Modern Mining: Featured News

Pan African Resources recently broke first ground at its Elikhulu tailings retreatment project in Evander, Mpumalanga, officially marking the start of construction of the plant which is expected to produce an average of 50 000 ounces of gold per year for the next 13 years. The project is expected to produce its first gold in the final quarter of the 2018 calendar year.

Speaking at the soil-turning ceremony, Pan African Resources CEO Cobus Loots said: “Elikhulu’s capital expenditure of approximately R1,7 billion (approximately US$130 million) is a substantial investment in the South African mining industry and is expected to contribute materially to economic development and employment in the Mpumalanga province.”

Elikhulu tailings project moves into constructionPictured at the Elikhulu ground breaking are (from left): Advocate Thabo Mokoena, Director General: DMR; Eric Kholwane, MEC: Finance, Economic Development & Tourism, Mpumalanga; and Cobus Loots, Pan African’s CEO.

The benefits of Elikhulu to Mpumalanga and to the mining industry generally were also stressed by two of the speakers at the ceremony, Advocate Thabo Mokoena, Director General of the Department of Mineral Resources, and Eric Kholwane, MEC: Finance, Economic Development & Tourism, Mpumalanga. Both commended Pan African for proceeding with the project, with Advocate Mokoena making the point that it was a very welcome initiative given the wave of retrenchments sweeping the mining industry.

The start of construction at Elikhulu follows the recent granting of an Integrated Water Use Licence for the project by the Department of Water and Sanitation for a period of 20 years, the last regulatory approval required. The total water requirement of the project is 15,2 Mℓ/day, which will be derived from underground and other on-site sources.

The project entails establishing facilities and infrastructure at Evander Gold Mining (Proprietary) Limited (Evander Mines), owned and operated by Pan African Resources, to retreat historic gold plant tailings at a rate of 1 Mt per month.

The Evander gold field, the most easterly of the gold fields of the Witwatersrand system, has been producing gold since the late 1950s when Union Corporation commissioned the Winkelhaak mine. This was the first of several mines developed in the area to exploit primarily the Kimberley Reef (the Main Reef being absent in the Evander Basin). These mines were later amalgamated into what is now known as Evander Mines.

The definitive feasibility study on the Elikhulu project was undertaken by DRA Projects, which has been appointed as the engineering, processing and construction contractors to the project on a ‘target price’ basis. This contracting arrangement is based on a shared risk/reward philosophy and will see the project being essentially executed on a cost plus basis with a variable DRA Projects fee capped at 4 % of the project value.

Three existing tailings storage facilities will be reclaimed, in the following order: Kinross, Leslie and Winkelhaak. The three tailings facilities will, after processing, be consolidated into a single enlarged Kinross facility, thus reducing Evander Mines’ environmental footprint and associated environmental impact.

According to key highlights from the definitive feasibility study, the project is expected to yield approximately 56 000 ounces of gold per annum for the initial eight years of production (while treating the Kinross and Leslie tailings storage facilities), and then approximately 45 000 ounces a year for the project’s remaining six years from processing the Winkelhaak tailings storage facility.

The project will create more than 700 jobs during construction and approximately 250 direct permanent jobs once the plant is in production.

The mineral reserve estimate is a probable 185,3 Mt, comprised of the Kinross (45,2 Mt), Leslie (70,1 Mt) and Winkelhaak (70 Mt) tailings storage facilities at Evander Mines. The combined 185,3 Mt will provide feed material to the existing Evander Tailings Retreatment Plant (ETRP) at 200 000 tonnes per month, and to the new project process plant at a rate of 1 Mt per month (of which 40 000 tonnes per month will be from run-of-mine tailings).

The combined mineral reserve contains an estimated 1,7 million ounces, of which an estimated 688 000 ounces will be recovered over the life of the project. This estimate excludes the inferred resource of 244 398 ounces of gold leached and contained in the soil beneath the existing tailing dumps, which could potentially increase the project life.

The mineral reserve estimate assumes a non-selective mining method whereby the whole of the mineral deposit is mined in a predetermined sequence. The mining method allows for complete extraction of the targeted mineral deposit. Hydraulic mining has been selected as the mining method as it is a proven technology, cost effective and technically and operationally well understood.

The treatment plant, which is being erected close to the existing No 7 shaft and the Kinross metallurgical plant, utilises standard CIL technology, with one pre-oxidation stage and seven leach tanks.

Speaking to Modern Mining at the ground-breaking ceremony, Loots said that Elikhulu was Pan African’s primary expansion project and he stressed its excellent economics, noting that it would produce gold at an extraordinarily low all-in sustaining cost (AISC) of less than US$550 per ounce.

“The previous owner of Evander, Harmony Gold, looked at the potential of retreating the Evander tailings but never pursued the project,” he said. “After acquiring Evander in 2013, we took a fresh look at the tailing resources and in 2015 commissioned the 2,4 Mt/a Evander Tailings Retreatment Plant (ETRP) to reclaim gold deposited in the Kinross tailings storage facility. With a capacity of about 20 000 ounces of gold a year, this is a much smaller project than Elikhulu but its success has served as a ‘proof of concept’ of the mining and processing methods that Elikhulu will employ. The ETRP will continue in parallel with Elikhulu and has a remaining life of 13 years.”

Pan African, of course, also operates the Barberton Tailings Retreatment Plant (BTRP) at the Fairview mine of Barberton Mines. Construction of the R325,7 million project – which treats material from the Bramber tailings dam – started in April 2012 with the inaugural gold pour being achieved in June 2013. It has a capacity of 1,2 Mt/a, typically produces 20 000 ounces of gold a year and is ranked as one of the lowest cost gold producers in the industry.

Elikhulu may not be the last expansion at Evander. “We have a very attractive resource known as the 2010 Pay Channel resource which is approximately 3 km in tramming distance from the recently refurbished Evander 7 shaft, which is utilised for rock hoisting,” said Loots. “The project is currently in the feasibility study phase but indications are that it could increase Evander’s gold production quite significantly. The capex would be modest as we would be able to utilise the existing shaft system and the Kinross plant.”

Regarding the funding of the project, Pan African – listed on the JSE and London’s AIM – notes that the debt facility agreement for the R1 billion Elikhulu term debt facility has been signed. The facility was underwritten by Rand Merchant Bank, a division of FirstRand Bank Limited, and the syndication closed successfully, with an over-subscription of more than 50 %. The company believes the appetite shown by the banking market highlights the quality of the project.

Once Elikhulu is in full operation, Pan African’s annual production, currently in the region of 200 000 ounces (roughly evenly split between Evander and Barberton Mines) will rise to approximately 250 000 ounces a year. Elikhulu will also provide further diversification for a group whose fortunes were, until fairly recently, closely allied to a single gold mining operation. A further benefit is that it will reduce the group’s average all-in cost of production.

Photos courtesy of Pan African Resources

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