Pan African Resources PLC (AIM:PAF, OTCQX:PAFRY, JSE:PAN, OTCQX:PAFRF)’s acquisition of Mogale Gold Proprietary and Mintails SA Soweto Cluster from Mintails SA is a “significant step forward” for the group’s medium-term growth profile, according to broker Peel Hunt.
The deal, which was closed today, will see Pan African Resources paying R50mln (approximately US$2.8mln) for the company.
While the engineering on the project still needs to be optimized, the production uplift from Mintails should be a substantial 25%, the broker said.
Peel Hunt pointed out that the 2022 definitive feasibility study (DFS) for Mintails set out a project capable of delivering production of up to 50k oz pa and all-in sustaining costs of US$914/oz.
The deal will add significantly to the group’s surface re-mining profile and enhance its ESG reputation via environmental restoration as well as the options for increased solar usage, the broker commented.
Peel Hunt reiterated its buy rating and 28p price target, and shares in Pan African Resources rose 1.15% today following the news.