Pan African Resources has closed its R50 million cash deal to acquire Mogale Gold and Mintails SA Soweto Cluster, both of which are 100% owned by Mintails Mining SA, a company that was placed in provisional liquidation in 2018.
Pan African did a feasibility study on the Mogale Gold tailings storage facilities and announced the results demonstrated “compelling economics and the potential to significantly increase group gold production – an increase in excess of 25% compared to current annual production – over an initial life of mine of 13 years.
Re-mining of the MSC tailings storage facilities has the potential to add further production upside and extend the life of mine to 21 years.
Pan African Resources had secured funding with FirstRand Bank, acting through its Rand Merchant Bank division, for $80m of senior debt for part funding of the project’s construction.
A number of additional funding options were being evaluated for the balance of the capital budget requirement, Pan African Resources said in a statement yesterday.
Detailed engineering optimisation studies and the impact assessments required for the environmental authorisation process, stakeholder engagements and permitting had commenced.
Construction was expected to start in 2023, with commissioning expected between July 2024 and December 2024.
Pan African CEO Cobus Loots said: “Our studies have demonstrated robust operational and financial economics, with the project having the potential to further increase our high-margin, long-life production from tailings retreatment operations.”
The area where Mintails was situated presented a number of environmental and social challenges, and the assistance of the government and other stakeholders would be required to successfully address those challenges, remediate the site and develop a world-class project.
In the year to June 30, Pan African Resources lifted net cash from operating activities increased by 45.1% to $110m and headline earnings per share increased to 3.93 US cents per share from 3.87 US cents per share. Net debt reduced by 66.7% to $13m, notwithstanding payment of a record dividend and significant capital expenditure.
This was after the group made meaningful progress with its operational performance and growth projects, and achieved record gold production of 205 688 ounces from a better diversified portfolio of assets. It forecast production for the 2023 financial year to be in line with the 2022 financial year’s production. The share price nudged up 1.7% to R3.71 on the JSE yesterday afternoon.
BUSINESS REPORT
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