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), the Barberton Tailings Retreatment Project (20koz) and Elikhulu (55koz), now incorporating the Evander Tailings Retreatment Project (10koz).

Investment summary

Pan African’s production of 179.6koz gold in FY20 was 2.1% higher than our prior forecast, while earnings were within 5% of our expectations. At the same time, net debt declined by 52.6%, from US$130.7m to US$62.0m in H220 alone, which allowed PAF to increase its dividend more than five-fold such that it is now among the top 20 yielding precious metals companies, globally.

Y/E Jun
Revenue (US$m)
PBT (US$m)
EPS (c)
P/E (x)
P/CF (x)
2019A 218.8 65.5 37.1 1.64 18.2 9.6
2020A 274.1 115.2 80.8 3.78 7.9 7.8
2021E 307.9 153.6 129.5 6.42 4.6 4.5
2022E 316.0 164.5 142.1 6.42 4.6 3.6
Industry outlook

With the 8 Shaft pillar project having achieved steady state in May, near-term development opportunities for PAF include Egoli (ZAR2.01bn NPV and 50.1% IRR), which has now been sanctioned, the Prince Consort shaft pillar, the Fairview sub-vertical shaft (adding 7–10koz to production pa) and the Royal Sheba project (c 30koz pa). In the meantime, its acquisition of two Mintails assets holds out the possibility that it can recreate another Elikhulu. In our most recent note, we valued PAF at US$0.4048/share (31.31p/share) plus the value of c 19.2m underground Witwatersrand oz with an estimated value of 0.22–5.24c/share.

Last updated on 27/01/2021
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Share price graph
Balance sheet
Forecast net debt (US$m) 16.5
Forecast gearing ratio (%) 6
Price performance
Actual (7.6) 9.0 79.5
Relative* (8.2) (5.2) 99.0
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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