Pan African Resources Plc Successful completion of Mintails' Mogale Gold DFS

 
TIDMPAF 
 
Pan African Resources PLC 
 
(Incorporated and registered in England and Wales under the 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" or the "Group") 
 
PAN AFRICAN SUCCESSFULLY CONCLUDES MINTAILS' MOGALE GOLD DEFINITIVE FEASIBILITY 
STUDY ("DFS") 
 
Pan African is pleased to announce that the Company has successfully completed 
a DFS on the Mogale Gold Proprietary Limited ("Mogale Gold") Tailings Storage 
Facilities ("TSFs") that forms part of the Mintails Mining SA (Proprietary) 
Limited ("Mintails SA") assets, situated near Krugersdorp to the west of 
Johannesburg, South Africa (the "Project"). The DFS was prepared by DRA 
Projects SA (Pty) Ltd ("DRA"), with reliance on specialist input from third 
parties for Mineral Resource and Mineral Reserve estimation, dump re-mining, 
tailings pumping and disposal and metallurgical test work. The parties have 
provided their consent for the release of the information contained in this 
announcement as far as it pertains to the results of the DFS. 
 
HIGHLIGHTS FROM DFS 
 
  * Significant production impact: 
      + The Project has the potential to increase the Group's gold production 
        profile over the coming years, with re-mining of the Mogale Gold TSFs 
        expected to add approximately 50koz/yr of production over its 13-year 
        life of mine (LOM) 
      + Equivalent to an increase >25% on Group's current production 
  * Compelling project economics: 
      + Pre-tax NPV (at 9.5% real discount rate) of ZAR1,006 million (US$64,9 
        million), real ungeared IRR of 20.1% at US$1,750/oz and US$/ZAR:15.50. 
      + Forecast AISC of US$914/oz and operating cost of ZAR78/t (US$5/t at 
        US$/ZAR:15.50) over the initial 13-year LOM 
  * Construction capex: 
      + R2.5billion (US$161.3 million at US$/ZAR:15.50) 
  * Payback: 
      + Construction capital payback estimated within 3.5 years, post 
        commissioning 
      + Targeting production within 18-24 months from commencement of 
        construction 
  * Mineral reserve: 
      + The Mogale Gold TSFs, which comprise various individual dams, contain a 
        Probable Mineral Reserve of 123.6Mt of re-mineable material at a head 
        grade of 0.29g/t for an estimated content of 1.14Moz gold 
  * Further production upside: 
      + Addition of Mintails SA's Soweto Cluster resource has potential to 
        extend LOM from 13 years to 21 years and further increase annual gold 
        production 
  * Proven technology: 
      + Low unit cost hydro mining with low project execution risk at 800ktpm 
        (thousand tons per month) carbon in leach ("CIL") plant, similar to Pan 
        African's Elikhulu operation (currently processing 1.2Mt per month) 
  * Project funding: 
      + A number of funding options for the Project are being considered, 
        including offers of debt finance from financial institutions and other 
        third party financiers 
  * Strategic rationale: 
      + Builds on the Group's track record of bringing value enhancing surface 
        re-mining operations into production 
      + Enhanced ESG credentials 
          o Environmental rehabilitation and socio-economic initiatives for 
            local economic development to run concurrent with operations 
          o Job creation and skills development in host communities 
          o Potential to extend the Group's solar renewable energy PV footprint 
            in line with its decarbonisation strategy and strategic production 
            cost reduction initiatives 
 
Cobus Loots, CEO of Pan African, commented: "Pan African has an excellent track 
record of successfully commissioning and operating surface tailings retreatment 
operations, as evidenced by our BTRP, ETRP and Elikhulu operations. As 
originally anticipated, the Mogale Gold DFS has demonstrated a compelling 
Project, both operationally and financially. Mintails has the potential to 
further improve the Group's overall AISC, while increased annual production 
will move Pan African further up the ranks of mid-tier gold producers. 
 
Additionally, our re-mining activities will assist with environmental 
remediation in this area. We look forward to working with all stakeholders to 
further progress the Project in the months ahead." 
 
Background to the Project 
 
In November 2020, Pan African announced that the Company had entered into 
conditional sale of shares agreements to acquire the share capital and 
associated shareholder loans and other claims of Mogale Gold and Mintails' SA 
Soweto Cluster Proprietary Limited ("MSC") (together the "Mintails 
Transaction"). Both Mogale Gold and MSC are 100% owned by Mintails SA, which 
was placed into provisional liquidation during 2018. 
 
The deadline for fulfilment of the conditions to conclude the Mintails 
Transaction was extended to August 2022 and included the completion of a fatal 
flaw analysis, prefeasibility study ("PFS") and DFS. The PFS on the Mogale Gold 
TSFs was completed during July 2021, followed by the DFS, announced today. Both 
studies were led by DRA. Further technical work on the MSC TSFs is currently in 
progress. 
 
