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Pan African Resources ups earnings forecast for FY-2010

Shares in Pan African Resources (LON:PAF) were up more than 8% after the company reported it expects earnings for its full-year ending 30  June 2010 to be ahead of expectations . The company told investors that its earnings per share (NYSEARCA:EPS) is expected to rise between 148-158%, from FY09’s 0.4p.

Headline EPS is expected to have risen between 16-26%, from the 0.85p reported for the previous financial year. The company expects to report its audited full-year results on 31 August 2010.

Pan African has two primary assets, the Barberton gold mining complex and the Phoenix platinum project in South Africa. The Barberton mining complex consists of three mines: Fairview, Consort and Sheba. In April 2010, the company raised its production forecast for the second half of the financial year.

Subsequently, the Barberton mines are now expected to produce 97,000 ounces of gold - 318,000 tons at a head grade of 10.40 grams per tonne - for the full financial year 2010, with cash costs below ZAR165,000 (approx US$22,500) per kg.

Previously, in February, Pan African reported an improved financial performance in the first half, in which interim revenues rose 16.5% year-on-year. Revenues for the six months to 31 December rose to £29 million, while EBITDA (earnings before taxes, depreciation and amortisation) stayed virtually unchanged £8.6 million and attributable profit jumped from £2.6 million to £4.5 million as a result of the increase of Pan African’s holding in Barberton Mines from 74% to 100%.

At the Phoenix platinum project, the company is working towards the start of construction in Q1 2011, with first production is scheduled for September 2011. Last month, Pan African completed an updated resource statement, which showed an increase in total resource of 15.8% to 469,000 oz (ounces) of 4E PGM (platinum group metals platinum, palladium, rhodium and gold), while in-situ grade improved by 2.6% to 3.15 g/t (grammes per tonne) PGM 4E’s.

The resource consists of 3.2 million tonnes grading 3.09 g/t 4E for 321,000 oz in the measured category, 618,000 tonnes grading 3.20 g/t 4E for 63,000 oz indicated and an inferred resource of 382,000 tonnes grading 3.15 g/t 4E for 85,000 oz.

The resource upgrade extended the life of the project from 13 to 16 years based on a production of 15,000 oz of 4Es per annum.