JOHANNESBURG (miningweekly.com) – JSE- and NYSE-listed Sibanye Gold has agreed to buy midtier mining group Gold One’s Cooke underground and surface operations on the West Rand in an all-stock deal.

Sibanye CEO Neal Froneman said on Wednesday the acquisition would add an average yearly production of 260 000 oz of gold and 570 000 lb of uranium to its production profile over the next five years.

He said that the Cooke operations provided the shareholders of Sibanye, which was created out of Gold Fields earlier this year, with exposure to a low-cost gold and uranium project.

On average, Cooke underground would produce 240 000 oz/y of gold over five years, at a cash cost of $1 000/oz. The surface operations would produce 34 000 oz/y over three years at an average cash cost of $828/oz.

The majority of Sibanye Gold’s production comes from the Driefontein and Kloof gold mines, which are contiguous to the Cooke underground and Randfontein surface operations.

Froneman said Sibanye would seek to re-establish the Cooke underground operations as profitable gold mines with uranium co-product potential.

Gold One has invested in turning the Cooke underground operations around since January 2012, with cost and operating efficiency improvements being visible.

Froneman said the Cooke surface mining operations were restructured as a separate business unit to the underground operations, which would ensure technical and operational focus.

The surface operations were currently processing 300 000 t/m at a cash cost of $1 200/oz.

Sibanye Gold’s West Rand Tailings Retreatment project would also benefit from the tailings retreatment expertise of the Cooke surface operations, which were building up to approximately 400 000 t/m of surface tailings by the end of 2013 through a R230-million optimisation project.

Froneman said that the transaction positioned Sibanye to reclaim 6.4-million ounces of gold and 55-million pounds of uranium co-product contained in historical tailings deposits owned by the parties, which could support additional gold production of up to 300 000 oz/y.

“The addition of the Cooke operations to the Sibanye Gold portfolio could potentially create the largest surface retreatment project in South Africa,” he said.

In terms of the agreement reached between the companies, Sibanye Gold would acquire Gold One’s 74% shareholding in, and Gold One’s claims against Newshelf, which holds a 100% shareholding in Rand Uranium and, after the completion of an internal restructuring, would hold 100% of Ezulwini Mining Company, the activities of which include the Cooke operations.

The consideration for the acquisition would be about 150 000 new Sibanye shares, or such number of shares that represented 17% of Sibanye’s issued share capital on the closing of the transaction, which would take between four and six months to implement.

“Gold One and its 90% shareholder, the Chinese BCX Consortium, will be an anchor shareholder with a long-term investment horizon, which will support Sibanye Gold’s long-term growth strategy,” Froneman concluded.