Extending Horizons: PAR’s Strategic Approach to Mine Longevity

Gold is one of the world’s most endearing store of value. It is finite and cannot be created, unlike paper money where the creation of more paper money is always possible and destroys value. Gold is finite and has to be mined, and cannot be destroyed. Gold is also becoming increasingly popular as an industrial material in the manufacturing of electronic products and other systems, mainly because of its inert properties and indestructibility. Increasing investments by individuals and the central banks of most nations as well as these industrial needs are therefore fuelling gold demand, but the amount of gold left to mine is running out. If you’re going to invest in a gold producer, the one question you need to try and answer is how long it can remain in the mining business based on its remaining gold mining reserves and resources.

Pan African Resources (PAR) is a gold mining company focused on mining operations in Africa. Its primary mining base is South Africa, historically the world’s largest gold producer, where it operates several producing gold mines and upcoming mining projects. The company is also working on potential gold mining prospects in the Republic of Sudan.

It is common for investors to want to know what a mining company is doing to maintain and increase production. The reason for that is the belief that the more a company produces and sells, the more profit it can generate. Yet if you take a step back and look at the mining business from a sustainability perspective, you realize that it is in the best interest of investors of a mining company to sustain a mine operation for as long as possible, by constantly exploring and developing to replace or increase the reserves it has mined. That is exactly what PAR does. The company takes a balanced production-development approach to extend the life of its mines and deliver sustainable long-term value to its investors, shareholders and stakeholders, including the communities where it operates.

This article focuses on the mid-tier gold mining company Pan African Resources and explores the company’s strategy to extend its mine lifespan and how this all fits in with its sustainability efforts.

PAR  operates a portfolio of underground gold mines and surface re-mining operations. The underground mines are high-grade, long-life operations, while the surface mines are low-grade but high-margin operations. The company has the capacity to produce 200,000 ounces of gold annually across its mines in South Africa, which will grow by some 50,000 ounces or 25% of annual production once its new Mintails operation comes on stream in 2025. PAR has operations with a current estimated mine life of more than 20 years, where current production levels can be sustained.

With ongoing exploration and development activities, PAR continues to expand its mineral reserves to support its long-life gold producer strategy and focus on low-cost – high-margin operations that provide exceptional shareholder returns.

At the end of June 2023, the company’s mineral reserve base stood at 12.8 million ounces of gold. Mineral reserves refer to economically mineable gold deposits based on prevailing gold prices, so this reserve base at the end of 2023 represented an increase of 13.2% in the company’s mineral reserves compared with June 2022.

Innovation powers PAR’s mining operations and its implementation leads to outstanding results. Advanced technologies make it possible for the company to efficiently extract its resource base and extend the life of its projects. The company also uses technology to improve mine output, safety, and efficiency.

After the bulk of gold is extracted from the ore during mining, the pile of waste that remains is called tailings. In any mining operation, a vast amount of tailings is generated. Managing huge amounts of tailings has long presented challenges for mining companies due to the environmental impact it warrants.

Although tailings are considered mining waste, they can still have economic value. Gold mine tailings usually contain small amounts of gold and PAR has built a successful business out of reprocessing mine tailings to extract these traces of gold. The company operates tailings retreatment plants at its Barberton and Evander sites. The company is also building its fourth tailings retreatment complex in Mogale, at the Mintails site.

With a focus on sustainability and with the help of advanced technologies, PAR is tapping the potential of mine waste, helping it extend the life of its mines, alleviate its tailings management challenges, and reduce the environmental impact of its operations. Additionally, tailings treatment reduces the volume of mining waste.

Where it would be inefficient or impractical to drill from the surface, PAR drills from underground. Underground development and exploration require extra specialized equipment and techniques which helps to expand the resource base and allows for increased production.

It is in underground operations that PAR puts its advanced exploration technologies into full swing. The company applies various methodologies and mining techniques to extract gold from underground mines. It uses methods such as breast and up-dip mining and long-hole stope trackless mining and development in its underground operations.

