In the next few weeks, Shallow Reefs Gold is hoping to be able to announce what it describes as a fairly significant capital raise out of North America after being very active in the capital markets.

The target pipeline of the company that is intent on mining shallow deposits of South Africa’s historic Witwatersrand Gold Basin is focused on five initial projects.

An initial planned capital raise of $21-million seed money will allow the company to finalise the definitive feasibility study (DFS) on the first projects for a start-off production of between 50 000 oz/y and 80 000 oz/y from those projects out of the five that are selected to go ahead.

“We’re incredibly bullish,” said Shallow Reefs Gold’s Mark Gilbert, who spoke to Engineering News & Mining Weekly in a Zoom interview.

The five project assets are all on the eastern and western portions of the Wits Basin bar one, which is in the Pilgrim’s Rest/Barberton greenstone belt area.

Shallow Reefs Gold has picked those assets with good drill data and close proximity to infrastructure. From a regulatory point of view, they are properly approved, with mining rights and water licences in place and prospecting rights granted.

Interestingly, the company is able to report that some very high-grade gold mineralisation has been discovered that was not apparent to the old-time miners, who were very used to mining the traditional Wits conglomerates.

Built will be mines and not plant owing to the surplus of plant capacity available in the Wits. There is also no need to build tailings dams as the tailings material generated is wanted by established surface mining concerns.

“It’s almost a perfect storm,” said Gilbert, who reports a very bullish precious metals investor base that he does not see changing any time soon.

As reported by Engineering News & Mining Weekly in November, the company is targeting 200 000 oz of gold production a year over the next decade.

Involved is a collective 21-million-ounce-plus resource at 4.7 g/t all above 1 200 m, and most of it National Instrument (NI 43-101) or Samrec compliant, with one of the assets having a nigh two-million-ounce proven and probable reserve at 4.3 g/t.

Gilbert, who is CEO of the mining and environmental law firm NSDV, is a former MD of Macquarie Bank in both South Africa and Europe.

Shallow Reefs Gold, which is viewing Wits gold through the lens that sees value in one-million-ounce-plus mineable gold deposits that companies the world over list on, has former Mineral Resources Minister Susan Shabangu and former Exxaro chairperson Sipho Nkosi on its board, as well as former Department of Mineral Resources director-general and former Council for Geoscience CEO Dr Thibedi Ramontja as a key member of the team.

Shallow Reefs Gold is planning a primary listing in Toronto, followed up by a probable secondary listing in Johannesburg a year to two years later.

Engineering News & Mining Weekly: Can you give us an update on how things are going with Shallow Reefs Gold since Engineering News & Mining Weekly’s report last November?

Gilbert: We’re in an incredibly exciting phase right now. We’ve been very active in the capital markets and I’m hoping that in the next few weeks we’ll be able to announce a fairly significant capital raise out of North America into Shallow Reefs Gold. In many respects we have the curse of plenty in South African gold mining. We’ve been so used to these 60-,70-, 80-million-ounce ore deposits in the gold and platinum sector that we tend to view smaller deposits of a million ounces, two-million ounces, three-million ounces as not worthwhile. Yet if you go anywhere in the rest of Africa, if you were in Ghana, for example, and you found a two-million-ounce gold deposit, you’d have a listed gold mining company. What’s transpired over the last few decades is the majors have a huge amount of capital committed to these ultra-deep-level mines and it, of course, makes commercial sense to continue those. But we are literally blessed with this plethora – and I use that word – across the entire Witwatersrand basin, of these smaller deposits and we’re looking for mineable resources of a million ounces upwards. To put that in perspective, there are only a few hundred gold-mining companies in the world with a million-ounce deposit or bigger. We saw one in Nevada the other day – a 400 000 oz gold deposit – listed as a $200-million company. We are progressing very well; the capital raise is progressing. We have some very significant backers out of North America. Our target pipeline has been sharpened a fair bit over the last while. There are five initial projects that we’re looking at where we’ve been in very positive conversations with the owners. Some of them are the majors, as one would expect. What’s becoming apparent to us, most excitingly, is that South Africa is literally the cheapest place on the planet right now to buy gold assets. You cannot find gold deposits of the quality we have here in South Africa, at the prices that we’re seeing. That, of course, is a double-edged sword. There is a lack of capital coming into the South African market although I’m very, very pleased to say that we’re seeing that trend changed. We’ve been part of transactions over the last little while. We’ve seen very significant amounts of foreign capital coming into South Africa. Even more excitingly, we are starting to discover, which will all be announced in due course, some very high-grade mineralisation in the shallow Wits that was not apparent, let’s call it, to the old-time miners, who were very used to mining the traditional Wits conglomerates. Once we discover gold in the Wits conglomerate, we could literally just follow it and we have. We’ve followed it all the way to four-and-a-half kilometres underground now. But much like South Africa discovered the Carbon Leader in the 70s and 80s, as a very high-grade reef, we started to find some very interesting shallow reef deposits of similar mineralisation, which are unbelievably exciting. So I think you will find us at the opposite end of a lot of people in South African mining right now. We’re incredibly bullish. We’re very, very excited about South Africa. We have a focus on South Africa and we’re not looking at a diversification strategy out of the country. We have an incredible portfolio target list of assets that, again, it’s just mind-boggling the price at which one can acquire them at and we’ve got some very large development capital coming behind us who want to build a junior gold producer here in South Africa. The last two key pieces of the story, which we discussed last time, still hold true. We have an enormous surplus of plant capacity sitting in the Wits, which is available. We’ve been tolling at one of our mines with one of the majors very successfully, very cost-effectively. We’re in conversations with two of the other majors right now about tolling arrangements. They are incredibly open to it. We do know tolling arrangements have their challenges but we’ve got a fair bit of experience in that space now. And then, the most exciting bit for us is the liabilities, or the rehabilitation. All the dumps have been swallowed up by DRDGold and Mine Waste Solutions and those companies actually want our material. What we will be producing in time will be insignificant compared with the dumps that they are sitting on, but two of the biggest challenges for mining companies in Africa are tailings deposition and the liability associated therewith and infrastructure, and both of those we have ready built, for lack of a better word, in close proximity to the assets we’re looking at, which further reduces the cost of getting these assets on to the balance sheet. And finally, we’ve been working very hard with our mining team and building their competence. The quality of skills in this country is just absolutely phenomenal. It truly is. We are blessed. You need an electrical engineer to come and resolve a problem on your compressor, you literally pick up a phone, and the guy just jumps in his car and he’s in his bakkie and he’s there in an hour or two. Whereas, if you’re in the Congo or Ghana, the guy has to board an aeroplane from Johannesburg or Europe, and it’s four days. We think the pessimism scale has swung way too far to the negative. Again, to the old Warren Buffett analogy, ‘be fearful when others are greedy and greedy when others are fearful’, and we’re very much in the greedy phase right now. We’re very, very bullish on gold mining and precious metals mining in South Africa. Recent results from the listed gold companies and platinum group metals (PGMs) companies back that up. They are quite literally printing money at the moment across the board. We’ve got a skilled labour force here with surplus labour, a weakening currency in a hard-currency asset and we’ve seen precious metals price appreciation. It’s almost a perfect storm, and we’re really trying to drive hard that the narrative needs to shift in South Africa. Yes, of course we know it’s hard. We’re not naïve but having tried to buy a mine in Congo, that’s hard. It’s no harder here than it is there, I promise you.

