By Dineo Phoshoko
Executives discuss mining in Africa

An extraordinary amount of work goes into operating a successful mine. Inside Mining speaks to executives from five mine companies with operations across Africa to discuss what makes mining on the continent unique, what the challenges are, and the impact of Covid-19, among others.

Africa’s geological potential has made the continent an attractive location for the development of mines. The continent is home to a variety of minerals in high demand across the world.

Pan African Resources

Executives discuss mining in Africa
Pan African Resources is a mid-tier Africa-focused gold producer with a production capacity in excess of 170 000 oz of gold per annum. The company owns and operate a portfolio of high-quality, low-cost operations and projects located in South Africa. CEO Cobus Loots speaks.

In your view, what makes mining in Africa different compared to the rest of the world? 

CL  Mining in South Africa is better positioned than in many other parts of the continent, given the availability of electricity, infrastructure, and mining support industries. However, our mines are more labour-intensive and less suited to mechanised mining when compared with other countries. This has a bearing on productivity and costs of production. 

What would you say is the most challenging thing about operating in Africa? 

Currently, all of Pan African Resources’ operations are located in South Africa, namely in the Barberton and Evander areas, both in Mpumalanga. These areas are historical mining districts and have well-developed infrastructure (roads, electricity, fuel supply, rail) as well as the availability of skilled and unskilled labour. Mining presents a number of challenges, including keeping our people safe in what are sometimes difficult conditions, and dealing with all of our stakeholders.  

How do you deal with these challenges? 

Mining is ultimately about people, having the right people, and ensuring all of our people share our purpose and vision. In terms of safety, we have a hands-on approach. It is critical that individuals take responsibility for their own safety, with the company providing all of the necessary training, equipment, and policies/procedures.

“Mining is ultimately about people, having the right people, and ensuring all of our people share our purpose and vision”

When dealing with stakeholders and communities, it is important to be honest and sincere, and to resolve issues in a transparent and proactive manner. We are proud of the fact that Pan African’s mining operations are able to make a meaningful and positive difference in the lives of all of our stakeholders. 

What impact do you think the African Continental Free Trade Agreement would have on mine companies operating in Africa? 

This could only be a positive development, as it could simplify cross-border transactions and encourage new business and development opportunities.

In terms of your mining operations, what would you say Pan African is doing well and what could you improve on? 

The restrictions and conditions required to operate in terms of the Covid-19 national lockdown regulations will have some effect on production for the year. However, our management team has been particularly successful in repositioning and optimising our operations. At the Evander operations, we have curtailed our high-cost and logistically challenging deep underground operations to focus on pillar mining close to the shaft infrastructure.

We have also successfully commissioned our flagship Elikhulu Tailings Retreatment Plant. Elikhulu demonstrates the expertise in our organisation to design, build and commission tailings retreatment plants on time and within budget. It is also instrumental in ranking Pan African Resources among Southern Africa’s lowest-cost gold producers. 

Executives discuss mining in Africa
Operating in South Africa requires compliance with the law and adherence to strict health and safety standards. (Credit: Pan Africa Resources)
Along with the Barberton Tailings Retreatment Plant, these are high-volume, high-margin operations. They also tick all the boxes in terms of gold production, safety, low cost and rehabilitation. At Barberton underground, we have several projects that have been optimised so that they can be mined using existing infrastructure. We will increase on our production profile with a focus on bringing organic growth projects in our existing portfolio to account.

What would you say is the biggest lesson Pan African learnt throughout the years? 

Significant opportunities exist when resources are brought to account in a considered manner, especially in areas that were host to some of the world’s major ore deposits and prime areas thought to be mined out – such as the Witwatersrand Basin and the Barberton Greenstone Belt.

Operating in South Africa requires compliance with the law and adherence to strict health and safety standards. Also, applying new techniques, innovative thinking and world-class project execution can produce excellent results.

How has the Department of Mineral Resources and Energy (DMRE) dealt with Covid-19? 

The DMRE has been proactive in engaging with the SA Minerals Council – the industry body that represents the majority of South African mining companies, including Pan African. Together, we have formulated standard operating procedures (SOPs) required to prevent the spread of the Covid-19 at mining operations. 

The DMRE, through implementing the new SOPs, has allowed certain mining operations and essential services to continue during the national lockdown to ensure that operations can recommence without unnecessary delays once full production is allowed.

This initially enabled our surface operations to produce at approximately 70% capacity, which later ramped up to close to 100%. Underground operations have ramped up to 50%, with full production anticipated during June 2020.

On the assumption that Pan African can continue surface operations at close to maximum capacity for the remainder of FY 2020 and underground operations continuing at 50% of capacity, consistent with current restrictions, we have revised our annual production guidance from 185 000 oz to  175 000 oz – a reduction of only 5%. 

What measures has Pan African put in place to curb the spread of Covid-19 at the operations? 

Prior to the announcement of the lockdown regulations, we developed SOPs at all our operations, implementing best practices as provided by the SA Minerals Council and the DMRE, and in line with National Institute for Communicable Diseases guidelines.

The actual implementation of the practices includes necessary information campaigns at all operations (posters, video screens, daily safety talks), social distancing, the provision of sanitisers and disinfectants, regular temperature monitoring at entrances to operations, social distancing and isolation, regular disinfecting of workplaces and transport, as well as having the required medical personnel and facilities in place. These practices continue to be enhanced as new information in fighting the pandemic becomes available.

Executives discuss mining in Africa
Projects at Barberton underground have been optimised so that they can be mined using existing infrastructure. (Credit: Pan Africa Resources)
How do you see the future for Pan African Resources over the next few years? 

We will first focus on the pipeline of organic growth opportunities available within our existing mining licence areas and bring these to account.

We are finalising an independent review of the feasibility study at our Egoli Project at Evander and are considering the available funding options to fast-track its development. Egoli is an underground mine where the bulk of the infrastructure is already in place (such as the shaft and plant) and will have the capacity to produce about 90 000 oz per year over a period of 10 years. At Barberton, the Royal Sheba project has gold resources of approximately 650 000 oz that can also be extracted from existing infrastructure.

The company is always open to look at the acquisition of assets in Africa and the rest of the world, where our management expertise and operational track record will add value for our shareholders.

Is there anything you would like to add? 

We have repositioned the company by curtailing high-cost underground operations and optimised high-margin surface mining operations, from which we generate almost 50% of our production. We also have a pipeline of exciting near-term growth projects.

With regard to alleviating the impact of the Covid-19 pandemic, Pan African initiated a programme of relief and assistance at the end of April 2020, with the distribution of food and hygiene hampers to its employees, contractors, and vulnerable families in communities in close proximity to our operations.

The programme’s roll-out continued throughout May 2020 and approximately 5 400 hampers will have been provided with a total value of almost R5 million during the current phase of the programme. In light of the ongoing pandemic, Pan African will continue its initiatives to assist some of its most vulnerable stakeholders in the months ahead.

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