Pan African crashes more than 20% as it cuts guidance amid Eskom's failures

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Andrey Rudakov/Bloomberg

Shares in mid-tier gold producer Pan African Resources cratered by more than a fifth on Friday morning, after it cut its guidance due to Eskom's failure to guarantee reliable electricity, although it also faced its own challenges.

The miner, valued at R9 billion as of Friday's open, has cut its guidance to 175 000 ounces for its year to end June, an almost 15% fall from the upper end of its previous range of between 195 000 and 205 000 ounces.

In late morning trade shares in Pan African were down more than 21% to R3.46, having lost just less than this over the past year.

Click here for details of its shares.

The group said challenges related to "Eskom-generated electricity supply" hit all of its operations, resulting in a production loss of about 10 000 ounces - worth about R350 million at current prices. There was also a slower than anticipated ramp-up of continuous operations at Barberton as well as lower than expected production from Evander's underground operations.

The company also experienced a fatality at Evander at as a result of a fall of ground in March, which brought an end to a period of one million fatality free shifts.

Lower production has been offset, however, by better gold pricing, which has risen in rand terms by about 12% in the year to date when compared to 2022.

"Whilst we are disappointed with the production performance of our underground operations for the current financial year, the turnaround at Barberton Mines is now evident, especially in the past two months, following a longer than anticipated ramp-up after the implementation of continuous operations at Fairview Mine and Sheba Mine and implementation of the contractor mining model at Consort Mine," CEO Cobus Loots said in the update.

"Barberton Mines’ underground production tonnes have demonstrated a notable increase during the past two months, with further increases expected during the remainder of the current financial year. Implementation of the contractor mining model at Consort Mine is also bearing fruit and the operation is expected to return to profitability in the short term."

"The safety of our people and contractors remains our number one priority and we continue to implement a number of programmes to further improve the safety performance at our operations. We are deeply saddened by the fatal accident that occurred at Evander Mines as a result of a fall of ground incident."

Update: This article has been updated to reflect new movements in Pan African's share price.

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