Pan African Resources PLC (AIM:PAF, OTCQX:PAFRY, JSE:PAN, OTCQX:PAFRF) says it is in an excellent position to capitalise from record gold prices, with high margins, a stable and growing production profile.
The miner, which produces some 215,000 ounces of gold a year, has told investors that it will be materially unhedged from March 2025 and in due course it expects to review its returns to shareholders as it continues to reduce debt.
“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,” Pan African chief executive Cobus Loots said in its interim results statement out today.
“The group will revisit its dividend policy with regards to dividends post year-end, should current gold prices be sustained.”
Pan African reported on Wednesday a 10% rise in interim profit to $44.6 million on stable first-half revenue of $189.3 million.
Gold production for the six months ended 31 December amounted to 84,705 ounces, noting the impact of a delayed commission at the Evander mine.
It repeated guidance for full-year production of 215,000 ounces, which will represent some 16% growth from the prior year.
The miner highlighted that the ahead-of-schedule ramp-up of the Mogale Tailings Retreatment (MTR) operation partially offsets the shortfall from Evander, and, provides a fresh catalyst for the firm.
Production growth in the pipeline
Looking further ahead, PAF is anticipating significant production growth in FY2026, supported by the TCMG in Australia which is projected to add up to 60,000 ounces annually.
“We have diversified our production base from predominantly older underground mines to a more balanced portfolio of surface and underground assets.
“During the reporting period, we successfully commissioned our MTR operation, ahead of schedule and with a saving of some US$8 million on the upfront project capital.
“MTR is another flagship tailings retreatment asset for our group, which will produce approximately 50,000 ounces of gold per annum for a period of 20 years or more, if we include all of our West Rand tailings reserves and resources.”
Loots added: “The construction of the TCMG processing plant at its Nobles project is now nearing completion, ahead of schedule, and within its approximate US$32.2 million capital budget.
“This processing plant will be the largest to ever operate in the Tennant Creek mineral field, aligned with our approach of achieving economies of scale by operating bulk processing facilities.
“We have also now accelerated the timing of anticipated gold production from this asset, with estimated production of 48,000oz to 60,000oz in the next financial year, at a very competitive AISC.”
Mine safety
Loots also today commented: “Pan African has established an excellent safety record over the years, and we remain committed to our goal of zero harm.
“We wish to again express our condolences to the family, friends and co-workers of our colleague who succumbed to his injuries following a mud rush incident at a loading box at Evander Mines’ 7 Shaft on 30 December 2024.
“Overall, the Group has improved its safety performance in the period under review, and we continue to implement ongoing safety awareness and training programmes.
“We are especially proud of the safety achievements at the recently commissioned MTR operation, where we achieved 1.8 million fatality-free hours and zero reportable injuries during the construction phase, with over 1,600 employees and contractors on site.
“In the past few years, we have made excellent progress in positioning Pan African as a safe, sustainable and growing high-margin producer.”