TIDMPAF
Pan African Pan African Resources Funding
Resources PLC Company Limited
(Incorporated Incorporated in the Republic of
and South Africa with limited
registered in liability
England and
Wales under Registration number:
the Companies 2012/021237/06
Act 1985 with
registered Alpha code: PARI
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")
REVISED PRODUCTION GUIDANCE FOR THE YEARING 30 JUNE 2023, OPERATIONAL UPDATE
AND COMMENCEMENT OF MINTAILS PROJECT CONSTRUCTION
Pan African wishes to provide shareholders and noteholders with revised
production guidance and an operational update for the financial year ending 30
June 2023 (current financial year). It is also pleased to announce the imminent
commencement of the Mintails project's construction, with site clearance
activities having commenced.
Group production guidance
· Production guidance for the current financial year reduced to approximately
175,000oz (previously 195,000oz to 205,000oz), primarily as a result of:
· Challenges related to Eskom generated electricity supply, resulting in a
production loss of approximately 10,000oz of gold
· Slower than anticipated ramp-up of continuous operations at Barberton
Mines, largely addressed as highlighted below
· Lower than expected production from Evander Mines' underground operations.
· Tailings operations at Barberton and Elikhulu are performing in line with
expectations
· Group production guidance for the financial year ending 30 June 2024 of
178,000oz to 190,000oz, with a further production increase in the 2025 financial
year, following the Mintails project's commissioning during the first half of
this financial year.
Safety performance
· The Group regrets to report a fatal accident that occurred as a result of a
fall of ground at Evander Mines in March 2023, following one million fatality
free shifts achieved at the operation prior to the accident
· Despite this tragic setback, the Group expects an improvement in overall
group safety rates for the full year compared to the first half of the current
financial year as a result of the implementation of various initiatives to
further improve its safety performance
Electricity supply
· The Group estimates a production loss of approximately 10,000oz for the
current financial year as a result of issues related to Eskom generated
electricity supply impacting all of the Group's operations
· In addition to load curtailment, power outages and surges, difficulties
related to transformers and other Eskom infrastructure contributed to production
disruptions.
· As per the announcement released on 15 May 2023, Pan African is aggressively
rolling out its renewable energy plans in order to mitigate the impact of this
challenge.
Barberton Mines
· After a slower than anticipated ramp-up of continuous operations at
Barberton Mines' Fairview Mine and Sheba operations, the Group is pleased to
report the following improvements in recent months:
· A marked improvement in Fairview Mine's production tonnes has been noted.
The average tonnes produced for the preceding three months to April 2023 have
increased by more than 10% to approximately 9,100t per month, compared to an
average of 8,100t per month in the first seven months of the current financial
year. Projected tonnage is expected to further increase in excess of 5% in the
remaining two months of the current financial year
· Optimisation of mining methods at Sheba Mines' MRC and ZK stopes, to
reduce dilution and the increased availability of trackless mining machinery
(TMM), has improved underground grade and production, with an increase in
monthly production to approximately 8,700t per month during February to April
2023, compared to an average of 6,600t per month for the prior seven months.
Projected tonnage is expected to further increase in excess of 10% in the
remaining two months of the current financial year.
· Implementation of the Consort Mine contractor model has progressed slower
than expected, with challenges encountered with the recruitment of skilled
employees adversely affecting production. A full production ramp-up is expected
during June 2023, with the operation returning to profitability thereafter.
Evander Mines' underground operations
· Evander Mines' underground operations have underperformed as a result of
geological challenges due to faulting of the Kimberley Reef at the tail end of
the 8 Shaft Pillar mining area, and a slower than anticipated transition to full
production from 24 Level
· Infrastructure development for 24 Level mining is progressing well, with
the equipping of the ventilation shaft for hoisting to relieve the constraints
currently being experienced with the conveyor belt system. This development is
expected to be completed by the end of March 2024.
Mintails project
· The Group has been informed by the South African Department of Mineral
Resources and Energy (DMRE) of the imminent issuing of the Mintails project's
integrated environmental authorisation
· Commencement of plant construction is therefore expected in the next month,
and ground clearing activities have commenced, with steady state production from
the commissioned project expected by December 2024.
Financial
· The impact of the lower than expected gold production for the current
financial year has been partially mitigated by the increased year to date rand
gold price received of ZAR1,003,374/kg (2022: ZAR892,431/kg), relative to the
prevailing gold price of approximately ZAR1,220,000/kg
· As a result of the reduced production guidance, the Group's all-in
sustaining costs (AISC) for the current financial year is now expected to be
between US$1,325/oz and US$1,350/oz, at an average exchange rate of ZAR:US$
17.70
· Net senior debt (comprising secured, interest bearing debt, net of available
cash) is expected to decrease to between US$25 to US$35 million at the end of
the current financial year, relative to US$49.9 million at the end of the six
month period, ended 31 December 2022. This decrease is despite project
expenditure of US$10.4 million already being incurred during the current
financial year on the Mintails project
· With manageable group debt levels and the Mintails project's funding
secured, the group is well positioned to continue making cash distributions to
shareholders in the future.
