Special report: South Africa is looking to attract $US100 billion ($132.6 billion) in new investment and position its mining sector as a driver of economic recovery.

That’s good news for exporers like West Wits Mining (ASX:WWI), which just had its application accepted by the South African regulator to develop its Witwatersrand Basin Project.

“Marking the real start of WWI’s transformation into a junior gold miner, we have submitted the mining rights application for the project to the regulator which has now officially been accepted,” said Simon Whyte from West Wits.

“Once mining rights have been granted operations can be scaled up materially, which is likely from the first half of 2019 onwards.

“The timing is fortuitous as the board notes the investment climate for foreign investors in South Africa’s mining sector has improved, with the new administration adopting a business-centred strategy.”

Newly installed President Cyril Ramaphosa wants to create a conducive investment climate in South Africa to attract significant foreign investment, with a balanced mining charter acceptable to all stakeholders.

Video: Gold explorer West Wits has had its application accepted to develop this Witwatersrand Basin Project.

Mining to drive South Africa’s economy

South Africa is focused on positioning its mining sector as a driver of economic recovery. That started with the High Court throwing out a move by the former government relating to the level of Black Economic Empowerment (BEE) ownership.

BEE gives South Africans greater economic participation in mining projects.

The previous mining minister under former President Jacob Zuma was trying to change the mining charter to require holders of mining rights to top up black ownership if it fell below 30 per cent.

But the court ruled that the top-up provision would be detrimental to much-needed investment.

In mining and most other industries there has already been reform through BEE in South Africa.

West Wits’ already over-complies with BEE regulations, with its operations 31 per cent BEE-owned. The government requirement currently is for 26 per cent.

South Africa now has a new mining minister, Gwede Mantashe, who miners believe can create a fairer regulatory landscape.

“They are now putting in a new mining minister who is very much more business focused and trying to create that certainty for investment,” Mr Whyte told Stockhead.

The expectation is for a more transparent system and reduced regulation in areas such as the approvals process, which will create more certainty for miners and pave the way for new investment.

“For us, with this mining right application we expect it not to be caught up in the system as long as it might have previously,” Mr Whyte said.

“President Ramaphosa sees the way forward economically is to really foster that investor environment, both foreign and also African investment into the country. He’s really promoting that.”

The Chamber of Mines is working with stakeholders, including the Department of Mineral Resources, to develop a new mining charter that benefits all stakeholders.

“This new charter needs to help the mining sector to achieve stability, competitiveness, transformation and growth, and to ultimately enable the sector to realise its true economic and transformational potential,” chamber president Mxolisi Mgojo said.

Hulme Scholes, a top mining law expert in South Africa and a director of West Wits, has played an integral part in disputing the changes under the Constitution.

Success in reducing illegal mining

New initiatives are being made to address illegal mining in South Africa which are starting to take effect, such as Government directives for the rehabilitation of a specific area to allow land development and remove illegal miners.

Securing mining rights in South Africa is a rigorous process, as the regulator enforces tough environmental standards and consults widely with numerous stakeholders including community groups to ensure support.

West Wits says it has demonstrable evidence that it has the capacity to meet its environmental obligations through its’ ongoing rehabilitation of pits one and two at the Kimberley Central open-pit.

“To rehabilitate the area, we effectively open cut mine it, removing the top 20 to 30m of earth, which includes old mine shafts, and then back fill it,” Mr Whyte said.

This removes access to the old mine shafts that illegal miners use because they now have to dig 30m to get to them. Previously, they would see the concrete plug at surface (2-3m) and dig around it.

“When we receive the mining permits and to a larger extent the mining right we will be able to broaden the area and effectively remove the ‘carrot’ to the illegal miners,” Mr Whyte explained.

“It will also allow an increase in legal employment to the local community.”

Community engagement

On top of that, the management team have been highly proactive and positively engaging with local communities.

West Wits has already started small-scale mining in South Africa. Its goal is to become a mid-tier gold producer from a massive landholding in the Central Rand, which alone has produced over 247 million ounces.

The Witwatersrand Basin, or the Wits for short, is a geological formation that houses the world’s biggest known gold reserves, producing over 40 per cent of the world’s gold.

West Wits remains focused on fast-tracking the Witwatersrand Basin project, which is now cash flow positive and self-sustaining, into full production.

The company already employs 20 to 25 locals on its mine site for security and logistics.

This is forecast to increase to 40 to 50 locals once the mining permits are granted and up to 1000 to 1200 locals once West Wits is at full production.

 

This special report is brought to you by West Wits Mining.

This advice has been prepared without taking into account your objectives, financial situation or needs. You should, therefore, consider the appropriateness of the advice, in light of your own objectives, financial situation or needs, before acting on the advice.

If this advice relates to the acquisition, or possible acquisition, of a particular financial product, the recipient should obtain a Product Disclosure Statement (PDS) relating to the product and consider the PDS before making any decision about whether to acquire the product.

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