JOHANNESBURG (miningweekly.com) – Precious metals miner Pan African Resources on Tuesday reported lower earnings for the six months to December 2012.
Basic and headline earnings a share fell by 4.6% from R12.06 in the six-month period to December 31, 2011, to R11.50 in the period under review.
The JSE-listed group recorded an attributable profit of R166.6-million – a 4.3% decrease compared with the R174.1-million reported in the corresponding six months in the prior year.
The first half of the financial year saw earnings before interest, tax, depreciation and amortisation decrease by 11% to R259.28-million, from R291.44-million in the six months to December 2011.
A 19.46% rise in electricity costs and a 16.97% rise in labour costs – reaching R38.3-million and R153.74-million respectively in the six months under review – pushed production costs up almost 16% to R324.41-million.
“The group has delivered a solid performance in the first half in spite of severe cost pressures,” Pan African CEO Jan Nelson said.
Pan African’s cash on hand increased to R661.24-million in the first half of the year, up from R255.39-million in the corresponding period the year before, owing to cash generated by the operations and key shareholder irrevocable deposits received during a rights offer.
Revenue for the six months ended December 2012 reached R668.1-million, compared with R617.8-million in the six-month period to December 2011.
Gold sales contributed revenue of R641.24-million during the interim period, up from the R617.8-million reported in the first half of the previous year, despite a decrease in ounces sold.
Almost 45 000 oz of gold was sold during the period under review, compared with the 46 927 oz sold in the corresponding period the year before.
Revenue from platinum-group elements reached R26.9-million, as Pan African’s Phoenix operations reported its first sales of 3 138 oz.
Nelson commented that the progress made at the Barberton gold mining operations, particularly the development of the tailings retreatment project, which was expected to boost yearly gold production by 20 000 oz from June 2013, was encouraging.
“The Evander transaction, a game-changing project for the group, is expected to conclude in the coming weeks, on receipt of Section 11 [approval], and the integration of this project is already well under way, with a view to doubling the group's gold production to 200 000 oz in the next full financial year,” he added.
Pan African concluded that the focus over the next six months would be on delivering volume and grade, while driving costs down, in an effort to grow the profit margin and resume dividend payments.