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West Wits Mining banks Witwatersrand Basin receipts as it works on Paterson Province plan

Proactive Investors Monday, 8 April 2019
In South Africa, a regulator has approved West Wits’ scoping document to advance a mining right application for the Witwatersrand Basin Project Mt Cecelia in WA’s Pilbara region is near Rio ground and 70 kilometres west of the miner’s Winu project The project is also near Metals X’s Nifty copper mine and Newcrest’s Telfer gold mine A native title agreement has been reached for Mt Cecelia, allowing Department of Mines, Industry Regulation and Safety to finish up an exploration-licence granting process What does West Wits Mining do? West Wits Mining Limited (ASX:WWI) specialises in gold project development in South Africa and exploration project development on the boundary of Western Australia’s standout Paterson Province and Pilbara Craton. It is run by a board which includes chairman and shareholder Michael Quinert and exploration director Dr Andrew Tunks. Quinert has more than 30 years of experience as a commercial lawyer. He served three years with ASX Limited (ASX:ASX) and has been a partner with Melbourne law firm Quinert Rodda & Associates for more than 15 years. Tunks has headed up Tunks GeoConsulting for six years and has been the managing director of Meteoric Resources NL (ASX:MEI) (FRA:RNF) since January 2018. He previously headed up Auroch Minerals NL as its CEO in 2015-2017. The company has also made a number of executive appointments over the past six months, including hiring highly-experienced mining executive Jac van Heerden as chief executive officer of its South African subsidiary MLI in November 2018 and adding chartered accountant Simon Whyte to its team as chief financial officer in March 2019. What is West Wits Mining's primary asset? The Victorian company's key assets are the flagship Witwatersrand Basin Project (WBP) on the Central Rand Goldfield of South Africa’s Witwatersrand Basin and the secondary Mt Cecelia Gold Project in Western Australia. West Wits’ transformative goal is to be the only gold producer listed on the Australian Securities Exchange that has operations in the Witwatersrand Basin and the Pilbara (Mt Cecelia and Tambina). The 66%-held Witwatersrand project area historically produced 41 million ounces of gold at 5 g/t over 120 years. The latest open pit mining operations began at the project in June 2017, delivering free cash flow by November 2017. A resource upgrade to 1.9 million ounces in December 2017 preceded three mining right applications in March-April 2018. On April 1, 2019, the company confirmed that the South African mining regulator, Department of Mineral Resources (DMR), had accepted a scoping report for the project. DMR was satisfied the submitted plan of study for environmental impact assessment and scoping report complies with environmental impact assessment (EIA) regulations, enabling West Wits to a final stage of its mining right submission process, an environmental impact assessment report (EIAR). The well-advanced work is expected to be complete by the end of April 2019, with a 30-day EIA public review process to start in mid-April and reviewed before an expected EIAR submission by the end of May 2019. DMR can then take 107 days, or more than three months, to make a recommendation to the relevant minister on whether environmental authorisation should be granted. The latest JORC resource for the project is 3.67 million ounces. Next steps for the project include commissioning scoping and pre-feasibility studies of the first underground mine target (Kimberley East); extending open-pit operations and increasing toll-processing requirements; and continued work with community groups on positive social outcomes. In the December quarter of 2018, the company improved the recovered grade of ore at the development project by 49% to 2.16 g/t gold. While the tonnages, ounces and net cashflow were less than targeted ranges and the average cost was higher than forecast, the grade improvement dramatically increased profitability. The company produced 23,463 tonnes in the December quarter and processed 24,729 tonnes for 1,630 ounces at a US$1,134 annual cost. West Wits is developing a mine plan to demonstrate the project can produce 100,000 ounces a year over a 10-year mine life from surface and underground targets. The targeted range in the quarter for ore produced was 37,500 to 45,000 tonnes while ore processed was 37,500-45,000 tonnes in the quarter. What are West Wits Mining's secondary assets? In Western Australia, West Wits has two Pilbara region projects, Tambina and Mt Cecelia. Tambina near Marble Bar has exposure to three existing mining leases with West Wits last month entering into a farm in agreement with First Au Ltd (ASX:FAU). First Au can earn up to an 80% interest by subscribing to a share placement of 20 million shares in West Wits at 0.9 cents each and a cash payment of $60,000 plus $500,000 of exploration expenditure over three years. The $240,000 that the JV agreement is bringing in is expected to allow WWI to unlock value from Tambina while focusing on development of its flagship project WBP in South Africa. Mt Cecelia is abutted by Rio Tinto Ltd (ASX:RIO) which has upped its ground in the region by 10,000 square kilometres, or 1,000%, to 11,000 square kilometres amid a series of discoveries by minors and majors in the prospective area. West Wits’ project is also near Metals X Limited’s (ASX:MLX) Nifty copper mine and Newcrest’s (ASX:NCM) Telfer gold mine and is found 70 kilometres west of miner Rio’s Winu project. The Mt Cecelia project area overlies geological contact between the copper-gold rich Paterson province and the Archaean aged Pilbara Craton, which is prospective for conglomerate-hosted gold, and a third NNE-SSW mineralisation corridor containing gold and base metals. West Wits hopes to obtain an exploration licence application for Mt Cecelia project which has gold and base metals potential. A native title agreement has been reached for Mt Cecelia, allowing Department of Mines, Industry Regulation and Safety to finish up the exploration-licence granting process. The company has held the Derewo River Gold Project in the Papua Province of Indonesia since 2011, which West Wits believes has potential upside if the source of high-grade alluvial gravels discovered by artisanal miners can be determined. What are West Wits Mining's financials? West Wits had $2.4 million in customer receipts in the December quarter of 2018 and $4.3 million in the December 2018 half-year and raised $665,000 to accelerate its WBP development in December 2018 to end the year with $778,000 cash. The company expected $3.1 million of expenses in the March quarter of 2019, with $2.7 million budgeted for production costs and $180,000 for exploration and evaluation. West Wits raised about $243,000 for WBP through a Tambina farm-in agreement in March 2019, with its next quarterly report expected by the end of April 2019. Inflection points Regulatory approval wins with South African and Western Australian regulators Continued customer receipts and financing milestones, including capital raisings Paterson Province successes and significant transactions by neighbours, including mergers and acquisitions Resource definition and upgrade work in Australia and South Africa Chairman Michael Quinert highlights milestones and next steps “The notification of formal acceptance of the WBP’s scoping report by the Department of Mineral Resources (in South Africa) completes a critical phase of the mining right application and moves the company closer to full-scale mine development on the existing 3.65 million ounce gold JORC resource,” chairman Michael Quinert said on April 1, 2019. “The company is also pleased to report the remaining objection to Mt Cecelia project’s exploration licence application (in Western Australia) has been withdrawn, removing a significant hurdle to granting. “Mt Cecelia’s tenement area is situated within the highly prospective Paterson Province of Western Australia (and) the company anticipates announcing an exploration plan for the project in coming months.”  

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