Pan African enters into Conditional Agreements to Acquire Tailings Retreatment Projects
Pan African Resources PLC
(Incorporated and registered in England and Wales under Companies Act 1985 with registered
number 3937466 on 25 February 2000)
Share code on AIM: PAF
Share code on JSE: PAN
ADR ticker code: PAFRY
(Pan African or the Company)
PAN AFRICAN ENTERS INTO CONDITIONAL AGREEMENTS TO ACQUIRE TAILINGS RETREATMENT
1. INTRODUCTION AND STRATEGIC RATIONALE
Pan African is pleased to announce that the Company has entered into conditional sale-of-shares
agreements (Sale Agreements) to acquire the total share capital and associated shareholder loans
and other claims of Mogale Gold Proprietary Limited (Mogale Gold) and Mintails SA Soweto Cluster
Proprietary Limited (MSC), (collectively, the Proposed Transactions). Both Mogale Gold and MSC are
100% owned by Mintails Mining SA Proprietary Limited (Mintails SA), which was placed in provisional
liquidation during 2018.
The aggregate cash consideration for the Proposed Transactions will be a maximum of ZAR50.0
million (approximately $3.1 million).
The combined Mineral Resources of Mogale Gold and MSC comprise historic tailings storage facilities
(TSFs) that contain an estimated 243Mt of tailings with an in-situ grade of 0.30g/t gold, for an
estimated gold content of 2.36Moz of gold, constituted as follows:
- The Mogale Gold TSFs, which comprise various individual dams, containing an estimated
123Mt of re-mineable material at a head grade of 0.29g/t, for an estimated content of
1.16Moz of gold; and
- The MSC TSFs which comprise nine separate facilities with resources of 119Mt at 0.31g/t,
containing an estimated gold content of 1.20Moz.
Pan African has successfully executed on its strategy of producing gold safely from low-cost
operations and diversifying its operations to include both underground and low-risk surface
Pan African and its subsidiaries have a proven track record of successfully commissioning and
operating tailings retreatment projects, as demonstrated by the Barberton tailings re-treatment
plant, the Evander tailings re-treatment plant and most recently its flagship Elikhulu operation.
The Proposed Transactions are conditional on due diligence and feasibility studies over a period of
six to nine months (to Pan African’s sole and absolute satisfaction) and other conditions precedent
typical for a transaction of this nature, including, inter-alia, consent for the transfer of the mining
right by the Department of Mineral Resources and Energy (DMRE), approval from the South African
Competition Commission authorities if applicable, and approval for the provisional liquidators to
implement the Proposed Transactions.
Cobus Loots, Pan African’s CEO, commented: “The opportunity to acquire these surface resources
complements our strategy of focusing on safe, low cost gold mining opportunities, with the potential
to further grow our business by developing projects that meet our stringent investment criteria”.
2. BACKGROUND AND HISTORY OF THE ENTITIES TO BE ACQUIRED
The provisional liquidation of Mintails SA has resulted in an opportunity for Pan African to acquire
gold tailings Mineral Resources not previously retreated. As part of the due diligence examination
and planned feasibility work, Pan African will evaluate the merits of constructing a large-scale tailings
retreatment operation, similar to its Elikhulu operation at Evander.
Details of the legal entities to be acquired under the Proposed Transactions are as follows:
- Mogale Gold - the holding company of the TSFs located on the West Rand in South Africa; and
- MSC – the holding company of the TSFs located within the Soweto cluster in South Africa.
