Jan Nelson, CEO, Pan African Resources
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Pan African sets sights on gold growth
Allan Seccombe
Posted: Thu, 20 Dec 2007

[miningmx.com] -- THE acquisition of the Barberton gold mines will swing the fortunes of gold explorer Pan African Resources around and give it the cash to fund an active exploration pipeline in Africa and possibly fund acquisitions or joint ventures.

Pan African, which is traded on London’s AIM and Johannesburg’s AltX, recorded an operating loss of £955,000 in the 15 months to end-June 2007 against an £855,000 loss in the 18 months to end-March 2006.

The three Barberton mines, which were owned by diversified miner Metorex, generated a net profit before interest, tax and depreciation of £5.8m in the year to end-June 2007 after producing 90,000 oz of gold.

There is further upside in the Barberton projects after a hedge book was closed in November, with the final 1,688 oz delivered at R100,607/kg against the then spot price of around R160,000/kg.

Pan African is addressing flexibility issues at the three mines to restore production to 100,000 oz in 2008, CEO Jan Nelson told Miningmx in October.

In the transaction to acquire Metorex’s 74% stake in the Barberton mines, Pan African issued shares to the South African company, giving it a 55% shareholding. The deal announced a year ago was concluded after June and Barberton’s results aren’t incorporated.

Three Metorex executives have joined Pan African, with Keith Spencer appointed as chairman and Simon Malone and Charles Needham both appointed to the board.

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“The profits generated from the (Barberton) mining operations will be used to fund and increase the exploration effort of the Company,” Spencer said.

Pan African’s cash pile has shrunk to £327,000 by the end of June from £1.9m before. It has £1m worth of debt to repay this year.

“The Company will continue to aggressively pursue acquisitions of prospective gold deposits with good upside potential, as well as looking for acquisitions or Joint Ventures with other gold exploration companies who have proven resources or operating mines which can add to the production ounces and future cash flows.”

Pan African wants to be a 500,000 oz gold producer in five years.

The 1.5 million oz resource at the Manica greenstone exploration project is Pan African’s next potential gold producing asset. A pre-feasibility study will be completed in the first quarter next year.

Pan African is working in Central African Republic on two gold belts. It will work on delineating and evaluating a resource at two targets with a combined strike length of 12 km.

Pan African has the Akrokerri prospecting concession in Ghana adjacent to AngloGold Ashanti’s Obuasi underground gold mine. It will review the years of exploration data from previous owners to set exploration targets this year.