Wrap Text
Quarterly Activities Report Quarter Ended 30 September 2012
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")
Quarterly Activities Report
Quarter Ended 30 September 2012
September 2012 Quarter Highlights
- 59,642 ounces gold production
- Negative cashflow from operations of US$ 9.19 million
- Group operating cashflow of US$ 7.81 million
- Group cash balance increased by 28% primarily due to a US$ 25 million shareholder loan
- Group cash costs of US$ 1,318/oz
- Gold Fields and Gold One West Rand Tailings Joint Venture scoping study to be progressed to pre-
feasibility study
December 2012 Quarter Outlook
- December 2012 quarter production forecast of 59,000 ounces:
o 27,000 ounces from Modder East Operation
o 23,000 ounces from Cooke Underground Operation including Cooke 4 (Ezulwini mine)
o 9,000 ounces from Randfontein Surface Operation
- Pamodzi East Rand transaction expected to be concluded during December 2012 quarter
September 2012 Quarter Key Performance Data
(Average Exchange Rate of ZAR 8.25 / US$ 1)
(June 2011 Quarter Average Exchange Rate of ZAR 8.1 / US$ 1)
Cooke 4
Group Group
Underground
Cooke 1-3 Randfontein Production Production
Modder East Operation
Underground Surface September June
Operation (August and
Operation Operation 2012 2012
September
Quarter Quarter
2012)
Ore Mined
84 393 288 113 60 600
Underground (t)
Mined Grade (g/t) 6.87 4.27 4.41 0.47
Milled Tonnes (t) 87 452 255 310 69 229 856 501
Recovered Grade
5.17 3.13 3.27 0.35
(g/t)
Gold Recovery (%) 95 95 96 74
Gold Produced (oz) 17 1361 25 7012 7 281 9 524 59 642 62 904
Cash Cost3 (US$/oz) 770 1 717 1 863 1 148 1 381 1 007
Total Cost4 (US$/o)z 1 025 1 965 1 995 1 199 1 587 1 173
Average Gold Price
1 675 1 389 1 597 1 389 1 570 1 363
Received (US$/oz)
Gross Cash Margin
905 -328 -266 241 189 356
(US$/oz)
Group Development
and Capital
18.48 16.84
Expenditure
(US$ million)
Group Gold Revenue
87.89 87.82
(US$ million)
Notes:
1
Includes 2,587 ounces produced by the Modder East Operation through the treatment of 25,159 tonnes of low grade development ore,
mill rejects and mud at an average recovered grade of 3.20 grams per tonne.
2
Includes 30 ounces produced at the Cooke Underground Operation through the treatment of 695 tonnes of low grade development ore
and mud at a recovered grade of 1.35 grams per tonne.
3
Cash cost refers to all costs directly associated with mining activities, mine administration, processing and refining.
4
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.
1. CEO’s Review
During the September 2012 quarter a total of 59,642 ounces of gold was produced for the Gold One group.
This reflects a 5% decrease on the June 2012 quarter’s production primarily as a result of the ongoing
production build up at Modder East post the unprotected industrial action that took place at the operation
in June.
Safety for the group, measured according to the lost-time injury rate per 200,000 hours worked (“LTIFR”)
and inclusive of the recently acquired Cooke 4 (Ezulwini mine), was 1.22 for the September 2012 quarter.
This is an improvement on the June 2012 quarter’s LTIFR of 1.30 but remains above the group’s benchmark
of 1.0.
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The ramp up in production at Modder East following the unprotected strike action and the subsequent
dismissal of a large majority of the operation’s workforce during June progressed during the quarter but was
slower than expected, largely due to ongoing intimidation of loyal employees. Production at the operation
more than doubled from 3,409 ounces for July to 6,962 ounces for August, and amounted to 6,766 ounces
for September. Modder East’s ramp up is anticipated to continue throughout the December 2012 quarter
and pre-strike production levels are expected to be achieved by year-end.
With Modder East’s three year wage agreement signed with the National Union of Mineworkers (“NUM”),
coming to an end in December 2012 management has used the current disruptive period to successfully
negotiate a new two year wage agreement. The two year wage agreement will be effective for the period
from 1 January 2013 to 31 December 2014 and will apply to all Paterson band A and B employees, regardless
of union affiliation. Salaries will be increased by 10% for Category A and B Lower Employees and 8% for B
Upper Employees in 2013 and in 2014. Following the transition of Modder East as it ramps up from
development status to full production, substantial increases to minimum wages for surface and
underground categories will also be implemented to bring the operation in line with the industry. Newly
introduced terms include a maternity leave provision, physical transport provided by the company, a
medical allowance, and the issuing of a 13th cheque dependent on the achievement of an annual production
target. The agreement further provides for increases to: basic salaries; critical skills salaries; monthly living
out allowances; and company provident fund contributions.
During the previous quarter the company reported that the High Court had granted costs against the
Professional Transport and Allied Workers Union (“PTAWU”), which led violent illegal industrial action and
protest at the Modder East Operation during June. A compensation claim against PTAWU for production
losses suffered during 4 and 5 June of the illegal strike was submitted to the Labour Court on 19 September
2012 in terms of Section 68(1)(b) of the Labour Relations Act 66 of 1995. The company is seeking
compensation to the value of ZAR 9,888,564 (US$ 1.2 million). PTAWU has not opposed the application and
Gold One is currently waiting for the Court to set a date upon which the matter will be heard.
Amidst South Africa’s recent and ongoing wildcat strikes in the platinum and gold sectors, Gold One has also
suffered an illegal strike at Cooke 4, which the company acquired during mid-2012 from the First Uranium
Corporation (“First Uranium”). The illegal industrial action began with the 1 October night shift and was
subsequently interdicted by the Labour Court of South Africa on 2 October 2012. On 3 October, workers who
participated in the illegal strike were suspended pending disciplinary hearings for which representations and
appeals against dismissal were concluded on 5 and 15 October, respectively. In almost all cases
Management concluded that there were insufficient mitigating factors against the sanction of dismissal,
resulting in 1,417 of the operation’s 1,900 workers being dismissed.
Owing to Cooke 4’s status as a marginal underground operation and the continuing labour unrest in South
Africa’s mining industry, the company announced on 16 October 2012 that the underground operations at
Cooke 4 would be suspended for 30 days to ensure the safety and security of employees and assets. This
will also provide the company an opportunity to review its options regarding the underground operations.
The recent labour unrest in South Africa has also contributed to a significant decline in investor sentiment
and as a result the company is reviewing the timing of its listing on the Hong Kong Stock Exchange. In the
interim, the group will focus on building up the Modder East Operation to full production of 100,000 tonnes
per month, completing the two year turnaround at the Cooke Underground Operations, integrating Cooke 4,
and growing production at the Randfontein Surface Operation.
Although the Cooke Underground Operations’ September 2012 quarter production of 25,701 ounces was
only marginally below forecasts it was disappointing that a significant proportion of this production was
derived from low grade mining areas, below the pay limit, resulting in significant losses. Mining below the
pay limit occurred mainly due to a lack of current mining flexibility, an increase in unit mining costs and poor
3|Page
management controls. Flexibility in the longer term is being addressed through the systematic increase and
targeting of development. Leading indicators are positive with current development sampling across all
three shafts confirming the intersection of grades above current mining pay limits, specifically associated
with the Upper Elsburg Reef (“UE1A”), Ventersdorp Contact Reed (“VCR”) and selected Kimberley Reef
horizons. Over the next 12 months 32 raises will be completed, generating an estimated 140,000 square
metres of payable mining ground.
In the shorter term the pay limit is being addressed through a restructuring of the operations, which will
result in a decrease in volume of approximately 25,000 tonnes per month relative to original planning of
100,000 tonnes per month. This reduction in volume will unfortunately be associated with a reduction in
employees, which is currently estimated at approximately 1,300 persons. Management changes have also
been implemented to ensure that the quality of mining improves.
As a result of the change in ramp up at Modder East, the revised planning at the Cooke Underground
Operations and the illegal strike at Cooke 4, the next quarter’s production objectives have been reviewed
and it is envisaged that the group will achieve a 59,000 ounce output for the December 2012 quarter. This
will provide a revised outlook of 243,171 ounces for 2012, including the contribution from Cooke 4.
