Wrap Text
2017 Abridged Mineral Resource & Mineral Reserve Report
Pan African Resources PLC
(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
(“Pan African Resources” or the “Company” or the “Group”)
2017 Abridged Mineral Resource & Mineral Reserve Report
Pan African Resources, the African focused precious metals producer, is pleased to announce that the 2017
Abridged Mineral Resource and Mineral Reserve Report (“MR&MR”) has been published and is available
on the Company's website at www.panafricanresources.com. A summary of the MR&MR, including the
Group Mineral Resource and Mineral Reserve statement as at 30 June 2017, has been provided below.
Overview
• 1.2 million ounces (“Moz”) or 12.0% gross annual increase in Group gold reserves to 11.2Moz
(2016: 10.0Moz).
• 0.5Moz or 1.4% gross annual decrease in Group gold resources to 34.4Moz (2016: 34.9Moz).
• No material change in Group platinum group elements (“PGE”) resource, 0.6Moz (2016: 0.6Moz).
• No material change in Group PGE reserve, 0.2Moz (2016: 0.2Moz).
• Disposal of Uitkomst Colliery Proprietary Limited to Coal of Africa Limited on 30 June 2017. No
Group coal resources and reserves stated.
• Following positive mineral resource (2.0Moz) to mineral reserve (1.7Moz) conversion and the
definitive feasibility results of the Evander Gold Mining Proprietary Limited (“Evander Mines”)
tailings storage facilities re-mining projects (“Elikhulu Project”), the Company has mandated DRA
Projects SA Proprietary Limited (“DRA Projects”) to commence construction of the project. The
life of mine (“LOM”) for Elikhulu Project is stated at 14 years, yielding approximately 56 000oz a
year for the initial 8 years of production and then approximately 45 000oz per annum for the
remaining 6 years.
• Focused mineral reserve conversion at Barberton Mines Proprietary Limited (“Barberton Mines”)
through the development of the sub-vertical shaft project at its Fairview operation, thereby
increasing overall capacity and production from the main reef complex (“MRC”) section by 7 000 –
10 000oz per annum and sustaining the LOM at Barberton Mines to 20 years.
• Surface exploration drilling progressed well at Evander Mines targeting the 2010 Pay Channel. A
feasibility study on exploiting the surrounding pillars at Evander Mines’ No 7 Shaft and the 2010
Pay Channel resources is expected to be completed during the first quarter of the 2018 financial
year. Evander Mines and the current Evander Tailings Retreatment Plant (“ETRP”) LOM stated at
15 years.
• SRK Consulting (Pty) Ltd has independently reviewed the Mineral Resources and Mineral Reserves
of the Pan African Resources’ gold assets as at 30 June 2017 and signed off on the declared
estimates.
Gold
Group Gold Mineral Resources
The Group’s attributable gold Mineral Resources decreased from 34.9Moz at 30 June 2016 to 34.4Moz at
30 June 2017, equating to an annual decrease of 0.5Moz, or 1.4%.
Contained gold
Tonnes Grade
As at 30 June 2017 Category million g/t Tonnes Moz
Mineral Resources Measured 5.3 10.94 57.6 1.9
Indicated 262.2 2.43 636.2 20.4
Inferred 70.4 5.35 376.5 12.1
Pan African Resources Total 337.9 3.17 1 070. 3 34.4
Group Gold Mineral Reserves
The Group’s attributable Mineral Reserves increased from 10.0Moz at 30 June 2016 to 11.2Moz at
30 June 2017, equating to an annual increase of 1.2Moz, or 12.0%.
Contained gold
Tonnes Grade
As at 30 June 2017 Category million g/t Tonnes Moz
Mineral Reserves Proved 4.1 7.19 29.8 1.0
Probable 227.7 1.40 317.9 10.2
Pan African Reserves Total 231.8 1.50 347.7 11.2
The increase can primarily be attributed to the conversion of the Elikhulu Project Mineral Resources to
Mineral Reserves.
Platinum Group Elements
Group PGE Mineral Resources
The Group’s attributable PGE Mineral Resources did not change materially for the year under review.
Contained PGEs 4E
Tonnes Grade
As at 30 June 2017 Category million g/t Tonnes Moz
Mineral Resources Measured
Indicated 2.3 2.32 5.4 0.2
Inferred 3.4 3.67 12.5 0.4
Pan African Resources Total 5.7 3.12 17.9 0.6
Group PGE Mineral Reserves
The Group’s attributable PGE Mineral Reserves did not change materially for the year under review.
