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GDO - Gold One International Limited - Quarterly activities report
Quarter ended 30 September 2011
Gold One International 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 30 September 2011
September 2011 Quarter Highlights
- Net cash flow from operations increased quarter-on-quarter by 97% to US$
30.69 million
- Cash and gold receivables balance increased quarter-on-quarter by 72% to
US$ 43.31 million
- 23% increase in quarterly gold production to 35,128 ounces, exceeding
guidance of 34,000 ounces
- Modder East mined tones and grade increased by 16% and 19% respectively
- Total production of 89,827 ounces for the March, June and September 2011
quarters
- Modder East quarterly cash cost of US$ 478/oz
- Gold One takes over daily management of Rand Uranium and initiates
Uranium Project review
- Shareholders approve capital injection of A$ 150 million from future
strategic partner
December 2011 Quarter Outlook
- Company is well positioned to attain both quarterly and annual production
guidance of 33,000 ounces and 120,000 ounces respectively
- Completion of an updated Ventersburg resource estimate to underpin the
modified pre-feasibility study
- Modder North exploration project to be fast tracked
- Anticipated completion of the Jintu, Goliath Gold and Rand Uranium
transactions
September 2011 Quarter Key Performance Data
(Average Exchange Rate of ZAR 7.13 / US$ 1)
(June 2011 Quarter Average Exchange Rate of ZAR 6.75 / US$ 1)
September 2011 Modder Sub Total June 2011
Quarter East Nigel Quarter
Ore Mined 182 908 t 5 157 t 188 065 t 164 939 t
Underground
Mined Grade 8.39 g/t 2.93 g/t 8.24 g/t 6.89 g/t
Milled Tonnes 155 471 t 6 293 t 161 764 t 157 883 t
Recovered Grade 6.89 g/t 3.30 g/t 6.75 g/t 5.62 g/t
Gold Recovery 96% 92% 96% 96%
Gold Produced 34 460 oz 668 oz 35 128 oz 28 511 oz
Modder East Cash US$ 478/oz US$ 541/oz
Cost*
Modder East Cash US$ 777/oz US$ 879/oz
and Capital Cost
Group Development US$ 10.70 million US$ 9.36
and Capex million
Group Gold Revenue US$ 59.72 million US$ 43.08
million
Average Gold Price US$ 1 710/oz US$ 1 501/oz
Received
*Cash cost refers to all costs directly associated with mining activities,
mine administration, processing and refining.
1. CEO`s Review
It gives me great pleasure to advise that Gold One produced 35,128 ounces
for the September 2011 quarter. This exceeds guidance of 34,000 ounces and
is a 23% increase relative to the June quarter`s 28,511 ounces, bringing
the total production for the year to date to 89,827 ounces. Gold
production for the quarter under review was especially pleasing as the
production period was three days shorter than usual, owing to the Rand
Refinery closing for stock take on 28 September, 2011. Current production,
combined with the mining flexibility that has been created at Modder East,
has positioned the company well to achieve its target of 120,000 ounces for
2011. For the December 2011 quarter, the company has forecast production
of 33,000 ounces.
The significant increase in gold production, combined with higher gold
prices, resulted in group gold revenue for the quarter under review of US$
59.72 million, while group cash operating costs were US$ 17.86 million,
resulting in a positive operating cash flow of US$ 41.86 million. Cash
costs for the group were US$ 478/oz with a total cost* of US$ 744/oz
recorded for the quarter. Gold One ended the September 2011 quarter with
US$ 43.31 million of cash on hand and gold receivables (including
restricted cash of US$ 4.53 million).
Despite the increase in mining volumes, our South African operations
reduced the progressive lost-time injury frequency rate per 200,000 man
hours from 0.86 to 0.72 for 2011.
In line with the company`s growth strategy, Gold One has made significant
headway on both the Rand Uranium acquisition and the Jintu transaction.
Most pleasing was the support received for the Jintu transaction, with more
than 60% of the eligible shareholders participating in the vote and over
99% voting in favour of the injection of at least A$ 150 million in new
capital into Gold One by way of an issue of shares to the consortium. The
transaction is progressing well.
The completion of the Rand Uranium acquisition is still subject to the
necessary consents being obtained from the Department of Mineral Resources
of South Africa ("DMR"), which we are confident of receiving by the end of
2011. Following Competition Commission approval for the Rand Uranium
acquisition, the company recently signed an Interim Management and Funding
Agreement with Rand Uranium. Gold One has since taken over the daily
management of both the Cooke Underground Operations and the Randfontein
Surface Operations.
