Pan African upgrades full-year guidance buoyed by soaring gold price

The mid-tier gold producer yesterday raised its production guidance for the year ending June 30, 2024. Photo: Supplied

The mid-tier gold producer yesterday raised its production guidance for the year ending June 30, 2024. Photo: Supplied

Published May 10, 2024


Pan African Resources is well on course for a stronger financial performance this year after lifting up its output guidance and projected a lowering of its production costs, amid strengthening prices of the yellow metal.

The mid-tier gold producer yesterday raised its production guidance for the year ending June 30, 2024, to the upper end of its earlier forecast to between 186 000 ounces and 190 000 ounces, up from 180 000 ounces to 190 000 ounces.

The company has concurrently ceased “processing of marginal surface sources” at the Evander Gold Mine in Mpumalanga which had become “uneconomical”.

Pan African CEO Cobus Loots said the mine contributed approximately 2 500 ounces in the first half of the company’s current financial year, and would have seen the company surpass its 190 000 ounces guidance if it had been maintained in operation.

“We are pleased that Pan African will achieve the upper end of our full-year production guidance, and would have exceeded guidance had we continued with the processing of surface material at Evander in the second half of the financial year,” Loots said.

“The robust production results, combined with record rand gold prices, should see the Group deliver an excellent financial performance for the year.”

The all-in sustaining cost guidance for Pan African has, however, been maintained at between $1 325 (R24 500) per ounce and $1 350 per ounce for the current operating year.

This at an assumed exchange rate of $1:R18.50 against gold prices of around $2 308 in midday trading yesterday.

In the outlook, Pan African has projected that gold production for its 2025 financial year will bump up to between 215 000 ounces and 225 000 ounces, with the company planning to commission its Mogale Tailings Retreatment (MTR) project later this year.

“Our MTR project remains on schedule, and we look forward to commissioning it later in 2024,” Loots said.

“We have now demonstrated that the addition of the Soweto Cluster resources further improves the economic attractiveness of this world-class project.”

Pan African said capital costs for the MTR project remained on budget, with no expenditure overruns expected.

The miner is working with an updated exchange rate and gold price $1:R19.00 and $2 200 per ounce, respectively.

The payback period on the MTR project’s upfront capital investment of $135.1 million was reduced to approximately two years from 3.5 years post commissioning.

In March, Pan African completed an internal pre-feasibility study for the Soweto Cluster, with the most feasible outcome being possible development of re-mining, overland piping and pumping infrastructure to process the material at the MTR plant.

“Using this option, the MTR plant’s capacity can be expanded to process 1 million tons per month of feed material, compared to the current design capacity of 800 000 tons per month, resulting in a life-of-mine of 21 years for the combined Mogale and Soweto Cluster resources,” it said.

The company is now proceeding “with the necessary permitting and servitudes required for the re-mining and processing of the Soweto Cluster, with a final investment decision” expected in due course.

Shares in Pan African were 1.26% firmer at R5.62 in afternoon trade on the JSE yesterday.