Pan African’s interim profits slide on production woes

Pan African Resources, a mid-tier gold producer, reported a plunge in interim profits as production slid and costs climbed. And while the full-year production outlook remains steady, the miner said it is subject to the consistency of Eskom’s power supply.

For the six months ended in December, the group’s profit after tax of $28.9 million (R520.3 million) plunged 37% from $46.1 million in the comparative period in 2021.

Following record production in the previous reporting period, interim gold production dropped 15% to 92 300 ounces, down from 108 085 ounces  – primarily due to the performance of Barberton Mines’ underground operations. Meanwhile, all-in sustaining costs of $1 291 (R23 245) per ounce climbed 10% from $1 173 per ounce.

The average gold price received was 4.4% lower at $1725 an ounce.

The Barberton underground operations have experienced a number of headwinds in maintaining and increasing gold production, which include above-inflationary increases in labour and energy costs; increasing depth and underground travel times at Fairview Mine, reducing available face time; and the depletion of a high-grade block at the Consort Mine.

To mitigate these challenges, a detailed review of the operations was completed, and following intensive engagement with stakeholders, including the representative employee unions, an agreement was reached to restructure the underground operations. Consort Mine is to be converted to a contractor mining operation, and both Fairview and Sheba Mines will implement a continuous operating cycle, while still allowing for ongoing maintenance and other support activities.

Pan Africa CEO Cobus Loots said these interventions would result in a significant improvement in production during the second half of the financial year and in the years ahead. – news24.com