[miningmx.com] – PAN African Resources lifted its full-year dividend and said it remained on track to produce 250,000 ounces annually by 2017 despite headwinds at its Evander Mines premises in Mpumalanga province.
Low grades at Evander contributed to a 7.2% decline in headline earnings to R452m for the 2014 financial year ended June 30. The lower average gold price was also a factor in the firm’s showing. Gold production increased 44% to 188,000 ounces.
The outcome, however, was payment of a 14 cents/share final dividend compared to a 13c/share payout in the previous financial year.
Pan African Resources, which is also listed in London, outlined a number of growth projects that would put it in line to produce 250,000 oz/year of gold. These included the commissioning of tailings retreatment project at Evander – Elikhulu – , and the long term projects at Evander South, Poplar and Rolspruit.
“Once the above plans are actioned we will be on track to achieve our targeted 250,000 ounces of annual production from our current portfolio of assets and infrastructure,” it said in notes to its annual results published on the JSE News Service.
Ron Holding, CEO of Pan African Resources, said the results were “satisfactory” at its mainstay Barberton Mines, but acknowledged the grade problems at Evander. Payment of the dividend, however, was a statement of confidence in the business.
“Increased dividends and a new progressive dividend policy demonstrates the board and
management’s confidence in the quality of our assets and Evander Mine’s future performance,” said Holding in comments to the results.
“Our statement of financial position remains strong, whilst cash generative assets and internal projects will provide the platform for further profitable growth.’ he said.
Elsewhere in the results statement, the company said it was “… very well positioned to take advantage of further growth opportunities” without providing details. Net debt increased marginally to R101m from 93.6m previously.
In addition to Barberton Mines and Evander Mines, Pan African Resources also operates a chrome retreatment operation, called Phoenix Platinum, in South Africa’s North West province. Phoenix Platinum was profitable and cash generative for the first time during the year under review, the company said.
Commenting on the “low patch of grade” at Evander, Holding said at a presentation in Johannesburg that the company expected to hit higher grades of between 5g/t to 5.2g/t into the plant in February 2015. “We’ll definitely get there,” said Holding.
The grade, at 4.2 grams per tonne (g/t) was lower than the 4.6g/t anticipated by Edison Investment Research.
Its gold analyst, Charles Gibson, said cash costs were kept in check while the dividend, which came in at a yield over 5%, meant the share was still relatively cheap.
Pan African Resources “… remains London’s second best performing gold stock (since March 2010) and its best performing producer,” he said in a note.
