Revolutionizing Gold Mining: Pan African Resources’ Ore Processing Breakthroughs

After over 135 years of gold mining in South Africa, the large gold deposits remaining in the ground are mostly deep. Because deep-level mining is costly, only the higher grade reefs are still viable.

But the industry is not yet closing up shop. There are still pockets of economically-mineable gold in the ground in various areas which can be detected and extracted using modern exploration, mining and processing techniques. There is also a vast resource of lower-grade gold on the surface. These are mine dumps or tailings – traces of gold in material that was discarded because in the early part of the 20th century, higher grades were mined from underground and the technology to process tailings profitably has only been refined in recent years, helped by the significant rise in the gold price.

The flexibility to pivot between maintaining the profitability of older, higher-grade gold mines and investing in infrastructure to exploit old gold tailings is what makes Pan African Resources one of the most exciting mid-tier South African mining companies today.

Investor concerns addressed through innovation

1. The Challenge of Depleting Orebodies

As mines get older and deeper and further away from established infrastructure, it becomes harder for their owners to extract gold profitably. This is because the initial design of a mine usually entails sinking the main shaft as close as possible to the high-grade areas for rapid payback on investment. In later years, the mining face moves further and further away from the main shaft, entailing more traveling time for workers and longer distances to haul the gold-bearing rock. Mines also get deeper, which adds costs such as traveling time to the working areas and power for haulage and refrigeration (as temperatures increase at depth). Mines with multiple old shafts and abandoned tunnels are more vulnerable to the incursion of illegal miners, which raises the costs of security.

2. Pan African’s response

Diversification: over the last decade, Pan African has diversified its gold mining activities beyond the Barberton Mines complex in Mpumalanga through buying Evander Gold and Mintails and developing surface tailings treatment operations at Barberton, Evander and Mintails.

Modernisation: Pan African deploys trackless mining equipment where it is viable, and has invested in communications, monitoring and reporting systems to improve planning, security and response times. It has also invested in its own renewable energy plants to contain energy costs and reduce emissions.

Exploration:      Digitisation of historic mine plans and modern geological modeling systems are used to detect, interpret  and better define economically viable orebodies and their extensions that can increase the life of operations.

Education: efforts to educate and motivate the workforce to create an entrepreneurial, performance-driven culture motivates the workforce and enhances productivity.

Ore processing technologies

Pan African treats refractory gold-bearing ore at its BIOX® plant at Barberton Mines, where bacteria break down the sulphide material before it is sent to the cyanide circuit at Fairview Mine for chemical processing. Pan African is a world leader in BIOX® processing technology and hosts students and research organisations to learn more about its innovative processes in ore treatment Non-refractory ore is treated at the Fairview, Consort, Sheba, BTRP, Elikhulu or Kinross plants using physical (crushing) and chemical (cyanidation) processing to produce gold dor.

The gold dor is transported to Rand Refinery, where it is further refined into gold bullion for export.

Case study: Evander’s processing excellence

1. Overview

Pan African bought a controlling shareholding in the Evander Gold Mine in 2013. It was an old gold mine with one operating shaft, No 8, but it also offered various potential multi-million ounce mineral resource projects (Rolspruit, Poplar, Evander South and tailings on surface) and its own hoisting shafts, offices and metallurgical processing plant.

At that stage, Evander No 8 shaft had an expected life of mine of over 10 years. Although it is deep (about 2.4kms), it offered some very attractive grades, at over 14g/t, an experienced management team and workforce, and good infrastructure.

2. Spotlight on innovation

The company’s first investment into expansion at Evander was to develop the Elikhulu tailings retreatment project, which came on stream in 2018. This was the company’s third and largest tailings retreatment investment, and it was delivered within budget and ahead of schedule.

The second major investment was in mining the No 8 shaft pillar. This project reached steady state production in 2022. It significantly reduced the risk profile of the underground operations due to simplified logistics, modern underground mine support systems and improved working conditions, including that it reduced underground traveling distances. As the pillar is mined, support is provided by “pseudo-pillars” which replaced the timber packs previously used and which have been proven to be effective in controlling subsidence and enabling clean mining practices.