The Mineral Resources of Mogale Gold and MSC were declared as at 7 February 2013 and reported
according to the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves (the JORC Code) of 2004 by Mr Peter Camden-Smith, a South African Council for Natural
Scientific Professions registered geologist (Registration No. 400078/94 – Management Enterprise
Building, Mark Shuttleworth Street, Innovation Hub, Pretoria, South Africa), who acted as the
Competent Person for this declaration. Mr Peter Camden-Smith is the owner of an independent
geological consultancy firm, Camden Geoserve, based in Boksburg, Gauteng province, South Africa
(www.geoserveafrica.com) and was appointed as an independent consultant by Mintails SA for the
declaration of the Mineral Resources at the time. Mintails SA has publicly reported these Mineral
Resources in its annual Mineral Resources and Mineral Reserves declaration. It is assumed that no
significant mining has taken place on these TSF dams since the time of that report due to the effective
date of the provisional liquidation. The due diligence will aim to confirm and update the 7 February
2013 Mineral Resource declaration.
3. DETAILS OF THE PROPOSED TRANSACTIONS
Key commercial terms and conditions of the Sale Agreements include the following:
- The acquisition of Mogale Gold, inclusive of the assets, surface rights permits, deposition
rights, mining right, water use licence, rehabilitation liabilities and shareholder loans for a cash
consideration of ZAR37.5 million (approximately $2.3 million at an exchange rate of
- The acquisition of MSC, inclusive of its assets, rehabilitation liabilities and shareholder loans
for a cash consideration of ZAR12.5 million (approximately $0.8 million at an exchange rate of
- Pan African is afforded a six-month period (with a three-month extension option) for purposes
of conducting a due diligence to its sole and absolute satisfaction;
- The Mogale Gold transaction is subject to an approval by the DMRE in terms of Section 11 of
the South African Mineral and Petroleum Resources Development Act for the transfer of the
issued share capital of Mogale Gold to Pan African; and
- The Proposed Transactions are subject to other regulatory approvals typical for a transaction
of this nature and of South African companies in provisional liquidation, including that the
provisional liquidators of Mintails SA obtain the necessary approval from the Master of the
South African High Court to implement the Proposed Transactions.
The Sale Agreements are not inter-conditional, and Pan African can accordingly acquire either
Mogale Gold and/or MSC, at its sole discretion.
The Proposed Transactions are subject to the fulfilment and/or waiver, where appropriate, of the
relevant conditions precedent which are to be fulfilled by no later than 5 November 2021, failing
which, the Proposed Transactions will be terminated.
The effective date of the Proposed Transactions is expected to be the date by which all conditions
precedent have been fulfilled.
4. CATEGORISATION OF PROPOSED TRANSACTIONS
The Proposed Transactions are, separately and collectively, uncategorised transactions and do not
involve any related parties in terms of the JSE Listings Requirements or the AIM Rules for Companies
and are therefore not subject to shareholder approval.
6 November 2020
Certain information communicated in this announcement was, prior to its publication, inside
information for the purposes of Article 7 of Regulation 596/2014.
For further information on Pan African, please visit the Company's website at
Corporate Office Registered Office
The Firs Office Building Suite 31
2nd Floor, Office 204 Second Floor
Cnr. Cradock and Biermann Avenues 107 Cheapside
Rosebank, Johannesburg London
South Africa EC2V 6DN
Office: + 27 (0)11 243 2900 United Kingdom
email@example.com Office: + 44 (0)20 7796 8644
Cobus Loots Deon Louw
Pan African Resources PLC Pan African Resources PLC
Chief Executive Officer Financial Director
Office: + 27 (0)11 243 2900 Office: + 27 (0)11 243 2900
Phil Dexter/Jane Kirton Ross Allister/David McKeown
St James's Corporate Services Limited Peel Hunt LLP
Company Secretary Nominated Adviser and Joint Broker
Office: + 44 (0)20 7796 8644 Office: +44 (0)20 7418 8900
Ciska Kloppers Thomas Rider/Neil Elliot
Questco Corporate Advisory Proprietary Limited BMO Capital Markets Limited
JSE Sponsor Joint Broker
Office: + 27 (0)11 011 9200 Office: +44 (0)20 7236 1010
Hethen Hira Huneiza Goolam
Pan African Resources PLC CMS RM Partners
Head: Investor Relations Transaction Legal Advisors
Tel: + 27 (0)11 243 2900 Office: + 27 (0)87 210 0711
Date: 06-11-2020 02:07:00
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