West Wits Mining lands equity-for-fees coup for South African gold mine funding
- James Pearson
- Nov 10
- 4 min read
In a ringing endorsement of West Wits Mining’s (ASX: WWI) Qala Shallows gold project in South Africa, government-backed Absa Bank has taken more than 100 million share options instead of cash fees for arranging the company’s recent US$50 million senior loan facility.
The ASX-listed junior company revealed that Absa accepted 100,386,000 unlisted options in settlement of fees worth ZAR 7.65 million (A$680,000). Each option is priced at 1.85 cents and carries a five-year term.
Although the option strike price is below West Wits’ current 5.2 cent share price, the terms were set a year ago when the company first began funding talks and its stock was trading near 1.6 cents - long before the June loan approval and well ahead of gold’s barnstorming run.
Absa’s early decision to accept options in lieu of cash suggests the bank has long-term faith in the potential of the Qala Shallows operation and the broader Witwatersrand Basin project - one of South Africa’s largest undeveloped gold systems, with a five-million-ounce resource running at 4.66 grams per tonne (g/t) gold.
West Wits says the option-for-fees equity arrangement has also helped West Wits preserve valuable cash reserves at a pivotal stage of its financing journey.
Absa’s proactive engagement and early flagged preference to forgo cash fees to secure equity exposure is a strong vote of confidence in our vision and execution.
West Wits Mining CEO Rudi Deysel
The Witwatersrand Basin project sits on fabled ground in the historic Central Rand Goldfield, with its surrounding goldfields yielding a staggering 62,000 tonnes of gold since the early 1900s.
Legendary names such as Rand Mines and Durban Roodepoort Deep once ruled these reefs, carving out what remains the richest goldfield on Earth. To this day, the basin holds its crown, having produced more than 22 per cent of all the gold ever mined in human history.
After lying dormant for two decades – a period in which gold prices started low but skyrocketed to record highs – West Wits was handed the keys to one of South Africa’s most famous goldfields in 2018, when the Department of Mineral Resources and Energy gave the company approval to reopen the legendary Witwatersrand Basin.
Between 2021 and 2023, a series of scoping and feasibility studies mapped out the project’s full potential, outlining a colossal global resource of 5.025 million ounces grading a respectable 4.66 grams per tonne gold. The company quickly zeroed in on the Qala Shallows deposit as the logical starting point – a near-surface, easily accessible orebody packing 10.7 million tonnes at 2.98g/t for 1.026 million ounces of contained gold.
Adding to its appeal, Qala Shallows already boasts an existing adit, decline and shaft – all of which have since been refurbished to provide rapid underground access for sampling and survey work. One early foray into the old workings produced a 150-kilogram bulk sample that confirmed the continuity and quality of the ore grades.
Five months ago, West Wits unveiled its much-anticipated definitive feasibility study – and the numbers turned heads. The study modelled a net present value of US$500 million (A$766 million) at a 7.5 per cent discount rate, paired with a post-tax internal rate of return of a staggering 81 per cent.
The mine is tipped to produce about 70,000 ounces of gold a year, generating a cumulative free cash flow of US$983 million (A$1.5 billion) over a 12-year mine life based on a very conservative assumed gold price of US$2850 an ounce (A$4368). Even more compelling is its cost profile with the forecast for all-in sustaining costs per ounce coming in at just US$1289 (A$1975) per ounce, putting the project squarely within the lowest quartile of global producers.
Perhaps the most attractive element, however, is the modest price tag. Given West Wits is reopening a historic operation rather than starting from scratch, much of the underground infrastructure remains intact and has already been brought back to working order. The total capital cost to bring Qala Shallows into production sits at just US$60 million (A$92 million).
Peak funding requirements are capped at a lean US$44 million (A$67 million), comfortably covered by the company’s already approved loan facilities. That financial headroom gives West Wits the breathing space to bring South Africa’s newest underground gold mine back to life – leaner, faster and more profitably than anyone could have imagined when the lights first went out 20 years ago.
Absa’s involvement offers more than just financial muscle—it brings a strategic endorsement from one of Africa’s biggest banks, with deep experience in corporate and investment financing across the continent. The partnership could also position West Wits favourably for future expansion and refinancing options as its development footprint grows.
The company now finds itself fully funded thanks to Absa bank’s syndicated loan, a recent US$35 million (A$53M) funding package from United States-based Nebari Natural Resources Credit Fund II and $17 million from a fresh capital raising.
With mining now in full swing and the first pour expected as soon as the new year, Absa’s equity-for-fees move is a strong vote of confidence from one of Africa’s biggest banks and appears a clear validation of West Wits’ strategy.
And for West Wits, the message seems clear. The old Witwatersrand Basin is stirring again – this time powered by modern mining, strong institutional backing and the golden tailwinds of a booming metal price.
Is your ASX-listed company doing something interesting? Contact: office@bullsnbears.com.au
