Western Areas keeps stake in South Deeps

After months of wrangling, South Africa’s Western Areas has decided not to sell its 50% stake in the South Deeps gold mine, near Johannesburg.

Chief Executive Officer Brett Kebble says the company considered two options — one being the outright sale of its interest in South Deeps and the other leveraging the asset to support a cash distribution. “We received a number of approaches from prospective buyers, but it was clear that their offers were coloured by the pre-emptive right of our joint-venture partner, Placer Dome,” states Kebble. “Placer Dome also made a bid that apparently assumed we were under pressure to sell.”

Placer Dome (PDG-T) owns the other half of South Deeps, which it purchased from Western Areas in April 1999 for US$235 million plus future payments based on production. Placer soon embarked on a 4-year plan to double production to more than 700,000 oz. annually by 2003. Placer retains a right of first refusal on Western Area’s half-interest and has been open about its desire to acquire the other half.

The mine produced 325,000 oz. at a total cash cost of US$220 per oz. in 2000. Output for the first nine months of 2001 was 255,000 oz. at US$234 per oz.

Proven and probable reserves at the end of 2000 totalled 58.1 million contained ounces, with a projected life of 72 years.