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GDO - Gold One International Limited - Quarterly Activities Report
Gold One International Limited
(Previously BMA Gold Limited)
Registered in Western Australia under the Corporations Act, 2001 (Cth)
Registration number ACN: 094 265 746
Registered as an external company in the Republic of South Africa
Registration number: 2009/000032/10
Share code on the ASX/JSE: GDO
ISIN: AU000000GDO5
OTCQX International: GLDZY
("Gold One" or the "company")
Quarterly Activities Report
Quarter Ended 31 December 2010
December 2010 Quarter Highlights
- Quarterly gold production targets achieved with production increasing to
21,480 ounces
- Modder East cash costs maintained at US$ 467/oz
- Net cash flow from operations increased by 70% to US$ 8.35 million
- Cash and gold receivables balance increased by 26% to US$ 11.55 million
- US$ 18 million profit before tax for the 2010 financial year, based on
unaudited financials
- On-reef development of 270 metres continues to expose ore at 14.6 grams
per tonne over an optimised mining width of 147 centimetres
- Excellent plant recoveries maintained at 96%
- 63% increase in Modder East mine life to 13 years total life (until 2022)
- Substantial increase in group mineral resources to 21.71 million ounces,
including a 96% increase in measured and indicated resources and a 41%
increase in inferred resources (refer to detailed resource table in
report)
- Excellent 2010 safety performance resulting in a progressive LTIFR of
0.48 per 200,000 hours
- Convertible bondholders unanimously confirm that they will not exercise
their once-off put option to redeem their bonds for cash
March 2011 Quarter Outlook
- On track for March quarter production guidance of 25,000 ounces
- Ongoing exploration drilling at Venterburg to continue with a pre-
feasibility study due to be completed by end of March 2011
- Modder East shoreline extension drilling programme to resume
- General meeting for White Water Resources shareholders to approve the
Goliath Gold transaction is targeted to take place during the March 2011
quarter
December Quarter 2010 Key Performance Data
(Average Exchange Rate of ZAR 6.93 / US$ 1)
December 2010 Modder Sub Total September
Quarter East Nigel 2010 Quarter
Ore Mined 96,332 t 15,349 t 111,681 t 98,793 t
Underground
Mined Grade 6.94 g/t 2.74 g/t 6.36 g/t 7.12 g/t
Milled Tonnes 96,916 t 17,456 t 114,372 t 99,064 t
Recovered Grade 6.49 g/t 2.26 g/t 5.84 g/t 6.12 g/t
Gold Recovery 96% 92% 95.7% 96.1%
Gold Produced 20,211 oz 1,269 oz 21,480 oz 19,470 oz
Modder East Cash US$ 467/oz US$ 483/oz
Cost
Modder East Cash US$ 914/oz US$ 945/oz
and Capital Cost
Group Development US$ 9.08 million US$ 8.48
and Capex million
Group Gold Revenue US$ 29.2 million US$ 23.5
million
Average Gold Price US$ 1,370/oz US$ 1,235/oz
Received
2010 Annual Key Performance Data
(Average Exchange Rate of ZAR 7.34 / US$ 1)
2010 Financial Year Modder East Sub Nigel Total
Ore Mined Underground 301,481 t 46,847 t 348,328 t
Mined Grade 7.58 g/t 3.11 g/t 6.98 g/t
Milled Tonnes 292,908 t 54,397 t 347,305 t
Recovered Grade 6.63 g/t 2.28 g/t 5.95 g/t
Gold Recovery 96% 92% 95.9%
Gold Produced 62,404 oz 3,980 oz 66,445 oz*
Modder East Cash Cost US$ 484/oz
Modder East Cash and US$ 968/oz
Capital Cost
Group Development and US$ 31.46
Capex million
Group Gold Revenue US$ 81.91
million
Average Gold Price US$ 1,252/oz
Received
*An additional 61 ounces were produced from low grade surface stockpile
material during the March 2010 quarter
1. CEO`s Review
Gold One ended the 2010 financial year with a positive quarter that featured
both continued build up in production levels from Modder East, upgraded
resources for our Megamine and Ventersburg projects and increased resources
and reserves at Modder East. These achievements have formed a solid
foundation for the company as we enter 2011.
Production ramp up at Modder East continued during the quarter with outputs
now approaching 40,000 tonnes per month and 10,000 square meters per month.
During the quarter under review, Gold One produced 21,480 ounces, resulting in
a total gold production of 66,445 ounces for 2010. The production results for
the quarter under review were particularly pleasing given that operations
essentially ceased on 23 December, resulting in only 91% of the quarter being
available for production.
Development and development efficiencies continue to increase with an ever
increasing number of development ends and attack points. Increased on-reef
development has increased available face length such that, at the end of
December 2010, Modder East had effectively opened up sufficient reserves to
support our planned production profile for a period in excess of six months
should no further development take place. This level of flexibility, combined
with the continuous build up in production levels at Modder East, underpins
our confidence in achieving our production guidance of 120,000 ounces for
2011.
While it is disappointing that annual production for 2010 was lower than
initial guidance after the 5-week strike in April, I am pleased to report that
our cost guidance is well on track. Fourth quarter cash costs of US$ 467/oz
were achieved in a strong exchange rate environment of ZAR 6.93 / US$ 1.
Extremely pleasing is that, for the year, we managed to produce gold at an
average cash cost of US$ 484/oz given an average exchange rate of ZAR 7.34 /
US$ 1. When adjusting actual cash costs using the budgeted exchange rate of
ZAR 8.41 / US$ 1, the average cash cost for 2010 equates to US$ 423/oz. This
was negatively affected by the April strike month and if this period is
excluded, the annual cash cost for the balance of 2010 would equate to US$
410/oz at our budgeted exchange rate, compared to guidance of US$ 400/oz. Cash
costs guidance for 2011 is US$ 417/oz at a budgeted exchange rate of ZAR 7.69
/ US$ 1.
