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Pan African Resources plc (JSE:PAN) News - Pan African successfully concludes Mintails’ Mogale Gold Definitive Feasibility Study (“DFS”)
Pan African Resources PLC
(Incorporated and registered in England and Wales under the Companies Act 1985 with registered
number 3937466 on 25 February 2000)
Share code on AIM: PAF
Share code on JSE: PAN
ISIN: GB0004300496
ADR ticker code: PAFRY
(“Pan African” or the “Company” or the “Group”)
PAN AFRICAN SUCCESSFULLY CONCLUDES MINTAILS’ MOGALE GOLD DEFINITIVE FEASIBILITY STUDY
(“DFS”)
Pan African is pleased to announce that the Company has successfully completed a DFS on the Mogale
Gold Proprietary Limited (“Mogale Gold”) Tailings Storage Facilities (“TSFs”) that forms part of the
Mintails Mining SA (Proprietary) Limited (“Mintails SA”) assets, situated near Krugersdorp to the west
of Johannesburg, South Africa (the “Project”). The DFS was prepared by DRA Projects SA (Pty) Ltd
(“DRA”), with reliance on specialist input from third parties for Mineral Resource and Mineral Reserve
estimation, dump re-mining, tailings pumping and disposal and metallurgical test work. The parties
have provided their consent for the release of the information contained in this announcement as far
as it pertains to the results of the DFS.
HIGHLIGHTS FROM DFS
• Significant production impact:
o The Project has the potential to increase the Group’s gold production profile over the
coming years, with re-mining of the Mogale Gold TSFs expected to add approximately
50koz/yr of production over its 13-year life of mine (LOM)
o Equivalent to an increase >25% on Group’s current production
• Compelling project economics:
o Pre-tax NPV (at 9.5% real discount rate) of ZAR1,006 million (US$64,9 million), real
ungeared IRR of 20.1% at US$1,750/oz and US$/ZAR:15.50.
o Forecast AISC of ~US$914/oz and operating cost of ~ZAR78/t (~US$5/t at
US$/ZAR:15.50) over the initial 13-year LOM
• Construction capex:
o ~R2.5billion (US$161.3 million at US$/ZAR:15.50)
• Payback:
o Construction capital payback estimated within 3.5 years, post commissioning
o Targeting production within 18-24 months from commencement of construction
• Mineral reserve:
o The Mogale Gold TSFs, which comprise various individual dams, contain a Probable
Mineral Reserve of 123.6Mt of re-mineable material at a head grade of 0.29g/t for an
estimated content of 1.14Moz gold
• Further production upside:
o Addition of Mintails SA’s Soweto Cluster resource has potential to extend LOM from
13 years to 21 years and further increase annual gold production
• Proven technology:
o Low unit cost hydro mining with low project execution risk at 800ktpm (thousand tons
per month) carbon in leach (“CIL”) plant, similar to Pan African’s Elikhulu operation
(currently processing ~1.2Mt per month)
• Project funding:
o A number of funding options for the Project are being considered, including offers of
debt finance from financial institutions and other third party financiers
• Strategic rationale:
o Builds on the Group’s track record of bringing value enhancing surface re-mining
operations into production
o Enhanced ESG credentials
- Environmental rehabilitation and socio-economic initiatives for local
economic development to run concurrent with operations
- Job creation and skills development in host communities
- Potential to extend the Group’s solar renewable energy PV footprint in line
with its decarbonisation strategy and strategic production cost reduction
initiatives
Cobus Loots, CEO of Pan African, commented: “Pan African has an excellent track record of successfully
commissioning and operating surface tailings retreatment operations, as evidenced by our BTRP, ETRP
and Elikhulu operations. As originally anticipated, the Mogale Gold DFS has demonstrated a compelling
Project, both operationally and financially. Mintails has the potential to further improve the Group’s
overall AISC, while increased annual production will move Pan African further up the ranks of mid-tier
gold producers.
Additionally, our re-mining activities will assist with environmental remediation in this area. We look
forward to working with all stakeholders to further progress the Project in the months ahead.”
Background to the Project
In November 2020, Pan African announced that the Company had entered into conditional sale of
shares agreements to acquire the share capital and associated shareholder loans and other claims of
Mogale Gold and Mintails’ SA Soweto Cluster Proprietary Limited (“MSC”) (together the “Mintails
Transaction”). Both Mogale Gold and MSC are 100% owned by Mintails SA, which was placed into
provisional liquidation during 2018.
The deadline for fulfilment of the conditions to conclude the Mintails Transaction was extended to
August 2022 and included the completion of a fatal flaw analysis, prefeasibility study (“PFS”) and DFS.
