PAN AFRICAN RESOURCES PLC - Pan African enters into Conditional Agreements to Acquire Tailings Retreatment Projects

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
ISIN: GB0004300496
ADR ticker code: PAFRY
(Pan African or the Company)


PAN AFRICAN ENTERS INTO CONDITIONAL AGREEMENTS TO ACQUIRE TAILINGS RETREATMENT
PROJECTS



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
operations.
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 $2.3 million at an exchange rate of
      US$/ZAR:16.25);
-     The acquisition of MSC, inclusive of its assets, rehabilitation liabilities and shareholder loans
      for a cash consideration of ZAR12.5 million (approximately $0.8 million at an exchange rate of
      US$/ZAR:16.25);
-     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.



Rosebank

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
www.panafricanresources.com



 Contact information

 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

 info@paf.co.za                                                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

E-mail: hhira@paf.co.za

Website: www.panafricanresources.com

Date: 06-11-2020 02:07:00
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