Mineral Reserves and Resources 
 
Following the initial due diligence on Mogale Gold, the following work was 
undertaken to improve the Mineral Resource confidence: 
 
  * a highly accurate Light Detection and Ranging ("LIDAR") survey of the 
    entire project area to ascertain available tonnages; 
  * twinning 25 of the historical holes in order to verify grades previously 
    reported; and 
  * drilled 82 new boreholes in areas with sparse or no data. 
 
The combined drilling totaled 2,761m resulting in 1,877 samples and 187 control 
samples; and resulted in the remodeling of all available resources as reported 
in the Mineral Resource table below: 
 
Indicated and Inferred 
 
TSF                           Tonnage       Gold 
                              Mt 
                                            g/t          kg         oz 
 
Indicated 
 
Total Indicated               121.62        0.29         35,049     1,126,855 
 
Inferred 
 
Total Inferred                4.64          0.33         1,525      49,040 
 
  * Density of 1.44; Gold conversion: 1kg = 32.1508oz 
  * No cut-off applied; No geological losses or modifying factors applied 
  * Mineral Resources are stated inclusive of Mineral Reserves 
  * Mineral Resources are reported as total Mineral Resources and not 
    attributed 
  * Mineral Resources are SAMREC Code (2016 Edition) compliant 
  * The Mineral Resources are signed-off by Charles Muller (BSc (Hons), 
    Pr.Sci.Nat), an independent Competent Person 
 
The updated three-dimensional Mineral Resource models were subjected to a 
hydro-mining and load-and-haul mine design and schedule according to 
engineering parameters as defined in the DFS. The same approach was previously 
used by Pan African during the design process of the Group's Elikhulu operation 
(Elikhulu). 
 
Scheduling of the available resources was built around achieving a throughput 
rate of 800ktpm, as detailed in the July 2021 PFS, as the optimal processing 
throughput. The Mineral Resources subjected to the mine design and scheduling 
was subsequently converted to Probable Mineral Reserves, as depicted in the 
table below: 
 
Mineral Reserves 
 
                          Tonnage      Gold 
Probable Reserves 
                          Mt           g/t         kg            oz 
 
Total Mineral Reserves    123.58       0.29        35,400        1,140,180 
 
  * Density of 1.44; Gold conversion: 1kg = 32.1508oz 
  * No cut-off applied; No geological losses or modifying factors applied 
  * Mineral Reserves includes 1.96Mt of Inferred Mineral Resources, scheduled 
    to access remaining Indicated Mineral Resources. The Inferred Mineral 
    Resource represents 3.75% of the total Mineral Reserve and is not deemed a 
    significant risk 
  * The Mineral Reserve is signed-off by PAR's Competent Person, Hendrik 
    Pretorius 
 
Conceptual MSC resource/reserve and production upside 
 
In the SENS announcement of 6 November 2020, the Company reported that the MSC 
TSFs comprise nine separate facilities with resources of 119Mt with an in-situ 
grade of 0.31g/t, containing an estimated gold content of 1.20Moz. Although Pan 
African currently classifies the MSC Mineral Resources in the Inferred Mineral 
Resource category until further technical studies and work is completed, a 
conceptual production schedule for this project was applied, based on available 
information. 
 
This conceptual production scheduling, entailing the processing of combined 
TSFs demonstrates a more robust recovered ounce profile and an extended LOM for 
the project, in excess of 20 years. The conceptual MSC TSF model increased 
production by an average of 11koz/yr from years 6 to 13 (once the Mogale Gold 
TSF resources are depleted), giving rise to a production profile of an average 
54koz/yr from year 14 to 20. 
 
No Mineral Reserves or financial valuation for the conceptual MSC scheduling 
can be reported on at this stage and the incremental production from this 
cluster is included for illustrative purposes only. 
 
Re-mining and processing 
 
The study envisages hydro-mining to be utilised for the larger dumps, using 
hydraulic guns of similar specification as used at Elikhulu, cutting mine 
widths of 15m wide and 20m deep. The North Sands and South Sands dumps are 
conducive to load-and-haul mining, to extract the resources from these dams. 
 
The re-mined tailings will be processed in a CIL plant of similar design to the 
Elikhulu operation, with the addition of a water treatment section to limit 
corrosion and potentially improve recoveries. The DFS process plant is designed 
for an average throughput of 800ktpm, with up to 900ktpm achievable without 
negatively affecting performance. 
 
