2nd Aug 2016 10:17
LONDON (Alliance News) - Pan African Resources PLC Tuesday said earnings in the recently ended financial year are expected to be substantially higher following robust operating performances from its Barberton Mines and Evander Mines and a boost in gold prices.
The South African-based precious metals mining group said earnings per share in the financial year to the end of June should be in the region of 29.47 cents to 31.77 cents, a huge lift from the 11.48 cents reported in the previous year.
Headline earnings per share should be between 29.45 to 31.79 cents per share, also a large increase from 11.67 cents last year.
In sterling, EPS and HEPS will both be within a range of 1.37 to 1.50 pence per share in the recently-ended financial year, compared to 0.65 pence last year.
Excluding exceptional items, EPS is expected to have risen to a range of 43.10 to 45.50 cents from the 11.48 cents last year and HEPS will have increased to 43.08 to 45.42 cents from 11.67 cents the previous year.
In sterling, EPS and HEPS before exceptional items will be between 2.0 to 2.13 pence compared to 0.65 pence last year.
The significant improvement in earnings during the year are a result of improved performances from Baberton Mines and Evander Mines, both subsidiaries of the company producing gold in South Africa.
Gold prices were also considerably higher in the period, with Rand prices averaging 22% higher year-on-year. The spot gold price on Tuesday in dollar terms was USD1,359 per ounce, 28% higher than the start of 2016 as prices have particularly rallied since the start of the year.
Gold production from Baberton Mines was up 7.0% in the year to 113,281 ounces from 105,776 ounces and production from Evander Mines was up 31% to 91,647 ounces from 70,081 ounces.
Pan African Resources said it also benefited by consolidating the Uitkomst Colliery's results in the last quarter of the financial year that started in April. That contributed production of 136,102 tonnes of coal in the financial year.
However, the company's platinum production declined in the year because it was adversely impacted by a lack of feedstock to its operation after London-listed International Ferro Metals Proprietary Ltd entered into a business rescue plan.
Pan African's platinum operation is situated on the same property that was owned by International Ferro Metals, which recently sold its troubled South African subsidiary that held the asset after entering into business rescue proceedings.
International Ferro Metals' distressed subsidiary was hit by a wave of factors last year that led ultimately led to its demise, but that left Pan African's operations without the feedstock that it was being supplied by International Ferro's processing operations. Pan African was not reliant on the feedstock, but it also sourced electricity, water and "certain other services" from the nearby operation.
Following the business rescue proceedings, a subsidiary of Samancor Chrome agreed to purchase International Ferro's troubled subsidiary, and Pan African has now been able to effectively transfer the previous agreement to Samancor to keep the deal going, re-establishing the supply of feedstock to Pan African's operation.
Platinum group metal production in the financial year was 19% lower year-on-year at 8,339 ounces from 10,245 ounces.
Pan African said it has hired DRA Projects(Pty) Ltd to complete a definitive feasibility study for the Elikhulu project, part of Evander Mines, with results expected in November this year.
Net debt at the end of June stood at ZAR347.0 million, rising from ZAR321.0 million a year earlier, driven by a share buyback, the acquisition of the colliery and the dividend payment made in December. Net debt has since fallen to ZAR255.0 million.
Pan African shares were trading down 0.7% to 21.85 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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