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GDO - Gold One International Limited - Quarterly Activities Report / Quarter
Ended 31 December 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
OTCQX International: GLDZY
ISIN: AU000000GDO5
("Gold One" or the "company")
Quarterly Activities Report
Quarter Ended 31 December 2011
December 2011 Quarter Highlights
- 33,352 ounces produced for the December 2011 quarter, surpassing guidance
of 33,000 ounces
- 123,179 ounces produced for the 2011 year, exceeding guidance of 120,000
ounces
- Modder East achieves quarterly cash cost of US$ 468/oz and annual cash
cost of US$ 491/oz
- Cash and gold receivables, excluding the capital injection, increased by
80% to US$ 77.96 million
- Completion of the Jintu transaction and subsequent A$ 150 million (US$
152.28 million) capital injection into Gold One
- Post capital injection, cash and gold receivables balance increased
quarter-on-quarter by 432% to US$ 230.24 million
Lost-time injury-free quarter with a low 2011 progressive lost-time
injury frequency of 0.54 per 200,000 hours worked
- 71% increase in Modder East measured mineral resources and 17% increase
in Ventersburg indicated mineral resources
- Completion of Ventersburg pre-feasibility study
- Converted Modder East Mining Licence granted
- Rand Uranium transaction completed in early January 2012
March 2012 Quarter Outlook
- March 2012 quarter production forecast of 68,000 ounces:
- 34,000 ounces from the Modder East Operations
- 26,000 ounces from the Cooke Underground Operations
- 8,000 ounces from the Randfontein Surface Operations
- 2012 production forecast of 300,000 ounces:
- 150,000 ounces from the Modder East Operations
- 118,000 ounces from the Cooke Underground Operations
- 32,000 ounces from the Randfontein Surface Operations
- Establishment of a Hong Kong office
- Updated mineral (ore) reserves for Modder East
- Modder North exploration project to be fast-tracked
- Anticipated completion of the Goliath Gold transaction
December 2011 Quarter Key Performance Data
(Average Exchange Rate of ZAR 8.12 / US$ 1)
(September 2011 Quarter Average Exchange Rate of ZAR 7.13 / US$ 1)
Modder East December September
2011 2011
Quarter Quarter*
Ore Mined 194 760 t 188 065 t
Underground
Mined Grade 7.10 g/t 8.24 g/t
Milled Tonnes 167 308 t 161 764 t
Recovered Grade 6.20 g/t 6.75 g/t
Gold Recovery 96% 96%
Gold Produced 33 352 oz 35 128 oz
Modder East Cash US$ 468/oz US$ 478/oz
Cost**
Modder East Cash US$ 770/oz US$ 777/oz
and Capital Cost
Group Development US$ 11.27 US$ 10.70
and Capex million million
Group Gold Revenue US$ 56.09 US$ 59.72
million million
Average Gold Price US$ 1 US$ 1
Received 685/oz 710/oz
2011 Annual Key Performance Data
(Average Exchange Rate of ZAR 7.25 / US$ 1)
(2010 Average Exchange Rate of ZAR 7.34 / US$ 1)
2011 Financial Modder Sub Total 2010
Year East Nigel* Financial
Year
Ore Mined 660 289 t 15 810 t 676 099 348 328 t
Underground t
Mined Grade 7.74 g/t 3.35 g/t 7.64 g/t 6.98 g/t
Milled Tonnes 596 430 t 15 616 t 612 046 347 305t
t
Recovered Grade 6.34 g/t 3.31 g/t 6.26 g/t 5.95 g/t
Gold Recovery 96% 92% 96% 95.9%
Gold Produced 121 518 oz 1 661 oz 123 179 66 445 oz
oz
Modder East Cash US$ 491/oz - US$ US$ 484/oz
Cost** 491/oz
Modder East Cash US$ 819/oz - US$ US$ 968/oz
and Capital Cost 819/oz
Group Development US$ 41.72 million US$ 31.46
and Capex million
Group Gold Revenue US$ 194.31 million US$ 81.91
million
Average Gold Price US$ 1 572/oz US$ 1 252/oz
Received
*September 2011 quarter data included delivery from Sub Nigel, while
December 2011 quarter data relates exclusively to Modder East, following
the closure of Sub Nigel during the September 2011 quarter.
**Cash cost refers to all costs directly associated with mining
activities, mine administration, processing and refining.
1. CEO`s Review
The 2011 year was all about the growth of Gold One and the leveraging off of
the strong operational base that had been set by Modder East during 2010.I am
extremely pleased that Gold One reached a significant milestone in this
regard, namely, ending the financial year with the successful closing of the
Jintu transaction and thus introducing a new strategic shareholder and partner
to the Gold One Group. This transaction has resulted in the transformation of
the company, with the consortium now holding 89.17% of the share capital in
Gold One and A$ 150 million (US$ 152.28 million) in new capital being injected
into the company. The consortium is supportive of Gold One`s fundamental
growth strategy and is committed to providing financial, technical and
corporate resources to support our internal and external growth strategy of
becoming a million ounce producer in the coming years.
The company subsequently also opened the new financial year with the closing
of the Rand Uranium (Pty) Limited transaction. While the introduction of the
consortium as our strategic partner has strengthened the company`s ability to
grow organically and acquisitively, the integration of the Cooke Operations,
acquired through the Rand Uranium transaction, has seen the company
immediately increase its production profile. This transaction has allowed the
Gold One Group to transition from a junior gold mining company to a mid-tier
player with multiple production assets.
Gold One ended the December 2011 quarter with an extremely pleasing production
performance. The company continued to build off the solid foundation provided
by the ramp up at the Modder East Operations and quarterly production targets
were consistently surpassed throughout 2011. The December 2011 quarter`s
production amounted to 33,352 ounces, exceeding guidance of 33,000 ounces,
with production for the 2011 year thus amounting to 123,179 ounces. In
addition to improving on last year`s output by 85%, the company also
maintained its proud safety record, ending the year with a lost-time injury
frequency rate per 200,000 hours worked for 2011 of 0.54.
A December 2011 quarter group cash cost of US$ 468/oz was achieved in an
exchange rate environment of ZAR 8.12 / US$ 1, with a total cost* of US$
688/oz recorded for the quarter. For the year, we managed to produce gold at
an average cash cost of US$ 491/oz, given an average exchange rate of ZAR 7.25
/ US$ 1.
Group gold revenue for the quarter under review was US$ 56.09 million, while
group cash operating costs were US$ 16.53 million, resulting in a positive
operating cash flow of US$ 39.56 million. During the December 2011 quarter,
Gold One increased its cash on hand and gold receivables by 80% from the
September 2011 quarter balance of US$ 43.31 million, to US$ 77.96 million. The
cash balance was further boosted by US$ 152.28 million to US$ 230.24 million
with the injection of capital from the strategic shareholder. The cash balance
includes restricted cash of US$ 4.40 million. I am pleased to report that the
company expects to achieve its earnings forecast for 2011. The full audited
annual financial statements are expected to be released toward the end of
February 2012.
