Mining exploration company Wits Gold, which is looking to list on the JSE at the end of April, will provide investors seeking leverage a long-term option on the gold price through its access to an ore resource of 1420-million troy ounces of gold in the Wits Basin, Dr Marc Watchorn from the company said in an interview on Thursday.
To meet JSE listing requirements, Wits Gold is set to raise its issued shares to 25-million and increase its shareholders to 500 from the current 180.
The company expects to raise R8-million from the share issue and is hoping to make its debut at R20 a share, with a market capitalisation of R500-million or $83-million, equating to close to 60 US cents per resource ounce, Watchorn said.
The company is looking to place its shares with gold bulls that believe in the long-term future of gold, Watchorn said.
The rand gold price was last at R114 456 per kilogramme, just off the all-time high in rand terms above R116 per kilogramme.
Wits Gold is designed for investors who are gold bulls as a long-term option on the gold price and the South African rand, Watchorn said.
There is significant appetite for gold resources companies, especially in North America, he added.
The JSE listing will come at a time when the gold and metals prices are heading higher in a strong bull phase.
While there isn’t a company on the JSE with which to compare Wits Gold, an international example is Banro, which is listed on the Toronto Stock Exchange and explores for gold in the Democratic Republic of Congo, he said.
Another example is Toronto and American Stock and Options Exchange listed NovaGold Resources, which is advancing three undeveloped gold and copper deposits in North America.
At the time that Wits Gold was established, the gold price was $350/oz and the increase in the price of gold has outperformed the company’s wildest expectations, Watchorn said.
In late 2004 Wits Gold raised $4,6-million or about R30-million from 180 shareholders from South Africa and outside the country.
At present, Wits Gold has about R30-million in cash available.
Following the listing, the company will embark on a two-week road show to visit investors in South Africa, the United Kingdom, Switzerland, Canada, Hong Kong and Singapore, Watchorn said.
Wits Gold has prospecting rights in the southern Free State near Welkom, adjacent to the Potchefstroom and Klerksdorp Goldfields in North-West province, and near Carletonville.
The company has six prospecting rights and its exploration area covers 798 kilometres in the Witwatersrand Basin.
About 62-million ounces of Wits Gold’s resource is accessible using a standard single drop shaft system, Watchorn said. Mining consultancy Snowdens has audited the company’s resources.
The company currently has six employees, who will start drilling on the various properties over the coming months.
Wits Gold’s expertise will be in the area of discovering gold deposits and firming up the confidence of gold deposits, Watchorn said.
During his career Watchorn has played a part in the discovery of the Evander South gold deposit and a base metals deposit in Burkina Faso, he said.
Empowerment groups Continental Africa Gold Resources and Tranter Kismet Investments and Wits Gold Women’s Trust, a trust to promote the training of women within the industry, hold 40% of equity in Wits Gold.
Management and directors of Wits Gold, which include empowerment parties, hold a total of 18% of the company’s issue capital.
Should any of Wits Gold’s projects move into mining, a new operating company will be formed.
AngloGold Ashanti, Gold Fields and Harmony Gold, which previously owned the properties, had the onc-off right to claw back 40% of the new company.
The properties were bought for between R10-million to R15-million, Watchorn said.
Wits Gold’s chairperson is Adam Fleming, who was Harmony Gold’s chairperson until 2003. – I-Net Bridge