As part of Gold One`s turnaround strategy for Rand Uranium, the Cooke
Underground Operations and the Randfontein Surface Operations have been
given separate operational and managerial focuses as two distinct business
units. The clear distinction between underground and surface operations is
a critical step in restructuring the Cooke and Randfontein operations to
provide appropriate focus and capacity to ensure a successful underground
turnaround and surface operational growth. In line with the focuses on the
two separate business units Syd Caddy, an existing executive of Gold One
and Senior Vice President: Operations, has been appointed to manage the
Cooke Underground Operations. Dick Plaistowe, who has recently joined the
Gold One Executive as Senior Vice President: Surface Operations, will
assume responsibility for the Randfontein Surface Operations.
Dick will also be responsible for the Cooke Uranium Project together with
Roland Freeman, VP: Engineering, who recently joined Gold One to manage the
Uranium Project. External consultants have been approached to undertake an
extensive review of the existing feasibility study for the uranium plant
that was previously undertaken by Rand Uranium, with a view to commencing
uranium production by 2015. Discussions have also been initiated with
international banks to evaluate third party vendor financing for the
plant`s construction, planned to commence in early 2013.
The company`s internal project pipeline has also continued to advance. A
scoping study has been initiated for the Modder North property on the back
of exciting exploration results where the Buckshot Pyrite Leader Zone
("BPLZ"), the primary orebody at Modder East, of Black Reef was intersected
at depths of 160 to 180 metres below surface, combined with encouraging
intersections of the underlying Main Reef (at depths less than 500 metres
below surface). This study will run in parallel with the ongoing
exploration programme in order to fast track the Modder North production
opportunity. Considering that Modder North is located within the Modder
East Mining Licence area and that it has the possibility of sharing
metallurgical infrastructure and other resources with the existing Modder
East operation, the project could be rapidly brought to account.
At Ventersburg, the exploration drilling of the identified eastern
extension is due to be completed during the December 2011 quarter and will
underpin an updated mineral resource estimate for this project. This in
turn will be utilised to complete the modified pre-feasibility anticipated
to be finalised during the December 2011 quarter.
The solid operational foundation created at Modder East, combined with the
exciting pipeline of projects, ensures that Gold One is well positioned for
sustained future growth.
*Total cost refers to the sum of the cash cost, depreciation and royalties.
Capital expenditure, finance costs and corporate costs are excluded from
total cost.
2. Financial Review
Cash Flow (Unaudited) September June
2011 2011
Quarter Quarter
(US$ (US$
Million) Million)
Gold Sales 59.72 43.08
Payment to Operating Suppliers and Employees -17.86 -18.13
Operating Cash Flow 41.86 24.95
Development and Capital Expenditure -11.17 -9.36
Cash Flow from Operations 30.69 15.59
Exploration -2.50 -2.36
Corporate Overheads -3.30 -2.33
Annual Bonuses - -1.91
Bond Interest Payments -1.27 -1.27
Transaction Costs -2.04 -1.26
Working Capital and Exchange Rate Movement -3.40 -
Net Cash Flow 18.18 6.46
Opening Cash in Bank and Gold Receivables 25.13 18.67
Closing Cash in Bank and Gold Receivables 43.31 25.13
Group gold revenue for the quarter was US$ 59.72 million, while group cash
operating costs were US$ 17.86 million, resulting in a positive operating
cash flow of US$ 41.86 million. After development and capital expenditure
of US$ 11.17 million, the group generated a net cash flow from operations
of US$ 30.69 million, which is 97% higher than the June 2011 quarter`s net
cash flow from operations of US$ 15.59 million. General and administration
costs for the September 2011 quarter were higher than the June 2011
quarter`s due to transaction costs payable for the Goliath Gold Mining
Limited ("Goliath Gold"), formerly White Water Resources Limited ("WWR"),
transaction, the Rand Uranium transaction and the Jintu transaction. The
transaction costs amounted to US$ 2.04 million over the quarter.
Gold One ended the September 2011 quarter with US$ 43.31 million of cash on
hand and gold receivables (including restricted cash of US$ 4.53 million),
compared to an end of June 2011 quarter cash on hand and receivables
balance of US$ 25.13 million (including restricted cash of US$ 5.28
million). The quarterly interest payment of US$ 1.27 million on the
company`s 500 convertible bonds was made in September 2011.
Figure 1: Group Gold Sales and Revenue
(For the release with pictures and schematics, please refer to the
company`s website: www.gold1.co.za)
3. Operational Review
During the September 2011 quarter gold production amounted to 35,128
ounces, exceeding guidance of 34,000 ounces. This represents a 23%
increase in production compared to the June 2011 quarter`s 28,511 ounces.
Total production for the year to date amounts to 89,827 ounces and the
company remains on track to achieve the total year guidance of 120,000
ounces.
