www.miningmx.com | gold_silver Pan African changes tack on Manica gold

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Jan Nelson, CEO, Pan African Resources

� Pan African warns on Manica gold
� Pan African sets sights on gold growth
� Metorex extends arm in PAF takeover

Pan African changes tack on Manica gold
Allan Seccombe
Posted: Wed, 11 Jun 2008

[miningmx.com] -- PAN African resources has extended work on deciding whether it will have a gold mine at Manica in Mozambique by three months to incorporate high grade areas to counter soaring input costs and to plan an underground mine not originally envisioned, CEO Jan Nelson said on Wednesday.

Acknowledging shareholders might be frustrated by the three-month delay in issuing the pre-feasibility study, Nelson said evolving circumstances had resulted in Pan African changing its approach to the ore body.

�The delay is because of the new geological interpretation, the fact we have to do underground mine design and the new costing,� Nelson told Miningmx. �I�ve perhaps been too optimistic about the time line as well.�

costs are the big, big issue

�The difference between the scoping study and now is that we have more data, but costs are the big, big issue,� he said.

�Obviously it�s a disappointment when a company under-delivers on a promise. The only thing we can do now is be honest about it and say we are late, but it�s more important that we do a proper job here.�

This was not all bad news for investors because it reflected a more considered approach to the project, he said.

�We�ve got a more cautious and slower approach than before. Before you had a bunch of geologists and now we�ve got all the mining skills of Metorex behind us.

�That�s given us a reality check to slow down and look at this properly. It�s painful, but that�s the advantage of having the mining skills and experiences of the guys who�ve done this before,� he said.

Metorex is a diversified South African mining company, which has built a copper and cobalt project at Ruashi in the Democratic Republic of Congo and is busy studying re-starting the old Kinsenda mine there. Metorex owns 74% of Pan African.

Pan African�s stock is trading just above a year low. From a high of 9.75 pence on AIM in early November 2007, the price is now at 5.38. In morning trade, the share shrugged off the Manica news and was up 2.4% in London. On the JSE, the shares were up one percent at R0.92 on small volumes.

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Given the current capital raising difficulties for exploration and junior companies and the gloom on AIM it might be a sensible move to take the company to a bourse like Toronto, where circumstances and investor attitudes are slightly more favourable for a company such as Pan African.

Nelson declined to say whether Manica would go ahead or not.

�We don�t have an answer yet on the project. The answer is not positive or negative. We need a solid answer that can convince the board and shareholders that this is the right project for the company to develop.�

Pan African will also begin talks with the Mozambican government about royalty payments, which are set at 10% on revenue.

Nelson said the company understands this rate is negotiable and it hopes to have answers as part of the finalised pre-feasibility study that should be released in September if not sooner.

The Manica mine, if it is built, could produce 50,000 to 100,000 oz of gold a year, but this will be part of the study, and Nelson declined to be drawn on what the figure is likely to be.

�We are not going to start a mine for any less than 50,000 oz,� he said.

A bright spot for Pan African is the identification of five exploration targets at the Barberton mine, formerly owned by Metorex. The South African mine produces some 100,000 oz of gold a year, providing capital towards Pan African�s exploration projects in Mozambique, Central African Republic and Ghana.

Pan African has chosen the five largest of the exploration targets on which to focus the attention of its geologists over 12 months. These are intended to expand the production profile at Barberton, supplementing the prospects that will keep output steady.

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