PAN African Resources has been included in the influential GDX Index for the first time after New York fund manager Van Eck took a 5.9% stake in the gold miner.
“It’s been a long time trying but now we are getting recognition for our numbers, eventually,” said Hethen Hira, head of investor relations for Pan African. “We are now getting the recognition for our production growth, market cap and liquidity.”
Shares in Pan African have increased 118% over 12 months partly owing to an improvement in the rand gold price – up 27% over the same period – as well as the prospect of increased production.
Pan African will commission its R2.4bn Mintails gold remining project next month. Situated on the West Rand, near Krugersdorp, the project will add up to 60,000 ounces in gold production, a one third increase on output in the firm’s 12 months ended June when fully commissioned. This will be done at an all in sustaining cost of about $1,000/oz.
Pan African has guided to an increase in gold production of up to 21% in the current financial year, equal to between 215,000 and 225,000 ounces. If achieved this would exceed the firm’s previous production record in 2022 of just over 200,000 oz. Production in the 2023 financial year was 186,039 (2023: 175,209 oz).
Van Eck bought 113 million shares owing to Pan African’s improved liquidity and because the company had market value of more than $700m. Pan African joins rivals Harmony Gold and DRDGold on the index.
A risk to Pan African’s production target for this year is a possible delay in the commissioning of another project, the Evander Mines’ subvertical hoisting shaft.
The issues at Evander Mines could potentially hurt 2025’s production guidance by about 5,000 oz but possibly itself offset by vamping operations at Evander and the earlier production from Mintails.
During the 2024 financial year, net debt ballooned to $106.4m – an increase of $84m year-on-year mostly as a result of the cost of building Mintails.
Despite the pressure Pan African declared a 1.2 US cents per share final dividend. A final dividend of 0.96 US cents/share was paid for the 2023 financial year. The company said it ought to be net cash by 2026.
The miner also said it had extended its Barberton Tailings Retreatment Plant’s life of mine to seven years from the previous two-year target. The increase in life for BTRP’s was after the group reassessed its feedstock sources.