The PFS on the Mogale Gold TSFs was completed during July 2021, followed by the DFS, announced
today. Both studies were led by DRA. Further technical work on the MSC TSFs is currently in progress.
Mineral Reserves and Resources
Following the initial due diligence on Mogale Gold, the following work was undertaken to improve the
Mineral Resource confidence:
• a highly accurate Light Detection and Ranging (“LIDAR”) survey of the entire project area to
ascertain available tonnages;
• twinning 25 of the historical holes in order to verify grades previously reported; and
• drilled 82 new boreholes in areas with sparse or no data.
The combined drilling totaled 2,761m resulting in 1,877 samples and 187 control samples; and
resulted in the remodeling of all available resources as reported in the Mineral Resource table below:
Indicated and Inferred
TSF Tonnage Gold
Mt g/t kg oz
Indicated
Total Indicated 121.62 0.29 35,049 1,126,855
Inferred
Total Inferred 4.64 0.33 1,525 49,040
• Density of 1.44; Gold conversion: 1kg = 32.1508oz
• No cut-off applied; No geological losses or modifying factors applied
• Mineral Resources are stated inclusive of Mineral Reserves
• Mineral Resources are reported as total Mineral Resources and not attributed
• Mineral Resources are SAMREC Code (2016 Edition) compliant
• The Mineral Resources are signed-off by Charles Muller (BSc (Hons), Pr.Sci.Nat), an independent Competent Person
The updated three-dimensional Mineral Resource models were subjected to a hydro-mining and load-
and-haul mine design and schedule according to engineering parameters as defined in the DFS. The
same approach was previously used by Pan African during the design process of the Group’s Elikhulu
operation (Elikhulu).
Scheduling of the available resources was built around achieving a throughput rate of 800ktpm, as
detailed in the July 2021 PFS, as the optimal processing throughput. The Mineral Resources subjected
to the mine design and scheduling was subsequently converted to Probable Mineral Reserves, as
depicted in the table below:
Mineral Reserves
Tonnage Gold
Probable Reserves Mt g/t kg oz
Total Mineral Reserves 123.58 0.29 35,400 1,140,180
• Density of 1.44; Gold conversion: 1kg = 32.1508oz
• No cut-off applied; No geological losses or modifying factors applied
• Mineral Reserves includes 1.96Mt of Inferred Mineral Resources, scheduled to access remaining Indicated
Mineral Resources. The Inferred Mineral Resource represents 3.75% of the total Mineral Reserve and is not
deemed a significant risk
• The Mineral Reserve is signed-off by PAR’s Competent Person, Hendrik Pretorius
Conceptual MSC resource/reserve and production upside
In the SENS announcement of 6 November 2020, the Company reported that the MSC TSFs comprise
nine separate facilities with resources of 119Mt with an in-situ grade of 0.31g/t, containing an
estimated gold content of 1.20Moz. Although Pan African currently classifies the MSC Mineral
Resources in the Inferred Mineral Resource category until further technical studies and work is
completed, a conceptual production schedule for this project was applied, based on available
information.
This conceptual production scheduling, entailing the processing of combined TSFs demonstrates a
more robust recovered ounce profile and an extended LOM for the project, in excess of 20 years. The
conceptual MSC TSF model increased production by an average of 11koz/yr from years 6 to 13 (once
the Mogale Gold TSF resources are depleted), giving rise to a production profile of an average 54koz/yr
from year 14 to 20.
No Mineral Reserves or financial valuation for the conceptual MSC scheduling can be reported on at
this stage and the incremental production from this cluster is included for illustrative purposes only.
Re-mining and processing
The study envisages hydro-mining to be utilised for the larger dumps, using hydraulic guns of similar
specification as used at Elikhulu, cutting mine widths of 15m wide and 20m deep. The North Sands
and South Sands dumps are conducive to load-and-haul mining, to extract the resources from these
dams.
The re-mined tailings will be processed in a CIL plant of similar design to the Elikhulu operation, with
the addition of a water treatment section to limit corrosion and potentially improve recoveries. The
DFS process plant is designed for an average throughput of 800ktpm, with up to 900ktpm achievable
without negatively affecting performance.
