Pan African demonstrates resilience and operational flexibility

Pan African Resources’ improved operational and financial performance for the six months ended 31 December 2020 continues to demonstrate the resilience and operational flexibility of its multiple producing assets, despite the challenges of the ongoing COVID-19 pandemic.

Barberton Mines deserves recognition for a robust operational performance, with gold production of 52,354oz for the six months ended 31 December 2020, demonstrating the excellent progress at this flagship operation in reserve development and infrastructure optimisation.

Pan African is on track with its forecast de-gearing, and the Group’s net debt decreased by 47.3% to US$65.2 million relative to the six months ended 31 December 2019. A record rand dividend for the June 2020 financial year was paid in December 2020.

Group all-in sustaining costs (AISC) increased marginally to US$1,252/oz, including realised hedge losses of US$6.7 million, which if excluded reduces the Group’s AISC to US$1,182/oz. The Group’s low-cost operations (Barberton Mines’ underground, Elikhulu and BTRP), which account for more than 80% of the Group’s total production, achieved an AISC of US$1,030/oz, which is in line with Group’s target AISC of sub-US$1,000/oz.

Although the ramp up in production at Evander Mines’ 8 Shaft pillar has been slower than anticipated, Pan African expects a much-improved performance during the second half of the 2021 financial year, as the pillar mining gains momentum.

“We are excited about the Egoli project (Egoli), which will be South Africa’s newest underground gold mine and which will contribute considerably to the Group’s future gold production. We have now commenced with early preparation work and limited capital expenditure in anticipation of the commencement of the execution phase of this organic growth project. The existing shaft infrastructure and Kinross metallurgical plant, which will be utilised for Egoli’s production, contribute to significantly reduced capital cost and timelines to production, making the project attractive from a financial perspective,” says Cobus Loots Chief Executive Officer.

“We expect to finalise Egoli’s debt funding package within the first quarter of the 2021 calendar year. The project has strong environmental, social and governance (ESG) credentials, as it is already fully licensed, the closure cost will be fully funded through the Group’s existing rehabilitation funds and the existing tailings storage facilities at Evander Mines will be utilised for tailings deposition, resulting in no additional environmental footprint.

Construction of the 9,975MW solar photovoltaic plant at Evander Mines is on track to commence during the first quarter of the 2021 calendar year, with first power expected to be generated during the third quarter of the 2021 calendar year. This plant will be one of the first of its kind in the South

African mining sector and demonstrates Group’s commitment to ESG initiatives, with the benefit of cost saving and certainty of power supply. A feasibility study for a similar sized solar photovoltaic plant at Barberton Mines is also currently being undertaken and, in conjunction with several other advanced ESG projects, these plants will also underpin the Group’s profitability and sustainability in the longer term.

The Group remains on track to produce its guided 190,000oz of gold for the financial year ending 30 June 2021, which is a substantial increase compared to actual production of 179,457oz for the 2020 financial year.

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