[miningmx.com] — PAN African Resources (Pan African) was looking to grow both organically and through M&A activity using its strategic partnership with empowerment partner Shanduka Resources.
That’s according to CEO Jan Nelson, who was speaking at the presentation in Johannesburg of the company’s interim results for the six months to end-December.
He said Pan African was in a position to pursue new growth opportunities, now that the Phoenix Platinum tailings recovery plant was under construction and the flagship Barberton Gold Mines (Barberton) was operating smoothly.
Pan African reported a 58% rise in attributable profits to ₤7.6m (six months to end-December 2009 – ₤4.8m) on the back of a 32% rise in gold revenues to ₤38.3m (₤29m), because of higher gold recovery grade and increased gold revenues combined with lower operating costs at Barberton.
Nelson said Barberton management was now totally in control of the illegal mining situation on its operations.
“There were no illegal mining activities reported at Barberton for the period under review. Working with the police, we have addressed this problem and arrested all of the 11 syndicates that were operating at the mine.’
That came at a cost with R18.2m (R9.2m) spent on security measures for the six months, and Nelson has estimated the total security bill for the year to end-June at about R35m.
Nelson said he believed the security costs could be reduced to about R20m annually now that the situation was under control, but vowed: “We will not drop the ball on this one.’
Nelson highlighted the increase in Barberton’s recovered grade to above 10g per tonne – which he believed was sustainable – as well as a string of high-grade intersections from exploration drilling at each of Barberton’s three separate mines – Fairview, Sheba and New Consort.
He said: “These are excellent results. Many people reckon that the Barberton gold field is old and finished, but I don’t think so.
“I believe there’s another 100 years of life in this deposit and I base my confidence on the fact that we have such a great orebody.’
Pan African is also assessing a project to recover gold from the tailings dam at the Fairview mine, where drilling is under way. It has revealed gold grades of between 0.6g/t and 2.5g/t.
Nelson said if a feasibility study showed the project was viable, it could produce about 25,000 ounces of gold annually over a six-year life at an operating cost of under $300/oz.
He said: “With Barberton sorted out, we can now look at more projects which will provide further growth for Pan African and our relationship with Shanduka is integral to this strategy. “
Nelson said Pan African intended maintaining its focus as a precious metal miner, and that the projects to be looked at would involve both organic growth and acquisitions.
He declined to provide any specifics at this stage, but said there might be further developments during the current calendar year.
Nelson added Pan African had no intention of ending its listing on London’s AIM market, despite the costs involved and even though the bulk of the group’s operations was now located in South Africa.
“We have a large shareholder base in the UK and that is still a market we may want to access for capital. I don’t want to close the door on that at this stage.’
The writer owns shares in Pan African.