Pan African CEO Cobus Loots commented:
"The safety of our people and contractors remains our number one priority and we
continue to implement a number of programmes to further improve the safety
performance at our operations. We are deeply saddened by the fatal accident that
occurred at Evander Mines as a result of a fall of ground incident.
Whilst we are disappointed with the production performance of our underground
operations for the current financial year, the turnaround at Barberton Mines is
now evident, especially in the past two months, following a longer than
anticipated ramp-up after the implementation of continuous operations at
Fairview Mine and Sheba Mine and implementation of the contractor mining model
at Consort Mine. Barberton Mines' underground production tonnes have
demonstrated a notable increase during the past two months, with further
increases expected during the remainder of the current financial year.
Implementation of the contractor mining model at Consort Mine is also bearing
fruit and the operation is expected to return to profitability in the short
term.
Pan African is leading the way in terms of rolling out renewable energy projects
and reducing our dependency on Eskom. In the coming years, we believe this
strategy will greatly benefit all of our stakeholders.
The development of the 24 Level project at Evander Mines is progressing well,
with crews redeployed to the 24 Level area as the 8 Shaft pillar mining nears
completion. Improved mining flexibility, together with the other initiatives
being implemented to ensure that infrastructure availability is optimised, will
ensure sustainable production from this long life underground operation.
Ground clearing at the Mintails project has commenced in anticipation of the
senior debt component of the funding package being closed by June 2023.
Commissioning of the plant is expected in the fourth quarter of the 2024
calendar year, which will result in a significant increase in the Group's
production profile from the 2025 financial year onwards.
Despite lower than expected production, the Group is positioned to deliver a
robust financial performance for the current financial year as a result of the
excellent rand gold prices being received and also disciplined operational cost
control.
Pan African is committed in its resolve to continued value creation for its
stakeholders by positioning the Group as a sustainable, safe, high-margin and
long-life gold producer with an attractive pipeline of growth projects. We look
forward to presenting our final results in September 2023, which will include
further details on our operational and financial performance, as well as
information on progress being made with our growth projects."
Safety
As previously communicated, the Group has implemented initiatives during the
second half of the 2023 financial year to further improve its safety
performance.
Barberton Mines has seen a progressive improvement in safety performance for
both lost-time injury frequency rate (LTIFR) and reportable injury frequency
rate (RIFR), compared to the first half of the current financial year.
Despite the regrettable fatal accident, we remain confident that the safety
performance at Evander Mines will improve as it continues to implement safety
initiatives to reinforce a zero-tolerance approach towards safety incidents.
Elikhulu operations have seen a slight regression in safety performance during
the current financial year, resulting from two recorded contractor lost-time
injuries.
The Group's forecasted LTIFR and RIFR for the current financial year are
expected to improve from the rates reported for the first half of the year.
Group production
Group production for the current financial year is expected to be approximately
175,000oz, split per operation as follows:
+-----------------------+----------+----------+-----------------+---------------
-+
|Operation |Year ended|Year ended|Guidance for |Guidance for
|
| |30 June |30 June |current financial|2024 financial
|
| |2021 |2022 |year |year
|
+-----------------------+----------+----------+-----------------+---------------
-+
|Barberton Mines - |84,826 |75,738 |64,000 |71,000 - 74,000
|
|Underground total | | | |
|
+-----------------------+----------+----------+-----------------+---------------
-+
|BTRP |18,239 |19,560 | 19,000 |17,000 - 20,000
|
+-----------------------+----------+----------+-----------------+---------------
-+
|Elikhulu |51,459 |52,220 |50,000 |49,000 - 51,000
|
+-----------------------+----------+----------+-----------------+---------------
-+
|Evander Mines - |47,253 |58,170 |42,000* |41,000 -
45,000*|
|Underground and surface| | | |
|
|sources | | | |
|
+-----------------------+----------+----------+-----------------+---------------
-+
|Total ounces produced |201,777 |205,688 |175,000 |178,000 -
|
| | | | |190,000
|
+-----------------------+----------+----------+-----------------+---------------
-+
* Includes gold equivalent PGM ounces produced by Evander Gold Mines' Osmiridium
circuit
Royal Sheba Project
Mine layout optimisation and scheduling was finalised and requests for
quotations were issued for the initial development and production activities.