I am pleased to report that the company has achieved its maiden annual net
profit before tax of US$ 18 million based on the unaudited financial
statements, a great achievement given that this is the first full year of
Modder East`s commercial production. The full audited annual financial
statements are expected to be released toward the end of February 2011.
Extremely pleasing too, is that the lower cash costs and higher production
levels in the December quarter have resulted in net cash flow from operations
increasing by 70% in the December quarter relative to the September 2010
quarter, totalling US$ 8.35 million. Gold One increased its cash on hand and
gold receivables by 26% to US$ 11.55 million during the December quarter,
compared to an end of September 2010 quarter cash on hand and gold receivables
balance of US$ 9.2 million.
Importantly, these achievements were made without compromising our strong
safety record, with the 2010 total lost-time injury frequency rate per 200,000
hours (LTIFR) of 0.48, better than the Australian industry benchmark of one
LTIFR against which Gold One is measured.
The December quarter also saw the update of our resources and reserves at
Modder East, Ventersburg, and Megamine. I am pleased to report that Gold One`s
total resource base now stands at 21.71 million ounces of gold, including 8.60
million ounces in the measured and indicated resource category (88.09 million
tonnes at 3.03 grams per tonne) and 13.11 million ounces in the inferred
category (103.06 million tonnes at 3.95 grams per tonne). The company`s
proved and probable ore reserves have increased to 1.53 million ounces at 4.0
grams per tonne, resulting in an additional five years mine life being added
to Modder East.
During the December quarter we announced the planned formation of Goliath Gold
Mining Limited. Goliath Gold is intended to develop Gold One`s medium-depth
assets. This will be achieved through vending our Megamine portfolio into
White Water Resources Limited in return for 1.05 billion White Water Resources
shares at ZAR 0.25 each (crystallising approximately ZAR 260 million / A$ 38.6
million of value for Gold One shareholders). White Water Resources will be
renamed Goliath Gold once the transaction has been approved by White Water
Resources shareholders. It is expected that the general meeting for White
Water Resources shareholders to approve the transaction will take place during
the March 2011 quarter.
I would like to highlight that despite recent rains in and around
Johannesburg, South Africa, where our operating assets are located, we have
not been affected operationally or in any other way by the rains and sporadic
flooding that has been reported in the media.
Our primary focus for 2011 will be on maintaining the production build up at
Modder East and cementing our position as one of the lowest cost gold
producers in the industry. In addition, the continued advancement of our
exploration projects aims to ensure a sustainable pipeline of production for
future growth. Over the past years, Gold One`s focus has primarily been on
successfully bringing Modder East into production. With the solid operational
base that has been established the company is now in a position to dedicate
resources to focus on external, value accretive growth opportunities.
2. Financial Review
2.1. Overview
Cash Flow (Unaudited) Dec 2010 FY 2010
Quarter Annual
(US$ (US$
million) million)
Gold Sales 29.2 81.91
Payment to Operating Suppliers -11.77 -35.57
and Employees
Operating Cash Flow 17.43 46.34
Development and Capital -9.08 -31.46
Expenditure
Cash Flow from Operations 8.35 14.88
Exploration -1.3 -3.8
Corporate Overheads -1.23 -6.85
Bond Interest Payments -1.27 -5.08
Partial Bond Buyback - -4.2
Debt Facility Transaction -2.2 -3
Costs
Net Cash Flow 2.35 -8.05
Opening Cash in Bank and Gold 9.2 19.6
Receivables
Closing Cash in Bank and Gold 11.55 11.55
Receivables
Group gold revenue for the quarter was US$ 29.2 million. Group cash operating
costs were US$ 11.77 million, resulting in a positive operating cash flow of
US$ 17.43 million. After development and capital of US$ 9.08 million, the
group generated net cash flows of US$ 8.35 million from operations, 70% higher
than the September 2010 quarter. General and administration costs for the
quarter were higher than previous quarters` due to transaction costs payable
on the establishment and cancellation of the US$ 65 million debt facility for
the once-off bond put option. These once-off transaction costs amounted to US$
2.2 million over the quarter with a further US$ 1.3 million payable in the
first quarter of 2011.
Gold One ended 2010 with US$ 11.55 million of cash on hand and gold
receivables (including restricted cash of US$ 5.4 million) compared to an end
of September 2010 quarter cash on hand and receivables balance of US$ 9.2
million (including restricted cash of US$ 4.9 million). The quarterly interest
payment of US$ 1.27 million on the company`s 501 convertible bonds was made in
December 2010.
For the year, Gold One generated positive cash flow from Modder East and Sub
Nigel of US$ 14.88 million from revenue of US$ 81.91 million and group
operating costs of US$ 35.57 million. Development and capital expenditure for
the year across the Modder East and Sub Nigel operations was US$ 31.46
million.
(For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za)
Gold One, under its continuous disclosure obligations, would like to provide
guidance in respect of the results of its 2010 financial year ended 31
December 2010. Unaudited financials for 2010 indicate that Gold One achieved a
profit before tax of approximately US$ 18 million compared to a loss of US$
25.8 million in 2009. The profit is after a positive fair value adjustment on
its convertible bond liability of US$ 8.3 million arising from the weakening
of the US dollar compared to the Australian dollar over the period. The
convertible bonds are denominated in US dollars.
Profit before tax is reported in this release as the taxation adjustments for
the year-end have yet to be finalised. The group, however, will not be liable
for normal taxation on its mining activities until such time that it has fully
utilised the accumulated tax losses and claimed its significant balance of
redeemable capital expenditure available for offset against future taxable
income from mining.
