West Wits Mining Limited (ASX:WWI)’s scoping study production model has indicated the potential for a long-life at the Witwatersrand Basin Project (WBP) on the northern edge of the Witwatersrand Basin southwest of Johannesburg, South Africa.
Results have indicted the potential to turn the project into a long-term gold producer with average steady state annual production of 80,000 ounces for 18 years over a 20-year mine-life.
WBP also has to the potential to build up to a peak production rate of more than 95,000 ounces per annum and the report’s production target averages 90,000 ounces from Year 6 – 11 as production reaches steady state from the Qala Shallows, Main Reef package & Bird Reef East areas.
The scoping study by Bara Consulting is underpinned by the WBP’s global 3.55-million-ounce gold resource, which covers the WBP’s mining right footprint.
Further growth potential has been demonstrated as West Wits aims to build its substantial JORC compliant mineral resource beyond the current 25.91 million tonnes at 4.26g/t for 3.55 million ounces gold (2g/t cut-off).
“Special mineral resource”
West Wits managing director Jan van Heerden said: “We have always known that West Wits had control of a special mineral resource in South Africa.
“This mine yielded robust results historically and, we can confidently say, will again do so well into the future.
“The team is excited about commencing mine development and the early mining initiative.
“Results from the scoping study reaffirms WWI’s key objective of establishing WBP as a full-scale mining operation which targets sustained production at an average of 80,000 ounces per annum for over 18 years and a total life-of-mine (LOM) in excess of 20 years.
“The company has identified an experienced mining contractor as well as a skilled technical services team who will assist with the start-up of the mining operation as West Wits accelerates towards underground production.”
WBP’s key production metrics
The original Scoping Study production model relied in part on an area comprising an exploration target on the K9A reef.
This K9A exploration target has since been converted to a JORC compliant mineral resource.
Additionally, K9A and K9B were subject to an infill-drilling program, which targeted conversion of Inferred Mineral Resources in the early stage of mining.
Bara has recently updated the original scoping study to allow for updates to the K9A and K9B mineral resource models.
The removal of the exploration target and reduction of inferred mineral resources in the early stage of mining in the updated production model has enabled the release of the WBP production target.
Mining inventory summary
A mining inventory was estimated for each mineral resource body based on the available resources, practical mining limits and the application of the modifying factors.
The Scoping Study utilises a narrow reef breast mining method in the upper sections of the conceptual mine plan which was the same mining method being used when the historical mine ceased in the early 2000’s.
This method is still being used extensively in South African gold mining today.
Bara’s view, which is shared by the Company, is that there is sufficient capacity and quality of processing in the region to enter a toll treating arrangement with one of the local process plant operators as opposed to allocating CAPEX for the construction and operation of a process facility.
At the time of the original report, a financial evaluation of the project was undertaken using a discounted cashflow analysis.
A gold price of USD1,500 per oz was used with an exchange rate of ZAR16.5 to USD.
The project financial analysis was undertaken through a phased scenario approach, such that the financial feasibility of investment in each of the target areas may discreetly be evaluated.
All the scenarios considered showed robust positive financial results.
Financial modelling on the updated production target is expected to be finalised in September, after the completion of the Qala Shallows DFS.
The forecast financial information on the WBP’s scoping study will be released when available.
Next on the agenda
Following the report’s recommendation, the Qala Shallows project was selected as the project to progress forward into a DFS which was commissioned in Q3 2020.
The Qala Shallows DFS is scheduled for completion by the end of August.
West Wits is soon to embark on the execution of the Qala Shallows section, being the initial phase of the WBP’s development.
The team will commence with the rehabilitation and re-commissioning of the existing box cut at the Qala shaft.
During the re-commissioning phase, a technical services team will access the old working to conduct geological and rock engineering survey’s, also identifying potential old workings that can be restarted as an early mining initiative.
While the early mining initiative is in progress, the project team will commence with the development of the underground infrastructure and construction of surface infrastructure.