Pan African Resources: New Dividend Policy Unveiled
Edison | Sep 28, 2016 08:24AM ET
Pan African Resources' (LON:PAFR) FY16 results were closely in line with Edison’s expectations. Excluding Uitkomst, revenue of £164.7m compared with our forecast of £165.1m and costs of £103.9m compared with our forecast of £104.6m; precious metal mining profit was therefore £49.3m vs our expectation of £48.9m. The only material negative variance was in ‘other expenses’, where a loss of £12.2m (largely attributable to a mark-to-market loss on its small hedge position) compared with our expectation of an £8.9m loss, with the result that actual earnings were £25.5m (or 1.41p for EPS and HEPS) vs our expectation of 1.48p/share. Normalised HEPS and EPS were reported to be ZAR0.4424/share, or 2.08p/share (Edison conversion).
Operations
FY16 was a record year for gold production at Pan African, with Barberton contributing 113,281oz at a cash cost of US$881/oz (including the BTRP) and Evander contributing 91,647oz at US$599/oz (including the ETRP). To achieve this, Edison calculates that the H216 underground head grade at Evander must have been c 5.9g/t. Management avers that there is scope to increase this further, to 6.5-7.0g/t, depending on the balance of production and development.
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