2.2. Refinancing of the Convertible Bonds
On 15 November 2010 it was announced that none of the company`s convertible
bondholders intended to exercise their once-off put option to redeem their
bonds for cash. The company had a US$ 65 million bank facility credit approved
leading up to the put notification date but this facility was not required and
was terminated. The terms and conditions of the convertible bonds remain
unchanged with a maturity date of 13 December 2012, interest of 8.5% per annum
payable quarterly in arrears, and a redemption value of 109.6% of the nominal
value, unless converted into Gold One`s shares at the bondholders` option at
any time during the conversion period. Gold One can redeem all of the bonds if
the market value of the shares that would be issued on conversion exceeds 150%
of the conversion price.
3. Operational Review
3.1. Overview
Gold production for the December 2010 quarter amounted to 21,480 ounces, in
line with guidance of between 20,000 and 22,000 ounces and a 10% increase
relative to the September quarter`s 19,470 ounces. This increase in output is
despite the quarter under consideration being approximately 9% shorter due to
the cessation of mining on 23 December 2010, when mining stopped for the
company`s annual shutdown. During the December quarter, the South African
rand continued to appreciate against the US dollar, averaging ZAR 6.93 / US$ 1
for the quarter (compared to ZAR 7.33 / US$ 1 during the September 2010
quarter). Despite this, the company managed to maintain Modder East`s
operating costs at US$ 467/oz.
Annual 2010 gold production totalled 66,445 ounces at a cash cost of US$
484/oz. Although production levels were lower than anticipated, primarily due
to a 5-week strike during the June quarter and lower than anticipated ramp up
in the Raise Line 2 during the September quarter, costs were successfully
contained with equivalent cash costs for the year of US$ 423/oz at the
budgeted exchange rate of ZAR 8.41 / US$ 1.
During 2010, Modder East successfully maintained its safety record with a
progressive LTIFR of 0.48 per 200,000 hours, better than the Australian
benchmark of one LTIFR against which Gold One is measured.
(For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za)
3.2. Modder East
Modder East continued with its steady build up during the December quarter,
increasing gold production by 11% to 20,211 ounces on the back of a 12%
increase in tonnes mined from underground. The continued increase in output
is largely due to increased production levels from Raise Line 2 as the number
of panels mined in this area continues to increase, as well as an increased
number of mining panels being fully established, associated with increased
production efficiencies.
Modder East
Dec 2010 Sep 2010 2010 Total
Quarter Quarter
Ore Mined 96,332 t 85,769 t 301,481 t
Underground
Mined Grade 6.94 g/t 7.67 g/t 7.58 g/t
Milled Tonnes 96,916 t 83,726 t 292,908 t
Recovered Grade 6.49 g/t 6.76 g/t 6.63 g/t
Gold Recovery 96% 96.5% 96%
Gold Produced 20,211 oz 18,185 oz 62,404 oz
Modder East Cash US$ 467/oz US$ 483/oz US$ 484/oz
Cost
The plans below illustrate the extent of mining undertaken during 2010.
Although the bulk of mining during the year comprised ground mined from the
Raise Line 1 area, Raise Line 2 became an increasingly important production
area, particularly during the latter half of the year. This second raise line
will form the basis for production during 2011, together with Raise Line 3.
Although production from Raise line 3 is only planned to commence during the
June 2011 quarter, the respective initial mining panels are currently being
established and limited production is likely to commence from this area during
the March 2011 quarter.
(For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za)
Average mined in-situ grades for the Buckshot Pyrite Leader Zone (BPLZ) of the
Black Reef decreased from 12.8 grams per tonne in the September 2010 quarter
(over an average reef width of 123 centimetres) but remained in line with
expectations at an average of 10.9 grams per tonne over a reef width of 122
centimetres. As a result, the final diluted mined grade (including dilution
associated with reef development) decreased from 7.67 grams per tonne in the
September quarter to 6.94 grams per tonne during the December quarter. On-
reef development completed during the quarter represents the next areas
planned to be mined during the first half of 2011. Assay values over a total
of 270 metres of sampled on-reef development were obtained during the quarter
under review at an average grade of 14.6 grams per tonne over an optimised
mining width of 147 centimetres. This has provided further confidence in the
anticipated grades for 2011. In addition, the exposed portion of the
underlying Blanket Facies was sampled at an average grade of 0.94 grams per
tonne.
3.2.1. Development
As discussed in the September 2010 quarterly report, total development rates
have increased significantly since April 2010, largely due to an increase in
the number of development ends available for blasting. In the September
quarter, development priority was on opening up additional reef development,
particularly in the Raise Line 2 area, to support the continued ramp up in
production. This focus shifted during the December quarter to an increase in
the total off-reef development, while maintaining sufficient on-reef
development to sustain the planned production ramp up. As at 31 December
2010, on-reef development had opened sufficient face length to make some
71,760 square metres available for mining. This equates to in excess of six
months of mining at 2011 planned production rates i.e. production could be
maintained for some six months without any additional development being
undertaken.
For the December quarter, a total of 510 metres of on-reef development
(including 357 metres of primary development) and 666 metres of off-reef
development (including 630 metres of primary development) were completed.
(For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za)
3.2.2. Stoping and Ledging
During the December quarter, a step change in the quantum of square metres
mined was achieved and this ramp up was maintained through to the end of 2010.
This was largely due to a combination of the increase in the number of panels
mined as well as increased efficiencies associated with an increasing number
of established mining panels.
