JOHANNESBURG (miningweekly.com) – Precious metals mining company Pan African Resources on Wednesday declared a reduced dividend on halved headline earnings and higher net debt.

The JSE- and LSE-listed company headed by CEO Cobus Loots reported group headline earnings of R213.6-million in the 12 months to June 30, 53% down on the R452-million of last year, with gold production impacted negatively by the lower grade mining cycle at the Evander gold mine.

“The group is well positioned to deliver an improved performance in 2016,” Loots said, adding that the successful commissioning of the Evander Tailings Treatment Plant together with Phoenix Platinum’s profitability ramp-up, confirmed value-accretive growth prospects.

In addition to being an underground miner, Pan African Resources was now firmly established as a tailings retreatment operator in both gold and platinum.

The company, with higher net debt of R321-million, reduced the final dividend to R0.11466 a share with a promise that an interim dividend would be considered in the 2016 financial year.

Phoenix Platinum production increased 42.2% to 10 245 oz and Barberton Tailings Retreatment Plant sold 6.1% more gold at 24 283 oz.
 
Barberton Mines average underground head grade was down to 10.9 g/t on 11.5 g/t last year and Section 54 safety stoppages issued by the Department of Minerals Resources resulted in the loss of 11 production days.

Gold sold from Barberton decreased by 5.2% to 105 776 oz and cash kilogram costs jumped 16.4 % to R278,859/kg on a 10.3% increase in the cost of production and lower sales.

All-in sustaining cash cost a kilogramme increased 17.5% to R332,151/kg.

Capital expenditure incurred was at a lower at R112.6-million.

Mine life increased to 20 owing to the down dip extension of the high grade 11 Block by a further 170 metres, which has resulted in a yearly increase in Barberton Mine’s mineral reserves by 236 162 oz.

Evander Mines sold 8.5% less gold at 70 081 oz and kilogram cash costs rose 18.7% to R455 896/kg.

All-in sustaining cash kilogram costs rose 14% to R507 980/kg and mine life decreased to 16 years from 17 years before.

Phoenix Platinum’s headline earnings increased fourfold to R15.2-million on a 42%-higher 10 245 oz of platinum-group metals on a lower R9 603/oz average price.

The life of the operation remained at 28 years.

Pan African has a production capacity of 200 000 oz of gold and 12 000 oz of platinum-group elements a year.

Barberton aims to improve levels of production by focussing on recoveries, increased tonnages and cost containment to avoid margin erosion.

The Sheba and New Consort tailings dams will provide potential future sources of tailings.

At this stage, Phoenix Platinum is not in a position to assess fully the impact of the business rescue of International Ferro Metals, from which it draws material for reprocessing.

The company has taken steps to acquire the Uitkomst colliery from Oakleaf and Shanduka for R200-million, which is expected to be earnings and cash flow accretive.

The colliery contains a resource of 25.7-million tonnes of coal in an area that has additional exploration potential.

Current 400 000 t/y operations demonstrate that the colliery can readily produce yields of coal suitable for export or local metallurgical markets.

The company remains focused on creating stakeholder value through unlocking the potential of its organic surface and brownfield development projects.

Initiatives to extend the life of assets include ongoing exploration at the Fairview gold mine in Barberton, a preliminary economic assessment of the Elikhulu tailings retreatment and an assessment of the merits of developing Evander South.