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January 2017
MODERN MINING
7
MINING News
Pan African Resources, listed on the
JSE and AIM, announced in December
positive results from the independent
Definitive Feasibility Study (DFS) for its
Elikhulu tailings project. As a consequence,
the company’s board of directors has
approved the construction of the project,
subject to finalisation of the project financ-
ing package.
Pan African says the DFS results indicate
excellent recovered grades and gold pro-
duction, attractive financial returns and a
low execution risk, with the DFS results sur-
passing expectations of previous technical
and financial assessments of the project.
The DFS was undertaken by DRA Projects.
The planned commencement date of
the project is January 2017, with first gold
forecast for the final quarter of the 2018
calendar year and full commissioning in
December 2018.
Annual recoverable gold production of
approximately 56 000 ounces is projected
for Elikhulu’s initial eight years of opera-
tions and 45 000 ounces of gold for the
remaining five years thereafter. Optimal
plant capacity for the project allows
12 Mt/a throughput. Current arisings and
inferred gold resources could extend proj-
ect life beyond the DFS estimated life of 13
years. The projected AISC over the life of
Elikhulu is US$523/oz.
Initial capital cost is forecast at approxi-
mately R1,74 billion (US$119,9 million). The
internal rate of return (IRR) (real, post-tax)
is 23,1 %with a payback period of less than
four years, based on an assumed gold price
of US$1 180/oz.
Pan African believes the experience
gained in the construction and operation
of the Barberton Tailings Retreatment
Plant (BTRP) and the Evander Tailings
Retreatment Plant (ETRP) positions it to
successfully execute the construction and
operation of Elikhulu.
The project entails establishing facilities
and infrastructure at Evander Gold Mining,
owned and operated by Pan African, to re-
treat gold plant tailings at a rate of 1 Mt/
month. This is in addition to the existing
production from the ETRP which will con-
tinue to operate independently for the
next 13 years.
Three existing tailings storage facilities
will be reclaimed, in the following order:
Kinross, Leslie and Winkelhaak. Post pro-
Scoping study completed on Lindi Jumbo
Emerging African graphite producer
Walkabout Resources, listed on the ASX,
has announced the results of a scoping
study for a proposed open-pit mine and
graphite processing plant at the 70 % held
Lindi Jumbo graphite project in south-
eastern Tanzania. Project economics are
highly robust as a result of the high grade
nature of the project and the expected pre-
mium natural flake graphite product, says
the company.
The base case employed during the
scoping study was for the development of
a mining and processing operation at Lindi
Jumbo to produce an annual output of
25 000 tonnes per annum of four discrete
products of graphite concentrate for sale
FOB from the Port of Mtwara. Such a level
of production would entail the milling of
only 3 Mt over the 20-year life of mine, an
average of only 150 000 tonnes per annum
(12 500 tonnes per month).
Although the project will potentially
deliver a sought-after premium product
with up to 85 % of the flake graphite in
concentrate above 180 µm, the basket
price used in the scoping study is up to
33 % less than prices used in bankable
feasibility studies conducted by other ASX
companies developing graphite projects in
Africa.
The upside case model considered the
increase of the initial production rate to
40 000 tonnes of graphite in concentrate
per annum. The difference in processing
capacity has already been built into the
plant design and equipment sizing as a
redundancy so minimal additional capital
would be employed. This model has also
been estimated in capex, working cost and
life of mine production to an accuracy level
of cost of ±25 %. Mining production rates
are increased to 260 000 tonnes per annum
or a very modest 21 500 tonnes per month.
Key study outcomes include an oper-
ating cost per tonne in concentrate
estimated at US$290 to US$350 and a pre-
production capex of approximately US$35
million to US$40 million with a payback
period of less than two years.
The base case pre-tax NPV
10
is estimated
to be US$169 million for the 25 kt/a pro-
duction option and US$304 million for the
40 kt/a production option. The pre-tax IRR
estimate is 63 % for the base case and 97 %
for the upside case.
Mineral Reserve Estimation – All Probable
TSF Name Tonnes (Mt) Au (g/t) Au (Moz)
Kinross
47,0
0,31
0,47
Bracken/Leslie
70,1
0,32
0,71
Winkelhaak
70,0
0,24
0,55
Total
187,1
0,29
1,73
cessing, these will be consolidated into
a single enlarged Kinross tailings facil-
ity, contributing to reducing Evander’s
environmental footprint and associated
environmental impact.
Comments Cobus Loots, Pan African’s
CEO: “We are pleased to announce the
positive findings of the independent
Definitive Feasibility Study. Operating
low-cost tailings plants has become an
important business for Pan African in
recent years, and we now intend to pro-
ceed with construction of the Elikhulu
tailings retreatment project. This project
is expected to materially enhance our
Group’s production profile and support
Pan African’s continued focus on low-cost,
high-margin gold ounces. The sub-
stantial capital investment required
demonstrates our commitment to
the South Africanmineral sector and
our shared responsibility of creating
employment and alleviating pov-
erty in the Evander community.
“Our primary consideration in
Pan African approves Elikhulu tailings project
any capital allocation decision is our abil-
ity to successfully execute the designated
project and to generate the required
returns over the investment horizon. The
attractive returns already being earned on
the capital invested in the BTRP and ETRP
bear testimony to our previous success
and will serve as invaluable experience in
completing the project.
“Elikhulu is expected to firmly establish
Pan African as a leader in long-life, low-
cost tailings retreatment, and possibly
unlock other opportunities in the sector.
We expect the project to reduce the Group
and Evander cost profiles and generate
robust cash flows and attractive returns
for our shareholders.”