Pan African Resources declares record dividend

Miner Pan African Resources reported a record return to shareholders and an increase in profit despite underlying operational difficulties in the first half of its financial year.

There will be further challenges in the second half of the year, particularly at the Evander mine where two shafts have been suspended for two months for a R40m refurbishment programme.

The mine will produce 14,000oz less of gold in the year and drag the company's annual output down to 181,000oz.

Pan African, which mines gold and coal, and extracts platinum group metal from chrome tailings, reported a profit of R250m for the six months to end-December, a 10% increase compared with the same period a year earlier.

The higher gold price and inclusion of profit from its Uitkomst colliery in KwaZulu-Natal were the key factors driving profit and offset a poor interim operational performance at its gold mines in Barberton and Evander.

Uitkomst contributed R21m to the profit line, making up nearly 9% of the bottom line.

Pan African reported a R300m dividend payment, its largest yet, equating to R0.1544 per share and compared with R0.1147 before.

Revenue was 19% higher on the back of a higher gold price and the addition of R225m from Uitkomst colliery.

Pan African’s net debt increase by R157m to R497m.

Gold output fell by 10% to 91,613oz but was offset by a 16.5% increase in the received gold price of R565,298/kg. The group’s all-in sustaining costs rose to R456,187/kg from below R400,000/kg a year earlier.

At Evander, the all-in sustaining cost shot up 29% to R589,181/kg and the all-in cost ballooned by a third to R608,783/kg.

The mine’s gold sales of 42,401oz were 6.5% lower than a year ago, with increased safety stoppages related to difficulties at Evander’s 7 Shaft, which is used to hoist ore from underground.

At Barberton, gold output was negatively affected by incidents of community unrest and safety stoppages at the mine as well as lower underground mining grades.

Barberton sold 49,212oz of gold, which was 13% less than a year earlier, with nearly 10,000oz less gold coming from the underground operations.