The share price of JSE- and Aim-listed Pan African Resources rose on Friday on the news that it had entered into an agreement to acquire gold tailings assets owned by Mintails Mining, which was placed in provisional liquidation in 2018, for up to R50-million, and that it would evaluate the merits of building another large-scale tailings retreatment operation similar to its flagship Elikhulu operation.

Under the terms of conditional sale-of-shares agreements, Pan African intends to acquire the share capital and associated loans and other claims of Mogale Gold and Mintails SA Soweto Cluster (MSC), both of which are wholly-owned by Mintails.

Pan African noted in a release that the provisional liquidation of Mintails had resulted in an opportunity for the company to acquire gold tailings mineral resources not previously retreated.

The combined mineral resources of Mogale Gold and MSC comprise historic tailings storage facilities (TSFs) that contain an estimated 243-million tonnes of tailings with a grade of 0.30 g/t gold, for an estimated gold content of 2.36-million ounces of gold.

The Mogale Gold TSFs, which comprise various individual dams, contain an estimated 123-million tonnes of remineable material at a head grade of 0.29 g/t, for an estimated content of 1.16-million ounces of gold. 

The MSC TSFs, which comprise nine separate facilities with resources of 119-million tonnes at a grade of 0.31 g/t, contain an estimated gold content of 1.2-million ounces.

The purchase price for Mogale Gold, including the assets, surface rights permits, deposition rights, mining right, water-use licence, rehabilitation liabilities and shareholder loans, is R37.5-million in cash. 

The purchase price for MSC, including its assets, rehabilitation liabilities and shareholder loans, is R12.5-million in cash.

Pan African will have six months to conduct a due diligence on the assets. The transactions, which are not inter-conditional, remain subject to conditions precedent, including approval by the Department of Mineral Resources and Energy in terms of Section 11 of the Mineral and Petroleum Resources Development Act. 

Pan African expects the conditions to be fulfilled before November 5, 2021.

“The opportunity to acquire these surface resources complements our strategy of focusing on safe, low-cost gold mining opportunities, with the potential to further grow our business by developing projects that meet our stringent investment criteria,” said CEO Cobus Loots.

Pan African has successfully executed on its strategy of producing gold safely from low-cost operations and diversifying its operations to include both underground and low-risk surface operations. It and its subsidiaries have a proven record of successfully commissioning and operating tailings retreatment projects, as demonstrated by the Barberton tailings retreatment plant, the Evander tailings retreatment plant and, most recently, its flagship Elikhulu operation.

Mining Weekly previously reported that Elikhulu means 'The Big One' in Zulu. The operation was built at a cost of R1.74-billion and poured its first gold in August 2018.

The company's share price on the JSE had risen by more than 5% on the news, while its share price on the LSE rose by nearly 5%.