Pan African Resources’ capital-reduction resolution to correct accounting errors for the period 2019 to 2023 has become effective, although this has been of no consequence to the company’s net asset value and number of shares in issue.
At a general meeting of the company last month shareholders passed a resolution in favour of an exercise on “capital reduction to enable the company to pay future dividends, address the payment of certain past distributions by the company by way of dividends, and in respect of certain share buybacks as well as the resultant-related party transactions”.
Pan African Resources said on Friday this resolution has now been effected.
It said “the resolution at the general meeting to approve the cancellation of the company’s share premium account, and the reduction of capital have now become effective.
It had said earlier that past dividend distributions had apparently been paid otherwise than in accordance with the Companies Act, 2006.
“Following the passing of this resolution, formal approval by the high court of the capital reduction was granted on July 2, 2024. The court order confirmed the capital reduction and statement of capital approved by the court was registered with the Registrar of Companies on July 18, 2024 and therefore the capital reduction became effective on this date,” said Pan African Resources.
The purpose of the capital reduction has been described as enabling the company to “create distributable” reserves.
“Following the capital reduction, the company’s net asset value and number of ordinary shares of 2 222 862 046 in issue, including 306 358 058 shares held in treasury remains unchanged,” it added.
Keith Spencer, non-executive chairman for Pan African Resources explained in June that regulations require that a public limited company may only pay a dividend if it can satisfy the Net Assets Test.
Pan African Resources paid dividends for the years ended June 30, 2019; 2020; 2021; 2022; and 2023 amounting to an aggregate value of $93.3 million (R1.7 billion).
Additionally, Pan African Resources undertook a share buyback programme in 2022 for R50.3m. Pan African Resources has been one of the top-performing gold stocks on the JSE, notching up a bullish trend and supported by stronger gold prices.
However, on Friday shares in Pan African shed 1.10% to R6.29 on the JSE. This was in contrast to the company’s 53.79% rise on the JSE in the year to date comparative and 10.93% strengthening in the past three months.
Stephan Erasmus, investment analyst at Anchor Capital told Business Report that gold has been “outperforming most major asset classes, driven by central bank purchases, Asian investment inflows, strong consumer demand, and geopolitical” uncertainty. This was providing support for the JSE gold stocks.
“The global economy shows mixed-growth signals, anticipating rate cuts amid persistent inflation, and the gold price reflects these expectations. Potential catalysts for gold include falling rates in developed markets and continued global investor support as a hedge against rising risks,” said Erasmus.