Pan African Resources (AIM: PAF)

Currency in GBP

Last close As at 30/03/2023

GBP0.16

0.14 (0.87%)

Market capitalisation

GBP322m

Pan African Resources has four major producing precious metals assets in South Africa: Barberton (target output 95koz Au pa), the Barberton Tailings Retreatment Project, or BTRP (20koz), Elikhulu (55koz) and Evander underground, incorporating Egoli (currently 45koz, rising to >75koz).

Following H123 results, our core valuation of PAF was 32.59c/share (27.08p/share), based on projects either already in production or sanctioned. However, this rises by 16.09–21.11c (13.30–17.45p) once other assets (eg Egoli) are also taken into account. Alternatively, if PAF’s historical average price to normalised EPS ratio of 8.6x is applied to our FY23 forecast, it implies a share price of 29.53p, followed by 30.49p in FY24.

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Equity Analyst

Lord Ashbourne

Lord Ashbourne

Director, Energy & Resources

Key Management

  • Cobus Loots

    CEO

  • Deon Louw

    FD

  • Keith Cousens Spencer

    Chairman

Balance Sheet

Forecast net debt (US$m)

74.5

Forecast gearing ratio (%)

21

Share Price Performance

Price Performance
% 1M 3M 12M
Actual 19.6 (1.9) (23.5)
Relative 25.1 (2.2) (21.8)
52 week high/low 24.0p/12.8p

Financials

On 13 March, Pan African Resources (PAF) announced the completion of the final component in its funding package for its Mintails dump retreatment project outside Johannesburg. The funding is in the form of an innovative transaction with Rand Merchant Bank (RMB) in the style of a synthetic forward sale agreement, whereby Pan African will sell 4,846oz of gold per month to RMB for 24 months, commencing in March at a fixed price of ZAR1,025,000/kg (US$1,750/oz at the prevailing forex rate), in return for an upfront premium of ZAR400m (US$22.0m). Including the upfront premium, the effective price at which the group will sell these ounces (representing c 30% of annual group production) will be ZAR1,135,604/kg (US$1,938/oz at prevailing rates) over the full 24-month period.

Y/E Jun Revenue (US$m) EBITDA (US$m) PBT (US$m) EPS (c) P/E (x) P/CF (x)
2021A 368.9 156.6 117.7 4.54 4.3 3.0
2022A 376.4 147.8 117.2 4.44 4.4 2.6
2023E 355.0 144.5 109.0 4.17 4.7 3.2
2024E 342.1 130.1 100.2 4.31 4.6 2.9

Research

Metals & Mining

Webinar: Pan African Resources

Metals & Mining

Pan African Resources — Entailed

Metals & Mining

Pan African Resources – executive interview

Metals & Mining

Pan African Resources — Back to where it belongs

Metals & Mining

Pan African Resources — Roundabouts and swings

Metals & Mining

Pan African Resources — Entering harvest mode

Metals & Mining

Pan African Resources — EGM’s Parthian shot

Metals & Mining

Pan African Resources — FY17 results in line

Metals & Mining

Pan African Resources — Canning coal

Metals & Mining

Pan African Resources — Tails wagging

Metals & Mining

Pan African Resources — Update 13 December 2016

Metals & Mining

Pan African Resources — Update 28 September 2016

Metals & Mining

Pan African Resources — Update 18 August 2016

Metals & Mining

Pan African Resources — Update 15 March 2016

Metals & Mining

Pan African Resources — Update 24 February 2016

Metals & Mining

Pan African Resources — Update 10 February 2016

Metals & Mining

Pan African Resources — Update 9 December 2015

TMT

ESG, moving beyond the box tick

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The PGM markets – Outlook and price forecasts

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Gold stars and black holes

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Making a case for uranium: Life after Fukushima

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Indaba special, 2014

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Indaba special, 2013

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Edison mining quarterly: October 2012

Metals & Mining

Mining catalyst: China’s new stimulus

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Asia-Pacific resources quarterly: August edition

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Asia-Pacific resources quarterly

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Edison mining quarterly: April 2012

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Macro Outlook – Price weakness on the cards

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Indium and gallium overview

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Switzerland: Global Resources Investing Conference