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(Alliance News) - Pan African Resources PLC on Monday issued its revised guidance following the closure of its mines in South Africa due to the Covid-19 lockdowns.
The London and Johannesburg-listed miner now expects total gold production of 175,000 ounces, down from the 185,000 expected prior to the lockdown.
"As expected, production at the group's operations was severely affected during the lockdown months of March and April 2020. The group was however able to mitigate some of the impact through continued mining activities at its surface operations, which was staffed by a materially reduced employee complement, and also with limited high-grade underground mining at Barberton Mines," Pan African said.
The revised production guidance is "only" a decrease of only 5% from the previous guided production, the miner said, due to its ability to increase output from surface toll treatment and low grade surface stockpile processing initiatives, in substitution of underground production.
"The substituted production was however at a reduced margin, when compared to normal margins earned on ounces produced from underground", Pan African added.
The miner said it remained cashflow positive during the lockdown period.
Pan African continued: "Assuming that the prevailing rand gold price of approximately ZAR1 million per kilogram - approximately USD1,680 per ounce - can be sustained for the remainder of the 2020 financial year, the group is expected to reduce its senior interest-bearing debt, including the outstanding gold loan balance, net of projected available cash, to approximately ZAR1.3 billion from ZAR1.8 billion at June 30."
Pan African said it entered into a number of short-term zero-cost dollar hedges. For the two months to June 30, the miner has hedged 21,820 ounces with an average floor price of ZAR683,226 per kilogram and an average ceiling price of ZAR847,109. For the 6 months to December 31, Pan African has hedged 50,000 ounces with an average floor price of ZAR708,000 per kilogram and an average ceiling price of ZAR925,829.
Pan African Resources shares in London were 4.4% higher on Monday at 14.20 pence each. In Johannesburg, the shares were down 3.3% at ZAR3.21.
By Paul McGowan; paulmcgowan@alliancenews.com
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