19th Feb 2014 09:44
LONDON (Alliance News) - Pan African Resources Wednesday said its pretax profit jumped 30% in the first half of its financial year, as its tailings re-treatment plant and Evander mines in South Africa came fully online, although it warned of a more difficult second half due to gold price volatility, the weakening rand, and lower grades from one of its mines.
The Africa-focused precious metals and mining company posted pretax profit of GBP22.8 million for the six months ended December 31, from GBP17.6 million in the same period the previous year, as sales rose 71% to GBP84.6 million, from GBP49.5 million.
The company had previously said earnings per share for the first half of the financial year would be between 8% and 15% higher than in the year-earlier period in sterling terms, and Wednesday it confirmed EPS rose 11.8% to 0.95 pence, from 0.85 pence in its first half 2012.
The company said that it expects a more difficult second half based on gold prices, inflationary pressures from the weakening South African Rand, along with lower grades from its Evander mine.
"The lower grade cycle at Evander Mines will also now be in full force, and will impact production as well as cash unit costs," Chief Executive Officer Ron Holding warned. "We will continue to seek ways of mitigating this situation to continue to deliver returns to shareholders."
The company said sales in the first half were buoyed as its Barberton Mines in South Africa increased the amount of gold sold from its newly commissioned Tailings Retreatment Project, and as its Evander Mines in South Africa became fully integrated into the company.
Tailings are mining refuse, left over materials which can be reprocessed by retreatment usually from a slurry mix of fine mineral particles and water.
Pan African said its underground gold production almost doubled to 80,559 ounces, from 42,808 ounces, its surface gold production jumped to 4,345 ounces from 783 ounces, and it received its first gold tailings production of 11,603 ounces. That meant gold sales volumes more than doubled to 100,172 ounces, from 44,926 ounces, bringing in gold sales of GBP82.9 million.
Increased production and its new tailings re-treatment plant also meant that the company could increase its gold resource inventory sixfold to 35.1 million ounces, from 5.9 million ounces, and increase its gold reserve inventory sevenfold to 9.2 million ounces, from 1.2 million ounces.
The company noted two fatalities during the six month period at its combined Barberton Operations but said it is committed to safety and reducing fatalities.
Pan African resources shares were down 1.1% to 15.57 pence Wednesday morning.
By Tom McIvor; [email protected]; @TomMcIvor1
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