Pan African posts solid half-year despite lower gold production

Pan African Resources posted its results for the six months to 31 December on Wednesday, with the group’s profit after taxation in rand terms increasing by 9.8% to ZAR 249.8m, while in sterling terms, it was up 28.4% to £14m.

The AIM-traded firm said earnings per share were 33.4% firmer at 16.58 rand cents, or 55.0% to 0.93p.

Group revenue improved 19.2% to ZAR 1.88bnn or 38.9% to £105m, which the board put down to an increase in the rand gold price received and the inclusion of Uitkomst Colliery’s revenue of ZAR 225m.

The group paid a final dividend of ZAR 300m or £17.1m, up from ZAR 210m or £9.7m, on 22 December, for the 2016 financial year.

That dividend equated to 15.44 rand cents or 0.88p per share.

“Pan African Resources generated higher earnings, revenues and a record dividend payout, despite lower production from our gold operations,” commented CEO Cobus Loots.

“The Elikhulu Tailings Retreatment Project, which was approved by the Pan African Resources board during the period under review, will provide organic production growth of approximately 56,000oz of gold per annum, and also reduce the overall cost profile of our operations.

“Elikhulu reflects Pan African Resources’ strategy of delivering long-life, low cost quality production ounces, with the focus of generating attractive returns for our shareholders.”

Loots said transactions completed in the prior financial year positively impacted results in the current period, and had been extremely value accretive.

“The PAR Gold Proprietary acquisition enhanced earnings per share by 17.7%, [and] Uitkomst Colliery contributed 8.5% towards the group’s profit after taxation.

“Our immediate focus is to recommence the Evander Mines underground mining operations, following the temporary suspension of mining to refurbish critical infrastructure, and to finalise the Elikhulu funding package.”