PAN African Resources announced plans to buy back up to R500m of its own shares after a surge in cash flow helped it declare a record final dividend for its 2026 financial year.
Cobus Loots, CEO of Pan African, said in notes to the group’s results published on Wednesday that the buy-back – which would begin in October – takes the shareholder return for the period to 40% of cash generated from operations, the maximum payout allowed as per the firm’s dividend policy.
A final dividend of R1.58bn was declared, which equates to 65 South African cents per share (3.95 US cents per share). Combined with the interim dividend of R280m (12 SA cents/share), the total dividend for the year was R1.86bn or $113.6m – equal to 77 SA cents (4.69 US cents/share).
It was earned on the back of $557m (R9bn) in cash flow during the year, enough to wipe out net debt of $150.5m and leave the company with net cash of $185.7m or R3bn as of end-June.
Pan African has multiple draws on its cash in addition to paying out the dividend and funding the buy-back of shares. It increased capital expenditure slightly to $330m (from $324m) for the 2027 financial year as it focuses some of its cash on growth projects.
It is rolling out its Royal Sheba project, a 40,000-ounce-a-year extension in the Barberton Mines operations of Mpumalanga province, as well as White Devil, an expansion project at its Nobles mine in the Tennant Creek gold mining region of Australia’s Northern Territory.
The company, which is known for splitting its attention between low-cost surface mining and high cost (and potentially troublesome) underground production, is embarking on expansions over several fronts. It is evaluating the development of Poplar, a long-standing undeveloped orebody on the outskirts of Evander in Mpumalanga, as well as moving into copper/gold mining in Australia.
Regarding the latter, it took a 15% stake in CuFe earlier this year, a company with neighbouring properties in Australia, for A$15.35m. Loots said today CuFe’s Gecko and Orlando projects have synergies with the Warrego project which is how, combined with Nobles, production of 100,000 oz/year will be achieved for Pan African from the region in the near-term.
“Warrego was historically was the largest copper and gold producer in Tennant Creek,” said Loots today. A combined working group has been formed with CuFe on potential cross-property work “among other matters”, said Loots.
In South Africa, Pan African is set to make an investment decision on the R3.68bn expansion of Mintails through development of the nearby “Soweto Cluster” of gold dumps, it announced earlier this month.
Pan African currently retreats tailings from Mintails’ Mogale dumps from which it produces between 50,000 and 60,000 ounces of gold annually. Once the expansion is complete, the Mintails assets will account for 100,000 oz a year, at peak production.
Production for Pan African’s current year is forecast to be between 280,000 and 302,000 ounces, with the growth coming from a full year of the recently commissioned Mintails surface retreatment operation in Johannesburg and the ramp-up of Nobles, which has disappointed in the year under review.
Production for the year under review, as previously announced, was 272,310 oz, a 37% year-on-year increase. Coupled with a 54.8% increase in the average dollar gold price received – the first year since Pan African closed out its hedge book – the higher output resulted in revenue doubling to $1.16bn.
The outcome for shareholders was a near tripling in headline earnings per share, to 17.64 South African cents.
Shares in Pan African have gained 31% over the last 12 months, but are 6% lower year-to-date.
