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Pan African commits to dividend as debt falls

Group is on course for 200,000oz and 9,000oz of gold and PGEs [platinum] respectively this year said chief executive Cobus Loots
Pan African commits to dividend as debt falls
Gold prices rose by 12% in rand terms

--UPDATE, ADDS BROKER COMMENT--

South African gold miner Pan African Resources (LON:PAF) confirmed its commitment to ‘attractive dividends’ as interim earnings soared.

Cash generation increased greatly during the half year, said chief executive Cobus Loots, which allowed it to cut its debts by 40% in sterling terms to £15mln.

“As a result, the company remains well positioned to maintain its sector-leading dividend pay-out and take advantage of future growth,“ Loots said.

Pan African has been a beneficiary of the slide in the rand against the US dollar, with the local gold price rising by 12% at a time when it fell in US currency terms.

Revenues rose 29% to R1.58bn in the six months to December with earnings per share 100% better at R12.43. In sterling terms, earnings rose 98% to £10.9mln or 0.6p per share.

At its two main gold mine operations, Evander ‘s gold sales rose 34% as the underground head grade improved to 5.8 grams per tonne, or g/t (2014:4.3g/t), principally due to mining at 8 Shaft’s newly established 25 level.

Barberton’s sales rose by 7% to 56,500 oz with a head grade of 10.9 g/t (11.6 g/t).

Coots added that overall it was a  much improved operating and financial performance, underpinned by the stronger prevailing rand gold price environment.

“We delivered important operational improvements at Evander Mines, with gold sales and revenue increasing significantly.

“The Evander Mines Tailing Retreatment Plant has assisted our production growth and continued focus on low-cost, high-margin gold ounces.

“The group is well positioned to produce approximately 200,000oz and 9,000oz of gold and PGEs [platinum] respectively, over the full year period.”

Broker SP Angel, in a note, said: “Pan African is generating both profits and cash and should benefit from the continuing currency weakness.”

Separately, Pan African announced it was to buy Standard Bank's 16.9% stake in Shanduka Gold for an undisclosed cash sum

Shanduka is Pan African’s primary black economic empowerment shareholder with its sole asset being its 23.8% stake in the miner.

SP Angel added that Pan African is effectively buying a 4% beneficial interest in its own shares that may reduce possible dilution if Shanduka Gold is dissolved in future.

Shares rose 2% to 13.25p.

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Pan African Resources plc Timeline

Big Picture
October 20 2017

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