(For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za)
Mining at the start of the December quarter commenced on 37 panels, of which 7
were ledging panels. By the end of the December quarter a total of 40 panels
were being mined (10 of which were ledging), having replaced panels in the
Raise Line 1 area that had mined out against the shoreline. Almost half of
the currently mined panels (19) are located in the new Raise Line 2 area.
Mining efficiencies (illustrated as face advance in the diagram below)
initially decreased in the September quarter - associated with the opening of
new panels in the Raise Line 2 - but later increased during the December
quarter as the number of established mining panels increased. The combined
impact of an increased number of faces and increased mining efficiencies
resulted in a 12% quarterly increase in tonnage mined (equivalent to a 25%
increase considering a full production month in December).
(For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za)
3.2.3. Modder East Processing Plant
Metallurgical plant efficiencies remained consistent during the December
quarter with recoveries for Modder East ore of 96% being maintained. Modder
East recovered grades decreased marginally during the December quarter from
6.76 grams per tonne to 6.49 grams per tonne.
The decrease in recovered grade was partly due to the treatment of low grade
development ore during the December shutdown period. A total of 3,069 tonnes
of low grade ore intersected in footwall development was treated at an average
grade of 0.9 grams per tonne. Excluding this low grade material, the
recovered grade for Black Reef ore only was 6.67 grams per tonne for the
December quarter.
The gravity circuit in the plant was successfully commissioned in November
2010. Although the operating period to date is insufficient to conclusively
comment on operating and cost benefits of the gravity circuit, 33% of total
gold recovered during December was recovered through the gravity circuit.
3.2.4. Resources and Reserves
On 15 December 2010, the company announced an update on the mineral resources
and ore reserves for Modder East. Measured and indicated resources increased
by 19% from 2.63 million ounces (including 28.83 million tonnes at 2.84 grams
per tonne) to 3.13 million ounces (including 46.12 million tonnes at 2.11
grams per tonne). Inferred mineral resources increased by 16% from 1.04
million ounces (including 14.98 million tonnes at 2.16 grams per tonne) to
1.21 million ounces (including 20.73 million tonnes at 1.81 grams per tonne).
Total ore reserves increased by 13% from 1.36 million ounces (including 7.65
million tonnes at 5.51 grams per tonne) to 1.53 million ounces (including
11.93 million ounces at 4.0 grams per tonne). The increases in the total
resource and corresponding reserves were predominantly as a result of lowered
cut-off grades associated with increased commodity prices and weaker exchange
rates.
As a result of the updated production profile and increases in reserves, the
mine life at Modder East has been extended by five years to a total life of 13
years. The updated resources and reserves have been audited by SRK Consulting
(SA) (Proprietary) Limited.
Modder East Consolidated Mineral Resource Table1
Tonnes Grade Gold
Content
(Mt) (g/t) (Moz)
Measured BPLZ + Channel Facies2,6 0.29 16.25 0.15
Total Measured: 0.29 16.25 0.15
Indicated BPLZ + Channel Facies2,6 9.19 4.56 1.35
Black Reef Channel 33.19 1.11 1.18
Facies3
UK9a4,6 3.45 4.03 0.45
Total Indicated: 45.83 2.02 2.98
Total Measured and 46.12 2.11 3.13
Indicated:
Inferred BPLZ + Channel Facies2 2.62 1.85 0.16
Black Reef Channel 4.73 0.73 0.11
Facies3
UK9a4 3.97 3.03 0.39
UK5a5 9.41 1.82 0.55
Total Inferred: 20.73 1.81 1.21
Total Resource:7 66.85 2.02 4.34
1 Signed-off by Minxcon (Proprietary) Limited, independent resource
consultants to Gold One, audited by SRK Consulting
2 Quoted at a cut-off of 122 centimetre grams per tonne
3 Quoted at a cut-off of 260 centimetre grams per tonne
4 Quoted at a cut-off of 119 centimetre grams per tonne
5 Quoted at a cut-off of 496 centimetre grams per tone
6 Mineral resources are quoted inclusive of ore (mineral) reserves
7 Mineral resources are reported in accordance with the SAMREC Code
and would be identical if reported in accordance with the JORC Code
Modder East Consolidated Ore (Mineral) Reserve Table1
Tonnes Grade Gold
Content
(Mt) (g/t) (Moz)
Proved BPLZ + Channel Facies2 0.24 10.90 0.08
Total Proved: 0.24 10.90 0.08
Probable BPLZ + Channel Facies2 8.35 4.00 1.07
UK9a3 3.34 3.50 0.37
Total Probable: 11.69 3.86 1.45
Total Proved and Probable Reserve:4 11.93 4.00 1.53
1 Signed off by Turgis Consulting (Proprietary) Limited,
independent resource consultants to Gold One, audited by SRK
Consulting (SA)
2 Quoted at a cut-off of 149 centimetre grams per tonne
3 Quoted at a cut-off of 146 centimetre grams per tonne
4 Ore (mineral) reserves are reported in accordance with the SAMREC
Code and would be identical if reported in accordance with the JORC
Code
3.3. Sub Nigel
During the December quarter, the total gold production from the Sub Nigel
training centre amounted to 1,269 ounces, resulting in total 2010 annual
production of 3,980 ounces. During the quarter, a decision was taken to move
the majority of the training centre from Sub Nigel to Modder East as Sub Nigel
is connected to the historic underground mine workings of the East Rand Basin,
which, should the water level in the basin rise due to the cessation of
pumping by other mining operators, will have an effect on Sub Nigel. The
current water level at Sub Nigel is some 106 metres below the level where
training and stoping operations are conducted and it is estimated that should
all pumping cease, it will take approximately nine months for the underground
water level to reach the operating level. The winder at Sub Nigel is also
currently undergoing repair work and is expected to be fully functional at the
end of February 2011.
