Acquisition of Wits Gold

Transcription

1 We are One Acquisition of Wits Gold Securing the long term future of Beatrix 11 December 2013

2 Wits Gold A South African focussed, fully empowered, junior gold developer and emerging producer World s fifth largest gold resource attributable to a single company (157 Moz) Total Probable Reserves of 8.5 Moz gold 4.8g/t) South Rand Goldfields Burnstone Mine JSE, TSX listed: WGR; ADR: WIWTY Shares in issue: 34.5 million 2

3 The Transaction Sibanye Gold has offered to acquire Witwatersrand Consolidated Gold Resources Limited ( Wits Gold ) for R407 million in cash The transaction Is consistent with Sibanye Gold s stated intent of ensuring a sustainable dividend yield Creates value for all stakeholders through logical regional consolidation Reinforces Sibanye Gold s dominant position in the Southern Free State Potentially secures an additional low cost production source in another Witwatersrand Basin operating region Shifts Sibanye Gold s operating profile towards shallower operations Wits Gold s assets consist of: Various gold and uranium mineral rights, the majority contiguous to Beatrix An extensive pipeline of projects in the Southern Free State and contiguous with Beatrix The right to acquire the Burnstone mine in the South Rand Goldfield Securing the future of Beatrix through value accretive consolidation 3

4 The Southern Free State Goldfields Mineral Resources Mt g/t Moz Joel (HAR) Beatrix (SGL) Bloemhoek (WGR) DBM (WGR) Robijn (WGR) As of June 2012, all SAMREC-Compliant Sibanye Mineral Reserves Mt g/t Moz Joel (HAR) Beatrix (SGL) Bloemhoek (WGR) DBM (WGR) As of June 2012, all SAMREC & NI compliant At least 1 Moz directly extractable from Beatrix North Section 4

5 Offer Offer consideration Key Conditions Precedent Transaction details Sibanye Gold to acquire 100% of Wits Gold by way of scheme of arrangement Final decision to invest in the Burnstone Project/Mine subject to finalisation of due diligence Wits Gold has secured irrevocables from 5 shareholders, amounting to 57%, to vote in favour of the transaction Payment of R 407 million on completion of the transaction, to be settled in cash Offer equates to R11.55 per Wits Gold share, representing a 35% premium to the 30 day VWAP as at 5 November 2013, when nonbinding terms were agreed Due diligence by the Sibanye Gold team has confirmed that the transaction price represents a significant discount to the inherent value of Wits Gold Approval from Sibanye Gold s 3 rd party debt providers Regulatory approvals including Competition Commission, JSE, TSX, SARB Approval by at least 75% of Wits Gold shareholders Wits Gold Board obtains fair and reasonable opinion on transaction 5

6 Rationale Secures key resources adjacent to Beatrix, which will enable an extension of Beatrix s LOM Possible utilisation of existing infrastructure at Beatrix will enhance the value of Wits Gold s advanced Southern Free State projects The tax base at Beatrix can be used to enhance the economics of developing these projects Prior joint investigations by Sibanye Gold and Wits Gold have identified higher grade payshoots extending through Bloemhoek which are readily accessible from Beatrix 3 shaft Beisa North and South will provide critical mass to the possible development of Beatrix West Section into a uranium mine Possibilities of further regional consolidation Possible acquisition of Burnstone will enhance Sibanye Gold s production profile by increasing its reach into the South Rand Goldfield Securing the future of Beatrix through value accretive consolidation 6

7 DBM an advanced project De Bron Merriespruit ( DBM ) contains relatively shallow gold mineralisation in multiple reefs from 480m below surface Independent pre-feasibility completed in June g/t declared as a reserve Nameplate production planned at oz/yr 4 years to first production from project start $629/oz total operating cost (average over LOM) Bankable study on track for completion by the end of 2013 Metallurgical plant synergies provided by Beatrix will enhance the project by approximately R642 million Source: Wits Gold - Turgis PFS Securing the future of Beatrix through value accretive consolidation 7

8 DBM valuation DBM Valuation Sensitivity Gold Price (R/kg) IRR 22.2% 28.0% 33.1% 37.6% NPV (10%) (R'm) Source: Wits Gold - Turgis PFS (Note: Pre-tax NPV with 5% state royalty rate) Securing the future of Beatrix through value accretive consolidation 8

9 Bloemhoek technical detail summary Snowden s completed the PFS in October 2009 Medium depth: m, 25 year LOM project containing same reefs as adjacent operations (Beatrix & Joel) New properties acquired in December 2011 so as to extend southern high grade resource channel Potential synergies with DBM Project and Beatrix Production planned at oz/yr 7 years to first production from project start Operating cost estimated at $406/oz (2009 terms) Included within DBM Mining Right application area Securing the future of Beatrix through value accretive consolidation 9

10 DBM and Bloemhoek Mineral Resource Indicated and Inferred Resource 2012 Tonnes (Mt) Gold Grade (g/t) Content (Moz) Tonnes (Mt) Uranium Grade (kg/t) Content (Mlb) INDICATED Bloemhoek DBM Total Indicated INFERRED Bloemhoek DBM Total Inferred TOTAL RESOURCES Source: Wits Gold - Turnberry PFS 2009 and Turgis PFS 2012 Securing the future of Beatrix through value accretive consolidation 10

