Pan African Resources Achievements in Sustainable Mining

Source: Pan African Resources

Pan African Resources has started to establish  its name as one of the most efficient mid-tier sustainable gold producers, focused on extracting value from minerals while prioritizing long-term sustainability.

The gold miner’s commitment to sustainability is affirmed by its focus on environmental, social and governance considerations.

Consequently, the company has started to leverage renewable energy to limit carbon emissions in its operations through the construction of solar photovoltaic (PV) plants. It also helps and supports host communities around its mines through various skills development and employment initiatives. 

The company operates a portfolio of high-quality, low-cost mining projects with an annual gold production capacity of over 200,000 ounces. While the company strives for growth in all its mining operations, it also focuses on sustainability and efficiencies, but never at the cost of surrounding communities or the environment.

Key Takeaways

  • Pan African Resources plans to increase its renewable energy mix to 50% by 2035.
  • Gold production to increase by 20% to 215,000oz to 225,000oz for fiscal 2025 as production from the new MTR project ramps up.
  • Carbon intensity per ounce of gold produced declining annually on sustainability efforts.
  • The water conservation plan saves PAR $0.5 million annually, with further recycling projects planned.
  • Pan African Resources revenues and earnings on the rise which is positive for higher dividend payments.

Pan African Resources’ Sustainability Journey

Pan African Resources has consistently affirmed its commitment to sustainable mining by reducing the harmful effects of its activities on the natural environment. The company has recently built and commissioned a new facility that can generate 8.75MW of power to support the Barberton Mines operations and increase the company’s capacity from renewable energy to 40MW when wheeling offsite from third parties commences.

The company intends to enhance its renewable energy use by increasing its mix to 15% by 2027, 30% by 2030, and 50% by 2035. Additionally, PAR is committed to enhancing water management and water recycling.

In addition to environmental protection and conservation, it has completed building a new school in Barberton that supports over 1600 students annually.  At Evander, new laboratories have been constructed at two community schools, benefitting over 1200 learners annually.

Current Position in Sustainable Mining

Source: Pan African Resources

Pan African Resources has been ramping up gold production at all of its operations. Consequently, it expects gold production of 215,000oz to 225,000oz for fiscal 2025. Its fiscal 2024 gold production climbed 6.2% to 186,039 ounces due to significant improvements at the Barberton Mines’ underground operations and Elikhulu Tailings Retreatment Plant’s (Elikhulu) surface operations as a result of operational enhancements and optimisation initiatives.

 These improvements led to below-inflation increases in the all-in-sustaining costs (AISC) for the current reporting period to US$1,354/oz. (2023: restated US$1,309/oz.) at an average exchange rate of US$/ZAR: 18.71, slightly above guidance of between US$1,325/oz. to US$1,350/oz.

As one of the JSE-listed companies that has taken integrated reporting seriously, Pan African Resources is one of the companies that scooped the Integrated Reporting Excellence Award in the JSE Limited Small cap companies as recognised by the Chartered Governance Institute of Southern Africa. The award affirms the company’s commitment to transparent and high-quality corporate reporting standards.

ESG Excellence in Pan African Resources Mining Operations

Even as Pan African Resources continues to ramp up gold production, it remains committed to its “beyond compliance ESG strategy. It has invested in ongoing environmental impact assessments and community engagement programs that cover topics such as climate change, water pollution and biodiversity conservation. These initiatives contribute to the sustainability of its businesses and ensure that its mining sector activities provide economic and social benefits to its host communities while maintaining environmental stewardship.

 When Evander Mines’ water treatment plant to treat underground water for use in its processing plants was put into service in March 2023, it reduced the company’s environmental impact by saving substantial expenditure through  requiring less water to be drawn from municipal sources.

In 2024, the company moved forward with rehabilitating an additional 85ha of land previously disturbed by mining at Barberton Mines (2023: 23.03ha) as part of its conservation efforts. The rehabilitation guarantees of Barberton Mines and Evander Mines are fully funded at US$9.5 million (2023: US$8.3 million).

Renewable Energy Achievements

Pan African Resources has achieved significant milestones as part of its renewable energy strategy. The steady-state renewable solar energy generation at Evander Mines’ 9.9MW solar plant since May 2022 was one of the advancements made, and the first of its scale for the mining industry in South Africa. 

For the 2024 fiscal year, the plant generated 24.6GWh compared to 23.8GWh in 2023, providing roughly 30% of Elikhulu’s energy needs while saving  annual electricity costs at current rates by about US$2.2 million (2023: US$1.9 million), as well as saving a commensurate amount in annual carbon emissions.

