Pan African Resources PLC (AIM:PAF, OTCQX:PAFRY, JSE:PAN, OTCQX:PAFRF) said a definitive feasibility study (DFS) on the Mogale Gold Proprietary Ltd tailings storage facilities (TSFs) demonstrated the project's potential.
Re-mining of the Mogale TSFs is expected to add about 50,000 ounces a year of production, over its 13-year mine life - equivalent to a 25% increase in Pan African’s current output.
“Pan African has an excellent track record of successfully commissioning and operating surface tailings retreatment operations, as evidenced by our BTRP, ETRP and Elikhulu operations,” said chief executive Cobus Loots.
“As originally anticipated, the Mogale Gold DFS has demonstrated a compelling project, both operationally and financially.”
The TSFs forms part of the Mintails Mining SA (Proprietary) Ltd assets in South Africa.
“Mintails has the potential to further improve the group’s overall AISC [all in sustaining cost], while increased annual production will move Pan African further up the ranks of mid-tier gold producers,” said Loots.
The DFS envisages an AISC of about US$914 an ounce over the initial 13-year-mine life and a long-term gold price of US$1,750 an ounce. It also estimated a pretax net present value for the project of about US$64.9mln and an internal rate of return of 20.1%.
Construction is estimated to cost about US$161.3mln with construction capital payback estimated within 3.5 years, post commissioning. Production is anticipated to begin within 18-24 months of the start of construction.
Pan African signed a conditional agreement in November 2020 to buy Mogale Gold and Mintails SA Soweto Cluster Proprietary Ltd, both owned by Mintails Mining, which was placed into provisional liquidation in 2018.
READ: Pan African Resources rises as it acquires tailings retreatment projects in South Africa
Pan African was given until August 2022 to complete a fatal flaw analysis, prefeasibility study and DFS, which are all now completed. Further technical work is in progress, it said.