Pan African Resources to go ahead with Egoli Project

On 10 July 2020, Pan African released its operational update for the year ended 30 June 2020, wherein shareholders were advised that an independent review had been completed on the feasibility study at Evander Mine’s Egoli Project.

The Egoli Project is a long life, low cost brownfield project that will capitalise on the Evander mine’s existing established infrastructure during its development and exploitation. This synergy has materially reduced Egoli’s upfront capital investment, when benchmarked against other development projects of similar scale, and contributed to its compelling and robust economic returns.

The project has an initial life of mine of 9 years, with annual gold production of approximately 72koz at an average head grade of 6.61g/t (LOM gold production of 17,771 kg (c.570koz)).

First gold is expected to be produced approximately 20 months after construction commences, with ramp up to steady state production over the following 16 months. Additional geological and operational upside exists when the Inferred Resources are accessed as underground development proceeds, potentially increasing LOM to 14 years.

The feasibility study demonstrates a compelling organic growth project, with the following salient financial parameters:

    •   Peak funding: R1,05 billion (US$66m)

    •   Capital payback period: 3.8 years (from project inception)

    •   NPV10.71: R2,01 billion/USD 131,25 million, at a gold price of R850,000/kg (US$1,650/oz) and an exchange rate of ZAR/US$:16.00)

    •   IRR (post tax real): 50.1%

    •   AISC: R399,600/kg (US$777/oz)

Detailed project scheduling and planning is in progress and is expected to be completed in the first quarter of the 2021 financial year. Non-dilutive funding options are currently being explored following receipt of a number of financing offers from investors and institutions.

Funding is expected to be finalised in the second quarter of the 2021 financial year.

Inception of the Egoli project is scheduled to commence in the second quarter of the 2021 financial year with the dewatering of the decline followed by re-quipping, standard footwall development, further deeping of the decline and on-reef development.

Egoli is expected to directly employ approximately 1,200 people, mainly from the local communities surrounding Evander and will provide additional economic and supplier development opportunities for this region of the Mpumalanga Province.

The project has strong Environmental Social & Governance credentials, as it is already fully licenced and empowered, the closure cost rehabiliation liability is fully funded and the Company intends to utilise the existing TSF at Evander for the project, resulting in there being no additional environmental footprint.

The Evander solar plant, which will be completed in the next year, is expected to also contribute to cost savings and reduced emissions at Evander’s operations.

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