PAN AFRICAN RESOURCES PLC - Update on Barberton Mines Royal Sheba Project (Royal Sheba)

Release Date: 06/09/2018 08:00
Code(s): PAN
 
Wrap Text
Update on Barberton Mine’s Royal Sheba Project (“Royal Sheba”)

Pan African Resources PLC
(Incorporated and registered in England and Wales under Companies Act 1985 with registered
number 3937466 on 25 February 2000)
AIM Code: PAF
JSE Code: PAN
ISIN: GB0004300496
(“Pan African” or the “Company” or the “Group”)

UPDATE ON BARBERTON MINE’S ROYAL SHEBA PROJECT (“ROYAL SHEBA”)

Shareholders are referred to previous announcements pertaining to Royal Sheba, specifically, the
information included in the operational update of 28 March 2018. The Group has continued the Royal
Sheba exploration drilling programme and is now able to provide feedback on the updated Mineral
Resource Estimate (“MRE”) and the surface exploration drilling results. The results, thus far, have
exceeded expectations. Salient features of the MRE and drilling results are as follows:


   -   150% increase in Royal Sheba’s Mineral Resources from 0.36Moz (2.60Mt at 4.32g/t) to
       0.9Moz (8.56Mt at 3.27g/t);

   -   Near surface resource being 0.35Moz (2.84Mt at 3.81g/t) while the underground resource is
       delineated at 0.55Moz (5.72Mt at 3.0g/t);

   -   The near surface resource of 0.35Moz conducive to open pit mining;

   -   The Royal Sheba Project’s surface drilling programme (Phase 1 and 2 - 1,645m of drilling)
       confirms robust mineralisation extending from the surface along an 850m strike and 150m
       down dip of the Royal Sheba deposit;

   -   Summarised drilling results confirms the mineralisation ranges in a width from 5m to 25m with
       in-situ gold grades ranging between 0.5g/t to 174g/t and averaging 3.27g/t; and

   -   Phase 3 drilling of the Royal Sheba deposit has commenced to test a further 600m strike
       length, within the Sheba Mine’s mining right.

The Company has also embarked on an extended exploration programme within Barberton Mines’
mining right at both Sheba and New Consort Mines around historic workings and for potential new
satellite deposits.


       Pan African CEO Cobus Loots commented:

       “The exploration results from the drilling on Royal Sheba have exceeded our expectations,
       reaffirming the grades historically mined at depth. Significantly, the drilling programme has
       indicated the orebody extends to surface, with the potential to establish a new open pit mining
       operation in the short term, transitioning to an underground mining operation only after a
       number of years. In conjunction with the ongoing exploration programme, we will finalise a
       definitive feasibility study, with the view of commencing project development in the near term.
       I am also excited at the prospectivity of our mining lease namely; New Consort and Sheba
       Hills and proving similar near-surface resources from this extended exploration programme.

       Royal Sheba’s opencast orebody has the potential to increase production from our flagship
       Barberton operations at a very competitive cost, aligned with our strategic positioning as a low
       cost gold producer. We look forward to working with all stakeholders in advancing this project,
       to the benefit of not only shareholders, but also the Mpumalanga province and the Barberton
       area.
       
       We anticipate updating the market with a further MRE in November 2018 and a definitive
       feasibility study in February 2019.”


The history of Barberton Mine’s Royal Sheba Project

In 1885, Edwin Bray found gold in the Sheba Hills, which eventually led him to the famous discovery
of the Golden Quarry orebody. This triggered a gold rush that culminated in the establishment of a
number of mines along the Sheba Fault Shear Zone, within the Barberton Mountain area. The Sheba
Fault Shear Zone has been a prolific gold-bearing geological structure, producing numerous gold
deposits and mines within the Pan African stable, notably the existing underground Sheba Mine and,
more recently, the re-emergence of the Royal Sheba Project.

The Royal Sheba orebody was mined underground on a small scale until 1996, producing 3,000
tonnes of ore per month from the central high grade zone of the deposit. A compound shaft was sunk
                                th
in 1964 from surface to the 12 level, approximately 340m below surface, and was used as the main
access to the Royal Sheba orebody. The ore was treated at the Sheba metallurgical plant and found
to be free milling and non-refractory. A total of approximately 280,000 tonnes of ore was mined at a
grade of more than 4g/t, resulting in over 37,000 ounces of gold being produced from this orebody.
Due to the prevailing economic conditions in the 1990’s and very constrained underground
infrastructure, mining at the Royal Sheba section was suspended in 1996.