Production ramp up and mining flexibility at Modder East is continuing in line
with our plans. Increased on-reef development has increased available face
length such that, at the end of December 2011, Modder East had effectively
opened up sufficient reserves to support our production profile for a period
of approximately eight months, should no further development take place. This
level of flexibility, combined with the continuous build up in production
levels, underpins our confidence in achieving our Modder East guidance of
150,000 ounces for 2012. I am also delighted to announce that the converted,
new order, Modder East Mining Licence was granted during the quarter under
review.
Following the successful closing of the Rand Uranium transaction, the company
has fully implemented the separation of the Randfontein-based operations into
two distinct business units, namely, the Randfontein Surface Operations and
the Cooke Underground Operations. The acquisition of the operations has also
doubled Gold One`s production forecast for 2012, with production forecasts of
118,000 ounces from the underground operations and 32,000 ounces from the
surface operations. This production, combined with the operations`
substantial mineral resources and mineral (ore) reserves base, adds quality
long term production life to the Gold One Group. Syd Caddy, Senior Vice
President: Operations, has taken control of the Cooke Operations and his
management and leadership, combined with his significantly enhanced and
capable team, are well entrenched. The operations are advancing strongly with
the implementation of a detailed turnaround strategy - the benefits of which
will start to be realised during the March 2012 quarter. The turnaround
strategy for the Cooke Operations commenced during the quarter under review
with ZAR 265 million (US$ 32.80 million) targeted annual savings to be
achieved during 2012. Over two years, the company is targeting a sustainable
profitability enhancement of in excess of ZAR 500 million per year (US$
61.89 million). Achieving this turnaround strategy would bring the operation
in line with our planned operating cash costs of approximately US$ 1,000/oz by
2014, excluding co-product uranium benefits which we anticipate by 2015.
Delivery at the Cooke Operations has continued with a focus on asset
optimisation and the uranium co-product mining strategy. The Cooke Operations
team, with its significant gold and uranium mining experience, is well placed
to bring the Cooke assets to account and I remain excited about the value-add
that these assets create for our portfolio. As part of the Rand Uranium
transaction, Gold One acquired a high quality, low risk, ready-to-build and
proven uranium development project with substantial growth potential. The
primary focus of the Cooke Uranium Project is the construction of a uranium
metallurgical plant to treat the high grade Cooke Tailings Deposit with
supplementary uranium bearing ore from the Cooke Operations. Senior Vice
President: Surface Operations Dick Plaistowe is leading a review of the
substantial feasibility work undertaken on the project by the previous owners
and the company is targeting uranium production in 2015. Review studies have
been initiated and definitive capital costs and timelines will be provided on
the completion of these studies.
I am pleased to announce that Gold One has also entered into a Memorandum of
Understanding with Gold Fields Limited ("Gold Fields"), with the view to
investigate the joint processing of both companies` tailings in the West Rand
area. The combination of resources and infrastructural synergies present an
exciting opportunity for the Joint Venture and is a significant step towards
the growth of Gold One`s surface business.
The success of the Gold One Group is largely dependent on the competence and
skill-set of our team. As the company continues to transform in line with both
its corporate and operational growth objectives, people remain the company`s
most valuable asset. We are very serious about ensuring that Gold One has
sufficient capacity to deliver on our strategy of value accretive growth and
the senior appointments we have made are testament to this commitment. I am
pleased to welcome several new senior appointments to the Gold One team,
namely, Hartley Dikgale, who has been appointed as Senior Vice President:
General Counsel, and Grant Stuart, who has been appointed as Vice President:
Investor Relations. Both Mr Dikgale and Mr Stuart were previously members of
the Rand Uranium Executive. Nomakuze Mguqulwa has joined Gold One as Vice
President: Corporate Affairs, and Mbali Magudulela has joined as Vice
President: Human Resources. I am confident that our new appointments,
together with our pre-existing strong and competent team, will achieve great
success.
Reflecting back to Gold One`s beginnings in 2009, Gold One has transitioned
from a gold explorer and developer, to a gold producer. Production from
Modder East has increased consistently and this, together with the closing of
the Jintu and Rand Uranium transactions in late 2011 and early 2012,
respectively, has seen the transformation of Gold One into a mid-tier gold
producer. During 2012, we are looking forward to continued ramp up in
production from Modder East, a well-structured turnaround plan for the Cooke
Underground Operations, dedicated focus on the Randfontein Surface Operations,
further progress on the Cooke Uranium Project and the advancement of key
projects.
In addition to progressing our substantial internal project pipeline, the
company remains focused on value accretive external acquisitions that enhance
our production profile with quality assets that fit the Gold One strategy. In
this regard, the company is evaluating several possible opportunities.
In summary, we are well positioned to continue our growth during 2012 and I
look forward to reporting on our progress.
*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. Strategic Update
Following the significant support for the Jintu transaction, the company has
planned several key strategic focus areas for the upcoming months. The
introduction of the Gold One Group`s new majority shareholder and strategic
partner has culminated in a partnership with strong mining, finance and
investment expertise, providing Gold One with both financial and technical
support for its transformation into a leading global mining company.
Partnering with the consortium allows Gold One the opportunity to leverage off
the more than 30-year international track record of the CITIC Group, which,
along with the People`s Republic of China`s Gansu Provincial Government, owns
Baiyin Non-Ferrous Group Co Limited ("Baiyin"). Baiyin is a 60% stakeholder
within the consortium.
As a leading state-owned multinational financial and industrial conglomerate,
the CITIC brand boasts international recognition. The CITIC Group is a Fortune
Global 500 corporation comprising 44 subsidiaries and operates within the
financial services, civil infrastructure, energy and resources, real estate,
manufacturing, engineering contracting, information technology and trading
services sectors, among others.
With the CITIC Group`s premium corporate brand in Asian financial markets,
Gold One will benefit substantially from access, as required, to the Asian
capital markets. The company will also have access to large business networks
and a greater number of potential business partners, providing exposure to
potential acquisition opportunities. Together with the consortium`s financial
support and commitment, Gold One will be uniquely positioned as an active
participant in the consolidation of the African and global gold mining
industries.
Gold One will initiate a listing on the Hong Kong Stock Exchange, which is
envisaged to take place within nine to 18 months` time. To support the
listing and growth in this region, Gold One is focused on rapidly developing a
presence in Hong Kong where it is currently establishing an office.
Together with our partners, we are looking forward to growing our business
with a view to be ranked among the top global gold mining companies. This will
be achieved through the successful and continued ramp up of our existing
operations, internal growth through our substantial project pipeline, and
value accretive external growth opportunities. The underlying Gold One
business model of focusing on high margin and high quality assets has
underpinned the success of the company to date and will remain the strategic
underpin for the company in the future.