Figure 2: Quarterly Group Gold Production
(For the release with pictures and schematics, please refer to the
company`s website: www.gold1.co.za)
3.1 Modder East
Modder East September 2011 June 2011 Quarter
Quarter
Ore Mined Underground 182 908 t 158 226 t
Mined Grade 8.39 g/t 7.03 g/t
Milled Tonnes 155 471 t 150 043 t
Recovered Grade 6.89 g/t 5.74 g/t
Gold Recovery 96% 96%
Gold Produced 34 460 oz 27 683 oz
Cash Cost US$ 478/oz US$ 541/oz
For the September 2011 quarter, production from Modder East amounted to
34,460 ounces, reflecting a 24% increase on the previous quarter`s 27,683
ounces. This substantial increase is attributable to a 16% increase in
production volumes and a 19% increase in mined grade relative to the June
2011 quarter. The average mined grade for the quarter under review was 8.39
grams per tonne. Of the 182,908 tonnes mined during the September 2011
quarter, 24,104 tonnes were generated from footwall development that mined
through the underlying Kimberley Reef horizons. Excluding this low grade
development ore, 158,804 tonnes of Black Reef ore were mined at a grade of
9.62 grams per tonne. This represents an 8% quarter-on-quarter increase in
Black Reef volumes and a 28% increase in mined grade compared to the June
2011 quarter`s 7.53 grams per tonne. As reported previously, the grade
mined during the June 2011 quarter was adversely affected by a localised
geological structure associated with abnormal geotechnical conditions.
This structure was successfully negotiated and mining teams were able to
safely reduce the amount of dilution mined during the September 2011
quarter, facilitating the increased grade.
During both the June and September 2011 quarters mined low grade
development ore from the Kimberley Reef horizons was stockpiled on surface,
comprising 26,750 tonnes at the end of the September 2011 quarter. The
existing secondary crushing circuit at Modder East is required when
production volumes exceed 70,000 tonnes per month and it is therefore
envisaged that this stockpile will be utilised for the commissioning of
this circuit. Prior to the commissioning of the secondary crushing
circuit, this stockpile also provides significant benefit and flexibility
to the metallurgical plant by serving as an additional grinding media to
the Modder East ore and thereby reducing operating costs (discussed in
further detail in Section 3.4).
During the quarter under review, mining in Raise Lines 1 and 2 continued as
planned. The sustained increase in production was largely supported by the
establishment of new panels and continued increasing production in the
western section of Raise Line 2 and Raise Line 3. Mining in the eastern
portion of Raise Line 1 progressed as planned and has continued to
accommodate training centre activities since the relocation of the centre
from Sub Nigel.
3.2.1. Stoping and Ledging
Modder East maintained its build up in square metres mined during the
quarter under review with a 16% quarter-on-quarter increase to 37,769
square metres. Following the mining of the localised palaeohigh area, as
reported in the June 2011 Quarterly Report, significant focus was placed on
safely reducing the mined stope width facilitating a reduction in the
dilution of the mined grade. As such, the 16% increase in area mined
translated to an 8% increase in equivalent tonnes mined.
The September 2011 quarter commenced with 62 panels available for mining,
of which 11 were at a ledging (establishment) stage. At the end of the
September 2011 quarter a total of 70 panels were available for mining, of
which 19 were in the ledging phase. Although some panels mined out against
the shoreline as planned in Raise Line 1 and 2, there has been a
substantial increase in the establishment of new panels being ledged in
Raise Lines 2, 3 and the eastern portion of Raise Line 1.
Figure 3: Square Metres Mined per Quarter
(For the release with pictures and schematics, please refer to the
company`s website: www.gold1.co.za)
Figure 4: Ore Tonnes Mined
(For the release with pictures and schematics, please refer to the
company`s website: www.gold1.co.za)
3.2.2. Development
Total development for the September 2011 quarter increased by 4% to 1,541
metres compared to the previous quarter`s 1,488 metres. Trackless off-reef
development for the September 2011 quarter totalled 807 metres while the on-
reef development increased to a total of 575 metres.
Life of mine planning currently being undertaken has indicated that current
development rates are sufficient to support the planned production build up
to steady state. However, the company is targeting off-reef development
rates of approximately 900 metres per quarter. This is being undertaken to
both maximise operational flexibility and also to ensure maximum
utilisation of the decline that has a design capacity of 125,000 tonnes per
month (which at steady state production will consist of 100,000 reef tonnes
and 25,000 tonnes of waste rock). The higher development rates will be
maintained during the production build up until the increased reef
production displaces off-reef development tonnes.
