Mid-tier gold producer Pan African Resources produced the most gold yet in the 2022 financial year, helping the group achieve a slight increase in profit despite a lower gold price and higher costs.
The company’s gold production for the full year to end-June was up 1.9% to 205,688oz. The average gold price received for the year was down 1.3% in rand terms and all-in mining costs increased 6% due to increases in labour and electricity costs, among other things.
Record gold production caused its headline earnings to increase 1.2% to $75m.
The miner, with underground and tailings retreatment operations in Gauteng and Mpumalanga, said it expects to maintain its 2022 production levels in 2023.
Increased production in 2022 was due to the stellar performance of its Evander Mines’ underground operation, with output rising 23% to 58,170oz.
The Elikhulu tailings retreatment plant produced 52,220oz, consistent with its mining plan while production at the Barberton tailings retreatment plant improved 7.2% to 19,560oz, the JSE and London-listed miner said on Wednesday.
“Over the past year, the group has again made meaningful progress with our operational performance and growth projects. Our teams achieved record gold production of 205,688oz from what is now a better-diversified portfolio of assets. The organic growth projects at Evander Mines’ underground operation are on schedule to commence delivering within their anticipated production time frames,” said Pan African CEO Cobus Loots.
Reduce costs
A key focus for the year ahead, said Loots, will be the smaller underground operations at Barberton Mines to ensure that these high-grade assets perform to their full potential.
According to Loots they have embarked on a number of initiatives to reduce the cost of production in real terms, with future cost savings expected from solar PV renewable energy projects.
“Savings at the commissioned Evander Mines solar PV renewable energy facility [a 9.9MW plant] now average about $250,000 a month during the winter months, following full commissioning in May 2022,” he said.
A feasibility study has also been completed to expand the PV facility at Evander Mines by a further 12MW, and a permit has been obtained for a 8MW solar plant at its Barberton Mines site.
“We are reducing our reliance on Eskom. Our first 10MW solar plant is up and running and we are planning to have at least 30MW of our own generation capacity installed across operations in the next 24 months,” Loots said.
With 30MW of installed capacity the group will be able to draw about 25%-30% of its total energy needs from these self-generation activities, Loots told Business Day.
The miner said in its results that it is making progress with the development of the Mintails tailings remining facility that it wants to develop at a surface gold resource near Carletonville, west of Johannesburg.
The results of the definitive feasibility study at the Mintails project demonstrated that the project has the potential to increase the group’s gold production profile by about 50,000oz a year, about a quarter of its current annual production.
Exploration activities
Pan African announced earlier in September that the date for the conclusion of the transaction had been extended to September 30. If the project does proceed the first production from Mintails was expected within 18-24 months from the commencement of construction, which is scheduled to start in May 2023.
The group has also begun exploration activities in northeastern Sudan, where it has been awarded five prospecting concessions. It said that despite the recent political unrest in Sudan’s capital, Khartoum, mining producers and developers have generally been able to continue operating unhindered in the country.
According to Loots they plan to spend about $2m on exploration in Sudan, the third-largest gold producer in Africa after Ghana and SA.
“Our strategy with Sudan is to start slowly and show that we can operate and then build it up gradually,” Loots said.
The likelihood, he said, of finding a large mineral deposit is high.
“We’ve always wanted to diversify the business over time into other jurisdictions. We spend a lot of time looking at assets in West Africa and often the discount rates or valuations [of these assets] don’t reflect the real country risk. When we looked at the exploration potential in Sudan and all the artisanal mining happening there [we saw real potential] — it is a bit of a risk, but the potential return is [disproportionately large] compared to the risk,” Loots said.
The group will pay a final dividend of 18c per share, in line with the previous year.
By the JSE’s close on Wednesday, Pan African’s share price was unchanged at R3.70. It is down 3.65% so far in 2022 but up 20.52% on a one-year basis, according to Infront data.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.