Pan African Resources Chief executive Cobus Loots said the group believed its share price was undervalued. Picture: Itumeleng English
Pan African Resources Chief executive Cobus Loots said the group believed its share price was undervalued. Picture: Itumeleng English

Pan African Resources declares highest-ever dividend

By Dineo Faku Time of article published Sep 16, 2021

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PAN AFRICAN Resources yesterday proposed its highest-ever dividend as the group posted record profits and the second-highest annual gold production during the year ended June 2021.

The JSE- and London Stock Exchange listed group also announced plans to launch a share buy-back programme.

Chief executive Cobus Loots said the group believed its share price was undervalued. A week ago the share price fell to R3. “We are saying this must be an opportunity for us to add value. We want the flexibility when we see the share price inexplicably depressed, to buy some shares. It is, in this case, potentially one of the best investments we can make,” Loots said.

He said the company expected to make further announcements on the programme in due course.

Pan African proposed a final dividend of R402.2 million for the 2021 financial year, subject to approval by shareholders at the annual general meeting scheduled for November.

The proposed dividend was a divergence from the group’s policy of a payout ratio of 40 percent of net cash generated from operating activities and constituted a payout ratio of 71.4 percent of the group’s net cash generated from operating activities.

“The board, having applied its discretion, believes that a deviation from the dividend policy is justified for the 2021 financial year given the favourable gold price environment, robust 2021 cash flows and the encouraging prospects for the 2022 financial year,” the group said.

Pan African, whose assets include the Barberton Mines and Evander Mines in Mpumalanga, posted a record profit after tax of $74.7m (R1 billion), up 68.6 percent from the $44.3m recorded in 2020.

Other financial highlights were the 34.6 percent higher revenue to $368.9m from a year earlier, predominantly due to the 16 percent higher gold sales, increasing at 201 777 ounces from 173 864 ounces in 2020, and the 16 percent increase in the average gold price, to $1 826 an ounce, up from $1 574 an ounce in 2020.

Earnings per share increased to $3.87 cents per share from $2.30c per share in 2020 and headline earnings a share were 69 percent higher to $3.87c per share.

Gold production rose by 12.4 percent t0 201 777 ounces, up from 179 457 ounces in 2020, and the group maintained its production guidance of a minimum of 195 000 ounces for the 2022 financial year.

Pan African will complete the construction of a 10MW solar plant at Evander Mines, and expand the facility to 26MW. The group is also planning to construct a similar plant at Barberton and will complete a feasibility study next month.

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