Midtier gold mining company Pan African is rolling out vibrant internal growth projects involving the revival of Evander Mines’ 7 Shaft and the alleviation of congestion at Barberton Mines’ Fairview operation, which will provide the flexibility needed to better exploit what is arguably the highest-grade underground orebody in the world.
At Evander, 7 Shaft revival will involve the dewatering to open the way for subsequent additional vamping and pillar mining on available panels.
Part of the same Evander 7 Shaft revival is the 2010 Pay Channel project, on which a feasibility study will be completed in early 2018.
The Pay Channel, which adjoins 7 Shaft, will not require a new vertical shaft or plant infrastructure, with access gained from the No 3 decline, which is already developed from 15 to 21 level.
Dewatering and refurbishing of the No 3 decline will be required from 18 level downwards.
“The focus will be to rejuvenate 7 Shaft and, within the next four years, significantly increase underground production at Evander,” Pan African Resources CEO Cobus Loots explained to Mining Weekly.
At Barberton Mines, the key focus is the putting down of the subvertical shaft between 42 Level and 64 Level at the company’s Fairview operation, with the potential to eventually extend that shaft down to 68 Level.
“That’s going to give us massive flexibility in what is one of the highest-grade orebodies, if not the highest-grade orebody of any scale underground in the world,” Loots commented. Fairview’s 11 Block Main Reef complex orebody section is graded at 35 g/t.
Up to now, Pan African has reinvested in its operations, while simultaneously providing cash dividend returns for its shareholders.
The London- and Johannesburg-listed company has also established a record of turning growth projects into free cash at high speed.
This was done sensationally at the Barberton tailings retreatment project, where payback was achieved after a mere 18 months and at an amazingly low all-in cost of $392/oz and now a repeat performance is expected at the higher-volume Elikhulu tailings retreatment project, which is poised to deliver at an all-in cost of below $550/oz from the last quarter of next year.
What the company is also now working on intensely is a reversal of the declining underground production trends being recorded at Evander and Barberton.
Evander Mines’ 40-year-old 7 Shaft, which is currently being used for rock hoisting, will in future provide the infrastructure for pillar mining and vamping while a feasibility study is undertaken into the mining of the 2010 Pay Channel orebody.
A vertical borehole sunk into the 2010 Pay Channel in the past year has confirmed all the expectations of this orebody.
It, too, can be accessed from existing infrastructure and an added plus is its distance from 7 Shaft.
To put it into context, ore is currently trammed 13 km from 8 Shaft for hoisting up 7 Shaft, whereas the ore from the 2010 Pay Channel orebody will have to travel only 3 km to 4 km to get to the hoist at 7 Shaft.
Loots, who visited the underground area two months ago, was impressed by the upkeep of the infrastructure and the state of the ore.
“The ore’s in very good nick – infrastructure is well maintained, so that’s exciting,” he told Mining Weekly.
The Africa-focused precious metals mining company, which has a resource base of 34-million ounces of gold, in the 12 months to June 30, invested capital totalling R613-million on sustaining and expanding its underground and surface operations at Evander and Barberton.
In the 12 months to June 30, its tailings businesses contributed 56 218 oz of gold at an all-in sustaining cost (AISC) of $477/oz, with the company reminding stakeholders of the “game-changing” efficacy of the upcoming R1.7-billion Elikhulu gold tailings project now under construction.
Funding is in place and comprises the R1-billion seven-year debt facility from RMB and the R705-million raised in a share placing.
“The payback on that project is quite exceptional. We’re forecasting payback of about four years,” Loots told Mining Weekly.
After the commissioning of Elikhulu, more than a third of total gold production will be from its low-cost and low-risk tailings businesses.
Pan African is guiding output of 190 000 oz-plus in the 12 months to June 30 next year, which is seen as a conservative number.
Once Elikhulu reaches steady state at the end of 2018, the forecast is that output will increase to 250 000 oz-plus, with the revival of 7 Shaft at Evander and the addition of the subvertical shaft at Barberton contributing ounces at moderate cost.
The indications are that Elikhulu will lower the AISC of the group to below $900/oz.
Ongoing capital expenditure in the current 2018 financial year is expected to total R300-million, with the subvertical shaft at Barberton Mines requiring an additional R100-million that will be spent over two years.
“We’re quite happy with our robust statement of financial position, or balance sheet. “At the end of the year, we had some R70-million worth of debt and, with the sale of Phoenix, once we get that done and concluded, that’ll bring in an extra R90-million. So, we’re quite positive and comfortable from a debt perspective,” he added.
Pan African concluded a conditional agreement in July for the disposal of all its shares and loan accounts in its wholly owned noncore subsidiary, Phoenix Platinum, to Sylvania Platinum for cash.
Options are also being evaluated to access the “fantastic” Rolspruit orebody, which is effectively an extension of what is being mined currently at Evander 8 Shaft.
Being studied are ways to access portions of the Rolspruit orebody in the quickest possible way and using minimal capital.
Bringing Elikhulu in below budget and ahead of schedule is also an intense current aspiration.