South African explorer West Wits Mining has bought into the Pilbara goldfields via an explorer with a licence application underway.

West Wits will buy Northern Reserves, which has an application underway for the Mt Cecelia Project, an area in the Lower Fortescue Group which targets high grade conglomerate gold mineralisation.

The Fortescue Group is made up of mafic volcanic rocks found in the Fortescue Basin in the Pilbara Craton which are known to host gold and other minerals.

West Wits Mining (ASX:WWI) will pay $935,000 in shares upfront, increasing its share base by a third.

It’s also paying $500,000 in options, $200,000 in cash, another $75,000 if it’s granted the licence, $700,000 once the drilling program starts, and a royalty of 1 per cent of net revenue once production starts.

In total, it’s paying about $2.4 million at its current share price of 2c for Northern Reserves, not including the royalty.

The company is worth $9 million.

“The profile of Pilbara conglomerate gold has recently gained considerable investor interest due to Novo Resources discovery at Purdy’s Reward,” said chairman Michael Quinert.

“[Northern Reserves’] primary asset is the 224 sq km Mt Cecelia project area in the eastern Pilbara.

“While this acquisition is clearly opportunistic, it is the board’s strategic intent to leverage its experience and expertise in South Africa’s Witwatersrand Basin to complementary Australian assets.”

The Witwatersrand Basin is a South African geological formation that houses the world’s biggest known gold reserves, producing 2 billion ounces — or about half of gold ever mined.

At the end of the 2017 financial year, West Wits Mining had $165,000 in cash.

Exploration costs for the year were running at $627,000, compared to revenue of $599,000.

Separately, the company is also raising $1.75 million from investors to give them some working capital.

West Witts Mining shares gained 10 per cent to 2.2c in Wednesday morning trade — but had cooled to 2c by 12 noon AEDT.

Featured Companies

You might be interested in