Contained PGEs 4E
Tonnes Grade
As at 30 June 2017 Category million g/t Tonnes Moz
Mineral Reserves Proved
Probable 2.3 2.32 5.4 0.2
Pan African Reserves Total 2.3 2.32 5.4 0.2
Group organic growth
Current exploration drilling as well as activities to access and develop our orebodies was maintained during
the financial year. The strategy of converting Mineral Resource to Mineral Reserve was progressed by
moving organic projects further up the mining value chain towards feasibility or production. The tables
below reflect the progress of near-mine growth projects that have contributed ounces to the Mineral
Resource for the year.
Group: Exploring the orebody - exploration drilling
Number
Average of
Number channel intersections Average Total
Total of width above grade expenditure
Operation metres boreholes cm cut-off g/t R’million
Barberton Mines 8,793 106 136 34 17 4.7
Evander Mines 783 14 31 6 28 1.4
Group: Accessing the orebody - on-reef development
Total
on-reef Average
development grade
Operation metres g/t
Barberton Mines 2,533 6.20
Evander Mines 245 28.86
Barberton Mines: Developing the orebody - capital ore reserve projects
Potential
resource
2017 2016 2015 target
Project metres metres metres oz
Sheba – pillar development 450 540 824 10,101
Sheba – Edwin Bray to Thomas and Joe’s
Luck area 8 27 5 18,701
Fairview – 11 Level Royal Reef – Equipping Equipping 826
Fairview – 1# one reserve opening 71 131 84 13,958
Fairview – No 3 Shaft deepening 171 64 26 22,943
Fairview – (64 – 68) Level 451 581 447 851,562
New Consort – (33 – 45) PC 265 387 258 10,000
New Consort – MMR pillar development 8 – – 66,309
New Consort – No 3 Shaft – 17 327 5,969
Royal Sheba 143 189 165 309,180
Sheba Western Cross 4 133 295 25,143
Evander Mines: Developing the orebody - capital ore reserve projects
Potential
resource
2017 2016 2015 target
Project metres metres metres oz
No 2 Decline 24 – 25 Level 73 356 904 1,200,000
25 A block ventilation 222 87 10
Group growth projects
Elikhulu Project
The Elikhulu Project entails establishing facilities and infrastructure at Evander Mines, owned and operated
by Pan African Resources, to retreat gold plant tailings at a rate of 1-million tonnes per month. This is in
addition to the existing production from the ETRP, which will continue to operate independently of the
Elikhulu Project for the next 15 years. Three existing tailings storage facilities will be reclaimed, in the
following order: Kinross, Leslie and Winkelhaak. The 3 tailing facilities will, post their processing, be
consolidated into a single enlarged Kinross facility, thus reducing Evander Mines’ environmental footprint
and associated environmental impact.
The project is expected to yield approximately 56,000oz of gold per annum for the initial 8 years of
production (while treating the Kinross and Leslie tailings storage facilities), and then approximately
45,000oz a year for the project’s remaining 6 years from processing the Winkelhaak tailings storage facility.
These production figures exclude an inferred resource of 244,398 ounces of gold delineated in the soil
material beneath the existing tailing dumps.
Mineral Resource estimate
Tailings Contained
storage Tonnes Grade gold
Mineral Resource category facility million g/t Moz
Indicated Kinross 51.03 0.31 0.51
Winkelhaak 72.47 0.24 0.56
Leslie 70.07 0.32 0.71
193.57 0.29 1.79
Inferred (soil) Kinross 9.23 0.33 0.10
Winkelhaak 8.02 0.27 0.07
Leslie 4.57 0.45 0.08
Total 21.83 0.33 0.24
Total Mineral Resource*
215.40 0.29 2.03
Mineral reserve estimate
Tailings Contained
storage Tonnes Grade gold
Mineral Reserve category facility million g/t Moz
Probable Kinross 45.2 0.31 0.4
Leslie 70.1 0.32 0.7
Winkelhaak 70.0 0.24 0.6
Total Mineral Reserve* 185.3 0.29 1.7
* Inclusive of ETRP
The Mineral Reserve estimate is a probable 185.3Mt, comprised of the Kinross (45.2Mt), Leslie (70.1Mt)
and Winkelhaak (70.0Mt) tailings storage facilities at Evander Mines. The combined 185.3Mt will provide
feed material to the existing ETRP at 200,000 tonnes per month, and to the new project process plant at a
rate of one million tonnes per month (of which 40,000 tonnes per month will be from run-of-mine tailings).