From the No 8 shaft pillar, mining has gradually transitioned to the 24-26 level developments, which will add another 11 years of life to the mine. This is enabled by several innovations:

  • Phase 2 of the refrigeration plant on Level 24 will allow more efficient mining at depth, as it will supply chilled water to a bulk air cooler. When the level 25 mining area development is       completed, it will increase production to above 65 000 oz/year from the current 40 000oz/year.
  • In 2024, the existing ventilation shaft will be equipped to be able to hoist about 40 000tpm from 17-24 levels, which will obviate the need for kilometers of cumbersome underground conveyor belts currently used. This will simplify ore handling and improve gold recoveries and efficiencies.
  • Mining on levels 25 and 26 will be hybrid in nature, which combines conventional breast mining with mechanized trackless on-reef development.

In 2023 Evander produced about 40 000oz of gold, equivalent to about one-fifth of total group gold output. 

Pan African is also extending the life of Evander through developing the Egoli project. Egoli is an area of considerable potential that is accessible from the Evander 7 shaft No 3 Decline. This decline was partially flooded when Harmony stopped mining the No 7 shaft.      

In 2020, Pan African decided to revive development towards the Egoli section because it represents an opportunity, accessible from existing infrastructure at relatively low capital and operating cost, to access about 3.4 million tonnes of material containing an estimated 730 000oz of gold reserves.

The Egoli project entails refurbishment of the existing Kinross gold plant as well as the 7 and 7A vertical shafts and winders, and dewatering the No. 3 Decline area over the course of a year. About 600 megalitres of flood water will have to be pumped out, as well as ongoing fissure water of about 3 megalitres(Ml)/day. This water will be treated at the new Evander 3Ml/day water recycling plant for use in Elikhulu’s gold retreatment plant. Egoli will use conventional breast mining and face drilling using pneumatic hand-held rock drills.

Other advantages of Egoli are that it can use existing tailings facilities and solar power on the Evander site.

Case study: Barberton Mines

1. Introduction

The Barberton Mines complex consists of three operating underground mines: Fairview, Sheba and Consort. Together, they produce about 80 000oz of gold a year, which is almost half of Pan African’s current annual gold output, although over time the company is growing the contribution from low-cost surface mining.

Despite the fact that Sheba is one of the world’s oldest operating gold mines, at over 135 years old , Barberton Mines still has an expected 20 years of remaining life from underground operations and it is continuously investing in exploration and efficiencies that are helping to prolong this life.

In 2012, Pan African began the development of the Barberton Tailings Retreatment Plant (BTRP), which has the capacity to treat about 100 000 tonnes of tailings a month to produce about 20 000oz/gold per year at relatively low cost ($650     /oz).

Management is deploying technology at the Barberton complex to increase mine production and improve efficiency, safety and security. It is also trying to create a more entrepreneurial, performance-driven culture, which leads to better decision-making, greater retention of employees, loyalty, productivity and sustainability. Technology is used to educate employees and promote their well-being and self-development, as well as to enhance the working environment to improve communication, productivity and safety.

2. Technical breakthroughs

A mining complex like Barberton presents unique challenges. It mines greenstone orogenic orebodies which contain gold deposits in shear zones within greenstone belts. These deposits show significant variation within short distances. Also, the complex has grown organically over decades rather than being fully planned from scratch, presenting challenges with layout and congestion in ore transport.

To recover gold from refractory ore, Barberton Mines uses a treatment processes called BIOX® or bacterial oxidation, where bacteria are used to destroy the sulphide material and expose the gold ore for processing by cyanidation.

Management has taken various steps to improve flexibility and reduce bottlenecks, including developing multiple high-grade mining platforms at Fairview and planning for an additional subvertical shaft from levels 42 to 78. By optimizing hoisting, this shaft has the potential to       contribute another 10 000oz of gold a year. At Sheba, an up-dip mining method is being used to reduce dilution on the narrow orebodies. This, along with the implementation of continuous mining operations and the increased availability of trackless mining machinery, is helping to lift production and improve grades.

Fairview is taking steps to improve its production profile and mine at deeper levels, which entails developing and equipping a chairlift decline adjacent to the 3 Decline between levels 42 and 64. Also, refrigeration infrastructure is being extended and an investment in a grout backfill plant has been completed.

