PAN African Resources kept the full year dividend unchanged despite a robust performance for the 12 months ended June, opting to keep its powder dry ahead of a 40% increase in capital expenditure this year before it nearly doubles again in the next.
It announced today an 18 South African cents/share payout (just over one US cent’share), equal to about R400m. This was on the back of strong cash generation – up 45% year-on-year to $110m – that enabled the group to all but remove net debt, reduced 67% to $13m as of June 30.
Pan African also amended its dividend policy which would be 40% to 50% of discretionary cash flow.
Capex increases to about R1bn this financial year compared to R600m in the period under review, some of which is the carry over of unspent capex from the year under review, and then increases to R1.8bn for the 2024 financial year as the group looks to expansion.
These include the extension of its Evander Gold Mines at a cost of just over R800m over the next five years and the extension of Royal Sheba at its Barberton Mines operations. Once completed Pan African will have 14 years of gold production from Evander equal to about 65,000 ounces a year.
The company also recently completed a bankable feasibility study of Mintails, a large surface tailings gold resource west of Johannesburg that could provide 50,000 oz/year in gold production for 13 years. It extended the purchase date for Mintails to September 30. The development of the Mogale section of Mintails is estimated to cost $161m (R2.8bn).
The company is also conducting site preparation for construction of an 8MW solar renewable energy project at its Barberton Mines and is considering an expansion of the 9.9MW solar plant at Evander Mines to 12MW.
Pan African produced a decent financial performance with headline earnings increasing to 3.93 US cents/share (2021: 3.87c/share) after registering virtually unchanged taxed profit of $75m for the year.
As previously announced in a trading statement, production was at a record 205,688 oz produced at an all-in sustaining cost of $1,284/oz slightly up from $1,261/oz. The company has guided to 205,000 oz in gold production at an AISC of 1,250/oz.
Commenting on prospects, Pan African CEO Cobus Loots said the company would focus on its smaller operations. Roughly 87% of production came from Evander and its Elikhulu surface gold retreatment plant. “A key focus for the year ahead will be the smaller underground operations at Barberton Mines to ensure that these high grade assets perform to their ful potential,” said Loots.