REG-Pan African Resources Plc: Operational Update and Completion of the Tennant Consolidated Mining Group Transaction

Pan African ResourcesAnnouncement

12/12/2024 07:15

Pan African Resources PLC    Pan African Resources Funding Company

(Incorporated and registered in England and Wales  Limited

under the Companies Act 1985 with registered   Incorporated in the Republic
of South Africa

number 3937466 on 25 February 2000)   with limited liability

Share code on AIM: PAF     Registration number: 2012/021237/06

Share code on JSE: PAN     Alpha code: PARI

ISIN: GB0004300496

ADR code: PAFRY

(Pan African or the Company or the Group)

 

OPERATIONAL UPDATE AND COMPLETION OF THE TENNANT CONSOLIDATED MINING GROUP
TRANSACTION

 

Pan African is pleased to provide its shareholders and noteholders with a
preliminary operational update for the half year ending 31 December 2024.

 

Highlights
* Completion of TCMG acquisition: The acquisition of Tennant Consolidated
Mining Group (TCMG) has been completed, with TCMG now a wholly owned
subsidiary of the Group. 
* Expect to deliver a significant increase in gold production for FY2025:
H1FY2025 production expected to be in line with H2FY2024 and FY2025 estimated
at ~215,000oz (FY2024: 186,039oz), an increase of approximately 16% from the
prior year.  
* Increased FY2026 production guidance: Group FY2026 production (excluding the
TCMG operation in Australia) estimated to further increase to between
235,000oz and 250,000oz.
* Balance sheet strength: Group expects to be materially unhedged by February
2025 allowing increased benefit from the spot gold price. At prevailing gold
prices, it is anticipated that the Group will be fully de-geared in the next
12 to 18 months.
 

GROUP GOLD PRODUCTION FOR THE SIX MONTHS ENDING DECEMBER 2024 (H1FY2025)

 

Gold production for the half year is expected to be in line with production
achieved in H2FY2024 (H2FY2024: 87,581oz). Early production from the Mogale
Tailings Retreatment (MTR) operation, where production to the end of December
2024 is estimated to be approximately 9,000oz, has offset the impact on
production at Evander in the first half of the year due to the delay in the
commissioning of Evander Mines’ subvertical shaft as previously flagged,
which has now been resolved.

 

Production for the full year FY2025 is estimated at approximately 215,000oz
(FY2024: 186,039oz), an increase of 16% from the prior year. Production for
FY2026 is expected to increase significantly, as detailed below. 

 

SURFACE OPERATIONS

 
* Elikhulu Tailings Retreatment Plant production is forecast at approximately
26,000oz for H1FY2025, on track to achieve 52,000oz or more for the full
financial year	* Phases 3 and 4 of the new tailings dam construction were
completed ahead of schedule and under budget
	
* The Barberton Tailings Retreatment Plant (BTRP) is on track for production
of between 7,000oz and 8,000oz in H1FY2025, with the life-of-mine (LoM) of the
operation increased by a further six and a half years, as previously reported
* At the MTR operation, the plant’s upfront construction capital is
estimated at ZAR2,35 billion to ZAR2,4 billion (US$127 million to US$130
million), versus the ZAR2,5 billion (US$135 million) originally budgeted, a
saving of approximately ZAR100 million to ZAR150 million (US$5 million to US$8
million). Production ramp-up is ahead of schedule with steady-state production
to be achieved during December 2024. Further details are outlined below:	*
Following the successful plant commissioning and first gold pour in early
October 2024, production of ~9,000oz is expected by end December 2024, with
forecast FY2025 production of approximately 33,000oz
* FY2025 all-in sustaining costs (AISC) are estimated at below US$1,000/oz
* Studies are underway to increase annual production from 50,000oz to
~60,000oz in the next year through:		* the installation of additional reactors
to further improve recoveries
* the addition of two carbon-in-leach (CIL) tanks to increase throughput from
800ktpm to 1mtpm, at a limited estimated capital cost of ZAR70 million (US$3.8
million)
* a prefeasibility study to be concluded in the next three months on the
inclusion of a hard rock crushing circuit enabling the processing of nearby
remnant hard rock sources
		
* A Soweto Cluster feasibility study is to be completed by September 2025,
with the study focusing on:		* the option of constructing a new processing
facility in closer proximity to the Soweto Cluster tailings storage facilities
(TSFs), which would be a stand-alone operation also producing approximately
50,000oz per year  
* the option to include additional proximal TSF resources that will add to the
LoM of the project
		
	
* Construction work at TCMG’s Noble’s Project is proceeding on schedule.
 

