OPERATIONAL improvements and optimisation at the BarbeRton underground and Elikhulu surface operations helped bump up full year bullion production for Pan African Resources by 6.2% to 186 039 ounces, providing impetus to a firming up in revenue which widened headline earnings by 32.1%.
The company’s 6.2% strengthening in production was in line with its expectations for the period to the end of June, it said yesterday.
Kobus Loot, Pan Africa’s CEO, said the company had operated against the backdrop of “a very favourable gold price environment, with the metal appreciating by more than 20% in US$ terms in the past year” while he was also seeing a “generally positive sentiment on near-term prospects” for the gold price.
Operational enhancements and optimisation initiatives resulted in significant improvements at Barberton Mines’ underground and Elikhulu Tailings Retreatment Plant’s (Elikhulu) surface operations for Pan African.
The company raised output from Fairview and Sheba Mines by 13.5% to 65 580 ounces while production from Elikhulu was 8.4% firmer at 54 812 ounces.
This boosted revenues for the period under review by 16.8% to $373.8 million, with profit for the year firming up 30.2% to $78.8m.
Loots is, however, taking a cautious strategy for the company just in case there is a reversal of fortunes in the elevated gold price.
“We also recognise that, although fortuitous, the commodity price tailwinds may not last indefinitely. We therefore have to use this opportunity to ensure our business model remains robust, and continue to position our assets for long-term sustainability,” he said.
As a result of the stronger profitability in Pan African Resources over the full year to June, headline earnings for the same period surged by 32.1% to $79.5m.
Although net cash generated from operating activities declined by $9.3m to $90.8m, net debt in the company increased to $106.4m compared to $22m a year ago mainly as a result of the construction of the Mogale Tailings Retreatment (MTR) Project.
Nonetheless, available cash and undrawn debt facilities at year-end amounted to $95m compared to $84.7m a year earlier.
Pan African is now progressing with the commissioning of the MTR project, with steady-state production expected by the end of this year.
“This $135.1m project is expected to be delivered under budget and ahead of schedule. The Barberton Tailings Retreatment Plant’s life has been extended to seven years (previously two years), following a successful internal project to reassess feedstock sources, further enhancing the Group’s high-margin, long-life surface remining operations,” said Pan African Resources.
Its Evander Mines’ 8 Shaft 24 and 25 Level underground expansion project is scheduled for completion at the end of this month following delays in the equipping of the ventilation shaft for hoisting.
“Equipping the 17 to 24 Level subvertical hoisting shaft will significantly increase efficiencies by reducing reliance on the current cumbersome conveyor belt infrastructure for ore transport to 24 Level’s refrigeration plant will be commissioned in phases to facilitate mining at depth,” said the company.
All-in sustaining costs for the year to June averaged $1 354 ounces compared to the previous year’s restated threshold of $1 309 ounces at an average exchange rate of R18.71/$1. This was marginally above the company’s guidance of between $1 325 per ounce and $1 350 per ounce.
The delay in the commissioning of Evander Mines’ subvertical hoisting shaft negatively impacted unit costs, said the company.
All-in sustaining costs for Pan African Resources’ lower-cost operations, which account for more than 84% of its total annual production, amounted to $1 170 per ounce.
For the current year to June 2025, Pan African has tabled a production guidance of 215 000 ounces to 225 000 ounces of gold pivoted on the expected increase in production largely attributable to stronger contribution from the new MTR project.
However, negative impacts to this could emanate from the delay in the commissioning of Evander Mines’ subvertical shaft which could impact guidance by approximately 5 000 ounces.
Shares in Pan African Resources shed 3.2% to R6.70 in midday trade on the JSE yesterday although it is 69.2% firmer in the year-to-date comparative period.
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