Rising gold prices prompt West Wits to review mine plan

A strategic review for the entirety of the Witwatersrand Basin project in South Africa is breaking ground as gold prices reached another new record overnight.

Special report: West Wits is looking to unlock further value for shareholders by undertaking a strategic review of its assets in South Africa given the higher gold price environment. 

• West Wits plans to carry out a review of Witwatersrand Basin project 
• Focus will centre on project assumptions of the Qala Shallows mine plan 
• Several changes will be made as part of a broader long-term strategy 

The gold price rose to US$3164 per ounce on Wednesday night following President Trump’s tariff announcement, which outlined a 10% baseline tariff on imports from all countries, with higher rates for nations with trade surpluses including China (34%), the EU (20%) and Japan (24%). 

West Wits (ASX:WWI) is optimising key project assumptions of the Qala Shallows mine plan as well as related projects across the entire Witwatersrand Basin (WWB) project as a result. 

The company believes that a strategic reassessment is warranted given the sustained increase in the gold price, which now exceeds US$3000 per ounce, and materially exceeds the gold price assumptions used when the original plans were finalised. 

Qala Shallows life of mine plan and budget 

The Qala Shallows life of mine plan and budget were last updated in July 2023 as part of the definitive feasibility study. 

Qala Shallows ore reserve. Pic: West Wits Mining

At this stage, the review will focus on evaluating lower cut-off grades and previously excluded mining blocks, which may be potentially more viable under the current gold price environment.

WWI believes unlocking these zones could increase the ore reserve base and support an accelerated production ramp up to enhance project economics. 

New exploration focus 

The WBP comprises three distinct reef mining targets, each slated for sequential development – the Kimberley Reef (where Qala Shallows is located), Main Reef and Bird Reef. 

WBP’s Main Reef project targets high-grade gold remnants located ~800m north of the Bird Reef. 

Historically, parts of the Main Reef were excluded from planned development due to economic thresholds. These areas will now be reassessed in the context of current gold prices.

Additionally, the potential to explore the largely unmined North Reef from the Main Reef horizon will be investigated.

Over at Bird Reef, improved prevailing gold prices enhance the potential feasibility of extracting gold independently or in conjunction with uranium. 

The Bird Reef Central’s (BRC) relatively lower-grade gold deposit now opens a strategic opportunity which has never been tested, to consider the BRC as a combined gold and uranium operation. 

WWI has developed an exploration plan aimed at seeking to convert the Bird Reef Central’s uranium exploration target into a JORC-compliant resource estimate, which will underpin future development decisions. 

What now? 

Results of the strategic reviews will provide clarity to WWI and provide the investor market with certainty around the company’s longer-term vision and plans. 

WWI continues to evaluate its forward exploration and feasibility strategies to ensure its development pipeline remains robust and aligned with long-term growth objectives.

Independently of these initiatives, the company continues to make positive progress towards finalising funding in order to begin operations at its Qala Shallows gold project.

In the meantime, an interim loan funding of $550,000 at 10% interest per annum (capitalising) has been secured and will provide ongoing working capital pending finalisation of the Qala Shallows funding package. 

Upon securing funding, mobilisation to begin operations at Qala Shallows will start immediately and the company will transition to a developer/producer quickly. 

This article was developed in collaboration with West Wits, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

Originally published as Rising gold prices prompt West Wits to review mine plan