Pan African produces solid first half numbers as prepares groundwork for Egoli project

PAN African Resources recorded higher production for the six months ended December, and made significant in-roads into net debt on a year-on-year basis, reducing it 47% to $65.2m (14.7% period-on-period).

Based on gold output of 98,386 ounces for the six months, some 5.9% higher than interim production in the previous year, the company was on track to meet its 190,000 oz year-end target which, if achieved, would be a 5% improvement over 2020, and 10% higher over two years.

Cobus Loots, CEO of Pan African Resources, has pitched a business case based on predictable earnings and dividend payouts as well as increasing gold production. Added up, the firm’s growth initiatives could take it to 250,000 oz/year in gold production.

Loots said in a trading update today the company was hoping to finalise a debt package for the development of its Egoli mine in the first quarter. Pan African said last year R1.2bn in funds was required for Egoli, effectively an extension of the firm’s Evander Gold Mines in Mpumalanga province.

The mine is expected to contribute 72,000 oz of gold about 20 months after construction begins. Debt was being negotiated with Rand Merchant Bank, the South African finance provider. “Early preparation work” and “limited” capital spend was taking place on the project, the company said.

In the short-term, Pan African is working on settling down pillar mining at Evander where the build-up of production was not smooth. Production increased nearly 18% to 19,169 oz in the period, but there was a slower than expected ramp-up.

Difficulties were hit with the initial installation of underground support, since resolved. There were also production delays owing to “… fracturing of the shaft lining following the establishment of the pillar mining in the vicinity of the shaft”, it said. “Production from the 8 Shaft Pillar is expected to further improve during the second half of the 2021 financial year,” the company said.

Loots singled out Barberton Mine for its performance in the first half, especially in its reserve development and infrastructure optimisation. It contributed 52,354 oz in first half production.

Construction of a solar photovoltaic plant at Evander Mines would start in the current (first) quarter with first power expected in the third quarter of the calendar year. “We look forward to presenting our interim results on 16 February,” said Loots.

Shares in Pan African were about 1.5% higher in early trade on the Johannesburg Stock Exchange. The stock has been on a ride, however, having more than doubled in value over the last 12 months.