Group gold revenue for the September 2012 quarter amounted to US$ 87.89 million from the sale of 55,995
ounces at an average price of US$ 1,570/oz. This comprised 36,150 ounces of gold sold into the spot market
at an average price of US$ 1,662/oz and 19,845 ounces delivered into the hedge book at an implied average
price of US$ 1 166/oz. A possible restructuring or cash settlement of the ex-Rand Uranium (Pty) Limited
(“Rand Uranium”) hedge was considered during the quarter under review to improve the Cooke
Underground Operations’ profitability in the short term. It was, however, decided that, at this stage, it would
be optimal to continue delivering into the hedge as the monthly commitments become due. This will carry
on through to the end of the hedge commitments in June 2013.
Cash cost for the quarter increased to US$ 1,381/oz from US$ 1,007/oz, eroding the gross cash margin by
47% to US$ 189/oz. The increase in cash cost can be attributed to the lower gold production following the
illegal strikes at Modder East and increased total working costs at the Cooke Underground Operations.
Capital expenditure for the quarter was US$ 18.48 million (US$ 311/oz), of which US$ 10.4 million was spent
on orebody development and equipping. Cashflow from operations, which is measured after capital
expenditure, is an outflow of US$ 9.19 million and will be funded from current cash resources.
Gold One ended the quarter with a cash balance of US$ 97.57 million (including restricted cash of US$ 30.76
million) excluding gold receivables amounting to US$ 11.84 million. The company also received a further
shareholder loan shortly before the end of the quarter, which boosted the quarter end cash balance. This
compares to a cash balance of US$ 75.99 million (including restricted cash of US$ 30.12 million) and gold
receivables of US$ 6.09 million at the end of the June 2012 quarter, reflecting a 28% quarter-on-quarter
increase in the cash balance.
At quarter-end Gold One reflected debt of US$ 219.95 million (principal amount of US$ 213.79 million and
interest of US$ 6.16 million). This debt is made up of the shareholder loans received during the March and
September 2012 quarters, amounting to US$ 104 million, and the Investec facility, amounting to US$ 115.95
million. The shareholder loan was used, in part, to reduce the capital owing under the Investec facility. This
repayment was made during early October, reducing the Investec facility by US$ 12.58 million.
During the quarter an additional US$ 60 million drawdown of the Investec facility took place in order to fund
the remaining portion of the purchase price for Ezulwini Mining Company (Pty) Limited (“Ezulwini”) (Cooke
4). As at the end of the quarter, Gold One has access to US$ 96.21 million in undrawn Investec facilities.
4|Page
Corporate Development
In January 2012, Gold One and Gold Fields Limited (“Gold Fields”) initiated a study investigating the
feasibility of a joint venture into which both parties will contribute surface assets for retreatment. The
intention is to reclaim and retreat the historical and current tailings material to recover residual gold,
uranium and sulphur. A further objective of the project is to address the redeposition of the residues in
accordance with modern sustainable deposition practices.
During the quarter the West Rand Tailings Joint Venture scoping study was successfully concluded. The
study has shown extensive value and risk reduction synergies, which underpin a significant opportunity to
extract value from the parties’ surface resources that is not inherent in either company’s share price.
The positive scoping study outcome and the significant amounts of technical and economic work already
undertaken by the companies have facilitated fast-tracking to a joint pre-feasibility assessment and a
positive decision has been taken in this regard. During the pre-feasibility assessment a comprehensive
metallurgical test work programme will be carried out on Gold One’s Millsite and Old 4 Dam tailings
facilities. Further strategic phasing of capital and scheduling of available feed material will also be optimised
during the pre-feasibility study. The outcome of the pre-feasibility study is expected by the end of the June
2013 quarter.
On 17 April 2012 Gold One announced that the company had entered into an acquisition agreement through
its wholly owned subsidiary New Kleinfontein Mining Company Limited (“NKMC”) and with Goliath Gold
Mining Limited (“Goliath Gold”) to acquire control over the underground deposits of Grootvlei (Pty) Mines
Limited, Consolidated Modderfontein Mines 1979 Limited and Nigel Gold Mining Company (Pty) Limited
(“the Pamodzi East Rand Operations”) for a total of ZAR 70 million. This strategic transaction essentially gives
Gold One and Goliath Gold access to explore one of the largest brownfield exploration properties in the
world that still hosts significant potential resources. Specifically, Gold One will have access to exploring and
delineating the down dip extension contiguous to Modder East. This largely unmined area is highly
prospective with regards to the UK9a (Kimberly Reef) orebody. The UK9a currently comprises some 26% of
Modder East’s existing mineral reserve and the down dip extension has the potential to substantially
increase Modder East’s current 10 year life of mine.
The anticipated completion of all conditions precedent to the acquisition of the Pamodzi East Rand
Operations has been extended to 14 December 2012 by mutual agreement from both parties, and can be
extended further by mutual agreement.
2. Financial Review
Ezulwini
Cooke Randfontein Total
Modder East (Cooke 4) June 2012
Cashflow Underground Surface September
Operation Underground Quarter
(Unaudited) Operation Operation 2012 Quarter
(US$ Million) Operation (US$ Million)
(US$ Million) (US$ Million) (US$ Million)
(US$ Million)
Gold Sales 26.76 36.66 10.88 13.59 87.89 87.82
Payment to
Operating
-12.26 -44.13 -12.76 -10.93 -80.08 -63.62
Suppliers and
Employees
Operating
14.50 -7.47 -1.88 2.66 7.81 24.20
Cashflow
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Development
and Capital -6.00 -8.78 -1.29 -0.93 -17.00 -15.46
Expenditure
Cashflow from
8.50 -16.25 -3.17 1.73 -9.19 8.74
Operations
Group gold revenue for the September 2012 quarter amounted to US$ 87.89 million from the sale of 55,995
ounces at an implied average price of US$ 1,570/oz. This was up marginally from the revenue achieved in
the June 2012 quarter, and comprised 36,150 ounces of gold sold into the spot market at an implied average
price of US$ 1,662/oz and 19,845 ounces delivered into the hedge book at an implied average price of US$
1 166/oz. A possible restructuring or cash settlement of the ex-Rand Uranium hedge was considered during
the quarter to improve the Cooke Underground Operations’ profitability in the short term. It was, however,
decided that, at this stage, it would be optimal to continue delivering into the hedge as the monthly
commitments become due. This will carry on through to the end of the hedge commitments in June
2013.The average gold price was also affected by the Franco Nevada Corporation (“Franco Nevada”) gold
royalty inherited with the acquisition of Cooke 4, where 7% of gold produced from Cooke 4 is delivered to
Franco Nevada at a fixed price of US$ 400/oz. This had the effect of decreasing the implied average price by
US$ 10/oz. The ounces sold to Franco Nevada are included in the hedge ounces detailed above.
Payments to operating suppliers and employees totalled US$ 80.08 million for the quarter, resulting in an
operating cashflow of US$ 7.81 million. The Modder East and Randfontein Surface Operations contributed
US$ 14.50 million and US$ 2.66 million to this cashflow, respectively. The Cooke Underground Operations
and Cooke 4 consumed US$ 7.47 million and US$ 1.88 million of this operating cashflow, respectively. The
Cooke Underground Operations, inclusive of Cooke 4, are expected to contribute positively to the group
cashflow in the short term with the restructuring of the Cooke Underground Operations and the continued
implementation of the turnaround strategy. The Randfontein Surface Operation is expected to continue its
positive contribution to the group cashflow in line with its turnaround strategy.
Group development and capital expenditure totalled US$ 18.48 million with the Modder East, Cooke
Underground, Cooke 4 and Randfontein Surface Operations’ expenditures totalling US$ 6 million, US$ 8.78
million, US$ 1.29 million and US$ 0.93 million respectively. The Randfontein Surface Operation’s projects,
which include the Cooke Gold Plant Optimisation Project, incurred US$ 1.41 million in capital expenditure.
The remaining capital expenditure of US$ 0.07 million was incurred by the company’s corporate offices.
Negative cashflow from operations for the September 2012 quarter therefore totalled US$ 9.19 million. This
outflow is slightly more than the US$ 8.04 million forecast as per the September Quarter Guidance and
Operational Update, released by the company on 10 September 2012, largely as a result of the lower
volumes and grades experienced at the Cooke Underground Operations. This outflow has been funded from
current cash resources. As was reported in the aforementioned September Quarter Guidance and
Operational Update, capital and project expenditure has been minimised until such time that production is
normalised at the operations. Cashflow from operations is expected to be positive during the December
2012 quarter.
Gold One ended the quarter under review with a cash balance of US$ 97.57 million (including restricted cash
of US$ 30.76 million) and excluding gold receivables amounting to US$ 11.84 million. The higher cash
balance was largely due to the US$ 25 million shareholder loan. This compares to a cash balance of US$
75.99 million (including restricted cash of US$ 30.12 million) and gold receivables of US$ 6.09 million at the
end of the June 2012 quarter, reflecting a 28% quarter-on-quarter increase in the cash balance. The
shareholder loan was provided to reduce the capital owing on the Investec facility and to provide Gold One
with additional working and project capital. A portion of the loan will be used to procure long lead capital
items planned for the Cooke Gold Plant Optimisation Project.
