PERTH (miningweekly.com) – ASX- and JSE-listed gold junior Gold One plans to spin off its Megamine project into separately JSE-listed company, CEO Neal Froneman told Mining Weekly Online on Monday.

The Megamine project consists of prospecting rights over 16 000 ha in South Africa’s Witwatersrand basin.

By listing a separate entity for the development of the Megamine project, Gold One would be able to raise capital without diluting shareholder value, Froneman said in an interview on the sidelines of the Paydirt Gold conference in Perth.

The company would also have a completely different risk profile than Gold One, as the Megamine project would focus on deeper-level resources, he added.

The spin-off company was likely to take shape within the next three to six months, and Froneman added that Gold One would not need to raise any capital to assist with this spin-off.

The Megamine project had an inferred resource of 5,2-million ounces of gold at a grade of 3,39 g/t and was separated from the East Rand and Central Rand water basin, where mining had to be accompanied by costly water pumping.

The project incorporated the consolidated areas in the vicinity of the three former gold mines of Spaarwater, Vlakfontein and West Vlakfontein.

He added that a significant amount of technical work was being done on the project area.

Froneman added that there was also the potential to expand the resource area through the acquisition of nearby deposits. “When you look at a map of the area, there are some very obvious acquisition opportunities, that we would like to pull together in this new vehicle.”

Meanwhile, Froneman reported that production at the company’s flagship Modder East project, also in the Witwatersrand area of South Africa, would increase to around 50 000 oz during the December quarter.

The project began commercial production during the December 2009 quarter, at which time it produced around 10 865 oz of gold.