Pan African Resources


£226.2m market cap

10.12p last close

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

Investment summary

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 to H218, Barberton, the BTRP and the ETRP all recorded substantial cost improvements and a Q3 operational update has reconfirmed production guidance for FY19 of 170koz, rising to 185koz in FY20, which will propel EPS towards c 2p/share.

Y/E Jun
Revenue (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 167.8 32.4 19.4 1.22 8.3 5.3
2018A 154.2 14.8 2.4 1.60 6.3 N/A
2019E 164.9 51.7 31.1 1.14 8.9 3.4
2020E 180.2 76.0 54.1 1.72 5.9 3.1
Last updated on 13/06/2019
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), the 8 Shaft pillar project (US$19.4m pre-tax NPV) and Egoli (optimised 34% IRR and ZAR1.04bn pre-tax NPV). As a result, our all-in valuation of PAF has risen to 17.69p/share plus the value of c 19.2m underground Witwatersrand oz (which could add a further 0.17–4.05p/share). In addition, PAF remains cheaper than its peers on at least 70% of common valuation measures.

Last updated on 13/06/2019
Share price graph
Balance sheet
Forecast net debt (£m) 94
Forecast gearing ratio (%) 73
Price performance
Actual 11.4 9.6 35.7
Relative* 8.8 7.0 43.3
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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