LONDON (ShareCast) - (Sharecast News) - Pan African Resources reported a 13.6% increase in total gold sold in its interim results on Tuesday, to 90,602 ounces, which it put down to an increase in production by Evander Mines.
The AIM and JSE-traded firm said gold produced by the group for the six months ended 31 December was ahead 14.7% year-on-year at 92,941 ounces.

Group profit after taxation rose 125.8% to $21.9m (?16.8m), which was due to the improved production performance at Evander Mines and the prevailing robust dollar and rand gold price, the board said.

It reported group adjusted EBITDA as rising "considerably", by 83.4%, to $44.2m.

Revenue was 36.2% higher than the prior year's period at $132.8m, which was also put down to the increase in gold sales by Evander Mines, as well as a full six-month contribution from Elikhulu to the group's production profile and also the increase in production from remnant mining and surface sources.

Earnings per share more than doubled to 1.14 US cents per share, while headline earnings per share rose to 1.13 cents per share from 0.50 cents per share year-on-year.

No dividend was declared for the six-month period.

"Our business strategy of delivering safe, sustainable and high-margin gold production has yielded improved operational, financial and safety results for the six months ended 31 December," said chief executive officer Cobus Loots.

"Despite the increase in the group's overall all-in sustaining costs (AISC) for the current reporting period, AISC at our tailings businesses operated at exceptional margins, with Elikhulu producing at an AISC of $708 per ounce and our Barberton Tailings Retreatment Plant reporting an AISC of $643 per ounce.

"We are pleased to maintain our previous guidance of gold production of 185,000 ounces, at an AISC below 1,000 per ounce, for the full 2020 financial year."

Loots said that previously, the company committed to increasing margins at its higher-cost underground operations, explaining that it was "encouraged" by the progress made in achieving that objective.

"Evander Mine's 8 Shaft pillar project, where all development milestones were achieved on-schedule and on-budget, will reach commercial production in the next few weeks, adding further high-margin production from our operations in the second half of this year.

"At Barberton's New Consort Mine, we will also commence mining the PC Shaft pillar in March, adding incremental gold production and considerably reducing the unit cost of production from this operation.

"Critically, we are conducting pillar mining activities in a way that does not sterilise the longer-term future of the operations."

The company completed the mining feasibility study on Evander Mines' Egoli project, Loots said, which demonstrated its technical viability and compelling economic returns.

He added that the study was currently subject to an independent technical review.

"The group is exploring several non-dilutive funding options for Egoli, which will enable Pan African Resources to continue its strategy of de-gearing its balance sheet and increasing dividends.

"To this end, we are engaging with several financial institutions who have expressed an interest in the continued financing of the group's organic growth projects.

"Our attractive pipeline of near- to medium-term growth projects, including the Egoli project and Barberton Mines' Royal Sheba project, have the potential to significantly boost Group production in the coming years."

Despite some challenges, including electricity supply constraints and illegal mining, Cobus Loots said Pan African Resources had demonstrated the ability to operate successfully in South Africa.

"We will continue to use our experience and resources to improve the lives of all our stakeholders and grow shareholder value.

"Management's key focus for the remainder of the 2020 financial year includes further improving the safety performance, delivering on production guidance, reducing operational costs, managing cash flow generation and strengthening the group's financial position by reducing senior debt."

At 1041 GMT, shares in Pan African Resources were down 0.16% in London at 12.22p.

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