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16 Feb 2021 | 09:06

Pan African Resources on track after decent first half

(Sharecast News) - Pan African Resources reported a 5.9% increase in group gold production in its first half on Tuesday, to 98,386 ounces. The AIM-traded firm described operational performance at Barberton Mines as "robust", with the complex achieving production output of 52,354 ounces in the six months ended 31 December, up from 47,356 year-on-year.

It said it was on track to deliver on its full-year production guidance of around 190,000 ounces of gold.

Net cash generated from operating activities was ahead 178.2% at $28.1m, as the company reduced its net debt by 47.3%, implying a net debt-to-net adjusted EBITDA ratio of 0.5x.

Profit after tax and headline earnings totalled $40.8m, rising from $21.7m a year earlier, as its adjusted EBITDA increased by 72.9% to $76.4m.

Earnings per share increased 85.1% to 2.11 US cents, and headline earnings per share rose 86.7% to 2.11 cents.

Pan African made a record rand dividend payment to shareholders in December of $17.8m.

On the operational front, the board said the agreement for the evaluation of the proposed Mintails transaction had been extended to 31 January 2022.

Environmental, social and governance projects, including the 9,975MW solar photovoltaic plant at Evander Mines and large-scale agriculture projects at Barberton Mines, were on track for commissioning in the third quarter of the 2021 calendar year.

The group said it remained "vigilant" in monitoring and implementing operating procedures for the prevention and mitigation of Covid-19 among its workforce.

"Pan African's improved operational and financial performance for the six months ended 31 December continues to demonstrate the resilience and operational flexibility of our multiple producing assets, despite the challenges of the ongoing Covid-19 pandemic," said chief executive officer Cobus Loots.

Loots said that group all-in sustaining costs increased marginally to $1,252 per ounce, including realised hedge losses of $6.7m, which, if excluded, reduced the group's all-in sustaining cost to $1,182 per ounce.

The group's low-cost operations, being the Barberton Mines underground operation, Elikhulu and BTRP, which account for more than 80% of its total production, achieved an all-in sustaining cost of $1,030 per ounce, which Loots said was in line with its target of below $1,000 per ounce.

"The group remains on track to produce its guided 190,000 ounces of gold for the financial year ending 30 June, which is a substantial increase compared to actual production of 179,457 ounces for the 2020 financial year."

At 0928 GMT, shares in Pan African Resources were down 1.29% at 21.82p.
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