Mining flexibility in the form of square metres available for mining (ore
reserves already opened up through development) were maintained during the
quarter under review totalling some 95,100 square metres available at the
end of the quarter. This was achieved despite the increased monthly
production rates and provides approximately seven-and-a-half months of
mining flexibility at current production rates.
During the September 2011 quarter, assay values over a total of 288 metres
of sampled on-reef development were obtained for the BPLZ at an average in-
situ grade of 14.90 grams per tonne over an optimised mining width of 130
centimetres. In addition, the exposed portion of the underlying Basal Unit
was sampled at an average grade of 1.34 grams per tonne over an average
width of 76 centimetres. The company is also pleased to report on the
results of the additional exposure of the Upper Kimberley (UK9a) Reef,
which constitutes approximately 30% of the expected life of mine ore
reserves. Sampling values obtained over a distance of 48 metres of the
UK9a Reef returned an average grade of 2.89 grams per tonne over a 100
centimetre mining width. In the higher grade payshoot areas, sampling
results reflected 3.78 grams per tonne over 100 centimtres (optimal mining
width) over a distance of 36 metres. The sampling results obtained to date
have continued to confirm the modelled UK9a payshoots and associated
mineral resource grades.
Figure 5: Total Developments Metres
(For the release with pictures and schematics, please refer to the
company`s website: www.gold1.co.za)
3.3. Sub Nigel
Sub Nigel September 2011 June 2011
Quarter Quarter
Ore Mined Underground 5 157 t 6 713 t
Mined Grade 2.93 g/t 3.55 g/t
Milled Tonnes 6 293 t 7 840 t
Recovered Grade 3.30 g/t 3.29 g/t
Gold Recovery 92% 92%
Gold Produced 668 oz 828 oz
During the September 2011 quarter a total of 6,293 tonnes was processed
from Sub Nigel through the Modder East metallurgical plant, of which 5,157
tonnes were mined during the quarter while the balance was sourced from a
surface stockpile carried over from the June 2011 quarter.
Mined grades decreased slightly as expected to 2.93 grams per tonne,
compared to 3.55 grams per tonne for the June 2011 quarter. This was
largely due to the downscaling and eventual ceasing of stoping operations.
Further to the flooding of Sub Nigel 1 Shaft`s 19 Level on 15 June, 2011,
all mining operations carried out on 17 Level were stopped on 10 September,
2011, and the hoisting of rock to surface stopped on 17 September, 2011.
The reclamation of equipment is continuing safely and it is envisaged that
all operations will cease by mid-November 2011. The training centre in its
entirety, including both underground and surface facilities, has been
relocated to Modder East.
Recovered grades from Sub Nigel ore at the Modder East metallurgical plant
remained constant at 3.30 grams per tonne, resulting in the production of
668 ounces from Sub Nigel for the quarter.
3.4. Modder East Metallurgical Plant
The total number of tonnes milled during the quarter under review increased
to 161,764 tonnes, while plant efficiencies remained consistent with
metallurgical recoveries of 96% being maintained.
The metallurgical plant utilises a semi autogenous milling circuit for
throughput below 70,000 tonnes per month. Much of this autogenous grinding
media was provided through the processing of Sub Nigel material. Once
monthly throughput exceeds 70,000 tonnes per month, the already completed
secondary crushing circuit will be introduced into the circuit and the
milling circuit will be converted to a ball mill circuit only, with no
further autogenous milling required.
During the September 2011 quarter, 10,876 tonnes of stockpiled low grade
Modder East development ore was processed. The average recovered grade
from treatment of the development ore was approximately 0.77 grams per
tonne. Although the treatment of this low grade ore adversely impacts on
the total recovered grade, while there is additional capacity in both the
communition and plant recovery circuits during production ramp up,
processing of this lower grade ore is economically viable. In addition it
also acts as a grinding media for the Black Reef ore, thereby reducing
operating costs.
Modder East recovered grades of 6.89 grams per tonne were achieved for the
quarter under review, representing a 20% increase compared to the previous
quarter`s 5.74 grams per tonne. Excluding the low grade development ore, a
recovered grade of 7.35 grams per tonne was achieved.
The Knelson Concentrator has continuously exceeded its planned recoveries
of approximately 40% and maintained a 44% recovery for the September 2011
quarter.
4. Exploration and Projects
4.1. Modder North
The Modder North project is located approximately six kilometres north of
Modder East and occurs within Modder East`s current Mining Licence area.
On the basis of historical information, the Modder North exploration
programme was designed to test both the shallow (less than 500 metres)
unmined areas of the Main Reef as well as potential Black Reef occurrences
developed further north of the current Modder East operation. This
drilling programme commenced during the June 2011 quarter and during the
current reporting period further exploration drilling, comprising a total
of 1,412 metres at a total cost of US$ 0.22 million, was completed.
