PAN African Resources was on the wrong end of its hedging contract in the 12 months ended June booking a $5.8m loss on one aspect of its forward sales.
Including a $26,2m opportunity cost – gold sold at an agreed level below the average spot price – the impact on Pan African’s profits for the year was 23%.
The gold miner disclosed this on Thursday in a trading statement in which it said earnings for the 12 month period were forecast to be between 68% and 78% higher.
Pan African sold 105,004 ounces of gold in forward contracts that “didn’t fully benefit from prevailing gold prices” which had averaged $2,735 per ounce in the period, a year-on-year increase of 35.7%, it said.
The forward sales agreed in order to finance its R2.5bn Mintails project which is expected to add about 50,000 ounces in Pan African’s production. Output for the 12 month period increased 6.5% to 196,926 ounces (2024: 184,885 oz).
Pan African said in June production for its 2025 financial year would slip below guidance of 205,000 to 215,000 oz. This was owing to delays at its Evander underground project in South Africa and at its newly acquired Nobles Gold Project in Australia where the ramp up was slower than expected.
For the current financial year, however, Pan African will be unhedged and produce more gold, forecast to increase to between 275,000 oz and 292,000 oz. The increase is owing to new production from MTR and Nobles.
Pan African announced the $54.2m acquisition of Tennant Consolidated Mining Group, the owner of Nobles, in November last year. The mine is scoped to produce 50,000 ounces a year.
In addition, the group is likely to benefit from an even higher average gold price during the period. Gold is 7% higher since July 1 and following a recent improvement to a new record of more than $3,500/oz is forecast to test even higher levels. Compared to the average price received by Pan African in its 2025 financial year, spot gold is 29% higher.
Shares in the company have gained 97% year-to-date. At an all time high of R16.31, the company has a market capitalisation of R33bn (£1.4bn).
Pan African is due to report is full year results on September 10.