All of the borehole samples were utilised to refine and test the expected gold 

recoveries from the processed material, under the direct supervision and 
management of Pan African. The modelled recoveries are presented in the table 
below: 
 
Resource material     % Recovery 
TSF                     modelled 
 
1L23-25                   54.70% 
 
1L13-15                   48.90% 
 
1L28                      34.40% 
 
1L8                       53.56% 
 
1L10                      50.85% 
 
North Sand Dump           71.00% 
 
South Sand Dump           75.71% 
 
Key financial assumptions and outputs (as per DFS) 
 
Description 
 
Net Present Value (9.4)                           R1,006 million (US$64,9 
                                                  million) 
 
Real Ungeared Internal Rate of Return             20.1% 
 
Total construction capex requirement              R2,460 million (US$158,7 
                                                  million) 
 
Forecast payback period (post commissioning)      38 months 
 
Average AISC                                      US$ 914/oz 
 
LOM operating cost                                ZAR 78/t (US$5/t) 
 
Average annual gold production                    50koz 
 
LOM                                               13 years 
 
  * Long term gold price US$1,750/oz 
  * Long term US$/ZAR:15.50 
 
Envisaged project financing 
 
The Group has received a number of offers from financing institutions and third 
party financiers for the Project funding and expects to finalise the funding 
package later this year, if the Company was to proceed to project execution. 
 
Way forward and possible project execution timeline 
 
Following in-principle approval by Pan African's board to further progress the 
Project, the Company will commence with the environmental authorisation process 
and stakeholder engagements. 
 
Activity                                                          Estimated 
date 
 
Completion and finalisation of DFS                Completed 
 
Engineering optimisation activities               June - August 2022 
 
Detailed engineering study                            September 2022 - March 
2023 
 
Likely project commencement date               September 2022 
 
Funding package finalised                              October/November 2022 
 
Environmental approvals                               March 2023 
 
Construction commences                              April 2023 
 
Commissioning                                               July 2024 - 
December 2024 
 
ESG/Social Impact 
 
As part of the DFS, the Company has already conducted extensive engagements 
with community representatives and other interested and affected organisations 
based in the area, including regulatory authorities. This information and the 
EMPR is being utilised to compile an action plan to remediate past 
environmental damage and restore the surface for productive land use, while at 
the same time investigating impactful socio-economic development projects 
intended to stimulate the local economy. 
 
The Company will also conduct feasibility studies into the merits of renewable 
energy for the new tailings retreatment plant's energy requirements. 
 
Competent Person 
 
The competent person for Pan African Resources, Hendrik Pretorius, the manager 
for Group mineral resource management, signs off the Mineral Resources and 
Mineral Reserves for the Group. He is a member of the South African Council for 
Natural Scientific Professions (SACNASP 400051/11 - Management Enterprise 
Building, Mark Shuttleworth Street, Innovation Hub, Pretoria, Gauteng Province, 
South Africa), as well as a member in good standing of the Geological Society 
of South Africa (GSSA - CSIR Mining Precinct, Corner Rustenburg and Carlow 
Roads, Melville, Gauteng Province, South Africa). Hendrik has 18 years' 
experience in economic geology and mineral resource management (MRM). He is 
based at The Firs Office Building, 2nd Floor, Office 204, Corner Cradock and 
Biermann Avenues, Rosebank, Johannesburg, South Africa. He holds a BSc (Hons) 
degree in Geology from the University of Johannesburg as well as a Graduate 
Diploma in Mining Engineering from the University of the Witwatersrand. Hendrik 
has reviewed, and approved, in writing the information contained in this 
document as it pertains to Mineral Resources and Mineral Reserves. 
 
The information contained in this announcement is the responsibility of the 
Company's board of directors and has not been reviewed or reported on by the 
Group's external auditors. 
 
Rosebank 
 
30 June 2022 
 
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 
 
Corporate 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 
 
Chief Executive Officer                       Financial Director 
Cobus Loots                                   Deon Louw 
Office: + 27 (0)11 243                        Office: + 27 (0)11 243 2900 
2900 
 
Head: Investor Relations                      Website: 
Hethen Hira                                   www.panafricanresources.com 
Tel: + 27 (0)11 243 2900 
E-mail: [e-mail] 
 
Company Secretary                             Nominated Adviser and Joint Broker 
Phil Dexter/Jane Kirton                       Ross Allister/Alexander Allen 
St James's Corporate Services Limited         Peel Hunt LLP 
Office: + 44 (0)20 7796 8644                  Office: [phone] 
 
JSE Sponsor                                   Joint Broker 
Ciska Kloppers                                Thomas Rider/Nick Macann 
Questco Corporate Advisory Proprietary        BMO Capital Markets Limited 
Limited                                       Office: [phone] 
Office: + 27 (0)11 011 9200 
 
                                              Joint Broker 
                                              Matthew Armitt/Jennifer Lee 
                                              Joh. Berenberg, Gossler & Co KG 
                                              (Berenberg) 
                                              Office: [phone] 
 
 
 
END 
 
 

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June 30, 2022 02:00 ET (06:00 GMT)