- Pan African Resources revises production guidance to approximately 175,000 ounces of gold due to challenges with electricity supply and operational issues.
- Construction of the Mintails project, a significant growth initiative, is set to begin soon, following the receipt of environmental authorization.
- Despite production challenges, Pan African Resources maintains a positive financial outlook, with improved safety measures and a decrease in net senior debt expected.
Pan African Resources PLC (AIM: PAF, JSE: PAN), a leading gold producer with operations in South Africa, has provided shareholders and noteholders with revised production guidance and an operational update for the financial year ending June 30, 2023. The company is also pleased to announce the imminent commencement of the Mintails project’s construction, with site clearance activities already underway.
Revised Production Guidance: Pan African Resources has revised its production guidance for the current financial year to approximately 175,000 ounces of gold, compared to the previous guidance of 195,000 to 205,000 ounces. The revision is primarily attributed to challenges related to electricity supply from Eskom, resulting in a production loss of approximately 10,000 ounces. Slower ramp-up of continuous operations at Barberton Mines and lower than expected production from Evander Mines’ underground operations also contributed to the revision.
Operational Update: Despite the challenges, tailings operations at Barberton and Elikhulu are performing in line with expectations. Barberton Mines has shown improvement in production, with a marked increase in average tonnes produced at the Fairview Mine and Sheba operations over the past three months. Optimizations of mining methods and increased availability of trackless mining machinery have also contributed to improved underground grade and production.
Regarding safety performance, Pan African Resources unfortunately reported a fatal accident at Evander Mines in March 2023. However, the company expects an overall improvement in group safety rates for the full year compared to the first half of the financial year due to the implementation of various safety initiatives.
Electricity Supply Challenges: Pan African Resources estimates a production loss of approximately 10,000 ounces for the current financial year due to issues related to Eskom-generated electricity supply. Load curtailment, power outages, surges, and difficulties with transformers and other infrastructure have disrupted production. To mitigate this challenge, the company is aggressively rolling out its renewable energy plans.
Mintails Project Construction: Pan African Resources has received notification from the South African Department of Mineral Resources and Energy (DMRE) regarding the imminent issuing of the Mintails project’s integrated environmental authorisation. The construction of the plant is expected to commence in the coming month, with ground clearing activities already underway. Steady-state production from the Mintails project is anticipated to begin by December 2024, following the completion of the funding package.
Financial Outlook: The impact of lower than expected gold production has been partially offset by increased gold prices. Pan African Resources’ all-in sustaining costs (AISC) for the current financial year are now projected to be between US$1,325 and US$1,350 per ounce. The company’s net senior debt is expected to decrease to between US$25 million and US$35 million at the end of the current financial year, demonstrating a positive trend in financial performance.
Cobus Loots, CEO of Pan African Resources, expressed his commitment to safety and improving operational performance. He also highlighted the company’s renewable energy initiatives and the progress made in its growth projects, including the Mintails project and the Royal Sheba Project. Despite the lower production guidance, Pan African Resources remains confident in delivering a robust financial performance for the current financial year.