UNDERGROUND OPERATIONS

 
* Evander Mines’ underground production ramp-up delays from 24 to 25 Level
operations at 8 Shaft have now been resolved 	* The sub-vertical hoisting
shaft commissioning is being completed during December, enabling its full
700t/day hoisting capacity to be achieved
* A production loss of 7,000oz is now anticipated (compared to 5,000oz
previously communicated), resulting in production of approximately 12,000oz
expected for H1FY2025 and 38,000oz for FY2025 
* Underground mining operations with full crews continue on 24 Level as
planned
* Rapid recovery in the production run rate is anticipated in H2FY2025, with
mined ore transported to surface utilising the subvertical shaft and related
infrastructure
* Establishment of the 24 Level B-Line raise in Q3FY2025 further improving
face length and mining flexibility, with the average grade expected to improve
from 6.0g/t to 7.5g/t.
	
* At the Egoli project, following the dewatering of Evander Mines’ 7 Shaft,
long-inclined borehole reserve delineation drilling at 19 Level has commenced,
to further define the ore payshoot.
* Barberton Mines 	* Multiple Eskom transformer failures at Barberton Mines’
Fairview and Sheba operations negatively impacted production for 10 days in
November (by approximately 2,250oz), with the Eskom power utility’s back-up
units also failing as a result of ageing infrastructure. Further contingencies
are being implemented to prevent the failures from recurring, with additional
spare transformers to be kept on site in the future 
* High-grade areas of the 262 Platform at Fairview Mine, indicated by drill
intersections of up to 80g/t gold, are anticipated to be accessed by Q3FY2025
as development rates are accelerated 
* At Consort Mine, underground sampling has confirmed high-grade Mineral
Reserve areas below 41 Level in the Prince Consort (PC) Shaft area.
Rehabilitation work on the shaft has now been largely completed, allowing
operations to recommence
* Production of approximately 32,000oz is expected for the Barberton Mines
underground operations in H1FY2025 (H2FY2024: 34,690oz), with full year
production of approximately 73,000oz (FY2024: 71,470oz), excluding the BTRP.
 

FINANCIAL

 
* Apart from the zero-cost collars previously reported, Pan African will be
materially unhedged by March 2025, when the last tranche of the synthetic
forward sale is completed, following which the Group will fully benefit from
the spot gold price
* At prevailing spot gold prices, it is anticipated that the Group will be
fully de-geared in the next 12 to 18 months.
 

ENVIRONMENTAL, SOCIAL AND GOVERNANCE UPDATES

 
* Barberton Mines’ 8.75MWAC Fairview solar plant reached full capacity
during October 2024 and produced 1.1GWh, equivalent to an emissions reduction
of 1 ktCO2e, resulting in initial cost savings of approximately ZAR36 million
(US$2,0 million) per year
* The 3ML/day underground water recycling plant at Evander Mines has resulted
in municipal water cost savings of approximately ZAR8.8 million since
operations commenced in November 2023. The board has approved the expansion of
the plant capacity to 6ML/day, which will be completed during 2026
* At the MTR operation, environmental rehabilitation is ongoing, including
cleanup of historical spillages and removal of derelict pipelines, eradication
of alien vegetation and wetlands remediation, where some 122ha have been
completed to date.
 

