gold
Image credit: Stock

JSE-listed Pan African Resources believes its Barberton Mines will produce approximately 50 0000 oz of gold for the second half of the 2018 financial year, an increase of approximately 23% from the first half of the 2018 financial year. 

This forecast is based on current grades and the anticipated mining profile.

To improve future flexibility and sustain gold production, development to the next high grade platform (256 platform), will commence early in the 2019 financial year and average grades of 28.4 g/t over 5.2 metres are estimated over the 95 metres strike length.

The 256 platform is expected to be in full production in the 2020 financial year to sustain production from the MRC section over the next 5 years.

Barberton tailings retreatment plant

The construction of the regrind mill is proceeding according to schedule, with commissioning anticipated in the last week of April 2018.

On commissioning of the regrind mill, production at the Barberton tailings retreatment plant is expected to increase to approximately 21 000 oz per annum.

Elikhulu

Construction at Elikhulu is progressing ahead of schedule with first gold expected in August 2018.

Ramp up to full production of approximately 55 000 oz per annum is expected to take no longer than two months, after which Elikhulu is estimated to produce gold at an all-in sustaining cost of production of below US$650/oz, at the prevailing ZAR:USD exchange rate of R11.75:1.

In conjunction with the Evander tailings retreatment plant (ETRP), these two operations are expected to produce more than 70 000 oz per annum.

Royal Sheba project

Pan African Resources previously communicated that the Royal Sheba orebody has the potential to deliver approximately 30 000 oz per annum at a relatively low production cost.

The company has mandated DRA Global to undertake a life-of-mine technical feasibility study on the Royal Sheba orebody, which is planned to be completed during 2018.

The Royal Sheba orebody forms part of the Barberton Mine complex and was historically mined on a small scale to a depth of 340 metres below surface.

In the 2010 financial year, a concept study was completed by Turgis Consulting with the aim of re-opening the mine as a larger, mechanised, stand-alone operation.

Since a study was completed by Turgis Consulting, several synergies have been identified at the Barberton Mines complex, which indicate that the Royal Sheba orebody could be a viable economic proposition with a materially lower capital investment than previously envisaged.

Pan African Resources has revisited the Royal Sheba Mineral Resource, and the process focussed on the geology and mineralisation of the deposit, incorporating a full 3D geological modelling exercise on the structural, lithological and mineralisation components of the deposit. .

The updated Mineral Resources statement is stated over a larger down dip extent than the previous Mineral Resource statement due to variogram model parameters applied.

The updated Mineral Resources statements are reported in accordance with the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves, 2016 edition. Cut-off values are calculated at 2.5g/t applying a gold price of R600,000/kg (US$1,435/oz and R13.00:1).

Mineral Resources are reported inclusive of Mineral Reserves. All updated Mineral Resources reported exclude geological structures and are reported as in-situ tonnes. Any discrepancies in totals are due to rounding.

Evander Mines

As announced on 2 March 2018, Evander Mines is currently in a consultation process with its labour in terms of section 189 of the South African Labour Relations Act, 66 of 1995.

Further announcements will be made in due course, with the process expected to be
finalised before the end of the 2018 financial year.

Gold production from Evander Mines will be dependent on the outcome of the labour consultation process and the review of the 8-shaft operations.

As previously communicated, Pan African Resources is prioritising lower cost, high margin ounces in the current weak rand gold price environment. A reduction in non-paying gold production will therefore benefit Group margins and sustainable cash flows.

Following the recent announcement on the Section 189 Process at Evander Mines, the Group will be re-assessing the feasibility of the Egoli project as a stand-alone project by the end of the 2018 financial year.