Pan African Resources has concluded the merits of mining the near-surface resource at the Royal Sheba project in Barberton, using an opencast mining method, and has concluded that it does not meet its disciplined capital allocation criteria.
"Due to the Group’s disciplined capital allocation criteria and the capital cost estimates to develop this mine, Pan African will not pursue the Royal Sheba project on a stand-alone basis," explains Pan African CEO, Cobus Loots.
"The existing Barberton Mines’ processing plant infrastructure can be upgraded to process ore from this orebody. The benefits of this approach is the ability to expedite the environmental licencing process, shorten the timeline to production, enhance returns from mining this orebody and negate the requirement for external capital funding.
"This was as a result of higher than anticipated capital expenditure, largely due to the challenging topography of the Sheba valley.
"The emphasis is now to assess the merits of using an underground sub-level open stoping mining method by developing haulages from surface into the orebody.
"The existing Barberton Mines’ processing plant infrastructure can be upgraded to process ore from this orebody, which will substantially reduce the originally contemplated capital expenditure, and shorten the environmental licensing approval process.
Commenting on other points of the company's nine operational highlights Loots highlights:
“The Group’s performance over the past nine months reflects our efforts to maintain Pan African’s position as a safe, low-cost and long-life gold producer.
"Safe, highly profitable and sustainable ounces at Elikhulu have replaced those of Evander’s loss-making underground operations. We continue to optimise Elikhulu, which delivered a throughput of 1.3-million tonnes in March 2019, 100,000 tonnes above the name plate capacity.
"The focus is now on maximising sustainable margins from this world-class operation.
"We have commenced the development and equipping of Evander Mines’ 8 Shaft Pillar, with first gold expected in August 2019. The Evander 8 Shaft Pillar is expected to contribute an additional 20,000 oz to 30,000 oz per annum for three years, at an AISC of approximately US$900 per ounce, therefore making a meaningful contribution to the Group’s near-term production and profitability.
"The operation will be mined by a specialised and experienced independent
contractor given the nature of pillar mining.
"We are confident Pan African remains on track to meet its gold production guidance of 170,000 oz for the full financial year to end 30 June 2019.
"With Elikhulu producing at a steady state for a full year and the incremental contribution from Evander’s Pillar operation, we expect to produce approximately 185,000 oz of gold for the 2020 financial year, which is a sizeable increase in our gold production profile.”