6|Page
The large increase in gold receivables at the end of the September 2012 quarter when compared to the June
2012 quarter was due to the annual Rand Refinery (Pty) Limited stock-take, which took place from 28
September 2012 to 1 October 2012. This created a backlog of payments at the refinery. The gold receivables
were received in full in early October.
In summary major cash movements during the quarter related to:
- Cash of US$ 14.41 million consolidated into the group on the closing of the First Uranium transaction
- Cash of US$ 10.30 million received from First Uranium as repayment of the loan advanced to it
during the March and June 2012 quarters
- A payment of US$ 10 million as a portion of the final payment made under the First Uranium
transaction. Refer below for detail regarding the remaining portion paid.
- The first interest payment on the Investec facility, made on 2 July 2012. This amounted to US$ 0.85
million.
- The settlement of transaction fees amounting to US$ 3.95 million
- A drawdown of the Investec facility on 28 September 2012, amounting to US$ 4.28 million
- A shareholders loan received to the value of US$ 25 million.
At quarter-end Gold One reflected debt of US$ 219.95 million (principal amount of US$ 213.79 million and
interest of US$ 6.16 million). This debt is made up of the shareholder loans received during the March and
September 2012 quarters, amounting to US$ 104 million, and the Investec facility, amounting to US$ 115.95
million. A capital amount of US$ 12.58 million of the Investec facility was repaid in early October 2012 using
the additional shareholder loan.
During the quarter an additional drawdown of the Investec facility took place in order to fund the remaining
portion of the Cooke 4 purchase price. This drawdown amounted to US$ 60 million and was paid directly to
the sellers. Gold One has access to US$ 96.21 million in undrawn Investec facilities.
The Cooke Underground and Randfontein Surface Operations’ hedge book totalled 74,584 ounces at 30
September 2012 at an average deliverable price of ZAR 10,184/oz. During the quarter Gold One entered
into a short term tactical hedge to deliver 21,000 ounces at an average deliverable price of ZAR 14,493/oz.
The short term tactical hedge, which comes into effect in October 2012, was entered into in order to lock in
a portion of the revenue for the remaining period of the 2012 year. The hedge is expected to be
extinguished by year-end.
For the release with pictures and schematics, please refer to the company`s website hosted at www.gold1.co.za
3. Group Operational Review
September 2012 June 2012 Quarter
Variance
Quarter Actual Actual
Gold One Group 59 642 oz 62 904 oz -3 262 -5%
September
September 2012
2012 Quarter Revised Variance
Quarter Actual (oz)
Guidance (oz)
Modder East Operation 17 136 17 000 136 1%
Cooke 1, 2 and 3 Underground
25 701 27 200 -1 499 -6%
Operation
Cooke 4 Underground
7 281 6 000 1 281 21%
Operation
Randfontein Surface Operation 9 524 9 400 124 1%
Total 59 642 59 600 42 0%
For the release with pictures and schematics, please refer to the company`s website hosted at www.gold1.co.za
3.1. Modder East Operation
September 2012 June 2012
Modder East
Quarter Quarter
Ore Mined Underground 84 393 t 114 727 t
Mined Grade 6.87 g/t 7.44 g/t
Milled Tonnes 87 452 t 110 958 t
Recovered Grade 5.17 g/t 7.03 g/t
Gold Recovery 95% 95%
Gold Produced 17 136 oz1 26 493 oz2
Cash Cost3 US$ 770/oz US$ 590/oz
Notes:
1Includes 2,587 ounces produced by the Modder East Operation through the treatment of 25,159 tonnes of low grade
development ore, mill rejects and mud at an average recovered grade of 3.20 grams per tonne.
2Includes 1,407 ounces produced at Modder East by the treatment of 51,574 tonnes of low grade development ore at a
recovered grade of 0.85 grams per tonne.
3Cash cost refers to all costs directly associated with mining activities, mine administration, processing and refining.
3.1.1. Modder East: Operational Review
At the end of the September 2012 quarter, Modder East’s progressive LTIFR for the 2012 year amounted to
1.05, reflecting an improvement on the operation’s 2012 LTIFR as at the end of previous quarter of 1.29.
The LTIFR for the quarter alone was 0.48 compared to 1.27 for the June quarter, indicating that the
contingencies put in place to alleviate the effect of the illegal strike were implemented without
compromising safety.
The ramp up in production at Modder East following the unprotected strike action and subsequent dismissal
of a large majority of the operation’s workforce during June has progressed slower than expected due to
intimidation of loyal employees, which is discussed in more detail below. Subsequent to the strike,
9|Page
production at the operation more than doubled from 3,409 ounces in July 2012 to 6,962 ounces in August,
and totalled 6,766 ounces in September. As previously announced, the company has engaged Jongingozi
Outsourcing (Pty) Limited, a contract mining company, to assist in normalising Modder East’s production.
This plan has seen a systematic build up towards pre-strike levels comprising approximately three mining
teams per week into the stoping and development operations. By the end of September, 30 mining teams
had been employed at Modder East equating to 50% of the number employed prior to the strike.
While production at Modder East was initially anticipated to return to pre-strike levels by the end of the
September 2012 quarter, continued intimidation of new recruits by dismissed employees led to a spate of
resignations as new recruits feared for their safety. The intimidation levels reached breaking point following
a call to dismissed employees to make mines in South Africa ungovernable and to prevent non-striking
workers from going to work at Modder East. These events and ongoing threats of violence against the
company, its assets and loyal employees have placed significant pressure on the organisation. In recent
weeks levels of intimidation have subsided and it is now anticipated that pre-strike production levels will be
achieved by year-end.
With the three year NUM wage agreement coming to an end in December 2012, management has used the
current disruptive period to successfully negotiate a new two year wage agreement. The two year wage
agreement will be effective for the period from 1 January 2013 to 31 December 2014 and will apply to all
Paterson band A and B employees, regardless of union affiliation. Salaries will be increased by 10% for
Category A and B Lower Employees and 8% for B Upper Employees in 2013 and in 2014. Following the
transition of Modder East as it ramps up from development status to full production, substantial increases to
minimum wages for surface and underground categories will also be implemented to bring the operation in
line with the industry. Newly introduced terms include a maternity leave provision, physical transport
provided by the company, a medical allowance, and the issuing of a 13th cheque dependent on the
achievement of an annual production target. The agreement further provides for increases to: basic salaries;
critical skills salaries; monthly living out allowances; and company provident fund contributions.
Total production volumes for reef mined at Modder East during the September 2012 quarter amounted to
84,393 tonnes at an average grade of 6.87 grams per tonne. In addition, a further 25,159 tonnes of low
grade development ore, mud and mill rejects were treated with an average recovered grade of 3.20 grams
per tonne. Underground ore mined showed a 25% quarter-on-quarter tonnage decrease, in line with the
company’s expectations following the impact of the illegal strike action and the subsequent dismissal of the
majority of the operation’s workforce.
Mined grade for the quarter decreased from 7.44 grams per tonne in the June 2012 quarter to 6.87 grams
per tonne. The 9% decrease in mined grade is exclusively due to the continued focus on mechanised on-reef
development throughout the strike period. Mechanised on-reef development exposes the high grade Black
Reef simultaneously with much lower grade basal units, which dilutes the mined grade for this development
to 3.45 grams per tonne, compared to the in-stope Black Reef broken grade of 8.35 grams per tonne for the
quarter.
For the release with pictures and schematics, please refer to the company`s website hosted at www.gold1.co.za
The overall impact of the illegal strike and the subsequent dismissal of the majority of the workforce are
evident in the reduction in ounces produced, from 31,128 ounces in the March 2012 quarter to 26,493
ounces in the June 2012 quarter and 17,136 in the September 2012 quarter. The total of 17,136 ounces for
the quarter under review is 1% above the revised September guidance.
The cash cost for the quarter increased by 31% from US$ 590/oz for the June 2012 quarter to US$ 770/oz for
the September 2012 quarter and is largely due to the combination of decreased tonnage and grade and
winter electricity tariffs. With an increase in tonnage and grade expected during the December 2012 quarter
as Modder East normalises, costs are expected to stabilise at levels of US$ 600/oz.
