Wits Gold to Lend 950 Million Rand in South Africa Mine Offer
Witwatersrand Consolidated Gold Resources Ltd. (WGR), which explores for the metal in South Africa, said it has made an offer for Great Basin Gold Ltd.’s Burnstone mine, giving the company its first bullion-producing asset.
Wits Gold will pay a nominal 100 rand ($10) for Great Basin Gold’s Southgold unit, which owns the mine that’s located in Balfour in Mpumalanga province and started business-rescue proceedings last year, the company said in a statement. Wits Gold will also advance as much as 950 million rand to Southgold through a shareholder loan at 400 basis points, or 4 percentage points, over the three-month Johannesburg interbank agreed rate, which was 5.14 percent yesterday.
Wits Gold, based in Johannesburg, is making the offer as producers in the nation confront slumping prices for the metal and face labor unrest amid demands by entry-level workers at mines for pay to be doubled. Gold’s decline in the three months through June was the biggest quarterly loss in nine decades. South Africa was the world’s sixth-biggest bullion producer in 2012, the Chamber of Mines said on July 2.
“Wits Gold plans to fund the transaction through a combination of debt and equity, depending on the market conditions at the time,” Pam Wolstenholme, an external spokeswoman for the company with Russell and Associates, said in an e-mailed response to questions.
The offer is conditional on the restructuring of all Southgold liabilities due to debt holders and the South African Revenue Services.
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