12th Jan 2015 12:31
LONDON (Alliance News) - Pan African Resources PLC Monday said its half year results are expected to be impacted by the exchange rate between the South African Rand and the British Pound alongside operational downtime at a number of its projects.
The company, which operates in South Africa but reports in British Sterling, said the average prevailing Rand to Pound exchange rate during the six months to December 31, was ZAR17.87 for every GBP1, compared to ZAR15.94 per GBP1 in 2013, representing a 12.1% change year on year.
As a result, Pan African said earnings per share and headline earnings per share for the period, calculated in Rand, is expected to be between 60% to 80% lower than the 15.11 cents earnings per share reported in 2013.
The earnings per share figure is expected to be between 3.02 cents per share and 6.04 cents per share. In pounds, earnings per share are to drop between 63% and 83% compared with the 0.95 pence in 2013, resulting in earnings per share of between 0.16 pence and 0.35 pence.
"This 12.1% year-on-year change in the average exchange rate should be taken into account for the purposes of a comparison with the prior period," it said in a statement.
The decrease in earnings per share is also due to a number of operational problems during the six month period. At the Evander gold mine, the company said production is "currently in a low grade mining cycle," impacting gold production and reducing profit margins and net profit from the project compared with 2013.
The low grade mining cycle is expected to last until February, when high grade mining will continue. Pan African said it is working on lessening the impact of lower grade cycles in the future as well as increasing the life of mine at the project.
It also lost three days worth of production from the Evander mine and five days from the Baberton mine during the period after failing to meet health and safety standards concerning the mining operations' lamp rooms and gas monitors. The deviations have now been corrected by the company.
The Baberton mine Biox plant was also subject to oil contamination from the primary crusher, which impacted operations. The plant returned to recoveries of 96% in December, compared with historic recoveries between 96% and 97% before the incident.
The Evander and Baberton mines were also hit by power supply interruptions caused by load shedding by South African power utility Eksom. The electricity supply is expected to remain restricted during 2015, it said in a statement.
During January, Pan African is expecting the Evander tailings re-treatment plant to begin production on schedule and on budget, adding an additional 10,000 ounces of gold to production per year from the mine.
Pan African shares were down 7.5% to 11.57 pence per share on Monday afternoon.
By Joshua Warner; [email protected]; @JoshAlliance
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