Pan African Resources Plc Proposed acquisition of Tailings Retreatment Projects

 
TIDMPAF 
 
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 
 
ADR ticker code: PAFRY 
 
(Pan African or the Company) 
 
PAN AFRICAN ENTERS INTO CONDITIONAL AGREEMENTS TO ACQUIRE TAILINGS RETREATMENT 
PROJECTS 
 
1. INTRODUCTION AND STRATEGIC RATIONALE 
 
Pan African is pleased to announce that the Company has entered into 
conditional sale-of-shares agreements (Sale Agreements) to acquire the total 
share capital and associated shareholder loans and other claims of Mogale Gold 
Proprietary Limited (Mogale Gold) and Mintails SA Soweto Cluster Proprietary 
Limited (MSC), (collectively, the Proposed Transactions).  Both Mogale Gold and 
MSC are 100% owned by Mintails Mining SA Proprietary Limited (Mintails SA), 
which was placed in provisional liquidation during 2018. 
 
The aggregate cash consideration for the Proposed Transactions will be a 
maximum of ZAR50.0 million (approximately $3.1 million). 
 
The combined Mineral Resources of Mogale Gold and MSC comprise historic 
tailings storage facilities (TSFs) that contain an estimated 243Mt of tailings 
with an in-situ grade of 0.30g/t gold, for an estimated gold content of 2.36Moz 
of gold, constituted as follows: 
 
  * The Mogale Gold TSFs, which comprise various individual dams, containing an 
    estimated 123Mt of re-mineable material at a head grade of 0.29g/t, for an 
    estimated content of 1.16Moz of gold; and 
  * The MSC TSFs which comprise nine separate facilities with resources of 
    119Mt at 0.31g/t, containing an estimated gold content of 1.20Moz. 
 
Pan African has successfully executed on its strategy of producing gold safely 
from low-cost operations and diversifying its operations to include both 
underground and low-risk surface operations. 
 
Pan African and its subsidiaries have a proven track record of successfully 
commissioning and operating tailings retreatment projects, as demonstrated by 
the Barberton tailings re-treatment plant, the Evander tailings re-treatment 
plant and most recently its flagship Elikhulu operation. 
 
The Proposed Transactions are conditional on due diligence and feasibility 
studies over a period of six to nine months (to Pan African's sole and absolute 
satisfaction) and other conditions precedent typical for a transaction of this 
nature, including, inter-alia, consent for the transfer of the mining right by 
the Department of Mineral Resources and Energy (DMRE), approval from the South 
African Competition Commission authorities if applicable, and approval for the 
provisional liquidators to implement the Proposed Transactions. 
 
Cobus Loots, Pan African's CEO, commented: "The opportunity to acquire these 
surface resources complements our strategy of focusing on safe, low cost gold 
mining opportunities, with the potential to further grow our business by 
developing projects that meet our stringent investment criteria". 
 
2. BACKGROUND AND HISTORY OF THE ENTITIES TO BE ACQUIRED 
 
The provisional liquidation of Mintails SA has resulted in an opportunity for 
Pan African to acquire gold tailings Mineral Resources not previously 
retreated.  As part of the due diligence examination and planned feasibility 
work, Pan African will evaluate the merits of constructing a large-scale 
tailings retreatment operation, similar to its Elikhulu operation at Evander. 
 
Details of the legal entities to be acquired under the Proposed Transactions 
are as follows: 
 
  * Mogale Gold - the holding company of the TSFs located on the West Rand in 
    South Africa; and 
  * MSC - the holding company of the TSFs located within the Soweto cluster in 
    South Africa. 
 
The Mineral Resources of Mogale Gold and MSC were declared as at 7 February 
2013 and reported according to the Australasian Code for Reporting of 
Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) of 2004 
by Mr Peter Camden-Smith, a South African Council for Natural Scientific 
Professions registered geologist (Registration No. 400078/94 - Management 
Enterprise Building, Mark Shuttleworth Street, Innovation Hub, Pretoria, South 
Africa), who acted as the Competent Person for this declaration. Mr Peter 
Camden-Smith is the owner of an independent geological consultancy firm, Camden 
Geoserve, based in Boksburg, Gauteng province, South Africa 
(www.geoserveafrica.com) and was appointed as an independent consultant by 
Mintails SA for the declaration of the Mineral Resources at the time. Mintails 
SA has publicly reported these Mineral Resources in its annual Mineral 
Resources and Mineral Reserves declaration. It is assumed that no significant 
mining has taken place on these TSF dams since the time of that report due to 
the effective date of the provisional liquidation. The due diligence will aim 
to confirm and update the 7 February 2013 Mineral Resource declaration. 
 
