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Mining Indaba 2015: Harmony Agreement for Creasy

Mark Creasy’s White Rivers Exploration Pty Ltd (WRE) is eyeing production from its JV with Harmony Gold Mining Company Ltd by 2020. WRE, majority-owned (64%) by the Creasy Group, entered the EJV partnership with South Africa’s third-largest gold miner in October. The EJV covers WRE’s Beisa project and exploration areas near Harmony’s adjacent operations in the Free State. WRE will manage and fund exploration activities through to a PFS, with both parties to contribute to the BFS based on their interests – WRE 65%, Harmony 35% – under the JV.

Upon completion of the BFS, a mining JV will be formalised, at which point Harmony will increase its stake to 51%, taking WRE to 49%. WRE is headed by former Barminco chief executive Neil Warburton, who is also involved with Sirius Resources NL, Red Mountain Mining Ltd and Peninsula Energy Ltd in non-executive capacities.

Warburton, who joined WRE in August 2013, said the company was formed in 2007 on the back of South Africa’s introduction of the “use it or lose it” policy under the current mining law and is now the second-largest landholder in one of the most prospective gold belts in the world. “Like he has done in Fraser Range and India, Mark [Creasy] pegged large amounts of ground [in South Africa] mainly adjacent or abutting existing operations. Part of the strategy is that we don’t mind spending exploration dollars to determine whether the ground is prospective for gold, silver or uranium, as long as we have a direct route or possible route to development and mine production,” Warburton said.

The ground concerning the EJV is next to Harmony’s Target mine, where established infrastructure can be leveraged when production scenarios come into consideration. Target produced almost 4t gold @ 5.53 g/t in 2013. Warburton said WRE hoped to have a resource for the EJV sometime in 2015. About $7 million has been spent so far by WRE acquiring borehole databases that have given the company 1,700 drill holes at an average depth of about 2.5km, sourced from 20 different entities throughout South Africa. “To drill those 1,700 holes would have probably cost about $500 million in drilling and assay,” Warburton said. “A lot of the information is not in digital form and it will take about six to nine months to collate that information. After that, we are going to have a geological model and, we believe, a very large JORC compliant resource. We have something like 70km of underground diamond drilling located on our property. We have about 1,600 plans and sections [to assess] and we have SRK on board as the consultants.”

WRE could be in a position to release a resource in 10 months, and with the amount of drilling completed, early indications from SRK are that some of the areas will be in the measured category.
“With Harmony’s infrastructure we have the opportunity to be a part of a very profitable mine, with production potentially in 2019,” Warburton said. “Harmony has capacity in their shafts and treatment facilities at the moment and we hopefully have a major gold orebody sitting on our tenement.” As the EJV gathers momentum, WRE will contemplate listing on the JSE, AIM or LSE.
Despite its management and ownership ties in Australia, Warburton said an ASX listing is not an option at the moment.

“We have been talking to a lot of companies in Australia, and generally speaking South Africa to them is on the nose for whatever reason,” he said. “A lot of people aren’t fully informed of what is happening in South Africa. If you go to Johannesburg … it is booming at the moment. It is like Perth, in the sense that there are cranes everywhere, there is a lot of development going on, there is a lot of expansion, a lot of the big service companies that are servicing the world are based in Johannesburg, and the population is growing at a rate.”

WRE owns 31 tenements in South Africa covering gold, uranium, coal, gas, diamonds and manganese. Therefore the company will look to split its assets into holding companies to capitalise on each of its commodities. “Doing that will maximise returns to shareholders, in the sense that if gold is running and there is an appetite in the marketplace we can float the gold off. The place we would most likely do that is the London Stock Exchange, AIM or JSE,” Warburton said.

–Mark Andrews

WRE and Harmony’s JV Project, South Africa.

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