MRE results

Project geology

The Royal Sheba orebody is associated and aligned along the prominent regional shear zone of the
Sheba Fault, within the north-western quadrant of the Archaean aged Barberton Greenstone Belt.
The Sheba Fault juxtaposes the Fig Tree Group’s deep marine sediments, namely the greywacke
and banded chert and carbonatised shale in the Ulundi Syncline, adjacent to the shallow marine
sediments of the Moodies Group in the Eureka Syncline.

The mineralisation of the Royal Sheba orebody is encapsulated in a shear envelope of the Sheba
Fault, ranging in width from 5m to 25m. The gold mineralisation occurs predominantly in sulphide
minerals and as native gold. In-situ gold grades range between 0.5g/t to 174g/t averaging 3.27g/t.
The Royal Sheba orebody has a potential strike length of 1,450m and extends down dip to a depth of
600m. The Royal Sheba orebody is open ended along strike and dip.

Mineral Resource

The Company has reviewed the Mineral Resource of the Royal Sheba orebody, focussing on the
geology and mineralisation of the deposit, incorporating a full 3D geological modelling exercise on the
structural, lithological and mineralisation components of the deposit. The combination of the three
components resulted in a robust and fit-for-purpose 3D geological model.

The following new Mineral Resource tabulation has been reported from the 3D geological model and
resource block model, using a 0.5g/t cut-off grade for near surface ore and 1.87g/t for down-dip
extensions.
                                                         Contained gold

                                 Tonnes        Grade           Tonnes    Ounces
 As at 30
                 Category
 June 2018
                                (Million)         (g/t)         (Gold)    (Koz)


                 Measured        1.46           3.88             5.66       182
   Open pit
    Mineral      Indicated       1.38           3.73             5.14       165
   Resource
  (0.5g/t cut-   Inferred        0.00             -              0.00       0.00
      off)
                 Total           2.84           3.81             10.80      347

                 Measured        2.65           2.97             7.87       253
 Underground
    Mineral      Indicated       1.76           2.89             5.08       163
  Resource
 (1.87g/t cut-   Inferred        1.31           3.22             4.20       135
     off)
                 Total           5.72           3.00             17.15      552

 Resources       Total           8.56           3.27             27.96      899


Mineral Resources are reported in accordance with the South African Code for the Reporting of
Exploration Results, Mineral Resources and Mineral Reserves, 2016. Mineral Resources would be
the same if reported according to the guidelines of the Canadian Institute of Mining’s National
Instrument 43-101. Cut-off values are calculated at 0.5g/t for open pit and 1.87g/t for underground,
applying a gold price of ZAR 600 000/kg (USD 1 435/oz and ZAR 13.00/1 USD). Mineral Resources
are reported inclusive of Mineral Reserves. All Mineral Resources reported exclude geological
structures. Mineral Resources are reported as in-situ tonnes. Any discrepancies in totals are due to
rounding.

The following tonnage discount factors have been applied to the Mineral Resource:

   -    Geological loss of 5% for the Measured category;
   -    Geological loss of 10% for the Indicated category; and
   -    Geological loss of 15% for the Inferred category.

Additional effects of mining and recovery losses have been considered in the cut-off grade
calculations.

The competent person for the Mineral Resource is Mr Hendrik Pretorius, the Group Project Geologist
of Pan African. Mr Hendrik Pretorius has reviewed and approved the information contained in this
announcement as it pertains to Mineral Resources. Mr Pretorius holds a BSc (Hons) in the field of
geology and a Graduate Diploma in Mining Engineering focussing on mineral resource management.
He has more than 15 years’ relevant experience, is registered with the South African Council for
Natural Scientific Professionals (400051/11) and is a member in good standing with the Geological
Society of South Africa.

This sizeable Mineral Resource prompted an in-fill drilling campaign to define any near surface
Mineral Resource to a depth of 100m. The Phase one and two drilling comprised of 20 drillholes on
grid spacing of 50m. The available results (80% of the drilling campaign) of these drillholes are
presented below and do not form part of this Mineral Resource tabulation. An updated Mineral
Resource statement will be released in November 2018.

Exploration

The Company has embarked on a three-phase exploration programme. Phases one and two
comprise 20 drill holes, totalling 1,645m, and is 95% complete. This announcement contains the
results of 80% of the completed drill holes.

A further 15 drill holes, totalling 2,280m, is planned for phase three, which will test the easterly strike
and dip extension of the Royal Sheba deposit.

An exploration team headed by Mr Walter Seymore (Exploration Manager), has been based in
Barberton since May 2018, managing the Royal Sheba surface drilling. A regional exploration
strategy over the Company’s mining right lease areas is in place to define new and historic satellite
deposits around the Royal Sheba Project. Several historic satellite deposits have been targeted in the
Sheba Hills namely Golden Quarry, Oriental Quarry, Eureka, Margaret and Sheba West for resource
definition drilling.

