Mining News

NYU Graduates Seeking $11 Billion of Gold in Ransacked Mine

Written by  Kevin Crowley Friday, 29 April 2016 16:40
Rate this item
(0 votes)

At Blyvooruitzicht, a 77-year-old gold mine southwest of Johannesburg, almost everything had been stolen except gold-bearing ore in the looting after the operation was closed in 2013.

Now, New York University graduates Bastiat Viljoen, 31, and his brother Dane, who was an intern at Goldman Sachs Group Inc., want to revive the ailing mine, which they say may contain 9 million ounces of gold, worth almost $11 billion at current prices. They are partly financed by South African mining entrepreneur Peter Skeat.

 

With their backgrounds, the Viljoens and their partners would look more at home in Silicon Valley than South Africa’s rust belt of aging gold mines, some of the deepest and most dangerous in the world. The challenge at Blyvooruitzicht, which means happy prospect in Afrikaans, is formidable: to rebuild a mine and win over a restive local community, who described the area as a war zone when it was overrun by thieves and illegal miners after falling into liquidation in 2013, Johannesburg’s Sunday Times newspaper reported in 2014.

“We’re trying to bring a start-up mentality to an industry that’s been around for thousands of years,” said Dane Viljoen, 28, in an interview at the mine’s head office under broken light bulbs and surrounded by mine maps from the 1950s. “We’ve been gifted this reset button. It’s a massive opportunity.”

Processing Plant

While the partners have big ambitions, they plan to start small. They want to rebuild Blyvooruitzicht’s processing plant and begin mining a single waste dump in 2017. Waste material, or tailings, from decades of mining is deposited in giant mounds that still contain a small amount of gold, which can now be accessed with better technology.

Reviving the mine will be difficult, said Louis Venter, a retired gold-mining analyst who used to follow companies that operated Blyvooruitzicht, including DRDGold Ltd. and Village Main Reef Ltd., at Anglorand Securities Ltd. in Johannesburg

“I don’t like making sweeping statements but Blyvoor is beyond repair,” Venter said by phone. “That infrastructure is completely destroyed. One would assume that when private investors spend money on an asset like that they see some value somewhere, but I don’t know what that will be.”

Gold Grades

The dump to be mined contains about 400,000 ounces of gold at a grade of 0.33 gram (0.01 ounce) a ton, similar to that being mined by DRDGold, which also processes such deposits, albeit on a bigger scale. To get mining up and running will cost 150 million rand ($10 million) to 200 million rand, according to Richard Floyd, a business partner of the Viljoens.

The investment into Randlord Consolidated Mines (Pty) Ltd. in part comes from Peter Skeat, who helped pioneer modern, surface gold mining in South Africa and has run companies including Afrikander Lease Ltd., Mintails Ltd. and Galaxy Gold Mining Ltd.

The 6,000 residents living on the mine, a legacy of the operation’s heyday when it owned a town, clinics and a golf course, are hoping Randlord get it right. When the operation went into liquidation in 2013, 1,700 workers lost their jobs and the mine fell into ruin with the surrounding area beset by crime.

“We had murders, we had a mass rape, it was a real mess,” said Pule Molefe, 37, a former mineworker who lives in the town, also named Blyvooruitzicht. “The municipality came in and cut off our water supply. They wanted to cut electricity also.”

Underground Mining

At current gold prices, which averaged about 600,000 rand a kilogram in the first quarter, Randlord estimates it can make profit margins of about 40 percent. The cash generated will be used to reopen Blyvooruitzicht’s underground mine, which is about 3 kilometers (1.9 miles) deep and contains 9 million ounces of gold resources, a figure that could rise to 40 million with further exploration, according to Karel Potgieter, one of the brothers’ partners.

“We didn’t make the investment in the shaft just to think about what we’re going to do,” said Potgieter, 33. “Our intentions are absolutely to go underground.” Gold fell 0.9 percent to $1,220.33 an ounce at 2:31 p.m. in Johannesburg Wednesday.

A key reason why previous operators such as DRDGold and Village Main Reef couldn’t make Blyvooruitzicht profitable was because they had to pump water from mined-out areas to access the gold. After the operation went into liquidation, AngloGold Ashanti Ltd., the biggest gold company based in Johannesburg, took on the pumping costs to save its nearby mines from flooding.

“We’re young but we want to build a legacy, a good legacy,” said Dane Viljoen, who named Randlord after the term given to entrepreneurs such as Barney Barnato, who was among those who controlled South Africa’s mining industry in the 19th century. “We want to be the guys that build libraries, put money into universities.”

After production started in 1942, profits from the Blyvooruitzicht mine flowed through the mining village and the town of Carletonville, four miles away. Within a decade, Blyvooruitzicht was said to be the most profitable gold mine to date, according to the 1968 book Golden Age, chronicling South Africa’s mining industry. Dividends of 100 percent or more were paid out for five straight years, the book said. The operation is situated in the Witwatersrand Basin in central South Africa, a geological deposit billions of years old that’s produced a third of all the world’s gold.

Mariette Liefferink, who runs non-governmental organization Federation for a Sustainable Environment, says Randlord may struggle if they don’t reinvest profits in the local community and fix the environmental damage the mine has caused in the past.

“We hope they’ll do what they say they’re going to do,” said Molefe. “But we want to see action and jobs. Many people came to us with big promises but we’ve been let down many times.”

