Pan African Resources

LN: PAF

£201.1m market cap

9p 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

Pan African’s (PAF) earnings and output in H1 were consistent with our prior FY19 expectations, with a 54.2% increase in gold produced from continuing operations and a 23.1% decline in AISC combining to result in a 116.7% increase in EPS in GBP. Compared with H218, there were substantial cost improvements at Barberton, the Barberton Tailings Retreatment Project (BTRP) and the Evander Tailings Retreatment Project (ETRP). Most encouragingly, unit working costs at Elikhulu were 4.3% lower than our long-term projections and a similar performance in FY20 will propel EPS to closer to c 2p/share.

Y/E Jun
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 167.8 32.4 19.4 1.22 7.4 4.7
2018A 154.2 14.8 2.4 1.60 5.6 N/A
2019E 164.9 51.7 31.1 1.14 7.9 3.1
2020E 180.2 76.0 54.1 1.72 5.2 2.8
Last updated on 22/03/2019
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 oz (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 is trading on a resource multiple of just US$11.77/oz.

Last updated on 22/03/2019
Share price graph
Balance sheet
Forecast net debt (£m) 94
Forecast gearing ratio (%) 73
Price performance
%
1m
3m
12m
Actual (13.1) 0.0 34.1
Relative* (13.2) (7.0) 30.9
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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