Wrap Text
Further Operational Update and Significant Increase in Barberton’s Royal Sheba Gold Resource
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”)
FURTHER OPERATIONAL UPDATE AND SIGNIFICANT INCREASE IN BARBERTON’S ROYAL SHEBA GOLD RESOURCE
Following the operational update released on 2 March 2018, Pan African is pleased to provide further
information on the Group’s operations and growth projects. Key points can be summarised as
follows:
- Barberton Mines is on track to produce approximately 50,000oz of gold in the second half of
the 2018 financial year, an increase of approximately 23% from the first half of the 2018
financial year;
- installation of the regrind mill at the Barberton Tailings Retreatment Plant (“BTRP”) remains
on schedule and on budget;
- construction of the Elikhulu Tailings Retreatment Plant (“Elikhulu”) remains ahead of
schedule, with first gold production expected in August 2018;
- feasibility study completed which confirms viability of post-commissioning capacity increase of
Elikhulu to allow the plant to process tailings tonnes currently assigned to the Evander
Tailings Retreatment Plant (“ETRP”), with resultant cost and throughput benefits;
- a 100% increase in Mineral Resources at Barberton’s Royal Sheba Project to 720,000oz;
- as previously communicated, Evander Mines’ labour consultation process is in progress, with
finalisation expected prior to the end of the financial year; and
- a re-assessment of the feasibility of Evander Mine’s Egoli Project is in progress.
Gold production from Barberton Mines
As anticipated, recent grades as announced on 2 March 2018 from the Fairview Mine’s 11-block MRC
272 and 358 platforms, have resulted in an increase in gold production at Barberton Mines.
Based on current grades and the anticipated mining profile, Barberton Mines is expected to produce
approximately 50,0000oz for the second half of the 2018 financial year, an increase of approximately
23% from the first half of the 2018 financial year, in line with production guidance from the full
financial year.
To improve future flexibility and sustain gold production, development to the next high grade platform
(256 platform), will commence early in the 2019 financial year and average grades of 28.4g/t over 5.2
metres are estimated over the 95 metres strike length. The 256 platform is expected to be in full
production in the 2020 financial year to sustain production from the MRC section over the next 5
years.
BTRP regrind mill construction update
The construction of the regrind mill is proceeding according to schedule, with commissioning
anticipated in the last week of April 2018. On commissioning of the regrind mill, production at the
BTRP is expected to increase to approximately 21,000oz per annum.
Elikhulu construction and ETRP study updates
Construction at Elikhulu is progressing ahead of schedule with first gold expected in August 2018.
Ramp up to full production of approximately 55,000oz per annum is expected to take no longer than
two months, after which Elikhulu is estimated to produce gold at an all-in sustaining cost of production
of below US$650/oz, at the prevailing ZAR:USD exchange rate of R11.75:1. In conjunction with the
ETRP, these two operations are expected to produce more than 70,000oz per annum.
A DRA Global feasibility study has concluded that the ETRP’s throughput of approximately 200,000
tonnes per month can be incorporated into the Elikhulu Project with limited additional capital. This will
be done post commissioning of the Elikhulu Project and should result in the existing ETRP throughput
benefitting from Elikhulu’s lower cost structure and higher recoveries.
Barberton Mines’ Royal Sheba Project
Pan African previously communicated that the Royal Sheba orebody has the potential to deliver
approximately 30,000oz per annum at a relatively low production cost. The Company has mandated
DRA Global to undertake a life-of-mine technical feasibility study on the Royal Sheba orebody, which
is planned to be completed during 2018.
The Royal Sheba orebody forms part of the Barberton Mine complex and was historically mined on a
small scale (approximately 2,000 tonnes per month) to a depth of 340 metres below surface. Due to
poor economic returns resulting from the low tonnage mining profile, and the prevailing low gold price
at that time, it was closed during 1996.