Read about the author, Kevin Crawley

 

MINING

FSE COMMENTS - Millsite Tailings Storage Facility Reclamation Project

Comments on the Millsite Tailings Storage Facility Reclamation Project: Wetland Sensitivity Mapping and Impact Assessment Freshwater Resource Assessment in the Vicinity of the Proposed Lindum Railway Decommissioning Freshwater Resource Assessment in the Vicinity of the Proposed Millsite Reclamation Surface Water Assessment Report Groundwater Assessment Report Integrated Water Use Licence Application for the Sibanye-Stillwater Rand Uranium/Cooke Operations Integrated Water and Waste Management Plan in support of the WULA   The following comments are submitted on behalf of the Federation for Sustainable Environment (FSE). The FSE is a federation of community based civil society organisations committed to the realisation of the constitutional right to an environment that is not harmful to health or well-being, and to having the environment sustainably managed and protected for future generations. Their mission is specifically focussed on addressing the adverse impacts of mining and industrial activities on the lives and livelihoods of vulnerable and disadvantaged communities who live and work near South Africa’s mines and industries.  

Presentations at the conference "Sustainable Use of Abandoned Mines in the SADC Region"

Presentations, including the FSE’s presentation, held at the conference “Linki...

Palmietkuilen Coal Mining Project Rejected

The Gauteng Department of Agriculture and Rural Development (GDARD) has refused ...

SA NEWS

Battle to save Marico's river

De Beers has secured rights to prospect for kimberlite in the sensitive catchment of Groot Marico, but residents worry that minim firms could damage their pristine river, writes Sheree Bega

Saturday Star - No holds barred in draft National Master Plan for Water

Saturday Star January 27 2018 No holds barred in draft National Master Plan for Water   Sheree Bega   South Africa’s water scarcity could rapidly get worse as supply contracts and demand escalates due to growth, urbanisation, unsustainable use, degradation of wetlands, water losses and a decline in rainfall because of climate change. This is one of the warnings contained in the new draft National Master Plan for Water and Sanitation. Based on current demand projections, the water deficit confronting the country could be between 2.7 and 3.8 billion cubic metres, a gap of about 17%, by 2030. As of July last year, according to the draft plan, South Africa has consumed more water per capita at about 237 * /c/d than the world average of around 173 * /c/d. To address crippling water shortages, desalinated sea water in coastal areas, and treated waste water, will increasingly be brought into the water mix - together with an increase in the use of groundwater. Desalination plants should “not be implemented as an emergency scheme, only to be used intermittently or during times of drought and inadequate supply from the conventional water resources,” the draft plan cautions. “These schemes are too costly to be moth-balled for any length of time.”

THE IMPACT OF MINING ON THE SOUTH AFRICAN ECONOMY AND LIVING STANDARDS

  POLITICS WEB MINING AND PEOPLE: THE IMPACT OF MINING ON THE SOUTH AFRICAN ECONOMY AND LIVING STANDARDS INTRODUCTION AND SYNOPSIS There are two ways of looking at mining in South Africa. The first is to see it as a sunset industry plagued by rising costs, technical difficulties, and political hostility. The second is to see it as an industry well positioned for a new lease of life despite all the vicissitudes. Even though the attractiveness of South Africa for mining investment has declined, the country still has the world's richest reserves of precious minerals and base metals. Companies both large and small would like to exploit these. Some are doing so despite the political threats. Even more will do so if the threats can be effectively managed or reduced. According to the Chamber of Mines, investment over the next few years could almost double in the absence of threats.

FSE’s Preliminary Comments on the Minister of Water and Sanitation’s decision to consolidate the 9 Catchment Management Agencies into one Catchment Management Agency.

  (Reg. No. 2007/003002/08) NPO NUMBER 062986-NPO PBO No. (TAX EXEMPT) 930 039 506 Postnet Suite 87 Private Bag X033 RIVONIA 2128   COMMENTS ON THE DEPARTMENT OF WATER AND SANITATION’S DECISION TO IMPLEMENT A SINGLE CATCHMENT MANAGEMENT AGENCY (CMA) TO PERFORM WATER RESOURCE MANAGEMENT FUNCTION IN THE NINE WATER MANAGEMENT AREAS.  The following comments are submitted on behalf of the Federation for a Sustainable Environment. The Federation for a Sustainable Environment (FSE) is a federation of community based civil society organisations committed to the realisation of the constitutional right to an environment that is not harmful to health or well-being, and to having the environment sustainably managed and protected for future generations. The FSE’s mission is specifically focussed on addressing the adverse impacts of mining and industrial activities on the lives and livelihoods of vulnerable and disadvantaged communities who live and work near South Africa’s mines and industries.  

WATER

SUBMISSION ON THE DWS MASTER PLAN

WRITTEN SUBMISSION ON THE DRAFT 2.6: NATIONAL WATER AND SANITATION MASTER PLAN (NW&SMP)  In this document, the Federation for a Sustainable Environment (“FSE”) submits comments on the National Water and Sanitation Master Plan, draft 2.6 (the “draft plan”).  THE FSE:  The FSE is a federation of community based civil society organisations committed to the realisation of the constitutional right to an environment that is not harmful to health or well-being, and to having the environment sustainably managed and protected for future generations. Their mission is specifically focussed on addressing the adverse impacts of mining and industrial activities on the lives and livelihoods of vulnerable and disadvantaged communities who live and work near South Africa’s mines and industries.    In accordance with the above-mentioned mission, the FSE’s comments are limited to matters pertaining to the mining industry. The FSE’s comments will be substantiated by real examples within the scope of the FSE’s experience and our active participation in a significant number of environmental impacts assessments, environmental management programme reports, water use license applications, environmental authorisations, steering committees, forums, task teams, teams of experts, academic research groups, boards, etc. over a period of 15 (fifteen years).[1] [1] Kindly note that the Legal Resources Centre assisted with this publication.

Coalition defending Mpumalanga water source area

Last week, the coalition of eight civil society and community organisations that...