Pan African gold production on track to 190 000 oz

JOHANNESBURG – In its operational update for the six months ended 31 December 2020 Pan African Resources published the following key operational results:

• Industry leading safety performance maintained with improvements in reportable rates across all Group operations
• Group gold production increased by 5.9% to 98,386oz (2019: 92,941oz)
• Gold production from Barberton Mines for the period was 52,354oz, while Elikhulu and Evander Mines produced 26,863oz and 19,169oz respectively
• Operations have continued to implement and maintain stringent policies and protocols to mitigate the effects of the ongoing COVID-19 pandemic on employees and production
• ESG projects, including the 10MW renewable energy solar photovoltaic plant at Evander Mines and large-scale agriculture projects in Barberton Mines, are on track for commissioning in Q3 2021
• Group net debt decreased by 47.3% to US$65.2 million (2019: US$123.7million)
• Pan African is on track to deliver its full year production guidance of approximately 190,000oz

Pan African CEO Cobus Loots commented: “Pan African’s financial results and increase in gold production for the first six months of the year demonstrates a commendable operational and safety performance, amidst the challenges of the ongoing COVID-19 pandemic.”

The Group remains on track to produce 190,000 oz of gold for the financial year ending 30 June 2021, and it is committed to position Pan African as a sustainable, safe, high-margin and long-life gold producer.

BARBERTON MINES

Barberton Mines’ production increased by 10.6% to 52,354oz (2019: 47,356oz) for the Current Reporting Period. Underground production increased by 15.3% to 42,350oz (2019: 36,737oz) and Barberton Tailings Retreatment Plant (BTRP) production remained stable at 10,004oz (2019: 10,619oz) for the Current Reporting Period.

The increased production from Barberton Mines is principally due to:

• Improved mining flexibility and available face length with the establishment of three high grade platforms at the Fairview mine, as well as the extension of the strike length on the 256 and 257 platforms through active delineation drilling and systematic development. Fairview mine has now established concurrent multiple platform availability.
• Improved recoveries at BTRP following the implementation of an oxygen Carbon-in-leach (CIL) addition project, resulting in the feed sources achieving a higher recovery than previously estimated.
• The high-grade section at New Consort’s Prince Consort (PC) Shaft 42 Level being successfully extracted, this orebody remains continuous along the planned strike length and up-dip to 41 Level.

ELIKHULU TAILINGS RETREATMENT PLANT (ELIKHULU)

Gold production from Elikhulu decreased by 8.3% to 26,863oz (2019: 29,301oz) during the Current Reporting Period, as a result of:

• Lower gold recoveries from the re-mining activities on Kinross Dam 1 and 2 during the Current Reporting Period. As per the mine plan, re-mining activities have subsequently moved to Kinross Dam 3, and Kinross Dam 3’s material indicates an improvement in recoveries of approximately 5-10%, albeit at a lower head grade, relative to Dam 1 and 2 recoveries.
• Plant throughput was constrained by preventative maintenance and improvement work to sections of the lower Elikhulu tailings storage facility compartment and the installation of elevated drains. This work will be complete in February 2021, where after tonnage throughput will again be increased.

Gold production from Elikhulu is expected to increase in the second half of the 2021 financial year.

EVANDER MINES’ 8 SHAFT PILLAR PROJECT (8 SHAFT PILLAR) AND SURFACE SOURCES

Production from the Evander Mines operations increased by 17.7% to 19,169oz (2019: 16,284oz). Underground production increased by 9.1% to 12,607oz (2019: 11,553oz). The ramp-up in production of the 8 Shaft Pillar was slower than expected during the Current Reporting Period, as a result of:

• Difficulties encountered with the initial installation of underground support pseudo-packs, which have now been resolved following the introduction of dry tailings and additional grout ranges for filler use.
• Production delays due to fracturing of the shaft lining following the establishment of the pillar mining in the vicinity of the shaft.

Production from the 8 Shaft Pillar is expected to further improve during the second half of the 2021 financial year. The increased production from surface sources of 6,562oz (2019: 4,731oz) also contributed positively to the Group’s production for the Current Reporting Period.

EVANDER MINES EGOLI PROJECT (EGOLI)

Early works and preparation for the execution phase of the Egoli project has commenced. Finalisation of the legal agreements for the implementation of Egoli’s debt funding package is also currently underway. Inception of the project’s construction is expected in the next month, with phase -1 construction and development expected to be completed in 18 months, followed by phase-2 development and equipping in the next 18 months thereafter. First gold is expected to be produced within 20 months from the project’s inception.

GROUP NET DEBT

The Group’s net debt decreased by 47.3% to US$65.2 million (2019: US$123.7 million). Relative to the 30 June 2020 financial year-end, Group net debt decreased by 14.7% from US$76.4 million to US$65.2 million.

The reduction in the net debt was achieved notwithstanding the cash outflow associated with the record net Rand dividend.