Pan African Resources


£422.3m market cap

21.9p 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

On 10 July, Pan African announced FY20 production of 179,575oz gold, which was 4.1% higher than in FY19, 2.0% higher than guidance and 2.1% higher than Edison’s forecast, despite the South African lockdown. At least as importantly, PAF announced that net debt had declined from US$123.7m in December 2019 to US$62.5m in June 2020 – a reduction of US$61.2m or 49.5% within the space of just six months. In the wake of its announcement, we valued PAF at US$0.4214/share plus the value of c 19.2m underground Witwatersrand oz (estimated at 0.22–5.24c/share). At the same time, its historical average price to normalised EPS ratio of 9.6x implies a share price as high as 48.7p in FY21.

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 21.9 97.1
2019A 218.8 65.5 37.1 1.64 17.5 9.2
2020E 274.2 105.3 68.4 2.98 9.6 4.4
2021E 325.0 161.6 137.8 6.47 4.4 4.8
Industry outlook

Near-term opportunities for PAF include the Fairview sub-vertical shaft (adding 7–10koz to production pa), the Royal Sheba project (c 30koz pa), Egoli (updated ZAR2.01bn NPV and 50.1% IRR), the extraction of the Prince Consort shaft pillar and the Evander 8 Shaft pillar project, which achieved steady-state in June.

Last updated on 24/09/2020
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Share price graph
Balance sheet
Forecast net debt (US$m) 62.5
Forecast gearing ratio (%) 31
Price performance
Actual (9.5) 21.7 81.0
Relative* (5.1) 27.2 123.6
52-week high/low 27.1p/9.0p
*% relative to local index
Key management
Keith Cousens Spencer Chairman
Cobus Loots CEO
Deon Louw FD

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