Pan African Resources returns to paying dividends
Strong annual profits are behind the resumption of payouts, but the balance sheet is showing signs of strain
Gold miner Pan African Resources returned to paying dividends after doubling full-year profit, but net debt rose.
Pan African, which is listed in Johannesburg and London, will return R50m, or 2.24c per share, to shareholders as its new Elikhulu tailings retreatment project reached commercial production in September 2018. It returned R185m to shareholders in 2017.
It withheld its dividend in the 2018 financial year when it recorded an impairment of R1.78bn for the year against its unprofitable Evander mine, which it closed during that year, laying off 1,635 people at a cost of R161m.
Post-tax profit for the year to end-June increased to $38m from $16m based on continuing operations. Including discontinued operations, the previous year’s loss was $123m.
Revenue shot up to $218m from $146m.
Total gold sales grew to 171,706oz for the year compared with 160,444oz. Pan African is targeting output of 185,000oz in its 2020 financial year.
The received gold price was R577,573/kg, up from R538,100/kg. All-in sustaining costs dropped to R450,564/kg from R561,468/kg.
Net cash flows from operating activities were $38m from an outflow of $13m the year before. Finance costs more than doubled to $15m.
The balance sheet showed current assets were $30m, including cash of $5.3m, up from $921,800 the year before, compared with current liabilities of $64m.
A year ago, current assets were $26.5m compared with current liabilities of $44.4m.
Pan African’s net debt grew to $129.9m from $118m a year earlier because of funding the R1.7bn Elikhulu project.
After the year-end, Pan African entered a gold loan agreement with RMB, receiving $28m for 20,000oz of gold over a 12-month period. The effective gold price was R633,347/kg.
Pan African has also hedged 120,000oz of gold between July 2019 and December 2020 at a floor and ceiling price of R654,166/kg and R828,303/kg.
The Barberton mines in Mpumalanga recorded a profit of $22m for the year and the Evander operations, which include Elikhulu, made a $36m profit, including an $18m reversal of an impairment.