Pan African digs into details of Blyvoor Gold tailings acquisition

Pan African has entered into a conditional agreement to acquire the entire issued share capital of Blyvoor Gold Operations from Blyvoor Gold.

The salient terms of the Transaction are as follows:

• Pan African will be afforded a three-month period (commencing in January 2022) to conduct a fatal-flaw due diligence on Blyvoor Operations and its tailings resources (DD period).
• If Pan African elects to proceed with a definitive feasibility study (DFS), after the DD period, the Group will be afforded the right to conduct the DFS over the following nine months (to December 2022).

In December 2022, Pan African may, at its sole discretion and subject to fulfilment of suspensive conditions customary for a transaction of this nature, elect to conclude the Transaction and acquire all the issued share capital of Blyvoor Operations for a cash consideration of ZAR110m (c.US$6.9m at current exchange rates), which will be funded from Pan African’s internal cash resources.

RATIONALE FOR THE PROPOSED TRANSACTION

One of Pan African’s competitive advantages is its success in bringing tailings projects to fruition. The existing BTRP and Elikhulu operations bear testament to this, contributing materially to the Group’s financial success.

Given the lower execution risk and the relatively short-term payback periods associated with tailings projects, these operations lend themselves to higher gearing levels, with commensurate levered equity returns.

CURRENT STATUS OF THE MINTAILS TRANSACTION

During November 2020, the Group announced the conditional acquisition of Mintails SA Mogale Gold and Soweto Cluster (MSC) TSFs with combined Mineral Resources of 243Mt with an in-situ grade of 0.30g/t gold, for an estimated gold content of 2.36Moz of gold.

A PFS was completed on Mogale Gold’s TSFs during July 2021. The MSC TSFs were excluded from the study’s scope as their Mineral Resources requires additional technical and due diligence analysis, which will be addressed in forthcoming studies. The PFS results were disseminated with the Group’s 2021 FY annual results. Average production of between 40-50koz/yr over an 11-year life of mine was foreseen.

Following the positive PFS findings, the Group is currently finalising a DFS, led by DRA Global (DRA), which is scheduled to be completed in Q1 of the 2022 calendar year. A concept study on the Soweto

Cluster is also progressing under the auspices of DRA.

As previously reported, finalisation of the Mintails transaction was delayed by ongoing legal action, which could have seen Mintails revert to either business rescue or remain in provisional liquidation.

Judgement on the legal action has now been received, and Mintails will remain in provisional liquidation. Pan African remains optimistic on the Mintails transaction’s potential, and will now engage with the provisional liquidator on progressing the transaction, as well as continue with the finalisation of the DFS.

PRODUCTION UPDATE FOR THE FIRST SIX MONTHS OF THE 2022 FINANCIAL YEAR

Pan African expects to produce circa 105,000oz (2021: 98,386oz) of gold during the first six months of the 2022 financial year, ending December 2021, representing a 6.7% production increase relative to the corresponding period.

Gold production per operation is expected as follows:

     •   Barberton Mines: ~50,000oz (2021: 52,354oz)

     •   Elikhulu: ~27,000oz (2021: 26,863oz)

     •   Evander Mines’ 8 Shaft pillar operation and Evander’s surface sources: ~28,000oz (2021:

         19,169oz)

The Group is now well positioned to meet and exceed its full year production guidance of more than 195,000oz.