3. DETAILS OF THE PROPOSED TRANSACTIONS 
 
Key commercial terms and conditions of the Sale Agreements include the 
following: 
 
  * The acquisition of Mogale Gold, inclusive of the assets, surface rights 
    permits, deposition rights, mining right, water use licence, rehabilitation 
    liabilities and shareholder loans for a cash consideration of ZAR37.5 
    million (approximately $2.3 million at an exchange rate of US$/ZAR:16.25); 
  * The acquisition of MSC, inclusive of its assets, rehabilitation liabilities 
    and shareholder loans for a cash consideration of ZAR12.5 million 
    (approximately $0.8 million at an exchange rate of US$/ZAR:16.25); 
  * Pan African is afforded a six-month period (with a three-month extension 
    option) for purposes of conducting a due diligence to its sole and absolute 
    satisfaction; 
  * The Mogale Gold transaction is subject to an approval by the DMRE in terms 
    of Section 11 of the South African Mineral and Petroleum Resources 
    Development Act for the transfer of the issued share capital of Mogale Gold 
    to Pan African; and 
  * The Proposed Transactions are subject to other regulatory approvals typical 
    for a transaction of this nature and of South African companies in 
    provisional liquidation, including that the provisional liquidators of 
    Mintails SA obtain the necessary approval from the Master of the South 
    African High Court to implement the Proposed Transactions. 
 
The Sale Agreements are not inter-conditional, and Pan African can accordingly 
acquire either Mogale Gold and/or MSC, at its sole discretion. 
 
The Proposed Transactions are subject to the fulfilment and/or waiver, where 
appropriate, of the relevant conditions precedent which are to be fulfilled by 
no later than 5 November 2021, failing which, the Proposed Transactions will be 
terminated. 
 
The effective date of the Proposed Transactions is expected to be the date by 
which all conditions precedent have been fulfilled. 
 
4. CATEGORISATION OF PROPOSED TRANSACTIONS 
 
The Proposed Transactions are, separately and collectively, uncategorised 
transactions and do not involve any related parties in terms of the JSE 
Listings Requirements or the AIM Rules for Companies and are therefore not 
subject to shareholder approval. 
 
Rosebank 
 
6 November 2020 
 
Certain information communicated in this announcement was, prior to its 
publication, inside information for the purposes of Article 7 of Regulation 596 
/2014. 
 
For further information on Pan African, please visit the Company's website at 
www.panafricanresources.com 
 
Contact information 
 
Corporate Office                               Registered Office 
The Firs Office Building                       Suite 31 
2nd Floor, Office 204                          Second Floor 
Cnr. Cradock and Biermann Avenues              107 Cheapside 
Rosebank, Johannesburg                         London 
South Africa                                   EC2V 6DN 
Office:   + 27 (0)11 243 2900                  United Kingdom 
[e-mail]                                 Office: + 44 (0)20 7796 8644 
 
Cobus Loots                                    Deon Louw 
Pan African Resources PLC                      Pan African Resources PLC 
Chief Executive Officer                        Financial Director 
Office: + 27 (0)11 243                         Office: + 27 (0)11 243 2900 
2900 
 
Phil Dexter/Jane Kirton                        Ross Allister/David McKeown 
St James's Corporate Services Limited          Peel Hunt LLP 
Company Secretary                              Nominated Adviser and Joint Broker 
Office: + 44 (0)20 7796 8644                   Office: [phone] 
 
Ciska Kloppers                                 Thomas Rider/Neil Elliot 
Questco Corporate Advisory Proprietary Limited BMO Capital Markets Limited 
JSE Sponsor                                    Joint Broker 
Office: + 27 (0)11 011 9200                    Office: [phone] 
 
Hethen Hira                                    Huneiza Goolam 
Pan African Resources PLC                      CMS RM Partners 
Head: Investor Relations                       Transaction Legal Advisors 
Tel: + 27 (0)11 243 2900                       Office: + 27 (0)87 210 0711 
E-mail: [e-mail] 
 
Website: www.panafricanresources.com 
 
 
 
END 
 

(END) Dow Jones Newswires

November 06, 2020 07:00 ET (12:00 GMT)