Pan African cuts debt as production rises

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Pan African cuts debt as production rises

Published Date: 2020-07-13 | Source: Stephen Gunnion | Author: Stephen Gunnion

Pan African cuts debt as production rises

At current rand gold prices and guided production levels, the gold producer expects to be debt free within the next year.

Pan African Resources has beaten its full-year production guidance despite the impact of Covid-19. It's used the extra cash to slash debt and says it plans to further degear its balance sheet so it can increase future dividends.

In an operational update, Pan African said production rose 4.1% to 179,575 ounces for the year to end-June - 2% higher than its revised production guidance of 176,000 ounces. It cut debt debt by 49% to $62.5 million from $124 million in December, beating its target of $70 million due to the better than expected production, the weaker rand and disciplined working capital management. It said its operations had implemented stringent policies and protocols to deal with the ongoing pandemic.

Pan African said it delivered on its plans to reduce the costs of its lower margin operations, supported by the pillar mining at Evander Mine's 8 Shaft, which reached steady state production last month. The accelerated development at Barberton Mines' Consort operation had also beaten expectations in terms of recovered grades and gold production, while a positive feasibility study for Evander's Egoli Project demonstrated that the project could add considerably to its production profile and firmly entrench the group as an established mid-tier gold producer.

Pan African said its board had approved the construction of a 10 megawatt power plant at Elikhulu. Following a 12-month construction period, it said the plant was likely to materially reduce its electricity costs.

The group has increased its production guidance for its 2021 financial year to approximately 190,000 ounces. At current rand gold prices and guided production levels, it expected to be debt free within the next 12 months.

Its shares rose 4.3% to R4.38 on Friday.





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