Pan African's R2.8bn gold project

Pan African Resources' feasibility study on its Soweto cluster tailings storage facilities (Soweto TSFs) indicates potential for a significant increase in gold production that is likely to cost some R2.8 billion.

Short term expansion through December, notwithstanding the feasibility study plans, is expected to increase production to 60 000 ounces a year from 50 000 ounces a year, the company announced on Thursday.

"The successful commissioning of the MTR operation in October 2024, completed ahead of schedule and under budget, again demonstrated Pan African's ability with regards to successfully commissioning tailings retreatment operations," said the CEO Cobus Loots.

The company's board said a feasibility study has been completed to process the Soweto TSFs, which were acquired in 2021. The Soweto TSFs are said to contain mineral reserves of 108 million tons at 0.28 grams per ton for 0.98 million ounces of gold.

As part of the study, two options were evaluated: A 1 million ton per month carbon in leach plant, for which a definitive feasibility study (DFS) was completed; and a 600 000 ton per month (tpm) expansion circuit added to the Mogale Tailings Retreatment Complex (MTR) operation, for which the study was completed to prefeasibility study (PFS) level.

The 600 000 ton per month circuit at MTR was assessed to be the preferred option, due to a much lower upfront capital requirement, a shorter construction period, less permitting obligations and superior financial returns, the board said.

"The addition of the STR circuit will further increase annual production from the MTR complex to almost 100 000 ounces per year and leverage operational synergies to reduce the complex's very competitive AISC even further," said Loots.

"This option will also benefit from synergies with the existing MTR plant and operational infrastructure. The DFS for this option is expected to be completed by June 2026, with a final board decision to commence project construction shortly thereafter," the board said.

The addition of the 600 000 ton per month module at MTR, to be partly integrated into the existing operation, with standalone feed from the Soweto TSFs, was expected to cost $160 million (about R2.8bn) and would take about 24 months to construct.

The capital cost estimate included remining and overland pumping infrastructure and an expanded TSF. The expected annual gold production could be between 30 000 and 35 000 ounces for about 15 years at an all-in-sustaining cost (AISC) of between $1 000 per ounce and $1 200 per ounce, using a gold price of $2 800 per ounce on the project returns. Payback was estimated at two years, post commissioning.

"The addition of the STR circuit will further increase annual production from the MTR complex to almost 100 000 ounces per year and leverage operational synergies to reduce the complex's very competitive AISC even further," said Loots.

The Environmental Impact Assessment and water use license processes were progressing in accordance with the project schedule, with approvals expected by June 2026.

Given the prevailing high gold prices, the group was on track to be fully de-geared from a net debt perspective by February 2026. This is despite the payment of a record dividend to shareholders in December 2025.

"The robust financial position and cashflow generation profile provides strategic flexibility in terms of funding the STR circuit, and proposals have already been received from financial institutions in this regard," said Loots.

Pan African's share price increased 2.38% to R22.37, a price that has increased sharply by 181.4% from R7.95 over the past 12 months.