Pan African Resources reports earnings drop
JUNIOR gold producer Pan African Resources fell 6 percent by midday yesterday on the JSE after it reported a drop in both production and earnings for the six months to December 2017 as well as a review of its cost base.
The JSE- and London-listed stock plummeted 19.72 percent to close at R1.75 on the JSE last night on news that earnings a share were 1.58 cents and 4.90c, or between 90 percent and 70 percent, weaker in rand terms.
Headline earnings a share were expected to be between 88 and 68 percent lower than estimated headline earnings per share of 1.88c to 5.14c, compared to the 16.32c in the prior reporting period.
Pan African Resources reported total group production of 85 282 ounces compared with 91 613 ounces in the prior reporting period in 2016. A major setback was disruptions from pressure groups, community unrest and protected and unprotected strikes at Barberton Mines, which resulted in 11 lost production days, equal to 3 000 ounces of gold.
“The source of the frustration from these stakeholders is driven by issues unrelated to the mine and is symptomatic of the general dissatisfaction with service delivery, interunion conflict, and unemployment – issues that currently characterise the South African mining and other sectors,” the company said.
There were also infrastructure issues at Barberton, including problems at its Fariview underground operation.
However, Evander Mines reported a 5.4 percent increase in gold production and lower costs as it returned to profitability following the remedial action taken to address the critical shaft infrastructure and the cost base of this operation.
The group revised its production guidance for 2018 financial year to now be between 177 000 ounces to 181 000 ounces down from the group’s production guidance of 190 000 ounces for the financial year ending June 30, 2018.
Last October the company agreed an 8 percent wage increase with the National Union of Mineworkers for employees at its Barberton Mines. Pan African Resources chief executive Cobus Loots said the group was reviewing its operations.