3.1.2. Modder East: Stoping and Ledging
A total of 14,906 square metres was mined during the September 2012 quarter compared to the 27,573
square metres mined during the June 2012 quarter. Despite this overall 46% decrease, output during the
quarter increased significantly on a month-on-month basis as new stoping teams were formed and became
operational. Stoping width increased from 122 centimetres to 132 centimetres in line with a 11% increase in
channel width, while the external waste variance remained consistent at 54 centimetres compared to 52
centimetres for the June 2012 quarter.
For the release with pictures and schematics, please refer to the company`s website hosted at www.gold1.co.za
3.1.3. Modder East: Development
The company increased the amount of mechanised on-reef development during the strike as well as
throughout the post-strike rebuild phase. This has been largely achieved through supervisors operating
mechanised equipment while operators were on strike. Total on-reef development increased by 33%, from
367 metres at the end of the June quarter to 489 metres at the end of the September quarter. This has
facilitated future mining flexibility, which has been significantly enhanced, and mining layouts have been
reviewed for optimal productivity through improved ore handling and material supply.
At the end of the September 2012 quarter 294,018 square metres were available for mining compared to
300,938 square metres that were available at the end of the June quarter. This translates into 16 months of
mining at 18,000 square metres per month. The net quarter-on-quarter reduction is a result of the
continued extraction of square metres during the strike period, while on-reef development has been
focused on creating future flexibility rather than on short term increases in available square metres.
During the quarter 241 metres of mechanised off-reef development were achieved with mechanised
equipment mostly dedicated to on-reef development. The focus of the off-reef development teams has been
to continue the development of the main decline up to the point of the excavation of the life of mine pump
station, which position was reached during the quarter under review.
For the release with pictures and schematics, please refer to the company`s website hosted at www.gold1.co.za
3.1.4. Modder East: Metallurgical Plant
During the quarter 112,611 tonnes were milled and treated at the Modder East Metallurgical Plant,
reflecting a 31% decrease when compared to the previous quarter’s 162,532 tonnes milled. Tonnes treated
included 87,452 tonnes of Black Reef with the balance comprising 25,159 tonnes of low grade development
ore from the Middle Kimberley Reef horizons, mill rejects and mud. Black Reef yielded recovered grades of
5.17 grams per tonne while the total tonnes milled and treated yielded an average recovered grade of 4.73
grams per tonne. Metallurgical recoveries remained consistent at 95%.
3.2. Cooke Underground Operations
September 2012 August and September June 2012
Cooke Underground Quarter 2012 Quarter
Cooke 1, 2 and 3 Cooke 4 (Cooke 1, 2 and 3 only)
Ore Mined Underground 288 113 t 60 600 t 282 736 t
Mined Grade 4.27 g/t 4.41 g/t 4.51 g/t
Milled Tonnes1 255 310 t 69 229 t 269 946 t
Recovered Grade 3.13 g/t 3.27 g/t 2.98 g/t
Gold Recovery 95% 96% 95%
Gold Produced 25 701 oz3 7 281 oz 26 041 oz2
Cash Cost US$ 1 717 US$ 1 863 US$ 1 438
Notes:
1Milled tonnes exclude low grade development ore.
2Includes 229 ounces produced at the Cooke Underground Operations by the treatment of 27,678 tonnes of low grade
development ore and sludge.
3Includes 30 ounces produced at the Cooke Underground Operations by the treatment of 695 tonnes of low grade
development ore and sludge at a recovered grade of 1.35 grams per tonne.
3.2.1. Cooke Underground: Operational Review
At the end of the September 2012 quarter the Cooke Underground Operations’ progressive LTIFR for the
2012 year amounted to 1.79, reflecting a continuous improvement on the operations’ 2012 LTIFR as at the
end of the June 2012 quarter. Although this pleasing trend indicates that the safety initiatives introduced
are impacting positively, the LTIFR remains above the company’s benchmark rate of 1. The LTIFR for the
quarter alone was 1.58.
Gold production for the September 2012 quarter amounted to 25,701 ounces, which is 6% or 1,499 ounces
lower than the forecast of 27,200 ounces. This was produced from 255,310 tonnes milled at an average
recovered grade of 3.13 grams per tonne, as well as the treatment of 695 tonnes of low grade development
ore and underground sludge. The lower gold output was largely due to the milling of lower than anticipated
production volumes that resulted from underground accumulations. Although the amount of ore mined
underground increased quarter-on-quarter, this was associated with a reduction in mined grade from 4.51
grams per tonne to 4.27 grams per tonne. The reduced grades were largely the result of a lack of mining
flexibility and included mining in marginal and unpay areas, which negatively impacted on grade. Increasing
grade flexibility, primarily through continued increases in development rates, will remain a focus area of the
planned two year turnaround programme within the restructured organisation.
Cash operating costs increased by 19% from US$ 1,438/oz to US$ 1,717/oz as a result of the reduction in
gold output as well as stores and remuneration cost overruns. Changes in accounting policy for capital
expenditure and two months of winter electricity tariffs further contributed to the high costs for the quarter.
The mining of marginal and unpay ground combined with the increase in operating costs have received
urgent executive management attention. This has included a restructuring of the operations, which will
result in a decrease in planned mining volumes of approximately 25,000 tonnes per month relative to
original planning of 100,000 tonnes per month. This reduction in volumes will unfortunately be associated
with a reduction in employees, currently estimated to be approximately 1,300 persons. Discussions with
organised labour in this regard have commenced. Management and operational structural changes have also
been implemented to ensure an improvement in operational profitability.
Of the total tonnes milled, Cooke 1 milled 73,697 tonnes at an average recovered grade of 3.26 grams per
tonne, reflecting an 18% quarter-on-quarter increase in recovered grade. Cooke 2 milled 78,158 tonnes at an
average recovered grade of 2.94 grams per tonne, reflecting a grade decrease of 6% when compared to the
previous quarter, and Cooke 3 milled 103,455 tonnes at an average recovered grade of 3.17 grams per
tonne, reflecting a grade increase of 6% when compared to the previous quarter. In addition, underground
sludge and low grade development ore milled at the Cooke Gold Plant contributed 695 tonnes at an average
recovered grade of 1.35 grams per tonne. The low volume of sludge and low grade development ore treated
did not impact on the total operations’ recovered grade of 3.13 grams per tonne; overall recovered grade
improved by 5% when compared to the previous quarter. It is expected that the elimination of marginal and
unpay mining across the operations will result in recovered grades increasing into the next quarter, albeit at
lower volumes.
During the quarter the operation’s mine call factor improved by 2% to 68.1%. Cooke 1 achieved 76.2%,
Cooke 2 achieved 53.7%, and Cooke 3 achieved 76.5%. A continued focus on reducing underground
accumulations is anticipated to positively reflect in the mine call factor for all three shafts during the
December 2012 quarter.
Plant efficiencies and accountability are continually increasing and are being further bolstered by the
continued implementation of the capital refurbishment programme at the Harmony Gold Mining Company
Limited Doornkop Plant.
For the release with pictures and schematics, please refer to the company`s website hosted at www.gold1.co.za
3.2.2. Cooke Underground: Cooke 4
Cooke 4 August and September 2012
Ore Mined Underground 60 600 t
Mined Grade 4.41 g/t
Milled Tonnes 69 229 t
Recovered Grade 3.27 g/t
Gold Recovery 96%
Gold Produced 7 281 oz
Cash Cost US$ 1 863
The successful acquisition of Ezulwini (renamed as the Cooke 4 Underground Operation) was completed on 1
August 2012.
The Cooke 4 shaft has recorded two lost-time injuries since 1 August 2012 at a LTIFR of 0.49. The milestone
achievement of 500,000 fatality free shifts was surpassed by the Cooke 4 Shaft on 31 August 2012.
Production at Cooke 4 during the September 2012 quarter has been recorded as for the August and
September months only. During this period 7,281 ounces of gold were produced from 69,229 milled tonnes
at a recovered grade of 3.27 grams per tonne. The mine call factor remained stable over the quarter at 77%.
Plant recovery for the two months was 95.6 %.
Regrettably, during the first week of October the majority of the Cooke 4 workforce participated in an illegal
strike and 1,417 workers were subsequently dismissed. Owing to Cooke 4’s status as a marginal operation
and the continuing labour unrest in South Africa’s mining industry, the company has suspended the
operation for 30 days to ensure the safety and security of employees and assets. The suspension will
continue until such time as operations can be safely resumed. Essential services will operate in the interim.
