1. Resumption of revenues during the Mine Safety Rehabilitation Operation
2. Stakeholder Value Realization Plan
We are delighted to report that the Mine Safety Rehabilitation Operation at the Xiaonanshan (“XNS”) Mine, conducted by our partner, Anhui Zhonghai Mining and Trading Company (“AZH”), is expected to be completed by the end of Q2 2014. This will allow the XNS to seek to procure the deep mining rights and ramp up to full-scale production.
It is a natural consequence of this activity, that a residual recovery occurs of saleable iron ore and as a result, since early September 2013, more than 40,000 tonnes of ore has been processed.
Mine production requires approximately 3.5 tonnes of ore to produce one tonne 62%+ Fe concentrate, which is currently being sold at an average price of CNY800 ($130 USD) with a direct production cost of CNY350 ($57 USD) per tonne.
Safety work is the priority and AZH estimates that the residual production as a result of this rehabilitation program will increase and yield up to 130,000 tonnes of ore per month by mid Q1 2014.
Although revenue has commenced, no dividends from operations will be available until all Mine Safety Rehabilitation Operation costs have been recovered.
Stakeholder Value Realization Plan:
Wits Basin has developed a clear and achievable plan to unlock stakeholder value. This plan has commenced and is expected to be executed within a 12-month period.
The key elements and goals of the plan include:
1. Corporate objectives
- Appoint additional directors and deploy experienced supervisory management and mining personnel to the XNS and Jianshan mines, specifically to oversee all payments, monitor production and deliveries to clients, and ensure safety and the proper execution of the five year mining plan;
- Promote and implement good corporate governance and internal controls;
- Provide clear and regular communication to the Wits Basin shareholders;
- Update SEC regulatory filings and call regular shareholders meetings;
- Investigate all means of liquidity, restructuring, listed equity, dual listings, special dividends and consolidation of interests of minority shareholders and stakeholders in subsidiaries; and
- Raise sufficient funding for accelerated expansion of operations.
2. Operational objectives
- Comply with government directive nr. 54 to consolidate the GQ, SBQ and XNS mining pits, secure deep mining rights, renewal of mining licenses and pay associated liabilities;
- Increase the 200 million tonnes of proven resource by "JORC" standard drilling on the new assets of Jianshan as well as additional resource development drilling at XNS. The estimated drilling costs for Jianshan should not exceed $4.2 million USD while the additional drilling at XNS should not exceed $2.2 million USD; and
- Enlarge the infrastructure that will allow the XNS and Jianshan mines to increase production capacity to produce 2 million tons of concentrate per annum by the end of 2015.
While the affairs of Wits Basin and its subsidiaries are being regularized, frequent update reports provided by CGMR (including revenue/production figures) will be released commencing November 2013, which will provide clear and regular communication to the Wits Basin shareholders.
We express our gratitude to the patience and support shown by our shareholders, funders and stakeholders to date.
About Wits Basin Precious Minerals Inc.
Wits Basin is a minerals exploration and development stage company that owns a 75% equity interest in China Global Mining Resources (BVI) Limited (“CGMR”), which owns the Xiaonanshan Mine, located in Anhui Provence of The Peoples Republic of China. Our common stock trades on the Over-the-Counter Bulletin Board under the symbol "WITM." To find out more about Wits Basin Precious Minerals Inc. (WITM) visit our website at www.witsbasin.com.
Forward-Looking Statements and Risk Factors
Certain statements included in this press release may constitute forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. Such statements are valid only as of today, and we disclaim any obligation to update this information. These statements are subject to known and unknown risks and uncertainties that may cause actual future experience and results to differ materially from the statements made. These statements are based on our current beliefs and expectations as to such future outcomes. These risks and uncertainties relate to the Company and its subsidiaries, and include, among others, the ability to obtain or maintain regulatory approvals; the risks relating to mine rehabilitation and ongoing mining activities; market pricing of iron ore; the ability to obtain necessary financing; and other risks and uncertainties described in the Company's filings from time to time with the Securities and Exchange Commission.