Johannesburg — Pan African increased gold production by 3% to 97483oz at its Barberton mines in the year to June. It posted a 26% increase in headline earnings per share of 1,07p.

GOLD producer Pan African Resources will decide by end of this year whether to go ahead with a Mozambique gold project, and it will begin platinum production in SA by end of next year.

Pan African, listed in London and on the JSE, increased gold production by 3% to 97483oz at its Barberton mines in the year to June. It posted a 26% increase in headline earnings per share of 1,07p. Cash grew by 436% to £12,8m and it posted a dividend of £5,26m, or 0,3723p a share.

Pan African plans to grow gold output at Barberton by 25 000oz over the next five years. Its two growth projects are in platinum and Mozambique gold. Project Phoenix is a tailings treatment operation to process chrome tailings on property owned by International Ferro Metals.

It has resources of 469 000oz of platinum group metals and is in talks with other companies to grow this resource base by up to 1,5-million ounces.

The outcome of these talks should be known by year-end and, if successful, may entail Pan African adding to the 12000oz a year plant it will commission in September next year, CEO Jan Nelson said yesterday.

Steady state production could be reached by December next year. Phoenix could generate 20 000oz a year of platinum group metals, he said.

The £8,5m first phase will see Pan African producing platinum group metals at below 400/oz against a platinum price of 1522. Pan African expects Phoenix to generate profit of R50m a year against the R150m profit from Barberton, which has a much larger workforce and more infrastructure.

In Mozambique, the company expects to produce a definitive feasibility study next month into a gold mine at Manica, which will initially treat oxide material. There is a 2,5-million ounce gold resource at Manica.

An important factor in the decision on whether to build a mine would be to persuade the Mozambican government to lower a 10% royalty on gold revenues.

Pan African is in talks with owners of nearby gold deposits so that it can bulk up its oxide resources, which, if successful, will enhance the financial dynamics of the project. This would either lead to a longer-life mine or increased output. Pan African has been in talks with its neighbours for 18 months. "We are quite far down the track with one of those parties," Mr Nelson said.

Pan African is submitting an application next month to convert its exploration licence to a mining right at Manica.

"The feeling is the oxides make sense to mine, but not on a large scale. We could mine it on a trial basis," Mr Nelson said.

A further study into the more expensive and challenging sulphide part of the ore body is due before the end of the year.