The Evander Gold Mine (EGM) is one place where PAR is actively implementing advanced mining technologies and techniques as well as improving infrastructure to make mining more efficient, including the equipping of a ventilation shaft to hoist ore at a rate of 40,000 tons per month. This should be complete during 2024 and will enable efficient extraction of ore from the 24-26 Level expansion project in place of the cumbersome conveyor belt system currently in use which is prone to breakdowns and high maintenance costs.

The EGM complex currently extends for about 2.4 kilometers below the surface. The company relies on advanced geological exploration software and data modeling techniques to enable it to plan mining at deeper levels to access high-grade orebodies at EGM. This advanced technology at work at the Evander site is allowing PAR to extend the lifespan of the 24 to 26 Level project and the company further expects to mine at these levels for at least 13 years, as well as at the Egoli project at 7 Shaft which also has an initial life of mine of some 9 years with the option to extend.

As aforementioned, PAR is one of the few mining companies in South Africa with a track record of successfully reprocessing tailings material to extract gold from what is ordinarily considered mine waste. It operates tailings retreatment projects at BTRP in Barberton, and Elikhulu at Evander mines.

In an expansion of its tailings reprocessing business, PAR acquired surface tailings storage facilities (TSF) previously owned by the liquidated mining company Mintails and DRD Gold in South Africa’s West Rand region. It invested about $2.8 million to purchase the Mintails assets in a transaction that was completed in October 2022.

The Mintails assets consist of two major properties: The Mogale Gold and the Mintails Soweto Cluster (MSC) tailings storage facilities.

The Mogale Gold property is made up of several dams holding an estimated 123 million tonnes of historic tailings material from previous mining operations in the area. The Soweto property consists of 9 dams containing approximately 119 million tonnes of tailings material.

The Mogale and Soweto facilities make up the Mintails project that PAR is developing into a massive tailings retreatment operation. The Mintails project will expand PAR’s surface mining operations as it pursues low-cost, high-margin gold production opportunities. Across the Mogale and Soweto facilities, the Mintails project aims to reprocess 243 million tonnes of tailings over a period of 20 years at an all-in-sustaining cost (AISC) of less than US$1,000 per ounce, with the material containing an estimated 2.36 million ounces of gold content.

At the Mogale tailings retreatment plant, PAR aims to process 800,000 tonnes of tailings material a month and expects to produce 50,000 ounces of gold annually. The Mogale tailings operation is expected to have a mine life of 13 years.

PAR will be using the hydro-mining method at the Mogale plant and the company has received regulatory approvals for the Mogale facility and expects to fully commission the plant in October 2024 with production expected from December 2024. The Mogale tailings retreatment (MTR) mining operation is expected to increase PAR’s Group annual production by 25% annually compared to the current levels.

Processing the Soweto tailings material will be done through the MTR plant and will boost PAR’s output and add more years to the Mintails project life. PAR expects at least 21 years of mine life for its Mintails project across the Mogale and Soweto historic tailings dams.

Once PAR has commenced with all their tailings reprocessing, the company will concurrently rehabilitate the surface footprint of these historic dams to return the land to a state of productive use. It is considering reclaiming the land for use in farming, housing and renewable energy generation.

ESG (Environmental, Social, and Governance) initiatives are a central focus for PAR. Rehabilitating Mintails’ footprint would improve the environment and living conditions of the communities situated around the dams, reducing dust and water pollution. While farming the reclaimed land would produce food and benefit the local economy, building solar power plants on the reclaimed land would help PAR to reduce its carbon footprint and will result in lower electricity costs, further reducing the overall cost of gold production.

Illegal miners are known to target abandoned old mining sites that are situated adjacent to the historic tailings facilities and, as a result, illegal mining is a threat that PAR expects to face in the Mintails project. The illegal miners target the old shafts for remnants of reefs that were left in place to support the tunnels and cannot extract any value from the tailings. However, with the experience gained from its tailings reprocessing operations over the years, PAR has learned how to deal with the problem of illegal mining at its properties. In the Mintails project, the company has made the security of its assets a top priority and has instilled its head of security as part of its executive committee. Additionally, PAR looks to collaborate with its peers in the region to tackle the illegal mining threat.

