Pan African shifts to safer gold

Pan African Resources has made a move into cheaper and safer gold, pouring the first gold at its R1.74bn Elikhulu tailings retreatment project at Evander.

Pan African has said it is closing its unprofitable underground mine at Evander, with the loss of 1,700 jobs. It is studying whether to mine other underground areas at the mine.

The London- and Johannesburg-listed company is replacing underground gold with cheaper gold from the large tailings retreatment project, which will deliver 55,000oz a year at an all-in sustaining cost of up to $700/oz, which at the prevailing exchange rate gives the company gold at a cost of less than R326,000/kg.

The rand gold price is trading at close to R550,000/kg.

“The completion of Elikhulu’s construction and the inaugural gold pour, ahead of schedule and in line with the project budget, is a further significant milestone as we deliver into our strategy of repositioning the group as a low-cost, long-life gold producer,” said CEO Cobus Loots.

Pan African is folding its Evander Tailings Retreatment Plant into Elikhulu and from December will bump up throughput at the entire tailings retreatment project to 1.2-million tons a month and deliver 70,000oz of gold a year.

Elikhulu will employ 350 people during its 14-year life, during which time it will generate 674,000oz of gold worth R15.5bn in revenue at an assumed price of R550,000/kg.

Of that revenue, R1.3bn would go to the government in taxes and royalties, while R5.3bn would flow back into the SA economy from the purchase of goods and services, Loots said.