Key points
- The Soweto gold tailings project carries an estimated capital cost of R3.68 billion and a post-tax net present value of R1.85 billion.
- Pan African expects 561,000 ounces of gold over 15 years, lifting the Mogale complex to a peak of 100,000 ounces a year.
- A final investment decision is due in December, with construction set to take 28 months.
Pan African Resources has completed the definitive feasibility study for its Soweto gold tailings project, and the London-, Johannesburg- and Sydney-listed miner says the numbers point to a long-term growth path for its Mogale tailings complex on the West Rand.
The company announced the results on Friday. According to Pan African, the project will process old mine waste in Soweto, west of Johannesburg, and will tap into the elution, carbon regeneration, electrowinning and smelting plant already running at Mogale. As a result, the estimated capital cost comes in at R3.68 billion.
Pan African picked up the Soweto Cluster tailings storage facilities through its Mintails deal. Together, they hold mineral reserves of 0.98 million ounces of gold.
Production and returns
Over a 15-year life, the project should deliver about 561,000 ounces of gold at a rate of 35,000 to 40,000 ounces a year. In addition, it gives the Mogale complex enough feed to reach 100,000 ounces a year at peak production. The plan involves treating 600,000 metric tons of tailings a month alongside the existing Mogale plant.
Pan African forecasts an all-in sustaining cost of $1,750 to $1,800 an ounce. However, that figure leaves out any savings from renewable energy supply, so the real cost could land lower.
At a gold price of $3,550 an ounce, the study points to a post-tax net present value of R1.85 billion and an internal rate of return of 29.55%. Moreover, the company expects to recover its investment within three years of commissioning.
Timeline and environmental cleanup
Pan African expects to make a final investment decision in December. After that, construction will take 28 months. Meanwhile, the company anticipates environmental authorizations during its 2027 financial year.
Importantly, the project also tackles a long-standing environmental problem. Reclaiming the tailings will address historical West Rand liabilities from decades of mining, and the company says the cleanup will happen at the same time as the production growth.
“We’ve been able to define a project that delivers attractive returns, meaningful production growth and accelerated environmental rehabilitation,” CEO Cobus Loots said.
Still, the returns hinge on gold prices holding near the $3,550 level used in the study. Therefore, investors will likely watch the December decision closely as Pan African weighs the spend against its wider West Rand ambitions.
