South African mining veteran Peter Skeat is pressing ahead with plans to squeeze more gold out of an 80-year-old ransacked gold mine west of Johannesburg, after settling a dispute with three former partners.
The entrepreneur, who is part-financing the venture himself, is seeking investors to help fund a revised development plan at the Blyvooruitzicht mine after receiving a 30-year mining right for the operation on April 6.
Skeat plans to spend as much as $100m rebuilding Blyvooruitzicht. While the mine was once among the world’s top producers, its recent history has been tumultuous.
The site was overrun by illegal miners and equipment looted after it was abandoned by the previous owners in 2013.
That is not deterring Skeat, who says there is still 27-million ounces of gold resources left to be extracted, including about 1-million contained in massive pillars left behind to support shafts during the mine’s early development.
Those alone, which the entrepreneur calls his "ace card", could be mined at low cost for a decade, he says.
Dispute settled
Blyvoor "has been through some hard times, but we’re confident in our plan to get this producing at the lowest cost for any underground mine" in SA, Skeat says.
The support structures contain relatively high-grade ore and can be mined because they are redundant, he says.
The mine was placed in liquidation in 2013, costing about 1,700 workers their jobs and the site fell into ruins.
When Skeat bought the mine in 2015, he teamed up with brothers Bastiat and Dane Viljoen and another director, Karel Potgieter.
The group planned to focus initially on reprocessing old waste dumps.
However, the relationship soured. The dispute about scrap metal sales has now been settled and the three directors have left the venture.
At an average of about 13g a ton of gold, about three times higher than a typical South African gold mine, Skeat says he can produce about 100,000oz a year from the pillars at all-in sustaining costs of $600/oz.
Gold has climbed more than 10% this year and traded 1.1% higher at $1,265.93/oz at 4pm in London on Friday.
Reviving Blyvooruitzicht will not be easy, says Ferdi Dippenaar, who says he mined pillars when he was CEO of Village Main Reef, the last operator.
"It’s old infrastructure, a lot of maintenance, with a lot of seismic activity," he says.
Intensive mining can increase the likelihood of seismic events. "If you’re mining remnant pillars in old areas, it’s always going to be difficult."
Blyvooruitzicht, which means Happy Prospect in Dutch, was one of the world’s biggest and most profitable gold mines in the 1950s and 1960s, according to Golden Age, a 1968 book chronicling SA’s mining industry.
It is situated in the heart of SA’s Witwatersrand Basin, which has produced almost half of the world’s gold.
Bloomberg
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