Pan African Resources plc (LON:PAF) has more than doubled the mineral resource estimate at its Royal Sheba gold project in South Africa after results from the latest round of drilling “exceeded expectations”.
The AIM-quoted miner now thinks the orebody is host to 0.9mln ounces of gold – a 150% increase on its previous estimate of 0.36mln ounces.
Drilling has suggested that around 0.35mln ounces of the precious metal are near to the surface and are conducive to open pit mining.
Open pit mining is generally a cheaper and easier process than underground mining, albeit with slightly lower grades. That isn’t the case at Sheba though, with the results suggesting the near-surface resource is of a slightly higher grade than that of the underground resource. Overall, Pan African estimates the grade at Sheba to by 3.27 grams per tonne.
Definitive feasibility study by end of February
“The exploration results from the drilling on Royal Sheba have exceeded our expectations, reaffirming the grades historically mined at depth,” said chief executive Cobus Loots.
“Significantly, the drilling programme has indicated the orebody extends to surface, with the potential to establish a new open pit mining operation in the short term, transitioning to an underground mining operation only after a number of years.
He added: “Royal Sheba’s opencast orebody has the potential to increase production from our flagship Barberton operations at a very competitive cost, aligned with our strategic positioning as a low-cost gold producer.”
More drilling planned
Another 15 holes are planned to be drilled as part of this current exploration programme, after which another mineral resource estimate is expected to be given, likely in November.
Shortly after, Pan African expects to undertake a definitive feasibility study which is scheduled for completion in February 2019.
Shares were up 2.1% to 7.7p in early deals on Thursday.