Pan African Resources H1 Earnings Call Highlights

Pan African Resources LON: PAF reported record interim results for the six months, citing a sharp rise in the gold price alongside a more than 50% increase in production following the ramp-up and integration of two newer operations, Mintails Tailings Retreatment (MTR) in South Africa and Tennant Mines in Australia.

In its interim results presentation, management said the group is benefiting from “the highest gold prices in history,” while remaining “entirely unhedged” and expecting to be net debt-free by the end of the month. The company also highlighted its move to the London main market and inclusion in the FTSE 250 index during the period.

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Production growth and cost guidance

Management said gold production increased by more than 50% in the half year and reiterated full-year guidance of “275,000 ounces or more,” with production weighted to the second half as MTR completes expansion work, Tennant begins processing higher-grade ore from open pits, and Evander Underground continues accessing higher-grade areas. The company said it expects next financial year’s production to be “even closer to 300,000 ounces,” driven largely by MTR and Tennant ramp-ups.

All-in sustaining cost (AISC) for the half year was reported at $1,874 per ounce, above previous guidance. Management attributed the overshoot primarily to the rand-dollar exchange rate, employee option expenses, higher royalties, and the processing of third-party material. For the full year, Pan African revised its expected AISC range to $1,820-$1,870 per ounce, assuming higher second-half production.

Management also noted that roughly 90% of the portfolio produced at an AISC of $1,700 per ounce, and said the group’s cost performance remains competitive versus the broader sector.

Operational highlights: tailings and underground mines

Pan African emphasized its portfolio mix of tailings retreatment and underground operations, stating that surface operations can reduce unit costs while turning legacy liabilities into profits, and underground mines provide long life and optionality. The company said all operations now have extended lives, with the shortest being the Barberton Tailings Retreatment Plant (BTRP) at six years, excluding Royal Sheba.

Elikhulu: Management described Elikhulu as a flagship asset with “just under 9 years” of production remaining and the lowest cost in the group at about $1,200 per ounce. Production rose 15% and the asset generated $78 million of EBITDA in the half year, which management said was roughly equal to the prior full financial year. The group is constructing the Winkelhaak pump station ahead of need to enable additional feed sources in the next financial year.
BTRP: The company reported a solid performance and said it has extended the asset’s life to six years, supported by a $4 million Bramber pump station that has been commissioned.
MTR: Pan African said it commissioned MTR in October 2024 ahead of schedule and below budget, and completed a CIL and reactor expansion in December, reaching expanded nameplate capacity in the same month. However, interim production was about 10% lower than anticipated due to lower grades and recoveries in the area processed. Management said it expects a pickup in the second half and guided to 55,000-60,000 ounces per year going forward. A water treatment plant is under construction and the company expects to begin construction of a 20-megawatt solar facility before year-end.
Tennant Mines: Management said the Nobles plant is running at steady state and Tennant produced nearly 16,000 ounces in the half year, largely from the lower-grade Crown Pillar stockpile. Production is expected to improve in the second half as higher-grade ore is mined from the Rising Sun open pit (average grade 5.8 g/t) and the Nobles open pit (about 2 g/t). Full-year guidance was set at 46,000-50,000 ounces. Management said AISC in the first half was impacted by lower unit production and pushback costs and is expected to decline as output rises.
Evander Underground: The company said production rose almost 90% and further improvement is expected in the second half, with new infrastructure fully commissioned and AISC declining as output ramps up.
Fairview and other Barberton underground mines: Fairview production increased 10%, while Consort rose 20% after rehabilitation work enabled a return to higher-grade sections. Sheba was impacted by lower grades, with development continuing to improve flexibility.

Financial results: record revenue, earnings, and cash flow

Financial Director Marileen Kok said results reflected both higher gold prices and increased volumes sold. The average U.S. dollar gold price received rose 62% and gold sold increased 59% for the period.

