Pan African Resources


£239.1m market cap

10.7p last close

Pan African Resources has four major producing or near-producing precious metals assets in South Africa: Barberton (targeting 95koz Au pa), Barberton Tailings Retreatment Project (20koz), Evander Tailings Retreatment Project (10koz) and Elikhulu (55koz).

Investment summary

With 1.08p of EPS derived from continuing operations and 160.4koz of production, PAF’s FY18 results were ahead of our expectations. The closure of Evander underground will cost PAF c 49koz pa in lost production. However, it will be more than made up for by Elikhulu, which is now operating at full capacity and will propel EPS towards c 2p/share. In the meantime, interim production of 81koz puts PAF well on course to meet its production guidance of 170koz for FY19.

Y/E Jun
Revenue (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 167.8 32.4 19.4 1.22 8.8 5.6
2018A 154.2 14.8 2.4 1.60 6.7 N/A
2019E 160.1 54.5 31.8 1.09 9.8 4.4
2020E 187.1 79.2 58.2 1.83 5.8 2.7
Last updated on 19/02/2019
Industry outlook

Additional near-term opportunities include the the Fairview sub-vertical shaft project (adding 7-10koz to production pa), the Royal Sheba project (c 30koz pa) and Egoli (optimised 34% IRR and ZAR1.04bn pre-tax NPV). Our all-in valuation of PAF is currently 17.01p/share plus the value of c 20.1m underground Witwatersrand ounces (which could add a further 0.17–4.15p/share). In addition, it remains cheaper than its peers on at least 91% of common valuation measures and has the eighth-highest prospective dividend yield globally.

Last updated on 19/02/2019
Share price graph
Balance sheet
Forecast net debt (£m) 88.8
Forecast gearing ratio (%) 70
Price performance
Actual 17.6 32.1 16.4
Relative* 13.8 28.5 18.2
52-week high/low 10.8p/6.5p
*% relative to local index
Key management
Keith Cousens Spencer Chairman
Cobus Loots CEO
Deon Louw FD

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