With access to Cooke 4’s gold and uranium processing facility Gold One has commenced with a detailed
feasibility study considering the implementation of a gold and uranium co-product strategy. In addition to
extracting uranium from certain reefs currently mined for gold only, this feasibility also considers certain
sections of Cooke 2, 3 and 4 that have significant uranium resources present in unmined ground as well as in
a number of high tonnage pillars. A reconnaissance of the higher uranium grade underground areas has
already found the development to be in good condition although, apart from rail tracks, all other
infrastructure such as air, water, and power have been removed and will need to be reinstalled. A study
compiled in 2009 by TWP Projects (Pty) Limited on the combined gold and uranium opportunities at the
Cooke shafts is currently being reviewed in line with updated resource models and the newly integrated
Cooke 4 gold and uranium plants. This study is expected to be completed during the December 2012 quarter
and has included the finalisation of a capital programme to recommission the Cooke 4 uranium plant, which
is currently on care and maintenance. This programme could commence during the March 2013 quarter
pending the positive outcome of the total feasibility study. The capital will be spent in two phases, the first
of which will see the first 50,000 tonne per month module operating at full capacity and will require
approximately ZAR 13 million (US$ 1.55 million) of capital. The second phase will see the commissioning of
the plant to full production levels of 100,000 tonnes per month at an additional capital cost of approximately
ZAR 22 million (US$ 2.962 million)
It is envisaged that gold and uranium bearing ore will initially be trucked to Cooke 4 until such time as
permanent ore transport arrangements have been implemented. A detailed study investigating various
transport alternatives is well underway.
3.2.3. Cooke Underground: Turnaround Strategy
The primary focus of the Cooke Underground Operations’ two year turnaround programme remains on
reducing costs and increasing development to ensure an increase in mining flexibility, which is expected to
begin having a positive impact in early 2013.
Current development sampling across all three shafts has been positive confirming the intersection of grades
above current mining pay limits, specifically associated with the UE1A, VCR and selected Kimberley Reef
horizons. Over the next 12 months 32 raises will be completed, generating an estimated 140,000 square
metres of payable mining ground.
During the quarter under review good progress was made in understanding the key drivers of the mine call
factor, with several initiatives being driven across the different shafts. A further focus on revenue
initiatives, such as team face advance, was initiated during the previous quarter.
Prior to the suspension of the Cooke 4 Underground Operations a comprehensive turnaround programme
was initiated to enhance revenue and reduce cost, much like the turnaround programmes that have already
been implemented across the Cooke 1, 2 and 3 shafts and the Randfontein Surface Operations. A
turnaround team has been appointed and a high level analysis phase has been undertaken. The turnaround
initiative will resume once the suspension of the operation is lifted. Despite the suspension of the
operations, however, the team’s current focus is on the implementation of shared services, which is a key
component in the realisation of cost synergies across the Cooke Underground and Randfontein Surface
Operations.
3.2.4. Cooke Underground: Stoping and Ledging
Square metres mined for the September 2012 quarter across Cooke 1, 2 and 3 totalled 36,264 square
metres, representing a 2% increase relative to the June 2012 quarter. During the quarter, however, the
secondary stoping operation of double cuts was also undertaken resulting in an equivalent additional 4,921
square metres; an increase of 31% from the previous quarter.
Increasing mining flexibility remains a priority to facilitate increased grade and volumes. During the quarter
under review the average monthly face length mined was 1,669 metres, reflecting a decrease of 4% or 68
metres when compared to the previous quarter. This decrease was offset by a positive increase in face
advance, increasing by 0.4 metres to an average of 7.2 metres per month. The primary reason for the lower
face length has been the stopping of marginal and unpay panels across all three shafts. A further decrease in
face length is expected during the December 2012 quarter as full attention is applied to optimising the
mining mix relative to current cost structures.
Vamping, a mining method used to recover ore historically left in mined out areas, continues to be a focus at
the Cooke Underground Operations. Vamping tonnage increased by 9% compared to the previous quarter,
although the associated gold recovered by this operation decreased by 4%. This decrease in vamping gold is
ascribed to the lower vamping grade, which decreased from 5.20 grams per tonne to 3.70 grams per tonne
over the quarter, and is a function of fluctuating grades as teams move from area to area.
At Cooke 4 face length mined during the months of August and September was 1,306 metres with a face
advance of 8.9 metres, resulting in 11,581 square metres. Recovered grades remained steady at 3.19 grams
per tonne compared to 3.17 grams per tonne for the previous quarter.
3.2.5. Cooke Underground: Development
Off-reef development performance for the September 2012 quarter amounted to 2,325 metres with the
Cooke 1, 2 and 3 shafts showing an overall 5% improvement in metres when compared to the previous
quarter. On-reef development for the quarter amounted to 2,486 metres, reflecting a 1% increase on the
previous quarter. A further 759 metres of payable face length were made available during the September
2012 quarter, compared to the 520 metres that were made available during the June 2012 quarter.
Total development on Cooke 4 for the months of August and September was 1,142 metres with 650 metres
on-reef and 492 metres in the waste development ends. On-reef development generated 18,174 payable
square metres.
Development sampling results for the quarter are illustrated in the table below, which indicates significant
grades in many of the new mining areas that support the planned production profile. In particular,
promising grade intersections have been achieved in the primary reefs such as the UE1A horizon and in
historical “secondary reef” horizons, such as the VCR and the Kimberley (K4 and K9) Reefs. Significant
uranium grades, particularly associated with the UE1A across Cooke 2 and Cooke 3 and the A5 Elsburg Reef
at Cooke 3, will facilitate the benefits of the uranium co-product strategy that will ultimately reduce
operating costs through additional uranium revenue.
Cooke Underground September 2012 Quarter Development Sampled Metres
Total
Development Gold Uranium
Sampled
Sampled
Reef Type CW g/t cmg/t SW g/t (SW) kg/t cmkg/t
(M)
Cooke 1
UE1A 144 140 4.98 699 160 4.37 0.118 18.86
E8 120 132 4.68 618 152 4.07 0.172 26.13
K9 255 155 2.07 322 175 1.84 0.107 18.67
Cooke 2
VCR 90 81 19.73 1604 101 15.88 N/A N/A
UE1A 119 124 10.91 1352 144 9.39 0.111 16.72
E8 30 205 0.08 16 225 0.07 N/A N/A
K9 111 139 1.96 468 149 3.14 N/A N/A
Cooke 3
VCR 288 34 7.34 253 100 2.53 0.058 5.8
UE1A 345 120 9.31 1114 140 7.96 0.469 65.63
A5 342 205 2.50 515 225 2.29 0.230 51.73
K4 51 138 11.84 1637 158 10.36 0.151 23.91
Notes:
1. The sampling interval for on-reef development is 3 metres.
2. Weighted average values for individual reef ends are calculated using all sample sections within the development end. Averages
per reef horizon are determined based on weighted averages according to sampled metres.
3. The theoretical stoping width used is based on a minimum stoping width of 100 centimetres, or channel width plus 20
centimetres (10 centimetres above and below the reef, with a minimum width of 100 centimetres).
4. The sampled metres include backlog sampling.
3.2.6. Cooke Underground: Doornkop Plant
The total Cooke Underground Operations produced a total of 25,701 ounces from 255,310 tonnes milled at
an average recovered grade of 3.13 grams per tonne and from the treatment of 695 tonnes of low grade
development ore and underground sludge at a recovered grade of 1.35 grams per tonne. During the quarter
under review reef from the Cooke Underground Operations was treated at the Doornkop Plant as well as at
the Cooke Gold Plant. During the September 2012 quarter 51,036 tonnes of Cooke 1 ore with a recovered
grade of 2.90 grams per tonne, 920 tonnes of Cooke 2 ore with a recovered grade of 3.09 grams per tonne,
942 tonnes of Cooke 3 ore with a recovered grade of 3.57 grams per tonne, and 695 tonnes of low grade
development ore and sludge with a recovered grade of 1.35 grams per tonne were treated at the Cooke
Gold Plant, producing 4,984 ounces.
Of the total tonnes milled at the Doornkop Plant, Cooke 1 milled 22,661 tonnes at an average recovered
grade of 4.08 grams per tonne, Cooke 2 milled 77,238 tonnes at an average recovered grade of 2.94 grams
per tonne, and Cooke 3 milled 102,512 tonnes at an average recovered grade of 3.17 grams per tonne,
producing 20,716 ounces.
The total Doornkop Plant cost including capital and administration fees reduced quarter-on-quarter from
ZAR 133.87 per tonne milled to ZAR 116.72 per tonne milled, as phase 1 of a capital spend programme to
improve feed throughput, leach retention times and carbon management concluded. Phase 2 and 3 of the
plant refurbishment will focus on maintaining the Doornkop Plant at sustainable throughput and efficiency
levels and is expected to be completed during the December 2012 quarter.
