JOHANNESBURG (miningweekly.com) – JSE-listed Pan African Resources lifted its headline earnings for the six months to December 31, by 121.8% year-on-year, to R227.6-million.

Headline earnings a share were 121.6% higher year-on-year at 12.43c.

FD Deon Louw attributed the increase in headline earnings to the 29.4% year-on-year increase in revenue to R1.58-billion, higher gold production and the 11.7% increase in the rand gold price to R485 215/kg.

Gold sales increased by 17.4% year-on-year to 101 797 oz.

The group was profitable and cash flow generative, which had resulted in its net debt being reduced from R458.6-million as at December 31, 2014, to R345.8-million at the end of December 31.

“The performance in this period is a testament to our quality assets and dedicated workforce and management. The group is well positioned to produce about 200 000 oz and 9 000 oz of gold and platinum-group elements respectively, over the full year period,” said CEO Cobus Loots.

Pan African would continue to pursue organic and acquisitive growth opportunities that were value-accretive to shareholders, while increasing margins from current operations.

With strong cash flows and improved funding capacity of up to R1.1-billion, the group was well positioned to take advantage of such growth opportunities.

In light of positive results at the Evander Mines Tailing Retreatment Plant and the improved rand gold price, Pan African was completing a definitive feasibility study to assess the merits of starting construction of the Elikhulu project.

Elikhulu could potentially treat slimes at a processing capacity of up to 12-million tonnes a year and at a head grade of 0.28 g/t from the Winkelhaak, Leslie and Kinross tailings storage facilities.

The project was estimated to yield 50 000 oz/y of gold over an initial eight years of production.

Meanwhile, significant work had been performed on evaluating the Evander South Project, and progressing it to a preliminary economic assessment level. The project team was assessing the capital costs associated with the various mine designs that would provide the most efficient and cost effective manner of accessing the orebody.

COAL
Meanwhile, Pan African said its R200-million acquisition of the Uitkomst colliery from Oakleaf and Shanduka, remained subject to Ministerial approval.

The colliery, which contained a resource of 25.7-million tonnes of coal, had a 28-year mine life, with the coal suitable for export and local metallurgical markets.

SHANDUKA GOLD
Pan African on Tuesday announced that it had also entered into an agreement to acquire a 16.9% stake in Shanduka Gold – Pan African’s primary black economic empowerment shareholder.

“The acquisition represents a unique opportunity for Pan African to enhance shareholder value by indirectly investing in its own shares via Shanduka Gold, while proactively reducing the potential risk of future shareholder value dilution that could arise if the existing Shanduka Gold structure were to be dissolved,” the company explained.