Pan African Resources has entered into a deal with Harmony Gold to buy the Evander gold mine in South Africa for US$176.71 million
The two companies plan to complete the sale by the end of October 2012. The acquisition will be financed by a mixture of debt finance and cash. Pan African Resources is also considering raising equity finance.
Pan African Resources chief executive Jan Nelson said, “The transaction meets Pan African’s strategic objective of acquiring a high grade, high margin, quality asset on the low end of the cost curve from which the company will achieve stakeholder growth.”
The purchase will double Pan African’s annual gold production to approximately 200,000 ounces and increase its resources and reserves significantly.
In line with its stated goals, Pan African Resources is also considering the disposal of certain non-core assets, such as its interest in the Manica gold project in Mozambique, to gain additional cash, which it would put towards the Evander purchase.
The deal is subject to regulatory approval in South Africa and Evander entering into an electricity supply agreement with Eskom by July 31 this year, on conditions acceptable to Pan African.
Located in Mpumulanga, Evander mine’s total underground resource stands at 32.5 million ounces. Evander has recently experienced a vast improvement in performance through the closure of unprofitable shafts, plants and additional investments in its infrastructure.
