West Wits Mining, listed on the Australian Securities Exchange, has secured a crucial financing agreement valued at US$12.5 million (approximately A$19 million) from Nebari Natural Resources Credit Fund II LP. This funding will support the development of the Qala Shallows gold project in South Africa, which is expected to yield one million ounces of gold. The financing arrangement is essential as West Wits aims to advance its operations, with first production scheduled for the first quarter of 2026.
The loan from the US-based investment fund is earmarked for initial mobilization and the first phase of development at Qala Shallows, part of the expansive Witwatersrand Basin project. The deal also opens up the potential for an additional US$22.5 million in funding through two further tranches under the same terms, bringing the total financing to US$35 million (around A$53.5 million).
West Wits Mining has introduced new hydro drills to expedite operations at Qala Shallows, positioning the company for a timely commencement of production. The recent funding complements a previous approval for a ZAR 875 million (approximately A$76 million) senior syndicated loan from the South African government-backed Industrial Development Corporation and Absa Bank, enhancing West Wits’ financial flexibility.
According to Rudi Deysel, Managing Director and Chief Executive Officer of West Wits Mining, “Securing credit approval from Nebari is a major milestone for West Wits and underscores the strong fundamentals of the Qala Shallows project.” While the new financing does not replace the earlier funding package, it provides West Wits with additional options to manage its financial strategy effectively.
The four-year loan will be drawn as a single tranche upon financial closure and features interest linked to the three-month overnight rate plus an 8.5 percent margin, with a minimum of 4 percent. To incentivize Nebari, West Wits will issue options equivalent to 35 percent of the loan amount, allowing the investor to purchase shares at a premium of 30 percent relative to either the lower 20-day average share price before the drawdown notice or the closing price on the day of the agreement.
The Witwatersrand Basin remains a historically significant gold-producing region, having yielded over 62,000 tonnes of gold since the early 1900s. The basin has produced more than 40 percent of all the gold ever mined globally, making it the richest goldfield on Earth. After being dormant for two decades, West Wits was granted permission in 2018 by the South African Department of Mineral Resources and Energy to resume mining operations in this legendary area.
Despite environmental challenges due to the mine’s proximity to residential areas in Johannesburg, West Wits has navigated regulatory requirements successfully. With new guidelines in place, the company has conducted scoping studies and feasibility assessments from 2021 to 2023, identifying a total resource of 5.025 million ounces grading 4.66 grams per tonne (g/t).
The Qala Shallows deposit, with an estimated resource of 10.7 million tonnes grading 2.98 g/t for 1.026 million ounces of gold, has been prioritized for development. The existing underground infrastructure, including an adit, decline, and shaft, has been rehabilitated for early access to the resource, facilitating sampling and surveying efforts.
A recent definitive study revealed strong economic indicators for the project, forecasting a net present value of US$500 million (approximately A$764 million) at a 7.5 percent discount rate and a post-tax internal rate of return of an impressive 81 percent. The mine is projected to produce 70,000 ounces of gold annually, generating a total free cash flow after tax of US$983 million (around A$1.5 billion) over a 12-year mine life, based on an assumed gold price of US$2,850 (approximately A$4,360) per ounce.
The all-in sustaining cost of production is anticipated to average only US$1,289 (around A$1,970) per ounce, situating the Qala Shallows project in the lowest quartile of global producers. The modest capital expenditure is estimated at US$60 million (approximately A$93 million), with peak funding capped at US$44 million (around A$67 million), aligning comfortably with the loan facilities already secured.
As operational developments progress, West Wits is moving quickly to procure underground mining equipment, with blasting drill rigs and underground dump trucks scheduled for delivery in October 2023. The new equipment will be utilized to stockpile ore in preparation for the critical first gold pour. Processing will initially occur through toll-treatment agreements at nearby gold plants until West Wits establishes its own processing capabilities.
Geotechnical drilling is currently assessing ground conditions to ensure the project remains on track. Above ground, the company and its engineering, procurement, and construction management (EPCM) contractor are advancing the construction of key infrastructure, anticipating a steady output of 65,000 tonnes of ore per month.
West Wits Mining’s share price has surged over the past two months, more than doubling to 4.6 cents per share. As the countdown to the first gold pour approaches, stakeholders are keenly observing the developments within this historic goldfield. With secured funding, incoming equipment, and accelerated mobilization, West Wits is poised to embark on a promising new chapter in one of the world’s most renowned gold mining regions.
