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Pan African hails “encouraging" drilling results

Published: 08:36 09 Jun 2011 BST

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Pan African Resources (LON:PAF), the Africa-focused precious metals producer, revealed “encouraging” results from a drilling programme on its 100% owned Barberton gold mining operation in South Africa.

The drilling on the Bramber tailings dam at the site indicates mineral resource of 148koz at a cut-off grade of 0.5g/tonne. Initial metallurgical test work indicates recoveries of 45% to 55%.

Pan African estimates £11m in capex would be needed for a processing plant to treat 1.2 million tonnes of tailings per annum at Barberton for three years. An additional 9 million tonnes of ‘dump material’ is currently being investigated that could increase the life of project from three years to ten years.

The company reckons that if viable the project could increase production at Barberton Mines by another 20koz per annum over the life of the project. A feasibility study on the project will be completed by the second quarter of the 2011/12 financial year.

Jan Nelson, chief executive Officer of Pan African, said: "We are very encouraged by these results that show that the re-treatment of tailings at Barberton Mines is developing into a significant stand-alone gold project.

"Not only could it increase the current production profile of the Company by 20koz per annum but also increase the operating margin and reduce unit costs."

The Bramber tailings dam, which has been used as a tailings storage facility at Barberton Mines since 1986, reached the end of its operational life in January 2011. However, the current high gold price and low cost associated with the re-treatment of tailings dams has encouraged the company to re-evaluate the dam as a source of additional production ounces.

In February the group posted strong interims despite heavy cost pressures. Attributable profits came in at £7.58 million, a rise of 70 per cent last time, as sales advanced by almost a third to £38.33 million and gold prices remained bouyant.

In early morning trade Pan African shares were unchanged at 10.75p, valuing the company at £155m.

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