In addition to the exploration in the Sheba Hills, the Company is exploring the Jamestown Shear
Zone, within the New Consort mining right for near-surface Mineral Resources. Initial desktop studies
indicate high prospectivity in the Consort Bar and an exploration drilling programme will commence in
November 2018.


Drilling Results

                                                     Full Composite              Significant Intersection
               Intersecti
                             Intersection
               on Depth                         Corrected
 Drillhole                    Depth (m)                           Average                         Average
                  (m)                          Intersected                       Corrected
 Number                         Below                              Grade        Intersected        Grade
               Downhol                            Width
                                Collar                          Intersected        Width        Intersected
                   e
                                                                    (g/t)           (m)             (g/t)
                                                   (m)

 RSPE001           34.75         31.49            11.50             3.38            0.65           19.16

 RSPE002           56.63         51.32             9.89             2.53            3.28            5.10

 RSPE003           24.34         22.06            12.94             0.91            1.36            2.31

 RSPE004           47.32         42.89             6.28             1.36            0.62            5.96

 RSPE005           26.34         23.87            15.59             1.91            0.34            9.96

 RSPE006           35.02         31.74             8.77             1.41             3.5            2.98

 RSPE007           26.73         24.23            14.17             1.38            2.13            5.45

 RSPE008           6.97           6.32            13.60             3.17            1.81           12.79

 RSPE009           69.56         63.04            11.48             6.10            1.73           30.43

 RSPE010           25.54         23.15             8.01             0.63            1.00            2.12

 RSPE011           38.70         35.07             8.33             0.72            1.05            1.83

 RSPE012           24.05         19.70            24.05             1.53            2.42            6.35
 RSPE013                                             Awaiting results

 RSPE014           42.88         35.13             7.83             1.50             3.8            2.51

 RSPE015           60.23         13.55             8.51             0.62             1.6            2.32

 RSPE016                                             Awaiting results

 RSPE017                                             Awaiting results

RSPE018*                                             Awaiting results

RSPE019*           56.96         18.54            18.60             0.47             0.30           4.97

RSPE020*           92.54         67.68             8.84             0.33             1.23           1.71

*Holes drilled to test the westerly extent of the mineralisation. Results indicate zones of economical
grade within the envelope of the shear zone.

The in-fill drilling programme of 1,645m (Phase 1&2) comprising 20 drill holes will complete in
September 2018. The drill hole results presented in the table above confirm robust mineralisation
extending from surface over a strike length in excess of 850m at grades above economic break-even
concentrations (0.5g/t).

Based on these positive drill hole results and the prospectivity of drill holes RSPE 001, 002 and 004,
an additional 15 holes (Phase 3) have been planned to test a further 600m easterly strike extension
within the Sheba Mine’s mining right. This drilling will provide data of an indicated Mineral Resource
category.

Next steps

An update to the MRE is expected to be completed by November 2018. This will include all of the
results from the in-fill drilling programme. SRK Consulting Proprietary Limited (South Africa) has been
appointed as the independent third party consultant to review and sign-off on the updated MRE and
tabulation.

Following the update to the MRE, a definitive feasibility study will be undertaken by DRA Global (Pty)
Ltd. and is expected to be completed in February 2019. The Company has proceeded with
metallurgical test-work and geotechnical studies for the Royal Sheba open pit operation in support of
a definitive feasibility study. All regulatory permitting will be pursued during the feasibility study.

The information contained in this announcement has not been reviewed or reported on by Pan
African’s auditors and is the responsibility of the directors of Pan African.

Mr Hendrik Pretorius, the Group Project Geologist of Pan African, has reviewed and approved the
information contained in this announcement. Mr Pretorius holds a BSc (Hons) in the field of geology
and a Graduate Diploma in Mining Engineering focussing on mineral resource management. He has
more than 15 years’ relevant experience, is registered with the South African Council for Natural
Scientific Professionals (400051/11) and is a member in good standing with the Geological Society of
South Africa.