In the 2010 financial year, a concept study was completed by Turgis Consulting (“Turgis Study”) with
the aim of re-opening the mine as a larger, mechanised, stand-alone operation. The Turgis Study
found that it was a viable proposition, but required a significant amount of capital expenditure for a
new shaft system to be sunk from the surface and the construction of a new gold plant.
Since the Turgis Study was completed, several synergies have been identified at the Barberton Mines
complex, which indicate that the Royal Sheba orebody could be a viable economic proposition with a
materially lower capital investment than previously envisaged.
The Company has revisited the Royal Sheba Mineral Resource, and the process focussed 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 these three
components resulted in a robust and fit for purpose 3D geological model highlighting the increase in
the Royal Sheba Mineral Resources, adjacent to and below the current Royal Sheba mine
infrastructure.
The 3D geological model and coded composite data set was subjected to full statistical and
geostatistical analyses by considering 10 domains within the Royal Sheba deposit. The final output of
the 3D geological model and Mineral Resource estimate honours all of the available data. Checks and
validation techniques applied to the estimates ensured a robust Mineral Resource estimate of the
Royal Sheba orebody, the results of which are tabulated and reconciled against the previous Mineral
Resource estimate in the table below. The measured and indicated categories of the Royal Sheba
orebody has doubled to 0.48Moz (30 June 2017: 0.24Moz). The increase in the Royal Sheba Mineral
Resource is summarised as follows:
Updated Previous
Mineral Resource statement Mineral Resource statement
Royal Sheba Project Royal Sheba Project
Contained Contained
Tonnes Grade Tonnes Grade
gold gold
Category
Million g/t Moz Million g/t Moz
Measured 2.72 3.91 0.34 0.39 4.15 0.05
Indicated 1.34 3.22 0.14 1.35 4.35 0.19
Inferred 1.83 4.05 0.24 0.86 4.35 0.12
Total 5.89 3.80 0.72 2.60 4.32 0.36
The updated Mineral Resources statement is stated over a larger down dip extent than the previous
Mineral Resource statement due to variogram model parameters applied. The updated Mineral
Resources statements are reported in accordance with the South African Code for the Reporting of
Exploration Results, Mineral Resources and Mineral Reserves, 2016 edition. Cut-off values are
calculated at 2.5g/t applying a gold price of R600,000/kg (US$1,435/oz and R13.00:1). Mineral
Resources are reported inclusive of Mineral Reserves. All updated Mineral Resources reported
exclude geological structures and are reported as in-situ tonnes. Any discrepancies in totals are due
to rounding.
The following tonnage discount factors have been applied to the updated Mineral Resources:
• 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 Pan African Resources, Mr Barry Naicker, the group mineral resource
manager, has reviewed and signed off the updated Mineral Resource for Royal Sheba. He is a
member of the South African Council for Scientific Professions (400234/10). Mr Naicker has 17 years
of experience in economic geology and mineral resource management. He is based at 1st Floor, The
Firs, corner Cradock and Biermann Avenues, Rosebank 2196, Gauteng.
Evander Mines labour consultation process and gold production
As announced on 2 March 2018, Evander Mines is currently in a consultation process with its labour
in terms of section 189 of the South African Labour Relations Act, 66 of 1995 (“Section 189
Process”). Further announcements will be made in due course, with the process expected to be
finalised before the end of the 2018 financial year.
Gold production from Evander Mines will be dependent on the outcome of the labour consultation
process and the review of the 8-shaft operations. As previously communicated, Pan African is
prioritising lower cost, high margin ounces in the current weak rand gold price environment. A
reduction in non-paying gold production will therefore benefit Group margins and sustainable cash
flows.
Egoli Project update
Following the recent announcement on the Section 189 Process at Evander Mines, the Group will be
re-assessing the feasibility of the Egoli Project as a stand-alone project by the end of the 2018
financial year.
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.
For further information on Pan African, please visit the Company’s website at
www.panafricanresources.com
28 March 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
Facsimile: + 44 (0) 207 796 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
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 Grammes 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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