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Ransacked gold mine venture reboots as partners quit project

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 6 April.

Skeat, 63, plans to spend as much as $100 million 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’s not deterring Skeat, who says there are 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 said.

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 South Africa, Skeat said. The support structures contain relatively high grade ore and can be mined because they’re redundant, he said.

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 before 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 13 grams per ton of gold, about three times higher than a typical South African gold mine, Skeat says he can produce some 100 000 ounces a year from the pillars at all-in-sustaining costs of $600 an ounce.

 

 

 

 

-Bloomberg

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