Ghost Bites (Pan African Resources | Rex Trueform | South32)

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Pan African Resources made the most of the gold price (JSE: PAN)

At a time of record average prices, group production moved higher

When the gold price is shining brightly, mining houses simply have to make the most of it. Pan African Resources has done exactly that in the year ended June, with group production up 6.2%. With average prices at a record high for the group ($2,201/oz), the timing of this great production result was perfect. Notably, production was within guidance.

All-in sustaining costs (AISC) are expected to come in at $1,350/oz, so there’s plenty of margin here to put a smile on the faces of shareholders.

These solid numbers could’ve been ever better, were it not for a delay in commissioning a ventilator shaft at Evander 8 that impacted production in the last two months of the period. This made them miss the high end of production guidance and also had a negative impact on unit costs. The delay should be out of the way in the next few weeks.

The Mogale Tailings Retreatment Project (MTR Project) is nearing its final stages, with first gold production anticipated ahead of schedule in October 2024. They should reach steady state production in December 2024. Best of all, they are coming in below budget! The forecast AISC over life of mine is below $900/oz, so that’s going to be a spectacular project if gold prices can stay at reasonable levels.

Previously announced FY25 guidance of between 215,000oz and 225,000oz has been reiterated. They produced 186,039oz in this period, so that’s a massive jump of 18.3% in the coming year at the mid-point of guidance.

Net debt has ballooned from $22 million to $106.4 million, with construction costs at the MTR Project of $71.5 million as the major driver, along with other expansion capex of $23.8 million at Evander 8 and $9.9 million at Fairview solar plant. The Fairview project will provide 15% of Barberton Mines’ energy requirements and will achieved significant savings vs. Eskom tariffs.

Financial Director Deon Louw has notified the company of his intention to retire with effect from 30 September, having been in the role since 2015. He will continue as a consultant to the group. Marileen Kok will take over, having been with the group since 2020 as Group Financial Manager.

Rex Trueform continues its push into property (JSE: RTO)

And remember, this company is a subsidiary of African and Overseas Enterprises (JSE: AOO)

Rex Trueform already holds 53.68% in Belper, an unlisted property business focused on industrial properties in the Western Cape. As part of a desire to increase exposure to this asset class, Rex Trueform will subscribe for additional shares that will take the stake to 72.03%. This is after taking the initial stake in 2022.

The structure is that the outstanding loan from Rex Trueform to Belper will be converted to shares, including the accumulated interest on the loan. The total value of the debt being converted is just under R27.4 million. As Belper’s current net asset value is negative R6.8 million, this will take the property business back into positive equity value.

South32 says goodbye to Illawarra Metallurgical Coal (JSE: S32)

The push into low-carbon metals continues

South32 announced that the sale of Illawarra Metallurgical Coal is now unconditional, taking the business closer to a simplified business and balance sheet.

Importantly, capital has been unlocked to invest in copper and zinc projects in line with the plans around focusing on low-carbon future opportunities.

Little Bites:

• Director dealings:
  • A director of Dis-Chem (JSE: DCP) received R441k worth of vested shares and sold the whole lot, not just the portion required to cover taxes.
  • A director of 4Sight (JSE: 4SI) and an associate sold shares in off-market deals worth over R154k.

• After Sasol (JSE: SOL) was given an immense scare from the regulator, it was eventually decided back in April 2024 that the boilers at Secunda Operations would be regulated on an alternative emission load basis. This is literally the difference between commercial viability and an economic nightmare. Of course, we are playing off the environment against the jobs etc. at the plant, so there are simply no winners here. Either way, the limits related to the alternative emission load basis have now been published, so Sasol has certainty over the matter and can carry on with its business, much to the annoyance of climate activists.

• Lighthouse (JSE: LTE) is still busy selling down the stake in Hammerson (JSE: HMN), with the latest sale of shares being worth R765 million. They don’t have to disclose every single sale, but rather the one that takes them through a 5% threshold in terms of ownership in Hammerson – and this was the one. Lighthouse now has 4.93% in Hammerson, so don’t expect to see another announcement like this one.

• Although Cilo Cybin Holdings (JSE: CCC) has technically released its inaugural set of financial results, they are a bit pointless. The company is a special purpose acquisition company (SPAC) and doesn’t have any operational assets yet. It earns investment revenue on the R63 million in cash and incurs the costs of being listed. There will no doubt be far more exciting things to report about this company in periods to come.

• Oando PLC (JSE: OAO) released an announcement that angrily refuted claims that the group has shares in a company in Malta that imports adulterated petroleum products into Nigeria. Interestingly, not only have they never had such shares, but the Maltese company named in the allegations doesn’t even exist. There’s a stern warning in the announcement to members of the press to validate claims before printing them. Seems like an appropriate level of irritation in this scenario.

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