South African gold producer Pan African Resources, listed on London’s AIM and the JSE, is on time and within budget on its US$135 million Mogale Tailings Retreatment (MTR) project at Mintails, which represents a major expansion of its tailings retreatment footprint.
ARTHUR TASSELL recently spoke to two senior Pan African executives, HETHEN HIRA and ORIEL SHIKWAMBANA, to learn more about the project, which will be commissioned by the end of 2024.
Pan African is no stranger to tailings retreatment and already has two highly successful operations – Elikhulu at its Evander Gold Mine and the Barberton Tailings Retreatment Plant (BTRP) at its Barberton Mines complex. Elikhulu produced approximately 50 koz of gold in Pan African’s 2023 financial year and the BTRP just short of 20 koz, both being near their nameplate capacities. The BTRP can claim to be one of South Africa’s lowest cost gold producers with its AISC for the first half of the 2024 financial year coming in at just US$650 per ounce.
According to Hira, who is Head of Investor Relations at Pan African, the MTR project, located on the West Rand, can be described as Elikhulu 2.0. “It is being built by the same team that brought Elikhulu online in 2018,” he says. “Elikhulu has been an outstanding performer for Pan African and our vision is to have the MTR project replicate its success. Once the project is operational, it will add 50 koz of gold to Pan African’s output over a mine life of at least 13 years from the Mogale tailings storage facilities (TSFs) and 20 years when one includes the Mintails Soweto Cluster TSFs.”
He adds that the project will also contribute to bringing down the company’s overall AISC. “Tailings retreatment is a low-cost process compared with the underground mining that we undertake at Evander and Barberton, so a higher proportion of production coming from tailings obviously drives down our average cost of production,” he explains.
The MTR project is based on a set of assets – the Mogale Gold TSFs in the Krugersdorp area – which at one time were controlled by Mintails Mining SA (Mintails), a company which went into provisional liquidation in 2018. Mintails also owned a second collection of historic tailings assets known as the Soweto Cluster TSFs, located 36 km from Mogale in the vicinity of Harmony’s Doornkop mine.
Both sets of assets were acquired by Pan African from the liquidator of Mintails in a transaction that was fully completed in October 2022. While Pan African is initially focusing on the Mogale Gold TSFs, it is envisaged that the Soweto Cluster TSFs will eventually be brought into the MTR project and extend its life.
The acquisition price at the time of the transaction was some R50 million (US$2.8 million), equivalent to just US$1.33 per resource ounce.
The Mogale resource consists of a number of tailings dams and sand dumps – spread over a mining right area of 750 ha – that are the result of decades of mining in the area. They host a probable mineral reserve of 123.6 Mt of re-mineable material at a very respectable – for a tailings operation – head grade of 0.29 g/t for an estimated content of 1.14 Moz of gold.
Mintails tried for years to exploit the Mogale resource but its efforts never met with success. A key problem was the low volumes it was processing. As Hira points out, tailings retreatment is a volumes game and Mintails never achieved the economies of scale that would have made the operation viable.
“They were probably doing about 200 kilotonnes per month (ktpm) whereas we will be doing up to 900 ktpm,” he says.
The attractive economics of the Mogale Gold TSFs were highlighted by an independent DFS, completed by DRA Global, the results of which were announced in June 2022. According to the DFS, the project delivers a pre-tax NPV (9.5%) of US$65 million and a real ungeared IRR of 20.1% at a gold price of US$1 750/oz, with these figures rising respectively to US$88 million and 23.0% at a gold price of US$1 906/oz.
The DFS forecasts an AISC of approximately US$914/oz over the initial 13-year LOM and payback of capex within 3.5 years of commissioning (which is similar to what was achieved at Elikhulu). Managing the implementation of the MTR project as Operations Manager is Shikwambana, who is a chemical engineer with 25 years’ experience of the mining industry, including at the ERGO plant on the East Rand, originally constructed and owned by Anglo but now part of DRDGOLD.
He later worked for a company that specialised in the design and construction of modular treatment plants. He headed the team that built Elikhulu, which was delivered on time and within budget, and subsequently managed the operation as GM.
Describing the MTR project, he says that both the mining and treatment methods will be almost exactly the same as those employed at Elikhulu. “We’ll mine the tailings material by blasting it with high-pressure water guns or monitors,” he explains. “The resultant slurry will gravitate to a central pump station. Here it will be screened and then pumped to the treatment plant where the gold will be recovered using a CIL process.”
He adds that while hydraulic mining will be the predominant mining method at Mogale some load-and-haul mining will be required once Pan African starts to mine the sand dumps (known as the North Sands and South Sands dumps), an exercise which is expected to start in year 5 of the project.
