REG-Pan African Resources Plc: Significan progress on renewable energy developments

Pan African ResourcesAnnouncement

15/05/2023 09:00

Pan African Resources PLC (Incorporated and registered in England and Wales under the Companies Act 1985 with registered number 3937466 on 25 February 2000) Share code on AIM: PAF Share code on JSE: PAN ISIN: GB0004300496 ADR ticker code: PAFRY (“Pan African” or the “Company” or the “Group”)              Pan African Resources Funding Company Limited Incorporated in the Republic of South Africa with limited liability Registration number: 2012/021237/06 Alpha code: PARI  

PAN AFRICAN ANNOUNCES SIGNIFICANT PROGRESS ON ITS RENEWABLE ENERGY
DEVELOPMENTS

Pan African is pleased to update shareholders on developments at the Group’s
8.75MWAC (10.465 MWP) Barberton Mines’ Fairview solar facility and the
conclusion of a Power Purchase Agreement (PPA) with Sturdee Energy (Pty) Ltd
(Sturdee Energy) comprising a 40MW wheeled renewable energy solution.

Highlights

Barberton Mines’ Fairview solar facility
* Engineering, procurement and construction (EPC) agreement entered into with
JUWI Renewable Energies (JUWI), a leading solar, wind and hybrid project
developer for the construction of an 8.75MWAC solar photovoltaic (PV)
renewable energy facility (Fairview solar facility) at Barberton Mines’
Fairview operation. The plant is expected to provide: 	* cost savings of
approximately ZAR26 million (US$1.4 million at a prevailing exchange rate of
approximately US$/ZAR: 18.00) in year one with an average of R40 million per
year (US$2.2 million) per year over the life of the plant 
* a reduction in CO2 emissions of approximately 22,000t/year
 

Sturdee Energy Power Purchase Agreement
* A PPA has been entered into for a 40MW wheeled renewable energy solution,
with the generation capacity available to any of the Group's operations
 

Other initiatives
* Pan African has also made significant progress in implementing its renewable
energy strategy, which aims to achieve long-term sustainability by securing a
stable energy supply, reducing CO2 emissions and realising all-in sustaining
cost (AISC) savings through large scale renewable energy projects. The
Group’s ongoing projects include:	* A feasibility study being progressed to
expand Evander Mines’ 10MW solar PV renewable energy facility by at least an
additional 12MW to secure additional capacity for Evander Mines’ long-life
24, 25 and 26 Level projects
* A feasibility study has also commenced on a solar PV renewable energy
facility for the Mogale Tailings Retreatment Plant
	
* Following the successful implementation of these projects, and based on
preliminary feasibility studies, Pan African will generate approximately 28%
of its power requirements through renewable energy, with a cumulative
estimated reduction of 137,000t in CO2 emissions annually and projected annual
cost savings of up to ZAR154 million (US$8.6 million) for the Group, at
current estimated Eskom tariffs and projected future price increases.
 

In May 2022, Pan African was the first South African mining company to
successfully commission a utility-scale, grid-tied solar PV plant with Evander
Mines’ 10MWAC (12MWP) solar PV renewable energy facility (Evander solar
facility). The EPC works for the project were also completed by JUWI.

 

Fairview Solar PV renewable energy facility

In early 2020, Pan African commenced studies for the development of the
8.75MWAC Fairview solar facility at its Barberton operations. This facility is
now fully permitted, including its water use licence, environmental approvals
and its registration with the National Energy Regulator of South Africa
(NERSA).

To accelerate the site work at the Fairview solar facility, an early works
phase was undertaken by JUWI and is nearing completion. This phase included
various activities such as the facility design and conducting specialist
studies that are essential for completing the detailed design and cost
estimation for the subsequent EPC work.

The Fairview solar facility’s plant is expected to generate approximately
ZAR2.2 million in monthly cost savings in year one. Assuming an estimated
annual tariff increase rate, by Eskom, of 10% per year, a payback period of
approximately 8 years is estimated. Based on preliminary studies, Fairview’s
solar facility will reduce the Group’s carbon emissions by some 22,000t of
CO2 per annum. The solar facility is expected to have an economic life in
excess of 25 years, which is sufficient for the mine’s current 20-year life
of mine, based on current Mineral Reserve estimates.

