Pan African Resources goes for gold

This, chief executive Cobus Loots said this week during an investor breakfast, was due in part to its success of recovering gold from its tailings.  

Loots said: "In the [gold] industry, cost increases and production drop-offs are causing some to diversify into industries such as copper, and there are not a lot of new mines coming on board." 

But he emphasised that copper and gold were "two very different commodities" with different drivers.  

"We can do what none of the majors can do, and grow gold production," Loots said. 

In its H1 2024 results, released last week, the company said it produced 186,039oz gold, up by 6.2%, in line with guidance. Its revenue was up by 16.8%% at $373.8 million and profit up $78.8 million, up by 30%. 

Analysts were bullish about the company, noting a period of investment in its assets.  

These include the Mogale Tailings Retreatment (MTR) project in South Africa, which is due to come online in Q4 2024 and produce c60,000oz of gold at an all-in sustaining cost (AISC) of $900/oz (with upside).  

Projects 

Pan African has a cluster of operating mines and near-term projects, mostly in South Africa, with a mixture of 45% surface and 55% underground, including Barbeton Mines and the Elikhulu Tailings Retreatment.  

The company has guided for output of between 215,000-225,000oz for 2025. 

Loots said the gold price meant it was "a good time for the gold sector" and that "people often forget half the gold ever mined in the world is from South Africa." 

The Barberton Mine has been active for 140 years, but the company said they are still finding new ore bodies there.  

Mogale 

However, the ability to get gold from tailings has given the company a significant boost, as this is a low-cost form of production. Loots joked that the safest place for gold was in tailings, as a plant like the one being developed at Mogale is needed to extract it. 

"You need scale for treating tailings," Loots said. "You can't extract economically without a plant like this." 

He said the Mogale plant, which cost £$135 million, needs 100Mt of tailings for its operation to be feasible.  

There are also ESG advantages to repurposing tailings in this way. 

"The perception is that gold mining is destructive, but we make a meaningful, positive difference everywhere we operate," Loots said, noting that Pan African aims to source half its energy from renewables in the next 3-4 years.  

Energy input 

While the economics of renewable energies were "questionable" a few years ago, he said the company expects to save a minimum of $6 million by using solar power at two of its mines.  

A few South African gold miners use surface treatment facilities, including Sibanye Stillwater and Harmony but Loots said : "there is definitely still scope for us." 

Pan African is also looking into creating a smaller footprint with its own tailings, with all new facilities compliant with the Global Industry Standard on Tailings Management.