The combined Mineral Reserve contains an estimated 1.7Moz, of which an estimated 688,000oz will be
recovered over the life of the project. This estimate excludes the inferred resource 244,398oz of gold leached
and contained in the soil beneath the existing tailing dumps, which could potentially increase the project life.
The Mineral Reserve estimate assumes a non-selective mining method whereby the whole of the mineral
deposit is mined in a predetermined sequence. The mining method allows for 100% extraction of the
targeted mineral deposit. Hydraulic mining has been selected as the mining method as it is a proven
technology, cost effective and technically and operationally well understood.
The overall average gold recovery over the life of the project is forecast at 47.8%. Using modelled
recoveries, the gold dissolution value estimated for Kinross is 51.4%, Leslie 48.3% and Winkelhaak 53.8%.
The Elikhulu Project is progressing according to plan with project completion and first gold expected in the
last quarter of the 2018 calendar year.
Barberton Mines sub-vertical shaft project at Fairview mine
The Fairview mining operation is currently restricted by the hoisting capacity of its No 3 Decline, which is
used to access workings below 42 Level. This decline is currently used to transport employees and material,
and for rock hoisting. The 11-Block, or MRC, orebody has an average grade of 31.3 g/t and current LOM of
20 years. With no intervention, future mining at depth will result in increased travelling distance, reduce
employee face time and cause a lack of capacity to ensure both ore replacement and exploration
development.
Pan African Resources, with the assistance of DRA Projects, has completed a feasibility study on the
construction of a raise-bored, sub-vertical shaft from Fairviews’ 42 Level to 64 Level, with the potential of
continuing the vertical shaft to 68 Level in future. This sub-vertical shaft will be used to transport employees
and material to the working areas, which will allow the No 3 Decline to be used exclusively for rock
hoisting, increasing overall capacity and production from this mining area.
DRA Projects has reviewed the technical and commercial aspects of the project and the supporting
feasibility study has yielded very positive results. The estimated capital expenditure for the project, including
contingencies, is approximately R105 million, to be incurred over a 2-year period. The productivity
improvements for Fairview are estimated to yield an additional 7,000oz of gold per annum, which can be
optimised further to more than 10,000oz per annum.
Contained gold
Tonnes Grade
Category million g/t Tonnes Moz
Mineral Resource Measured 1.08 10.92 11.26 0.38
Indicated 1.06 14.13 14.97 0.48
Inferred 2.68 14.90 39.93 1.28
Fairview Mine Total 4.82 13.79 66.16 2.14
Contained gold
Tonnes Grade
Category million g/t Tonnes Moz
Mineral Reserve Proved 0.51 10.05 6.68 0.21
Probable 1.50 13.89 18.28 0.58
Fairview Mine Total 2.01 12.42 24.96 0.79
Evander mines No 7 Shaft No 3 decline and 2010 Pay Channel
The 2010 Pay Channel resource is adjacent to the No 7 Shaft infrastructure and extends from the boundary
of Taung Gold International Limited’s No 6 Shaft project and mining rights. As previously reported,
Evander Mines embarked on an exploration programme to drill a further exploration borehole from surface,
to increase geological confidence in the 2010 Pay Channel orebody, for which resources are summarised in
the table below:
Contained gold
Tonnes Grade
Category million g/t Tonnes Moz
Measured 0.45 8.94 4.0 0.13
Indicated 0.70 7.11 5.0 0.16
Inferred 4.13 8.93 36.9 1.19
Total 5.28 8.69 45.9 1.48
On 6 July 2017, the exploration borehole successfully intersected the Kimberley reef at a depth of
approximately two kilometres, highlighting a reef intersection with a 6cm width at 36.8g/t. Additional
drilling deflections will be performed to further delineate the ore body. The previous borehole into the 2010
Pay Channel yielded a reef intersection with a 49cm width at 36.04g/t.
Grades
Depth Core width
Borehole m cm g/t cmg/t
2245 2 059.3 49.0 36.04 1 766
EGM PAR 1 2 014.6 5.7 36.8 210
EGM PAR 1-Deflection 1 2014.9 5.7 33.2 189
EGM PAR 1-Deflection 2 2 014.8 4.8 144.7 694
Harmony Gold Mining Company Limited previously developed the No 7 Shaft mine workings towards the
2010 Pay Channel. However due to financial constraints and a reassessment of capital expenditure priorities,
it halted all development on the Evander Mines’ shafts (other than No 8 Shaft) in 2009. This resulted in the
controlled flooding of the development ends and No 7 Shaft’s No 3 Decline, from 22 Level up to 18 Level.
Following the dewatering, only standard footwall and on-reef development would need to be completed,
with the associated engineering infrastructure, before mining can commence.
