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Gold miner Pan African Resources (LON:PAF) expects to improve its performance in the current financial year after problems in South Africa and a weak gold price hit earnings.
Cobus Loots, chief executive, said it had been a difficult twelve months but the payment of a final dividend was a sign of confidence in its operations.
In rand terms, revenues dropped by 3% to £2.54bn (£141mln), but lower grades at the Evander mine and power supply problems in South Africa generally meant earnings dropped 56% to R120mln (£11.7mln).
The final dividend was R0.115 per share (0.54p) compared to R0.141 per share or 0.82p per share a year ago, but Pan African said the reduced payment was not a departure from a progressive dividend policy.
It will consider an interim dividend in the 2016 financial year, it added.
Loots said: “Having implemented a number of corrective measures to resolve the issues that impacted on the 2015 financial year, the group is well positioned to deliver an improved performance in 2016.
The successful commissioning of the ETRP [tailings plant] together with Phoenix Platinum’s production and profitability ramp-up, confirms the group’s ability to grow in a value-accretive manner.”
Broker Peel Hunt said gold production of 176,000 was affected by the longer than expected low grade mining cycle at Evander, oil contamination at other mine Barberton, and the health and safety stoppages that resulted in 11 days of lost production at Barberton and nine days at Evander.
Even so, the broker added that Pan African has emerged from a challenging period with the balance sheet intact and is now delivering on hoped for improvements.
With operational performance picking up and the weakening Rand sheltering the company’s margin from the falling gold price, Peel Hunt retained it buy stance and noted there is potential for generous dividend distributions to recover.
Numis also added there should be better to come from Evander with the double whammy of moving back to the high-grade cycle and fixing tonnage constraints, plus tailings operation ETRP will be at full pelt for the whole year.
Shares eased 2% to 7.14p.