3. Financial Review
Cash flow (Unaudited) December Septembe Annual Annual
2011 r 2011 2011 2010
Quarter Quarter (US$ (US$
(US$ (US$ Million) Million)
Million) Million)
Gold Sales 56.09 59.72 194.31 81.91
Payment to Operating -16.53 -17.86 -66.36 -35.57
Suppliers and Employees
Operating Cash Flow 39.56 41.86 127.95 46.34
Development and Capital -11.27 -11.17 -41.72 -31.46
Expenditure
Cash Flow from Operations 28.29 30.69 86.23 14.88
Exploration -1.55 -2.50 -8.07 -3.80
Corporate Overheads -3.40 -3.30 -9.75 -6.85
Annual Bonuses -1.16 - -3.07 -
Bond Interest Payments - -1.27 -3.81 -5.08
Transaction Costs -0.94 -2.04 -4.66 -3.00
Partial Bond Buyback - - - -4.20
Share Options Exercised 14.58 - 14.58 -
Tax to be Paid on Share 5.37 - 5.37 -
Options
Subscription Cash Received 152.28 - 152.28 -
Working Capital and -6.54 -3.40 -10.41 -
Exchange Rate Movement
Net Cash Flow 186.93 18.18 218.69 -8.05
Opening Cash in Bank and 43.31 25.13 11.55 19.60
Gold Receivables
Closing Cash in Bank and 230.24* 43.31 230.24* 11.55
Gold Receivables
*Excluding the capital injection, the quarter`s cash balances increased from
US$ 43.31 million to US$ 77.96 million, reflecting an increase of 80%.
Gold revenue for the Gold One Group for the December 2011 quarter was US$
56.09 million, with group cash operating costs amounting to US$ 16.53 million.
This resulted in a positive operating cash flow of US$ 39.56 million.
After development and capital expenditure of US$ 11.27 million, the net cash
flow from operations totalled US$ 28.29 million. US$ 166.86 million was
received in December from the exercise of share options and from the capital
injection in terms of the Jintu transaction.
Gold One ended the December 2011 quarter with US$ 230.24 million of cash on
hand and gold receivables (including restricted cash of US$ 4.40 million),
compared to an end of September 2011 quarter cash on hand and receivables
balance of US$ 43.31 million (including restricted cash of US$ 4.53 million).
Excluding the A$ 150 million capital injection from the closing of the Jintu
transaction, cash balances increased from US$ 43.31 million to US$ 77.96
million, reflecting an increase of 80%. Unlike previous quarters, there was no
quarterly interest payment of US$ 1.27 million on the company`s 500
convertible bonds. All of the bonds were converted into shares and accepted
into the Jintu bid during the quarter.
For the year, Gold One generated positive cash flow from Modder East and Sub
Nigel of US$ 86.23 million from revenue of US$ 194.31 million and group
operating costs of US$ 66.36 million. Development and capital expenditure for
the year across the Modder East and Sub Nigel operations was US$ 41.72
million.
Figure: Group Gold Sales and Revenue
(For the release with pictures and schematics, please refer to the company`s
website: www.gold1.co.za)
4. Operational Review
Despite a reduction in production days during the December 2011 quarter,
associated with the numerous December public holidays, production again
exceeded public guidance. Pleasingly, several production parameters continued
to increase steadily quarter-on-quarter in line with the planned ramp up
schedule. The December 2011 quarter was also the first quarter during which
production was derived solely from the Modder East Operations, following the
closure of the Sub Nigel Training Centre during September 2011 and the
training centre`s relocation to Modder East. Sub Nigel forms part of the
assets that will be sold to Goliath Gold Mining Limited ("Goliath Gold"),
formerly known as White Water Resources Limited ("WWR"). Gold One, on
completion of the transaction, will become a majority 71% shareholder of
Goliath Gold.
During the quarter under review, gold production for the Gold One Group
amounted to 33,352 ounces, compared to guidance of 33,000 ounces. This brings
the total ounces produced for the year to 123,179 ounces, exceeding guidance
of 120,000 ounces and representing an 85% increase relative to the 2010 annual
production of 66,445 ounces.
Figure: Quarterly Group Gold Production
(For the release with pictures and schematics, please refer to the company`s
website: www.gold1.co.za)
4.1. Modder East
Modder East December 2011 September 2011 2011 Total
Quarter Quarter
Ore Mined 194 760 t 182 908 t 660 289 t
Underground
Mined Grade 7.10 g/t 8.39 g/t 7.74 g/t
Milled Tonnes 167 308 t 155 471 t 596 430 t
Recovered Grade 6.20 g/t 6.89 g/t 6.34 g/t
Gold Recovery 96% 96% 96%
Gold Produced 33 352 oz 34 460 oz 121 518 oz
Cash Cost US$ 468/oz US$ 478/oz US$ 491/oz
Despite the loss in production time during the traditional festive holidays,
production volumes for reef mined at Modder East increased by 6.5% to 194,760
tonnes, compared to 182,908 tonnes during the September 2011 quarter. Of the
total reef volume mined, 158,355 tonnes comprised Black Reef mined at 8.64
grams per tonne. Footwall development that mined through the underlying
Kimberley Reef horizons contributed 36,405 tonnes to the total volume mined,
resulting in a combined mined grade of 7.10 grams per tonne. Low grade
development ore from the Kimberley Reef horizons was stockpiled on surface
during the quarter under review, with the stockpile at the end of the quarter
comprising approximately 23,000 tonnes of low grade Kimberley development ore.
This will be utilised for the commissioning of the existing secondary crushing
circuit at Modder East, anticipated to be undertaken during the June 2012
quarter.
4.1.1. Stoping and Ledging
Square metres mined during the December 2011 quarter increased by 5% to 39,834
square metres, compared to 37,769 square metres during the September 2011
quarter. As a greater proportion of mining is undertaken in areas further from
the shoreline, the expected decrease in the Buckshot Pyrite Leader Zone
("BPLZ") channel width (channel thickness) has been encountered and, as a
result, stoping widths were reduced by 4% compared to the previous quarter.
The current average mined stope width is 130 centimetres, with almost half of
the stopes mining at widths of less than 120 centimetres.
Figure: Square Metres Mined per Quarter
Figure: Ore Tonnes Mined
Figure: December 2011 Quarter Stoping Width
(For the release with pictures and schematics, please refer to the company`s
website: www.gold1.co.za)
4.1.2. Development
During the December 2011 quarter, off-reef development was prioritised ahead
of on-reef development and, as a result, off-reef development metres achieved
increased to 1,026 metres, with trackless off-reef development increasing by
20% to 972 metres. This is especially pleasing given that, in order to
maintain the planned production build up at Modder East, required off-reef
development varies between 300 and 350 metres per month. This is largely in
line with what was achieved during the December 2011 quarter.
On-reef development for the quarter decreased to 314 metres. Despite the
reduction in on-reef development, mining flexibility was maintained with
approximately eight months` of mining reserves at planned production rates
having been opened up through development.
Figure: Total Development Metres
(For the release with pictures and schematics, please refer to the company`s
website: www.gold1.co.za)
4.1.3. Resources and Reserves
During December 2011, Modder East updated its mineral resource estimate for
the Black Reef. This estimate considered the depletion of mined mineral
resources during 2011, additional mineral resources defined in the north-
eastern portion of the orebody based on the 2010 and 2011 surface exploration
drill programme, and an increased cut-off grade associated with anticipated
increased costs. The UK9a Reef was also intersected in development during the
quarter. Although sampling results to date have largely confirmed the initial
resource model, the additional data acquired was not considered sufficient to
undertake a complete UK9a Reef mineral resource update. As such, these UK9a
resources have remained unchanged and will be updated on the basis of newly
acquired information during 2012.
