Pan African Resources


£221.8m market cap

11.2p last close

Pan African Resources has three major producing precious metals assets in South Africa: Barberton (target output 95koz Au pa), Barberton Tailings Retreatment Project (20koz) and Elikhulu (55koz), now incorporating Evander Tailings Retreatment Project (10koz).

Investment summary

Headline earnings and output in FY19 were consistent with our expectations, with a 54% increase in gold produced from continuing operations and a 27% decline in AISC combining to result in a 75.3% increase in underlying EBITDA. Guidance for FY20 is production of 185,000 (higher margin) ounces, driving headline EPS from 1.19 to 2.46 US cents per share.

Y/E Jun
Revenue (US$m)
PBT (US$m)
EPS (c)
P/E (x)
P/CF (x)
2018A 145.8 38.1 29.3 1.31 11.5 51.1
2019A 217.4 64.0 35.6 1.56 9.7 5.1
2020E 274.6 114.8 83.4 2.46 6.1 2.9
2021E 309.9 149.8 120.3 3.75 4.0 2.0
Industry outlook

Additional near-term opportunities include the the Fairview sub-vertical shaft (adding 7–10koz to production pa), the Royal Sheba project (c 30koz pa), Egoli (optimised 34% IRR and ZAR1.04bn pre-tax NPV) and the Evander 8 Shaft pillar project (US$25.8m pre-tax NPV), which is already in development. In the wake of FY19 results, our valuation of PAF has increased to 24.07c/share plus the value of c 19.2m underground Witwatersrand oz (c 0.22–5.24c/share). In the meantime, PAF remains cheaper than its peers on at least 83% of common valuation measures and cheap relative to its historical P/E ratios with a top tier dividend yield in prospect.

Last updated on 15/01/2020
Share price graph
Balance sheet
Forecast net debt (US$m) 113.6
Forecast gearing ratio (%) 53
Price performance
Actual 13.6 2.9 24.3
Relative* 12.6 (3.5) 11.0
52-week high/low 14.5p/8.7p
*% relative to local index
Key management
Keith Cousens Spencer Chairman
Cobus Loots CEO
Deon Louw FD

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