Gold One Shareholder PromisesI started this exercise looking for the annual payments Gold One was making to Harmony to process their ore. This would be saved by acquiring Ezulwini.,,but I couldn't find the figure in Harmony's receivables nor Gold One's payables.
Over a shorter term, Gold One could start utilising Ezulwini’s gold plant to process ore mined at the Cooke operations. The Ezulwini plant has a capacity of 200,000 tonnes per month of which it only utilises 30,000 tonnes at the moment. Cooke’s ore is currently treated at Harmony’s Doornkop mine.
https://www.miningmx.com/news/gold_and_silver/Gold-One-wont-pay-more-for-Ezulwini.htm
Then I came across statements by Gold One. Promises to shareholders much of which are based on the successful acquisition of Ezulwini. All from their Quarterly activities report Mar/12.
https://www.gold1.co.za/
page 4 -The ability to consider uranium extraction as a co-product to gold significantly reduces the cash cost per ounce of gold production and is an integral part of the Cooke turnaround strategy.
page 5 - During March 2012, Gold One also announced that a binding agreement had been signed with First Uranium Corporation (”First Uranium”) to acquire 100% of the issued shares of, and all shareholders’ claims against Ezulwini Mining Company (Pty) Limited (“Ezulwini”), for a total consideration of US$ 70 million. This strategic acquisition is also aligned to the business strategy of value accretive growth and is a key component in the realisation of synergies across the Cooke underground and Ezulwini operations. The Cooke Operations management team has extensive knowledge of the Ezulwini operation and, as a result, Gold One is well placed to realise the inherent value of the consolidation of these assets. With immediate access to Ezulwini’s uranium and gold processing facilities, the company can unlock the value of the Cooke and Ezulwini underground resources and enhance the group’s uranium co-product strategy.
page 29 - Ezulwini is located in close proximity to the company’s Cooke Operations and possesses a uranium plant that is already in production, which will allow for the immediate production of uranium from underground ore mined at Cooke. In addition, Ezulwini offers an alternative gold plant for the processing of Cooke underground ore. While the sharing of services between Ezulwini and the Cooke Operations will facilitate a reduction in operating costs, Gold One will also benefit from the addition of Ezulwini’s declared gold and uranium resources as well as the asset’s further resource exploration potential.
page 15 - As shareholders were advised at the acquisition announcement the expected timeline
for a full turnaround is 2 years of which this reporting period represents the first full quarter. For the next two years, the company is targeting a sustainable profitability enhancement of in excess of US$ 61 million per year. Achieving this turnaround strategy will bring the operation in line with planned operating cash costs of approximately US$ 1,000/oz by 2014, excluding co-product uranium benefits.
page 30 - During the June 2012 quarter, the company will continue to work closely with First Uranium to timeously complete the outstanding conditions precedent relating to the Ezulwini transaction. The companies are currently targeting fulfilling the outstanding conditions by the end of the June 2012 quarter.
Conclusion......Gold One is in trouble at Cooke with cash costs around $1600/oz. They need Ezulwini more than we need Gold One. They've made promises to shareholders.