Pan African Resources (PAF): gold production increases by 54.2% for the six months ended 31 December

Monarch Gold


C$157.7m market cap

C$0.5 last close

Monarch Gold is a Canadian gold explorer and past producer with one major near-term project and four second tier projects in the Abitibi, Quebec, gold belt.

Investment summary

Monarch Gold has entered a definitive agreement with Yamana Gold to sell its flagship Wasamac property and its Camflo mill and tailings facilities to Yamana for C$152m, or C$0.48 per share on a fully diluted basis. Monarch’s remaining assets Croinor, McKenzie Break, Swanson and Beaufor (plus its Beacon Mill, related liabilities and C$14m in cash) will be spun out as a separate company (SpinCo). Management estimates of the SpinCo valuation of C$47.5m, of C$0.15 per share, would imply an overall deal valuation of C$200m. This would represent a 43% premium to the 20-day VWAP of Monarch, although ultimately the deal premium will be determined by the SpinCo valuation once it starts trading.

Y/E Jun
Revenue (C$m)
PBT (C$m)
EPS (c)
P/E (x)
P/CF (x)
2019A 31.7 (3.6) (4.0) (2.4) N/A N/A
2020A 6.7 (3.6) (3.8) (2.0) N/A N/A
2021E 11.5 4.9 5.0 0.4 125.0 40.5
2022E 11.1 4.5 4.7 0.3 166.7 46.0
Industry outlook

The Wasamac mine re-development represents, by our estimates, around 80% of the company’s value, based on it being able to use toll milling (study currently underway). Mine operating costs are forecast to be low compared to peers mainly because of using an electricity powered Rail-Veyor rock transport system, at one-eighth of the cost of conventional diesel transport and a new high-volume ramp access system, which significantly cuts down travelling time and increases capacity.

Last updated on 27/11/2020
Share price graph
Balance sheet
Forecast net cash (C$m) 27.7
Forecast gearing ratio (%) N/A
Price performance
Actual 22.0 7.5 127.3
Relative* 12.3 3.4 123.4
52-week high/low C$0.6/C$0.1
*% relative to local index
Key management
Jean-Marc Lacoste CEO
Alain Lévesque FD