ASX-listed West Wits Mining has unveiled positive results from an updated definitive feasibility study (DFS) for the Qala Shallows, which is part of the Witwatersrand Basin Project (WBP), in Johannesburg, Gauteng. 

West Wits commissioned independent mining engineers Bara Consulting to undertake a comprehensive review and update of the Qala Shallows DFS released in August last year. 

The updated DFS outlines a notable 38% increase in gold production, resulting in the expected recovery of 924 000 oz of gold over the 17.7-year life-of-mine.  

Further, steady-state production is expected to increase to about 70 000 oz/y, reflecting a 27% increase over the course of nine years. 

The all-in sustaining cost is projected to decrease by 10.7%, with the cost per ounce reducing from $1 093 to $977. 

The financial prospects for the project indicate that free cash flow is expected to reach $522-million, showcasing a 95% increase of $254-million, compared with the estimates set out in the initial DFS.  

The pre-tax net present value at a discount rate of 7.5% (NPV7.5) is expected to rise to $367-million, indicating a 104% increase of $187-million. The post-tax NPV7.5 is projected to be $255-million, signaling a 104% increase of $130-million. 

The project cost has also decreased to $54-million, compared with the $63-million funding requirement set out in the initial DFS. 

Moreover, the payback period from construction is estimated to be 4.1 years, showing an improvement from the previously estimated five years. 

As for the ore reserve, it is estimated to consist of 4.03-million tonnes at a grade of 2.71 g/t, resulting in a total of 351 400 oz of gold. This showcases a 21% increase of 61 400 oz when compared to previous figures. 

“Qala Shallows’ updated DFS has delivered a strong result and sets the scene for us to deliver a substantially larger gold project. The project's potential is evident in the updated financial metrics. These figures emphasise the project's value and its potential to deliver substantial returns,” West Wits chairperson Michael Quinert said in a July 26 report to shareholders. 

Higher operating expenditure and capital expenditure, resulting from the increased production, have been offset by revenue from increased production during the three-year funding period and favourable movements in the gold price and the rand. 

Development finance institution the Industrial Development Corporation (IDC) has expressed formal interest in providing loan funds of about $15.9-million for development capital at Qala Shallows 4.  

The proposed funding terms align with customary conditions for loan facilities of this nature. Both parties are now collaborating to expedite the due diligence process and secure final approval of terms and conditions by the IDC’s executive credit committee. 

The IDC funding will provide the foundation for funding the development plan outlined in the Qala Shallows DFS. Initial funds will be used to mobilise the mining contractor and acquire essential equipment to initiate operations. 

This will enable West Wits to establish a 30 000 t ore stockpile and facilitate a steady delivery of 15 000 t a month to diversified miner Sibanye-Stillwater’s plant. 

The company is currently progressing constructive discussions with several prospective funders to secure a funding solution for the WBP and believes it will be able to secure commitments to finance the restarting of operations in the near term. 

To date, operational activities at Qala Shallows have resulted in the completion of all critical infrastructure, including substations and water infrastructure, as well as the completion of the decline and boxcut rehabilitation.  

Reef underground access has also been completed, with the first ore delivered during an early works programme to an estimated 3 000 t stockpile.