Have you been able to get mining licences and environmental approvals?

We’re incredibly fortunate there. We have a partner law firm, NSDV, which is a specialist mining and environmental law firm. NSDV have taken a very different strategy to normal and to regulators in South Africa. For too long, and I’m very critical of the industry now and I’ll be vocally critical, you have heard the same people saying the same thing the whole time: “We need policy certainty.” At some point we have to say you’re not going to get it. So now, what are we going to do? Do we abandon ship or do we figure out how to play within the realm we’re operating in? NSDV have set themselves up in a very different way to the other law firms. They pride themselves in the relationship they have with the regulators. There are a lot of competent people in the regulators. They are hamstrung, they are under-capitalised, under-resourced and, to be frank, they’re tired of being beaten up with the big stick. Very often mining companies, in our view, win the battle but they lose the war, because these are human beings at the end of the day and after they’ve been hit enough, are you surprised that your Section 11 takes six years to process. NSDV pride themselves in holding those relationships and literally sit with the regulator, discuss the issues, ask the regulator for advice, and to be honest, so far, we find it to be an incredibly productive approach. We have not seen any challenges. The quick answer is, yes, we are getting our applications, we’re getting our water use licences, we’re getting our prospecting rights granted. Is it as quick and efficient as it should be? Of course not, but the risk-reward differential is so heavily stacked in our favour now as a country, when you look at, again, the price of assets that we can acquire. That’s no longer a hindrance. It’s a hassle and it’s stuff you’ve got to slog through and, again, it’s easy to say it’s stuff we shouldn’t have to do, well, at what time do you stop complaining and start to turn the narrative? In our opinion, we’re in the early stage of a commodity super cycle. We’ve seen unbelievable price increases across large portions of the commodity basket over the last 12 months, in a recession. You’re starting to see inflation ticking up in the US aggressively. I think their last print was 5.8%, which is above ours, which is pretty radical, if one thinks about it. So we’re a mineral-rich blessed country, we have a deeply functioning court system and legislative environment. The rules are changing and, yes, it’s frustrating, we accept that. There are ways of protecting oneself in that contractually, and we’ve started to do that so that we can create structures that if there are change of law events you have the capacity to restructure your ownership deal, for example. Instead of saying it’s a massive problem say, well, how do we solve the problem? So we’re in the midst of going into a commodity super cycle, that’s very much our in-house view. We’re blessed with highly skilled labour when it comes to underground mining – rock drillers, engineers, load haul dump operators, etc. We’ve got unbelievable technical skills across the entire spectrum of engineering and others. We’ve got phenomenal mineral resources, processing capability. So the one thing everyone complains about is policy certainty.