 JOHANNESBURG (miningweekly.com) – Police have arrested six of the seven gold-theft syndicate leaders that have been plaguing Barberton gold mines, London Aim- and JSE-listed Pan African CEO Jan Nelson told Mining Weekly Online on Tuesday.
Nelson said that police were also in hot pursuit of the fleeing seventh syndicate leader.
Pan African has been turned around from a loss-making exploration company to a gold miner producing 100 000 oz/y of gold and set to produce 11 000 oz/y of platinum.
Its Barberton Mines sold 98 000 oz of gold during the year, an increase of 0,76% on the previous year. Although marginal, the increase is significant in light of mining being stopped for two weeks in December because of criminal mining activities.
"Effectively, the Barberton syndicates have been broken. The pleasing thing to say is that I think we've solved the criminal-mining problem, " Nelson commented, after announcing the company's 9% increase in earnings before interest, tax, depreciation and amortisation (Ebitda) and impairments, to £25-million in the year to June 30. The impairment charge was for a failed investment in the Central African Republic. The cash position of the junior miner, which announced a final £5,26-million dividend, rose 435% to £12,8-million.
The company's steep security costs, which soared 237% in the year to June 30, to £2,7 million, are already abating: "Effectively, we were spending R4-million a month on security," Nelson told Mining Weekly Online. At one stage the company was paying for continuous helicopter patrols. But last month that monthly cost virtually halved to just over R2-million.
"We'll bring that down still further to R1,6-million a month in the next three months," Nelson said.
In combating criminal mining, Pan African has been conducting an intelligence approach to security. The informants who infiltrated the syndicates systematically provided intelligence that enabled the South African police in Nelspruit to swoop.
""It's all based on intelligence. If you know what the other parties are doing, you can counter them. The police and State prosecutors have also done an outstanding job," Nelson said.
He also paid special tribute to Harmony Gold CEO Graham Briggs and his team for assisting the company and commended Mineral Resources Minister Susan Shabangu for coming on site and applying significant pressure.
The crackdown on criminal mining has resulted in a significant increase in gold production.
The gross revenue from gold sales increased by 29% to £68,5-million and the cost of production by 42% to £40,6 million.
Production is expected to continue to increase as a result of increased capital investment and increased mining flexibility.
In rand terms, the cost of production increased by 17% to R483-million, attributable mainly to a 42% increase in electricity costs to R42-million.
Total capital expenditure (capex) at the mine increased by 20% to R70,4-million.
All old-order mining rights have been converted into new-order rights for Fairview, New Consort and Sheba mines, which make up the company's Barberton mining operations.
Barberton Mines paid £84-million to the South African government in royalties. Group income tax decreased by 6% to £7,7-million owing to a lower tax rate percentage calculated in accordance with the South African gold mining tax formula, which calculates a rate based on the ratio of revenues to mining costs and capex. The effective tax rate decreased from more than 50% to just over 34%.
Shaft sinking has been completed up to 36 level at Sheba mine and horizontal development has begun. The hanging wall contact has been intersected and development on this contact towards the cross fractures is under way.
Two of Fairview's capital projects have been completed and there are exploration drives at Consort mine's 40 level and 37 inter level, while sinking has progressed at Consort's 50 level decline.
Barberton Mines currently indicate an improved life of mine from ten years to 15 years.
Focus has shifted towards the identification of shallow, low cost mineral resources, which can be brought to account in the near term.
The resource of the Phoenix platinum project is 469 000 oz, a third located on the surface.
The current feasibility work indicates a 25-year life of mine at 11 000 oz/y.
Plant construction should begin in the second half of 2010 with commercial production in the second half of 2011.
The viability of Pan African's Manica gold project in Mozambique is being investigated in phases, of which assessing the oxide mining potential will be the first phase, followed by a mining option focusing on the sulphide bearing portion of the Fairbride project. The assessment of the first phase will be completed by the end of October.
None of 43 projects that Pan African reviewed during the year fulfilled the company's investment criteria.
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