[miningmx.com] – PAN African Resources, the R2.8bn gold and platinum producer, slashed net debt R251m to R70m in the last six months which would give it enough headroom to pay its full-year dividend, the company said in a trading statement.
The gold and platinum producer announced in its results for the year ended June 30 that it would pay a R210m dividend to shareholders, due by December when it closed its interim period of the subsequent financial year.
At the time, however, Pan African CEO, Cobus Loots, told Miningmx that if the company didn’t produce positive cash flow it would be “in serious trouble”. He told the website earlier this week that cash flow had been good.
The firm said today that a combination of improved operating conditions and a weakening in the rand against the dollar, which increased the received price of gold in South Africa, had resulted in a strong interim performance.
For the 2015/16 financial year, headline earnings per share would consequently be a minimum of 10.37 cents per share equal to an increase of 85% on headline earnings of the interim period in the 2014/15 financial year.
“The reasons for the increased earnings include an improved operating performance from both Barberton Mines and Evander Mines, as well as an increase in the ZAR gold price received by the operations during the first five months of the current interim reporting period,” said Pan African Resources in its trading statement.
Cash flow was, therefore, “robust”, said the group which added that “excellent progress” had been made in redeeming debt.
“At present, the group’s net debt position is R70m, relative to net debt of R321m reported at 30 June 2015,” it said.
“The group is able to draw on its revolving credit facility to the extent of R800m which adequately provides for the payment of the proposed dividend of R210m in December 2015,” the company added.
Speaking to Miningmx earlier this week, Loots said the company would “do whatever was needed” to protect its rights to treat the tailings of International Ferro Metals (IFM), the Australian firm that put its South African subsidiary into business rescue.
IFM announced on August 27 that it had put IFMSA into business rescue. It blamed deteriorating market conditions for the move and identified power and the labour unions for soaring costs as well as lost production.
The development affects Pan African Resources because its Phoenix Platinum operation recovers platinum group metals (PGM) from material taken off tailings dumps, dams and current arisings from IFMSA’s operations.
“The business practitioner can cancel contracts that are considered onerous, but Phoenix is not onerous in our view,” said Loots. “We will do whatever we need to do to protect our rights,” he added.
