Pan African unveils step out in strategy with $7m gold exploration budget for Sudan

PAN African Resources has embarked on a major step out of strategy by announcing plans to dig for gold in Sudan in northeast Africa.

“Our exploration programme will be phased, with expenditure of approximately $7m expected to be incurred during the first three years, to ensure we limit the group’s financial risk,” said Cobus Loots, CEO of Pan African.

Sudan has been host to a growing artisanal gold sector whilst formal sector exploration has been successfully carried out by Canadians Orca Gold, the company that Perseus Mining announced in February it would buy for $230m in shares.

Orca owns 70% of northern Sudan’s Block 14, a prospect that has been scoped to produce 228,000 ounces of gold annually for the first seven years of a 13.5 life of mine.

Pan African’s announcement is significant because it hasn’t embarked on greenfields development in the past as its business has focused on retreatment of surface gold ounces and the brownfields development of long-standing underground mines.

Pan African plans to explore a region some 1,100 square kilometres in area situated roughly 70km northwest of Port Sudan which is in the northern part of the country, far from the political ructions in South Sudan’s Darfur region.

Sudan produced about 90 tons of gold last year, making it the third largest gold producer in Africa after Ghana and South Africa, and the tenth largest producer in the world with production in 2021 – equivalent to Peru’s gold production, said Pan African.

The government of Sudan granted Pan African licences for a period of three years, with the option to renew for a further two years, the company said.

Exploration is expected to begin in the second quarter 2022. Some $2.5m has been budgeted in the exploration programme for the first year.

“Our management team has been visiting Sudan for the last two years to identify prospective gold mining sites,” said Loots. “We believe that the Block 12 concessions are highly prospective, and we look forward to reporting exploration results from these properties in due course.”

He added that the company would have to be “… comfortable with the country’s operating environment” before making further investment decisions.

Pan African has targeted production of 200,000 ounces for the 2022 financial year, ended June 30. However, it has ambitions to grow production. Two gold retreatment projects currently under consideration could boost Pan African’s current production by 50% if they are approved.

In December, Pan African announced a conditional agreement to buy the Blyvoor  Gold operation for R110m subject to a technical study. It joins Mintails on Pan African’s books which Loots said in 2020 contained two gold tailings resources capable of producing 533,000 ounces of gold over 12 years.

Added to Blyvoor, which is scoped to produce 25,000 to 30,000 oz a year for 15 years, the two operations would potentially add 100,000 oz/year to Pan African’s annual output, Loots said in February.