Wits Gold issues cautionary as Southgold buy-out agreement still under negotiation
JOHANNESBURG (miningweekly.com) – JSE-listed Witwatersrand Consolidated Gold Resources (Wits Gold) on Monday renewed its cautionary as the definitive transaction agreements of its buy-out of embattled Southgold Exploration were still being negotiated.
Wits Gold, which would pay $7.25-million in cash towards Southgold’s debt, last year received Competition Commission approval for the deal after creditors of the Great Basin Gold South African subsidiary gave the go-ahead.
Wits Gold said in September 2013 that it was confident of its ability to restart gold production at Southgold’s suspended Burnstone mine, in Mpumalanga, in the next 18 months. The company aimed to establish a 50 000 oz/y operation initially, before increasing output to 100 000 oz/y in Phase 2.
Wits Gold would need to inject R950-million over three years as working capital to bring the Burnstone mine back into production, including the initial payment of R7.25-million.
Wits Gold’s move to buy the embattled Burnstone gold mine, following Southgold Exploration’s descent into business rescue proceedings, has become a key condition for Sibanye Gold’s planned buy-out of Wits Gold.
The deal could boost Sibanye’s reach into the South Rand goldfield and drive the company's ambitions of shifting production into shallower gold-mining areas.
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