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Pan African Resources on target for annual output of 185,000 ounces of gold

The South African miner updated on a busy first half

Pan African Resources plc -
Gold pouring - the final part of the process

Pan African Resources plc (LON:PAF) expects to produce 185,000 ounces of the yellow metal for the full-year as the South Africa-focused gold miner said sales at the halfway stage were 92,941 ounces, up 14.7%.

The company, which owns the Barberton operations in Mpumalanga Province, said its development project, the Evander 8 Shaft Pillar will reach commercial production “in the next few weeks”. This will add “further high-margin” output in the second half, investors were told.

READ: Pan African Resources resumes dividends as profits bounce back

In a busy period for Pan African, it completed the mining feasibility study on the Evander Egoli project, which it said demonstrates its technical viability and “compelling economic returns”.

The technical assessment is currently the subject of a review by an independent third party that will be completed shortly, the market was told.

“We have already engaged with several financial institutions who have expressed an interest in the continued financing of Pan African’s organic growth projects,” revealed chief executive Cobus Loots.

This was part of finding “non-dilutive funding options, which will enable the miner to continue its strategy of “de-gearing its balance sheet and increasing dividends”, the CEO said.

Assessing Pan African’s overall progress in the six months ended December 31, Loots said he was satisfied with the direction of travel of the group.

“The operational and safety performance during the current reporting period demonstrates our continued progress in positioning Pan African as a sustainable, safe, high-margin and long-life gold producer, with an attractive project pipeline,” he concluded.

In a note to clients, analysts at Peel Hunt concluded that “with stronger profitability expected in H2 2020 (production, pricing and margin) PAF’s strong deleveraging program remains intact for the coming year.”

They reiterated a ‘buy’ rating and 16p price target on Pan-African Resources shares, which in morning trade on Friday were steady at 11.90p.

 -- Adds analyst comment, share price --

Quick facts: Pan African Resources plc

Price: 12.86 GBX

AIM:PAF
Market: AIM
Market Cap: £247.98 m
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