Severe cost pressures, including higher production costs linked to an increase in electricity and labour expenses, has lead to JSE– and AIM-listed gold and platinum miner Pan African Minerals revealing a weaker performance, in its recently released interim results for the six months ended 31 December 2012.As a result, the group has immediately shifted its focus on a short-term strategy. “Our focus in the next six months will be to deliver on volume and grade, and driving costs down as we intend to grow the profit margin and resume the dividend payment,” said the company’s CEO, Jan Nelson.
Pan African announced that its mining profit decreased by 8.28% to R292.1 million compared to R318.46 million in 2011, however, the company says it is optimistic that the decrease in gold sold at its Barberton Gold Mining operations (BMGO) will be turned around. “We are encouraged by the progress made at BMGO, in particular with the development of the tailings retreatment project, which will add a further 20 000 oz per annum starting in June 2013,” stated Nelson. The company further disclosed that the tonnes milled from underground at BMGO decreased by 7.53% to 135 000 t compared to 146 000 t in 2011;, however, underground gold production remained consistent at 42 808 oz. Revenue increased by 8.15% to R668.14 million compared to R617.80 million in 2011, while attributable profit decreased by 4.30% to R166.62 million compared to R174.10 million in 2011.
Meanwhile, Pan African Minerals says that the acquisition of the Evander mine from gold producer Harmony Gold, which will cost about R1.5 billion, has not been finalised and remains subject to the consent of the Minister of Mineral Resources in accordance with section 11 of the Mineral and Petroleum Resources Development Act.“The Evander transaction, a game changing project for the group, is expected to conclude in the coming weeks on receipt of Section 11, and the integration of this project is already well underway, with a view to doubling the groups gold production to 200 000 oz in the next full financial year,” explained Nelson. The gold and platinum miner said that BGMO reported one fatality,that whichtook place in November 2012 when a truck driven by its employee overturned and rolled down a hill at Sheba mine.