Jan Nelson, MD, Pan African ResourcesJan Nelson, CEO, Pan African Resources

Pan African lifts full-year profit 79pct

I-Net Bridge | Tue, 31 Aug 2010 09:58

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[] -- PAN African Resources, the African- focused gold mining company, on Tuesday reported a 25% improvement in its full year diluted headline earnings per share to 1.06 pence from 0.85 pence previously.

The company, which is in incorporated in England and Wales but has South African operations, posted a 79% increase in profit after tax to £14.5m for the year to end June 2010 from £8.1m the previous year.

Earnings per share were more than double at 1.04 pence from 0.40 pence the year before.

Gross revenue from gold sales increased by 29% to £68.5m from £53.0m with the improved revenue mainly due to a 27% increase in the average gold spot price received to $1 098/oz from $867/oz and the depreciation of the pound against the rand.

The average dollar versus rand exchange rate was 16% stronger at R7.59, against last year's R9.03, which negatively impacted revenue received in rands.

The effective ZAR gold price was 6% higher at R267 876/kg from R251 740/kg.

Mining profit at its flagship Barberton Mines grew by 12% to £24.7 m from £22m.

Cost of production increased by 42% to £40.6m from £28.5m, while cost of production in rand terms increased by 18% to R483.8m from R410.1m.

This increase was mainly attributable to a 43% increase in electricity costs to R42m, security costs increasing by 177% to R32.4 million and salary, wages and other staff expenses increasing by 18% to R215.5m.

Barberton Mines commenced payment of the new South African mining royalty tax upon its implementation in March 2010. This royalty charge for the year amounted to £0.84m.

EBITDA for the year under review, excluding impairment charges, was £25m, an increase of 9% on last year's £22.9m.

Barberton Mines sold 98 091 ounces of gold during the year, an increase of 0.76% from the previous year's 97 353 ounces.

All gold production was attributable from underground mining operations, which increased by 3% to 97 483 ounces from 94 909 ounces in 2009.

Production was expected to continue to increase as a result of increased capital investment and implementation of an integrated Mineral Resource Management programme, expected to increase mining flexibility.

The company also progressed on its Pheonix Platinum Project, where construction is expected to commence in the second half of 2010 and commercial production is forecast to start in the second half of 2011.

The company proposed a final dividend of 0.37 pence per share.

"Turning the company around from a loss making explorer to a gold producer, which soon will also yield platinum production, has taken only three years in a challenging global environment," the company said in a statement accompanying its results.

During this time the share price has remained unchanged. Looking ahead, the company said the ability to continue the payment of a dividend should in the future further realise the value in an increased share price.

"The foundation is solid and we are now able to take advantage of major growth opportunities to build Pan African into a significant mining house," the company said.

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