JOHANNESBURG – Pan African Resources on Wednesday soared 15 percent in early trade on the JSE  after saying the junior gold producer would more than double its earnings in the six months to December.  

Shares for the JSE and London listed company changed hands at R2.15 at 9.45am after it said that its earnings a share would jump as much as 126 percent to between 6.98 cents and 7.30c a share compared to 3.23c during the corresponding reporting period last year.

The miner said earnings a share were projected to rise by up to 109 percent, resulting in headline earnings a share ranging to between 6.98c to 7.34c per share, the company said.

The group said it classified the high cost Evander Mines underground shafts as discontinued operations during the period.

Pan African closed the Evander Mines’ large-scale underground operations in the year ending June 2018 after struggling with infrastructure problems, and a low rand gold price weighed heavily on the balance sheet. 

The closure resulted in the group impairing R1.78 billion and paying R161 million towards retrenchment costs. Pan African said the closure of the mines allowed it to reposition into a low-cost gold producer with 50 percent of production coming from tailing retreatment operations.

Elikhulu, the retreatment tailings plant was commissioned last September with R1.43bn, incurred on the construction of the plant on June 30, 2018.  The company said it would detail how it planned to curtail costs after debt ballooned in the year ending June 2018 to R1.62bn from R67m as the group’s facilities were drawn down to fund the Elikhulu capex and retrenchment costs at Evander.

The improved financial results come weeks after the company announced a 54.2 percent increase in production for the period under review, buoyed by Barberton underground operations and the group’s tailings retreatment.

It said the Elikhulu tailings retreatment plant, which reached nameplate throughput capacity in October, contributed 15 292 ounces in the six months to December.

The company has previously said that an exploration drilling programme was under way at Fairview Mine to increase minable areas. 

It had identified possible near-surface mining prospects within the Barberton Mines mining right, subsequent to the positive results of the concept study on Royal Sheba Mine.

Pan African shares closed 0.53 percent lower on the JSE on Wednesday at R1.87.