Pan African Resources' (LON:PAFR) (PAF’s) interim figures were consistent with both its trading statement of 27 January and our prior full-year expectations, despite a sharp increase in Department of Mineral Resources’ (DMR) Section 54 stoppage notices and an unusually strong South African rand. While overall gold production fell 10.0% cf H116, there were sharp increases at both the BTRP (+14.0%) and the ETRP (+77.3%) such that, for the first time, the company recorded greater profits, in the form of adjusted EBITDA, from its tailings retreatment projects than from underground.
Costs well contained in H117 relative to H216
Compared to H116, PAF’s gold cost of production (excluding realisation costs) increased 14.4%, to ZAR1,165.6m in local currency terms; including realisation costs, it increased by 16.4%, to ZAR1,193.3m. Compared to H216 however, PAF’s gold cost of production (including realisation costs) increased by only 5.5%; relative to the aggregate number of tonnes processed, it increased by only 1.4%, to ZAR643/t (vs ZAR634/t).
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