The updated mineral resource is illustrated below. Measured resources have
increased by 71% to 0.26 million ounces (including 0.54 million
tonnes grading at 14.93 grams per tonne). This increase is largely due to a
significantly enhanced database comprising closely spaced underground sampling
information. BPLZ indicated resources decreased by 13% to 1.17 million ounces
(including 7.02 million tonnes grading at 5.18 grams per tonne). The decrease
in indicated resources is a result of mining depletion, conversion to measured
resources, and increased cut-off grades. As a result of the latter, combined
with the enhanced database, the average grade in BPLZ indicated resources
increased by 14%. Indicated resources of the underlying Channel Facies
decreased by 25% to 0.89 million ounces (including 19.98 million tonnes at
1.39 grams per tonne). The additional information obtained from the most
recent drilling, combined with a better understanding of the nature of the
Channel Facies from underground exposures, allowed for the Channel Facies to
be more accurately constrained. Although this resulted in a decreased
resource, the corresponding grade increased by 25%.
1Modder East Consolidated Mineral Resource Table
Tonnes Grade Gold
Content
(Mt) (g/t) (Moz)
Measured BPLZ + Channel Facies2,6 0.54 14.93 0.26
Total Measured 0.54 14.93 0.26
Indicated BPLZ + Channel Facies2,6 7.02 5.18 1.17
Black Reef Channel Facies3 19.98 1.39 0.89
UK9a4,6 3.45 4.03 0.45
Total Indicated 30.45 2.56 2.51
Total Indicated and Measured 30.99 2.78 2.77
Inferred BPLZ + Channel Facies2 1.50 3.13 0.15
Black Reef Channel Facies3 8.77 0.76 0.22
UK9a4 3.97 3.03 0.39
UK5a5 9.41 1.82 0.55
Total Inferred 23.65 1.71 1.31
Total Resource 54.64 2.32 4.08
1 Resources are reported in accordance with SAMREC guidelines
(estimates would be identical if reported in accordance with JORC
standards)
2 Signed-off by Glanville Consulting, independent resource
consultants to Gold One, audited by SRK Consulting, quoted at a cut-
off of 171 cm.g/t
3 Signed-off by Glanville Consulting, independent resource
consultants to Gold One, audited by SRK Consulting, quoted at a cut-
off of 260 cm.g/t
4 Signed-off by Minxcon, independent resource consultants to Gold
One, audited by SRK Consulting, quoted at a cut-off of 119 cm.g/t
5 Signed-off by Minxcon, independent resource consultants to Gold
One, audited by SRK Consulting, quoted at a cut-off of 496 cm.g/t
6 Mineral resources are quoted inclusive
of mineral (ore) reserves
The updated resource estimates have been utilised to update the Modder East
life of mine plan and associated reserves. These are currently being
finalised and reviewed by SRK Consulting (South Africa) (Pty) Limited ("SRK
Consulting") and updated reserves will be released during the March 2012
quarter.
4.1.4. Modder East Metallurgical Plant
Tonnes milled at the Modder East Metallurgical Plant during the quarter under
review amounted to 167,308 tonnes, reflecting a 3.4% increase on the
previous quarter`s 161,764 tonnes. A total of 146,909 tonnes
comprised Black Reef and 20,399 tonnes were derived from low grade development
ore sources. An average recovered grade of 6.20 grams per tonne was achieved
for the December 2011 quarter and, excluding the low grade development ore, a
recovered grade of 6.96 grams per tonne was achieved for the Black Reef ore,
reflecting a 5% decrease relative to the September 2011 quarter`s 7.35 grams
per tonne. Although the treatment of this low grade ore reduces the total
recovered grade, processing of this lower grade ore is economically viable
while there is additional capacity in both the communition and plant recovery
circuits, which is the case during production ramp up. In addition, this
process reduces operating costs by acting as a grinding media for Black Reef
ore.
Plant efficiencies remained steady during the December 2011 quarter with
metallurgical recoveries of 96% being maintained. The Knelson Concentrator has
continued to operate at design parameters recovering in excess of 40% of gold
prior to the carbon-in-leach circuit for the 2011 year.
5. Rand Uranium Operations
Gold One completed the US$ 250 million acquisition of Rand Uranium after
fulfilling all conditions precedent on January 6, 2012. The closing of the
transaction gave the company full control of the Rand Uranium assets and
operations. Gold One took over daily management during September 2011 and
initiated a complete re-planning exercise for the Cooke Underground
Operations, incorporating Gold One`s turnaround strategy. As part of the
turnaround strategy the Rand Uranium operations have been restructured into
two distinct business units with separate operational and managerial focuses,
namely, the Cooke Underground Operations and the Randfontein Surface
Operations. The clear distinction between underground and surface operations
is critical in providing appropriate focus and capacity to ensure a successful
underground turnaround and surface retreatment growth.
Prior to the purchase of Rand Uranium by Gold One, Rand Uranium had entered
into a hedge with both Standard Bank Corporate and Investment Banking and
Standard Chartered Bank, whereby it committed to deliver 108,228 ounces at
prices between ZAR 9,642/oz and ZAR 10,215/oz during 2012, and 48,696 ounces
at prices between ZAR 9,751/oz and ZAR 11,075/oz during the first half of
2013. Gold One`s intention is to deliver the required number of ounces unless
market volatility allows value accretive restructuring.
5.1 Cooke Underground Operations
The Cooke Underground Operations` assets are shallow operations with
significant upside potential. The underground area comprises three sections
that are accessed by three shallow underground mine shafts (Cooke 1, 2 and 3).
These shafts are all fully operational. The shafts benefit from good quality
but under-utilised infrastructure, which will allow for the future anticipated
expansion of the operations. With Gold One`s primary focus being on returning
the gold operations to profitability, additional management has been appointed
thus resulting in complete and experienced teams being in place. These teams
have a good understanding of the orebody. Production numbers from the Cooke
Underground Operations for 2011 are illustrated below.
Cooke Underground 2011 Production
Operations
Tonnes Milled (t) 1 033 106 t
Gold Produced (kg) 3 529 kg
Gold Produced (oz) 113 445 oz
Recovered Grade (g/t) 3.42 g/t
Cash Operating Cost ZAR 1 132/t
(ZAR/t)
Cash Operating Cost ZAR 376 792/kg
(ZAR/kg)
Cash Operating Cost US$ 1 617/oz
(US$/oz)
Gold One commenced with several turnaround initiatives during the December
2011 quarter and identified a targeted sustainable profitability enhancement
in excess of ZAR 500 million per year (US$ 61.89 million) to be delivered over
two years. Approximately two-thirds of this economic benefit relate to
improvements in revenue and the balance to cost reductions. This equates to
in excess of US$ 500/oz in terms of operating cost savings at current
production levels and is in line with Gold One`s target of reducing cash costs
at the Cooke Underground Operations to approximately US$ 1,000/oz over the
next two years. Further cost reductions are anticipated associated with an
increasing ramp up in production to 2014. The implementation of the turnaround
strategy for the Cooke Operations commenced during the December 2011 quarter
with ZAR 265 million (US$ 32.80 million) targeted annual savings to be
achieved during 2012.