The initial surface exploration programme comprised five diamond drill
boreholes, of which three have been completed, that targeted the Main Reef
at maximum depths of up to 550 metres. In addition to Main Reef the first
borehole, MN1, intersected Black Reef (part of the BPLZ and the primary
reef horizon mined at Modder East) at a depth of 168 metres below surface.
This intersection yielded an average grade of 4.13 grams per tonne over a
reef width of 49 centimetres. Although this grade is relatively low by
Modder East standards, it was viewed as significant in terms of potentially
defining a favourable environment for the deposition of Black Reef as
previously mined in other areas of the East Rand Basin.
The second borehole, MN3, intersected a well-developed and mineralised
Black Reef containing an average grade of 23.55 grams per tonne over an
average reef thickness of 95 centimetres. The nature of the buckshot
pyrite mineralisation is similar to that of a typical BPLZ Reef mined at
Modder East, confirming the prospectivity of the project. In MN4 only the
upper portion of the BPLZ was intersected with the remainder having been
displaced by a structural discontinuity. It is, however, similar in
appearance to that intersected in MN3 and additional deflections are
currently being drilled in this borehole to attempt a complete intersection
of the BPLZ.
Although the Main Reef intersected in borehole MN1 yielded disappointing
results, the intersections in MN3 and MN4 were better developed, in
particular MN4, where the first two intersections yielded an average grade
of 26.0 grams per tonne over 30 centimetres (or 7.80 grams per tonne over a
100 centimetre mining width). A well developed Main Reef was also been
intersected in MN2, although assay results for this borehole are still
outstanding.
Considering the shallow depths at which the Black Reef occurs and that the
Modder North project is located within the existing Modder East Mining
Licence area, combined with the possibility of sharing metallurgical
infrastructure and other resources with the Modder East operation,
production at Modder North could potentially be significantly fast tracked.
As a result of the successful Black Reef intersections and initial
promising results on the Main Reef, the company has decided to
simultaneously commence with a conceptual study at Modder North to be
undertaken in parallel with an accelerated exploration programme. Pending
successful exploration results, the scoping study could be rapidly
progressed to pre-feasibility and feasibility studies.
Modder North September 2011 Quarter Drilling Results
Borehole REEF Depth (m) Dip Corrected
Name Bottom
Contact
Channel g/t 2 cm.g/t
Thickness
(cm) 1
MN_1 BSPL 167.75 50 3.80 189
MN_1 4D BSPL 168.21 53 4.39 231
MN_1 5D BSPL 168.53 44 4.29 188
MN_1 Main Reef 435.01 10 0.31 3
MN_1 1D Main Reef 435.50 12 5.79 70
MN_1 2D Main Reef 434.89 10 0.10 1
MN_3 BSPL 179.47 119 31.37 3727
MN_3 3D BSPL 179.21 112 25.82 2894
MN_3 4D BSPL 178.43 57 2.88 163
MN_3 Main Reef 473.92 12 0.60 7
MN_3 1D Main Reef 476.68 16 14.50 228
MN_3 2D Main Reef 470.08 11 4.00 43
MN_4 Main Reef 479.59 30 24.84 734
MN_4 1D Main Reef 479.64 30 28.02 828
1Channel thickness represents the true, dip corrected thickness of the
Reef. Dip corrections are undertaken based on dip measurements from core
bedding angles.
2 Represents the average grade over the true thickness of the total reef,
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).
4.2. Ventersburg
As described in the June 2011 Quarterly Report, a review of the pre-
feasibility study undertaken at Ventersburg indicated that the project
could potentially be significantly optimised and enhanced through the
addition of shallower resources, which would facilitate rapid orebody
access. A shallow extension to the eastern-most payshoot at Ventersburg
was modelled and drilling within this area continued during the quarter
under review. This drilling programme is planned to be completed by the
beginning of the December 2011 quarter and will be utilised to update the
existing resource estimate. The updated resource estimate will form the
basis of an updated pre-feasibility to be completed by December 2011.
Updated structural models for the eastern area have been completed and are
currently being utilised to refine the initial mine design layouts.
During the September 2011 quarter five boreholes were completed comprising
5,492 metres at a total cost of US$ 0.96 million. Assay results obtained
during the quarter are illustrated in the table below (refer to June 2011
Quarterly Report for information on remaining boreholes drilled in the
eastern area). Of the boreholes completed during the quarter under review,
only AFO-051 did not intersected A Reef due to a fault loss. AFO-049, AFO-
060 AFO-066 and AFO-071 intersected A Reef with geological characteristics
similar to those intersected in the other boreholes drilled in the eastern
target area. AFO-063 and AFO-072 have also intersected A Reef, however,
assay results for these boreholes are still outstanding.