Preliminary optimisation work for the life-of-mine (LOM) planning has been
completed at a cut-off grade of 1.7g/t, which translates into an average mining
grade of approximately 3.0g/t and circa 235,000oz of gold recovered over the
life of the project, with the orebody open at depth.
DRA Global has finalised the feasibility study for placing a crushing and
milling circuit at the Royal Sheba Mine site, together with the design to enable
slurry pumping from the milling plant at Royal Sheba to the BTRP. The processing
plant's feasibility study and the project's financial model is being updated and
reviewed. A phased approach to capital spending, based on the availability of
material to feed the BTRP plant, is also being considered. This will entail the
phased development of the decline, production levels, as well as the ventilation
infrastructure required for initial stoping operations.
First stoped ore is planned in 2025 at 5,000t per month, ramping up to 10,000t,
30,000t and 45,000t per month, every twelve months thereafter in line with a set
lateral and vertical development schedule. A trucking cost trade-off analysis
indicates that the onsite crushing and milling circuit and pipeline will only be
required to be completed once production rates reach 45,000t per month. The
internal feasibility study for the complete project is expected to be completed
in the next months.
Evander Mines' 8 Shaft pillar and 24, 25 and 26 Level and Egoli projects
The opening up of mining areas on 24 Level continues, which will enable the
phased transfer of crews from the pillar area as mining of the pillar resource
is completed. Two crews are currently mining the 24 Level F-line, with an
additional two crews mining the 24 Level D-line. Construction of phase 2 of the
refrigeration plant for cooling 24 Level is ongoing. The development of the
24_N1B drive towards 25 Level progressed slower than expected due to challenging
ground conditions. As ground conditions progressively improved, development
rates have now increased and multi-blasting is being considered to further
accelerate development.
The equipping of the ventilation shaft to enable hoisting of waste and ore
produced on 24 Level will reduce reliance on the ageing conveyor belt system and
simplify the ore handling process. Installation of pipes for equipping the
ventilation shaft at 17 Level has commenced, with the development of the winder
chamber and shaft station ongoing. Completion of the ventilation shaft's
equipping is expected by the end of the first quarter of the 2024 calendar year
and will provide a hoisting capacity of up to 40,000t per month. Additional
crews have been deployed to the conveyor belts in order to improve maintenance
and breakdown reaction times, which is expected to increase conveyor belt
availability until such time that ore hoisting will commence through the
ventilation shaft.
Construction of an additional grout plant (for pseudo-pack support) is expected
to be completed in June 2023. This plant will supply 24 Level and future mining
on 25 and 26 Levels with the required output for mining support. The use of
pseudo-packs in the 8 Shaft pillar area has proven to be effective in
controlling mining subsidence and enabling clean mining practices, and these
benefits will also be replicated through the utilisation of pseudo-packs as
mining support on the 24, 25 and 26 Level projects.
Dewatering of the 3 Decline infrastructure to 19 Level at the 7 Shaft Egoli
project is progressing well. The completion of the dewatering is projected to
take place in the next months, which will enable a more accurate assessment of
potential mining of remnant areas within the Egoli complex.
Mintails project progress and funding
Progress on the Mintails project and expected milestones include:
· Mineral Resource estimation on the Soweto Cluster 2L16 and 2L24 TSFs was
completed at the end of March 2023, resulting in these TSFs being upgraded to
the indicated Mineral Resource category. The remainder of the Soweto Cluster
TSFs remain classified in the Inferred Mineral Resource category
· Concept engineering work on the Soweto Cluster TSFs is underway, following
completion of the mineral resource estimation
· Completion of optimisation and value engineering activities in preparation
for construction
· Integrated environmental authorisation from the DMRE expected in the next
weeks, with commencement of construction imminent
· Steady state production forecast by December 2024.
A derivative funding structure was implemented during March 2023, to complete
the funding package for the Mintails project. The structure provided a US$22.6
million (ZAR400 million) upfront premium which, together with the proceeds of
US$47.3 million from the sustainability bond raised during December 2022 and the
debt funding package of US$73.4 million in the form of a credit approved term
loan facility underwritten by FirstRand Bank Limited, acting through its Rand
Merchant Bank division, ensure that the project is fully funded at commencement
of construction. Independent technical reviews of the project together with
legal drafting are currently underway in anticipation of the debt funding
package being closed by June 2023.
Blyvoor conditional acquisition - update
The due diligence and fulfilment of other conditions precedent for the
acquisition of the Blyvoor Gold Operations Proprietary Limited historical TSFs
was not completed within the required timeframe, and this transaction has
therefore lapsed. Although the Group is currently focused on the construction of
the Mintails Project, it continues to engage with the current owners of Blyvoor
Gold Operations to evaluate options to further develop this project.
