Wrap Text
Revised production guidance for the year ending 30 June 2023, operational update &Mintails construction commencement
Pan African Resources PLC Pan African Resources Funding Company
(Incorporated and registered in England and Wales Limited
under the Companies Act 1985 with registered Incorporated in the Republic of South Africa
number 3937466 on 25 February 2000) with limited liability
Share code on AIM: PAF Registration number: 2012/021237/06
Share code on JSE: PAN Alpha code: PARI
ISIN: GB0004300496
ADR ticker code: PAFRY
(“Pan African” or the “Company” or the “Group”)
REVISED PRODUCTION GUIDANCE FOR THE YEAR ENDING 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:
o Challenges related to Eskom generated electricity supply, resulting in a production
loss of approximately 10,000oz of gold
o Slower than anticipated ramp-up of continuous operations at Barberton Mines,
largely addressed as highlighted below
o 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
o 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:
o 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
o 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
o 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:
Year ended 30 Year ended Guidance Guidance
June 2021 30 June 2022 for current for 2024
financial financial
Operation year year
Barberton Mines – 71,000 -
84,826 75,738 64,000
Underground total 74,000
BTRP 17,000 -
18,239 19,560
19,000 20,000
Elikhulu 49,000 -
51,459 52,220 50,000
51,000
Evander Mines –
41,000 -
Underground and 47,253 58,170
42,000* 45,000*
surface sources
Total ounces 175,000 178,000 -
201,777 205,688
produced 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 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
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 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
Office: +44 (0)20 3207 7800
Date: 26-05-2023 08:00:00
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