Padenga banks on increased gold production

The expected increase in gold production and fulfilling its crocodile skin contract volumes is set to leave the firm with increased foreign currency earnings, the company said.

In its trading update for the first quarter of 2024, Padenga said the gold price outlook appeared to remain firm for the remainder of the year with record prices recorded to date.

“The group has embarked on further capital expenditure at Pickstone Peerless Mine for Phase 2 of the underground project in line with budget. Other projects earmarked for 2024 include the pre-leach thickener and solar project at Eureka Mine,” Padenga said.

“Looking forward, the group remains on track to increase gold production by expansion of the Pickstone underground mine cited above. The group remains focused on initiatives to enhance grade, reduce operating costs and improve recoveries.”

Regarding its Nile crocodile operations, the firm said the expected improvement in skin contract volumes was due to an improvement in skin quality to optimal production levels last year.

“The business is on course to fulfill its 2024/25 skin contract volumes to its primary customer within the FY2024 ahead of the contract end date of February 2025.

“Trading terms for the succeeding season are set to be negotiated in the third and fourth quarter, thus ensuring viability of the business in the short to medium term,” Padenga said.

“The exotic skins luxury market continues to withstand the turbulent global economic environment and maintains its position as a significant player in this value chain, thereby also expanding its customer base.”

Padenga said meat exports would resume later this financial year.

“The group’s management continues on its drive to reduce borrowings and related interest costs to sustainable levels and to improve profitability, thus generating shareholder value growth,” Padenga said.

It said subsequent to the pronouncements in the central bank’s Monetary Policy Statement made last month, the group anticipates to benefit from a stabilised local economic environment and will continue to pursue its objective of increasing export proceeds for the business operations and the country at large.

During the first quarter, gold sales surpassed the prior year comparative period by 39% to 751,6kg.

Padenga said this was achieved on the back of an increase in tonnes milled and mill feed grade.

“The tonnes milled increased by 7% to 457 440mt (metric tonnes) up from 427 702mt recorded for the same period last year,” the firm said.

“The increase was due to optimised plant throughput at Eureka Mine, as well as the addition of a new mill at Pickstone Peerless Mine. Mill feed grade also registered a 2% increase (1,47 g/mt vs 1,44g/mt).”

However, for its crocodile business, the period under review saw Padenga Nile crocodile operations record a 34% decrease in skin harvest volumes to 9 248 skins versus 14 096 skins in the prior period.

“The first quarter of 2023 benefited from the harvest of some 10 000 skins carried over from December 2022. Skin sales in the first quarter at 7 480 skins were 213% above the 2 392 skins sold for the comparative period,” Padenga said.

“Sales in the quarter ensured the timely completion of the 2023/24 skin contract with the main customer and included an early contribution towards the 2024/25 skin contract ending February 28 2025.”

Padenga said the significant improvement in skin quality realised at the end of 2023 continued into the first quarter of 2024.-newsday