The primary purpose of the turnaround strategy is to create and maintain safe,
flexible, profitable and sustainable gold operations and this will be achieved
through focused interventions that impact directly on revenue, cost, asset and
operational efficiencies. Key to the success of this turnaround initiative is
a fundamental shift in operating philosophy. The initiatives that will drive
the delivery of these benefits have been included in the 2012 business plans
and are supported by project plans that are managed on a daily basis.
The largest impact on costs at the Cooke underground section will be realised
through the co-product benefits of simultaneously producing uranium. The
Cooke Uranium Project is discussed in further detail below (Section 5.2.1).
With the implementation of the Cooke Uranium Project, including the processing
of uranium from the Cooke Tailings Dam and underground ore, the net cash costs
of the Cooke Underground Operations are anticipated to be approximately US$
500/oz gold on a co-product basis. The uranium co-product benefits are
dependent on the successful outcome of the current engineering and process
review, and are in addition to successfully raising funds for the capital
construction of the uranium processing facility (see further detail in Section
5.2.1 below).
5.2 Randfontein Surface Operations
Gold One has recognised the need to develop the Surface Operations as an
independent business unit, not only to ensure adequate focus on the existing
surface operation, but also to grow the business unit by exploiting the
substantial surface resources that belong to Rand Uranium. Included in the
strategic focus of the Randfontein Surface Operations is the Cooke Uranium
Project. The Cooke Uranium Project is focused on the development and
construction of a uranium processing plant to treat the Cooke Tailings Deposit
as well as uranium-bearing underground ore (refer to Section 5.1 for further
details).
The Randfontein Surface Operations are currently processing approximately
300,000 tonnes of surface material (Dump 20) per month through the existing
Cooke Gold Plant. 2011 production results for the Randfontein Surface
Operations are illustrated below.
Randfontein Surface 2011 Production
Operations
Tonnes Milled (t) 3 452 932 t
Gold Produced (kg) 1 132 kg
Gold Produced (oz) 36 394 oz
Recovered Grade (g/t) 0.33 g/t
Cash Operating Cost ZAR 88/t
(ZAR/t)
Cash Operating Cost ZAR 271 290/kg
(ZAR/kg)
Cash Operating Cost US$ 1 164/oz
(US$/oz)
The Randfontein Surface Operations business unit is being led by Dick
Plaistowe, who was appointed late last year. The management team has recently
been further bolstered to ensure that the team has sufficient capacity to
deliver on the operations` strategy. The strategic objectives of the
Randfontein Surface Operations include:
1) Optimisation of the existing surface retreatment operation
2) Develop and construct the uranium project utilising the high grade
Cooke Tailings Dam
3) Grow the tailings retreatment business unit by initially utilising
the company`s substantial surface resource
4) Maximise synergies within the district with a focus on quality,
margin and environmental sustainability
During the December 2011 quarter, Gold One commenced with assessing the
potential treatment of several other surface tailings deposits that exist on
the mining and prospecting licenses on the Rand Uranium lease area. In
addition to the Cooke Tailings Dam, the company owns significant surface
resources comprising uranium and gold, including the Millsite Complex, the 4
Tailings Dam, and a slimes dam that lies beneath Dump 20. These tailings
deposits contain over 220 million tonnes and are the subject of an extensive
drilling campaign that is expected to be complete during the latter half of
this year. The objective of the drilling campaign is to supplement the
drilling that has already been undertaken by the previous owners. It is
expected that the pre-feasibility study will be completed by mid 2012,
whereupon a decision will be taken to advance the expansion study to a
feasibility level.
5.2.1 Cooke Uranium Project
The company has commenced with its Cooke Uranium Project, which is uniquely
positioned in terms of its well-advanced status. This project entails the
construction of a large-scale uranium ore processing plant for the recovery of
uranium from the Cooke Tailings Dam (including the reclamation of sulphur and
gold as by-products) as well as from the uranium bearing ore from the
underground mining operations. It is envisaged that approximately 2.5 million
pounds of uranium can be produced per annum, which will significantly reduce
the Cooke Underground Operations` gold cash operations costs, considering
uranium recovery would be a cost credit.
The 100% owned Cooke Uranium Project has undergone extensive analysis and
design over the last three years. The project has approximately 70%
engineering complete and is fully permitted to start construction.
A validation of the original definitive feasibility study, for which Bateman
Engineering Limited ("Bateman") was the lead consultant, is currently being
investigated by Bateman and independently by MDM Engineering Group Limited.
These studies will also examine the recovery of gold together with the
feasibility of erecting an acid plant, and will provide a preliminary
assessment of resin-in-pulp as an alternative processing technology to counter
current decantation for uranium recovery. These reviews will be submitted to
Gold One at the end of March 2012. Proposals for the completion of the Cooke
Uranium Project to definitive feasibility study level by the end of 2012 will
also be submitted, including proposals for an engineering, procurement and
construction management contract to build and commission the plant by January
2015.
It is expected that the Cooke Uranium Project will have a highly competitive
cost position due to the high grade nature of the Cooke Tailings Dam and the
simple surface and low-cost mining and processing methods employed. In
addition, the Cooke Uranium Project is currently expected to have a 17 year
mine life, and has substantial prospects for expansion given the company`s
underground uranium potential.
5.2.2 Gold One and Gold Fields Joint West Rand Surface Tailings
Retreatment Project
In parallel to the ongoing economic studies being undertaken on the
Randfontein Surface Operations, Gold One has initiated a strategic
partnership with Gold Fields to investigate the joint processing of both
companies` tailings resources located on the West Rand (refer to the
announcement made on 24 January, 2012).
Gold One and Gold Fields have entered into a Memorandum of Understanding with
the intention of establishing a Joint Venture into which both parties will
contribute their surface tailings assets for retreatment. These assets
comprise in excess of 700 million tonnes and represent over 60% of the total
tailings material in the district. The parties will complete a detailed
scoping study by the middle of this year, whereupon a decision will be taken
to progress the study to a feasibility level.
The Joint Venture intends to reclaim and re-treat the historical tailings
material and current tailings to recover residual gold, uranium and sulphur.
A key objective of the project is addressing the re-deposition of the residues
in accordance with modern sustainable deposition practices, ultimately
supporting mine closure in an environmentally sustainable manner.
Over the past three years, Rand Uranium completed a comprehensive definitive
feasibility study on the processing of the Cooke Tailings Deposit for the
extraction of both Gold and Uranium (including 70% of detailed and already
completed engineering design). Similarly, Gold Fields has undertaken
extensive economic studies, including a definitive feasibility study
considering the retreatment of its existing tailings deposits. The combined
consideration of these studies, as well as the possibility of utilising
existing and planned metallurgical plant infrastructure, will allow the
companies to significantly fast-track and benefit from a joint economic
assessment of the reprocessing of the combined tailings deposits.
