Flooding halts production at Goliath...

Flooding halts production at Goliath mine

http://www.businessday.co.za/articles/Content.aspx?id=145259

Lack of pumping at Grootvlei becomes costly for Sub Nigel ALLAN SECCOMBE
Published: 2011/06/09 06:46:41 AM

NEWLY formed Goliath Gold will suspend operations at its Sub Nigel mine because of flooding due to the cessation of pumping at the nearby Grootvlei mine, the company announced yesterday.

The Grootvlei mine, once owned by Pamodzi Gold , is for sale after liquidators terminated a management contract awarded to preferential bidder Aurora Empowerment Systems.

Trade union Solidarity said yesterday it had warned the portfolio committee on mineral resources two months ago about the risk posed by the lack of pumping at Grootvlei. It called for the prosecution of Aurora?s directors for the way they operated Grootvlei and Orkney.

Gold One spun out its deeper assets into Goliath, formerly White Water Resources. This includes Sub Nigel, which acted as a training centre for Gold One?s new, shallow Modder East mine.

Sub Nigel contributed nearly 4000oz of gold to Gold One?s 66445oz last year . The gold was mined from the Main Reef package 700m below surface.

It is this reef that is forecast to be underwater by August, forcing Goliath to halt work there and devise a plan to plug the shaft below the unexploited Kimberley Reef package, which is 400m below surface.

The work will take millions of rand and 18- 24 months to complete, Goliath CEO Neal Froneman, who is also CEO of Gold One, said yesterday.

The Kimberley r eefs are of a lower grade than the Main Reef, but at recent gold prices are economic to mine, he said.

The training centre will move to Modder East, the first operating asset within Gold One in which a Chinese consortium is buying a 60% stake and has aggressive growth ambitions. Aurora struggled to keep pumping going at Grootvlei, which it mothballed after it ran out of funds. Pumping was stopped in February, Mr Froneman said. Aurora?s contract was terminated last month . The pumps at Grootvlei were stopped to move them to another pumping station, he said. Goliath Gold believes it is unlikely that the pump station will be reinstated in the near future.

The liquidators were in urgent talks with the Department of Water Affairs to secure a resumption of a subsidy payment to resume pumping, said liquidator Johan Engelbrecht, conceding the mine was being damaged as a buyer was sought. The liquidators hope to finalise an agreement soon with mining contracting firms to maintain the Grootvlei and Orkney mines, he said.

The liquidators have said there is a listed company interested in Grootvlei and it is widely assumed to be Goliath, which controls a large swathe of resources near Grootvlei. Mr Froneman declined to comment on the speculation.

Goliath?s other assets on the East Rand are also under threat from flooding because of developments at Grootvlei, but Mr Froneman said the company intended to develop new mines at the assets and not become involved in the expensive business of pumping.