Pan African Resources sees strong cashflows as gold price surges
Last updated: 20:30 24 Feb 2024 AEDT, First published: 23:35 15 Apr 2021 AEST
Snapshot
- Pan African highlights the miner's big strides forward - ICYMI
- Pan African in good position heading into Mintails build, suggests broker
- Pan African Resources on track to meet full-year guidance after strong first half
About the company
Pan African Resources PLC is a mid-tier African-focused gold producer with a production capacity in excess of 200,000oz of gold per annum.
The company owns and operate a portfolio of high-quality, low-cost operations and projects, which are located in South Africa.
How it is doing
Cobus Loots, CEO of Pan African Resources talks to Proactive’s Stephen Gunnion about production, surface mining and safety.
SG: Can you share how the last six months have been for Pan African?
CL: Helped by favourable gold price and our strong production performance it has been a good six months.
Specifically, our operations at Barberton and our tailings portfolio have shown exceptional outcomes. This positions us well for achieving our full-year production guidance of between 180,000 and 190,000 ounces of gold.
Pan African Resources more than doubled its cash flow and increased profit by almost 50% in its latest half-year.
'Exceptional' contributions from its surface tailings treatment operations at Elikhulu and Barberton (BTRP), a higher gold price and slightly lower costs helped profits jump to US$42.4 million (US$28.9m), said the South Africa-based gold miner.
Pan African Resources PLC (AIM:PAF, OTCQX:PAFRY, JSE:PAN, OTCQX:PAFRF) said earnings have rebounded due to higher gold production, a rise in the gold price and a weak South African rand.
Earnings per share for the six months to end-December 2023 will be between US$2.14 and US$2.30, the gold miner said, an increase of between 41% and 51% over the comparable period in 2022.
What the brokers say
Pan African Resources PLC (AIM:PAF, OTCQX:PAFRY, JSE:PAN, OTCQX:PAFRF)'s production of 175,00 oz in its latest financials came in as expected but its debt position was better than predicted, says broker Peel Hunt.
Net senior debt closed at US$18.9 million, well under the US$25-35 million guided in May and a $30 million improvement over the position on 30 December, with the sustained high gold price and weaker Rand aiding cash generation over the period.
“This puts the group into a strong position going into the Mintails build,” said the broker.
What management says
Pan African Resources PLC (AIM:PAF, OTCQX:PAFRY, JSE:PAN, OTCQX:PAFRF) CEO Cobus Loots takes Proactive's Stephen Gunnion through the company's interim results to 31 December 2023.
The mining firm experienced a significant uptick in performance, driven by increased production and a favourable gold price environment, particularly in South African rand. The impact of operational enhancements at its Barberton operations and its tailings retreatment portfolio including Elikhulu saw substantial production boosts, positioning the company to meet its full-year guidance of 180,000 to 190,000 ounces of gold.
Loots highlighted the successful management of costs despite inflationary pressures, attributing part of the efficiency to the depreciation of the rand against the dollar, higher gold output reducing unit costs, and prudent cost controls. Notably, the company's investment in renewable energy and water recycling initiatives has started to pay off, with the first solar plant saving approximately $13 per ounce in all-in-sustaining costs (AISC).