3.2.7. Cooke Underground: Resources and Reserves
During the quarter under review the Cooke Underground Operations commenced with a complete review
and update of the underground resources and reserves that will culminate in an updated independent
technical report anticipated to be completed during the December 2012 quarter. Geological models for all
reefs including the UE1A, A2, A3b, A5, E9Gb, K4, K7, K9, VC and UE7 have been updated following extensive
data review, analysis and capture. Structural models, reef wireframes, dip domains and block models have
also been updated and will underpin the future mineral (ore) reserves for the operations.
3.2.8. Cooke Underground: Projects
During the quarter under review six VCR surface exploration boreholes were drilled south of the Cooke 2
Shaft to explore for a possible extension of the VCR and UE7 reef horizons. Due to the highly channelised
nature of the VCR, this drilling was primarily aimed at confirming structural extensions of this reef rather
than to delineate grade distribution. Five of the six boreholes successfully intersected the VCR, confirming
the extension of the reef in this area. In addition, boreholes GB 34 and GB 36 yielded encouraging VCR assay
results, further confirming the presence of continued high grade channelised VCR. Assays results are
illustrated in the table below. The respective structural wireframe update will be completed during the
December 2012 quarter and will be utilised to guide underground exploration development.
For the release with pictures and schematics, please refer to the company`s website hosted at www.gold1.co.za
3.2.9. Zuurbekom Prospecting Right Extension
The Zuurbekom Prospecting Right (Prospecting Right 307) renewal has been submitted to the Department of
Mineral Resources. The application has included a revised prospecting work programme that proposes
access to the eastern payshoot extension from Cooke 1’s 101 level. Additional surface exploration drilling is
also planned for 2013 to confirm historic drilling undertaken in the Zuurbekom block. Current conceptual
economic studies completed on the Zuurbekom extension have suggested that, pending the outcome of
successful exploration results, the commencement of production from Zuurbekom utilising the Cooke 1
Shaft could be achieved in a period of approximately 12 months.
3.2.10. Cooke Shaft Backfill Projects
Significant opportunities have been identified at the Cooke Underground Operations to mine historical gold
bearing pillar areas. These areas could be selectively extracted considering high margin, lower volume
operations, which will positively impact on mine profitability and mining flexibility. The feasibility study
considering implementing backfill at the Cooke 2 Shaft is well advanced and indicates an attractive return on
investment.
The conceptual backfill plant design has been completed with detailed design currently being undertaken to
progress the project to a definitive feasibility stage. The associated environmental impact assessment (EIA)
and environmental management plan (EMP) are due to commence during the December 2012 quarter.
20 | P a g e
Plant construction is anticipated to commence early next year with commissioning planned for the
December 2013 quarter.
3.3. Randfontein Surface Operation
September 2012 June 2012
Randfontein Surface
Quarter Quarter
Reclaimed Grade 0.468 g/t 0.569 g/t
Milled Tonnes 856 501 t 786 346 t
Recovered Grade 0.346 g/t 0.41 g/t
Residue Grade 0.122 g/t 0.159 g/t
Gold Recovery 74 % 72 %
Gold Produced 9 524 oz 10 370 oz
Cash Cost US$ 1148 /oz US$ 1 000/oz
3.3.1. Randfontein Surface: Operational Review
At the end of the September 2012 quarter the Randfontein Surface Operation’s progressive LTIFR for the
2012 year was recorded at 1.23, reflecting a deterioration from the operation’s 2012 LTIFR as at the end of
the June 2012 quarter of 1.09. The LTIFR for the quarter alone was 1.46. Initiatives have been introduced to
address this decline and these include the introduction of a risk assessment system.
During the quarter under review the Cooke Gold Plant produced 14,509 ounces, of which 9,524 ounces were
attributable to the reclamation of Dump 20. This reflects a decrease of 8% when compared to the previous
quarter’s production of 10,370 ounces and is a consequence of the higher grade realised from the plant
clean-up during the June quarter.
4,954 ounces were attributable to Cooke ore, and the balance of 30 ounces was attributable to low grade
development ore, sludge and mud.
Production at the operation improved significantly during the quarter with total plant throughput, including
underground ore, increasing by 8.3% quarter-on-quarter and the surface sources feed increasing by 8.9%. A
total of 856,501 tonnes was treated from surface sources, reflecting an increase of 70,155 tonnes when
compared to the June 2012 quarter. The average head grade for the quarter was 0.47 grams per tonne,
which was above the expected grade reported during the previous quarter of 0.43 grams per tonne. The
June 2012 quarter head grade was inflated as a result of plant clean-up that happened during that quarter.
Gold recovery increased from 72% for the June 2012 quarter to 74% for the September 2012 quarter
following the successful commissioning of the high pressure leach shear reactor during the June quarter and
the installation of a mechanical agitator during the quarter under review. The overall reagent consumptions
also reduced as a result of the reactor’s operation, the most notable of which was cyanide, which reduced
from 0.9 kilograms per tonne to 0.3 kilograms per tonne.
Despite the 8.3% higher tonnage milled, the improved plant recoveries and the reduction in reagent
consumptions, the total operating cost for the plant increased by 15% from US$ 1,000/oz to US$ 1,148/oz.
This was largely a result of the higher electricity tariffs experienced during the winter season, which
increased by 64% quarter-on-quarter and increased site establishment costs for the reclamation contractor.
As such total operating costs are expected to reduce during the December 2012 quarter.
3.3.2. Randfontein Surface: Turnaround and Growth Strategy
The formal process instituted at the Randfontein Surface Operations at the beginning of the year to examine
cost and operating efficiencies has continued to produce improvements. Progress has been made on the
plant gold recovery with a year-to-date improvement of 4% from a base of 70%. Total stores costs have also
decreased by 16.8% from ZAR 55.80/t to ZAR 46.40/t. The introduction of steel balls in the milling circuit
and cyanide consumption has been the major contributor to this decline.
During the December 2012 quarter the operation will continue to reclaim the Dump 20 sand from the higher
grade floor in addition to the dump face. The hydraulically reclaimed fines from the Cooke 2 Shaft reported
in the previous quarter have been postponed to the 2012 December quarter.
3.3.2.1. Randfontein Surface: Cooke Gold Plant Optimisation Project
The Cooke Gold Plant Optimisation Project was initiated at the beginning of 2012 with the objectives of
extending the Cooke Gold Plant’s operating life, expanding the current operation to achieve improved
economy of scale, reducing plant operating costs and securing an alternative deposition site to the Cooke
Dump that will be reclaimed for the Cooke Uranium Project. The principal opportunity that has been
identified is that of changing the surface reclamation from a sand-only mechanically reclaimed source to a
combination of hydraulically reclaimed slimes and mechanically reclaimed sand, thereby reducing
reclamation costs and plant milling costs. The tailings residue will be deposited into abandoned open pits,
which will provide deposition capacity until approximately 2018.
During the September 2012 quarter significant progress was made with the project’s engineering design and
costing. Specialist environmental studies, pursuant to the pit deposition amendment applications for the
increased tonnage to be deposited to the various open pits owned by the company, were also substantially
advanced. Orders for long lead time items including pipes, pumps and valves will be placed during the
December 2012 quarter. Implementation of the project is planned for the December 2013 quarter.
3.3.3. Randfontein Surface: Resources and Reserves
During the March and June 2012 quarters an extensive drilling programme was completed on the slime and
sand resources at Dump 20. This drilling programme included a total of 770.5 metres and 37 boreholes.
During the June 2012 quarter extensive metallurgical test work was completed on composite samples of
sand and slimes material from Dump 20. The generation of a new sand and slime resource model for the
Dump 20 deposit is currently being undertaken by an external consultancy, and is expected during the
December 2012 quarter.
The exploratory drilling programme on the Millsite Tailings Complex and Old 4 Dam, for resource estimation
and metallurgical test work purposes, was completed during the quarter under review. The exploration
drilling programme was designed to compare the previous drilling programmes initiated on the respective
dams in 2007 and to refine the resource models for the purposes of declaring mineral resources that are
compliant with the South African Code for Reporting of Exploration Results, Mineral Resources and Mineral
Reserves (SAMREC Code). These resource estimates are expected during the December 2012 quarter.
22 | P a g e
In addition to the 54 boreholes drilled in 2007 on the Millsite Complex, an additional 152 boreholes were
drilled during the current programme, accounting for 3,921 metres. An additional 53 boreholes have been
drilled on the Old 4 Tailings Dam. Samples obtained from the drilling exercise will be used to generate
samples for metallurgical test work purposes as well as assay purposes. Samples will be assayed for gold,
uranium and sulphur.
