Lower grades at its Evander mine, a March flood and technical difficulties at the Barberton mining complex and the sliding price of gold made for a difficult year for Pan African Resource (PAF).
Although production ramped up significantly, with the volume of gold sales up 44 per cent to 188,000 ounces, revenues in sterling were only 16 per cent higher, reflecting a 16 per cent slide in the gold price to an average of $1,303 (£804) per ounce. Moreover, cash costs rose 10 per cent in sterling, despite the rand's weakness. That hit the group's cash profits, which fell 17 per cent to £44.2m.
Fortunately, the various production problems have now been resolved. The annual result would also have been much worse without the 22,885 ounces of gold extracted by the Barberton tailings retreatment plant, which started production in July 2013. Another tailing retreatment plant at Evander is expected to open in January, increasing the group's production by a further 10 per cent.
Management voiced its confidence by introducing a new progressive dividend policy. The payout proposed for the year just passed brings the yield to 5.6 per cent – versus an average of 1.6 per cent for gold miners globally.
Canaccord Genuity anticipates adjusted EPS of 1.5p for the current year.
| PAN AFRICAN RESOURCES (PAF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 14p | MARKET VALUE: | £ 256m | |
| TOUCH: | 13.8-14p | 12-MONTH HIGH: | 17p | LOW: 12p |
| DIVIDEND YIELD: | 5.6% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 8.7p | NET DEBT: | 4% | |
| Year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 69 | 22.2 | 1.0 | 0.37 |
| 2011 | 79 | 26.4 | 1.2 | 0.51 |
| 2012 | 101 | 42.2 | 2.0 | nil |
| 2013 | 134 | 54.7 | 2.6 | 0.80 |
| 2014 | 155 | 33.9 | 1.5 | 0.79* |
| % change | +16 | -38 | -44 | - |
Ex-div: tba Payment: tba *Precise sterling dividend will be confirmed prior to the AGM, based on the prevailing rand-sterling exchange rate | ||||
