JOHANNESBURG (miningweekly.com) – Funding for the R2.5-billion construction of the Mintails tailings project has been completed, with Pan African Resources managing to capitalise on the current attractive rand gold price to secure the final component of the full funding package without any dilution to its shareholders.

“We’re excited to commence with the project’s construction in the next months,” Pan African CEO Cobus Loots stated in a release to Mining Weekly on Monday.

The London- and Johannesburg-listed Pan African is finalising the project’s detailed engineering optimisation studies for the Mintails project, with environmental authorisation and related permitting expected within the next four months.

Construction is expected to begin by June 2023, with steady-state production forecast by December 2024.

Largely the same internal teams that completed Pan African’s previous three fast-payback tailings retreatment projects are undertaking the Mintails project, for which a R400-million ($21.6 million) transaction with FirstRand Bank division’s Rand Merchant Bank (RMB) forms the final component to the funding package for the project’s construction.

This follows the December issue of the group’s inaugural domestic medium term note programme of R800-million and receipt of a R1.3-billion credit approved and underwritten term sheet from RMB for the senior debt tranche of the project’s funding.

Under the terms of the transaction, the company will sell 4 846 oz of gold a month for 24 months starting this month at a fixed price of R1 025 000/kg ($1 723/oz), and receive an upfront premium of $21.6-million (R400-million). The effective price at which the group sold the 3 617 kg of gold, representing about 30% of annual group 200 000 oz production, over the 24 months, is R1 135 604/kg ($1 909/oz).

The senior debt facility is at drafting stage with the intention of this becoming effective by next month.

Pan African expects Mintails to contribute significantly towards Pan African’s future gold production over its 20-year life-of-mine.