Pan African Resources to raise up to $123m to fund gold project

Gold miner Pan African Resources is to raise up to $123m from a share placing and credit facility in order to fund its Elikhulu Tailings project in South Africa.

AIM-listed Pan African is to place 291.48m shares of 1p each with new investors at a price of 14p (2.42 rand) each to raise about $51m (705m rand). The new shares will be admitted to trade on AIM around 19 April.

The balance of $72m (1bn rand) will be underwritten from a seven year debt facility with Rand Merchant Bank.

The capital raised will be used to fast-track development of the Elikhulu Tailings project following publication of the definitive feasibility study and for general woking purposes.

Elikhulu is expected to produce about 56,000 ounces of gold per year for the first eight years of operation and 45,000 ounces of gold for the remaining five years. Commissioning and first gold is expected to occur in the final quarter of 2018.

Chief executive Cobus Loots said: “The completion of the proposed equity portion of the Elikhulu funding package and subsequent construction of the project will represent another key milestone for the group.

“Elikhulu is expected to deliver low-risk and low-cost gold production within a relatively short timeframe. This initiative, together with our recently announced coal disposal, is consistent with our strategy of pursuing and executing value accretive opportunities both within and outside of South Africa.”

Shares in Pan African Resources were down 4.69% to 15.25p at 1242 BST.