Sub Nigel December 2010 September 2010 Total
Quarter 2010 Quarter
Ore Mined Underground 15,349 t 13,024 t 46,847 t
Mined Grade 2.74 g/t 3.47 g/t 3.11 g/t
Milled Tonnes 17,456 t 15,338 t 54,397 t
Recovered Grade 2.26 g/t 2.61 g/t 2.28 g/t
Gold Recovery 92% 92% 92%
Gold Produced 1,269 oz 1,285 oz 3,980 oz
4. Exploration and Projects
4.1. Modder East
On 10 November 2010, the company announced the results of its surface drilling
programme at Modder East, which confirmed an extension to the high grade
Shoreline Facies of the Black Reef (the Shoreline Facies represents the
highest grade area of the BPLZ of the Black Reef). The total exploration
programme considered five surface exploration boreholes (DD65 to DD69). The
first three of these boreholes (DD65 to DD67) were considered during the
upgraded Modder East resource estimation discussed above. The confirmation of
a high grade intersection in the Black Reef Shoreline Facies in borehole DD67
prompted the drilling of another two boreholes, DD68 and DD69. Both boreholes
successfully intersected high grade shoreline as illustrated in the table
below. DD68 and DD69 have not yet been included in the resource estimate.
BH_ID Reef Depth Dip Corrected
Intersected
(m) Channel Grams cm.g/t Grams per
Thickness per Tonne over
(cm)1 Tonne2 100 cm Mining
Width3
DD68_D0 BPLZ 262.29 72 177.14 12,723 127.23
Channel 263.01 553 0.59 328
Facies
DD68_D1 BPLZ 261.98 77 358.90 27,530 275.30
Channel 262.75 412 1.14 471
Facies
DD69_D0 BPLZ 261.89 56 37.32 2,085 20.85
Channel 262.45 427 6.00 2,563
Facies
DD69_D1 BPLZ 263.19 55 44.10 2,412 24.12
Channel 263.74 422 5.15 2,173
Facies
1Channel thickness represents the true, dip corrected thickness of the BPLZ /
Channel Facies, rounded off to the nearest centimetre. Dip corrections are
undertaken based on dip measurements from core bedding angles, which typically
vary between 1 and 4 degrees.
2Represents the average grade over the true thickness of the total BPLZ /
Channel Facies, calculated using a weighted average of assayed grade from
individual samples over the total channel thickness (individual sample lengths
are typically between 15 centimetres and 30 centimetres).
3Represents the average grade over a mining thickness of 100 centimetres,
diluted at 0.0 grams per tonne. Resources are determined and quoted over a
minimum 100 centimetre mining cut.
The 2010 surface exploration drilling campaign at Modder East comprised a
total of five boreholes, totalling 1,729 metres of drilling at a cost of ZAR
2.19 million.
Following the successful drilling campaign, a decision was taken to continue
further drilling in the northeastern portion of the Black Reef orebody. This
continued surface exploration drilling at Modder East commenced during January
2011, and will initially comprise three boreholes with a step out of 100
metres to 150 metres to the north, northwest and east of the existing
boreholes described above.
(For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za)
4.2. Ventersburg
The completion of a successful scoping study during the March quarter of 2010
(the results of which were announced on 13 April 2010) supported the decision
to continue with the Ventersburg surface exploration drilling campaign.
During 2010, 8,004 metres were drilled at the project (3,282 metres completed
during the December quarter), comprising a total of 10 boreholes at a total
cost of ZAR 12.46 million (of which ZAR 5.22 million was spent during the
December quarter).
This additional drilling information allowed for confident geological
modelling of the A Reef horizon, the primary gold target at Ventersburg. This
modelling considered both 3D modelling of the orebody, which occurs from
depths of 350 metres below surface and dips at 17 degrees to the north-west
(indicated mineral resource considers a maximum depth of 1,100 metres below
surface), and also facilitated the definition of higher grade (payshoot) areas
relative to lower grade areas (refer to figure below). In addition, the more
extensive drilling significantly increased the total area considered for
resource estimation.
In early December 2010, Gold One announced a 70% increase in the Ventersburg
indicated resource to 2.45 million ounces (including 20.42 million tonnes at
3.70 grams per tonne). Previously Ventersburg had an indicated resource of
1.44 million ounces (including 8.73 million tonnes at 5.12 grams per tonne).
Inferred resources decreased by 22% from 1.84 million ounces (including 13.48
million tonnes at 4.24 grams per tonne) to 1.44 million ounces (including
13.44 million tonnes at 3.31 grams per tonne).
The upgraded resource estimation forms the basis of a pre-feasibility study
for Ventersburg, currently being conducted by Turgis Consulting. This study
is due to be completed by the end of the first quarter in 2011. Surface
exploration drilling is continuing at Ventersburg with the immediate focus to
delineate the shallow (approximately 300 metres below surface) south-eastern
limit of the orebody, as well the eastern limit of the currently modelled
higher grade payshoot area.
(For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za)
4.3 Megamine
As previously reported, Gold One has entered into a process of acquiring
control of JSE-listed White Water Resources. This will be achieved through
vending the Megamine portfolio into White Water Resources in return for 1.05
billion White Water Resources shares at ZAR 0.25 each. White Water Resources
will be renamed Goliath Gold once White Water Resources shareholders have
approved the transaction. The transaction will crystallise approximately ZAR
260 million (A$ 38.6 million) of value for Gold One shareholders. It is
expected that the general meeting for White Water Resources shareholders to
approve the transaction will take place during the March 2011 quarter.
