Never at Wits’ end

South Africa’s Witwatersrand basin never seems to run out of gold; you might even say it’s never at Wits’ end.

Witwatersrand Consolidated Gold Resources (WGR-T, WGR-J), a South African gold explorer with about 20 million oz. gold in the indicated category inside the Wits basin, is now listed on the TSX and was trading at around $17 per share at presstime.

By listing in Toronto, the company is trying to leverage its significant land position in the famous gold camp into more money for exploration and ongoing definition drilling.

The company is also positioning itself as an undervalued means of getting aboard gold’s bull run to US$1,000 per oz. and beyond.

“It is anticipated that the significant resource base controlled by Wits Gold will have strategic importance in a rising gold price scenario,” says chief executive Marc Watchorn.

A National Instrument 43-101 report on the company’s properties was completed by mining consultant Snowden.

The company reports an indicated gold resource at its Southern Free State property of 100.7 million tonnes grading 6 grams gold per tonne, for 19.4 million contained ounces. The inferred uranium resource there is listed at 186.5 million tonnes grading 0.000132 gram per tonne, for 54.3 million lbs. U3O8.

Snowden used cutoff grades of 300 cm-grams gold per tonne for narrow reefs and 600 cm-grams per tonne for the wider Cobble Reef within the Potchefstroom and Klerksdorp goldfields, all to a maximum depth of 5,000 metres. The cutoffs apply to both gold and uranium.

Chairman Adam Fleming claims his company holds the “world’s sixth-largest gold resource.” If that’s true, the market currently values those ounces at about US$3.50 apiece.

Adds Fleming, a former chairman of South Africa’s Harmony Gold (HMY-N, HAR-J): “We believe our TSX listing will provide North American gold investors with access to a significant new opportunity against the background of increasing constraints in the discovery and supply of precious metals worldwide.”

Wits Gold was established in 2003 and has since gathered 10 prospecting claims covering 969 sq. km adjacent to operating mines in the southern Free State (Welkom), Potchefstroom and Klerksdorp goldfields.

But Wits Gold only has prospecting rights for uranium in the southern Free State goldfield.

The overall mineral resource estimates were based on historical drilling data acquired from Anglo- Gold Ashanti (AU-N, ANG-J), Gold Fields (GFI-N, GFI-J) and Harmony Gold (HMY-N, HAR-J), as well as by some infill drilling conducted by Wits Gold.

Each major gold producer has

an option to earn a 40% interest in any mine established on the ground that each company contributed to Wits Gold.

Wits Gold listed on the Johannesburg Stock Exchange in April 2006 and since the company’s inception, in 2003, has raised US$26 million by way of five private placements, mainly with institutions. The financings were jointly co-ordinated by JP Morgan and Fleming’s Fleming Family & Partners.

Southern Free State

Wits Gold was granted prospecting rights covering 189 sq. km south of the town of Welkom, in the Free State, where more than 100 boreholes have been drilled into properties adjacent to the producing Beatrix, Joel and Merriespruit gold mines.

Wits Gold’s main goal is follow-up drilling at the Bloemhoek and De Bron projects that together contain an indicated mineral resource of 68.4 million tonnes grading 6.4 grams gold per tonne, using a 300 cm-grams per tonne cutoff. The inferred mineral resource there measures 28 million tonnes grading 6 grams gold per tonne, using a 300 cm-grams gold per tonne cutoff.

The company also conducted diamond drilling at the Robijn project, where the widespread, but thin Beatrix Reef occurs at depths of 500 to 2,000 metres below surface. Inthis area, Snowden has estimated an indicated mineral resource of 13.6 million tonnes at an average grade of 5.8 grams gold per tonne, using a 300 cm-grams per tonne cutoff. The inferred mineral resource stands at 9 million tonnes grading of 5.7 grams gold per tonne, using a 300 cm-grams gold per tonne cutoff.

In early January, the company was granted prospecting rights to the area south of the now-defunct Beisa uranium mine. Wits Gold will review the data before undertaking further exploration.

Prospecting rights for gold have been granted to Wits Gold in the area north of Potchefstroom and southeast of Klerksdorp. These areas cover 780 sq. km and are situated adjacent to operating mines in the Carletonville and Klerksdorp goldfields. More than 100 boreholes have previously been drilled in the company’s prospecting rights, where conglomerate reefs were the main targets.

These reefs generally occur at depths in excess of 2.5 km below surface. However, two shallower project areas were found adjacent to the Blyvooruitzicht gold mine in the Carletonville goldfield, where as many as seven Witwatersrand reefs exist at less than 2,500 metres below surface. Exploration drilling recently started in the Kleinfontein area.

Witwatersrand history

For more than a century, South Africa was the world’s largest gold producer, with peak production in 1970 of 32.1 million oz. gold.

Production had declined to 8.8 million oz. by 2006, partly due to a decrease in the gold recovery grade to 4.6 grams gold per tonne from 13.2 grams over that period. The ore has been derived mainly from the Witwatersrand basin, where gold and uranium are hosted by conglomerate reefs representing ancient river gravels.

Witwatersrand reefs are generally 1-2 metres thick and occur as laterally continuous bodies with consistent gold grades extending over large areas.

These bodies are usually mined in underground operations as the host strata are largely overlain by younger cover rocks.

The depth of Witwatersrand mines has generally increased through time so that most of the current workings are operating at depths of 1,500-3,000 metres below surface. AngloGold Ashanti and Gold Fields have indicated that some of their mines in the area will extend to depths in excess of 4,000 metres.

Fleming was appointed chairman of Harmony Gold in 1999 and remained in that position while the company went from a single mine operation to the fifth-largest gold mining company in the world. He resigned as chairman of Harmony Gold in 2003 and began work on forming Wits Gold.

Watchorn, meanwhile, is a geologist who once completed five years of post-graduate research on the Witwatersrand basin. He also worked for Anglo American (AAUKF-Q) between 1981 and 2002, both in South Africa and abroad.