Johannesburg - Pan African Resources, the JSE- and London-listed precious metals producer, is searching for growth opportunities through acquisitions elsewhere in Africa to supplement production from South African mines as it posted record profits for the year to June.
The company yesterday said the external growth would come through a focus on brown fields projects as opposed to green fields projects.
Chief executive Cobus Loos said the company was not keen on drilling holes in green fields projects. “We want a project that can be brought into production quickly,” he said.
The company reported that its earnings per share increased 63 percent to 30.20 cents during the period compared to 11.48 cents recorded last year. Loos said the group was in a position to increase profitable production through organic and acquisitive growth.
“The past year has been an exceptionally successful period for Pan African Resources and for our stakeholders,” said Loos.
“The group has delivered a year of record gold production and profits and the largest dividend payment to date.”
Loos emphasised that Pan African was predominantly a gold company with no plans to diversify.
“We would have acquired three assets in West Africa, but these assets did not meet requirements. This is because we are conservative as far as growth is concerned.”
Pan African owns the Barberton Mines and Evander Gold Mines both in Mpumalanga, and the Uitkoms Colliery in KwaZulu-Natal, among others.
Loos said Pan African was also finalising a feasibility study on the Elikhulu, a gold tailings project near Evander.
He said if the study was successful, production in the area would commence within two years.
Pan African rose 4.55 percent to R3.45 a share on the JSE yesterday on posting record profits and a robust operational performance for the period under review.
Pan African also proposed to pay a record R300 million dividend in the year under review with shareholders expected to vote at the company’s annual general meeting to be held in London in November.
Hurbey Geldenhuys, head of Research at Vunani Securities said Pan African had posted a good performance, with the potential to repeat this going forward. He warned, however, that the acquisitions the company wanted to embark on needed to be carefully considered.
“Asset prices have already gone up, it may be too late to be a buyer and not overpay. The retreatment project is a must do. One of the best unmined options left in South Africa. They have excellent track record for unlocking these kinds of assets. Capital expenditure is high, but probably a lot less than what they will have to fork out for any decent other mine,” said Geldenhuys, referring to the Elikhulu project.
However, safety regressed with one fatality for the year under review.
Pan African head of safety Mandla Ndlozi said the company had dismissed mine captains at its Evander Mine, Mpumalanga, for under-reporting accidents and had put measures to improve reporting.
Ndlozi said accidents had been hidden to attain performance bonuses.
“Accidents were hidden and in the second quarter we investigated the issue and dismissed a number of people,” said Ndlozi.