6. Exploration Projects
6.1. Modder North
Modder North, located approximately six kilometres north of Modder East, falls
within Modder East`s current mining licence area. The Modder North exploration
programme commenced during the June 2011 quarter to test both the shallow
(less than 500 metres) unmined areas of the Main Reef as well as potential
Black Reef occurrences north of the current Modder East Operations. This
drilling programme continued during the December 2011 quarter, including a
total of 2,731 metres. Total exploration expenditure at Modder North for the
2011 year amounted to US$ 0.86 million.
The initial surface exploration programme for the Modder North Project
comprised five diamond drill boreholes (MN1 to MN5). The assay results
received from the initial drill programme are outlined in the table below
(certain deflection assays are still outstanding). Boreholes MN1 and MN3
intersected well developed and mineralised Black Reef. MN4 only intersected
the upper portion of the Black Reef with the lower portion of the borehole
intersecting an intrusive geological feature. The final boreholes, MN2 and
MN5, yielded poorly developed Black Reef intersections.
Based upon up-dip historical mined out information, the Main Reef at Modder
North is channelised in nature and as such are associated with variable
grades. Boreholes MN2 and MN4 intersected well developed Main Reef, with MN4
containing high levels of mineralisation. The remaining boreholes intersected
poorly developed Main Reef that does not lie within the targeted channel
areas.
Modder North Assay Results
BH_ID REEF Depth (m) Dip Corrected
Bottom
Contact
Channel g/t2 cm.g/t
Thickness
(cm)1
MN1_0D BPLZ 167.75 50 3.80 189
MN1_4D BPLZ 168.21 53 4.39 231
MN1_5D BPLZ 168.53 44 4.29 188
MN1_0D Main Reef 435.01 10 0.31 3
MN1_1D Main Reef 435.63 12 5.79 70
MN1_2D Main Reef 435.00 10 0.10 1
MN2_D0 BPLZ 166.38 25 0.80 20
MN2_D0 Main Reef 462.66 31 3.80 117
MN2_1D Main Reef 464.42 26 3.99 102
MN2_2D Main Reef 464.46 34 3.28 112
MN3_D0 BPLZ 179.47 119 31.37 3,727
MN3_3D BPLZ 179.21 112 25.82 2,894
MN3_4D BPLZ 178.43 57 2.88 163
MN3_D0 Main Reef 473.92 12 0.60 7
MN3_1D Main Reef 476.68 16 14.50 228
MN3_2D Main Reef 470.08 11 4.00 43
MN4_D0 Main Reef 479.59 30 24.84 734
MN4_1D Main Reef 479.64 30 28.02 828
MN4_2D Main Reef 480.52 30 29.18 881
MN5_D0 BPLZ 177.23 20 0.11 2
MN5_3D BPLZ 178.02 18 0.10 2
MN5_D0 Main Reef 450.10 17 2.93 50
MN5_1D Main Reef 450.15 18 0.73 13
MN5_2D Main Reef 450.04 19 2.40 45
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).
The Modder North Project has several potential advantages given its location
within the existing Modder East Mining Licence area. Given its close proximity
to Modder East, Modder North could share metallurgical infrastructure and
other resources with the Modder East Operations. These factors would
facilitate the rapid progression of the project with significantly fewer risks
than most greenfield projects. Considering the exploration results received
to date and the shallow depths at which the Black Reef has been intersected,
the company intends to fast-track the exploration programme at Modder North by
increasing the number of drill rigs during the March 2012 quarter. This
exploration programme will consider two aspects. Firstly, a shallower drilling
programme targeting particularly the Black Reef to determine the extent of the
high grade and well mineralised reef intersected in boreholes MN1 and MN3 and,
secondly, a wider, more regional, drilling programme, targeting the underlying
Main Reef. These boreholes will also drill through the overlying Black Reef
facilitating the development of a broader, more regional Black Reef model.
In parallel with the ongoing exploration programme, the company has commenced
with conceptual economic studies to consider optimal access options to the
potential Modder North target. Environmental studies have also commenced to
facilitate the update of the Environmental Management Plan that was initially
developed for the Modder East Mining Licence area; this represents one of the
longest lead items for the commencement of construction at the project. In
this regard, a basic assessment application has already been completed and
submitted to the relevant authorities and the required specialist studies have
commenced.
6.2. Ventersburg
The 2011 Ventersburg exploration programme was primarily focused on the
addition of shallower resources that could facilitate rapid orebody access.
In this regard, a shallow extension to the eastern-most payshoot was modelled
and formed the focus of the 2011 drill programme (refer to the diagram below).
Drilling of this area was completed during the December 2011 quarter and
successfully delineated the high grade extension of this payshoot.
Encouragingly, the payshoot remains open to the north and east and its full
extent has not yet been delineated. A total of 2,322 metres of exploration
drilling was carried out during the quarter under review at a total cost of
US$ 0.86 million. This brings the total amount of exploration drilling
carried out at Ventersburg during 2011 to 14,041 metres.
Figure: Ventersburg 2011 Exploration Drilling Programme
(For the release with pictures and schematics, please refer to the company`s
website: www.gold1.co.za)
The results of the 2011 drill programme underpinned an updated resource
estimate that was completed in November 2011 by Dr I C Lemmer and was
independently reviewed by SRK Consulting. The updated resource resulted in a
17% increase in the indicated resource base from 2.45 million ounces
(including 20.42 million tonnes grading at 3.70 grams per tonne) to 2.86
million ounces (including 22.83 million tonnes grading at 3.90 grams per
tonne). Importantly, the increase in indicated resources in Domain 3 (the
eastern higher grade payshoot area) increased by an estimated 410,000 ounces
at an average grade of 7.35 grams per tonne. This increase in mineral
resources in Domain 3 is particularly significant as it considers the
shallower portion of the resource, which will form the initial mining area of
potential future mining plans at Ventersburg.
Ventersburg Consolidated Resource Table1
Tonnes Grade Gold
content
(Mt) (g/t) (Moz)
Indicated Domain 12 4.78 4.29 0.66
Domain 22 1.98 2.43 0.16
Domain 32 16.07 3.97 2.05
Total 22.83 3.90 2.86
Indicated:4
Inferred Domain 43 11.44 3.50 1.29
Total 11.44 3.50 1.29
Inferred:
Total Indicated and Inferred:4 34.28 3.77 4.15
1 Signed-off by Dr I C Lemmer, independent resource
consultant to Gold One, audited by SRK Consulting
2 Quoted at a cut-off of 350
cm.g/t
3 Quoted at a cut-off of 250
cm.g/t
4 Numbers may not appear
additive due to rounding
5 Resources are reported in accordance with SAMREC
guidelines (estimates would be identical if reported in
accordance with JORC standards)
This resource estimate has underpinned an updated pre-feasibility study that
was completed by Turgis Consulting (Pty) Limited in December 2011. The pre-
feasibility study has considered the utilisation of a vertical shaft to access
the A-Reef at Ventersburg. Primary access from the shaft considers a decline
and trackless footwall development. The average resource width of
approximately 140 centimetres lends itself to conventional breast stoping
mining methods. The selected primary access options and mining methods were
driven primarily by the consideration of the nature of the orebody and Gold
One`s recent experiences during the construction and ramp up at the Modder
East Operations.
