PAN African Resources said it had cut capital expenditure on the expansion of Mintails gold tailings deposits by about R700m following a definitive feasibility study.
A final investment decision on the expansion – now estimated to cost R3.68bn – will be made in December, the gold miner said in an announcement today.
The expansion involves building a new tailings retreatment circuit along with associated infrastructure such as a pumping station and pipelines for mining of the ‘Soweto Cluster’ of surface waste deposits west of Johannesburg.
Pan African currently retreats tailings from the Mogale dumps from which it produces between 50,000 and 60,000 ounces of gold annually. Once the expansion is complete, the Mintails assets will account for 100,000 oz a year, at peak production.
The expansion was estimated to cost R2.8bn in November last year. The increase in the cost takes into account construction of a dedicated new tailings storage facility. Costs will also be reduced if Pan African is able to get permission for a shorter pipeline route.
At a gold price of $3,550/oz, the project expansion will achieve an ungeared internal rate of return of 29.55%. Payback will be in about three years post commissioning. Construction is expected to take about 28 months.
No mention was made about financing the project, but Pan African is in good financial shape, having surged back to net cash in the 2026 financial year despite the $54.2m acquisition of Tennant Consolidated Mining Group in November last year. Tennant’s main asset, the Nobles mine in Australia, has added 50,000 oz to Pan African’s overall production.
For the 2027 financial year, Pan African expects to mine between 280,000 oz and 302,000 oz, an increase driven by Nobles.
Pan African will report production of 272,373 oz next week when it publishes its year-end results – an increase of 38.3% but at the lower end of guidance owing to the slower-than-expected ramp-up of production at Nobles. All-in sustaining costs will come in at $1,870/oz – the upper end of forecast costs for the year.
Despite this, earnings are expected to triple. Headline earnings per share will be 17.35 US cents and 17.94 US cents, compared to 5.89c/share in the previous financial year, representing a 195% to 205% year-on-year improvement.