Figure 6: Ventersburg Borehole Plan and Current Drilling Programme
(For the release with pictures and schematics, please refer to the
company`s website: www.gold1.co.za)
Ventersburg September 2011 Quarter Drilling Results
BH_ID REEF Depth Dip Corrected
(m)
Bottom
Contact
Channel g/t 2 cm.g/t
Thickness
(cm) 1
AFO049_1D A REEF 722.95 121 3.22 390
AFO049_2D A REEF 724.58 124 1.95 243
AFO049_3D A REEF 724.41 127 2.01 256
AFO049_4D A REEF 724.50 141 1.37 193
AFO051 Reef faulted out
AFO060_1D A REEF 665.88 199 3.86 769
AFO060_2D A REEF 665.78 195 2.77 540
AFO060_3D A REEF 666.52 205 2.99 613
AFO066 A REEF 782.05 116 1.92 222
AFO066_1D A REEF 782.05 115 2.64 303
AFO066_2D A REEF 781.71 110 2.31 254
AFO066_3D A REEF 781.67 117 1.91 224
AFO066_4D A REEF 782.16 115 1.63 188
AFO071 A REEF 601.78 86 1.53 132
AFO071_1D A REEF 601.82 89 1.00 89
AFO071_2D A REEF 601.89 92 1.52 140
AFO071_3D A REEF 601.60 90 3.34 300
1 Channel thickness represents the true, dip corrected thickness of the
reef. Dip corrections are undertaken based on dip measurements from core
bedding angles.
2 Represents the average grade over the true thickness of the total reef,
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).
4.3. Megamine
During the September 2011 quarter exploration, sampling and geological
modelling continued at the Megamine project under the control and
management of Goliath Gold, formerly WWR, a company in which Gold One will
own a 71% majority share. Gold One has entered into a management contract
with Goliath Gold to facilitate the sharing of costs, management and
technical expertise.
On October 13, 2010, Gold One announced the creation of Goliath Gold
through the reverse takeover of WWR and the planned vending of the Megamine
assets into WWR, which was later renamed as Goliath Gold. The transaction
is expected to be concluded during the beginning on 2012 and is discussed
in detail in Section 5.1. of this quarterly report.
4.4. Tulo
At Tulo, situated 20 kilometres south of the Tanzanian border in
northwestern Mozambique, Gold One`s primary objective is the exploration
and development of a shear hosted gold mineralisation target. Gold One has
established an exploration camp on Lake Malawi, 20 kilometres west of the
Tulo concession area and during the past quarter the primary focus has been
on constructing an access road to the outcropping orebody to establish
access for drill rigs. As at the end of the quarter, some 18 kilometres of
the road had been completed with a further 1.8 kilometres remaining to
reach the site where a drilling and prospecting camp is to be established.
Roads to drill sites will be prepared from this camp site.
Fugro Airborne Surveys (Pty) Limited have been contracted to conduct a high
resolution helicopter-borne geophysical survey of Tulo and the surrounding
areas during the December 2011 quarter. The survey will include magnetic,
radiometric and digital elevation model surveys to facilitate the
positioning of initial drill targets.
Remote Drilling Services specialises in rough terrain drilling conditions
and will be visiting the Tulo concession during November 2011 to inspect
the terrain and drilling conditions. Drilling is planned to commence during
the June 2012 quarter, after the wet season.
Regional geological reconnaissance work at Tulo has identified historical
trenches over the primary shear zone target. These trenches are currently
being cleared in preparation for a re-sampling programme planned to be
undertaken during the upcoming quarter.
Total exploration expenditure at Tulo for the year to date has amounted to
US$ 0.39 million, of which US$ 0.08 million was incurred during the
September 2011 quarter.
5. Corporate Development
5.1. Goliath Gold (Formerly WWR)
On 13 October, 2010, Gold One announced the proposed creation of Goliath
Gold, formerly WWR, through the disposal of Gold One Africa Limited`s
("Gold One Africa") Megamine business to Goliath Gold for ZAR 262 million,
to be paid in Goliath Gold shares resulting in Gold One owning 71% of
Goliath Gold.
Vending Gold One`s Megamine assets into Goliath Gold will allow for these
resources to be fully developed while not detracting from Gold One`s stated
focus on the development of shallow resources and also not negatively
impacting Gold One`s strong cash flow status. In addition, the Wit Nigel
Prospecting Right currently held by Goliath Gold is located adjacent to the
Megamine assets and will benefit from the regional geological modelling
already undertaken at the Megamine project. Gold One has already entered
into a management contract with Goliath Gold such that both parties benefit
from the synergy of shared costs, management and technical expertise.
