Name of the Project
Mogale Gold tailings storage facilities (TSFs).

Location
Near Krugersdorp, to the west of Johannesburg, in Gauteng, South Africa.

Project Owner/s
Pan African Resources.

Project Description
The Mogale Gold TSFs comprise various individual dams containing a probable mineral reserve of 123.6-million tonnes of remineable material at a head grade of 0.29 g/t for an estimated content of 1.14-million ounces of gold.

The Mogale Gold project has the potential to increase Pan African’s gold production profile over the coming years.

Remining the Mogale Gold TSFs is expected to add about 50 000 oz/y of production over its 13-year life-of-mine (LoM). The project entails low unit-cost hydromining, with low project execution risk, at 800 000 t a month using a carbon-in-leach plant, similar to Pan African’s Elikhulu operation currently processing 1.2-million tonnes a month, with up to 900 000 t a month achievable without negatively affecting performance.

The addition of Mintails’ Soweto Cluster resource has the potential to extend the LoM from 13 years to 21 years and further increase yearly gold production.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has a pretax net present value, at a 9.5% real discount rate, of R1.01-billion and a real ungeared internal rate of return of 20.1%. Construction capital payback is estimated within 3.5 years after commissioning.

Capital Expenditure
Construction capital expenditure is estimated at R2.46-billion.

Planned Start/End Date
Pan African envisages starting construction in 2023 and commissioning the project between July and December 2024. 

This project is expected to be at steady-state production during the first half of the 2025 calendar year.

Latest Developments
Funding for the construction of the Mogale project has been completed, with Pan African Resources managing to capitalise on the current attractive rand gold price to secure the final component of the full funding package without any dilution to its shareholders.

Pan African is finalising the project’s detailed engineering optimisation studies, with environmental authorisation and related permitting expected within the next four months.

Construction is expected to begin by June 2023, with steady-state production forecast by December 2024.

Most of the in-house teams that completed Pan African’s previous three fast-payback tailings retreatment projects are undertaking the Mogale project, for which a R400-million ($21.6 million) transaction, with FirstRand Bank division Rand Merchant Bank (RMB) forming the final component to the funding package for the project’s construction.

This follows the December issue of the group’s inaugural domestic medium-term note programme of R800-million and receipt of a R1.3-billion credit-approved and underwritten term sheet from RMB for the senior debt tranche of the project’s funding.

Under the terms of the transaction, the company will sell 4 846 oz of gold a month for 24 months, starting in March at a fixed price of R1 025 000/kg ($1 723/oz), and receive an upfront premium of $21.6-million (R400-million). The effective price at which the group sold the 3 617 kg of gold, representing about 30% of annual group 200 000 oz production, over the 24 months, is R1 135 604/kg ($1 909/oz).

The senior debt facility is at drafting stage; the aim is for it to be effective by next month.

Key Contracts, Suppliers and Consultants
DRA Projects (definitive feasibility study).

Contact Details for Project Information
Pan African Resources, tel + 27 11 243 2900 or email info@paf.co.za.