[miningmx.com] – SHARES in Witwatersrand Consolidated Gold
Resources (Wits Gold) shed a fifth of their value on the Toronto Stock Exchange and
took losses over the last 12 months to 50%.
This was despite some buying by two senior executives: chairperson Adam Fleming
and the company’s CEO, Philip Kotze who bought R68,675 and R70,291 worth of
company stock on April 11.
The value of the share was unchanged at R10/share on the Johannesburg Stock
Exchange but in Toronto it was last trading at C$1.11/share, down from C$2.15/share
three months ago.
There are few cases of well performing South African gold shares in the past 12
months and particularly since the beginning of the year despite the fact that the rand
gold price has weakened only 2% in that time.
But the weakness in Wits Gold is remarkable and continues a steady decline in
value over the past five years. The stock was once trading at R105/share compared to
the R10 at which it trades in Johannesburg today.
The company said recently it was interested in buying the Navachab gold mine owned
by AngloGold Ashanti which is known to be considered non-core by the group, as well
as the Burnstone gold mine which is owned by Great Basin Gold, currently undergoing
business rescue proceedings.
Wits Gold said on March 25 that it would “undertake a capital raising’ in the second
half of its 2013 financial year in order to repay a R40m loan.
If it failed to raise the required capital, it would make efforts to scale back planned
expenditure, it said.
“These adjustments will ensure that the company can continue as a going concern for
at least 12 months beyond the approval date of these summarised audited results,’
Wits Gold said. The company was commenting in notes to its annual results ended
December 31, 2012.
Cash and cash equivalents fell to a mere R15m as of December 31 from R111.6m at
the end of the previous financial year. In addition to R18m in losses for the 2012
financial year (FY11: R24.6m), the company spent just north of R50m completing the
purchase of the Merriespruit mineral rights from Harmony Gold.
Wits Gold said the funds from a successful capital raising would also be directed
towards unspecified “operational expenditure’, and to fast track the development of
its De Bron/Merriespruit (DBM), a prospect in the southern Free State province that
could yield production of 200,000 ounces/year in terms of a recently completed
prefeasibility study.
Peak funding of Wits Gold’s DBM project was estimated to be R2.37bn, the
prefeasibility study found. Wits Gold has a current market capitalisation of R465m.
