Witwatersrand Consolidated Gold Resources Ltd. (Wits Gold) has acquired Southgold Exploration Ltd., a 100%-owned subsidiary of Great Basin Gold Ltd., and owner of the Burnstone mine project in Mpumalanga Province in the South Rand area of South Africa’s Witwatersrand goldfields.
In Q2 2012, Southgold was successfully granted bankruptcy protection under Chapter 6 of the South African Companies Act, 71 of 2008. Under the filing’s aegis, the sale has been approved by Southgold creditors Credit Suisse AG and U.K.-based Standard Chartered Bank. Southgold’s restructuring and debt write-down will be settled on a $7.25 million down payment from free cash flow generated by Southgold and total liability balances of $170 million.
Wits Gold CEO Philip Kotze praised “a business plan for which we believe is realistic, deliverable, value accretive to Wits Gold shareholders to ensure maximum benefit.”
Wits Gold officials said 80% of the Burnstone mine’s capital has been spent to date, creating a strong platform for a re-rating of Wits Gold’s securities as the company moves from being an explorer to a producer.