Pan African Resources (LON:PAF) reported record production, earnings and cash generation for fiscal 2026, as higher gold prices and expanded output from its Mogale Tailings Retreatment operation and Tennant Mines in Australia lifted results.
The company produced just under 275,000 ounces of gold during the year, an increase of about 40% from the prior year. It said annualizing second-half production would imply a rate of almost 290,000 ounces, and guided for fiscal 2027 output of 280,000 to just over 300,000 ounces. Production is expected to be weighted toward the second half, reflecting lower-grade calcine processing at MTR early in the year, greater access to the White Devil deposit at Tennant, and expected higher grades at Evander later in the year.
Revenue and Earnings Rise With Gold Price
Adjusted EBITDA rose 169%, while attributable earnings increased 152%, Kok said. Headline earnings climbed 207% to $358 million, and headline earnings per share increased 200% to $0.1764. Earnings per share rose 146% to $0.1760.
Cash flow from operating activities before dividends, tax, royalties and net finance costs increased 260% to $557 million. The company said that cash generation enabled it to repay $149 million of debt during the year, including $119 million of voluntary repayments. It fully settled the MTR term loan in January 2026 and repaid all Australian operating debt facilities.
At year-end, Pan African held $246 million in cash and short-term investments, along with $79 million of undrawn facilities. Remaining debt consisted of listed corporate bonds with maturities through March 2028, according to Kok.
Dividend Increase and Share Buyback
The board proposed a final dividend of ZAR0.65 per share. Combined with the maiden interim dividend of ZAR0.12 per share, total dividends for fiscal 2026 would equal ZAR0.77 per share, up 108% year over year. The distribution is expected to total approximately $113 million, subject to shareholder approval at the company’s November 2026 annual general meeting.
Pan African also approved a share buyback program of up to ZAR500 million, or roughly $30 million, beginning in October 2026. The company said the dividend and repurchase program together represent a payout ratio of about 40% of cash flow under its dividend policy.
Kok said the company intends to remain fully unhedged under current conditions. She said Consort and Sheba remain profitable at prevailing gold prices and are not large enough within the portfolio to justify separate hedging.
Operations: MTR, Tennant and Underground Mines
MTR production increased almost 70% following completion of its carbon-in-leach and reactor expansion in December 2025. The operation is now processing about 1 million tonnes of feedstock per month and generated adjusted EBITDA of $156 million for the year. Management expects MTR to produce 55,000 to 60,000 ounces annually, although output will be lower in the first three months of fiscal 2027 while it processes remaining low-grade calcine material.
Elikhulu, the group’s lowest-cost asset, increased production 14% and generated more than $170 million of EBITDA. The operation produced at just over $1,200 per ounce and has eight years of remaining production, the company said.
At Tennant Mines in Australia, the company produced just over 32,000 ounces in its first operating year. The ramp-up was slower than anticipated because of lower-grade historical stockpiles, the time required to establish higher-grade mining sources, and dry-stack tailings commissioning constraints.
Pan African is pursuing processing modifications at Tennant, including fixed crushing, a secondary ball mill and additional dry-stack tailings capacity. Management identified White Devil as the principal high-grade feed source for the next roughly six years. The open-pit envelope contains more than 3 million tonnes at 3.8 grams per tonne, or about 350,000 ounces, and remains open at depth and along strike.
- Evander underground production increased almost 70% to 47,000 ounces, with recovered grade of about 11 grams per tonne.
- Barberton underground production increased about 5%, led by a 17% increase at Fairview to almost 48,000 ounces.
- Sheba and Consort recorded lower production, although the company said drilling and operational work continue to support efforts to access deeper and higher-grade areas.
More than 90% of Pan African’s portfolio produced at all-in sustaining costs below $1,700 per ounce. Management said Australian operations are budgeted at an all-in sustaining cost of about AUD2,000 per ounce in the coming year, with unit costs expected to decline as output rises. The company’s budget assumes diesel prices about 10% above spot levels.
Growth Projects and Capital Spending
Pan African expects fiscal 2027 capital expenditure of approximately $330 million. The company said the investment is aimed at increasing production, extending mine lives, improving efficiency and advancing priority projects, with Tennant Mines representing the largest growth-investment area.
Royal Sheba in South Africa is progressing after receiving key regulatory approvals. The company has appointed a mining contractor and ordered long-lead equipment, with the first development blast scheduled for early 2027. The current plan targets about 200,000 ounces in total, or approximately 40,000 ounces annually at steady state. Fiscal 2027 spending is expected to total around $15 million.
The company is also advancing the Soweto tailings project, which could be integrated with existing MTR infrastructure. A definitive study contemplates production of approximately 560,000 ounces over 15 years, or 35,000 to 40,000 ounces annually. Management said it has value-engineered the project to an upfront capital cost of $216 million, though final investment depends on permits, servitudes and deposition approvals.
Pan African is updating pre-feasibility work at Poplar, a South African resource containing approximately 6.5 million ounces. The company is evaluating a potential operation capable of producing about 100,000 ounces annually. It said Poplar may be a more attractive medium-term project than Egoli, although both remain under consideration.
Management said it will prioritize organic development over expensive acquisitions, while continuing to evaluate opportunities. The company also targets more than 60% renewable energy use in coming years and plans to begin construction of a 20-megawatt solar facility at MTR during the next financial year.