Key financial figures disclosed on the call included:

Revenue: up 157% to $487 million.
Adjusted EBITDA: up 323% (percentage increase cited; absolute value not provided in the presentation remarks).
Earnings: up 207% to $148 million.
Headline earnings per share (HEPS): management said headline earnings increased to $149 million and HEPS increased by 512% to $0.0734 per share.
Earnings per share (EPS): increased by 192% to $0.073 per share.
Operating cash flows: cash flows from operating activities before dividends, tax, royalties, and net finance costs increased 588% to $260 million.

Kok said costs in U.S. dollar terms were affected by a 3.2% appreciation of the rand, higher share-based payment expenses linked to a share price increase of more than 140%, increased royalties due to higher gold prices and profitability, and payments for third-party material processed at Evander and MTR. She said third-party sources are higher cost than the company’s own production but remain attractive at prevailing gold prices and help utilize processing capacity.

Balance sheet, dividends, and capital allocation

Management said the company reduced debt by more than $180 million over the last year and cut net debt by 80% during the period, from $229 million to $46 million. Kok said the group expects to be fully de-geared from a net debt perspective by the end of the month. The MTR term loan was fully settled in January 2026, well ahead of its contractual repayment date, and the revolving credit and banking facilities were undrawn, with extension proposals under review.

Pan African also initiated an interim dividend. Kok said the board approved a 12 South African cent per share interim dividend for payment in March 2026. She also referenced a record dividend of 37 cents per share for FY2025, resulting in a net payment of $44 million in December 2025.

On capital allocation, executives emphasized prudence, noting that higher cash flow margins are being used to fast-track developments, particularly at Tennant and MTR. Asked about buybacks versus special dividends, the company said it will continue to assess buybacks while balancing shareholder preferences with funding for value-accretive growth.

Growth pipeline and Q&A themes

Management outlined several growth initiatives, including:

Soweto Cluster (MTR): A project involving more than 100 million tons of tailings with mineral reserves of more than 500,000 ounces of recoverable gold. Management said a pre-feasibility study supports potential annual production of 30,000-35,000 ounces at competitive AISC for initial capex of about $160 million. A definitive study is expected to be completed in the coming months for board consideration.
Tennant expansion: The group said it plans to increase plant throughput from 840,000 to 1,000,000 tons per year by adding CIL tanks, a fixed crusher, and a flash float circuit, alongside accelerated underground development at Juno and Golden Forty. Management said these developments could lift Tennant production from 50,000 ounces to about 100,000 ounces per year over the next three years.
Warrego (Tennant): A feasibility study is underway on a copper and gold strategy, with results expected early in the new calendar year. Management said the study targets 10,000-15,000 tons of copper per year and an additional 20,000-30,000 ounces of gold, with potential to extend mine life beyond 15 years.
Poplar (Evander): The company described Poplar as a large, delineated high-grade underground project within its existing mining right and said an updated pre-feasibility study is targeting a 100,000-ounce-per-year operation leveraging existing infrastructure.

In Q&A, management addressed several investor concerns, including:

Evander production guidance: Executives said exceptional grades at 24 level support upside potential toward 70,000 ounces over the life of mine, but the company is maintaining conservative near-term guidance of 50,000-54,000 ounces for the next year.
Cyanide supply: Management said Pan African installed bracketing plants at all operations, allowing cyanide imports if needed, and does not expect shortages to impact operations.
Cost inflation: Kok said excluding certain items, AISC would be close to the prior year’s level and that costs in rand terms are controlled, with electricity the main area above inflation and savings from renewable energy and workforce restructuring offsetting some increases.
Hedging: Management said it is not contemplating hedging at present, citing shareholder preference for gold price exposure and noting hedging has historically been used mainly for risk mitigation during large capital projects or debt repayment periods.
Third-party material: The company said it is profitable at current prices but not relied on long-term, and it has legal checks to ensure suppliers have proper permitting and licensing.

Concluding the call, management said the group remains positioned to generate “very significant cash flows” at prevailing gold prices, while continuing to prioritize disciplined investment decisions and shareholder returns.

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