Pan African will protect rights in IFM rescue

[miningmx.com] – PAN African Resources said it 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 Cobus Loots, CEO of Pan African Resources. “We will do whatever we need to do to protect our rights,” he said in an interview.

In the meantime, the Phoenix operation is able to extract PGMs from other tailings at Kroondal and Elandskraal that Pan African owns and that have sufficient resources for “… a number of years” said Loots. “We hope to get some clarity soon.”

The Phoenix plant cost R104m to build and is slated to produce around 12,000 ounces of PGM annually. However, the operation has been negatively affected by availability of material suitable for treatment because of changes made to IFMSA’s mining operations.

It produced 4,711 oz of PGM in the six months to end-December from 2,987 oz in the previous comparable period.

DIVIDEND

A R210m dividend unveiled by Pan African Resources at its year-end results announcement on September 16 is due in December even through it generated net cash from operating activities of just R95.7m for the year ended-June.

Loots said at the time that it was important for Pan African to generate strong cash flows in the current financial year. “It’s not a big concern for us,” Loots said at the time of the dividend announcement.

“The question is can we generate R250m in cash (by December). If we can’t do that then we are in serious trouble. We are comfortable that this coming financial year will be a much better year for us.”

Asked for information regarding cash flow generation, Loots said: “We’re not in serious trouble, but we have not yet put out trading statement. We are very close to our half-year results but we are fairly comfortable with the dividend”.