“Our initial target is what we call the 1L23-25 slime dams and these will keep us busy for the next several years,” he says. “Once we start on the sand dumps, we will also have to introduce milling. Crushing is not required at any stage of the project.”
The plant will have an almost identical design to the Elikhulu facility, including a high oxygen mass transfer pre-oxidation step to improve gold extraction. It will also have a water treatment section to limit corrosion and potentially improve recoveries.
Interestingly, while Mogale has a nameplate capacity of 800 ktpm (but can easily do 900 ktpm), it will have the same level of gold production as Elikhulu, which has a throughput of 1.2 million tonnes per month (Mtpm), a reflection of the different residence times that the plants have.
“Another difference between Elikhulu and Mogale is that at Elikhulu we needed a new TSF right at the outset,” states Shikwambana. “By contrast, at Mogale we have available an open pit – located about 3 km from the plant site – into which we can deposit tailings. We will ultimately build a TSF to GISTM standards on the footprint of an existing 1L23-25 TSF footprint but that is still some way off.”
Shikwambana says the project is progressing extremely well. “We broke ground in late June last year and we’re now ramping up to a labour force of about 500 on site, which will be the peak. At this stage, we are on course to be fully commissioned by the end of the year.”
The EPCM contractor for the construction of the plant is SGS Bateman (who have recently built a similar plant at a gold mine in Guinea in West Africa). The earthworks contractor is CA Brand, which was also involved with similar work at Elikhulu. PICM Randfontein is handling the civils, Betterect is supplying the nine CIL tanks and MEICS is responsible for the structural steel, mechanical installation, platework and piping. The project will require about 14 km of HDPE-lined steel pipeline and Mocke Pipeline Construction (who also worked on Elikhulu) has been appointed as the pipeline contractor.
As it does at Elikhulu (where INTASOL Tailings is the hydro-mining contractor), Pan African will outsource the mining to an outside contractor. Tender documents for the contract are due to be issued shortly.
Hydraulic mining consumes large quantities of water and Mogale’s requirement will initially be 26 megalitres per day. “We will source water from an old mine shaft – known as No 9 shaft – and this will be sufficient for our mining requirements,” says Shikwambana. “Once we have a TSF in use, we’ll be able to recycle water and this will reduce the amount that we source from the shaft.”
In respect of power, the project will need around 16 MW initially with this rising to around 20 MW once milling starts. “Our power will be supplied by Eskom but we will also look at a solar installation,” says Hira. “We have an excellent track record with solar and in May 2022 we commissioned a 10 MW solar PV plant at Elikhulu, which was the first utility-scale solar installation at a South African mining operation. It accounts for about 30% of Elikhulu’s power requirements currently. We also have an 8.75 MW solar installation under construction at Barberton.”
The life of the Mogale plant will very likely be extended from 13 years to 21 years once Pan African starts to mine the Soweto Cluster TSFs. The total resource they contain is estimated at 133.5 Mt at 0.31 g/t for 1.35 Moz of gold and the reserve at 108.3 Mt at 0.26 g/t for 982 koz of gold.
“We are currently progressing with a PFS on the Soweto Cluster TSFs,” says Shikwambana. “Although we will have to wait on finalising of the PFS for more detail, we envisage a mining operation similar to Mogale at this stage, with the slurry probably being pumped to the Mogale plant for gold recovery. We anticipate that operations will start up on the Soweto Cluster TSFs in around 2030 and continue through into the early 2040s.”
Once the MTR is commissioned, Pan African’s annual gold production will be increased by around 25%. The company is expecting to produce between 180 and 190 koz in FY-2024 (to 30 June 2024) with this increasing to as much as 220-250 koz in FY-2025 and FY-2026 on the back of the MTR project’s output.
The project will confer true mid-tier status on Pan African, which just 15 or so years ago was a single-asset producer with its entire gold production of around 100 kozpa derived fromBarberton Mines.
A major challenge for Pan African as it implements the MTR project is that Mintails’ operations at Mogale left behind – by all accounts – what can only be described as an environmental mess. In addition, its mining activities alienated many within the surrounding community.
Pan African has committed and secured R2,5 billion to build the MTR project. This represents one of the largest investments made by a company in Gauteng in recent times and will significantly impact the local economy and communities, in terms of local business spend and job creation.
Pan African is therefore undeterred by the legacy it has inherited. “Our operations will lead to a major clean-up of the site,” says Hira. “We are also forging strong relationships with the local community, which will benefit from the permanent employment the project provides. Of course, we will be using local contractors and suppliers wherever we can, as we do at all our current operations. We have an outstanding ESG record and we will be applying all the expertise we’ve developed over the years to ensure that Mogale becomes a model project that is fully supported by the community.”
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