Gold mining company Pan African Resources is looking forward to a much-improved performance in 2018, with a substantial increase in gold production.

The group’s gold production guidance for the financial year ending June 30, 2018, is 190 000 oz-plus, a 10% increase on 2017 gold production.

During the past year, Pan African reaffirmed its gold focus.

“We look forward to a much- improved performance in 2018, with a substantial increase in gold production,” Pan African CEO Cobus Loots commented.

In an operational update for the 12 months to June 30 just past, the company says its Elikhulu tailings retreatment plant project is on track to contribute low-cost gold ounces and profits in the next 18 months.

Going forward, the completed Evander Mines shaft refurbishment and restructuring programme is yielding substantial cost savings.

Being undertaken with internal funding is a R105-million project aimed at yielding an additional 7 000 oz to 10 000 oz of gold a year from the development of a subvertical shaft at the high-grade Fairview mining operation, at Barberton Mines, for which a feasibility study has been completed.

Also reported is that the Evander Mines team has been mandated to bring the 2010 Pay Channel project to account in a profitable and value-accretive manner in the near term.

The company has a strong financial position, with sharply reduced net debt of R66.7-million, compared with R339.7-million last year and available debt facilities of R880.2-million.

In the next financial year, initiatives will continue at Evander Mines to ensure a sustainable and consistent performance from the operation.

These include the continuation of the engineering work plan to improve the reliability of the shaft and related infrastructure, taking in a pump column at 8 Shaft, buntons and guides steelwork at 7 Shaft and shaft bottom arrangements for both 7A and 8 shafts.

Improving the total square metres blasted per panel and per crew will be brought about by a clean mining programme, stoping width reduction through the introduction of improved hanging wall support, improved fragmentation resulting from optimisation of the blast design and improved quality of sweepings through the introduction of user-friendly blasting barricades and additional sweeping tools.

Old gold vamping, involving the cleaning of mud accumulation in redundant declines and spillage in and around the belt declines, as well as pillar mining and vamping at 7 Shaft, is also planned.

Set to continue for the remainder of the 2018 financial year is mining in the high-grade areas of the Fairview gold mine’s 11 Block, where the commissioning of a new bulk air cooler is expected to improve productivity by lowering ambient temperature at the work face by 3 ºC to 4 ºC.

The completed feasibility study into the new subvertical shaft addresses the flexibility constraints currently experienced at Fairview and increases gold production from this high-grade and long-life orebody.

The Fairview mining operation is currently restricted by the hoisting capacity of its No 3 Decline, which is used to access workings below 42 Level. This decline is currently used to transport employees, material and rock. The 11 Block, or MRC, orebody has an average grade of 31.3 g/t and a current life-of-mine of 22 years.

With no intervention, future mining at depth will result in an increased travelling distance and reduced employee facetime and cause a lack of capacity to ensure both ore replacement and exploration development.

Pan African, with the assistance of DRA Projects, has completed a feasibility study on the construction of a raisebored subvertical shaft from Fairview’s 42 Level to 64 Level, with the potential of continuing the vertical shaft in the future to 68 Level.

This subvertical shaft will be used to transport employees and material to the working areas, which will allow the No 3 decline to be used exclusively for rock hoisting, increasing overall capacity and production from this mining area.

DRA has reviewed the technical and commercial aspects of the project and the supporting feasibility study has yielded very positive results.

The estimated capital expenditure (capex) for the project, including contingencies of R105-million, will be incurred over a two-year period.

The productivity improvements for Fairview are predicted to yield an additional 7 000 oz of gold a year, which can be optimised further to more than 10 000 oz a year.

Elikhulu Project Update

The Elikhulu project is progressing according to plan, with project completion and first gold expected in the last quarter of the 2018 calendar year.

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

Capex of R175-million has been incurred on Elikhulu and capital spend remains on track relative to the total initial forecast capex of R1.74-billion.

The signed facility agreement for the R1-billion Elikhulu term debt facility, underwritten by Rand Merchant Bank, a division of FirstRand Bank, closed with an oversubscription of more than 50%.

The first drawings under the seven-year facility are scheduled for the final quarter of the 2017 calendar year.

Together with the group’s existing R1-billion revolving credit facility, these facilities comprise the core debt instruments for funding the group’s capex programmes. The low-cost, long-life Elikhulu project is expected to increase the group’s annual gold production by more than 50 000 oz a year and reduce the group’s average all-in cost of production.

Evander 2010 Pay Channel

The 2010 Pay Channel resource is next to the 7 Shaft infrastructure and extends from the boundary of Taung Gold International Limited’s 6 Shaft project and mining rights.

A programme to drill a further exploration borehole from surface has increased geological confidence in the 2010 Pay Channel orebody.

An exploration borehole successfully intersected the Kimberley reef at a depth of 2 km, highlighting a reef intersection with a 6 cm width at 36.8 g/t.

Additional drilling deflections will be performed to further delineate the orebody. The previous borehole into the 2010 Pay Channel yielded reef intersection with a 49 cm width at 36.04 g/t.

Harmony Gold, which previously developed the 7 Shaft mine workings towards the 2010 Pay Channel, halted all development, other than on 8 Shaft, in 2009, leaving standard footwall and on-reef development to be completed, with the associated engineering infrastructure and dewatering, before mining can start.

The 2010 Pay Channel is 3 km in tramming distance from 7 Shaft, which is currently used by Evander for hoisting to the Kinross metallurgical plant.

This compares favourably with the 8 Shaft mining areas, which are 10 km in tramming distance from 7 Shaft.

The feasibility study under way will collate geological data from the drill hole intersection and deflections.

It will also look at the cost and timing of dewatering and re-equipping the 7 Shaft No 3 decline from 18 Level to 22 Level and the development cost and timing to access the 2010 Pay Channel, which has the potential to increase Evander’s gold production at a relatively low capital cost, using established shaft and metallurgical facilities.

The feasibility study for the project is expected to be completed in the first quarter of next year.

Meanwhile, 173 000 oz of gold was produced for the current reporting period, 4.4% below the production guidance provided, owing to a slower-than-anticipated restart of the underground mine at Evander and operational challenges experienced at Barberton Mines, which have now been remedied. Evander Mines’ 7 Shaft refurbishment has been successfully completed, and the restructuring programme is materially complete.