COMPLETION OF TCMG ACQUISITION

 

Following the approval of special resolutions by the requisite majority of
shareholders at the Group’s annual general meeting on 21 November 2024, the
process of allotment of equity to the respective TCMG shareholders in terms of
the share acquisition agreement as outlined in the Company’s Stock Exchange
News Service announcement released on 5 November 2024, has been completed. 
TCMG is now a wholly-owned subsidiary of the Group.

 

FY2026 PRODUCTION GUIDANCE

 

It is estimated that the Group’s FY2026 production (excluding the TCMG
operation in Australia) will further increase to between 235,000oz and
250,000oz. This production enhancement is mainly driven by the steady-state
production at the MTR operation as well as increased production from Evander
Mines underground operations, following substantial investments in
infrastructure and development over the past few years.

 

Cobus Loots, Pan African’s chief executive officer commented:

 

“The performance of our MTR operation, completed ahead of schedule and under
budget, has exceeded expectations, with a successful production ramp-up and
the plant performing to specifications and at the same time maintaining an
excellent safety record. In terms of our production base, the Group is now
well diversified with both high-grade underground mining and high-margin
surface operations.  We are also excited about our ability to further expand
our surface business in the short term to the benefit of all stakeholders.

 

We expect a much-improved performance for the Evander Mines underground
operations in the second half of this financial year, with the large
investment in infrastructure and optimisation over recent years benefitting
this high-grade operation for more than a decade into the future.

 

We are poised to deliver a significant increase in gold production for the
full financial year, and then again in FY2026. By March 2025 Pan African will
also be largely unhedged, and at prevailing gold prices, the cashflow
generation from our long-life portfolio of quality assets should allow for
rapid de-gearing and flexibility in deploying capital on value-accretive
growth and further sector-leading dividends to shareholders.  

 

Pan African continues to excel in terms of our returns to shareholders, where
the Group was ranked third in the Sunday Times Top 100 Companies in 2024 (from
ninth in 2023). Additionally, the Group has now qualified for inclusion in the
Van Eck GDX Gold Miners ETF in the United States of America, which has
positively impacted liquidity and increases exposure to a larger pool of US
investors.”

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the
European Union (Withdrawal) Act 2018. Upon the publication of this
announcement via Regulatory Information Service (RIS), this inside information
is now considered to be in the public domain.

 

Rosebank

12 December 2024

 

For further information on Pan African Resources, please visit the Company's
website at

www.panafricanresources.com

 

 Corporate information                                                                                                                                                                                                                                                                                      
 Corporate office The Firs Office Building 2nd Floor, Office 204 Corner Cradock and Biermann Avenues Rosebank, Johannesburg South Africa Office: + 27 (0)11 243 2900 info@paf.co.za  Registered office 2 nd Floor 107 Cheapside London EC2V 6DN United Kingdom Office: + 44 (0)20 3869 0706 info@paf.co.za  
 Chief Executive Officer  Cobus Loots  Office: + 27 (0)11 243 2900                                                                                                                   Financial Director Marileen Kok Office: + 27 (0)11 243 2900                                                            
 Head: Investor Relations Hethen Hira                                                                                                                                                Website: www.panafricanresources.com                                                                                   
  Tel: + 27 (0)11 243 2900                                                                                                                                                                                                                                                                                  
  E-mail: hhira@paf.co.za                                                                                                                                                                                                                                                                                   
 Company Secretary Jane Kirton St James's Corporate Services Limited Office: + 44 (0)20 3869 0706                                                                                    Nominated Adviser and Joint Broker Ross Allister/Georgia Langoulant Peel Hunt LLP Office: +44 (0)20 7418 8900          
 JSE Sponsor Ciska Kloppers Questco Corporate Advisory Proprietary Limited Office: + 27 (0)63 482 3802                                                                               Joint Broker Thomas Rider/Nick Macann BMO Capital Markets Limited Office: +44 (0)20 7236 1010                          
                                                                                                                                                                                     Joint Broker Matthew Armitt/Jennifer Lee Joh. Berenberg, Gossler & Co KG (Berenberg) Office: +44 (0)20 3207 7800       

 



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