The Goliath Gold transaction is progressing well with, as was previously
advised, Goliath Gold shareholders having approved the transaction on 22
March, 2011. The remaining conditions precedent are in the process of
being fulfilled and, as was further advised on 28 September, 2011, the date
for such fulfillment has been extended by mutual agreement between the
parties from 30 September, 2011, to 31 January, 2012, to accommodate, inter
alia, DMR approval timelines.
Refer to the joint announcement released by Gold One and WWR, released on
the ASX Company Announcements Platform and SENS on 13 October, 2010.
5.2. Rand Uranium
On 24 May 2011, Gold One announced that, subsequent to a competitive sales
process, it had signed a Sale of Shares Agreement to acquire 100% of Rand
Uranium (Proprietary) Limited ("Rand Uranium") for a purchase price of US$
250 million. Rand Uranium`s assets and operations are situated in the West
Rand, 30 kilometres from Johannesburg, South Africa.
Following Competition Commission approval for the acquisition on 8 August,
2011, Gold One and Rand Uranium concluded an Interim Management and Funding
Agreement. Gold One has now taken over the daily management of the Cooke
Underground and Randfontein Surface Operations. The clear distinction
between the underground and surface operations is a critical step in
restructuring the Cooke and Randfontein operations to provide appropriate
focus and capacity, which is necessary to ensure a successful underground
turnaround and surface operational growth.
Syd Caddy, an existing executive of Gold One and Senior Vice President:
Operations, will be responsible for managing the Cooke Underground
Operations. As per the announcement on 5 September, 2011, several
additional experienced mining personnel have been employed or seconded to
the Cooke Operations to provide the necessary key expertise for the planned
turnaround strategy.
Dick Plaistowe Senior Vice President: Surface Operations, who was recently
appointed to the Gold One Executive, has assumed responsibility for the
Randfontein Surface Operations and will also be responsible for the Cooke
Uranium Project. The primary focus of this project is the construction of
a uranium metallurgical plant to treat the existing Cooke 1 tailings
deposit. In addition, the company is also reassessing the potential
treatment of several other surface tailings deposits that exist on the
present mining and prospecting licenses held by Rand Uranium (refer to the
announcement made on 28 April, 2011, for details regarding Rand Uranium`s
mineral resources and ore reserves).
Roland Freeman has joined Gold One as Vice President: Engineering and has
been appointed as the project manager for the Cooke Uranium Project.
Roland has in excess of 30 years experience in the mining industry and was
recently the group technical consultant for Simmer and Jack Mines Limited.
During this tenure he was intimately involved with the construction and
commissioning of the uranium and gold plants at First Uranium`s Ezulwini
and Mine Waste Solutions Operations.
Gold One has commenced with a review of the Cooke Uranium Project
feasibility study previously undertaken by Rand Uranium. External
consultants have been engaged to reassess the existing feasibility study
for the proposed uranium plant with a view to commencing production by
2015. Discussions have also been initiated with international banks to
evaluate third party vendor financing for the plant`s construction, planned
to commence in early 2013.
The Rand Uranium acquisition is progressing well with a significant portion
of the conditions precedent having been fulfilled. On 29 August, 2011, Gold
One announced that it had signed the financing agreements with Investec
Bank Limited for the Rand Uranium acquisition. The primary outstanding
condition precedent to the completion of the transaction is receipt of the
necessary consents being obtained from the DMR. The company is confident
of receiving these by the end of 2011. Refer to "Gold One to Acquire 100%
of Rand Uranium", released on the ASX Company Announcements Platform and
SENS on 28 April, 2011.
5.3 Jintu Transaction
On 16 May, 2011, Gold One announced that it had entered into an agreement
to implement a transaction with a consortium of Chinese investors, whereby
the consortium is seeking to become Gold One`s major shareholder and long
term strategic partner through both a takeover offer and share
subscription. With the consortium`s support Gold One will be ideally
positioned to partake in the future consolidation of the African and
international gold mining industries. The consortium shares in and supports
Gold One`s business and growth strategies and both entities have identified
various areas in which complementary skills can be leveraged.
The takeover offer and subscription by the consortium is progressing well.
The approvals of the Australian Securities and Investments Commission, the
ASX Limited, the JSE Limited and the South African Takeover Regulation
Panel were obtained before the issue of documents to shareholders on 8
August, 2011, which issue triggered the commencement of the takeover offer.
It was also announced on 8 August, 2011, that unconditional South African
Competition Commission approval had been obtained and, on 6 September,
2011, that Namibian Competition Commission approval had also been obtained.
