Pan African to put Evander underground back on its feet

Cobus Loots, CEO, Pan African Resources

PAN African Resources said it would complete the R40m refurbishment of underground shafts at its Evander Gold Mines in Mpumalanga province by April 15 with mining resuming soon after.

The completion date is almost bang on time following Pan African’s February 20 announcement that it would take 55 days to refurbish Evander’s 7 and 8 shafts with a 7% reduction in full-year production to 181,000 ounces.

It added that it had started the retrenchment of some 976 employees from Evander – about 30% of its 2,400 employees – after the firm served a Section 189 notice in March that enables it to restructure the operation. The retrenchments would cost up to R54m to conclude, it said at the time.

The two announcements will come as some welcome relief for Evander which had been loss-making for seven months as of March partly owing to a strengthening in the rand against the dollar. The rand has since lost more than 10% which, combined with a lift in the dollar gold price, sees the rand gold price increase to R560,000/kg, an increase of roughly R50,000/kg in less than a month.

“The retrenchment programme is currently being implemented and is expected to be completed within the next month,” said Pan African in a statement to the Johannesburg Stock Exchange. Shares in the company are 12% higher in the last 30 days.

Said Pan African: “Underground mining operations at Evander Mines will recommence following the completion of the refurbishment programme which is expected to be completed on or about April 15 with the hoisting of approximately 6,000 tonnes of miens ore currently stored within the Evander Mines underground infrastructure”.

Processing of these underground tonnes would assist with “… the expeditious ramp-up of Evander Mines’ underground production profile,” it said.

Included in the refurbishment is the replacement of the 7 shaft pump columns support infrastructure and the damaged section of the main pump column at the 7 shaft as well as assessment of underground infrastructure “… critical to maintaining and sustaining production,” the company said.

Getting the underground operation of Evander back on its feet represents a good month for Pan African. In addition to an improved price received for its gold, the company last week also announced the sale of its shares in Uitkomst, a thermal coal mine, for R275m. This brings the company squarely back to its gold focus while the funds would pad the balance sheet which could be used to fund more growth in gold production.