The Mintails project presents an excellent opportunity for PAR investors, local communities, and other stakeholders. With the project being a safe, high-margin, and long-life operation, it should be both profitable and sustainable.

In addition to having a minimal impact on the environment, the project would create hundreds of jobs and stimulate the local economies, as the company has raised some R2,5 billion to construct Mintails which is one of the most significant investments by a single company in South Africa in recent times. Apart from increasing PAR’s production, and extending mine life, the Mintails project will also help PAR advance its decarbonization efforts and also support the company’s efforts to obtain and maintain a social license to operate.

Pan African Resources has learned that a beyond-compliance approach to mining operations can be a highly rewarding strategy. Many mining companies only conform to the basics when it comes to tailings management compliance. But for a company like PAR that has made sustainability a core part of its business, compliance is not enough for mine waste management.

Mine tailings dam failures have caused catastrophic disasters in the world in recent years, drawing broad condemnation of mining companies with respect to their handling of mine waste. Tailings dam disasters are not only preventable but can also unlock tremendous environmental and economic benefits.

PAR has, therefore, made tailings retreatment a central part of its operation and creates modern tailings facilities with a smaller footprint that are safer and free up land taken up by the older facilities. All PAR’s modern facilities comply with global industry standards for tailings management and compliance is independently verified. They are expanding tailings processing operations as they work to extend their mine life and support economic sustainability in host communities. This not only benefits the communities but also supports the company’s ESG efforts.

The Mintails project is set to increase the company’s gold production by at least 25% annually over the next 20 years. The extra benefit of remining tailings is that it is a low-cost operation and yields high margins at the current gold price.

In addition to reprocessing tailings to recover extra gold and reduce mine waste, PAR also ensures water and energy efficiency in its operations as part of its ESG practices. In all these, the company lowers its production costs, increases economic benefits for stakeholders, and reduces the environmental impact of its operations.

Where it would be inefficient or impractical to drill from the surface, PAR drills from underground. Underground development and exploration require extra specialized equipment and techniques which helps to expand the resource base and allows for increased production.

It is in underground operations that PAR puts its advanced exploration technologies into full swing. The company applies various methodologies and mining techniques to extract gold from underground mines. It uses methods such as breast and up-dip mining and long-hole stope trackless mining and development in its underground operations.

The Evander Gold Mine (EGM) is one place where PAR is actively implementing advanced mining technologies and techniques as well as improving infrastructure to make mining more efficient, including the equipping of a ventilation shaft to hoist ore at a rate of 40,000 tons per month. This should be complete during 2024 and will enable efficient extraction of ore from the 24-26 Level expansion project in place of the cumbersome conveyor belt system currently in use which is prone to breakdowns and high maintenance costs.

The EGM complex currently extends for about 2.4 kilometers below the surface. The company relies on advanced geological exploration software and data modeling techniques to enable it to plan mining at deeper levels to access high-grade orebodies at EGM. This advanced technology at work at the Evander site is allowing PAR to extend the lifespan of the 24 to 26 Level project and the company further expects to mine at these levels for at least 13 years, as well as at the Egoli project at 7 Shaft which also has an initial life of mine of some 9 years with the option to extend.

With a sharp focus on sustainable mining and powered by advanced exploration and mining technologies, PAR is yielding more high-margin gold from its mines and prolonging the lifespan of its properties. In its primary underground operations, PAR is applying advanced technologies and improving infrastructure and safety protocols to reach orebodies that would otherwise be inaccessible. Ongoing explorations at underground sites are also helping the company expand its mineral reserve base.

At surface sites, PAR is extracting more ounces of gold through tailings retreatment techniques that are turning mine waste into valuable resources and reducing the overall cost of production thereby increasing profitability for the group. Through its tailings reprocessing operations, PAR is adding more years to its mines, squeezing more profit from its operations, paying more taxes, creating more jobs, and providing sustainability to the host communities. Additionally, tailings processing is a mine waste recycling activity that protects the environment and reclaims land for other productive uses.