PAN African Resources said on Thursday it was studying plans for the R2.8bn expansion of its Johannesburg tailings operations to nearly 100,000 ounces of gold a year.
The company currently mines about 50,000 oz annually from the Mintails Tailings Retreatment (MTR) facility, which is due to be increased to 60,000 oz/year by December. The expansion would add 30,000 to 35,000 oz a year of gold production.
Pan African said it had decided to investigate the expansion of MTR by adding a 600,000 tons per month Soweto Tailings Retreatment circuit. It had considered building a standalone circuit but decided against this option as it carried too heavy a capital cost, and less efficient in terms of operating cost than an expansion.
MTR extracts waste from previous mining at the Mogale resource while the Soweto Tailings Facility will treat material from the Soweto resource.
A definitive feasibility study is expected to be completely by mid-2026 with the results submitted to the board for a final investment decision. Pan African said there were no fears regarding funding of the project given the performance of the gold price which was set to leave Pan African debt-free by year-end.
Assuming a gold price of $2,800/oz had been assumed, the Soweto Tailings Retreatment project would carry an internal rate of return of 29.4%, rising to 40.2% at a $3,500 gold price. Spot gold is currently trading at $4,160/oz.
Project payback would be between two to three years.
“Subject to the DFS and final board approval, the STR circuit would fast track the remining of the Soweto assets and also environmental rehabilitation programmes, positively impacting our local communities in the area,” said Cobus Loots, CEO of Pan African. Shares in the firm were largely unmoved in early trade but are 17% higher this month, and 164% higher this year.
Pan African recently commissioned the Nobles mine in Australia which it acquired through the $54.2m acquisition of Tennant Consolidated Mining Group in November last year. Nobles will add another 50,000 oz to Pan African’s overall production. The firm has guided to output of 275,000 to 292,000 oz for the current financial year.