JUWI is one of the world’s leading renewable energy companies specialising
in the development, EPC, operation and maintenance of private and public
utility scale solar and wind energy projects. JUWI has successfully installed
over 400 MW of renewable power facilities in South Africa (5.5 GW globally)
and has developed wind and solar sites across South Africa. Additionally, JUWI
is listed in the top 10 solar EPC contractors globally and is the leading
renewable energy specialist for mining companies. JUWI was also the EPC
provider during the construction of Pan African’s Evander solar facility.

The construction of Fairview’s solar facility will be financed on a
ring-fenced debt basis similar to the Evander solar facility. Financing
Proposals have been obtained from a number of interested parties and are
expected to be finalised and available by June 2023.

Sturdee Energy Power Purchase Agreement

Pan African has also entered into a PPA with Sturdee Energy for a wheeled
renewable energy solution of 40MW from its Bela-Bela Project (Bela) solar PV
facility in Limpopo to any of the Group’s operations.

The initial PPA term is for 10 years, with the option to extend it for another
5 years. The indicative tariffs over the extended 15-year period will be
significantly lower than that expected from Eskom. The Bela solar PV facility
is expected to provide approximately 112,399 MWh of renewable energy per annum
to Pan African, resulting in an estimated ZAR646 million NPV10 savings over a
10-year period and ZAR884 million over a 15-year period.

There may also be further tariff savings if this 40MW Bela project is scaled
up to its permitted 75MW of solar power. The resultant economies of scale
associated with the construction of such a larger project should result in an
even lower tariff for Pan African.

The Bela solar PV facility has already obtained the key permits required for
construction. This includes environmental approvals, water use license, and
rezoning approvals. The facility will be connected to the Eskom grid via a 132
kV line in the area of Bela Bela.

The PPA is subject to standard terms and conditions typical for agreements of
this nature and will become effective following the construction of the Bela
solar PV facility, estimated to take place during the 2025 calendar year. The
Bela project will be funded by third party financial institutions with no
upfront contribution from Pan African.

Sturdee Energy is an African independent power producer with a track record of
developing, owning and operating over 600MW of renewable energy projects in
South Africa. Its vision is to deliver economic growth and socio-economic
development to Africa through the production of reliable renewable energy.
Further, Sturdee Energy’s focus is delivering renewable energy to corporate
and industrial customers on short and long term power purchase agreements
through onsite or wheeled power. 

Pan African’s renewable energy roadmap to decarbonisation

Pan African has embarked on a renewable energy strategy that includes:
* The construction of its 10MWAC Evander solar PV facility, the first
utility-scale, grid-tied solar PV plant to be commissioned in South Africa
* The construction of an 8.75 MWAC solar PV facility at Fairview Mines
* The entering into of the 40MWAC Sturdee Energy PPA for the provision of
wheeled power over a period of up to 15 years
* The development and construction of a second solar PV facility with a
minimum output of 12MWAC at Evander Mines
* The construction of a solar PV facility at its Mogale operations.
 

Cobus Loots, Chief Executive Officer of Pan African Resources, commented:

“Our solar PV renewable energy initiatives are key components in progressing
Pan African’s renewable energy strategy and in achieving our sustainability
targets. In addition to measurably reducing the Group’s carbon emissions,
these projects will assist in stabilising the electricity supply to our
operations, while also realising commensurate cost savings that will assist in
reducing our overall AISC per ounce of production in the longer term.”  

Certain information communicated in this announcement was, prior to its
publication, inside information for the purposes of Article 7 of Regulation
596/2014.

Rosebank

15 May 2023

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

www.panafricanresources.com

 Corporate information                                                                                                                                                                                                                                                                                                                                                                       
 Corporate office The Firs Office Building 2nd Floor, Office 204 Cnr. 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 7796 8644 info@paf.co.za  
 Chief executive officer  Cobus Loots  Office: + 27 (0)11 243 2900                                                                                                                                                                                                    Financial director  Deon Louw  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 7796 8644                                                                                                                                                                     Nominated adviser and joint broker Ross Allister/David McKeown Peel Hunt LLP Office: +44 (0)20 7418 8900               
 JSE Sponsor and JSE debt sponsor Ciska Kloppers Questco Corporate Advisory Proprietary Limited Office: + 27 (0) 11 011 9200 (https://www.google.co.za/search?q=questco&rlz=1C1EJFC_enZA816ZA818&oq=questco&aqs=chrome..69i57j0l5.1159j0j4&sourceid=chrome&ie=UTF-8)  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 Office: +44 (0)20 3207 7800                   

 



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