Funding will go towards construction of gold producer’s Mintails project
13 March 2023 - 19:34
by Andries Mahlangu
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Midtier gold producer Pan African Resources has secured R400m from Rand Merchant Bank (RMB), which forms part of the R2.5bn funding package for construction of the Mintails project.
Under the terms of the deal, Pan African will receive R400m upfront and sell back 4,846oz of gold per month at the fixed price of R1.125m/kg for 24 months starting in March. This represents 30% of the group’s annual production.
RMB is hoping that the rand gold price per kilogram it will be receiving will be higher than R1.125m/kg over the time horizon.
“We’re pleased that Pan African has managed to capitalise on the current attractive rand gold price to secure the full funding package for Mintails, without any dilution to our shareholders,” Pan African CEO Cobus Loots said in a statement on Monday.
The Mintails project will bump up the group’s production profile by about 50,000oz once it reaches steady production by December 2024. Pan African said it is finalising detailed engineering optimisation studies for the project, with environmental authorisation and related permitting expected within the next four months.
Last October, the gold producer took ownership of Mogale Gold and the Mintails SA Soweto Cluster, both belonging to Mintails Mining SA, which has been in provisional liquidation since 2018.
Mintails, which mostly extracted gold from dumps on the West Rand, was initially majority-owned by Australian-listed group Mintails Ltd before it was put into business rescue and subsequently into liquidation.
“We view this as a positive release as it finalises the funding plan for the project in a nondilutive manner for equity shareholders and will now allow the company to commence construction,” Berenberg’s Equity Research said in a note.
“We remain buy-rated on Pan African; the key near-term catalyst for the stock will be the operational turnaround at its Barberton complex, we think, alongside construction commencing at Mintails.”
The share price jumped 10.58% to close at R3.24 on the JSE, marking its biggest one-day rally since July 2020, according to Infront data. This was boosted by the gold price, which was lifted by a weaker dollar thanks to shifting expectations on interest rates in the US. The gold price was up just more than 2% to $1,909.70/oz in late trade.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Pan African Resources secures R400m from RMB
Funding will go towards construction of gold producer’s Mintails project
Midtier gold producer Pan African Resources has secured R400m from Rand Merchant Bank (RMB), which forms part of the R2.5bn funding package for construction of the Mintails project.
Under the terms of the deal, Pan African will receive R400m upfront and sell back 4,846oz of gold per month at the fixed price of R1.125m/kg for 24 months starting in March. This represents 30% of the group’s annual production.
RMB is hoping that the rand gold price per kilogram it will be receiving will be higher than R1.125m/kg over the time horizon.
“We’re pleased that Pan African has managed to capitalise on the current attractive rand gold price to secure the full funding package for Mintails, without any dilution to our shareholders,” Pan African CEO Cobus Loots said in a statement on Monday.
The Mintails project will bump up the group’s production profile by about 50,000oz once it reaches steady production by December 2024. Pan African said it is finalising detailed engineering optimisation studies for the project, with environmental authorisation and related permitting expected within the next four months.
Last October, the gold producer took ownership of Mogale Gold and the Mintails SA Soweto Cluster, both belonging to Mintails Mining SA, which has been in provisional liquidation since 2018.
Mintails, which mostly extracted gold from dumps on the West Rand, was initially majority-owned by Australian-listed group Mintails Ltd before it was put into business rescue and subsequently into liquidation.
“We view this as a positive release as it finalises the funding plan for the project in a nondilutive manner for equity shareholders and will now allow the company to commence construction,” Berenberg’s Equity Research said in a note.
“We remain buy-rated on Pan African; the key near-term catalyst for the stock will be the operational turnaround at its Barberton complex, we think, alongside construction commencing at Mintails.”
The share price jumped 10.58% to close at R3.24 on the JSE, marking its biggest one-day rally since July 2020, according to Infront data. This was boosted by the gold price, which was lifted by a weaker dollar thanks to shifting expectations on interest rates in the US. The gold price was up just more than 2% to $1,909.70/oz in late trade.
mahlangua@businesslive.co.za
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