Pan African Resources PLC (AIM:PAF, OTCQX:PAFRY, JSE:PAN, OTCQX:PAFRF) said it is well positioned to meet and exceed full-year production guidance of more than 195,000 ounces and expects to produce about 105,000 ounces of gold in the six months to end December - a 6.7% increase on the year-earlier period.
It also announced it has conditionally agreed to buy Blyvoor Gold Operations (Pty) Ltd, consisting of six historical tailings storage facilities with total resources of more than 1.4 million ounces of contained gold, for ZAR110mln (£5.2mln) in cash. The transaction will be funded from internal cash resources.
“Pan African is pleased to have secured the right to the Blyvoor tailings, which is one of the last remaining large-scale gold tailings resources available in South Africa,” said chief executive Cobus Loots. “Pan African is poised to grow its tailings retreatment operations in the years ahead, adding additional long-life, high-margin production to our already attractive portfolio of assets.”
The purchase, from Blyvoor Gold (Pty) Ltd, is subject to three months of due diligence after which Pan African has the right to conduct a definitive feasibility study over the following nine months to December 2022.
A pre-feasibility study indicates the potential to produce 25,000-30,000 ounces of gold by processing 6 million tonnes (Mt) of tailings per year over a mine life of 15 years, which is extendable to 25 years if inferred resource estimates are included.
The company said it has a demonstrable track record of developing and operating similar high-margin tailings processing operations at its Barberton Tailings Retreatment Plant, Evander Tailings Retreatment Plant and its flagship Elikhulu operations. All of these projects were commissioned within budget and on schedule.
The group currently produces approximately 70,000 ounces a year of recovered gold from Elikhulu and the Barberton Tailings Retreatment Plant.
It also provided an update on the conditional acquisition of Mintails SA Mogale Gold and Soweto Cluster tailings storage facilities, announced in November 2020.
Pan African said it is finalising a definitive feasibility study, which is scheduled to be completed in the first quarter of 2022.
As previously reported, finalisation of the Mintails transaction was delayed by ongoing legal action, which could have seen Mintails revert to either business rescue or remain in provisional liquidation. Judgement on the legal action has been received, and Mintails will remain in provisional liquidation.
Pan African said it remains optimistic on the Mintails transaction’s potential, and will now engage with the provisional liquidator on progressing the transaction.