Miningweb: Pan African Resources strikes gold - production up 51%, debt vanishes

Key topics:Gold production jumps 51% as Pan African hits operational strideNet debt slashed, dividends rise amid record gold pricesEvander turnaround and tailings projects drive future growth.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..BizNews Reporter.JSE-listed mid-tier gold producer Pan African Resources has delivered a stellar operational update for the six months ended December 2025, capitalising on a record gold price environment to boost production by 51% and aggressively slash debt.In a trading statement released this morning, the miner reported that gold production rose to 128,296oz for the half-year, up sharply from 84,705oz in the comparable period in 2024. The group confirmed it is firmly on track to meet its full-year guidance of between 275,000oz and 292,000oz..The Cash Machine.The combination of higher production volumes and record gold prices has transformed the company’s balance sheet. Net debt has been reduced by more than two-thirds to US$49.9 million (approx. R800m), down from US$150.5 million in June 2025.Even more striking is the speed of de-gearing. Despite paying a record final dividend in December 2025, management expects the group to be "fully de-geared" in terms of net debt by the end of February 2026. This financial health has prompted the board to propose an interim dividend of 12c a share, signalling confidence in continued cash generation..Operational Turnaround at Evander.The star performer in the portfolio was the Evander underground operations. Production here surged 87% to 21,640oz, driven by the sub-vertical hoisting shaft operating at capacity and the successful mining of the high-grade Kinross Channel.The group’s flagship tailings operation, Elikhulu, also delivered excellent results, with a 14% increase in production to 29,450oz.However, the Mogale Tailings Retreatment (MTR) operation faced minor headwinds. While achieving steady state, production came in at 21,729oz—roughly 10% below expectations due to lower mining grades in the current mining area. However, the MTR expansion to 1 million tonnes per month was successfully commissioned in December, which is expected to boost recoveries in the second half..The Cost of Success.Interestingly, the company’s success has put upward pressure on its reported All-in Sustaining Costs (AISC). Costs for the half-year are expected between US$1,825/oz and US$1,875/oz, higher than the full-year guidance of US$1,525/oz – US$1,575/oz.Management attributes this to three main factors:Currency Strength: The Rand strengthened 6.1% against the Dollar to R17.37, which inflates dollar-denominated costs by approximately US$115/oz.Share Price Rally: The company’s share price rocketed 140% between June and January. This success resulted in higher employee share-based payment expenses, adding roughly US$80/oz to the cost of goods sold.Royalties: Higher gold prices trigger higher royalty payments..Future Growth: The Soweto Cluster.Looking ahead, the company completed a feasibility study for the Soweto Cluster Tailings project. The preferred option is a 600ktpm integrated circuit at the existing plant. This approach offers lower capital requirements and synergies with existing infrastructure.A Definitive Feasibility Study is due by June 2026, with construction potentially taking 24 months. Once operational, this could add 30-35koz per annum for 15 years at a highly competitive AISC of roughly US$1,000 – US$1,200/oz..Solar and Sustainability.The group also updated the market on its environmental initiatives. The Evander solar plant is expanding from 10MW to 30MW, with construction starting in June 2026. Additionally, the new water treatment plant at Evander is set to deliver its first water next month, further reducing reliance on municipal infrastructure.With the Tennant Mines in Australia now contributing steadily (15,560oz) and higher grades expected from open pits in the second half, Pan African Resources appears to be in a "sweet spot"—generating cash, paying dividends, and funding growth simultaneously.

Miningweb: Pan African Resources strikes gold - production up 51%, debt vanishes

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