Pan African acquires remaining stake in Australian gold miner TCMG

Midtier gold producer Pan African Resources has acquired the remaining 92% of Tennant Consolidated Mining Group (TCMG) in Australia.

The company disclosed on November 5 that the acquisition was completed through a share agreement, with TCMG now a wholly-owned subsidiary of Pan African.

The transaction brings the total acquisition cost to $54.2-million. In March, Pan African invested $3.4-million in cash, securing an 8% stake in TCMG, with the latest purchase of remaining shares funded by issuing new Pan African shares valued at $50.8-million. This consideration represents less than 6% of Pan African’s current issued share capital.

The acquisition is part of Pan African’s strategy to secure low-cost production in a Tier 1 mining jurisdiction, with initial payback on investment expected within three years, assuming an average gold price of about $2 600/oz.

The company’s financial model projects returns aligned with Pan African’s yearly target of about 20%.

"Pan African has, in past years, successfully executed on our strategy of producing gold safely from low-cost operations and diversifying our portfolio to include both low-risk and low-cost surface and underground operations.

“TCMG represents an opportunity to further expand and diversify our near-term low-cost production base and the next phase in the growth trajectory of the group, in a Tier 1 mining jurisdiction," Pan African CEO Cobus Loots said on November 5.

The TCMG portfolio, which Pan African has assessed over the past year, is located in Australia's Northern Territory and includes several assets with high mineral potential.

The project encompasses 1 700 km², with holdings including the 100%-owned Warrego, Nobles, and Juno assets, as well as a joint venture with ASX-listed Emmerson Resources. The region remains underexplored, with only 8% of drilled holes extending beyond 150 m.

Current mineral resources stand at eight-million ounces of gold and about 1.2-million tonnes of copper.

“We are confident that this acquisition complements our strategy of focusing on safe, low-cost gold mining opportunities, with the potential to further grow our business by developing projects that meet our stringent investment criteria,” Loots said.

The financials for TCMG indicate significant potential. A completed feasibility study, compliant with Join Ore Reserves Committee 2012 and South African Code for Reporting of Mineral Resources and Mineral Reserves 2016 standards, reports mineral resources of 1.3-million ounces of gold and mineral reserves of 400 000 oz.

The projected financial performance includes a free cash flow of $420-million over the life-of-mine, assuming a gold price of $2 600/oz, with a net present value of $129.7-million and a real ungeared internal rate of return of 144% based on current reserves alone.

The project’s initial development capital of $35.7-million is fully funded, including debt facilities in Australia, with support from the Northern Territory government.

Construction of the processing plant is more than halfway complete, and commissioning is anticipated by June 2025, with the first gold pour expected the following month.

Over the initial three years of production, TCMG aims to produce about 50 000 oz/y of gold from surface stockpiles and tailings at an all-in sustaining cost of about $1 300/oz.

The project is expected to yield yearly production growth of about 20%. The Nobles gold project is set to commission in mid-2025, featuring an initial eight-year mine life with five years of current reserves and three years pending permit approvals. This processing facility will be the largest ever to operate in the region, creating economies of scale and efficiencies, Loots said.

“The group has been assessing the TCMG portfolio for almost a year. This acquisition complements our strategy of focusing on safe, low-cost gold mining opportunities," he adds.

He said the acquisition reflects Pan African’s focus on expanding its portfolio with long-life, high-margin projects in key mining jurisdictions.

The transaction, governed by the Australian Corporations Act, is expected to be fully implemented by December.

Pan African currently has operations at Mogale, Barberton and Evander in South Africa. The company also has exploration interests in Sudan. However, given the ongoing political unrest currently prevailing in Sudan, Pan African has to suspend exploration activities in country.

“All of the group’s assets [in Sudan] will be safeguarded and a notice of force majeure has been issued to the Sudanese Mineral Resources Company in order to maintain the validity of the exploration concessions,” the company said.