WWI secures $14m in placement
West Wits raising $14m at 2.2c per share with one free-attaching option
WWI will use placement funds to increase Qala Shallows project stake to 74pc
Qala Shallows is approaching first gold production, with gold prices hovering near all-time highs
Special Report: As gold returns to all-time highs, West Wits Mining is preparing to leverage the proceeds from a share placement to bring South Africa's Qala Shallows gold project into production.
West Wits Mining's (ASX:WWI) placement raised $14m at 2.2c per share, with every two shares accompanied by a free-attaching option exercisable two years from issue date at 3.85c each.
The fresh injection of cash will support the start of formal operations at Qala Shallows, including a feasibility study review and optimisation, and a US$5m buy-back of a 10% interest held by WW SA.
That will increase WWI's interest in Qala Shallows to 74% of the total project ownership.
With gold prices hovering around US$3450/oz, WWI is making the transformation into a gold producer in very supportive conditions.
'This fundraising enables West Wits to commence the exciting process of bringing Qala Shallows into production,' West Wits chair Michael Quinert said.
'We start this journey in an ideal environment for gold producers, whose ranks we are now joining.
'The fact that we will also be significantly increasing our stake in the overall project at this time is an added bonus.'
Three directors have also agreed to subscribe to the placement for a total of $260,000 additional shares, subject to shareholder approval.
Watch: Production closes in on record gold markets
Gold prices at all-time highs
Between months of back-and-forth tariff threats, the ongoing war between Russia and Ukraine, and the latest outbreak of hostilities between Israel and Iran, gold prices have been elevated for an extended period of time.
While the precious metal is yet to break through its current ceiling of US$3500 per ounce set in April 2025, it's currently just 1.8% off that all-time high.
In May, Goldman Sachs Research predicted gold will rise to US$3700 per ounce by the end of 2025, with much of the demand driven by Central Banks.
'While the key factor since 2022 used to be central bank buying alone, ETF investors are now joining the gold rally,' Goldman Sachs Research commodities strategist Lina Thomas said.
'As both compete for the same bullion, we are expecting gold prices to rise even further.'
The gold bull run has led West Wits to review its mine plan.
Qala Shallows contains a resource of over 1Moz of gold at ~3g/t, with ore reserves of 4Mt at 2.71g/t for 351,400oz.
But that mineral resource was tabled at a gold price of just US$1500/oz and a Rand exchange rate much less favourable than today's.
A DFS run on a base case of just US$1850/oz suggested it would cost just US$54m to bring Qala Shallows into production, producing 924,000oz over a 17 year mine life with a steady state rate of 70,000ozpa over its first nine years.
That DFS gives the project a post-tax NPV of US$255m ($405m) and IRR of 53%, rising to US$366m and 72% at just US$2200/oz.
Plug more than US$3000/oz in there, and it's easy to see the additional value waiting for WWI to capture.
This article was developed in collaboration with West Wits, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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