4. Development and Exploration Projects
4.1. Modder North
During the September 2012 quarter, diamond drilling on four exploration boreholes was completed, namely,
MN15, MN16, MN37 and MN47. In addition, percussion drilling was used to pre-collar a further eight
planned boreholes to a depth of between 102 and 120 metres (MN6, MN7, MN14, MN15, MN16, MN30,
MN50, MN52). Diamond drilling of MN6 and MN30 has commenced and will continue during the December
2012 quarter. During the quarter under review a total of 3,702 metres was drilled, including 888 metres of
percussion drilling and 2,814 metres of diamond drilling at a total cost of US$ 121,803.
For the release with pictures and schematics, please refer to the company`s website hosted at www.gold1.co.za
The primary target at Modder North is the Main Reef. Potential higher grade channelised areas (payshoots)
have been defined utilising information from historical boreholes, recent and historical underground
sampling, and the current exploration programme. This information has also facilitated the definition of a
preliminary structural geological model that will inform future borehole positioning and potential mine
layouts.
The drilling of additional holes to fix the Main Reef elevation at depth, together with the inclusion of existing
historical underground survey pegs, has also allowed the generation of a three-dimensional wireframe of the
Main Reef top contact and this is illustrated below. The shallower portions near the subcrop position of the
Main Reef dip ar at approximately 22 degrees, while the deeper portions that cover the majority of the
target area exhibit shallower dips between 8 to 10 degrees. Historical mining surrounding the project area
has indicated limited structural displacements with one northeast trending fault having a 50 metre vertical
displacement, while other fault displacements appear relatively minor.
For the release with pictures and schematics, please refer to the company`s website hosted at www.gold1.co.za
The Black Reef, which forms the primary orebody at Modder East, overlies the Main Reef at depths of
approximately 290 metres below surface. Well mineralised Black Reef was intersected in borehole MN3.
Borehole MN16 also intersected a 195 centimetre Buckshot Pyrite Zone within the Black Reef, with the
overall Black Reef channel intersection being 3 metres thick. A portion of the Buckshot Pyrite intersection is
shown below.
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Additional drilling has been planned in the vicinity of MN16 to determine the extent and direction of this
channel feature.
Based on the modelling undertaken to date a future three phased drilling programme is envisaged. Phase 1
has already commenced and considers four boreholes, namely MN37, MN 39, MN42 and MN43, with the
objective of confirming the extension of the modelled Main Reef payshoot areas. Drilling for phase 1 was
completed during the September 2012 quarter. Phase 2 will consider an infill drilling programme that will be
completed during the December 2012 quarter. On completion of the phase 2 drilling programme a mineral
resource for the area will be estimated and will underpin a pre-feasibility study.
The remaining possible strike and down dip resource potential is considerable and phase 3 drilling will
consider the expansion of the initial resource. This will commence during the March 2013 quarter.
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4.2. Ventersburg
The feasibility study, which is being executed by Royal HaskoningDHV (formerly Turgis Consulting (Pty)
Limited), is primarily aimed at validating and refining the mine design criteria considered during the pre-
feasibility study and has progressed well during the quarter. The feasibility study is expected to be
completed during the March 2013 quarter.
During the quarter under review eight boreholes and the infill drilling programme planned for 2012 were
concluded. This infill drilling will be utilised to update and enhance the existing mineral resource estimate
that will ultimately underpin the final feasibility study. Drilling during the September 2012 quarter
amounted to 4,471 metres at a drilling cost of US$ 0.58 million. Project expenditure for the quarter
amounted to US$ 1.46 million.
A light detection and ranging (LIDAR) topographical survey was also successfully concluded during the
quarter under review, and has aided Royal HaskoningDHV in refining the layouts of planned surface
infrastructure. The mine design will be refined and validated during the December 2012 quarter, following
the calculation of new resource blocks. Specialist studies, including environmental baseline studies, will also
continue and will form an essential part of the feasibility study and the ultimate implementation thereof.
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Two drill rigs are currently in operation with a focus on the A Reef on the edge of the resource area (area
within green dotted lines). This drilling will assist in updating the current geological and mineral resource
models.
The results for boreholes AFO076, AFO080 and AFO084 that were pending from the reported June 2012
quarter drilling results have since been updated and are shown in the table below. AFO067 intersected well
developed and mineralised A Reef with an average grade of 9.49 grams per tonne over a 140 centimetre
channel width. The exploration results gathered will enable better domain definition in the channelised A
Reef and this information will be used to update the mineral resource models during the December 2012
quarter.
Summary of Latest Results Received During the September 2012 Infill Drilling Programme
Depth True Gold Uranium
Intersection Reef in Width Grade Value Grade Value
meters ( cm )¹ (g/t)² (cmg/t) ³ (kg/t) (cmKg/t)
AFO067D2 A Reef 641.36 138 8.20 1135 0.403 55.808
AFO067D3 A Reef 641.75 138 8.81 1219 0.341 47.259
AFO067D4 A Reef 641.19 144 11.38 1634 0.489 70.187
140 9.49 1329 0.412 57.751
AFO068 A Reef 675.29 102 4.95 505 0.135 13.767
AFO068D1 A Reef 676.04 99 3.56 354 0.114 11.339
AFO068D2 A Reef 676.37 106 4.20 444 0.112 11.831
102 4.24 434 0.120 12.312
AFO073 A Reef 709.84 213 2.11 451 0.120 25.711
AFO073D1 A Reef 709.76 219 1.91 419 0.090 19.668
AFO073D2 A Reef 709.80 226 1.93 435 0.106 23.900
AFO073D3 A Reef 709.89 210 1.60 337 0.082 17.264
217 1.89 411 0.100 21.635
AFO076 A Reef 606.72 68 1.26 86 0.098 6.676
AFO076D1 A Reef 606.50 69 1.17 81 0.094 6.531
AFO076D2 A Reef 606.70 68 1.99 135 0.131 8.822
68 1.47 100 0.107 7.343
AFO078 A Reef 685.51 213 1.80 384 0.122 25.992
AFO078D1 A Reef 685.63 215 2.52 543 0.133 28.674
AFO078D3 A Reef 685.47 218 2.21 481 0.115 25.033
216 2.18 469 0.123 26.566
AFO080 A Reef 485.28 72 4.24 304 0.174 12.524
AFO080D1 A Reef 485.33 69 4.63 322 0.249 17.309
AFO080D2 A Reef 485.00 71 2.63 187 0.212 15.088
AFO080D3 A Reef 485.99 78 1.68 131 0.142 10.991
AFO080D4 A Reef 484.57 83 1.63 135 0.128 10.571
AFO080D5 A Reef 484.84 81 2.56 207 0.147 11.890
AFO080D6 A Reef 485.10 82 1.92 157 0.129 10.581
77 2.69 206 0.166 12.708
AFO084 A Reef 892.94 73 0.46 33 0.074 5.385
AFO084D1 A Reef 892.81 75 0.41 31 0.065 4.847
AFO084D2 A Reef 892.96 82 0.58 48 0.058 4.767
77 0.49 37 0.065 4.999
AFO083 A Reef 450.10 173 3.05 527 0.134 23.106
173 3.05 527 0.134 23.106
AFO047 A Reef
AFO055 A Reef
Final Results Pending
AFO079 A Reef
AFO082 A Reef
Notes:
¹ Channel thicknesses represent the true, dip corrected thickness of the reef rounded off to the nearest centimetre. 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).
³ Centimetre grams per tonne (gold accumulation) is calculated using the true dip corrected thickness of samples multiplied
by the grade of individual samples.
4.3. Tulo
During the quarter under review the primary focus at Tulo has been on the mapping, trenching and sampling
of a prominent 17 kilometre magnetic lineament that was identified by a high resolution helicopter-borne
geophysical survey. These activities have confirmed that the extent of the target area is larger than initially
interpreted and will be used to inform the future drilling strategy. To date 47 trenches have been excavated
along 2 kilometres of the most southern part of the magnetic lineament and 40 of these trenches have
exposed quartz veining. During the September 2012 quarter 18 trenches were sampled, and 360 samples
were delivered to Performance Laboratories (Pty) Limited in South Africa for analysis. Results are still
pending.
GAP Geophysics (Pty) Limited is currently preparing a litho-structural interpretation of the Tulo
aeromagnetic and radiometric data and the geological mapping, sampling and magnetic evaluation is
planned to be completed by the end of the year.