Sudan exploration project
Following the outbreak of violence in the Republic of Sudan, all expatriate
employees working on the exploration project were safely repatriated. All of the
Group's assets situated in the Republic of Sudan, including the fire assay multi
-element analytical laboratory, are currently guarded and have been placed under
care and maintenance until such time as the situation stabilises and the Group
can resume its exploration programme. The carrying value of the Group's
investment in the Sudan exploration project to date, including the acquisition
of the exploration concessions and other assets, amounts to approximately US$5.0
million. Limited expenditure is currently being incurred on securing the Group's
assets and their care and maintenance, until such time as exploration activities
can recommence.
The Group successfully commissioned the first commercial fire assay multi
-element analytical laboratory within the Republic of Sudan during 2022. This
laboratory is used to analyse all exploration samples extracted from the Block
12 exploration concessions granted to Pan African by the Sudan Ministry of Mines
and any regional exploration work by other explorers.
Prior to the conflict, the exploration team active within Block 12A South and
Block 12A North conducted soil geochemistry and hard rock chip sampling
programmes to further define the identified exploration anomalies. Initial
assaying received from the exploration targets identified in the south-eastern
corner of Block 12A South averaged 1.7g/t from 12 samples taken from quartz
veins, rock debris and soil. However, some of the structures sampled indicated
significantly higher gold mineralisation, with values ranging from 2.9g/t up to
9.4g/t. These structures will be further defined as part of a confirmatory
sampling programme. No Mineral Resources or Mineral Reserves are currently
reported for any of the targets.
Remote sensing imagery in Block 12A North detected a notable additional NE-SW
anomaly approximately 11km long. Initial field investigations identified a
siliceous unit hosting significant iron oxide alteration, with reported grades
of 7.3, 0.19, and 0.58 g/t. Further sampling along the strike and down-dip of
the unit, as well as subsequent mapping, revealed a potential extension of
several kilometres towards the southwest.
Pan African remains positive that the in-country situation will stabilise to the
extent that it can resume exploration activities in the near future.
Final results for the twelve months ended 30 June 2023
Pan African anticipates announcing its final results for the current financial
year on or about 13 September 2023.
The information contained in this update is the responsibility of the Pan
African board of directors and has not been reviewed or reported on by the
Group's external auditors.
Certain information communicated in this announcement was, prior to its
publication, inside information for the purposes of Article 7 of Regulation
596/2014.
Rosebank
26 May 2023
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 |2nd Floor
|
| |
|
|2nd Floor, Office 204 |107 Cheapside
|
| |
|
|Cnr. Cradock and Biermann Avenues |London
|
| |
|
|Rosebank, Johannesburg |EC2V 6DN
|
| |
|
|South Africa |United Kingdom
|
| |
|
|Office: + 27 (0)11 243 2900 |Office: + 44 (0)20 7796 8644
|
| |
|
|info@paf.co.za |info@paf.co.za
|
+----------------------------------------------+--------------------------------
-------------+
|Chief executive officer |Financial director
|
| |
|
|Cobus Loots |Deon Louw
|
| |
|
|Office: + 27 (0)11 243 |Office: + 27 (0)11 243
|
|2900
|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 |
| |
|
|Jane Kirton |Ross Allister/David McKeown
|
| |
|
|St James's Corporate Services Limited |Peel Hunt LLP
|
| |
|
|Office: + 44 (0)20 7796 8644 |Office: +44 (0)20 7418 8900
|
+----------------------------------------------+--------------------------------
-------------+
|JSE Sponsor and JSE debt sponsor |Joint broker
|
| |
|
|Ciska Kloppers |Thomas Rider/Nick Macann
|
| |
|
|Questco Corporate Advisory Proprietary |BMO Capital Markets Limited
|
|Limited |
|
| |Office: +44 (0)20 7236 1010
|
|Office: + 27 (0)11 011 |
|
|9200 (https://www.google.co.za/search?q=questc|
|
| |
|
|o |
|
|&rlz=1C1EJFC_enZA816ZA818&oq=q |
|
|uestco&aqs=chrome..69i57j0l5.1 |
|
|159j0j4&sourceid=chrome&ie=UTF-8) |
|
+----------------------------------------------+--------------------------------
-------------+
| |Joint broker
|
| |
|
| |Matthew Armitt/Jennifer Lee
|
| |
|
| |Joh. Berenberg, Gossler & Co KG
|
| |
|
| |Office: +44 (0)20 3207 7800
|
+----------------------------------------------+--------------------------------
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END
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