Pan African Resources PLC (AIM:PAF, OTCQX:PAFRY, JSE:PAN, OTCQX:PAFRF) is expanding its operations into Australia with the all-share acquisition of Tennant Consolidated (TCMG), the developer of a gold project in the Northern Territory.
South Africa-based Pan African acquired an 8% stake in TCMG in March for US$3.4 million in cash and taking full 100% ownership will cost $54.2 million.
TCMG's main asset, the Tennant Creek Gold Field (TCGF), has a JORC-compliant resource of 1.3 million ounces at 2.63 g/t with reserves of 400,000oz.
Work on mine construction has already started with the processing plant 50% complete, said Pan African, which added it expected the initial upfront cost of A$35.7 million to be paid back within three years.
First gold is scheduled for July 2025 and to come from surface stockpiles with production expected at 50,000oz a year to boost overall group production by 20% next year.
Cobus Loots, Pan African’s chief executive, said: “TCMG represents an opportunity to further expand and diversify our near-term low-cost production base and the next phase in the growth trajectory of the group, in a Tier 1 mining jurisdiction.
“The group has been assessing the TCMG portfolio for almost a year, and we are confident that this acquisition complements our strategy of focusing on safe, low-cost gold mining opportunities, with the potential to further grow our business by developing projects that meet our stringent investment criteria."
Based on a gold price of US$2,600 an ounce and sustaining costs of US$1,300oz, a mine feasibility study indicated a net present value of US$129.7 million based on an eight-year mine life, though Pan African said it expects to extend this.