Positive scoping study for Wits Gold’s Bloemhoek (May 12, 2008)

South African gold explorer Witwatersrand Consolidated Gold Resources (WGR-T, WGR-J) has wrapped up a scoping study on its Bloemhoek project in the southern Free State goldfield showing that, over the course of its lifetime, a mine there would produce about 9.6 million oz gold.

The National Instrument 43- 101 compliant scoping study was based on an indicated resource of 52.3 million tonnes at an average grade of 6.7 grams gold per tonne and total contained gold of 11.3 million oz.

The resource was estimated for the Beatrix, Kalkoenkrans and Leader reefs in the Bloemhoek area. Conglomerate reefs there occur at depths of 1.3-2.4 km metres below the surface and represent ancient river gravels.

Bloemhoek would produce its first gold in year nine of the project.

Following a five-year production ramp-up period, the mine would then operate at full production for 23 years with an annual production of 380,000 oz. gold.

The scoping study assessed a preliminary production model for Bloemhoek using examples from similar mining operations in South Africa that are based on footwall haulages, cross-cuts to reef at 180- metre intervals and breast stoping by hand-held pneumatic rock drills and scraper winches.

Such methods would result in the hoisting of 65.6 million tonnes at a tramming or mining width of 1.35 metres and a head grade of 4.81 grams per tonne including a mine call factor.

The scoping study anticipates that Wits Gold will have to sink a twin-shaft system to 2 km metres with deeper areas accessed via declines. But the declines will only be required towards the latter part of the mine’s estimated 32-year production life.

Based on recent capital projects in South Africa’s mining sector, the study estimates that Bloemhoek would need a life-of-mine capital expenditure of roughly US$1 billion.

Average operating costs over the life of the mine are estimated at about US$64 per tonne and average cash costs will be in the range of US$438 per oz.

At current gold prices near US$900 per oz., after state royalties of 1.5% on revenue, the project has an estimated 11.3% internal rate of return and a net present value of about US$725 million.

Wits Gold, which listed on the Toronto Stock Exchange in January, is currently trading at about $16 per share and has 27.2 million shares outstanding.

The stock has a 52-week trading range of $15.24-$21.50.