Evander Tailings Retreatment Project approved
28 March 2014
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")
EVANDER TAILINGS RETREATMENT PROJECT APPROVED
Shareholders of Pan African are referred to the announcement dated 14 March
2013 in which it was announced that the acquisition of Evander Gold Mines
Limited ("Evander") had been completed. Pan African is pleased to announce that
its board of directors ("The Board") has approved the commencement of
construction of the Evander Tailings Retreatment Project ("ETRP"), which will
recover gold from the retreatment of gold tailings situated at Evander in South
Africa's Mpumalanga province.
1. Salient information pertaining to the ETRP
* The ETRP comprises a total mineral resource of 597koz (57.8Mt @ 0.32g/t
contained in Dams 1, 2 and 3 of the Kinross tailings storage facility
("TSF")) and a mineral reserve of 369koz (32.3Mt @ 0.32g/t contained in
Dams 1 and 2 of the Kinross TSF).
* A total estimated capital expenditure budget ("Capex") of ZAR200 million
(approximately GBP11.2 million) has been approved for the ETRP in order to
retreat 2.16Mt per annum of gold tailings over a 14 year life.
* Once completed, it is anticipated that the ETRP will contribute
approximately 10,000 oz per annum to Evander's gold production, at expected
cash cost of ZAR280,000 per kilogram (approximately US$800 per ounce).
* The estimated net present value of the ETRP is ZAR170 million with a
forecast project payback period of less than five years.
* The Capex of ZAR200 million will be fully funded via a gold loan of
approximately 15,700oz from ABSA Bank Limited ("Gold Loan") and the ETRP
construction cost is therefore not expected to impact materially on other
Pan African cashflows. The Gold Loan will be repaid in quarterly
instalments over a 4 year period, commencing in August 2014.
* Commissioning of the ETRP is expected to commence during mid-January 2015,
with full production anticipated by June 2015.
* A remaining tailings mineral resource of 1.5Moz (167.6Mt @ 0.28 g/t) exists
on the Winkelhaak, Leslie, Bracken and Kinross Dam 3 TSF's situated on the
Evander mining right area. This presents the potential for a larger
tailings retreatment plant that may be constructed in the future.
The ETRP project will increase Evander's gold production with up to 10 000 oz
per annum at a low cash cost, thereby increasing the profitability of Evander
and, consequently, that of Pan African. The project will bring to account a
portion of the significant tailings resource at Evander and will utilise the
current spare capacity of the Kinross metallurgical plant (2.16 million tons
per annum). The success of the ETRP could provide a springboard for an even
larger tailings project in the coming years.
2. Project concept and locality
The ETRP is a tailings retreatment project which will exploit historically
generated gold tailings deposited on the Kinross TSF. The TSF is situated
adjacent to the Kinross metallurgical processing plant and falls within the
tenure of the Evander mining right. In order to achieve a comparable
life-of-mine to that of Evander No 8 Shaft the ETRP will only need to exploit
two of the three available Dams at the Kinross TSF.
A total of 88 boreholes were drilled on a 200m x 200m grid to determine the
potential mineral resource. Samples were also subjected to detailed
metallurgical test-work which indicates a gold recovery of 40%.
Total ETRP mineral resource and reserve statement as at 2 January 2014 is as
follows:
* The total mineral resource for the project has been estimated to be 57.8Mt
at an average grade of 0.32g/t Au generating 597koz Au over the life of the
project.
* The definitive feasibility study ("DFS") estimated a probable mineral
reserve of 32.3Mt at a grade of 0.32g/t Au generating 369koz Au over the
life of the project.
Mr B Naicker, the competent person for Evander and Pan African Group Mineral
Resource Manager, signed off the mineral resources and mineral reserves for
Evander. Based at Pan African's head office in Rosebank, Naicker is a member of
the South African Council for Scientific Professions (400234/10) and has a
Master's degree in Mineral Resource Management from Witwatersrand University
and a Bachelor of Science (Honours) in Economic Geology. He has 13 years of
experience in economic geology and mineral resource management in gold and
related deposits.
Mr. Naicker has approved the information contained in this announcement
relating to mineral resources and mineral reserves for the ETRP. The mineral
resources and mineral reserves comply with the SAMVAL Code insofar as it
relates to a valuation of mineral assets.
3. Project development summary
The original Kinross metallurgical plant was designed to treat 240,000 tons run
of mine ("ROM") per month and was subsequently rationalised to its current
capacity to process 60,000 tons per month from surface and underground sources.
The ETRP project will refurbish the carbon-in-leach plant to treat
approximately 180,000 tons of tailings per month, through using electro-winning
and smelting to produce a saleable product. A cost benefit of the ETRP is that
no additional milling of feed material will be required.
Basil Read-Matomo, who successfully constructed Pan African's Phoenix Chrome
Tailings Retreatment Plant as well as its Barberton Tailings Retreatment Plant,
completed the ETRP feasibility report and plant Capex forecast. Fraser
Alexander completed the TSF feasibility report and associated capital forecast.
The total Capex for the ETRP is estimated to be ZAR200 million (approximately
GBP11.2 million) of which approximately ZAR110 million will be spent on plant
design, refurbishment and construction with the remainder on re-mining, TSF and
other infrastructure.
Basil Read-Matomo has been contracted to design, procure and construct the ETRP
and Fraser Alexander will construct the TSF and operate the re-mining
operation. Long lead items such as leach tanks and carbon regeneration kilns
are currently being procured. Civil work of the ETRP is planned to commence in
April 2014 with re-mining and plant commissioning commencing in January 2015.
Build up to full production is anticipated by June 2015. The expected electric
power requirement of the ETRP (2800 KWhr) will be sourced as part of the
current Kinross plant power reticulation.
The project should provide full time employment for an additional 20 workers
after completion.
For further information on Pan African Resources plc, please visit the website
at www.panafricanresources.com
28 March 2014
JSE Sponsor
One Capital
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