www.panafricanresources.com
Pan African is a South African based precious metals mining company producing approximately 95,000 ozs of gold and, when in full production in May 2012, 12,000 ozs pgm per annum.
In January, the company announced a joint venture with Wits Gold to acquire the Evander Gold Mines from Harmony for a consideration of up to R1.7 billion, providing an attributable 50,000 ozs of gold production and a project pipeline for future growth.
Additionally, the company has approved phase 1 of a gold tailings retreatment project which could further increase gold production by 25,000 ozs per annum from August 2013.
The company is unhedged, debt free and dividend paying.
Pan African Resources and Wits Gold to buy Harmony's Evander mine - UPDATE
---Updated with more detail---
Pan African Resources (LON:PAF) is to buy the operating Evander gold mine from Harmony Gold for £139 million (R1.7 billion).
In a consortium with Wits Gold, the firm is to acquire 100 per cent of Harmony's interest in Evander Gold Mines in a 50:50 joint venture.
The company believes that the deal further represents an opportunity for Pan African to materially increase its gold production profile from 95,000 to around 140,000 ounces a year.
The Evander operations are in Mpumalanga, South Africa, and comprise the operating Evander 8 shaft, and several significant development projects namely Rolspruit, Poplar, Evander South, Libra, a surface tailings resource and the Kinross metallurgical processing plant.
The total underground resource represents 32.5 million ounces and a reserve of 7.6 million ounces
The Evander 8 shaft currently has an expected life of mine of more than ten years.
Evander is expected to produce between 85,000 and 95,000 ounces per year and the deal adds significantly to the firm's reserve and resource base, and provides an annual attributable share of production of around 45,000 ounces per annum, said Pan African.
£115 million is due in cash on the closing date of the transaction while four payments of £2 million each will be payable quarterly - beginning three months after the closing date.
A further £8 mln million is payable 19 months after the closing date, today's statement said, provided the average rand gold price exceeds R410,000 per kg over the 12 preceding months.
R100N million will be payable 31 months after the closing date provided the average rand gold price exceeds R450,000 per kg during the preceding 12 months.
The consortium members intend to utilise a combination of debt, equity and operational cash flows to settle the transaction, said the statement.
Chief executive Jan Nelson said this afternoon: "Evander meets our investment criteria in all aspects and has the same ability to yield high margins as our Barberton mining operations. The Evander 8 Shaft orebody has gold grades in excess of 14g /t in the measured and indicated resource category, an extremely experienced
management team and workforce, as well as good infrastructure.
"Together with Barberton, Evander will respectively increase our resource by 304 per cent to 22.9Moz and our reserve by 390 per cent or 4.9Moz."
He added: "The smart solution of a partnership with Wits Gold gives us the necessary momentum to continue to deliver profitable sustainable stakeholder growth and returns and represents a first in the junior gold sector in South Africa."
