Name of the Project
Elikhulu tailings plant project.

Location
The project is located at the Evander mine, in Mpumalanga, South Africa.

Client
Pan African Resources.

Project Description
A definitive feasibility study (DFS) completed on the Elikhulu tailings plant project has shown the project to have excellent recovered grades and gold production, attractive financial returns and a low execution risk, with the DFS results surpassing expectations of previous technical and financial assessments.

The project entails establishing facilities and infrastructure at Evander Gold Mining to re-treat gold plant tailings at a rate of one-million tonnes a month. This is in addition to the existing production from the Evander Tailings Retreatment Plant (ETRP).

A DRA Global study has concluded that the ETRP’s throughput of about 200 000 t/m can be incorporated into the Elikhulu project using limited additional capital. This will be done after the commissioning of the Elikhulu project and should result in the existing ETRP throughput benefiting from Elikhulu’s lower cost-structure and higher recoveries.

Three existing tailings storage facilities (TSFs) will be reclaimed in the following order: Kinross, Leslie and Winkelhaak. After processing, they will be consolidated into one expanded Kinross tailings facility, reducing Evander’s environmental footprint and associated environmental impact.

The project is expected to yield an estimated 56 000 oz/y of gold for the initial eight years of production while treating the Kinross and Leslie TSFs, and about 45 000 oz/y for the project’s remaining five years from processing the Winkelhaak TSF.

These production figures exclude an inferred resource of 244 398 oz of gold delineated in the soil material beneath the existing tailings dumps.

The average gold recovery over the life of the project is forecast at 47.77%. Using modelled recoveries, the gold dissolution value estimated for Kinross is 51.38%, Leslie 48.29% and Winkelhaak 53.77%. Current arisings and inferred gold resources could extend the project’s life beyond the DFS estimated life-of-mine of 13 years.

In terms of the DFS, the project has mineral reserves estimated at 187.1-million tonnes and comprises the Kinross (47-million tonnes), Leslie (70.1-million tonnes) and Winkelhaak (70-million tonnes) TSFs at Evander. The mineral reserves will provide feed material for the existing ETRP at 200 000 t/m, and for the project process plant at one-million tonnes a month, of which 40 000 t/m will be from run-of-mine tailings. The combined mineral reserve contains an estimated 1.73-million ounces of gold, of which an estimated 688 700 oz will be recovered over the life of the project. This estimate excludes the inferred resource of 244 398 oz of gold leached into the soil beneath the existing tailings dumps, which could potentially increase the life of the project. The mineral reserve estimate assumes a nonselective mining method, whereby the whole of the mineral deposit is mined in a predetermined sequence. The mining method allows for 100% extraction of the target mineral deposit. Hydraulic mining has been selected as the preferred mining method, as it is proven technology, cost effective and operationally well understood.

Potential Job Creation
Between 400 and 700 temporary jobs will be created during construction, and between 180 and 250 permanent employment opportunities will be created during operation.

Net Present Value/Internal Rate of Return
The net present value is R1.1-billion and the internal rate of return is 23.1%, with a payback period of less than four years, based on an assumed gold price of $1 180/oz.

Value
Phase 1 of the project is estimated at R1.74-billion.

This capital relates to the initial capital required to build the plant and associated infrastructure, and includes a contingency of R191.2-million to account for potential cost overruns and additional plant design requirements.

Capital of R313.1-million and R113-million for Phase 2 and Phase 3 respectively is required to establish the hydraulic mining infrastructure at the Leslie and Winkelhaak tailings dumps. This will be funded from project-generated cash flows.

Duration
Phase 1 of the hydraulic mining at the Kinross tailings storage facility is scheduled to start in the fourth calendar quarter of 2018, with full commercial production scheduled for December that year.

Phase 2 at the Leslie TSF is scheduled to start at the end of the third quarter of 2021 and Phase 3 at Winkelhaak in the third quarter of 2026.

Latest Developments
Pan African reported in July that construction at Elikhulu was progressing ahead of schedule, with first gold expected in August 2018; construction teams were also entering the commissioning phases of the project, in anticipation of a two-month ramp-up period to full production.

Meanwhile, the transfer of the ETRP processing capacity into Elikhulu is on track and scheduled for December 2018. Elikhulu, in conjunction with the ETRP, is expected to produce about 70 000 oz/y.

Key Contracts and Suppliers
DRA Projects (feasibility study and detailed design and construction supervision service) and Fraser Alexander (remining contract).

On Budget and on Time?
The Elikhulu project is on track for commissioning early in the 2019 financial year, ahead of schedule and below budget.

Contact Details for Project Information
Pan African Resources project lead Jonathan Irons, tel +27 11 243 2900 or fax +27 11 880 1240.
Aprio Strategic Communications Public and Investor Relations on behalf of Pan African Resources, Julian Gwillim, tel +27 11 880 0037.