The 2010 Pay Channel is approximately 4.5 kilometres in tramming distance from No 7 Shaft, which is
currently used by Evander Mines for hoisting to the Kinross metallurgical plant. This compares favourably
with the No 8 Shaft mining areas, which is approximately 12 kilometres in tramming distances from No 7
Shaft.
The Pan African Resources’ project team has commenced a feasibility study related to the No 7 Shaft No 3
Decline and the 2010 Pay Channel resource, which will address the following critical issues:
• Collation of geological data from the drill-hole intersection and deflections.
• The cost and timing of dewatering and re-equipping the No 7 Shaft No 3 Decline from 18 Level to
22 Level.
• The development cost and timing to access the 2010 Pay Channel.
• The economic viability of the project.
The 2010 Pay Channel can potentially increase Evander Mines’ underground gold production materially at a
relatively low capital cost, using Evander Mines’ established shaft and metallurgical facilities. The
feasibility study for the project is expected to be completed during the first quarter of the 2018 financial
year.
Reporting in compliance with SAMREC Code
To meet the requirement of the South African Code for the Reporting of Exploration Results, Mineral
Resources and Mineral Reserves (“SAMREC Code”) that the material reported as a Mineral Resource
should have “reasonable and realistic prospects for eventual economic extraction”, Pan African Resources
has determined an appropriate cut-off grade which has been applied to the quantified mineralised body. In
determining the cut-off grade, Pan African Resources uses a gold price of R600 000/kg. At Pan African
Resources’ underground mines, the optimal cut-off is defined as the lowest grade at which an orebody can be
mined such that the total profits, under a specified set of mining parameters, are maximised. The Mineral
Resource optimiser tool that was accordingly developed in-house was applied to the Mineral Resource
inventory.
The optimiser programme requires the following inputs to convert the Mineral Resource to the Mineral
Reserve:
• the database inventory of all mineral resource blocks;
• an assumed gold price – ZAR550 000/kg;
• planned production rates for each mine;
• mine call factor;
• plant recovery factors; and
• planned cash operating costs.
The Mineral Reserves represent that portion of the Measured and Indicated Mineral Resources above cut-off
in the LOM plan, and have been estimated after consideration of the modifying factors affecting extraction.
A range of disciplines has been involved at each mine in the LOM planning process including geology,
surveying, planning, mining engineering, rock engineering, metallurgy, financial management, human
resources management and environmental management.
Note: Mineral Resources are inclusive of the Mineral Reserve, unless otherwise stated. Rounding of
numbers contained in this announcement may result in minor computational discrepancies.
Competent Person
The competent person for Pan African Resources, Mr Barry Naicker, the group Mineral Resource Manager,
signs off the MR&MR for the Group and has reviewed and approved the information contained in this
announcement in writing. He is a member of the South African Council for Scientific Professions
(400234/10). Mr Naicker has 16 years of experience in economic geology and mineral resource
management.
He is based at 1st Floor, The Firs, cnr. Cradock and Biermann Avenues, Rosebank, 2196, Gauteng.
Johannesburg
20 September 2017
Contact Information
Corporate Office
The Firs Office Building
1st Floor, Office 101
Cnr. Cradock and Biermann Avenues
Rosebank, Johannesburg
South Africa
Office: + 27 (0) 11 243 2900
Facsimile: + 27 (0) 11 880 1240
Registered Office
Suite 31
Second Floor
107 Cheapside
London
EC2V 6DN
United Kingdom
Office: + 44 (0)20 7796 8644
Facsimile: + 44 (0)20 7796 8645
Cobus Loots Deon Louw
Pan African Resources PLC Pan African Resources PLC
Chief Executive Officer Financial Director
Office: + 27 (0)11 243 2900 Office: + 27 (0) 11 243 2900
Phil Dexter John Prior / Paul Gillam / James Black
St James's Corporate Services Limited Numis Securities Limited
Company Secretary Nominated Adviser & Joint Broker
Office: + 44 (0)20 7796 8644 Office: +44 (0)20 7260 1000
Sholto Simpson Matthew Armitt / Ross Allister
One Capital Peel Hunt LLP
JSE Sponsor Joint Broker
Office: + 27 (0)11 550 5009 Office: +44 (0)020 7418 8900
Jeffrey Couch / Neil Haycock / Thomas Rider
BMO Capital Markets Limited
Joint Broker
Office: +44 (0)20 7236 1010
Julian Gwillim
Aprio Strategic Communications
Public & Investor Relations SA
Office: +27 (0)11 880 0037
www.panafricanresources.com
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