Transvaal Gold Mining Estate (TGME) lays claim to being South Africa’s first gold mining company after being incorporated in 1895, roughly a decade after gold was unearthed from a site called Pilgrim’s Rest in the then Province of Transvaal. This was an unprecedented discovery at the time because the gold mineralisation ran for miles underground, as opposed to the sporadic alluvial gold finds that were commonplace in the region previously. This singular discovery was to have an untold impact on South Africa’s history, kickstarting the famous Witwatersrand Gold Rush which birthed South Africa’s commercial-scale gold mining industry and the city of Johannesburg, which has since grown to become the nation’s largest city today.
Ownership of TGME and the endless mining claims around Pilgrims Rest have been passed through a number of public and private hands during its 124-year history, with ASX-listed Theta Gold Mines the current incumbents in 2019.
Theta purchased TGME in 2012 and initially planned to focus on the underground potential of 43 historical mines around Pilgrim’s Rest, Barberton and Sabie, located approximately 370km Northeast of Johannesburg in today’s Mpumalanga Province.
However, the company’s recent name change signifies a new focus on open pit mining across the prospective area that spans 62,000 hectares and contains a JORC resource of 39.15 million tonnes (Mt) at 4.6 g/t Au for 5.75 million ounces (Moz) – one of the largest JORC resources owned by a junior explorer on the ASX today.
“The name change from Stonewall Resources to Theta Gold Mines signals a clear directional change towards progressing open cut strategies, as well as a new board, and a new company constitution,” says chairman Bill Guy.
“This large 620km2 field has never experienced open cut mining. In Western Australia, the approach of drill testing the old historical underground workings to delineate shallow open cut resources has delivered several newly operational mines.”
The company is focusing its efforts on the Theta Hill deposit within the Pilgrim’s Rest claim and has recently completed a scoping study on the project, which defined a 4.5Mt resource at 4.14 g/t Au for 600,000 oz (85% Inferred) and confirmed the potential low cost of the development and operation.
The scoping study indicated all-in sustaining costs (AISC) at US$569 per oz along with a low capex requirement of $16 million, primarily due to the fact that a large amount of infrastructure is already in place in the surrounding area.
“There is already a large permitted footprint near Theta Hill with an existing CIL plant and all associated infrastructure including offices, stores, workshops and weigh bridge. In addition, there is an existing tailings dam and associated pollution control dams and return water pond. The office, store and workshop infrastructure is currently in use by the onsite exploration management team,” Guy explains.
The refurbishment of TGME’s existing CIL plant is the only significant order of business for Theta at a capital cost of $11 million, which will provide the plant with new crushing and milling circuits, additional CIL circuit tanks, and the upgrade of the elution circuit and gold room.
Theta’s scoping study also specified a LOM of 7.6 years with a 67,000 oz per annum average production rate, plus a strong IRR of 132% and a post-tax/royalty net cashflow of $213 million for the LOM.
While these findings clearly indicate a robust project, Theta is hoping to further validate these numbers in its feasibility study due in the first quarter of 2019.
“In the feasibility study, the company is planning on confirming the positive project economics which came out of the scoping study and have a mining reserve to cover two to three years of production.
“The feasibility study will also allow the board and company to move forward with confidence and a positive study will allow different financial models and financing options to be examined.”
Beyond its current focus on completing the feasibility study for Theta Hill, the company harbours ambitions of undertaking multiple mine developments under a long-term production target of +100,000 oz per annum.
Additional targets have been identified adjacent to or near Theta Hill which show open‐cut potential and could add incremental tonnages to the mine plan. Meanwhile, the opportunity to develop a second, high grade open‐cut mine at Vaalhoek is also being explored by Theta.
Theta’s chairman says that in 2019 the company will cost out drilling for the remaining targets around Theta Hill in order to eventually add those into the mining reserve, while a drill programme has been scheduled at Vaalhoek for the same purpose.
In addition, the new Columbia Hill discovery is currently being drilled to test for extensions of the orebodies. “As the year goes on, the exploration team will also consider the underground resources and the remaining 43 historical mine sites,” Guy adds.
South African mining – on the mend?
The reputation of South Africa’s mining industry took a beating during the final months of Jacob Zuma’s presidency, with corruption allegations swirling around the government and all major areas of business, including mining.
Adding to the sector’s woes was an ill-conceived rewrite of the Mining Charter in 2017 – which was met with vociferous opposition, a stagnant gold price and continually rising input costs, plus sporadic industrial action relating to job cuts, worker safety and wage grievances.
All these factors combined to dent confidence in the mining industry and damaged the reputation of South Africa as a business jurisdiction. However, after new President Cyril Ramaphosa pledged to fix the struggling national economy in 2018, hopes are high that he can steer the mining sector back to prosperity.
The first sign of this recovery materialised in September when the government published a revised version of the Mining Charter after months of engagement with key stakeholders in the industry. The updated version upheld plans to raise the level of black ownership to 30% for new mining rights, but allowed companies that have already met the 26% threshold to remain at that level.
“In broad terms, the company is already compliant with the main financial aspects of the new Mining Charter,” says Guy. “The company has a 26% black economic empowerment (BEE) ownerships spilt between employees and local community groups.
“Moreover, the company sees South Africa as having many advantages over its neighbours. It’s the most developed country in Africa with strong rule of law, roads, freeways, ports, power stations, a large mining workforce and operating mines through the country.”
Further throwing its weight behind the sector, Theta recently joined the re-branded Minerals Council South Africa (formally the Chamber of Mines), adding its voice to a respected body of members from across the national minerals industry.
Corporate social responsibility
Theta also maintains a committed approach to corporate social responsibility (CSR), and is involved in various social projects in communities surrounding the TGME. The most significant of these is an ongoing commitment to local schools, which sees the company financially support additional teachers at the local school, along with a student meal programme and extra teaching aids.
“This year the company will again provide sponsorship to the South African National Gold Panning Championships, which have been held on the company’s mining claims at Pilgrims Rest for the last 21 years.
“The event attracts a large number of tourists but is primarily a family day with races and events taking place. Overall, the Panning Championships has a very positive affect on the local economy,” says Guy.
From an environmental perspective, Theta has explored many ways of reducing its impact on the environment and this is evidenced by the company’s choice of mining method for the Theta Hill project.
Contour haulback mining is mostly used in the coal industry for mining shallow thin seams but will be utilised at Theta Hill to significantly reduce its environmental footprint and the cost of earth works too.
“Applying coal mining techniques and technologies into a gold mine gold is innovative and means that mining and rehabilitation are carried out simultaneously, leaving the natural contours of the hill intact with no remnant open pit.
“We believe that this strong environmental focus, plus the offer of jobs to a mining community with a 130-year history, will build a strong case to support mining again in the local area.”
In 2019, the company will continue drilling and development at Theta Hill as it progresses towards the ultimate goal of pouring gold bars, with the first big milestone set to arrive in early 2019 when the feasibility study is published.
“Bringing the shallower open pit resources onstream first will then allow further underground mine exploration and development to be funded out of cash flow,” concludes Guy.