Expenditure at Tulo for the September 2012 quarter amounted to US$ 0.29 million, with expenditure for the
year-to-date amounting to US$ 1.11 million.
4.4. Cooke Uranium Project
After the acquisition of Rand Uranium Gold One initiated a revalidation of the Cooke Uranium Project
feasibility study. The revalidation exercise was successfully completed during April 2012. Innovative ideas
including footprint optimisation, substantially reduced earthworks, the inclusion of resin-in-pulp, and better
use of gravity in the plant layout all contributed to a decrease in plant capital.
The Cooke Uranium Project, albeit a priority project for Gold One, is a key component of the West Rand
Tailings Joint Venture between Gold One and Gold Fields. The recently concluded scoping study for this
project has successfully demonstrated that the value proposition of integrating the Cooke Uranium Project
into a broader surface retreatment strategy on the West Rand is greater than the value proposition for the
standalone project.
This project will continue to form an integral part of the joint venture as the company progresses the study
through the joint venture pre-feasibility study detailed in the section below.
4.5. Gold One and Gold Fields West Rand Tailings Joint Venture
In January 2012, Gold One and Gold Fields initiated a study investigating the feasibility of establishing a joint
venture into which both parties will contribute surface assets for retreatment. The intention is to reclaim
and retreat the historical and current tailings material to recover residual gold, uranium and sulphur. A
further objective of the project is to address the redeposition of the residues in accordance with modern
sustainable deposition practices.
During the quarter the West Rand tailings scoping study was successfully concluded and has shown
extensive value and risk reduction synergies that underpin a significant opportunity to extract value from the
parties’ surface resources, which is not inherent in either company’s share price.
The positive scoping study outcome and the significant amounts of technical and economic work already
undertaken by the companies have facilitated fast-tracking to a joint pre-feasibility assessment and a
positive decision has been taken in this regard. During the pre-feasibility assessment a comprehensive
metallurgical test work programme will be carried out on Gold One’s Millsite and Old 4 Dam tailings
facilities. Further strategic phasing of capital and scheduling of available feed material will be optimised
during the pre-feasibility study. The outcome of the pre-feasibility study is expected by the end of the June
2013 quarter.
4.6. Hong Kong Listing
The recent labour unrest in South Africa has contributed to a significant decline in investor sentiment and as
a result the company is reviewing the timing of its listing on the Hong Kong Stock Exchange. In the interim
the group will focus on building up the Modder East Operation to full production of 100,000 tonnes per
month, completing the two year turnaround at the Cooke Underground Operations, integrating Cooke 4,
and growing production at the Randfontein Surface Operation.
5. Outlook
5.1. Group Production Guidance
Total group gold production for the December 2012 quarter is forecast at 59,000 ounces.
The production outlook for the Modder East Operation’s December 2012 quarter is 27, 000 ounces. During
the December 2012 quarter the company will continue to normalise production at Modder East and it is
expected that the ramp up in production will progress in line with expectations. Management anticipates
that output levels for the December 2012 quarter will reach two-thirds of budgeted output as a result of
ongoing illegal acts of intimidation. The company envisages that recruitment and engagement will continue
through most of the December 2012 quarter with daily production volumes returning to pre-strike levels by
the end of the quarter, enabling further build up in production to commence from January 2013.
The production outlook for the Cooke Underground Operation’s December 2012 quarter is 23,000 ounces,
including the contribution from Cooke 4. This reflects a 30% decrease on September output following the
recent suspension of Cooke 4 and the recently announced restructure at Cooke 1, 2 and 3. The restructure
and turnaround initiatives are expected to position the operations for an increase in output from 2013. For
the Randfontein Surface Operation, the production outlook for the December 2012 quarter is expected to
remain stable at 9,000 ounces.
It is envisaged that the group will achieve a 59,000 ounce output for the December 2012 quarter, giving a
group revised outlook of 243,171 ounces for the total 2012 year.
5.2. Group Development Outlook
During the quarter the West Rand Tailings Joint Venture scoping study was successfully concluded. The
study has shown extensive value and risk reduction synergies, which underpin a significant opportunity to
extract value from the parties’ surface resources that is not inherent in either company’s share price.
The positive scoping study outcome and the significant amounts of technical and economic work already
undertaken by the companies have facilitated fast-tracking to a joint pre-feasibility assessment and a
positive decision has been taken in this regard. During the pre-feasibility assessment a comprehensive
metallurgical test work programme will be carried out on Gold One’s Millsite and Old 4 Dam tailings
facilities. Further strategic phasing of capital and scheduling of available feed material will also be optimised
during the pre-feasibility study. The outcome of the pre-feasibility study is expected by the end of the June
2013 quarter.
During the December 2012 quarter the company will continue to progress the outstanding conditions
precedent to the acquisition agreement with the joint provisional liquidators representing the Pamodzi East
Rand Operations. The anticipated completion of all conditions precedent is 14 December 2012, which can
be extended by mutual agreement of both parties.
6. Capital Structure
As of the release of this report, the company has 1,416,538,989 shares on issue, of which 1,365,227,955
(96.4%) are held on the Australian register and 51,311,034 (3.6%) are held on the South African register. The
company has 42,236,326 unlisted options in issue.
For the release with pictures and schematics, please refer to the company`s website hosted at www.gold1.co.za
Johannesburg
31 October 2012
JSE Sponsor:
Macquarie First South Capital (Pty) Limite
31 | P a g e
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 Stuart 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
About Gold One
Gold One 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 the Cooke 1, 2 and 3 Underground Operations and the
Cooke surface assets (Randfontein Surface Operations) located in the West Rand, 30 kilometres 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.
During mid-2012 Gold One also completed its transaction with First Uranium Corporation and acquired 100% of the Ezulwini Mining
Company (Pty) Limited, giving the company access to gold and uranium processing plants with nameplate capacities of 200,000 and
100,000 tonnes per month respectively. Ezulwini is contiguous to the company’s Cooke Underground and Randfontein Surface
operations. Access to the uranium production facility will allow for near term production of uranium from underground ore mined at
Cooke. In addition, the sharing of services between Ezulwini and the Cooke Underground Operations will facilitate a reduction in
operating costs. An integrated plan has been developed which will see Ezulwini being incorporated into the greater Cooke
Underground Operations as Cooke 4 Shaft.
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 1,416,538,989 shares.
Office Details
Stock Exchange Listings
Sydney Head Office ASX/JSE Limited: GDO
Level 3, 100 Mount Street, OTCQX International: GLDZY
North Sydney, NSW 2060
Australia Directors
PO Box 1244 North Sydney NSW 2059 ? N Froneman (CEO)
Telephone: +61 2 9963 6400 ? C Chadwick (CFO)
Fax: +61 2 9963 6499 ? Y Sun (Chairman)
? M Wheatley (Lead Independent Non-Executive Director)
Johannesburg Corporate Office ? K Winters (Independent Non-Executive Director)
Constantia Office Park, Bridgeview House, Ground Floor ? B Davison (Independent Non-Executive Director)
Corner 14th Avenue and Hendrik Potgieter Street ? M Solomon (Independent Non-Executive Director)
Weltevreden Park, 1709, Gauteng, South Africa ? H Liu (Independent Non-Executive Director)
Telephone: +27 11 726 1047 ? T L Chan (Independent Non-Executive Director)
Fax: +27 11 726 1087
? M Liao (Non-Executive Director)
? C Zhou (Non-Executive Director)
Issued Capital
1,416,538,989 shares on issue
Options (unlisted: 42,236,326)
Company Secretaries
ADR ratio: 1 ADR = 10 ordinary shares
32 | P a g e
? B Snell (Australia)
? P B Kruger (South Africa) Level 1 ADR Sponsor
The Bank of New York Mellon
Registrars Depositary Receipts Division
Boardroom Limited 101 Barclay St, 22nd Floor
Level 7 New York, New York 10286
207 Kent Street USA
Sydney Tel: +1 212 815 3700
NSW Fax: +1 212 571 3050
Australia
2000 Auditors
Tel: +61 2 9290 9600 PricewaterhouseCoopers Incorporated
201 Sussex Street
South African Transfer Secretaries Sydney, NSW 1171
Computershare Investor Services Australia
70 Marshall Street Telephone: +61 2 8266 0000
Johannesburg
2001
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
33 | P a g e
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.
Dr Stewart and Messrs Meyer and Cook 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 in the Gold One 2011 Annual Report, released on 29
February 2012 on the ASX MAP, JSE SENS and the Gold One website. The company’s resource statements are also available on the
Gold One website.
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.
34 | P a g e
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.
35 | P a g e
Date: 31/10/2012 07:57:00 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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