For further information on Pan African, please visit the Company’s website at
www.panafricanresources.com

6 September 2018

Contact information

Corporate Office                        Registered Office
The Firs Office Building                Suite 31
1st Floor, Office 101                   Second Floor
Cnr. Cradock and Biermann Avenues       107 Cheapside
Rosebank, Johannesburg                  London
South Africa                            EC2V 6DN
Office: + 27 (0) 11 243 2900            United Kingdom
Facsimile: + 27 (0) 11 880 1240         Office: + 44 (0) 207 796 8644

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
St James's Corporate Services Limited   Numis Securities Limited
Company Secretary                       Nominated Adviser and Joint Broker
Office: + 44 (0) 207 796 8644           Office: +44 (0) 20 7260 1000

Sholto Simpson                          Ross Allister/James Bavister/David McKeown
One Capital                             Peel Hunt LLP
JSE Sponsor                             Joint Broker
Office: + 27 (0) 11 550 5009            Office: +44 (0) 207 418 8900

Julian Gwillim                          Jeffrey Couch/Neil Haycock/Thomas Rider
Aprio Strategic Communications          BMO Capital Markets Limited
Public & Investor Relations SA          Joint Broker
Office: +27 (0)11 880 0037              Office: +44 (0) 207 236 1010

Bobby Morse
Buchanan
Public & Investor Relations UK
Office: +44 (0)20 7466 5000
Email: PAF@buchanan.uk.com

Website: www.panafricanresources.com


Glossary of technical terms:


Au                         Chemical symbol for gold

Cut-off Grade              The lowest grade     value   that   is   included   in   a
                           resource statement

Grade                      The proportion of a mineral within a rock or other
                           material. For gold mineralisation this is usually
                           reported as grams of gold per tonne of rock (g/t)

g/t                        Grams per tonne

Indicated Mineral          That part of a mineral resource for which tonnage,
Resource                   densities, shape, physical characteristics, grade
                           and mineral content can be estimated with a
                           reasonable level of confidence. It is based on
                           exploration,   sampling   and  testing   information
                           gathered   through   appropriate   techniques   from
                           locations such as outcrops, trenches, pits, workings
                           and drill holes. The locations are too widely or
                           inappropriately spaced to confirm geological and/or
                           grade continuity but are spaced closely enough for
                           continuity to be assumed

Inferred Mineral           That part of a mineral resource for which tonnage,
Resource                   grade and mineral content can be estimated with a
                           low level of confidence. It is inferred from
                           geological evidence and assumed but not verified
                           geological and/or grade continuity. It is based on
                           information gathered through appropriate techniques
                           from locations such as outcrops, trenches, pits,
                           workings and drill holes that may be limited, or of
                           uncertain quality and reliability

Life of Mine               The time in which, through the       employment of the
                           available   capital,   the  ore     reserves--or    such
                           reasonable   extension   of  the     ore   reserves   as
                           conservative geological analysis      may justify--will
                           be extracted.

M                          Metre

Mineral Resource           A concentration or occurrence of material of
                           economic interest in or on the Earth's crust in such
                           a form, quality, and quantity that there are
                           reasonable and realistic prospects for eventual
                           economic extraction. The location, quantity, grade,
                           continuity and other geological characteristics of a
                           Mineral Resource are known, estimated from specific
                           geological knowledge, or interpreted from a well
                           constrained and portrayed geological model

Measured Resource          That part of a Mineral Resource for which tonnage,
                           densities, shape, physical characteristics, grade
                           and mineral content can be estimated with a high
                           level of confidence. It is based on detailed and
                           reliable   exploration,   sampling    and   testing
                           information gathered through appropriate techniques
                           from locations such as outcrops, trenches, pits,
                           workings and drill holes. The locations are spaced
                           closely enough to confirm geological and grade
                           continuity

Moz                        Million troy ounces

Orebody                    Mining term to define a solid mass of mineralised
                           rock which can be mined profitably under current or
                           immediately foreseeable economic conditions. "Ore" a
                           mineral deposit that can be extracted and marketed
                           profitably

Ore Reserves               The economically mineable part of a Measured or
                           Indicated Mineral Resource demonstrated by at least
                           a Preliminary Feasibility Study. This Study must
                           include adequate information on mining, processing,
                           metallurgical, economic and other relevant factors
                           that demonstrate, at the time of reporting, that
                           economic extraction can be justified. A Mineral
                           Reserve includes diluting materials and allowances
                           for losses that may occur when the material is mined

Ounce / oz                 Troy ounce, equivalent to 31.103477 grams

Probable Mineral           The economically mineable part of an Indicated and,
Reserve                    in some circumstances, a Measured Mineral Resource
                           demonstrated by at least a Preliminary Feasibility
                           Study. This Study must include adequate information
                           on mining, processing, metallurgical, economic, and
                           other relevant factors that demonstrate, at the time
                           of reporting, that economic extraction can be
                           justified

Proven Mineral Reserve     The economically mineable part of a Measured Mineral
                           Resource demonstrated by at least a Preliminary
                           Feasibility Study. This Study must include adequate
                           information on mining, processing, metallurgical,
                           economic,   and    other   relevant   factors   that
                           demonstrate, at the time of reporting, that economic
                           extraction is justified

t                          Tonne (1-million grams)

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