Pan African Regulatory News (PAF)

Pan African Resources Plc - Operational Update

PR Newswire

London, March 27

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:

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:

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 http://www.panafricanresources.com/

28 March 2018

Glossary of technical terms: