REG-Pan African Resources Plc: 2017 Abridged Mineral Resource & Mineral Reserve Report <Origin Href="QuoteRef">PAFR.L</Origin>
20/09/2017 07:06
Pan African Resources PLC
(Incorporated and registered in England and Wales under Companies Act 1985
with registered number 3937466 on 25 February 2000)
Share code on AIM: PAF
Share code on JSE: PAN
ISIN: GB0004300496
(“Pan African Resources” or the “Company” or the “Group”)
2017 Abridged Mineral Resource & Mineral Reserve Report
Pan African Resources, the African focused precious metals producer, is
pleased to announce that the 2017 Abridged Mineral Resource and Mineral
Reserve Report (“MR&MR”) has been published and is available on the
Company's website at www.panafricanresources.com. A summary of the MR&MR,
including the Group Mineral Resource and Mineral Reserve statement as at 30
June 2017, has been provided below.
Overview
* 1.2 million ounces (“Moz”) or 12.0% gross annual increase in Group gold
reserves to 11.2Moz (2016: 10.0Moz).
* 0.5Moz or 1.4% gross annual decrease in Group gold resources to 34.4Moz
(2016: 34.9Moz).
* No material change in Group platinum group elements (“PGE”) resource,
0.6Moz (2016: 0.6Moz).
* No material change in Group PGE reserve, 0.2Moz (2016: 0.2Moz).
* Disposal of Uitkomst Colliery Proprietary Limited to Coal of Africa Limited
on 30 June 2017. No Group coal resources and reserves stated.
* Following positive mineral resource (2.0Moz) to mineral reserve (1.7Moz)
conversion and the definitive feasibility results of the Evander Gold Mining
Proprietary Limited (“Evander Mines”) tailings storage facilities
re-mining projects (“Elikhulu Project”), the Company has mandated DRA
Projects SA Proprietary Limited (“DRA Projects”) to commence construction
of the project. The life of mine (“LOM”) for Elikhulu Project is stated at
14 years, yielding approximately 56 000oz a year for the initial 8 years of
production and then approximately 45 000oz per annum for the remaining 6
years.
* Focused mineral reserve conversion at Barberton Mines Proprietary Limited
(“Barberton Mines”) through the development of the sub-vertical shaft
project at its Fairview operation, thereby increasing overall capacity and
production from the main reef complex (“MRC”) section by 7 000 –
10 000oz per annum and sustaining the LOM at Barberton Mines to 20 years.
* Surface exploration drilling progressed well at Evander Mines targeting the
2010 Pay Channel. A feasibility study on exploiting the surrounding pillars
at Evander Mines’ No 7 Shaft and the 2010 Pay Channel resources is expected
to be completed during the first quarter of the 2018 financial year. Evander
Mines and the current Evander Tailings Retreatment Plant (“ETRP”) LOM
stated at 15 years.
* SRK Consulting (Pty) Ltd has independently reviewed the Mineral Resources
and Mineral Reserves of the Pan African Resources’ gold assets as at 30 June
2017 and signed off on the declared estimates.
Gold
Group Gold Mineral Resources
The Group’s attributable gold Mineral Resources decreased from 34.9Moz at 30
June 2016 to 34.4Moz at
30 June 2017, equating to an annual decrease of 0.5Moz, or 1.4%.
Contained gold
As at 30 June 2017 Category Tonnes million Grade g/t Tonnes Moz
Mineral Resources Measured 5.3 10.94 57.6 1.9
Indicated 262.2 2.43 636.2 20.4
Inferred 70.4 5.35 376.5 12.1
Pan African Resources Total 337.9 3.17 1 070. 3 34.4
Group Gold Mineral Reserves
The Group’s attributable Mineral Reserves increased from 10.0Moz at 30 June
2016 to 11.2Moz at
30 June 2017, equating to an annual increase of 1.2Moz, or 12.0%.
Contained gold
As at 30 June 2017 Category Tonnes million Grade g/t Tonnes Moz
Mineral Reserves Proved 4.1 7.19 29.8 1.0
Probable 227.7 1.40 317.9 10.2
Pan African Reserves Total 231.8 1.50 347.7 11.2
The increase can primarily be attributed to the conversion of the Elikhulu
Project Mineral Resources to Mineral Reserves.
Platinum Group Elements
Group PGE Mineral Resources
The Group’s attributable PGE Mineral Resources did not change materially for
the year under review.
Contained PGEs 4E
As at 30 June 2017 Category Tonnes million Grade g/t Tonnes Moz
Mineral Resources Measured
Indicated 2.3 2.32 5.4 0.2
Inferred 3.4 3.67 12.5 0.4
Pan African Resources Total 5.7 3.12 17.9 0.6
Group PGE Mineral Reserves
The Group’s attributable PGE Mineral Reserves did not change materially for
the year under review.
Contained PGEs 4E
As at 30 June 2017 Category Tonnes million Grade g/t Tonnes Moz
Mineral Reserves Proved
Probable 2.3 2.32 5.4 0.2
Pan African Reserves Total 2.3 2.32 5.4 0.2
Group organic growth
Current exploration drilling as well as activities to access and develop our
orebodies was maintained during the financial year. The strategy of converting
Mineral Resource to Mineral Reserve was progressed by moving organic projects
further up the mining value chain towards feasibility or production. The
tables below reflect the progress of near-mine growth projects that have
contributed ounces to the Mineral Resource for the year.
Group: Exploring the orebody - exploration drilling
Operation Total metres Number of boreholes Average channel width cm Number of intersections above cut-off Average grade g/t Total expenditure R’million
Barberton Mines 8,793 106 136 34 17 4.7
Evander Mines 783 14 31 6 28 1.4
Group: Accessing the orebody - on-reef development
Operation Total on-reef development metres Average grade g/t
Barberton Mines 2,533 6.20
Evander Mines 245 28.86
Barberton Mines: Developing the orebody - capital ore reserve projects
Project 2017 metres 2016 metres 2015 metres Potential resource target oz
Sheba – pillar development 450 540 824 10,101
Sheba – Edwin Bray to Thomas and Joe’s Luck area 8 27 5 18,701
Fairview – 11 Level Royal Reef – Equipping Equipping 826
Fairview – 1# one reserve opening 71 131 84 13,958
Fairview – No 3 Shaft deepening 171 64 26 22,943
Fairview – (64 – 68) Level 451 581 447 851,562
New Consort – (33 – 45) PC 265 387 258 10,000
New Consort – MMR pillar development 8 – – 66,309
New Consort – No 3 Shaft – 17 327 5,969
Royal Sheba 143 189 165 309,180
Sheba Western Cross 4 133 295 25,143
Evander Mines: Developing the orebody - capital ore reserve projects
Project 2017 metres 2016 metres 2015 metres Potential resource target oz
No 2 Decline 24 – 25 Level 73 356 904 1,200,000
25 A block ventilation 222 87 10
Group growth projects
Elikhulu Project
The Elikhulu Project entails establishing facilities and infrastructure at
Evander Mines, owned and operated by Pan African Resources, to retreat gold
plant tailings at a rate of 1-million tonnes per month. This is in addition to
the existing production from the ETRP, which will continue to operate
independently of the Elikhulu Project for the next 15 years. Three existing
tailings storage facilities will be reclaimed, in the following order:
Kinross, Leslie and Winkelhaak. The 3 tailing facilities will, post their
processing, be consolidated into a single enlarged Kinross facility, thus
reducing Evander Mines’ environmental footprint and associated environmental
impact.
The project is expected to yield approximately 56,000oz of gold per annum for
the initial 8 years of production (while treating the Kinross and Leslie
tailings storage facilities), and then approximately 45,000oz a year for the
project’s remaining 6 years from processing the Winkelhaak tailings storage
facility. These production figures exclude an inferred resource of 244,398
ounces of gold delineated in the soil material beneath the existing tailing
dumps.
Mineral Resource estimate
Mineral Resource category Tailings storage facility Tonnes million Grade g/t Contained gold Moz
Indicated Kinross 51.03 0.31 0.51
Winkelhaak 72.47 0.24 0.56
Leslie 70.07 0.32 0.71
193.57 0.29 1.79
Inferred (soil) Kinross 9.23 0.33 0.10
Winkelhaak 8.02 0.27 0.07
Leslie 4.57 0.45 0.08
Total 21.83 0.33 0.24
Total Mineral Resource* 215.40 0.29 2.03
Mineral reserve estimate
Mineral Reserve category Tailings storage facility Tonnes million Grade g/t Contained gold Moz
Probable Kinross 45.2 0.31 0.4
Leslie 70.1 0.32 0.7
Winkelhaak 70.0 0.24 0.6
Total Mineral Reserve* 185.3 0.29 1.7
* Inclusive of ETRP
The Mineral Reserve estimate is a probable 185.3Mt, comprised of the Kinross
(45.2Mt), Leslie (70.1Mt) and Winkelhaak (70.0Mt) tailings storage facilities
at Evander Mines. The combined 185.3Mt will provide feed material to the
existing ETRP at 200,000 tonnes per month, and to the new project process
plant at a rate of one million tonnes per month (of which 40,000 tonnes per
month will be from run-of-mine tailings).
The combined Mineral Reserve contains an estimated 1.7Moz, of which an
estimated 688,000oz will be recovered over the life of the project. This
estimate excludes the inferred resource 244,398oz of gold leached and
contained in the soil beneath the existing tailing dumps, which could
potentially increase the project life.
The Mineral Reserve estimate assumes a non-selective mining method whereby the
whole of the mineral deposit is mined in a predetermined sequence. The mining
method allows for 100% extraction of the targeted mineral deposit. Hydraulic
mining has been selected as the mining method as it is a proven technology,
cost effective and technically and operationally well understood.
The overall average gold recovery over the life of the project is forecast at
47.8%. Using modelled recoveries, the gold dissolution value estimated for
Kinross is 51.4%, Leslie 48.3% and Winkelhaak 53.8%.
The Elikhulu Project is progressing according to plan with project completion
and first gold expected in the last quarter of the 2018 calendar year.
Barberton Mines sub-vertical shaft project at Fairview mine
The Fairview mining operation is currently restricted by the hoisting capacity
of its No 3 Decline, which is used to access workings below 42 Level. This
decline is currently used to transport employees and material, and for rock
hoisting. The 11-Block, or MRC, orebody has an average grade of 31.3 g/t and
current LOM of 20 years. With no intervention, future mining at depth will
result in increased travelling distance, reduce employee face time and cause a
lack of capacity to ensure both ore replacement and exploration development.
Pan African Resources, with the assistance of DRA Projects, has completed a
feasibility study on the construction of a raise-bored, sub-vertical shaft
from Fairviews’ 42 Level to 64 Level, with the potential of continuing the
vertical shaft to 68 Level in future. This sub-vertical shaft will be used to
transport employees and material to the working areas, which will allow the No
3 Decline to be used exclusively for rock hoisting, increasing overall
capacity and production from this mining area.
DRA Projects has reviewed the technical and commercial aspects of the project
and the supporting feasibility study has yielded very positive results. The
estimated capital expenditure for the project, including contingencies, is
approximately R105 million, to be incurred over a 2-year period. The
productivity improvements for Fairview are estimated to yield an additional
7,000oz of gold per annum, which can be optimised further to more than
10,000oz per annum.
Contained gold
Category Tonnes million Grade g/t Tonnes Moz
Mineral Resource Measured 1.08 10.92 11.26 0.38
Indicated 1.06 14.13 14.97 0.48
Inferred 2.68 14.90 39.93 1.28
Fairview Mine Total 4.82 13.79 66.16 2.14
Contained gold
Category Tonnes million Grade g/t Tonnes Moz
Mineral Reserve Proved 0.51 10.05 6.68 0.21
Probable 1.50 13.89 18.28 0.58
Fairview Mine Total 2.01 12.42 24.96 0.79
Evander mines No 7 Shaft No 3 decline and 2010 Pay Channel
The 2010 Pay Channel resource is adjacent to the No 7 Shaft infrastructure and
extends from the boundary of Taung Gold International Limited’s No 6 Shaft
project and mining rights. As previously reported, Evander Mines embarked on
an exploration programme to drill a further exploration borehole from surface,
to increase geological confidence in the 2010 Pay Channel orebody, for which
resources are summarised in the table below:
Contained gold
Category Tonnes million Grade g/t Tonnes Moz
Measured 0.45 8.94 4.0 0.13
Indicated 0.70 7.11 5.0 0.16
Inferred 4.13 8.93 36.9 1.19
Total 5.28 8.69 45.9 1.48
On 6 July 2017, the exploration borehole successfully intersected the
Kimberley reef at a depth of approximately two kilometres, highlighting a reef
intersection with a 6cm width at 36.8g/t. Additional drilling deflections will
be performed to further delineate the ore body. The previous borehole into the
2010 Pay Channel yielded a reef intersection with a 49cm width at 36.04g/t.
Grades
Borehole Depth m Core width cm g/t cmg/t
2245 2 059.3 49.0 36.04 1 766
EGM PAR 1 2 014.6 5.7 36.8 210
EGM PAR 1-Deflection 1 2014.9 5.7 33.2 189
EGM PAR 1-Deflection 2 2 014.8 4.8 144.7 694
Harmony Gold Mining Company Limited previously developed the No 7 Shaft mine
workings towards the 2010 Pay Channel. However due to financial constraints
and a reassessment of capital expenditure priorities, it halted all
development on the Evander Mines’ shafts (other than No 8 Shaft) in 2009.
This resulted in the controlled flooding of the development ends and No 7
Shaft’s No 3 Decline, from 22 Level up to 18 Level. Following the
dewatering, only standard footwall and on-reef development would need to be
completed, with the associated engineering infrastructure, before mining can
commence.
The 2010 Pay Channel is approximately 4.5 kilometres in tramming distance from
No 7 Shaft, which is currently used by Evander Mines for hoisting to the
Kinross metallurgical plant. This compares favourably with the No 8 Shaft
mining areas, which is approximately 12 kilometres in tramming distances from
No 7 Shaft.
The Pan African Resources’ project team has commenced a feasibility study
related to the No 7 Shaft No 3 Decline and the 2010 Pay Channel resource,
which will address the following critical issues:
* Collation of geological data from the drill-hole intersection and
deflections.
* The cost and timing of dewatering and re-equipping the No 7 Shaft No 3
Decline from 18 Level to 22 Level.
* The development cost and timing to access the 2010 Pay Channel.
* The economic viability of the project.
The 2010 Pay Channel can potentially increase Evander Mines’ underground
gold production materially at a relatively low capital cost, using Evander
Mines’ established shaft and metallurgical facilities. The feasibility study
for the project is expected to be completed during the first quarter of the
2018 financial year.
Reporting in compliance with SAMREC Code
To meet the requirement of the South African Code for the Reporting of
Exploration Results, Mineral Resources and Mineral Reserves (“SAMREC
Code”) that the material reported as a Mineral Resource should have
“reasonable and realistic prospects for eventual economic extraction”, Pan
African Resources has determined an appropriate cut-off grade which has been
applied to the quantified mineralised body. In determining the cut-off grade,
Pan African Resources uses a gold price of R600 000/kg. At Pan African
Resources’ underground mines, the optimal cut-off is defined as the lowest
grade at which an orebody can be mined such that the total profits, under a
specified set of mining parameters, are maximised. The Mineral Resource
optimiser tool that was accordingly developed in-house was applied to the
Mineral Resource inventory.
The optimiser programme requires the following inputs to convert the Mineral
Resource to the Mineral Reserve:
* the database inventory of all mineral resource blocks;
* an assumed gold price – ZAR550 000/kg;
* planned production rates for each mine;
* mine call factor;
* plant recovery factors; and
* planned cash operating costs.
The Mineral Reserves represent that portion of the Measured and Indicated
Mineral Resources above cut-off in the LOM plan, and have been estimated after
consideration of the modifying factors affecting extraction. A range of
disciplines has been involved at each mine in the LOM planning process
including geology, surveying, planning, mining engineering, rock engineering,
metallurgy, financial management, human resources management and environmental
management.
Note: Mineral Resources are inclusive of the Mineral Reserve, unless otherwise
stated. Rounding of numbers contained in this announcement may result in minor
computational discrepancies.
Competent Person
The competent person for Pan African Resources, Mr Barry Naicker, the group
Mineral Resource Manager, signs off the MR&MR for the Group and has reviewed
and approved the information contained in this announcement in writing. He is
a member of the South African Council for Scientific Professions (400234/10).
Mr Naicker has 16 years of experience in economic geology and mineral resource
management.
He is based at 1st Floor, The Firs, cnr. Cradock and Biermann Avenues,
Rosebank, 2196, Gauteng.
Johannesburg
20 September 2017
Contact Information
Corporate Office
The Firs Office Building
1st Floor, Office 101
Cnr. Cradock and Biermann Avenues
Rosebank, Johannesburg
South Africa
Office: + 27 (0) 11 243 2900
Facsimile: + 27 (0) 11 880 1240
Registered Office
Suite 31
Second Floor
107 Cheapside
London
EC2V 6DN
United Kingdom
Office: + 44 (0)20 7796 8644
Facsimile: + 44 (0)20 7796 8645
Cobus Loots Deon Louw
Pan African Resources PLC Pan African Resources PLC
Chief Executive Officer Financial Director
Office: + 27 (0)11 243 2900 Office: + 27 (0) 11 243 2900
Phil Dexter John Prior / Paul Gillam / James Black
St James's Corporate Services Limited Numis Securities Limited
Company Secretary Nominated Adviser & Joint Broker
Office: + 44 (0)20 7796 8644 Office: +44 (0)20 7260 1000
Sholto Simpson Matthew Armitt / Ross Allister
One Capital Peel Hunt LLP
JSE Sponsor Joint Broker
Office: + 27 (0)11 550 5009 Office: +44 (0)020 7418 8900
Jeffrey Couch / Neil Haycock / Thomas Rider
BMO Capital Markets Limited
Joint Broker
Office: +44 (0)20 7236 1010
Julian Gwillim
Aprio Strategic Communications
Public & Investor Relations SA
Office: +27 (0)11 880 0037
www.panafricanresources.com
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