23rd Feb 2016 08:40
LONDON (Alliance News) - Pan African Resources PLC Tuesday said it was "delighted" with its improved financial performance in the first half of the year after favourable foreign exchange rates underpinned the company's performance.
The company also said it has agreed to take a stake in Shanduka Gold Pty Ltd, the company's primary black economic empowerment shareholder, as it aims to preserve the relationship with the organisation.
The African-focused precious metals miner reported a profit before tax of GBP14.4 million in the six months ended December 31, more than 82% higher than the GBP7.9 million profit booked a year earlier as revenue rose 11% to GBP75.6 million from GBP68.1 million.
In rand terms, pretax profit rose to ZAR300.1 million from ZAR140.5 million with revenue increasing to ZAR1.57 billion from ZAR1.21 billion.
"We are delighted to announce a much improved operating and financial performance, underpinned by the stronger prevailing rand gold price environment," said Chief Executive Cobus Loots.
Pan African said it remains "well positioned to sustain attractive final dividend payments" but didn't announce an interim dividend for the period. In the last financial year, the miner paid a dividend of 0.53 pence per share, equating to ZAR0.1147, compared to the previous year when it paid dividends of 0.82p and ZAR0.1410.
The rise in profit came despite gold prices remaining under pressure. The average gold price in dollars was almost 10% lower year-on-year in the period, but in rand terms the gold price was 12% higher year-on-year. Alongside that, Pan African managed to materially reduce its cash costs in both dollar and rand terms.
Adjusted earnings before interest, tax, depreciation and amortisation rose 56% to GBP20.1 million in 2015 from GBP12.9 million last year, and the growth was even larger in rand terms as adjusted Ebitda rose by 82% to ZAR418.7 million from ZAR230.6 million.
Overall attributable earnings almost doubled to GBP10.9 million from GBP5.5 million, whilst attributable earnings in rand more than doubled to ZAR227.6 million from only ZAR99.2 million.
"The performance in this period is a testament to our quality assets and dedicated workforce and management. The group is well positioned to produce approximately 200,000 ounces and 9,000 ounces of gold and platinum group metals respectively, over the full year period," said Loots.
Gold sales in the first half rose by more than 17% year-on-year to 101,797 ounces.
In a separate statement Tuesday, Pan African said it has entered into a sale of shares agreement whereby it will acquire the 16.9% stake held in Shanduka Gold by The Standard Bank of South Africa Ltd.
Pan African said the consideration of acquisition will be settled in cash, but the value of the deal will remain confidential until after the transaction is completed, it said.
Shanduka Gold is Pan African's primary black economic empowerment shareholder, which holds a 23.8% stake in Pan African at a corporate level. Under South African law, companies operating in the area must supply a minimum stake to a black economic empowerment organisation.
"The acquisition represents a unique opportunity for Pan African to enhance shareholder value by indirectly investing in its own shares via Shanduka Gold whilst pro-actively reducing the potential risk of future Shareholder value dilution that could arise if the existing Shanduka Gold structure were to be dissolved," the company said.
Pan African shares were up 1.2% to 13.15 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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