Pan African to consider bump in gold production guidance after ‘excellent’ half-year

Mid-tier gold producer Pan African Resources has, for now, maintained its guidance for 2024 at between 180,000 to 190,000 ounces, but the miner said it may consider revising this “given the excellent production performance” during the first six months of the financial year.

Gold production was up 6.7% relative to the previous reporting period.

In its six-month operational update published on Monday, the company also reported that the construction of a new processing plant at the Mogale Tailings Retreatment project (MTR project) was progressing on time and within budget. The plant is set to be commissioned towards the end of 2024.

“We are pleased with the group’s excellent safety, production and cost performance for the reporting period which positions us well to deliver on our guidance for the full financial year,” said CEO Cobus Loots.

According to Loots, commissioning of the MTR project will increase production by about 50,000 ounces per year — that is a 25% increase in annual output.

The gold producer, which has a dual listing on the JSE and AIM in the UK, has benefited from an increase in the gold price and lower-than-expected production costs.

The gold price received jumped about 14% ($1,961/ounce) for the six months to end-December compared with the same period in the previous reporting cycle, while production costs were expected to be about $1,300/oz and slightly below the guidance of $1,350/oz.

The reduction in production costs was due to “excellent cost control, improved gold production, as well as the weaker dollar/rand exchange rate”, the company said.

The group expects to see more cost savings from its renewable energy project at the Fairview Mine in Barberton. The 8,75MW solar plant is set to be commissioned in June this year.

“The commissioning of Barberton’s solar PV plant will contribute to further cost savings in the next financial year, adding to the benefits already being realised from Evander’s PV solar plant,” said Loots.

Commenting on its financial performance the company said its group net senior debt increased to $60m (June 2023: $18.9m), primarily as a result of the capital expenditure of $23.2m incurred on the MTR project and the dividend of $22.1m paid to shareholders in December 2023.

In early morning trade on the JSE Pan African’s share price was up about 1.5% to R3.86 — in line with the price achieved this time last year. In 2023, the share traded at a high of about R4.80 in May and a low of R2.90 in March.

erasmusd@businesslive.co.za