4.4 East Rand Boundary Project
The East Rand Boundary Project (ERBP) considers the shallow portions (less
than 500 metres below surface) of Gold One`s New Kleinfontein, Turnbridge and
Modder North properties, where the Main Reef has previously been selectively
mined. The primary focus during 2010 was on gaining access to the underground
workings in an effort to confirm the extent of historic mining as well as to
undertake selective re-sampling of the workings to confirm historic sampling
databases. The total exploration expenditure on this project during 2010
amounted to ZAR 4.04 million, of which ZAR 1.0 million was incurred during the
December quarter.
Resampling at the Turnbridge property collected in excess of 2,000 samples for
567 complete sample sections. This information has been used to update
geological models and resource estimates. The resource estimate was completed
during the December quarter of 2010 and is currently being audited by SRK
Consulting (SA). On the basis of the updated resource, a pre-feasibility
study is being undertaken on the Turnbridge property and is due to be
completed during the current quarter. This study will also form the basis of
an application for a mining right over this area.
At Modder North, 1,503 samples have been collected from the historic
underground workings. These have been utilised to verify historic sampling
results and refine existing geological models. This data is currently being
used to determine resources for the Modder North property that will represent
the first resource declared over Modder North by Gold One. In addition to
defining a maiden resource, a prospective down-dip extension to the mined out
areas of Modder North has been identified and will form the target of a
surface exploration drilling campaign during 2011. Here, the targeted Main
Reef occurs at depths of between 300 metres and 700 metres below surface. In
addition, this property currently falls within the existing mining license for
Modder East, which, pending successful exploration results, should facilitate
the fast tracking of this project.
5. Resources and Reserves
On 15 December 2010, Gold One announced updated resources and reserves for its
flagship Modder East gold mine. With resources and reserve updates announced
during the quarter for the Ventersburg and Megamine projects, Gold One`s total
resource base increased to 21.71 million ounces of gold, including 8.60
million ounces in the measured and indicated resource categories (88.09
million tonnes at 3.03 grams per tonne) and 13.11 million ounces in the
inferred category (103.06 million tonnes at 3.95 grams per tonne). The
company`s proved and probable reserves have increased to 1.53 million ounces
(including 11.93 million tonnes at 4.0 grams per tonne).
Gold One International Consolidated Mineral Resource Statement
Tonnes Grade Gold
Content
Measured (Mt) (g/t) (Moz)
Modder East 1,2 0.29 16.25 0.15
Total Measured: 0.29 16.25 0.15
Indicated Modder East 1,2 45.83 2.02 2.98
Megamine 3 21.55 4.36 3.02
Ventersburg 4 20.42 3.70 2.45
Total Indicated: 87.80 2.99 8.45
Total Measured and 88.09 3.03 8.60
Indicated:
Inferred
Modder East 2 20.73 1.81 1.21
New Kleinfontein and 4.27 6.00 0.83
Turnbridge 5
Ventersburg 4 13.44 3.31 1.44
Megamine 3 64.62 4.64 9.63
Total Inferred: 103.06 3.95 13.11
Total Measured, Indicated and 191.15 3.53 21.71
Inferred: 6
1 Mineral Resources are quoted inclusive of ore reserves
2 Signed-off by Minxcon, independent resource consultants to Gold
One, audited by SRK Consulting (SA)
3 Signed-off by Dr I C Lemmer and Minxcon, independent resource
consultants to Gold One, audited by SRK Consulting (SA)
4 Signed-off by Dr I C Lemmer, independent resource consultant to
Gold One, audited by SRK Consulting (SA)
5 Signed-off by Camden Geoserve Close Corporation, independent
resource consultants to Gold One, audited by SRK Consulting (SA)
6 Mineral resources are reported in accordance with the SAMREC
Code and would be identical if reported in accordance with the
JORC Code
Gold One International Mineral (Ore) Reserve Statement1,2
Tonnes Grade Gold
content
(Mt) (g/t) (Moz)
Modder Proved Reserves 0.24 10.90 0.08
East
Probable Reserves 11.69 3.86 1.45
Probable and Proven 11.93 4.00 1.53
Reserves
1 Signed off by Turgis Consulting, independent resource
consultants to Gold One, audited by SRK Consulting (SA),
BPLZ was estimated at a cut-off of 149 centimetre grams
per tonne and UK9a estimated at a cut-off of 146
centimetre grams per tonne
2 Ore (mineral) reserves are reported in accordance with the
SAMREC Code and would be identical if reported in accordance with
the JORC Code
6. Outlook
The continued build up in production levels at Modder East during the
September and December quarters of 2010 has provided the company with a solid
foundation to achieve its 2011 production guidance of 120,000 ounces at
average cash costs of US$ 417/oz as outlined below:
- March 2011 quarter - 25,000 ounces
- June 2011 quarter - 28,000 ounces
- September 2011 quarter - 34,000 ounces
- December 2011 quarter - 33,000 ounces
During the upcoming quarter, the first phase of the surface exploration
programme at Modder East is expected to be completed and, pending the outcome
of drilling results, may be continued and/or the findings thereof incorporated
into an updated resource and reserve estimation.
The continued exploration drilling at Ventersburg will be utilised in
finalising the pre-feasibility study, due to be completed by the end of the
first quarter of 2011. Following this, extensions to the existing resource as
well as in-fill drilling to enhance confidence in the initial areas planned to
be mined (based on the outcome of the pre-feasibility study) will be
undertaken.
The surface exploration drilling programme at Modder North will commence
following the drilling at Modder East. A preliminary economic scoping study is
currently underway on the basis of Modder North`s underground sampling
results.
