Name of the Project
Elikhulu tailings plant project.

Location
The project is located at the Evander mine in Mpumalanga, South Africa.

Client
Pan African Resources.

Project Description
A definitive feasibility study (DFS) completed on the Elikhulu tailings plant project has shown the project to have excellent recovered grades and gold production, attractive financial returns and a low execution risk, with the DFS results surpassing expectations of previous technical and financial assessments.

The project entails establishing facilities and infrastructure at Evander Gold Mining to re-treat gold plant tailings at a rate of one-million tonnes a month. This is in addition to the existing production from the Evander Tailings Retreatment Plant (TRP), which will continue to operate independently of the project for the next 13 years.

Three existing tailings storage facilities (TSFs) will be reclaimed in the following order: Kinross, Leslie and Winkelhaak.

After processing, these will be consolidated into one enlarged Kinross tailings facility, contributing to reducing Evander’s environmental footprint and associated environmental impact.

The project is expected to yield an estimated 56 000 oz/y of gold for the initial eight years of production while treating the Kinross and Leslie TSFs, and about 45 000 oz/y for the project’s remaining five years from processing the Winkelhaak TSF.

These production figures exclude an inferred resource of 244 398 oz of gold delineated in the soil material beneath the existing tailings dumps.

The average gold recovery over the life of the project is forecast at 47.77%. Using modelled recoveries, the gold dissolution value estimated for Kinross is 51.38%, Leslie 48.29% and Winkelhaak 53.77%. Current arisings and inferred gold resources could extend the project’s life beyond the DFS estimated life-of-mine of 13 years.

The project has mineral reserves estimated at 187.1-million tonnes and comprises the Kinross (47-million tonnes), Leslie (70.1-million tonnes) and Winkelhaak (70-million tonnes) TSFs at Evander. The mineral reserves will provide feed material for the existing Evander TRP at 200 000 t/m, and for the project process plant at one-million tonnes a month, of which 40 000 t/m will be from run-of-mine tailings. The combined mineral reserve contains an estimated 1.73-million ounces of gold, of which an estimated 688 700 oz will be recovered over the life of the project. This estimate excludes the inferred resource of 244 398 oz of gold leached into the soil beneath the existing tailings dumps, which could potentially increase the life of the project. The mineral reserve estimate assumes a nonselective mining method, whereby the whole of the mineral deposit is mined in a predetermined sequence.

The mining method allows for a 100% extraction of the target mineral deposit. Hydraulic mining has been selected as the preferred mining method, as it is proven technology, cost effective and operationally well understood.

Jobs to Be Created
Between 400 and 700 temporary jobs will be created during construction, and between 180 and 250 permanent employment opportunities will be created during operation.

Net Present Value/Internal Rate of Return
The net present value is R1.1-billion and the internal rate of return is 23.1% with a payback period of less than four years, based on an assumed gold price of $1 180/oz.

Value
Phase 1 of the project is estimated at R1.74-billion.

This capital relates to the initial capital required to build the plant and associated infrastructure, and includes a contingency of R191.2-million to account for potential cost overruns and additional plant design requirements.

Capital of R313.1-million and R113-million for Phase 2 and Phase 3 respectively is required to establish the hydraulic mining infrastructure at the Leslie and Winkelhaak tailings dumps. This will be funded from project-generated cash flows.

Duration
Phase 1 of the hydraulic mining at the Kinross tailings storage facility is scheduled to start in the fourth calendar quarter of 2018, with full commercial production scheduled for December of that year.

Phase 2 at the Leslie tailings storage facility is scheduled for the end of the third quarter of 2021 and Phase 3 at Winkelhaak in the third quarter of 2026.

Latest Developments
Pan African has secured the final permits needed to start construction of the project.

The Department of Water and Sanitation has granted Pan African Resources a 20-year water use licence for the Elikhulu TRP project. An Integrated Environmental Authorisation has also been granted.

Following the successful $50-million equity raise in April 2017, Pan African has started funding the initial capital expenditure (capex) on the Elikhulu project’s civil engineering works and the procurement of long-lead-time items, such as the tower crane and the carbon-in-leach tanks, which are crucial to ensuring that construction deadlines are met.

Capex of about R175-million was incurred on the Elikhulu project during the quarter ended June 30, and capital spend remains on track relative to the total initial forecast capex of R1.74-billion.

Meanwhile, the facility agreement for the R1-billion Elikhulu term debt facility has been signed. The facility has been underwritten by Rand Merchant Bank, a division of FirstRand Bank, and the syndication has closed successfully, with an oversubscription of more than 50%. Use of the facility is subject to the fulfilment of customary conditions precedent, and the first drawings under the seven-year facility are scheduled for the final quarter of the 2017 calendar year.

Key Contracts and Suppliers
DRA Projects (feasibility study and detailed design and construction supervision service).

On Budget and on Time?
The plant is fully funded and construction on track.

Contact Details for Project Information
Pan African Resources project lead Jonathan Irons, tel +27 11 243 2900 or fax +27 11 880 1240.
Aprio Strategic Communications Public and Investor Relations on behalf of Pan African Resources, Julian Gwillim, tel +27 11 880 0037.