Pan African Resources PLC
("Pan African" or “the Company" or
“the Group”)
(Incorporated and registered in
England and Wales under Companies Act 1985 with registered
number 3937466 on 25 February
2000)
Share code on AIM: PAF
Share code on JSE: PAN
ISIN: GB0004300496
OPERATIONAL UPDATE
FOR THE NINE MONTHS ENDED 31 MARCH
2019
Pan African is pleased to provide an operational update for the
nine months ended 31 March 2019
(“Current Reporting Period”) as well as detail on progress with
internal growth projects and initial production guidance for the
2020 financial year.
Pan African CEO Cobus Loots commented:
“The Group’s performance over the
past nine months reflects our efforts to maintain Pan African’s
position as a safe, low-cost and long-life gold producer. Safe,
highly profitable and sustainable ounces at Elikhulu have replaced
those of Evander’s loss-making underground operations. We continue
to optimise Elikhulu, which delivered a throughput of 1.3-million
tonnes in March 2019, 100,000 tonnes
above the name plate capacity. The focus is now on maximising
sustainable margins from this world-class operation.
We have commenced the development and
equipping of Evander Mines’ 8 Shaft Pillar (“Evander Pillar
operation”), with first gold expected in August 2019. The Evander 8 Shaft Pillar is
expected to contribute an additional 20,000oz to 30,000oz per annum
for three years, at an all-in sustaining costs (“AISC”) of
approximately US$900 per ounce,
therefore making a meaningful contribution to the Group’s near-term
production and profitability. The operation will be mined by a
specialised and experienced independent contractor given the nature
of pillar mining.
We have completed extensive feasibility work on
Barberton Mines’ Royal Sheba project (“Royal Sheba Project”). Due
to the Group’s disciplined capital allocation criteria and the
capital cost estimates to develop this mine, the Company will not
pursue the Royal Sheba Project on a stand-alone basis. The existing
Barberton Mines’ processing plant infrastructure can be upgraded to
process ore from this orebody. The benefits of this approach is the
ability to expedite the environmental licencing process, shorten
the timeline to production, enhance returns from mining this
orebody and negate the requirement for external capital funding. We
look forward to updating the market on this project in the months
ahead.
We are confident the Group remains on
track to meet its gold production guidance of 170,000oz for the
full financial year to end 30 June
2019. With Elikhulu producing at a steady state for a full
year and the incremental contribution from Evander’s Pillar
operation, we expect to produce approximately 185,000oz of gold for
the 2020 financial year, which is a sizeable increase in our gold
production profile.”
Key highlights for the current
reporting period
Operational results:
- Gold production from the Group’s continuing mining operations
(note 1) increased by 51.4% to 123,771oz (2018: 81,729oz), with
robust performances from Barberton Mines’ underground operations
and the Group’s tailings retreatment plants.
- Gold production from the Barberton complex increased by 11.7%
to 72,944oz (2018: 65,297oz)
- Underground and surface mining increased by 3.4% to 54,857oz
(2018: 53,034oz); and
- Barberton tailings retreatment plant (“BTRP”) increased by
47.5% to 18,087oz (2018: 12,263oz) due to an improved tonnage
throughput and recoveries following the successful commissioning of
the BTRP regrind mill in May
2018.
- The Elikhulu tailings retreatment plant (“Elikhulu”) processed
6,915,113 tonnes from September 2018
to March 2019 at a recovered grade of
0.135g/t with 29,881oz (929.4kg) of gold sold. This excludes the
pre-production gold of 736oz (22.9kg) capitalised as pre-production
income and gold inventory locked-up in the Elikhulu
circuit;
- As previously communicated, the incorporation of the historical
Evander tailings retreatment plant’s (“ETRP”) throughput of 200,000
tonnes per month into Elikhulu was completed in December 2018, which increased Elikhulu’s
processing capacity to 1.2-million tonnes per month;
- Elikhulu’s all-in sustaining cost of production continues to be
lower than previously anticipated, at less than US$600/oz; and
- Evander Mines’ remnant mining and surface sources contributed a
further 20,946oz (2018: 16,432oz).
Note 1: The continuing mining operations include:
Barberton Mines, Evander Mines,
Elikhulu and Evander’s tailings retreatment plant (“ETRP”) as well
as the mining and vamping of the remnant high-grade stopes as part
of the phased closure of the underground mining operation. The
continuing mining operations exclude the discontinued Evander
Mines’ large-scale underground mining operation, which produced
42,118oz in the corresponding nine months ended 31 March 2018 (“corresponding reporting period”).
The Group’s corresponding reporting period gold production,
including discontinued operations, was 123,845oz.
Safety:
- The Group’s focus on safety and related ongoing improvements
continues to bear fruit, with material improvements in all
categories of safety statistics during the current reporting
period:
- The Group had no fatalities in this quarter (2018: no
fatalities);
- The Group’s lost-time injury frequency rate improved
substantially to 1.75 (2018: 3.79); and
- The reportable injury frequency rate improved substantially to
0.58 (2018: 1.17).