Desktop studies are continuing at Megamine, aimed at refining the planned
exploration programme. This largely considers both the upgrading of
production from the existing Sub Nigel shaft as well as surface drilling
targeting the shallower UK9a Reef and Main Reef extensions to the already
modelled resources. This drilling is anticipated to commence during the June
2011 quarter.
7. Capital Structure
As at 31 December 2010, the company had an issued share capital of 806,875,987
shares. As announced on 13 January 2011, the company issued a further 204,918
shares post the end of the quarter, increasing the issued share capital to
807,080,905 of which 431,875,533 (53.5%) are held on the Australian register
and 375,205,372 (46.5%) are held on the SA register.
(For the release with pictures and schematics, please refer to the Company`s
website: www.gold1.co.za)
ENDS
Issued by Gold One International Limited
Website: www.gold1.co.za
Parktown, Johannesburg
31 January 2011
JSE SPONSOR
Macquarie First South Advisers (Pty) Limited
Neal Froneman President and CEO
+27 11 726 1047 (office) +27 83 628 0226 (mobile)
neal.froneman@gold1.co.za
Ilja Graulich Investor Relations
+27 11 726 1047 (office) +27 83 604 0820 (mobile)
ilja.graulich@gold1.co.za
Carol Smith Investor Relations
+27 11 726 1047 (office) +27 82 338 2228 (mobile)
carol.smith@gold1.co.za
Derek Besier Farrington National Sydney
+61 2 9332 4448 (office) +61 421 768 224 (mobile)
derek.besier@farrington.com.au
About Gold One
Gold One is a gold producer listed on the financial markets operated by the
ASX Limited and the JSE Limited, issuer code GDO. Its flagship operation is
the newly built shallow Modder East mine on the East Rand, some 30 kilometres
from Johannesburg.
Modder East is the first new mine to be built in the region in 28 years and
distinguishes itself from most of the other gold mines in South Africa owing
to its shallow nature (300 metres to 500 metres below surface). To date Modder
East has provided direct employment opportunities for over 1,100 people. Gold
One also owns the nearby existing Sub Nigel mine, which is used primarily as a
training centre in the buildup of Modder East to full production. Gold One`s
other projects and targets include Ventersburg in the Free State Goldfields,
the Tulo concession in Mozambique and the Etendeka greenfield project in
Namibia. Gold One has an issued share capital of 807,080,905 shares.
Office details
Sydney Head Office
Level 3, 100 Mount Street North Sydney NSW 2060
PO Box 1244 North Sydney NSW 2059
Telephone: +61 2 9963 6400
Fax: +61 2 9963 6499
Johannesburg Corporate Office
45 Empire Road, First Floor
Parktown, 2193
Gauteng, South Africa
Telephone: +27 11 726 1047
Fax: +27 11 726 1087
Issued capital
807,080,905 shares in issues
Options (listed and unlisted: 85,806,927)
ADR ratio: 1 ADR = 10 ordinary shares
Stock Exchange Listings
ASX/JSE Limited: GDO
OTCQX International: GLDZY
Directors
N J Froneman (President and CEO)
C D Chadwick (Chief Financial Officer)
M K Wheatley (Non-Executive Chairman)
B E Davison (Non-Executive Director)
K V Dicks (Non-Executive Director)
W B Harris (Non-Executive Director)
S Swana (Non-Executive Director)
K J Winters (Non-Executive Director)
Company Secretaries
K M Pickering
P B Kruger
Registrars
Registries Limited
Level 7
207 Kent Street
Sydney
NSW
Australia
2000
Tel: +61 2 9290 9600
South African Transfer Secretaries
Computershare Investor Services
70 Marshall Street
Johannesburg
2001
Level 1 ADR sponsor
The Bank of New York Mellon
Depositary Receipts Division
101 Barclay St, 22nd Floor
New York, New York 10286 USA
Tel: +1 212 815 3700
Fax: +1 212 571 3050
Auditors
PricewaterhouseCoopers
201 Sussex Street
Sydney, New South Wales 1171
Australia
Telephone: +61 2 8266 000
This news release does not constitute investment advice. Neither this news
release nor the information contained in it constitutes an offer, invitation,
solicitation or recommendation in relation to the purchase or sale of
securities in any jurisdiction.
FORWARD-LOOKING STATEMENT:
This release includes certain forward-looking statements and forward-looking
information. All statements other than statements of historical fact included
in this release including, without limitation, statements regarding future
plans and objectives of Gold One International Limited are forward-looking
statements (or forward-looking information) that involve various risks,
assumptions and uncertainties. There can be no assurance that such statements
will prove to be accurate and actual values, results and future events could
differ materially from those anticipated in such statements. Important factors
could cause actual results to differ materially from Gold One`s expectations.
Such factors include, among others: the actual results of exploration
activities; actual results of reclamation activities; the estimation or
realisation of mineral reserves and resources; the timing and amount of
estimated future production; costs of production; capital expenditures; costs
and timing of the development of Modder East and new deposits; availability of
capital required to place Gold One`s properties into production; the ability
to obtain or maintain a listing in South Africa, Australia, Europe or North
America; conclusions of economic evaluations; changes in project parameters as
plans continue to be refined; future prices of gold and other commodities;
possible variations in ore grade or recovery rates; failure of plant,
equipment or processes to operate as anticipated; accidents; labour disputes
and other risks of the mining industry; delays in obtaining governmental
approvals, permits or financing or in the completion of development or
construction activities, economic and financial market conditions; political
risks; Gold One`s hedging practices; currency fluctuations; title disputes or
claims limitations on insurance coverage. Although Gold One has attempted to
identify important factors that could cause actual results to differ
materially, there may be other factors that cause results not to be as
anticipated, estimated or intended.
