Pan African Resources plc (LON:PAF) chief executive Cobus Loots reflected on a challenging year which saw the company ‘act decisively’ to reconfigure operations as it aimed for sustainable profitability.
It ended large-scale, high-cost underground operations at the Evander Mines in May, and, pushed forward alternative surface works and tailings processing. Meanwhile, at the Barberton site underground mining continues.
“Our cost base is now significantly lower, and efficiencies and stability improved due to the restructuring we effected during the year,” Loots said in today’s financial results statement.
“We are confident the group is now positioned as a lower-cost, long-life gold miner, consistent with stakeholder expectations and our key strategic objectives.
“All our producing assets are today generating positive cash flows through the production of low-cost gold ounces.”
PAF reported a £11.5mln profit from continuing operations, versus a £40mln comparative figure for the preceding twelve months – stated in South African rand that amounted to R202mln, against R700.6mln.
The annual results include a £106.3mln one-off write off (R1.78bn) due to the Evander cessation.
In turn, the overall business (including the discontinued operations) made a £93.3mln loss after tax (R1.56bn).
Revenue from the continuing operations was marked at £108.5mln for the year or R1.8bn.
The company announced the “expected but disappointing” decision to suspend dividend payments (it paid out £10mln early in the year for the 2017 final dividend).
Net debt was reported at £89.8mln, up from £4mln at the end of 2017. By June 30, the company had around £700,000 of cash, plus £14.8mln in trade and receivables and a gold inventory worth £2.7mln.
Loots highlights operational successes
With his comments to shareholders, chief executive Cobus Loots looked to the group’s operational success during the year.
“A key highlight of the year was the excellent progress made towards the completion of the Elikhulu tailings retreatment plant,” he said.
“The project poured its first gold on 16 August 2018, ahead of schedule and within the projected budget. It is expected to be a flagship operation within our low-cost, long-life asset base.
“In terms of our existing operations, the regrind mill at the Barberton tailings retreatment plant was completed, which alleviated past processing challenges. Barberton Mines’ sub-vertical shaft project at Fairview, together with our current programme of accelerated underground development, will facilitate improved access to the high-grade Fairview 11-block Main Reef Complex orebody in the future.”
Loots added: “Our existing portfolio presents attractive opportunities to further the group’s profitable production growth.
“The Royal Sheba Project at Barberton Mines offers the potential to access low-cost near-surface ounces and significantly boost Barberton Mines’ production in the short to medium term.
“The Egoli Project at Evander Mines also remains an attractive opportunity as a standalone project, following the difficult but necessary decision to cease large-scale underground mining activities at 8 Shaft.”