Gold One International (ASX: GDO, JSE: GDO) has been granted two of three prospecting applications relating to the acquisition of the underground deposits and selected surface assets of Pamodzi East Rand in South Africa.
These areas will effectively link Modder East in the north of the East Rand Basin with Goliath's 50 kilometres of underground mapping in the south, creating a continuous brownfield exploration property.
The company and its 72% subsidiary Goliath Gold had on 17 April 2012 agreed to acquire the assets for ZAR 70 million (A$7.8 million).
In addition, the acquisition of selected surface assets has been made unconditional.
"I am pleased that we have been able to progress the agreement and outstanding conditions with the joint provisional liquidators and bring some conclusion to a transaction that was announced over a year ago," Gold One acting chief executive officer Christopher Chadwick said.
"The closure of the transaction with respect to the sale assets will enable the company to take ownership of the surface assets and commence with prospecting activities on the down dip extensions to our Modder East Mining Right."
Goliath Gold chief executive Richard Stewart added the two companies looked forward to applying their geological and exploration experience with the knowledge developed over the past years in the East Rand to the historical Pamodzi assets as well as continuing efforts to restore gold mining in the greater East Rand.
"We remain confident that the final prospecting application will be granted to Goliath Gold in the near term." Stewart added.
Pamodzi East Rand acquisition
Under the agreement, Gold One was to acquire the treatment plant, selected surface assets - including the Grootvlei office complex), historical geological data and the right to apply for a prospecting right over the down-dip extensions to Gold One's Modder East Operations for ZAR 65 million from the joint provisional liquidators representing Pamodzi and its subsidiaries.
Goliath was to obtain prospecting rights and acquire historical mining and geological data from Consolidated Modderfontein Mines 1979 Limited, Consolidation Modderfontein Mines Limited, Nigel Gold Mining Company (Pty) Limited and Grootvlei for ZAR 5 million.
Since then, the original transaction has been made unconditional through an amendment to the Acquisition Agreement to comprise:
- An initial payment of ZAR 35 million for the selected surface assets and historical mining and geological data, which is now unconditional. The company has paid a ZAR 7 million in cash and will pay the remaining ZAR 28 million on transfer of the immovable property.
- A ZAR 35 million payment for the prospecting rights, which will only be payable in the event that the third prospecting right is granted within 30 days of the fulfillment of the last condition precedent, which must be fulfilled on or before 31 August 2013. Should the final prospecting right not be granted, then Gold One and Goliath Gold will be exempt from payment of the ZAR 35 million.
Prior to the sellers being placed in provisional liquidation, the Pamodzi East Rand had South African Code for Reporting of Mineral Resources and Mineral Reserves compliant Resources of 7.48 million ounces (including 4.16 million ounces in the Measured category, 0.68 million ounces in the Indicated category and 2.64 million ounces in the Inferred category.
Although the resource is no longer compliant due to flooding of the underground workings post the Sellers being placed in provisional liquidation, it does demonstrate the remaining potential of the greater East Rand Basin and in particular the significant "Secondary Reef" opportunities.
The expanded exploration area includes more than 10 previously mined reef horizons extending from surface to depths of 2,500 meters below surface and measuring some 45 kilometres by 20 kilometres.
The opportunity to explore and develop such assets without the associated legacy of pumping and environmental liabilities is critical to the successful execution of Gold One and Goliath Gold's strategy to extending the life of gold mining in the East Rand.
Gold One's Modder East Operation, which commenced construction in 2006, was specifically designed to be isolated from historical infrastructure and flooded workings so as not to be burdened with legacy water pumping problems that have plagued mining in the region and had been a direct cause of the Pamodzi East Rand being placed in provisional liquidation.
Gold One's Modder East gold operations have successful produced gold with robust operating margins and the acquisitions present the company with the opportunity to replicate this.
Success in developing Pamodzi East Rand also opens up further opportunities in the greater East Rand Basin.
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