Africa-focused metals producer Pan African Resources has exceeded its full-year production guidance of 170 000 oz, with output up 7.5% year-on-year to 172 442 oz.

This has seen Pan African emerging as a “safe, low-cost and long-life gold producer”, CEO Cobus Loots said on Friday.

The higher gold production was achieved as a result of the cessation of high-cost underground mining at Evander, the successful commissioning of the Elikhulu tailings retreatment plant, and Barberton Mines achieving a significant increase in production.

Critically, Barberton Mines achieved a historical milestone of two-million fatality free shifts during June, Pan African highlighted.

The metals producer intends to continue assessing the optionality of its portfolio and is looking to build upon this year’s momentum to drive further growth.

Evander’s 8 Shaft Pillar mining is expected to contribute an additional 20 000 oz/y to 30 000 oz/y for the next three years. The group is currently reviewing the merits of expediting the Egoli project and is assessing funding options.

Progress is also being made with the underground mining project feasibility study at Royal Sheba.

Pan African does, however, continue to experience certain challenges among specific stakeholder groups, which have negatively impacted on Barberton Mines, and are working in conjunction with law enforcement and other stakeholders to remedy the situation.

The 2020 financial year production guidance will be about 185 000 oz.

OPERATIONAL RESULTS

Production from the Barberton complex increased by 9.6% to 99 363 oz, with underground and surface mining having increased by 3.1% to 75 356 oz and Barberton tailings retreatment plant (BTRP) production increased by 37.2% to 24 007 oz owing to an improved tonnage throughput and recoveries following the successful commissioning of the BTRP regrind mill in May 2018.

The Elikhulu tailings retreatment plant, meanwhile, processed 10.85-million tonnes from September 2018 to June and achieved a recovered grade of 0.133 g/t gold. Elikhulu also produced 46 201 oz of gold, which excludes pre-production gold of 736 oz capitalised as pre-production income and gold inventory locked-up in the Elikhulu circuit.

Production figures include the 200 000 t a month throughput from the Evander tailings retreatment plant (ETRP), which was incorporated into Elikhulu with effect from January, and increased Elikhulu’s processing capacity to 1.2-million tonnes a month.

Remnant mining and surface sources at Evander contributed a further 26 878 oz of gold.

Moreover, in light of the strong prevailing rand gold price and the opportunity it presents to lock in an attractive cash margin and reduce interest costs, Pan African on Friday said it had entered into a gold loan for 20 000 oz with Rand Merchant Bank (RMB) this month.

This was done in exchange for an upfront cash receipt of R394-million, for which the group will deliver 12 monthly instalments of 1 666.67 oz to RMB, starting July 31, in settlement of the gold loan.

The gold loan locks in a gold price of about R633 000/kg.

The proceeds of this gold loan will be used to reduce the balance of the revolving credit facility debt, resulting in a material interest saving for the group over the next 12 months.