Two more big buys pending for Pamodzi Gold
Allan Seccombe
Posted: Thu, 10 Apr 2008
miningmx.com
[miningmx.com] -- PAMODZI GOLD will make two more sizeable acquisitions within the next 24 months to reach its stated production target of one million ounces, company management said on Thursday.
Pamodzi CEO Peter Steenkamp has raised with Miningmx the prospect of the company looking for a secondary listing in North America to raise the funds towards achieving that growth.
One of the most likely areas for such activity would be around the seven Orkney shafts Pamodzi bought from Harmony Gold in February of this year for R300m in shares.
Orkney is being ramped up from the current 250 kg/month of gold to 400kg/month in 2009, which is seen about as high as the mine will go, said chief operating officer Tony Murdoch-Eaton. That works out to some 155,000 oz of gold a year.
The all-in costs of raising the mine to that level is R65m, Steenkamp said.
Part of the plan is to exploit high grade pillars and grow the reserves at the mine out of the six million oz of resources above four grams a tonne at Orkney, extending the life of the mine.
When Pamodzi acquired the mine it had a life up to 2014, but it has now included reserves it feels it can mine economically, adding another six years to the life.
Key to the plans to increase production is to pour time and money into underground development, something Harmony wasn’t doing because it wasn’t a long-term, strategic asset, Steenkamp said.
“The strategies are very different. Harmony was mining what was left whereas we have a development strategy,” Steenkamp said.
The mine will reach 330kg/month production by the end of 2008.
The East Rand mine will hold around steady at around 300 kg/month of gold or 116,000 oz a year.
The President Steyn mine Pamodzi bought from Thistle for R233m in shares has the most upside in the current suite of assets, Murdoch-Eaton said, pointing out the mine has a particularly high grade around 13 grams/tonne.
The mine will initially produce 145,000 oz of gold, rising to 175,000 oz.
At that kind of size, with production topping 400,000 oz, Pamodzi will move into 13th place in the global output rankings, not bad for a company that had just 135,000 oz of production a year in 2006.
“To get to that million ounce target we’re going to have to make at least two big acquisitions,” Murdoch-Eaton said.
Steenkamp told guests at the Orkney mine there are growth options for Pamodzi around the mine.
“We believe there is huge potential for further expansion in this area,” he said.
The biggest mining group around the Orkney mines in AngloGold. Pamodzi appears to have forged fairly close ties with Harmony Gold.
Another company within the Pamodzi group is Pamodzi Resources Fund, which has acquired 60% of Harmony’s Cooke uranium assets, which have been hived off into a new company.
Harmony is on a drive to generate value from assets which were lower down the pecking order in the group. This entails selling them off, maintaining upside through a royalty for example, or bringing in partners in joint ventures. |
