West Wits Mining Ltd (ASX:WWI) is eyeing “significant cost savings” after receiving grid power supply approval from South Africa’s Joburg City Power.
According to an announcement released this morning, Joburg City Power will supply 7.5 megavolt amps (MVA) of power to West Wits’ Phase 1 Qala Shallows project, located within the broader Witwatersrand Basin project.
Qala Shallows currently runs off diesel generators. Though these generators will remain an integral part of the project’s power supply system, access to Joburg City Power’s grid is estimated to be roughly 75% less expensive.
“Access to grid power for the majority of operations will significantly reduce the projected electricity costs during the build-up phase and thereby further de-risk the project at a critical phase,” West Wits chief executive Jac van Heerden said.
South Africa’s power supply crisis
Access to reliable power supply is an ongoing concern in South Africa. Earlier this month, the government revoked a nation-wide “state of disaster” that was declared in February to manage the crisis.
More recently, President Cyril Ramaphosa appointed Kgosientsho Ramokgopa last month to the newly created role of electricity minister.
“Continued high levels of load-shedding (power cuts) . . . penalise the South African economy and it causes untold injury to the poor, and our ability to attract investment,” Ramokgopa said.
It was presumably with these concerns in mind that West Wits has also been in discussion with several renewable energy suppliers to further reduce the company’s reliance on diesel and mitigate the impact of higher electricity costs.
“This will ultimately enable the operation to achieve power security at the lowest power cost possible,” van Heerden added.
West Wits raises $1.1 million
In addition to the power supply approval announced this morning, West Wits said it has also received binding commitments for more than 78.5 million fully paid ordinary shares at 1.4 cents each, raising $1.1 million before costs.
The bids received exceeded the available shortfall of $902,000. As such, the company elected to scale back these excess bids and take around $200,000 in addition to the original shortfall.
According to an offer booklet released in February, the proceeds will be used to install critical infrastructure at Qala Shallows and conduct infill drilling.
Written by Oliver Gray.