Evander 8 Shaft Pillar:
- The feasibility study into the merits of mining the Evander 8
Shaft Pillar and high-grade areas in proximity to the pillar has
been completed and the Pan African board of directors has approved
the development of the project.
- Development and equipping of this area has already commenced,
with first gold expected during August
2019.
- The Evander 8 Shaft Pillar will replace the current remnant
underground mining and vamping production and is expected to
contribute, on average, 30,000oz per annum over the next three
financial years, with approximately 20,000oz of production forecast
for FY2020.
- The Evander 8 Shaft Pillar mining feasibility highlights are:
- An average all-in sustaining cost of approximately R415,000/kg
or US$900/oz over the life of the
project (assuming US$/ZAR1:14.30);
- The existing Kinross
processing plant and Evander’s 7 Shaft infrastructure will be used
to treat and hoist the mined ore from the Evander 8 Shaft
Pillar;
- Capital expenditure of approximately R70 million is to be
incurred over the life of the project, of which R40 million is to
be incurred upfront. All capital for the Evander 8 Shaft Pillar’s
development will be funded from existing Group facilities; and
- A forecast payback period on the initial capital investment of
less than one year, from commencement of mining, and a net present
value of R369 million (US$25.8
million) at a 10% real discount rate and an assumed gold
price of R600,000/kg or US$1,305/oz.
Royal Sheba Project:
- The Group has completed the Royal Sheba project feasibility
study and concluded that the merits of mining the near-surface
resource, using an opencast mining method, did not meet the Group’s
disciplined capital allocation criteria. This was as a result of
higher than anticipated capital expenditure, largely due to the
challenging topography of the Sheba valley.
- The emphasis is now to assess the merits of using an
underground sub-level open stoping mining method by developing
haulages from surface into the orebody. The existing Barberton
Mines’ processing plant infrastructure can be upgraded to process
ore from this orebody, which will substantially reduce the
originally contemplated capital expenditure, and shorten the
environmental licensing approval process.
- Shareholders will be updated on progress with Royal Sheba
development plans in the coming months.
Restructure of Revolving Credit
Facility (“RCF”):
- The Group has received final credit approvals from its
consortium of bankers and is finalising the legal agreements with
the intent of having the restructured facility effective by
30 June 2019. The proposed
restructured RCF will amortise according to the following repayment
profile:
Amortisation
profile |
RCF
available balance
(R million) |
Repayments
(R million) |
Up to 15 June
2020 |
1,000 |
250 |
15 June 2020 |
750 |
25 |
15 December 2020 |
725 |
25 |
15 June 2021 |
700 |
50 |
15 September 2021 |
650 |
50 |
15 December 2021 |
600 |
50 |
15 March 2022 |
550 |
50 |
15 June 2022 |
500 |
500 |
- The repayment profile of the Elikhulu project’s term debt
facility, comprising 10 semi-annual, equal principal instalments of
R100 million, commencing in December
2019, is unaffected by the restructuring of the RCF.
The financial and other information contained in this
announcement has neither been reviewed nor audited by the Company’s
external auditors.
For further information on Pan African, please visit the
Company’s website at www.panafricanresources.com.
Rosebank
17 May 2019
Contact information |
Corporate Office
The Firs Office Building
2nd Floor, Office 204
Cnr. Cradock and Biermann Avenues
Rosebank, Johannesburg
South Africa
Office: + 27 (0)11 243 2900 |
Registered Office
Suite 31
Second Floor
107 Cheapside
London
EC2V 6DN
United Kingdom
Office: + 44 (0)20 7796 8644 |
Cobus
Loots
Pan African Resources PLC
Chief Executive Officer
Office: + 27 (0)11 243
2900 |
Deon Louw
Pan African Resources PLC
Financial Director
Office: + 27 (0)11 243 2900 |
Phil Dexter
St James's Corporate Services Limited
Company Secretary
Office: + 44 (0)20 7796 8644 |
John Prior
Numis Securities Limited
Nominated Adviser and Joint Broker
Office: +44 (0)20 7260 1000 |
Ciska Kloppers
Questco Corporate Advisory Proprietary Limited
JSE Sponsor
Office: + 27 (0)11 011 9200 |
Ross Allister/David
McKeown
Peel Hunt LLP
Joint Broker
Office: +44 (0)20 7418 8900 |
Julian Gwillim
Aprio Strategic Communications
Public & Investor Relations SA
Office: +27 (0)11 880
0037 |
Jeffrey Couch/Thomas
Rider/Neil Elliot
BMO Capital Markets Limited
Joint Broker
Office: +44 (0)20 7236 1010 |
Bobby Morse/Chris
Judd
Buchanan
Public & Investor Relations UK
Office: +44 (0)20 7466 5000
paf@buchanan.uk.com |
Website:
www.panafricanresources.com |