The pre-feasibility study currently considers a total mine life of 17 years,
with production commencing during the fourth year and ramping up to steady
state (80,000 tonnes per month) by year seven. At steady state, maintained
for seven years, annual production is estimated to be approximately 135,000
ounces per annum. Over the life of the planned project, a total of 1.47
million ounces of gold is mined at an average head grade of 3.95 grams per
tonne. Total capital costs (including ongoing development capital) are
estimated at ZAR 3,565 million (US$ 441 million). Cash costs over the life of
mine are anticipated to be US$ 606/oz and total costs (including capital)
US$ 906/oz, based on an exchange rate of ZAR 8.50 / US$ 1.
On the basis of the positive outcome of the pre-feasibility study, the company
plans to continue with a feasibility study to be completed by the end of 2012.
In addition, infill drilling is planned to further refine the geological and
grade distribution models, targeting the area that defines the first five
years of production.
6.3. Megamine
On 13 October, 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. WWR was later renamed as Goliath Gold. The transaction is expected
to be concluded during the March 2012 quarter and is discussed further in
Section 7.1. of this report.
6.4. Tulo
The Tulo exploration target comprises a shear hosted gold mineralisation
target situated 20 kilometres south of Tanzania in the north-western part of
Mozambique. During 2011, the primary objectives at Tulo were to establish a
base exploration camp at Savannah Bay, complete an access road to the targeted
drill sites, and undertake an airborne geophysical survey.
Figure: Tulo Locality Plan and Airborne Geophysical Survey Area
(For the release with pictures and schematics, please refer to the company`s
website: www.gold1.co.za)
During the quarter under review, the 20 kilometre drill rig access road into
the concession area was completed as well as an additional six kilometers of
road sub parallel to the orebody for access to drill sites. The additional
construction of an exploration and drilling camp site was also started during
the quarter under review and is expected to be completed by the end of the
March 2012 quarter.
Fugro Airborne Surveys (Pty) Limited completed the high resolution helicopter-
borne geophysical survey of Tulo and the surrounding areas during November and
December 2011. This survey included magnetic, radiometric and digital
elevation model surveys to facilitate the positioning of initial drill
targets. In total, 6,365 line kilometres were flown. The results of the
geophysical survey are currently being processed and are expected during the
March 2012 quarter. Drilling is anticipated to commence at the exploration
sites during the June 2012 quarter after, the wet season.
Total exploration expenditure at Tulo for the 2011 year has amounted to US$
2.30 million.
6.5. New Kleinfontein and Turnbridge
The primary exploration target at Gold One`s New Kleinfontein and Turnbridge
properties is the shallow remnant (unmined) portions of the Main Reef. During
2010, the company gained access to these historical underground workings and
resampling at the Turnbridge property was undertaken. In excess of
2,000 samples for 567 complete sample sections were collected and the
information was utilised to update geological models and resource estimates.
The initial resource estimate was completed during the June 2011 quarter by
SRK Consulting.
However, the deeper portions of the updated resource estimate were at risk of
flooding given the cessation of pumping at the adjacent Grootvlei mine.
Recent governmental indications regarding the flooding of historical mine
voids has indicated that government will maintain the flooded East Rand
Compartment at levels above the environmental critical level ("ECL"), which is
defined, in the East Rand, as being approximately 315 metres below surface.
In light of this, Gold One has re-estimated the Turnbridge resources above 8
Level in the historical workings, which is the lowest level above the defined
ECL. SRK Consulting has subsequently re-stated the mineral resources for the
Turnbridge Project above this level.
Turnbridge Mineral Resource Statement
Tonnes Grade Gold Content
Indicated (Mt) (g/t) (Moz)
Turnbridge 1.92 2.70 0.17
1
Inferred
Turnbridge 3.88 2.73 0.34
1
Total Indicated and 5.81 2.72 0.51
Inferred 2
1 Signed-off by S Meadon, SRK Consulting, quoted at a cut-
off grade of 200 cm.g/t
2 Resources are reported in accordance with SAMREC
guidelines (estimates would be identical if reported in
accordance with JORC standards)
A detailed scoping study has been undertaken at the project on the basis of
this updated resource estimate, targeting only the indicated portions of the
updated resource. Although the scoping study has suggested positive results
for the project, Gold One is currently evaluating strategic alternatives
regarding the further development of this asset.
7. Corporate Development
7.1. Goliath Gold (Formerly WWR)
The Goliath Gold transaction is expected to conclude during the March 2012
quarter.
Gold One has entered into a management contract with Goliath Gold such that
both parties benefit from the synergy of shared costs, management and
technical expertise.
Refer to the joint announcement released by Gold One and WWR, released on the
ASX Company Announcements Platform and SENS on 13 October, 2010.
7.2. Rand Uranium
On 23 December, 2011, Gold One announced that it had received approval from
the Department of Mineral Resources for the Rand Uranium acquisition and on 9
January, 2012, the company announced that all conditions precedent to the
acquisition of 100% of Rand Uranium from the Rand Uranium shareholders,
Pamodzi Uranium (Pty) Limited, Pamodzi Cooke (Pty) Limited and Armgold/Harmony
Joint Investment Company (Pty) Limited (collectively referred to as the
"Sellers"), for a purchase price of US$ 250 million ("the Purchase Price") had
been fulfilled. The deal has thus been declared unconditional and closed on 6
January, 2012 ("the Completion Date").
US$ 137.7 million of the Purchase Price was settled by Gold One on the
Completion Date in cash, while the balance US$ 112.3 million of the Purchase
Price ("the Balance Payment") is to be settled in either cash, Gold One
ordinary shares, or a combination thereof within 90 days of the Completion
Date. Should Gold One issue ordinary shares for all or part of the Balance
Payment, then the number of shares to be issued will be determined by dividing
the amount of the Balance Payment by the 30 day volume weighted average price
in Australian dollars at which Gold One`s shares traded on the ASX Limited
over the 30 business days prior to the Balance Payment date.
7.3 Jintu Transaction
The takeover offer and subscription of A$ 150 million by the consortium was
completed on 29 December, 2011, resulting in the consortium holding 89.17% of
Gold One. As a result of Gold One`s production for the 2011 year exceeding
120,000 ounces, the Jintu transaction "claw-back", or adjustment subscription,
was not triggered.
Refer to the announcement "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.
8. Outlook
8.1. Production Guidance
Gold One`s production guidance for 2012 includes production from both the
Modder East and Rand Uranium operations.
Modder East guidance is underpinned by the continued ramp up in production.
Based on the extensive knowledge and understanding of this operation the
company has a high degree of confidence in these forecasts.
