PAN African Resources said on Wednesday gold production for its 2025 financial year would slip below guidance while costs would be higher owing to delays at its Evander underground project in South Africa and at Nobles, a newly acquired Australian mine where ramp up was slower-than-expected.
Production for the year ended June would be 197,000 ounces, higher than last year’s 186,039 oz but off guidance of 205,000oz to 215,000 oz. Consequently, all-in sustaining costs (AISC) will come in higher for the year at between $1,550 and $1,575/oz versus guidance of $1,450 to $1,500/oz.
ASIC also reflected losses on a hedge structure equal to $25 per oz. Pan African said it would be hedge-free from July as current contracts expired.
Pan African also announced an $11.1m (R200m) share buy-back programme, notwithstanding a 100% improvement in the stock over the last 12 months. Pan African said its valuation did not factor in its growth potential.
Production for the 2026 financial year is expected to be between 275,000 to 292,000 oz largely owing to a 46,000 to 50,000 oz contribution from Nobles, and a full year of production from its Mintails in South Africa which is expected to be 52,000 to 54,000 oz. Production from Mintails is expected to increase further in 2026 owing to a $6.5m expansion, currently underway.
AISC for the 2026 financial year has been put at between $1,475 and $1,525/oz.
Cobus Loots, CEO of Pan African struck a positive note despite the missed guidance. “I believe the group has never been better positioned to take advantage of record gold prices, with record second half gold production being testament to that achievement,” he said.
Indicative of its cash generation, the company expected to reduce net debt by $72m or 32% as of end-June compared to net debt of $228.5m end-December. “The group is expected to be fully degeared (in terms of net debt) in the next 12 months at prevailing gold prices,” it said.
As for its production issues in the year under review, Pan African said while it had completed the $36m construction work at Nobles, with hot commissioning in April, production ramp up was slower than planned owing to a delay in the commissioning of the filter presses associated with the dry stack landforms (tailings section) of the plant.
Steady-state throughput at an annualised rate of about 50,000 oz was expected to be achieved during the first quarter of the 2026 financial year.
There was heartening improvements at Pan African’s Barberton Gold Mines where restructuring had now been completed. But at Evander underground, there was slower-than-expected ramp up of the subvertical shaft project. It had now been fully commissioned and operational, Pan African said.
Shares in the company were not negatively affected by the missed guidance. Arnold van Graan, an analyst for Nedbank Securities said the improved gold price and recent operational performance of the South African mines would support Pan African’s valuation.
This coupled to the higher gold price received should materially lift the free cash flow performance. A combination of these factors should support the valuation, in our opinion.
“The improved 2H [second half] operating momentum and growth from MTR [Mintails] and Tennent, as well as operational improvements expected at Evander and Barberton, should put the Pan African on a much-improved operational footing heading into FY26,” he said.
“This coupled to the higher gold price received should materially lift the free cash flow performance. A combination of these factors should support the valuation, in our opinion.” Nedbank has a target price of R13/share against a ruling price of R11.20/share currently.
