Pan African has diversified its gold mining activities beyond the Barberton Mines complex in Mpumalanga through buying Evander Gold and Mintails and developing surface tailings treatment operations at Barberton, Evander and Mintails. Picture: Supplied.
Pan African Resources CEO, Cobus Loots, has expressed optimism regarding the company’s future despite grappling with a decline in production and revenue for the half-year period ending December 2024.
Loots on Wednesday highlighting that the gold miner will ramp up production over the next few months to benefit from current elevated bullion prices.
This comes as interim headline earnings per share for Pan African slumped by 43.7% to US 1.20 cents after revenues slid 1% to $189.3 million (R337 million) due to a 13% decrease in gold production for the period, as well as the impact of the synthetic gold forward sale transaction of about $17.4.
Over the period under review, Pan African enjoyed a 21% rise in the dollar gold price received.
“We have diversified our production base from predominantly older underground mines to a more balanced portfolio of surface and underground assets,” said Loots.
Pan African said it was positioned for improved production in the half-year to June, with further significant increases in production expected for FY2026. Its full-year guidance for FY2025 of approximately 215 000 ounces represents an increase of 16% from the prior year, the company said.
Pan African Resources commissioned its Mogale Tailings Retreatment (MTR) operation ahead of schedule during the half year to December, saving some $8m on the upfront project capital.
The MTR project is a tailings re-treatment asset that will produce approximately 50 000 ounces of gold per year over a period of at least 20 years.
“MTR also presents scope for further production growth, with the ability to grow gold output to approximately 60,000oz in the year ahead, via plant expansion initiatives,” added Loots.
This comes as underground mining in South Africa still represents a significant portion of Pan African’s production base. However, the company had flagged challenges experienced at its Evander Mines and Barberton Mines’ underground operations.
With production for the half year period slumping by 3.3% to 84 705 ounces, Pan African is now looking beyond this for a boost in output to benefit from currently higher gold prices.
Investment analyst, Charl Botha said production for the half year had been poor “but should improve materially as new projects come on stream and especially more stable tailings” at Mogale.
“Hedges will not repeat - value is about the future, not the past,” he wrote on X.
At the MTR project, studies are underway to increase annual production from 50 000 ounces to approximately 60 000 ounces over the next year through installation of additional reactors to further improve recoveries.
At Barberton Tailings Retreatment Plant (BTRP), construction of the pump station to reprocess the Bramber dormant TSF at the BTRP is expected to commence in Q4FY2025, helping to extend the life of mine of the project from two to seven years from current surface sources.
“We believe Pan African is in an excellent position to capitalise from record gold prices, with high margins, a stable and growing production profile, and the group being materially unhedged from March 2025,” said Loots.
“At prevailing gold prices, we anticipate the group to de-gear completely in the next 12 to 18 months, allowing us to re-invest, to grow and continue to provide sector-leading returns to shareholders.”
For the half year, net cash used in operating activities amounted to $11.7 million compared to $27.2m in the prior year same period, negatively impacted by the opportunity cost of $17.4m that resulted from the synthetic gold forward sale transaction utilised to partly fund MTR’s construction as well as increased finance costs
Net debt closed the half year higher at $228.5m from $64.3m. this has been attributed to “the construction of the MTR operation and the consolidation of debt acquired” as part of the TCMG Acquisition.
As at the end of the reporting period, available cash and undrawn facilities stood at $32.3m after the company paid $23.7m in net dividends for full year 2024 dividend in December.
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