The guidance provided for the Cooke Underground Operations is based on the
detailed turnaround strategy that has been compiled and which is currently
being implemented. The current management team has only been integrally
involved with the operation for a single quarter and, as such, is continually
improving its knowledge and understanding of these operations. While the
company is confident of achieving its turnaround strategy and attaining its
medium term goals, 2012 guidance is associated with a lower level of
confidence than that at Modder East.
Due to the low risk and continuous nature of the Randfontein Surface
Operations, management has a high degree of confidence in the production
guidance provided.
Total production for the Gold One Group for the 2012 year is forecast at
300,000 ounces, made up as shown below.
Modder East Operations
- Production guidance of 150,000 ounces
- Cash cost guidance of US$ 530/oz
- Total cost of US$ 797/oz
- Cooke Underground Operations
- Production guidance of 118,000 ounces
- Cash cost guidance of US$ 1,300/oz
- Total cost of US$ 1,450/oz
- Randfontein Surface Operations
- Production guidance of 32,000 ounces
- Cash cost guidance of US$ 1,214/oz
- Total cost of US$ 1,376/oz
8.2. Development and Exploration Outlook
During the March 2012 quarter the company will provide an updated mineral
(ore) reserve for Modder East, once independent review of the reserves has
been completed.
During the first six months of 2012, a significant surface exploration
drilling programme and associated economic scoping study will be completed at
Modder North. A maiden resource estimate for this project will be completed
during the first half of 2012 on the basis of historical underground sampling
information as well as the recent surface exploration drilling programme.
This will be undertaken with a view to fast-track the possible construction of
this project.
At Ventersburg, infill drilling is planned for the first half of 2012 to
refine existing resource models planned to be accessed during the initial
mining of this project. This will be undertaken in parallel with a
feasibility study due for completion by the end of the year.
Drilling at the Tulo project will commence during the June 2012 quarter after
the wet season, and the company is targeting declaring a maiden resource at
Tulo by the end of the 2012 year.
9. Capital Structure
As of the release of this report, the company has 1,415,302,711 shares in
issue, of which 1,353,918,973(96%) are held on the Australian register and
61,383,738 (4%) are held on the South African register. The company has
25,500,488 listed and unlisted options in issue.
Figure: ASX December 2011 Quarter Trading Statistics
Figure: JSE December 2011 Quarter Trading Statistics
(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
www.gold1.co.za
Neal Froneman
President and CEO
+27 11 726 1047 (office)
+27 83 628 0226 (mobile)
neal.froneman@gold1.co.za
Grant Stewart
VP: Investor Relations
+27 11 726 1047 (office)
+27 82 602 5992 (mobile)
grant.stuart@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
Weltevreden, Johannesburg
31 January 2012
About Gold One
Gold One International Limited is a dual listed (ASX/JSE: GDO) mid-tier mining
group with gold operations and gold and uranium prospects across Southern
Africa. Gold One remains focused on developing and mining low technical risk,
high margin precious metal resources in diversified jurisdictions. The
company`s flagship Modder East gold mine, commissioned in 2009, distinguishes
itself from most other gold mines in South Africa owing to its shallow nature
(300 to 500 metres below surface) and continues to ramp up production, having
produced 123,179 ounces in 2011.
At the beginning of 2012, the group expanded further with the acquisition of
Rand Uranium (Pty) Limited consisting of the Cooke Underground Operations and
the Randfontein Surface Operations located in the West Rand, 30 kilometers
from Johannesburg. The Cooke underground operations continue to deliver in
line with expectations and are currently the subject of a turnaround
intervention. Through Gold One`s purchase of Rand Uranium (Pty) Limited, the
group has also acquired one of the world`s most advanced uranium projects,
which envisages recovering uranium, gold and sulphur from the Cooke Tailings
Dam and underground ores. The Gold One group is majority-owned by a
consortium comprising Baiyin Non-Ferrous Group Co. Limited, the China-Africa
Development Fund, and Long March Capital Limited, and has an issued share
capital of 1,415,302,711 shares.
Office Details Directors
N J Froneman (President and CEO)
Sydney Head Office C D Chadwick (Chief Financial Officer)
Level 3, 100 Mount Street, M K Wheatley (Non-Executive Chairman)
North Sydney, NSW 2060 B E Davison (Non-Executive Director)
Australia K V Dicks (Non-Executive Director)
PO Box 1244 North Sydney NSW 2059 W B Harris (Non-Executive Director)
Telephone: +61 2 9963 6400 S Swana (Non-Executive Director)
Fax: +61 2 9963 6499 K J Winters (Non-Executive Director)
Johannesburg Corporate Office Company Secretaries
Constantia Office Park, Bridgeview B Snell (Australia)
House, Ground Floor P B Kruger (South Africa)
Corner 14th Avenue and Hendrik
Potgieter Street Weltevreden Park, Registrars
1709, Gauteng, South Africa Boardroom Limited
Telephone: +27 11 726 1047 Level 7
Fax: +27 11 726 1087 207 Kent Street
Sydney
Issued Capital NSW
1,415,302,711 shares in issues Australia
Options (listed and unlisted: 2000
25,500,488) Tel: +61 2 9290 9600
ADR ratio: 1 ADR = 10 ordinary shares
South African Transfer Secretaries
Stock Exchange Listings Computershare Investor Services
ASX/JSE Limited: GDO 70 Marshall Street
OTCQX International: GLDZY 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 Persons` Statement
The information in this release that relates to exploration results, mineral
resources or ore reserves is based on information compiled by the following
Competent Persons 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"):
The overall Competent Person for the Gold One group is 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 is Senior Vice President:
Business Development for Gold One, with which he is a full-time employee, and
has 12 years` experience 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 JORC Code and the
SAMREC Code.
The Competent Person for the Ventersburg Project is Mr Quartus Meyer, who has
a master`s degree in science (geology) and who is a professional natural
scientist registered with SACNASP, membership number 400063/88. Mr Meyer is
Group Exploration Manager for Gold One, with which he is a full-time employee,
and has 25 years` experience 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 JORC Code and
the SAMREC Code.
The Competent Person for the Modder East Operations is Mr Evan Cook, who has a
bachelor`s degree in technology (geology) and who is a professional natural
scientist registered with SACNASP, membership number 400162/07. Mr Cook is the
Mineral Resources Manager: Modder East Operations for Gold One, with which he
is a full-time employee, and has 13 years` experience 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 JORC Code and the SAMREC Code.
The Competent Person for the Cooke Operations is Mr Dave Whittaker, who has an
honour`s degree in science (geology geography) and who is a professional
natural scientist registered with SACNASP, membership number 400053/00. Mr
Whittaker is Mineral Resources Manager: Cooke Underground Operations for Rand
Uranium (Pty) Limited, with which he is a full-time employee and which is
wholly owned by Gold One, and has 30 years` experience 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 JORC Code and the SAMREC Code.
Dr Stewart and Messrs Meyer, Cook and Whittaker consent to the inclusion in
this release of the matters based on information compiled by themselves, Gold
One employees, Rand Uranium employees and the companies` consultants in the
form and context in which they appear for the purposes of both the JORC Code
and the SAMREC Code
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), 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.
Date: 31/01/2012 07:05:07 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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