“Pan African Resources operates in an environment that is uneasy. Some of the issues are external and some issue are internal, some are controllable while others are not,” commented Ronald Holdings, chief executive officer of [DATA PAN:PAN AFRICAN RESOURCES PLC.], at a presentation of their interim results for the six months ended 31 December 2013.
Despite the challenges of a weakening gold price and cost pressures, group revenue rose 102 percent from 668.1 million rand in 2012 to 1,349.1 million rand in 2013 while headline earnings per share increased 31 per cent to 15.11 cents.
A dividend of 240.3 million rand was paid out, equating to 0.1314 cents per share.
Their improved performance is attributed to their acquisition of Harmony Gold’s Evander Mine in 2012 for 1.5 billion rand, which has doubled the company’s gold production for the period.
“Evander Mine's 31.6 million ounces of gold resources offers significant expansion potential and optionality for our Group. The meaningful contribution from Evander Mines during the last six months, despite the mining activity moving into a lower grade mining cycle, further demonstrates the quality of this asset,” said Holding.
The group’s Barberton Tailing Retreatment Plant (BTRP) which was completed in 2013 on time and within budget, supports their Barberton Mine as a long life, low cost gold producer.
“Barberton Mine remains the backbone of the group,” he added.
“Production from Barberton Mines will continue to under pin the company's profitability by sustaining its gold production and well controlled costs”.
The same success however was not in the cards for their Phoenix Platinum Mine where gold production decreased by 4.8 percent from 3,136 ounces to 2,987 ounce.
Production at the Phoenix Platinum Chrome Tailing Retreatment Plant (CTRP) was affected by furnace ash and talc material which was historically deposited by on the Buffelsfontein dumps.
Holding stated even though they do not expect the Phoenix Mine to be profitable within the next 12 months, they were not prepared to sell it off and are instead opting to achieve stability at the plant while reducing costs.
On a positive note however, labour disruptions were settled after a final wage increase of 8 percent over a two year period was confirmed in 2013 after the National Union of Mineworkers embarked on a strike across the gold sector.
While the company expects that the final six months of the financial year will likely be challenging due to the weakening gold price and inflationary pressures, they will be focused on mitigating the effects of a lower grade mining cycle at Evander Mine as well as stabilising the BTRP.