JOHANNESBURG (miningweekly.com) – South Africa was on Wednesday reaffirmed as a country where business is able to do what is required, when London- and Johannesburg-listed gold mining company Pan African Resources outlined the remarkably efficient manner in which this country’s regulatory environment facilitated the closure of a lossmaking underground mine in three months, and the building from scratch of a business-boosting R1.7-billion surface gold project in a country record of ten months.
When the company’s cash-haemorrhaging Evander underground operations exponentially put the company at high risk, its management rapidly took successful steps within this country’s regulatory frameworks to return to international competitiveness as South Africa’s lowest-cost gold producer and a sector-leading dividend payer. (Also watch attached Creamer Media video).
Speaking at the presentation of results during which the company’s remarkably fast turnaround was achieved across multiple regulatory fronts, Pan African CEO Cobus Loots removed false notions about South Africa being a country where regulation has immobilised business.
In repositioning, it rebuilt on the basis that it was not good enough to be the lowest-cost gold producer in South Africa, but it was imperative to be competitive with international peers.
That meant not producing at an all-in cost of $1 200/oz, but at a cost of between $800/oz and $900/oz as an even safer, more profitable organisation with a strong growth horizon.
“To be clear, safety is our number one priority and we’ll never be complacent about safety. Despite an excellent performance in the last year, we can and we will do better,” Loots promised the investors, analysts and journalists present.
The company has successfully obliterated unprofitable production ounces from the Evander 8 Shaft, which was losing nearly R30-million a month.
After internal and external reviews, the board made the decision to shut the shaft. During the 12 months ended June 30, 1 635 employees were retrenched at a cost of R161-million and the run-of-mine circuit in the Kinross metallurgical plant closed.
It was all done within three months and has completely bettered the cost and profitability profile of the business.
“The fact that we have managed to successfully close a large-scale operation in such a short timeframe also demonstrates that you can do business and do what your business requires in South Africa,” Loots said.
Moreover, the company poured the first gold at Evander’s new Elikhulu tailings project more than two months ahead of the original feasibility schedule.
“It shows that we can build things and we can attract capital and we can achieve returns in South Africa,” Loots commented to Mining Weekly Online.
Pan African is guiding an output of 170 000 oz for the next year when the underground operations should be producing at below $1 000/oz, Evander's tailings operations at $650/oz and the Barberton Tailings Retreatment Plant (BTRP) at $750/oz. A challenge-alleviating regrind mill at the BTRP plant is now enhancing processing efficiency there.
“This is very competitive, even when we compare ourselves with international peers,” he noted.
On the safety front, a one-million fatality-free shifts milestone has been attained and progressive stakeholder engagement at Barberton Mines is kindling hopes of minimal operational stoppage. Barberton Mines experienced 58 lost production days in the period, owing to industrial action and community unrest.
Barberton Mines’ sub-vertical shaft project at Fairview is expected to facilitate improved future access to the high-grade Fairview 11-block Main Reef Complex orebody, the promising Royal Sheba exploration project at Barberton Mines is providing potential short- and medium-term access to low-cost near-surface underground ounces and the Egoli project at Evander Mines is presenting itself as a potential future standalone underground project.
The Royal Sheba drilling results have surpassed expectations with near-surface material graded at close to 4 g/t. Rendering it more attractive is that it is not refractory in nature and very susceptible to normal crushing, milling and carbon-in-leach circuitry.