PAN African Resources is half way to staging a strong year-on-year recovery for the 12 months ending June 30.
In an operational update for the six months ended December, the group today raised the prospect of upwardly revising production guidance. This comes against a backdrop of lower costs and a higher gold price, partly owing to a weaker rand.
A strong performance for 2024 may give Pan African some grounds to counter shareholder criticism of executive pay increases. At the firm’s annual general meeting in November, nearly half of Pan African’s shareholders declined to support the executive pay scheme as per its 2023 annual report.
Gold production for the six months was 6.7% higher at some 98,458 ounces, higher than a 94,000 to 98,000 oz estimate the firm made in November. While it has kept full year guidance to between 180,000 and 190,000 oz, it said in its update “revised guidance may be considered in due course”.
The conversion to round-the-clock mining at its Barberton Mines was one of the main contributors to the improved production. But Pan African also reported a ramp up of production at Evander Mines’ 24 Level while it had better metallurgical recoveries at its Elikhulu retreatment facilities. All of the firm’s mines are in South Africa’s Mpumalanga province.
The improvement in production helped keep a lid on costs. All-in sustaining costs averaged $1,300 per ounce at an exchange rate of R18.69 to the dollar. This compares to AISC guidance of $1,350/oz.
The rand weakened in the period but the other major factor influencing Pan African’s results other than higher production was the dollar gold price. Pan African reported a price received of $1,961/oz which compares to $1,725/oz for the comparative period last year – an increase of 13.7%.
If Pan African can outstrip production guidance it will provide a segue into its 2025 financial year in which it expects a 50,000 oz increase in output – 25% in group output – when it commissions the Mintails retreatment operation, west of Johannesburg.
Said Cobus Loots, CEO of Pan African: “Commissioning of the world-class processing plant at the MTR Project towards the end of this calendar year will further increase the group’s production with approximately 50,000 oz per year of high margin ounces”.
The project, which carries a capital bill of R2.5bn and is Pan African’s largest to date, is expected to commission at the end of the 2024 calendar year. Net senior debt increased to $60.0m from $18.9m primarily owing to capital expenditure of $23.2m on Mintails, and the dividend $22.1m paid to shareholders in December 2023.
