[miningmx.com] — PAN African Resources (Pan African) shares were unchanged in trading on both the London and Johannesburg stock exchanges after the announcement on Friday that it intended spinning out its Manica gold project in Mozambique.
According to Pan African CEO Jan Nelson a separate management team headed up by Craig Hutton as CEO and including Dean Cunningham as executive director has been appointed to run the Manica project.
Nelson added TWP Projects and Basil Read were also involved in the development of Manica as strategic partners.
The company will be listed separately on “an appropriate international exchange’ which Nelson declined to name at this stage, but said it would not be either the JSE or the LSE.
Nelson told Miningmx “it was decided that Manica is a good project and it was time to get on with it. We cannot keep putting it on hold but the capital cost cannot be funded by Pan African.
“Our major shareholders want us to focus on the development of our South African projects where we are also looking at further acquisitions.
“We hope to have the new listing in place by the end of the calendar year and Pan African will retain a stake in Manica.’
The Manica project is situated in central Mozambique close to the Zimbabwe border town of Mutare and near the Mutare-Beira road and rail corridor.
The deposit is currently estimated to have a life-of-mine of 11 years during which it would produce an average of 80,000oz of gold annually from both a heap leach and underground mine.
According to a presentation given by Pan African to the Mozambican Minister of Mines on August 18 the development of Manica would follow a two-pronged strategy.
Production would build from an initial 20,000t/month mining operations and eventually reach 250,000t/month through simultaneous exploration work and consolidation initiatives to grow the size of the resource to more than five million ounces of gold.
Nelson believed the separate listing and IPO to raise the capital needed to establish the initial 20,000t/month mine was feasible despite the current uncertain state of world markets.
He commented, “you need to look at the multiples being paid for gold projects elsewhere in Africa that have less resources than Manica.
“Manica is lost inside Pan African and nobody is giving us any value for the asset. This listing will separate it from our South African assets and will achieve a better premium for Manica.
Asked about the impact on Pan African’s earnings from the recent surge in the rand gold price Nelson replied, “we report our results for the year to end-June in about two weeks. You will see a significant annual dividend payment proposed.’
– The writer owns shares in Pan African.
