Burnstone mine
Photo by: Duane Daws
JOHANNESBURG (miningweekly.com) – JSE- and NYSE-listed Sibanye Gold planned to take over the intricacies of Witwatersrand Consolidated Gold Resources’ (Wits Gold’s) move to buy the embattled Burnstone gold mine, in Mpumalanga.
This came as Sibanye, which was two weeks away from concluding its R407-million, or R11.55 a share, bid for 100% of Wits Gold, had completed a due diligence on the idled mine that could boost Sibanye’s reach into the South Rand goldfield and drive the company's ambitions of shifting production into shallower gold-mining areas.
Wits Gold last year tabled a revival business plan for the embattled mine, which was accepted by the business rescue practitioner, following Southgold Exploration’s descent into business rescue proceedings.
The gold explorer, which would now apply to be delisted from the JSE and the TSX and have its American Depository Receipts Programme terminated, had planned to inject R950-million over three years as working capital to bring the Burnstone mine back into production.
“Sibanye Gold is acquiring the assets on extremely favourable terms and we are confident that this transaction, which is consistent with our strategy to extend the operating life of the company to support the dividend yield strategy, will contribute positively to Sibanye Gold’s free cash flow and enhance its longer-term value,” Sibanye CEO Neal Froneman said, adding that Burnstone had largely been developed, with a significant amount already invested in the mine’s infrastructure.
Wits Gold previously said it could restart gold production at the suspended Burnstone mine early in 2015, establishing a 50 000 oz/y operation initially, before increasing output to 100 000 oz/y in Phase 2.
The acquisition of Southgold remained subject to the fulfilment of, or waiver by Wits Gold, of conditions precedent, including obtaining all necessary regulatory approvals.