Operations

Exploration

In the process of enlarging the mineable reserve of the existing underground mines, geological surveys undertaken by Horizon Blue since 2005 revealed several surface anomalies with the potential to be economically treated using heap leach technology.

Based on Horizon Blue's findings, the company embarked on an extensive exploration programme with the following objectives:

  • To define heap leach targets in the near surface oxide zones located on the Simmers properties in the Mpumalanga area.
  • To define the deeper feeder systems of the surface gold occurrences in the area.

New Order Prospecting Permits cover approximately 57 000 hectares of the gold belt with a further 10 822 hectares under application for New Order mining rights. These permits cover 70 kilometers of the strike of known gold occurrences from Elandsdrift in the South, to Hermansberg in the North.

15 initial targets were identified as having potential for heap leach recovery, namely:

  • A sand dump comprising just under 300 000 tons at Elandsdrift. Construction of a test heap leach pad designed to treat these sand tailings began in March 2007. Elandsdrift is the Company's first heap leach pad and is intended to serve as a guinea-pig for the surface mining opportunities that have been identified as a result of the exploration programme in the area. Initial metrics put the production forecast at Elandsdrift at 7 395 ounces (230 kg) based on a 70% recovery rate at 0.83 g/t. Latest laboratory tests indicate a 65% recovery, and thus production is estimated at 6 380 ounces. However, these column tests are time-based in that they require a specific period of time to verify the results, and this period has yet to elapse. A recovery rate of 70% may well be achieved depending on the total leaching time on the pad. Production is expected to take place in November 2007 once the mining permit has been granted by the Department of Minerals and Energy.
  • Six targets in the vicinity of Frankfort mine known as the Molototse Valley Project. These appear to have a similar style of mineralization to the Carlin-type deposits found in the northern Nevada goldfields in the USA
  • Eight targets close to the metallurgical plant at TGME, termed DG 1 to DG8. Of these, the company is currently focusing on three of the eight DGs, namely DG1, DG2 and DG5

The conceptual study of these findings indicates the potential to define approximately 1-million ounces of resources, converted to around 733 000 ounces of reserves, depending on the individual pad characteristics and the leach period. This is an extrapolation based on the test results to date.

Capital raising to accelerate and complete drilling programme
As a result of the conceptual study the company has made a strategic decision to re-focus capital expenditure from underground projects to higher-return, lower-risk surface mining opportunities that are also quicker to bring to production. This means that while mechanization and production at Frankfort mine will continue, the company's plans to develop Beta Mine and the underground resource at Sabie Mines' Rietfontein Mine, have been delayed pending the roll-out of the company's surface mining plans.

To this end the company is in the process of raising R130-million in order to:

  • Accelerate and complete the drilling programme to allow the company to evaluate the resource potential of the surface deposits;
  • Complete a bankable feasibility study based on drill results by March 2008;
  • Construct new heap leach pads to confirm cost and metallurgical parameters for the feasibility study.

    Should the feasibility prove successful, production could peak at a rate of 250 000 ounces per annum by F2011 at a total capital and operating cost of $240 per ounce, assuming an exchange rate of R7.4 to the US$.

    A detailed presentation showing the metrics of the conceptual Mpumalanga projects can be found on the Simmers website under Investor Information entitled. "Accelerated exploration and heap leach potential at TGME in Mpumalanga." This conceptual presentation can be read in conjunction with the Phase 1 and 1a geological reports on the Molototse Valley, under the report section of this website.