PAN African Resources will consider paying an interim dividend in its 2026 financial year provided the price of gold remains buoyant.
Cobus Loots, CEO of Pan African said in the firm’s interim results on Wednesday that he expected the company to make inroads into net debt of $228.5m. On the back of this he commented: “This will allow a review of the group’s dividend policy after financial year-end, which could include instating interim dividend payments going forward”.
The South African gold miner, which saw its share price double last year amid a meteoric rise in the gold price, also said it was pressing forward with plans to increase production. A feasibility study was being run on a proposed one-fifth increase in output at Mintails, Pan African’s recently commissioned gold retreatment processing plant, west of Johannesburg.
The study would look at increasing production from Mintails to 60,000 oz from 50,000 oz by means of additional reactors to improve recoveries, two new carbon-in-leach (CIL) tanks and – a prefeasibility study permitting – a hard rock crushing circuit to treat nearby remnant hard rock resources.
Pan African also planned to accelerate production at its Nobles open pit mine in Australia, bought last year through the $54.2m all-share acquisition of Tennant Consolidated Mining Group. Loots said gold production from Nobles would be between 48,000 to 60,000 oz in the 2026 financial year.
Including the 10,000 oz expansion at Mintails, Pan African raised the prospect of production in 2026 increasing to between 270,000 and 308,000 oz at “a competitive all-in sustaining cost”. This compares to production of 215,000 oz for the 2025 financial year ended June 30, itself a 16% increase over 2024 production.
If realised, roughly half of Pan African’s production next year will be from surface or near surface gold, a development that would derisk its production profile, and lower costs.
The difficulty of mature underground mining was plain to see in the period under review in which gold output of 84,705 oz represented a 3.3% reduction compared to 87,581 oz mined in the corresponding six months of the previous financial year. The year-on-year decline in output was owing to a decrease in production from Evander Mines’ underground operations and multiple Eskom-related power failures at Barberton Gold Mines.
As a result AISC increased to $1,675/oz from $1,295/oz previously. Despite this, Pan African said full year AISC would be $1,450/oz to $1,500/oz owing to an improvement at the underground mines and the full ramp up of Mintails. Pan African stuck to gold production of 205,000 to 215,000 oz for 2025.
Another drag on the group was a hedge on 25% of production, installed to help finance the R2.4bn construction of Mintails. This portion of gold was sold at $2,359/oz which compares to a current spot price of $2,891/oz.
As previously reported, the hedge – which is due to expire at the end of February – resulted in an opportunity cost of $17.4m. “It can’t come soon enough,” said Loots in a presentation today.
Net cash from operating activities before dividend, tax, royalties and net finance costs decreased by $26.3m to $29.3m.
Gold traded at $2,916.37/oz on Monday giving support to analyst forecasts the metal could ease through $3,000/oz before year-end. “Gold remains in a sweet spot, with little standing in its way,” Westpac Banking Corp. analyst Richard Franulovich said in a note reported by Bloomberg News.
