SA’s newest gold mine summons Joburg’s colourful history

SOUTH Africa’s gold industry has been dwindling for years. Once supplying 83% of all production outside the Soviet bloc, the country doesn’t feature in the global top 10 today. Even before this decline, the focus had shifted from gold mining’s central Joburg origins to the prodigious resources in Roodepoort and the Free State.West Wits Mining’s Qala Shallows project, off Main Reef Road in western Joburg, is therefore a throwback. The plan is for first commercial production in the first quarter of 2026 and free cash flow two years after that. At that point, the mine will be producing 70,000 ounces a year. So small beans; nonetheless, Qala Shallows is the first new gold mine to hit South Africa in 15 years.The area may look a bit like a scene from Mad Max, but JSE-listed property developer Calgro M3 is operating there, and there are other low-cost housing developments under way. Criminality is a running problem, but miners such as DRDGold and Pan African Resources have demonstrated that social upliftment and commerce can be combined purposefully, even in the seemingly bankrupt Joburg metro.West Wits CEO Rudi Deysel says in an interview it was hard work getting support for the company. Despite its South African origins, West Wits is listed on the Australian Securities Exchange, a market comfortable with speculative mining companies but with strings attached.“The Australian market is not crazy about South Africa. In Sydney, a lot of the investors and analysts are South African expats. We struggled to get appointments.”Despite this, the firm raised equity as well as commercial debt from Absa and the Industrial Development Corp, which kicks in after 12 months of production. There are even plans to increase production to 200,000 oz a year, but the firm isn’t financed for that and requires further licence grants, says Deysel.There’s no pressing need. Qala Shallows has a 17-year life of mine and is lucrative, at least on paper. A gold price of $3,850/oz reduces peak funding to $31m from $44m, which assumes a gold price of $2,850/oz. Mining descends to only 850m underground at its deepest, and starts at 35m. That gives Qala Shallows a cost breakeven of about $1,200/oz. Even assuming a moderate correction in the gold price, West Wits is a noteworthy addition to the gold mining sector.There are plans for West Wits to take a secondary inward listing on the JSE, Deysel says. Initial talks have been held. “We always said the moment we are into production, we’ll start looking at dual listing. So that’s a big option for us because we see ourselves as a South African company,” he says.West Wits is a bit different because Qala Shallows is a new mine operating in an old area. Elsewhere in South Africa there are signs that good old-fashioned gold fever is in the air. Pilgrim’s Rest, the historic (but decaying) Mpumalanga village, is a popular destination for aspirant miners. It is also where another Sydney-listed mining firm, Theta Gold Mines, is trying to get a tune out of the aged TGME (Transvaal Gold Mining Estates) gold plant, having raised A$6m recently.Colourful historyEfforts to inject fresh life into South Africa’s gold industry are not especially novel and have tended to produce a mixed bag of results, ranging from the hapless to the villainous, to the downright entertaining.Take, for instance, Joe Berardo: arrested in Portugal in 2021 on allegations of €1bn in art fraud. His company, Egoli Consolidated, collapsed in a heap as worthless as the Nigel dumps he bought from Anglo American with the idea of remining them. Berardo fled South Africa after purloining rare cycads, about 40 years ago.Most recently, efforts to resuscitate the 90-year-old Blyvooruitzicht mine appear to have crashed. The mine’s backer, Aurous Resources, wanted to merge the mine with New York-listed cash shell Rigel Resource Acquisition Group this year. Efforts by the FM to contact Aurous CEO Richard Floyd have not been successful, amid claims that the deal has been rejected by the Reserve Bank. The Bank tells Miningmx it has made an adjudication but won’t say which way it decided.Public information regarding the performance of Blyvoor Gold is also unavailable. The last production numbers issued by Aurous showed it produced 11,000 oz. The Aurous and Rigel websites have not been updated since the end of 2024.In the absence of comments from its backers, Aurous smacks of frustrated good intentions and is small beer compared with the failures of the late Peter George’s Wit Nigel, Central Rand Gold, Consolidated Modderfontein, Southgo and Rand Leases. It’s also questionable whether Aflease falls into this category: it was an early endeavour undertaken by Neal Froneman, who had great success later at Sibanye-Stillwater.It seems even the most skilled are unable to eke out profitable gold from old assets. Peter Steenkamp was CEO of Harmony Gold from 2016 to the end of 2024 with incredible success, but he was previously at Pamodzi Gold. It was founded to operate Harmony’s Grootvlei and Orkney mines, among others. But the company also inherited a toxic hedge position.It once had hopes of producing one million ounces of gold a year. In the end it landed, via a dalliance with uranium, in the hands of Aurora Empowerment Systems, via a provisional liquidation order in 2009. Khulubuse Zuma, the nephew of former president Jacob Zuma, was an Aurora director. The mines never returned to production and were illegally stripped of machinery and infrastructure.A version of this article first appeared in the Financial Mail.The post SA’s newest gold mine summons Joburg’s colourful history appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com