At Royal Sheba, part of the Sheba Fault project which includes the low grade-high tonnage Western Cross orebody, work is under way on a project to access another 235 000oz of gold over an eight-year period that will be processed at the BTRP once current ore resources there are depleted.      

Some of the other technological breakthroughs at Barberton Mines include:

  • In 2023, Pan African commenced construction of an 8.75MW solar plant, which will save on annual electricity bills and reduce CO₂ emissions by about 22 000t/year. It is expected to be commissioned by mid-2024.
  • At Fairview and Sheba, an electronic radio frequency reef and waste tagging system has been installed which enables management to track live the movement of ore from underground to the plant.
  • An operations control room integrated with various SCADA systems has been installed to monitor various aspects of operations so as to respond rapidly to emergencies and breakdowns. This helps to reduce downtime and improve the ability to respond to safety incidents.
  • A Mineware Sycromine reporting system is being installed, which will report on production data in relation to planning statistics and capture labour-related information, enabling detailed analysis and speeding up decision-making.
  • A safety application is being developed, as well as an upgrade of the mine’s fibre communications, to enable any employee to report safety incidents from any part of the mine, even where there is no active internet connection.
  • Technology is being applied to help the mine to combat illegal mining and crime. These steps include installation of perimeter fences, early detection systems, CCTV networks and other modern surveillance technologies. Also, radar, seismic, long-range thermal cameras and X-ray technology are being integrated.
  • To actively manage ESG data and drive sustainable business practices, the group has implemented an ESG information management system.

Impact on Investor Confidence and Market Position

Pan African’s track record of extending the life of its older mines profitably and producing gold from tailings at lower cost underpins its appeal to investors. It has a track record of allocating its capital  effectively, within well-defined risk parameters, and only investing in projects that fall within the lower half of the cost curve, where execution risk is within its capability and returns meet the company’s established hurdle rates. 

These projects have raised the company’s annual gold output from 130 493oz in 2013 to a peak of 205 688oz in 2022. It is currently one of the lowest-cost gold producers in Southern Africa, with an all-in sustaining cost of $1 327/oz across all of its operations (with 85% of production at $1 149/oz;      peer group average is $1 330/oz), enabling it to deliver a 20.6% return on shareholders’ funds in 2023.

Looking ahead

Pan African’s goal is to balance reinvestment in its operations with other capital allocation priorities. Over time, it will increase its production profile from a pipeline of organic growth and expansionary projects, with upside from its early stage projects in the Republic of Sudan and other potential acquisition opportunities that the company is continually assessing. In its 2024 financial year, it will spend $18 million on sustaining capital projects and $137.2 million on expansionary projects. Expansionary spend includes the chairlift at Barberton Mines, completing phases 2 and 3 of the Elikhulu tailings facility’s footprint extension, the levels 24-26 development at Evander and the initial costs of building the Mintails treatment plant, which will add about 50 000oz per year to group production, increasing annual production by 25% to about 250 000oz per year.      

The group is also investing in sustainable development projects, including on energy management and minimizing its contribution to climate change through the installation of large-scale solar PV plants and wheeling contracts with independent renewable energy power producers. It invests in water management and recycling, biodiversity and conservation. At Evander Mines, it has built a water retreatment plant that recycles surplus underground water, significantly reducing its extraction of municipal water. Its contribution to conservation includes its collaboration with Mpumalanga Tourism and Parks Agency to preserve the Barberton Nature Reserve and annual sponsorship of orphaned rhinos. 

For its workers and surrounding communities, Pan African invests in education and health infrastructure, skills development, employing young people and women in projects outside mining, and promoting and conducting health and wellness programmes.

Conclusion

Utilizing modern mining and processing techniques at Barberton Mines and Evander, Pan African has demonstrated that South Africa’s depleting orebodies and aging mines can remain profitable and continue to contribute to employment and socio-economic upliftment for many years into the future. Management has taken a long-term view, as it recognises that reinvestment in exploration and technology and maintaining prosperous communities is the only way to deliver sustainable benefits to all stakeholders in the longer term.

For more information on how Pan African is mining at Evander, click here, and for more information on how Pan African is mining at Barberton, click here.