Statement re Phoenix Chrome Tailings Retreatmen...
5 November 2010
Pan African Resources PLC
(`Pan African' or the `Company')
(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 signs agreement to commence construction of processing plant to
produce platinum group metals concentrate
* High margin, simple processing operation
* Leverage off IFM's regulatory and legislative approvals and existing
infrastructure, accelerating the production date
* Chrome Tailings Retreatment Plant (`CTRP') construction to begin
immediately with first production anticipated by end of 2011
Pan African announces that it has today concluded the formal Chrome Tailings
Retreatment Plant (`CTRP') agreement with International Ferro Metals SA (Pty)
Limited (`IFM'), that will enable Phoenix Platinum Mining (Pty) Limited
(`Phoenix'), Pan African's 100% owned subsidiary, to construct and commission a
CTRP on IFM's Lesedi Mine, in the Bushveld Complex in the North West Province,
50 km east of Rustenburg. The CTRP is a surface processing plant that extracts
Platinum Group Metals ('PGM 4E's'), comprising 60.9% platinum, 21.9% palladium,
16.9% rhodium and 0.2% gold, from chrome tailings. Construction of the CTRP
will begin immediately, with full production anticipated by end 2011.
Subsequent to the acquisition of Phoenix in May 2009, Pan African has
successfully completed a Definitive Feasibility Study (`DFS') of the project
with the assistance of a number of metallurgical, geological and engineering
consultants. An independent review of the DFS was carried out by Venmyn Rand
(Pty) Limited which confirmed the technical and economical viability of the
project.
The Phoenix project has a total South African Code for Reporting of Exploration
Results, Mineral Resources and Mineral Reserves (`SAMREC') compliant resource
of 469,000 ounces PGM 4E's (4,646,000 tons at 3.15g/t PGM 4E's in situ). The
project is expected to produce 211,000 ounces PGM 4E's at a plant recovery of
45% over the 17 year life of the operation with a planned annual retreatment
capacity of 240,000 tons. The total capital cost required to construct and
commission the plant is estimated at ZAR104 million (£9.4 million), which
Venmyn considers fair and reasonable in relation to similar type and size of
operations. The capital cost for the plant will be funded from existing cash
resources
Payment schedule
The consideration of ZAR80 million (£7.2 million), payable to IFM, will be
funded from existing cash resources and payment will be made as follows:
* ZAR25 million (£2.26 million) payable upon signature;
* ZAR25 million (£2.26 million) on commencement of the first bulk earthworks
on the site to prepare for construction of the CTRP, which is expected to
be in January 2011;
* ZAR500,000 (£0,05 million) to purchase the CTRP property, on the date of
the property transfer; and
* ZAR29.5 million (£2.67 million) on the commissioning of the CTRP, which is
expected to be in late 2011.
Benefits to Pan African
The payment of ZAR80 million (£7.2 million) in phased tranches to IFM by Pan
African will enable Phoenix to:
* site and build the CTRP on IFM's Lesedi Mine;
* leverage off IFM's existing mining permits and licences;
* gain access to, and use of, existing infrastructure and services,
substantially accelerating the commissioning of the project from three
years to one year;
* enable Phoenix to expand the 20,000 tons per month CTRP capacity to a
potential 40,000 tons per month;
* terminate the 25% net profit interest held by IFM in respect of the PGM
4E's contained in the Lesedi Mine;
* purchase and own the property on which the CTRP has been built; and,
* secure additional tailings resources as a result of the geographical
location.
Pan African Chief Executive Officer, Jan Nelson, commented, `This project is in
line with our stated strategy of only developing low cost, high margin and long
life projects. At a conservative PGM 4E's basket price of US$1,250/oz, the
project is anticipated to have a profit margin of over US$850/oz with a cash
cost of less than US$400/oz. The completion of the CTRP will bolster our
operating cash flows and enable our company to continue its policy of dividend
payments without hampering further growth.'
ENDS
For further information on Pan African Resources and a presentation providing
more detail on the Phoenix acquisition, please visit the website at
www.panafricanresources.com
Notes to Editors
The resource estimate has been compiled in accordance with the SAMREC Code. The
data and the information contained in this announcement was verified and
validated by Martin Bevelander the Group Consulting Geologist who is registered
as Professional Natural Scientist and is SACNAS accredited (registration number
400158/07). He has consented to the inclusion of the technical information in
this announcement in the form and context in which it appears.
Derick de Wit of Venmyn Rand (Pty) Limited (Pr. Tech. Eng., B. Tech (Chem.
Eng), M.A.P (Wits) MSAIMM, MIASSA, MAusIMM) has consented to the inclusion of
the technical information in this announcement in the form and context in which
it appears.
Venmyn Rand (Pty) Ltd is an internationally focused, South African based,
independent mining and minerals management advisor, specializing in the
technical and economic evaluation of mineral projects and the strategic
analysis of mining and mineral resource companies.
Glossary of terms
Current arisings are tailings material generated following the beneficiation of
chromite ores extracted from mining
Tailings include tailings dumps and current arisings
SAMREC South African Code for reporting of Mineral Resources and Mineral
Reserves
SACNAS The South African Council for Natural Scientific Professionals
Enquiries
South Africa UK
Pan African RBC Capital Markets
Jan Nelson, Chief Executive Officer Martin Eales / Brett Jacobs
+27 (0) 11 243 2900 +44 (0) 20 7029 7881
Macquarie First South Advisers (Pty) St James's Corporate Services Limited
Ltd
Phil Dexter
Melanie de Nysschen / Annerie Britz/
Yvette Labuschagne +44 (0) 20 7499 3916
+27 (0) 11 583 2000
Vestor Media & Investor Relations Hansard Communications
Louise Brugman Justine James
+27 (0) 787 3015 +44 (0) 20 7245 1100
083 504 1186 +44 (0) 7525 324431
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