JOHANNESBURG (miningweekly.com) – The biggest takeaway from the hugely profitable Mogale tailings retreatment (MTR) operation, which was commissioned west of Johannesburg by Pan African Resources on Thursday, is that one can make a huge success and look forward to very rapid payback by investing in South Africa.

“It’s quite ironic. We’ve been pretty much all over Africa looking for opportunities in terms of expanding our business and ultimately we’ve come back to South Africa and less than an hour from our corporate office, we have 1.1-million ounces of recoverable gold reserve here, and we acquired all of it for just over $1/oz, which is fantastic,” an ebullient Pan African CEO Cobus Loots outlined to Mining Weekly. (Also watch attached Creamer Media video.)

“I’m exceptionally proud of the team and the fact that we’ve managed to deliver another tailings retreatment operation ahead of schedule and below budget,” Loots remarked at MTR's official commissioning on October 3.

The R2.5-billion project has come in below budget in 14 months.

Payback of the initial investment is expected in two to three years with estimated all-in sustainable cost below $1 000/oz, at a time when the gold price is $2 500/oz.

Interestingly, the London- and Johannesburg-listed company has advanced significantly in gold recovery from surface dumps.

“It’s very exciting that the surface remining or tailings retreatment business is now such a material part of Pan African’s portfolio,” said Loots, in pointing out that the company has Elikhulu providing 50 000 oz of gold a year, BTRP in Barberton, which is where it all started on surface for the company, and now MTR, which will be producing 50 000 oz to 60 000 oz a year for 20 years or more with the potentially upcoming Soweto Cluster.

“So, we’re basically producing more than 100 000 oz of gold per annum from these really low-cost operations,” Loots highlighted.

Pan African's total gold production is expected to hit the 220 000 oz mark this financial year, with net cash possibly flowing by 2026.

PROVIDER OF MUCH-NEEDED EMPLOYMENT

MTR's contribution to employment in an area needing jobs far exceeds the original estimate of 700 jobs during construction and 300 for the operation. On site currently are 1 600 people and ultimately 500 will be active at the operation and with remining.

The fact that 1 040 of the current jobs have gone to locals is reflective of the highly successful community engagement that has taken place. The social and labour plan and other investments into schools, for example, will provide far-reaching benefit and the economic opportunity provided has given rise to local enterprise development.

Environmentally, MTR is also a major plus: “This was a huge environmental headache for government. It was unfunded when we took over. Some estimated the environmental liability to be in excess of half a billion rand. I think it could be more.

“So, with us treating these dumps, we’re going to reduce that liability to a very manageable number by cleaning water and the land and repurposing these areas for exciting new developments," said Loots. Studies demonstrate that water quality upliftment is on the way.

RENEWABLE ENERGY

Pan African is a first-mover renewable energy generator. It was the first mining company to commission a utility scale renewables plant at Evander, which was followed by the establishment of a large renewables plant at Barberton.

"Now we’re looking at a potentially 20 MW renewables plant at MTR in the next 12 to 24 months,” Loots revealed.

On what is next, he said: “Let’s get up and running at MTR, let’s demonstrate that this plant can do the 800 000 t. We’ll get there in the next month or so, and then we’ll look to expand this area, and the Soweto Cluster by itself could also be interesting for us.”

The Soweto Cluster appears to be a resource that could well add another 50 000 oz a year if turned to account.