“The 2017 financial year was operationally challenging in many respects, however the group is now seeing the benefits of the remedial actions implemented by management,” says Pan African Resources CEO, Cobus Loots.
“We look forward to a much improved performance in 2018, with a substantial increase in gold production.
“The Elikhulu project is on track for delivering first gold as originally planned, and is expected to contribute low-cost ounces and profits in the next 18 months.
“We are excited about the prospects for the Evander Mines’ 2010 Pay Channel project; the Evander Mines team now has to bring the project to account in the near term, in a profitable and value-accretive manner.
“During the past year, Pan African Resources has reaffirmed our gold focus and again delivered transactions that crystallise shareholder value,” continues Loots.
Pan African Resources’ Elikhulu project update
The Elikhulu project is progressing according to plan with project completion and first gold expected in the last quarter of the 2018 calendar year.
Following the successful US$50 million equity raise on 12 April 2017, Pan African Resources has commenced funding the initial capital expenditure on the Elikhulu project’s civil engineering works and the procurement of long-lead-time items, such as the tower crane and the carbon-in-leach tanks, which are critical to ensuring construction deadlines are met.
Capital expenditure of approximately R175 million has been incurred on the Pan African Resources Elikhulu project during the current reporting period, and capital spend remains on track relative to the total initial forecast capital expenditure of R1.74 billion.
Pan African Resources is also pleased to announce that the facility agreement for the R1 billion Elikhulu term debt facility has been signed.
The facility was underwritten by Rand Merchant Bank, a division of FirstRand Bank Limited, and the syndication has closed successfully, with an over-subscription of more than 50%.
The appetite shown by the banking market highlights the quality of the project, which prevailed despite the negative sentiment at the time of the release of the new Mining Charter.
Utilisation by Pan African Resources of the facility is subject to the fulfilment of customary conditions precedent, and the first drawings under the seven-year facility are scheduled for the final quarter of the 2017 calendar year.
Together with Pan African Resources’ existing R1 billion revolving credit facility, these facilities comprise the core debt instruments for funding the group’s capital expenditure programmes.
The low-cost, long-life Elikhulu project is expected to increase Pan African Resources’ annual gold production by more than 50 Kozpa and reduce the group’s average all-in cost of production.