11 DBM and Bloemhoek Mineral Reserve Proven and Probable Reserve 2012 Tonnes (Mt) Grade (g/t) Content (Moz) Bloemhoek DBM TOTAL Source: Wits Gold - Turnberry PFS 2009 and Turgis PFS 2012 Securing the future of Beatrix through value accretive consolidation 11

12 Beisa North uranium Historically drilled by Anglo American (13 holes) which intersected the Ada May or Beisa reef at 650 to 1 115m below surface. Union Corporation drilled 14 holes in 1977 to 1991 south of the Sand River and intersected reef between 450 and 1 500m A Ni compliant report delineating resources was completed in 2009 by ExplorMine Consultants Potential extension of Beatrix West Uranium Project 12

13 Uranium resources Beisa North Beisa North Mineral Resource Tabulation - June 2009 (U 3 O 8 cut-off 50 cm.kg/t) Area Mineral Resource Category Tonnes (Mt) Grade (g/t) Gold Content (Moz) Grade (kg/t) Uranium Content (Mlbs) Palmietkuil Facies - Southern Africa Boschluispuit Facies - Southern Africa Total Beisa North project Inferred Total Measured, Indicated and Inferred Inferred Total Measured, Indicated and Inferred Inferred Total Measured, Indicated and Inferred Source - ExplorMine: Technical report June 2009 Ni compliant Securing the future of Beatrix through value accretive consolidation 13

14 Burnstone Targeting shallower mining horizons

15 Background In September 2012, Great Basin Gold Limited ( Great Basin ) commenced liquidation proceedings Southgold Exploration (Pty) Limited ( Southgold ), which owns the Burnstone Mine ( Burnstone ) on the South Rand Goldfield, entered into business rescue Burnstone was placed on care and maintenance under the control of a small management team employed under short-term contracts On 4 July 2013 Wits Gold submitted a binding offer for the acquisition of Southgold which was accepted and formed part of the business rescue plan approved on 11 July 2013 by the creditors Wits Gold has since progressed a suite of agreements, including transaction and refinancing agreements, which are expected to be executed shortly Targeting shallower mining horizons 15

16 Purchase price of Southgold is R100 Key terms Bank debt reduced to $177.3 million and to be repaid from future free cash flow over LOM (free cash flow is defined as profit after deducting state royalty tax, gold mining tax and capital expenditure) Commitment by Wits Gold to provide a loan of up to R950 million for working capital and CAPEX ( Wits Gold loan ) Wits Gold Loan is to be repaid first from future cash flows (90% to Wits Gold loan / 10% to bank debt) On settlement of the Wits Gold loan future cash flow is allocated 70% to Wits Gold/30% to bank debt $7.25 million of Wits Gold loan is injected on the closing of the Proposed Transaction to settle creditors and business rescue fees 36 months interest and payment holiday on bank debt Option to settle outstanding balances at any time without penalty Targeting shallower mining horizons 16

17 Burnstone Mine A shallow, semi-mechanised mine (360m below surface) January 2011 a 6.4 Moz Reserve and 21.7 Moz Resource was declared (Minxcon and Deswik) Mine construction started in 2006 Mine infrastructure 90% complete Approximately US$800 million spent on establishing the mine Produced approximately oz Currently under care and maintenance All mining and prospecting licences in place Targeting shallower mining horizons 17

18 Burnstone opportunity Recent geological work confirms the existence of a substantial shallow Kimberley Reef resource and viable mine plan Initial investigations have indicated a value accretive investment opportunity Final decision to invest in Burnstone will be made on completion of the due diligence Burnstone establishes Sibanye Gold s presence in the South Rand Goldfield and East Rand Basin Shifts centre of gravity of Sibanye Gold s production towards shallower mining, reducing risk and cost profile Targeting shallower mining horizons 18

19 Gradual shift to shallower mining 0 Modder East Burnstone DBM Cooke 1-3 Joel Cooke 4 Unisel Doornkop Beatrix Tshepong Robjin Kopanang Phakisa Masimong Target 1&3 Bloemhoek Great Noligwa South Deep Moab Khotsong Kusasalethu Driefontein Kloof Mponeng Bambanani Savuka/TauTona -500 Depth below surface (m) Sibanye Gold leading the drive into shallower areas Source: QR Research Targeting shallower mining horizons 19

20 Conclusion Supports Sibanye Gold s commitment to strengthening and securing the long term future of its business in order to sustain its industry leading dividend yield Secures key resources adjacent to Beatrix, which will enable an extension of Beatrix s LOM Leveraging existing Beatrix infrastructure increases returns and enhances the economics of the Wits Gold Projects The acquisition of Wits Gold is value accretive, strategic and provides growth opportunities Shifts centre of gravity of Sibanye Gold s production towards shallower side of the depth curve reducing risk and cost profile Burnstone establishes Sibanye Gold in the South Rand Goldfield and East Rand Basin Securing the future of Beatrix and targeting shallower mining horizons 20

21 Questions