PAN African Resources is to restructure the way it mines at its Barberton Mines in Mpumalanga province which will involve converting to contractor mining and round-the-clock mining.
Barberton Mines turned in a disappointing performance for the six months ended December producing 32, 022 ounces of gold compared to 39, 991 oz for the half year in Pan African’s 2022 financial year.
It resulted in a 14.5% year-on-year decline in total production for the period which came in at 92,307 oz compared to 108,085 oz previously. Gold production from Pan African’s Evander Gold Mines was also lower year-on-year.
Pan African has kept gold production guidance unchanged at between 103,000 to 112,000 oz – subject to Eskom’s related loadshedding – but it’s clear that previous attempts to improve mining flexibility at Barberton Mines – principally at Consort mine and Fairview/Sheba – had run their course.
These efforts, including an increase in development and exploration of the orebody, had been offset by above inflation labour and energy costs, said Pan African.
Other headwinds were the depletion of a high grade part of the orebody at Consort Mine as well as the natural mechanics of an ageing mine replete with increased travel times to lower depths.
Cobus Loots, CEO of Pan African said in the group’s interim operating report today the company had therefore decided to convert Consort Mine to a “contractor mining model” while continuous operations would be implemented at Fairview and Sheba.
There would be no job losses as a result of implementing contractor mining at Consort Mine as employees would be transferred to Fairview and Sheba in line with increased shifts – a step that would reduce overtime costs. Negotiations with unions to enable continuous operations were concluded on January 27, the group said.
Power curtailments as a result of Eskom’s loadshedding regime also ate into Pan African’s performance in the half-year. At Evander Mines, “electricity issues” resulted in a five percent decline in production, said Loots. The outages “reinforced” plans to expand the group’s renewable energy portfolio in the years ahead, he added.
While Pan African patched up its older operations – mining at Barberton has been underway for about 130 years with an estimated 20 years of economically mineable resources left – Pan African pressed on with new projects.
These included Mintails, a $161m gold retreatment operation west of Johannesburg which, once developed, would add annual production of about 50,000 ounces a year for 13 years, according to a study by DRA, a consulting engineering company.
Loots said senior debt funding for Mintails ought to be concluded in April. The project made money “at a much lower gold price than the prevailing spot price,” he added.
South African gold producers may be assailed by public sector failures of which Eskom is the most high profile example, but the gold market is helping to offset the pressure. The rand gold price is about R1.07m per kilogram – its highest level in about two-and-a-half year.
