26th Feb 2015 12:00
LONDON (Alliance News) - Pan African Resources PLC Thursday increased its dividend and committed to maintaining dividend payments in the future despite earnings falling by over 50% during the first half of the year.
The company was hurt by selling less gold in the period, at lower prices and at higher costs, but said production will increase during the second half.
For the six months ended December 31, the company reported earnings before interest, tax, depreciation and amortization of GBP12.9 million, less than half of the GBP28.3 million reported in the first half of 2013.
The company reported GBP4.7 million in depreciation costs across all three of its operational mines alongside a small impairment of GBP56,253.
Profit after tax totalled GBP5.5 million, down nearly 70% from GBP17.3 million in the first half of 2013, with earnings per share following, to 0.3 pence from 0.95 pence.
However, despite the dramatic drop in earnings, the company edged up its interim dividend to 0.82 pence per share from the 0.80 pence paid per share a year earlier.
"We will maintain our focus on generating cash flows from our asset base to ensure the continuation of future dividend payments," said Chief Executive Ron Holding.
The company, which operates in South Africa, also recorded a GBP281,233 loss on foreign currency during the first half and said the rand to dollar exchange rate was 9.1% worse in the first half than it was a year earlier.
Earnings were hit by revenue falling to GBP68.1 million from GBP84.6 million, a near 20% reduction. Revenue fell after the company sold less gold at weaker prices, which fell by 6.1% during the period, alongside its cash costs increasing.
All of its product is sold in South Africa, and nearly all of Pan African's revenue comes from a single customer, Rand Refinery (Pty) Ltd.
At the end of the first half, Pan African reported a cash balance of GBP4.9 million.
In the first half, Pan African achieved an average gold price of USD1,231 per ounce, down from USD1,311 per ounce in the first half of 2013, while cash costs rose to USD996 per ounce from USD834, and all in cash costs followed by increasing to USD1,283 per ounce from USD1,044 a year earlier.
This was accompanied by a fall in gold sales from the company's Baberton mine, which totalled 52,942 ounces in the first half, down 7% from 57,008 ounces a year earlier, and sales from the Evander mine fell by 22% to 33,733 ounces from 43,164 ounces.
This was partially offset by Pan African's production of platinum, palladium, rhodium, iridium, ruthenium and gold from its Phoenix operation increasing to 4,711 ounces from 2,987 ounces, representing a 58% rise.
Pan African said it is expecting gold and platinum group metal production to increase in the second half of the year, and said it continues to grow the company organically and through value-enhancing acquisitions.
Pan African shares were trading down 1.6% on Thursday at 11.81 pence per share.
By Joshua Warner; [email protected]; @JoshAlliance
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