Pan African Resources on target for good annual earnings growth

Pan African Resources yesterday released interim results that showed profit well up by 46.7% to $42.4 million (R809m).

Pan African Resources yesterday released interim results that showed profit well up by 46.7% to $42.4 million (R809m).

Published Feb 15, 2024


Pan African Resources was well positioned to deliver on its 2024 financial year production guidance of between 180 000 ounces (oz) and 190 000oz of gold, CEO Kobus Loots said in a presentation yesterday.

The surface reminer and deep surface gold mining company yesterday released interim results that showed profit well up by 46.7% to $42.4 million (R809m). Earnings per share and headline earnings per share increased by 46.1% to US 2.22 cents per share (US 1.52 cents per share).

Speaking in a presentation, Loots said gold production for the six months came to 98 458oz (2022: 92 307oz), an increase of 6.7% relative to the six months ended December 31, while they had also benefited from the tailwinds of the rise in the rand gold price from the second quarter of last year.

He said production in January had continued to be good and looked to be the same in February.

Production costs were well managed, despite inflationary pressures, resulting in all-in sustaining costs (AISC) per ounce reducing to $1 287/oz (2022: $1 291/oz).

“The surface remining operations performed exceptionally well, with their sub $900/oz AISC,” he said.

“If the gold price tailwinds persist, shareholders can look forward to a continuation of the reporting period’s excellent financial performance for the full financial year," directors said in a statement.

Renewable energy generation and water recycling, and other initiatives to increase the future gold production, were expected to contribute to a further decline in future real AISC.

The AISC per ounce guidance range for the 2024 financial year reduced to between $1 325/oz and $1 350/oz. Net cash from operating activities increased by 134.5% to $27.2m ($11.6m).

The MTR project was expected to reach steady-state production by December 2024. Incremental annual production of about 50 000oz per year was anticipated, an increase of about 25% of group production, at an expected AISC per ounce of about $900/oz, over the 20-year life-of-mine.

Evander Gold Mine’s 8 Shaft 24, 25 and 26 Level underground expansion was on track. Construction of phase 2 of the refrigeration plant on 24 Level was advanced, with completion expected during the 2024 year.

Equipping of the 17 Level underground ventilation shaft at Evander, which is in Mpumalanga, with a hoisting capacity of up to 40 000 tons per month, was also expected to be completed during the 2024 year, improving efficiencies and eliminating the majority of the cumbersome conveyor system.

Dewatering of Evander Mines’ 7 Shaft Egoli project was ongoing and once dewatered to below 20 Level, reserve delineation drilling would commence during the first quarter of the 2025 year to further define the ore payshoot and its grade variability.

In the past six months, group operations, which account for more than 85% of the group’s gold production, produced at an AISC per ounce of $1 149/oz (2022: $1 139/oz).

The tailings retreatment operations, Elikhulu Tailings Retreatment Plant (Elikhulu) and Barberton Tailings Retreatment Plant (BTRP), produced at an AISC of $894/oz (2022:$887/oz).

A robust financial position was maintained with net debt of $64.3m ($53.7m) at the end of the period. The rise in debt was mainly due to capital expenditure on the MTR project.

Liquidity was healthy, with cash of $31.3m ($33.9m) and undrawn facilities of $86.4m ($52.1m).

The introduction of continuous operations at Barberton Mines’ Fairview and Sheba Mines had made a positive impact on production and further improvements would become evident once optimisation of the underground infrastructure was fully implemented.

“In the short term, our priority is to deliver into the production guidance for the 2024 financial year and commission the MTR project on schedule and within budget, which will elevate Pan African into the next tier of global gold producers,” said Loots.