PAN African Resources said on Thursday it would reach full production at its $135.1m Mintails project in December, achieving a run-rate of 50,000 ounces of gold a year.
“We are pleased to announce the successful commissioning of the MTR (Mogale Tailings Retreatment) operation in October 2024, ahead of schedule and below budget,” said Cobus Loots, CEO of Pan African in a statement to the JSE.
Ramp-up is in progress, with steady-state production and plant throughput of 800,000 tons per month in tailings volumes expected by December, the company added.
“The project was delivered under budget and ahead of schedule, with construction completed in only 14 months,” it said.
Once it is at full pelt, Mintails will take Pan African’s production to about 250,000 oz/year and help lower all-in sustaining costs. The project is forecast to operate at an AISC of about $1,000/oz which compares to the group’s average of $1,354/oz in the 2024 financial year.
There is also growth potential given there are gold reserves in the larger Soweto Cluster footprint.
Loots said earlier this month the company was considering building another R2bn standalone plant at the Soweto Cluster. “We have to do what’s right over the long to medium term”.
The advantage of Mintails is that it doesn’t need a $2,500/oz gold price to perform. “We do have a bit of optionality in the portfolio. It [the Soweto Cluster] is another 50,000 oz per year in production,” he said. “The question you have to ask is whether you’re here for a good time or for a long time.”
Shares in Pan African have doubled this year as the gold price continued to rack up record high after record high. The company is currently valued at £689.5m (R15.8bn).
On October 21, Pan African said it had raised R850m in sustainability-linked notes ahead of the repayment of a three-year bond in December.
The group is required to repay just under R600m this year representing portions of two bonds. The bullet payment comes just as the company reaches $190m in peak funding for Mintails.
“The markets are very favourable at the moment so we thought this was a good opportunity,” said CFO Marileen Kok in an interview today. The bond also helps improve the robustness of our balance sheet, she added.
The capital raise also helps keep Pan African to target the repayment of the Mintails debt within about three years.