All of the borehole samples were utilised to refine and test the expected gold recoveries from the
processed material, under the direct supervision and management of Pan African. The modelled
recoveries are presented in the table below:
% Recovery
Resource material TSF
modelled
1L23-25 54.70%
1L13-15 48.90%
1L28 34.40%
1L8 53.56%
1L10 50.85%
North Sand Dump 71.00%
South Sand Dump 75.71%
Key financial assumptions and outputs (as per DFS)
Description
Net Present Value (9.4) R1,006 million (US$64,9 million)
Real Ungeared Internal Rate of Return 20.1%
Total construction capex requirement R2,460 million (US$158,7 million)
Forecast payback period (post commissioning) 38 months
Average AISC ~US$ 914/oz
LOM operating cost ~ZAR 78/t (~US$5/t)
Average annual gold production ~50koz
LOM 13 years
• Long term gold price US$1,750/oz
• Long term US$/ZAR:15.50
Envisaged project financing
The Group has received a number of offers from financing institutions and third party financiers for
the Project funding and expects to finalise the funding package later this year, if the Company was to
proceed to project execution.
Way forward and possible project execution timeline
Following in-principle approval by Pan African’s board to further progress the Project, the Company
will commence with the environmental authorisation process and stakeholder engagements.
Activity Estimated date
Completion and finalisation of DFS Completed
Engineering optimisation activities June – August 2022
Detailed engineering study September 2022 – March 2023
Likely project commencement date September 2022
Funding package finalised October/November 2022
Environmental approvals March 2023
Construction commences April 2023
Commissioning July 2024 – December 2024
ESG/Social Impact
As part of the DFS, the Company has already conducted extensive engagements with community
representatives and other interested and affected organisations based in the area, including
regulatory authorities. This information and the EMPR is being utilised to compile an action plan to
remediate past environmental damage and restore the surface for productive land use, while at the
same time investigating impactful socio-economic development projects intended to stimulate the
local economy.
The Company will also conduct feasibility studies into the merits of renewable energy for the new
tailings retreatment plant’s energy requirements.
Competent Person
The competent person for Pan African Resources, Hendrik Pretorius, the manager for Group mineral
resource management, signs off the Mineral Resources and Mineral Reserves for the Group. He is a
member of the South African Council for Natural Scientific Professions (SACNASP 400051/11 –
Management Enterprise Building, Mark Shuttleworth Street, Innovation Hub, Pretoria, Gauteng
Province, South Africa), as well as a member in good standing of the Geological Society of South Africa
(GSSA – CSIR Mining Precinct, Corner Rustenburg and Carlow Roads, Melville, Gauteng Province, South
Africa). Hendrik has 18 years' experience in economic geology and mineral resource management
(MRM). He is based at The Firs Office Building, 2nd Floor, Office 204, Corner Cradock and Biermann
Avenues, Rosebank, Johannesburg, South Africa. He holds a BSc (Hons) degree in Geology from the
University of Johannesburg as well as a Graduate Diploma in Mining Engineering from the University
of the Witwatersrand. Hendrik has reviewed, and approved, in writing the information contained in
this document as it pertains to Mineral Resources and Mineral Reserves.
The information contained in this announcement is the responsibility of the Company’s board of
directors and has not been reviewed or reported on by the Group’s external auditors.
Rosebank
30 June 2022
Certain information communicated in this announcement was, prior to its publication, inside
information for the purposes of Article 7 of Regulation 596/2014.
For further information on Pan African, please visit the Company's website at
www.panafricanresources.com
Corporate information
Corporate Office Registered Office
The Firs Office Building Suite 31
2nd Floor, Office 204 Second Floor
Cnr. Cradock and Biermann Avenues 107 Cheapside
Rosebank, Johannesburg London
South Africa EC2V 6DN
Office: + 27 (0)11 243 2900 United Kingdom
info@paf.co.za Office: + 44 (0)20 7796 8644
Chief Executive Officer Financial Director
Cobus Loots Deon Louw
Office: + 27 (0)11 243 2900 Office: + 27 (0)11 243 2900
Head: Investor Relations Website: www.panafricanresources.com
Hethen Hira
Tel: + 27 (0)11 243 2900
E-mail: hhira@paf.co.za
Company Secretary Nominated Adviser and Joint Broker
Phil Dexter/Jane Kirton Ross Allister/Alexander Allen
St James's Corporate Services Limited Peel Hunt LLP
Office: + 44 (0)20 7796 8644 Office: +44 (0)20 7418 8900
JSE Sponsor Joint Broker
Ciska Kloppers Thomas Rider/Nick Macann
Questco Corporate Advisory Proprietary Limited BMO Capital Markets Limited
Office: + 27 (0)11 011 9200 Office: +44 (0)20 7236 1010
Joint Broker
Matthew Armitt/Jennifer Lee
Joh. Berenberg, Gossler & Co KG (Berenberg)
Office: +44 (0)20 3207 7800
Date: 30-06-2022 07:57:00
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