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Gold One International Cements Acquisition Of Developing Gold And Uranium Producing Ezulwini Mine

Gold One International (ASX: GDO) has signed a definitive agreement to acquire the Ezulwini Mine in South Africa.

Ezulwini currently produces gold and uranium, with Gold One making an offer of US$70 million, which in the local currency is around ZAR 540 million.

The mine is a developing producer which sold 59,689 ounces of gold and produced 31,407 pounds of uranium in 2011.

It contains a Measured and Indicated Resource of over 13.2 million tonnes for 2.7 million ounces of gold and 6.6 million pounds of uranium, and an Inferred Resource of 159 million tonnes for 25.5 million ounces of gold and 189 million pounds of uranium.

Ezulwini has a new gold plant with nameplate capacity of 2.4 million tonnes per annum and a new uranium plant in place with simple, proven uranium technology and nameplate capacity of 1.2 million tonnes per annum.

Gold One has entered into a binding sale of shares and claims agreement with First Uranium Corporation to acquire all the shares and claims against Ezulwini Mining, held by First Uranium's wholly owned subsidiary First Uranium Limited.

Where the story becomes very interesting for investors is that the acquisition is expected to deliver synergies by combining Ezulwini with Rand Uranium.

President and chief executive officer Neal Froneman previously said the acquisition is a key component in the realisation of synergies across the Cooke Underground and Randfontein Surface Operations.

"With immediate access to Ezulwini's uranium processing facility, we can now look towards unlocking the value of our joint underground resources and begin capitalising on our gold and uranium co-product strategy in the near term.

"The Zuurbekom downdip extension is expected to have a material impact on the life of Cooke 1 shaft.

"Our Cooke Operations management team has extensive knowledge of the Ezulwini orebody and, with their gold and uranium mining experience, we are well placed to realise the inherent value from the combination of these assets."

Going forward

With the capital intensive projects totalling around US$400 million, including shaft refurbishment and construction of the gold and uranium plant, substantially completed, Gold One's immediate focus will be on implementing a right sized operation, in line with the re-structuring program currently being undertaken by Ezulwini.

This will include reducing operating costs through shared synergies with the Cooke underground operations, while also considering a focused underground development program to ensure sustainable underground mining flexibility.

Ezulwini represents an attractive economic proposition in that it provides seamless regional consolidation with Gold One's Cooke Operations.

The combination of Ezulwini with the Cooke Operations available under the Proposed Transaction is expected to provide immediate benefits in the realisation of uranium production from the Cooke Operations.

This dual commodity mix of gold, combined with high grade uranium, is anticipated to allow for a flexible co-product mining approach.

In addition to the existing gold operations, in Gold One's view Ezulwini provides further tangible upside potential that can be realised in the short to medium term including tailings retreatment opportunities.