Pan African Resources beats rising costs in strong first half for gold
Pan African Resources PLC on Wednesday said it was on track for sustained growth, after profit multiplied in the first half thanks to ‘the very favourable current environment’.
The Johannesburg-based gold producer’s pretax profit surged to $209.9 million, during the six months ended December 31 from $58.8 million the year prior, with attributable profit up to $148.0 million from $48.2 million. Revenue more than doubled to $487.1 million from $189.3 million.
The company highlighted that the received gold price surged 62% to $3,812 per ounce from $2,359/oz a year ago.
Pan African’s board has approved an interim dividend of 12 South African rand cents, which is about 0.74 US cents or 0.55 pence. This compares to no dividend a year prior.
The company’s shares rose 3.8% to 151.60 pence on Wednesday morning in London, where they are up more than fourfold over the past year. The stock traded 7.4% higher at R 32.72 in Johannesburg.
According to Pan Africa, steady production and strong gold prices outpaced creeping costs in the first half, as cost of production ticked up to $222.6 million from $135.4 million, and other costs tripled to $39.7 million from $13.3 million.
All-in sustaining costs pushed ahead of guidance, averaging $1,874 per ounce compared to the target range of $1,525 to $1,575. The company attributed this to ‘rand currency strength, an increase in employee share-based payment expenses and higher royalty costs’. It stressed that it ‘remains competitive relative to other producers’, with lower-cost projects comprising around 88% of the portfolio at an AISC of $1,700 an ounce in the first half.
Still, the company has raised full-year cost guidance, with AISC now seen between $1,820 and $1,870 per ounce, assuming an exchange rate of R 17.00 to the dollar. Pan African sees the annual figure lower than in the first half, based on planned production increases and ‘continued focus on cost control’.
Chief Executive Cobus Loots said the firm ‘will continue to capitalise on the very favourable current environment’, noting: ‘The half-year results demonstrate the success of our strategy of focusing on high-margin, long-life tailings retreatment operations and also the acquisition of the very prospective Tenant Mines in Australia.
‘Pan African has the ability to continue to deliver very attractive production growth over the next years, specifically internal expansions in Australia and around our [Mogale Tailings Retreatment] operation, which will not only add mine life but also significant additional production ounces.’
The company is eyeing a 100% production increase to 100,000 ounces annually at the Tennant project, and is due to complete a feasibility study at MTR in the next few months.
‘Pan African’s safety, operational and financial performance in the first half of the financial year, together with the boon of record gold prices, has positioned us to deliver outstanding results for the full year,’ Loots added.
The firm’s net debt stood at $46.2 million at the end of December, reduced from $150.5 million at June 30.
‘At the prevailing gold prices, the group expects to be in a net cash position by the end of February 2026,’ Pan African said. Available cash and undrawn loans totalled $158.9 million at December 31, up from $32.3 million six months earlier.
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