Midtier gold mining company Pan African Resources has successfully raised R705-million in a share placing, the net proceeds of which will be used, together with a R1-billion seven-year debt facility, to fast-track the high-return Elikhulu gold tailings project in Mpumalanga, according to JOHANNESBURG (miningweekly.com).
Pan African CEO Cobus Loots drew grateful attention to the good support the company received in the placing from both new and existing investors and applications will be made for the placing shares to be admitted to trading on the London Aim- and JSE on April 19.
The issue prices represented discounts of 11% to the R2.72 a share price in South Africa and 12.5% to the 16p a share price in the UK.
At a gold price of $1 180/oz, Elikhulu has a net present value of $75.6-million, a real post-tax internal rate of return of 34.3% and a low all-in sustaining cost (AISC) of $527/oz of gold, for a 13-year life-of-mine at an average gold production of 52 000 oz/y.
Elikhulu will produce at a rate of 56 000 oz/y of gold for its first eight years of operation and at a rate of 45 000 oz/y for the remaining five years, a definitive feasibility study (DFS) completed in December has determined.
The project‘s debt redemption profile matches its cash flows, resulting in the funding arrangements not impacting on Pan African’s ability to pay dividends during the construction period.
Long-life, low-cost tailings retreatment operations are becoming synonymous with Pan African and Elikhulu’s successful entrenching of this position could possibly unlock other tailings opportunities.
The R1.74-billion project is expected to add 25% to the group’s current 200 000 oz/y production profile and reduce its AISC, and its advance comes against the background of the refurbishment of the 7 and 8 Shaft complex at its Evander mines coming in within the R40-million budget, and on time for April 15 completion.
Cash outflow an ounce over the life of the operation is below $650/oz and amounts to $805/oz over the debt redemption term.
Pan African will be bolstered by the experience gained in the construction and operation of the Barberton tailings retreatment plant and the Evander tailings retreatment plant, positioning it well for Elikhulu’s smooth construction and operation.