Pan African extends completion date for Mintails transaction to September 30

Mintails, west of Johannesburg

PAN African Resources has extended the completion date for the purchase of Mintails, a large surface gold resource west of Johannesburg to September 30.

This follows completion of a definitive feasibility study which showed that Mintails – which consists of the Mogale Gold and Mintails’ Soweto Cluster – would increase Pan African’s gold production by a quarter.

“We believe that Pan African will be in a position to conclude the acquisition of Mogale Gold and MSC in the next month,” said Cobus Loots, CEO of Pan African last week.

“Our studies and other additional work has demonstrated a compelling opportunity to construct a world-class tailings retreatment operation, and we look forward to updating the market further in due course,” he said.

According to the feasibility study the Mintails Mogale section contains an probable gold reserve of 1.14 million ounces. Mogale would cost an estimated $161m (R2.5bn) in capital expenditure to develop – by far the largest capital call the company has undertaken.

The study, completed by DRA Global, estimates annual production of about 50,000 ounces a year for 13 years based on a probable mineral reserve of 123.6 million tons of surface gold at a head grade of 0.29 grams per ton. That would take Pan African’s production to 250,000 oz/year based on this year.

All-in sustaining costs, which accounts for stay in business and capital costs, is estimated to be $914/oz over the 13 year life of mine. A net present value of just over $1bn has been imputed to the project assuming a gold price of $1,750/oz, the company said.

Payback is estimated to be within 3.5 years after commissioning. Pan African is targeting production within 18 to 24 months from the beginning of project construction. There was also possibility for expansion of Mintails into other adjacent areas.