Additionally, in June 2024, PAR completed the construction of Barberton Mines’ 8.75MW solar plant, which is anticipated to save about US$2.4 million annually at current rates. In August 2024, the Fairview solar plant started producing electricity, putting the company on track to reach future renewable energy goals. The company is on course to reach a 15% renewable energy mix by 2027.

To lessen its reliance on Eskom for electricity and its rising tariffs to better manage future gold production costs, Pan African Resources is also actively looking into ways to negotiate power purchase agreements for renewable energy from suppliers of wind, hydropower and battery storage solutions.

Water Management Innovations

Source: Pan African Resources

In addition to increasing renewable energy use as part of its sustainable practices, Pan African Resources is also implementing a water conservation strategy. The water treatment plant at Evander Mines is increasingly reducing the company’s environmental impact by retreating underground water thus preventing acid mine drainage and increasing available local water supplies. 

In fiscal 2024, the company’s total water withdrawal dropped by 10.3%, resulting in a 10.9% decrease in water consumption to 9.2ML. The amount of water recycled from the treatment plant rose by 1,568.5% to 747.5 ML or 8.1% of the total amount of water used.

The Elikhulu processing plant and the 8 Shaft underground infrastructure of Evander Mines receive 3ML of drinkable water per day from the reverse osmosis water treatment plant, with plans to expand the facility soon.  Additionally, it helps the local municipality maintain a sufficient water supply for its growing user base in the region and is anticipated to save the Group US$0.5 million annually.

Emissions Reduction Progress

While Pan African Resources’ gold production increased significantly,  carbon emissions were reduced considerably. Carbon intensity per ounce of gold sold decreased by 1.6% in the fiscal year, attributed to increased use of renewable energy with a mix of about 6.1%.

PAR seeks to reduce greenhouse gas emissions by achieving an energy portfolio made up of a renewable energy mix that is aligned with sustainable mining and climate change response. It also plans to decarbonise gold production for export competitiveness through GHG emissions intensity management. The company’s GHG emissions have been averted significantly through renewable electricity, increased by 5.6% to 22.8ktCO2e. Additionally, 2.8ktCO2e was averted through operational energy efficiency initiatives.

2025 Focus Areas: Accelerating Sustainable Mining Practices

For a number of years, Pan African Resources has made climate change a key factor in developing its strategy. Given its high energy requirements, it acknowledges its crucial role in reducing its carbon footprint.

Its main priorities are to meet its production targets safely and carry out capital projects that will sustain and boost gold production sustainably in the years ahead for the benefit of all stakeholders. As the capital expenditure for the MTR project is fully funded and secured, the company also controls its debt levels while advancing the Group’s ESG initiatives. In October 2024 the company commissioned the Mogale Tailings Retreatment (MTR) operation and ramped up to steady-state gold production of 50,000oz of gold annually.

Pan African Resources is also committed to expanding its renewable energy capacity as part of an effort to decarbonize its operations. Part of the plans revolves around the 20MW solar plant planned for the MTR operation. 

With the possibility of higher dividends as the Group de-gears in the upcoming year, it is also dedicated to producing sustainable shareholder returns. Additionally, it cautiously and responsibly investigates domestic and global growth prospects to increase profitable gold production.

Analyst Insights on PAR’s Sustainability Initiatives

Pan African Resources delivered outstanding operational and financial results for the 2024 financial year, with a 16.8% revenue increase to $373.8 million. The increase was supported by a 4.9% increase in gold sales to 184,885oz and an 11.3% increase in the average US$ gold price received during this period.

The increased production and revenue demonstrate that improving operational efficiencies yields positive results.  Earnings per share (EPS) increased by 30.2% to 4.14 cents per share, and headline earnings per share increased by 32.2% to 4.15 cents per share when compared with the previous financial year. 

Amid the robust earnings growth, Pan African Resources is proposing a sector-leading final dividend of ZA 22 cents per share (or 1.20946 US cents per share at an exchange rate of US$/ZAR: 18.19) subject to approval at the upcoming annual general meeting (AGM) in November 2024.

Conclusion: Leading the Way in Sustainable Mining Operations

Pan African Resources is one of South Africa’s best-performing mid-tier and high-margin gold producers engaged in sustainable mining operations. Its competitive edge stems from world-class assets that comprise safe, high-quality underground mines and state-of-the-art, low-cost surface re-mining operations.

With 40 million ounces of gold Mineral Resources and more than 12 million ounces of gold Mineral Reserves, Pan Africans’ unique portfolio mix offers substantial upside potential for shareholders and potential investors. As a safe, profitable, and long-lasting gold producer, it is dedicated to generating value for stakeholders through sustainable mining operations and an unwavering commitment to causing zero harm.