LONDON (ShareCast) - (ShareCast News) - London-based precious metals firm Pan African Resources said on Wednesday that it had seen profits fall over the last financial year as a result of an "operationally challenging" year.
Pan African posted a pre-tax profit of £23m for the year ending 30 June; down from the £33.9m it posted at the same time a year earlier.

The group did grow revenue 5.1% to £169.6m over the period but profits suffered as a result of significantly increased gold production costs that jumped from £100.5m in 2016 to £134m twelve months later, as salaries and wages rose along with electricity and production costs.

The overall production cost per kilogram jumped up 27% to roughly ZAR 430,863, as the average price of gold slipped marginally lower to ZAR 542,773.

Pan African also said that production of the yellow metal had suffered at a number of its mines over the period. Evander was suspended for 55 days in order to carry out refurbishments to its critical shaft infrastructure, and Barberton saw reduced production as a result of "frequent instances of community unrest."

Overall the group produces 173,285 ounces of gold over the period, a 15% decrease on the prior year, but anticipated it would bounce back to around 190,000 for its 2018 financial year.

However, despite the challenges presented, the South African-focused explorer decreased its net debt an impressive 76.8% to $4m while raising cash and equivalents on hand from £2.65m at 30 June 2016 to £9.44m a year later.

EBITDA dropped 32.3% to £30.4m and earnings per share dropped 19.1% to 1.14p each.

Cobus Loots, chief executive of Pan African Resources said, "We have appropriately addressed critical shaft infrastructure repairs at Evander Mines, and the operation's cost base is now leaner, without compromising the safety or sustainability of the business. Pan African Resources looks forward to a much-improved performance from Evander Mines in the 2018 financial year, with a substantial increase in expected gold production. Despite mining flexibility challenges, Barberton Mines, our flagship long-life cash flow producer, is currently mining high-grade panels in its Fairview 11-block and is poised to contribute substantially to our production guidance of 190,000oz for the 2018 financial year. The Elikhulu Project is on schedule, with environmental approvals now in place, and is expected to produce first gold in the final quarter of the 2018 calendar year."

As of 1115 BST, shares had grown just 0.53% to 13.24p.

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