Any forward-looking statements in this release speak only at the time of
issue. There can be no assurance that such statements will prove to be
accurate as actual values, results and future events could differ materially
from those anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements. Gold One does not
undertake to update any forward-looking statements that are included herein,
or revise any changes in events, conditions or circumstances on which any such
statement is based, except in accordance with applicable securities laws and
stock exchange listing requirements.
COMPETENT PERSON
The information in this release that relates to exploration results, mineral
resources or ore reserves is based on information compiled by Dr Richard
Stewart, who has a doctorate in geology and who is a professional natural
scientist registered with the South African Council for Natural Scientific
Professions (SACNASP), membership number 400051/04. Dr Stewart is also a
member of the Geological Society of South Africa (GSSA) and Senior Vice
President: Business Development for Gold One, with which he is a full-time
employee. He has 10 years` experience which is relevant to the style of
mineralisation and type of deposit under consideration, and to the activity
which he is undertaking, to qualify as a Competent Person for the purposes of
both the 2004 Edition of the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (JORC Code) and the 2007 Edition
of the South African Code for Reporting of Exploration Results, Mineral
Resources and Mineral Reserves (SAMREC Code). Dr Stewart consents to the
inclusion in this release of the matters based on information compiled by Gold
One employees and it`s consultants in the form and context in which they
appear. Further information on Gold One`s resource statement is available in
the pre-listing statement of Gold One International Limited issued on 19
December 2008 and in the resource statements released by Gold One on the ASX
Company Announcements Platform and the Stock Exchange News Service (SENS) on
11 October 2010 (Megamine), 7 December 2010 (Ventersburg), and 15 December
2010 (Modder East).
SAMREC AND JORC TERMINOLOGY
In addition, this release uses the terms `indicated resources` and `inferred
resources` as defined in accordance with the SAMREC Code, prepared by the
South African Mineral Resource Committee (SAMREC), under the auspices of the
South African Institute of Mining and Metallurgy (SAIMM), effective March 2000
or as amended from time to time and where indicated in accordance with the
Canadian National Instrument 43-101 - Standards for Disclosure for Mineral
Projects. The terms `indicated resources` and `inferred resources` are also
defined in the 2004 Edition of the JORC Code, prepared by the Joint Ore
Reserves Committee (JORC) of the Australasian Institute of Mining and
Metallurgy (AusIMM), the Australian Institute of Geoscientists (AIG) and the
Minerals Council of Australia (MCA). (The use of these terms in this release
is consistent with the definitions of both the SAMREC Code and the JORC Code.)
A mineral reserve (or `ore reserve` in the JORC Code) is the economically
mineable part of a measured or indicated resource demonstrated by at least a
preliminary feasibility study. This study must include adequate information on
mining, processing, metallurgical, economic and other relevant factors that
demonstrate at the time of reporting that economic extraction can be
justified. A mineral reserve includes diluting materials and allows for losses
that may occur when the material is mined. A proven mineral reserve (or
`proved ore reserve` in the JORC Code) is the economically mineable part of a
measured resource for which quantity, grade or quality, densities, shape and
physical characteristics are so well established that they can be estimated
with confidence sufficient to allow the appropriate application of technical
and economic parameters to support production planning and evaluation of the
economic viability of the deposit. A probable mineral reserve (or `probable
ore reserve` in the JORC Code) is the economically mineable part of an
indicated mineral resource for which quantity, grade or quality, densities,
shape and physical characteristics can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and economic
parameters to support mine planning and evaluation of the economic viability
of the deposit.
A mineral resource is a concentration or occurrence of natural, solid,
inorganic or fossilised organic material in or on the earth`s crust in such
form and quantity and of such a grade or quality that it has reasonable
prospects for economic extraction. The location, quantity, grade, geological
characteristics and continuity of a mineral resource are known, estimated or
interpreted from specific geological evidence and knowledge. A measured
mineral resource is that part of a mineral resource for which quantity, grade
or quality, densities, shape and physical characteristics can be estimated
with a level of confidence sufficient to allow the appropriate application of
technical and economic parameters to support mine planning and evaluation of
the economic viability of the deposit. The estimate is based on detailed and
reliable exploration, sampling and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits,
workings and drillholes that are spaced closely enough to confirm both
geological and grade continuity. An indicated mineral resource is that part of
a mineral resource for which quantity, grade or quality, densities, shape and
physical characteristics can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and economic
parameters to support mine planning and evaluation of the economic viability
of the deposit. The estimate is based on detailed and reliable exploration and
testing information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drillholes that are spaced
closely enough for geological and grade continuity to be reasonably assumed.
An inferred mineral resource is that part of a mineral resource for which
quantity and grade or quality can be estimated on the basis of geological
evidence and limited sampling and reasonably assumed, but not verified,
geological and grade continuity. The estimate is based on limited exploration
and sampling gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drillholes. Mineral resources which are
not mineral reserves do not have demonstrated economic viability. Investors
are cautioned not to assume that all or any part of the mineral deposits in
the measured and indicated resource categories will ever be converted into
reserves. In addition, "inferred resources" have a great amount of uncertainty
as to their existence and economic and legal feasibility. It cannot be assumed
that all or any part of an inferred mineral resource will be ever be upgraded
to a higher category. Under South African and Australian rules, estimates of
inferred mineral resources may not form the basis of feasibility or pre-
feasibility studies or economic studies except under conditions noted in the
SAMREC Code and the JORC Code, respectively.
Investors are cautioned not to assume that all or any part of an inferred
resource exists or is economically or legally mineable. Exploration data is
acquired by Gold One and its consultants under strict quality assurance and
quality control protocols.
No stock exchange, securities commission or other regulatory authority has
approved or disapproved the information contained herein.
Date: 31/01/2011 07:05:06 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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