News

April 28, 2008

Pan African Sitting Pretty With Cash Flow And Exploration

By Our Man in the City

Nine months since completing the £32 million acquisition of South Africa’s Barberton mine, Pan African Resources is increasingly the subject of envious looks from peers in the junior resources sector. It has made the transition to producer and secured a revenue-producing asset that will fund exploration projects without having to trouble the market or financiers for cash until the serious development stage. “Barberton is what it is – a cash cow,” says chief executive Jan Nelson. “We’d like to increase production rates, but for the next two to three years output is going to stay at current levels. Too many companies make promises about raising production and lowering costs, and it never happens. We have three major exploration projects to try and grow the reserves at Barberton. If we find something good, only then will we make plans to increase production.”

No-one can accuse Pan African of lacking ambition. Having effectively become Metorex’s gold vehicle - the major owns 55 per cent of Pan African - the company now has the appropriate resources to find multi-million ounce gold deposits. It has cash from Barberton, access to skilled engineers within Metorex, and corporate introductions from Pangea Exploration. “The Metorex guys certainly know how to build mines,” says analyst Brock Salier of house broker, Ambrian. “Pan African is also lucky in...