$ - Pan African Res Plc - $

Found this on minesite, sounds good to me.....



Minews Story Date: December 20, 2005

Pan African Resources Among The First On The Ground In The Central African Republic

By Stephen Clayson

Pan African Resources (AIM: PAF) has found significant favour with the market recently, its share price having almost doubled since late October. The company is focused on gold exploration across the eponymous continent, and has established a particularly strong position on the ground in the relatively under-explored Central African Republic.

The CAR is located, as its name would suggest, almost smack bang in the middle of Africa, bordering Chad, Sudan and the two Congolese republics. The recent politics of the CAR have been turbulent even by the standards of the rest of sub-Saharan Africa, with the last bout of civil war only drawing to a close in 2003. Hence, mineral exploration of the country using modern methodology has been very limited. Now however, a measure of political stability seems to have taken root in the country, and several international mining companies have moved in, encouraged by what looks to be a fairly sound mining code and ground that is in general comparatively accessible from a logistical standpoint.

Pan African’s CEO, Jan Nelson, puts the total number of mineral exploration outfits now active in the CAR at six, of which only AXMIN is primarily oriented like Pan African towards gold. Pan African presently has a joint venture agreement in place with International Mining Investments covering the Bogoin project in the CAR., each of the two companies holding a 45 per cent contributing stake. Making up the balance is a 10 per cent free carried interest for local groups.

The ground in question covers much of a sizable gold-mineralised belt within which several drill holes were sunk some years ago by a previously interested party, the efforts of which for various reasons fell by the wayside. An open pit mine was also operatd there in the past, which is always encouraging. Pan African has been highly encouraged by the results of these holes, which include intercepts of up to 17.38g/t gold, and according to Nelson the company is now looking to delineate five or six attractive drill targets before sinking some holes of its own, a step which will likely be eagerly awaited by the market. In addition, Nelson reports that Pan African is looking to expand its set of exploration licences, which may bode well for the company’s future in the country.

Pan African is also currently active in Mozambique and Ghana. The company’s Wa project in Ghana is though described by Nelson as “under review”, indicating that it could be dropped soon. Around 400,000oz of gold have been inferred to exist on the Wa property, but the auguries may simply be deemed by Pan African to point against eventual viability, in which case forsaking the project would be the right decision.

The Manica project in Mozambique looks somewhat more promising. Within a total strike length of 22kms, two distinct types of gold mineralisation have reportedly been identified, one being characterised by narrow vein material grading 10-12g/t, and the other by large amounts of low grade material found relatively near the surface. Pan African intends to concentrate first on outlining areas of the latter type of mineralisation that may be suitable for bulk mining, feeling that this strategy probably offers the best chance of success.

The company has carried out 6800metres of drilling on the Manica project so far, and a programme consisting of a further 3000metres is slated to begin in March and be concluded by June. This programme could well improve on the project’s current resource, which Pan African estimates at around 800,000ozs of gold grading 4.84g/t on average. Preliminary heap leach studies are also planned to be undertaken on low grade sample material as a prelude to the contemplation of a bulk mining operation.

Pan African has the option to ultimately acquire 100% of the Manica project, an option which Nelson expects the company to exercise, probably through the issuance of equity to the project’s current owner, Pangaea Exploration. Pangaea can retain a 20% carried interest in the project until it reaches feasibility stage, after which Pan African has first option to buy Pangaea out.

There is another aspect to Pan African’s relationship with Pangaea; Pan African holds right of first refusal over the purchase of any of Pangaea’s African gold prospects, and this arrangement may lead to one or more acquisition opportunities. Nelson imparts that Pan African has determined that enlarging its project portfolio is an option to be considered seriously in the near future, and the company’s relationship with Pangaea might provide a useful means of facilitating this.

As might be expected from a company chaired by Colin Bird, Pan African aims to run itself in a decidedly lean fashion. No business class seats for these boys and Jan Nelson sticks to basic accommodation when visiting projects. On this basis he expects its current cash position of around £400,000 to carry it through until the third quarter of next year. Then Nelson envisages a placing of new shares in order to provide the company with the finance to take itself forward following the evaluation of results from the Bogoin and Manica projects, the latter of which could by that time have passed the pre-feasibility stage, and following any acquisitions that may have taken place.

Overall, there seem at present to be three prime sources of potential upside for investors in Pan African. Firstly, despite being tempered by the high political risk rating of the CAR, the geological potential of the Bogoin project may prove to be very significant, and Pan African’s early entry into the country should give it an advantage. Secondly there is the Manica project, the risks embodied in and the possible timescale to mining of which are probably comparatively less than those of the Bogoin project. Thirdly, there is the possibility of value enhancing acquisitions. On this basis, shares in Pan African have had a nice run upward recently as more news has been forthcoming and could be worth watching in 2006.