The resolutions to approve, inter alia, the subscription were approved by
an overwhelming majority of shareholders at Gold One`s general meeting held
on 7 September, 2011. The main outstanding conditions precedent includes
FIRB approval and approvals from the various Chinese regulatory bodies.
Independent of the above transaction the consortium previously acquired,
through a subsidiary of one of its members, 17.7% or 142,689,350 Gold One
shares previously held by Navada Trading (Pty) Limited, a subsidiary of
African Global Capital (SA) (Pty) Limited. The consortium has subsequently
announced on 29 September, 2011, that it currently has an interest in Gold
One of 168,984,109 shares or 20.89%
Refer to "Cash Offer to Gold One Shareholders of A$ 0.55 per Share",
release on released the ASX Company Announcements Platform and SENS on 16
May, 2011.
6. Outlook
With the excellent production output from Modder East and continued
increasing operational flexibility, the company has continued to build on
the solid foundation that it has established throughout this year. For the
December 2011 quarter, 33,000 ounces of gold production is being targeted,
which will also result in the achievement of Gold One`s annual gold
production target of 120,000 ounces.
The company is well positioned to develop its growth pipeline and, in line
with these plans, Gold One announced several key appointments focused on
increasing management and operational capacity. With Gold One having taken
over the daily management of the Rand Uranium operations, the upcoming
quarter will be focused on implementing the planned turnaround strategy.
This will include a detailed review of the mine plan and underground
exploration targets facilitating production forecasts for 2012. In
addition, the company will focus on its objectives of reducing operational
costs and increasing operational efficiency and flexibility at the
underground operations.
On the surface operations, the review of the existing surface deposits at
Rand Uranium will continue and it is envisaged that economic scoping and
prefeasibility studies will be considered on identified targets. The
review of the Uranium Project feasibility study will continue during the
December 2011 quarter, with specific emphasis on the capital costs and
metallurgical process.
At Ventersburg, an updated mineral resource estimate considering the newly
identified eastern extension will be completed, which will underpin the
modified pre-feasibility study. Additional drill rigs have been employed
at the Modder North Project in an effort to fast track this exploration and
to gain a better understanding of the potential of the Black Reef and
underlying Main Reef targets. Pending successful exploration results, an
initial resource estimate for this area is anticipated in early 2012.
On the corporate development front, the company looks forward to receiving
DMR approval for both the Goliath Gold and Rand Uranium transactions,
effectively fulfilling the last outstanding conditions precedent relating
to these transactions. The completion of the Jintu transaction is
progressing well and the company is confident that it will receive the
necessary remaining approvals, both in China and Australia, in due course.
7. Capital Structure
As of the release of this report, the company has 809,004,592 shares in
issue, of which 598,320,637 (73.96%) are held on the Australian register
and 210,683,955 (26.04%) are held on the South African register. The
company has 86,535,981 listed and unlisted options in issue.
Figure 7: ASX September 2011 Quarter Trading Statistics
(For the release with pictures and schematics, please refer to the
company`s website: www.gold1.co.za)
Figure 8: JSE September 2011 Quarter Trading Statistics
(For the release with pictures and schematics, please refer to the
company`s website: www.gold1.co.za)
Issued by Gold One International Limited
www.gold1.co.za
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
1,500 people. Gold One also owns the nearby existing Sub Nigel mine, which
was until recently used primarily as a training centre in the build-up 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.
Office Details
Sydney Head Office
Level 3, 100 Mount Street,
North Sydney, NSW 2060
Australia
PO Box 1244 North Sydney NSW 2059
Telephone: +61 2 9963 6400
Fax: +61 2 9963 6499
Johannesburg Corporate Office
Constantia Office Park, Bridgeview House, Ground Floor
Corner 14th Avenue and Hendrik Potgieter Street Weltevreden Park, 1709,
Gauteng, South Africa
Telephone: +27 11 726 1047
Fax: +27 11 726 1087
Issued Capital
809,004,592 shares in issues
Options (listed and unlisted: 86,535,981)
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
B Snell (Australia)
P B Kruger (South Africa)
Registrars
Boardroom 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 Incorporated
201 Sussex Street
Sydney, NSW 1171
Australia
Telephone: +61 2 8266 0000
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 Announcements Platform and the
Stock Exchange News Service (SENS) on 11 October 2010 (Megamine), 7
December 2010 (Ventersburg), and 15 December 2010 (Modder East) and in the
2010 Annual Report released on 28 February 2011.
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.
Weltevreden Park
17 October 2011
JSE SPONSOR
Macquarie First South Capital (Pty) Limited
Date: 17/10/2011 08:10:01 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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