects to define new oxide open-cut resources, saying: “We’ve identified a lot of other open-cut potential.

“But it’s got to be systemic, methodical, get-going, nice operations close to TGME (carbon-in-leach) plant.”

Stonewall plans to truck ore 1.5 kilometres down the hill to the TGME plant to produce gold, then expand by opening up additional open-cut operations.

The company acknowledges there are more reserves underground but it plans to look at this opportunity down the track.

For now, it’s focused on finished its Theta Hill feasibility study by first quarter next year.

Stonewall Resources will hold its AGM this Friday, November 30 at 11am AEDT at Boardroom Pty Ltd, 225 George Street, Sydney where shareholders will vote on a name change and a 10-to-one share consolidation.

— With Tharun George, Danielle Doporto

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Price: $0.16

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Market Cap: $62.13 m
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