[miningmx.com] – THE business case for Evander Gold Mines was intact
at a gold price of R400,000/kg, said Ron Holding, interim CEO of Pan African
Resources, the company that bought the Mpumalanga gold mine from Harmony earlier
this year for R1.5bn.
The world’s gold mining companies have been rocked by a $200 per ounce decline in
the price of the metal in mid-April. It has led to cost cuts, and reassessments of
capital projects, most recently at Harmony Gold which said it wanted to save R800m
in South African-based corporate costs. It had also changed the timing of R1bn in
capital expenditure at its Wafi-Golpu project in Papua New Guinea.
“When we bought the mine we did our sensitivities and worked on a gold price of
R400,000/kg,” said Holding in an interview. “The payback will be pushed back from
when the gold price was R486,000/kg, but there are no concerns,” he said.
“We are still within our parameters,” he said. The current gold price is about
R424,000/kg.
The acquisition of the mine from Harmony Gold, which was completed on February 28,
doubles Pan African Resources’ output to 215,000 ounces of gold a year.
Holding said the task for the group now was technical rather than obsessively
watching the gold price. “We always wanted to position ourselves in higher margin
operations at a lower operating price. The direction we are looking at now is to
integrate Evander,” he said.
Pan African Resources said earlier today that Evander had resumed planned gold
production in the third quarter achieving output of R25,592 ounces (10,325 oz
attributable) compared to 20,737 oz in the previous quarter. The mine is expected to
produce 100,000 oz/year of gold at a head grade of 7.43g/t.
Holding said that in addition to existing gold production, the company would look at
finding new, short-term organic growth projects. He identified some 203 million tons
of surface material that, although at a low grade, could be a exploited.
“The acquisition of Evander has propelled Pan African into a new phase of growth,”
said Holding in Pan African Resources’ statement to the JSE.
Holding also said that he would like to be considered as the permanent CEO of Pan
African Resources. “There is an internal and external process underway [to replace
recently resigned CEO, Jan Nelson) and the company is not in a rush.
I would have had to see to the integration of Evander anyway (as COO of Pan African
Resources),” he said of his new role. “That’s not to say I wouldn’t want to be
considered for the role of CEO,” he added.
Cobus Loots, the former CFO of Pan African Resources and now an executive looking
after mining investments at Shanduka Group, is the other half of the joint interim CEO
structure at Pan African Resources.
