Pan African to increase production 25pct

[] — JUNIOR gold producer Pan African Resources aims to push production up by 25% over the next five years.

According to a report in Business Day, a politics and financial newspaper, the plans come after the company successfully stamped out illegal mining problems at its Barberton operations in Mpumalanga.

The firm, a 100 000oz-per-year producer, was among the most affected by illegal mining which included two hostage taking situations at the end of last year that led to the company suspending operations for two weeks in December to address the problem.

Spending on security tripled to R4.5m a month and security teams swept through tunnels clearing out illegal miners, reported the Business Day.

Jan Nelson, the CEO of Pan African, said: “The security situation has been normalised.”

Some people in the mine’s junior management were involved in the criminal syndicates behind the illegal mining, but they were rooted out and systems were put in place to prevent this from happening again, added Nelson.

Pan African, though, is unlikely to consolidate mining operations in Barberton, where Peter Sleat’s Galaxy Gold is trying to raise up to R400m to revive the fortunes of the old Agnes mine.

There are an estimated 350 mines in the region, but few are still operational.

“There’s no sense in us buying other projects and still have to pump development capital into them. We’ve got higher grade ore bodies and have more than enough of these to keep us busy,” said Nelson.

The junior producer is revisiting Royal Sheba with a view of restarting mining and building a separate plant for the mine inlight of a higher gold price. Mining at the Royal Sheba was stopped in the 1990s due to low grades and a subdued gold price.

Royal Sheba will feature strongly in the company’s plans to raise production by 25 000oz to 125 000oz in 2015.

Pan African is talking to a company called Vantage, which has the Bonanza mine next to Royal Sheba.

Nelson said, “We have started talking to Vantage about the synergies around Royal Sheba and mining logistics.”

Pan African has a new prospecting right to the south of its properties and geologists have identified geological structures they hope will yield another like Fairview, which produces 45% of the company’s gold.