Pan African Resources — Anticipating a happy valentine

Pan African Resources (AIM: PAF)

Last close As at 27/02/2024

GBP0.19

0.64 (3.52%)

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GBP405m

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Research: Metals & Mining

Pan African Resources — Anticipating a happy valentine

Pan African Resources’ (PAF’s) production update of 22 January revealed H124 production of 98,458oz gold, compared with prior guidance of 94,000–98,000oz, Edison’s expectation of 96,000oz and a figure of 92,307oz in H123. For the moment, we have left our financial forecasts for H124 unchanged, seeing roughly equally balanced upside and downside risks to our estimates pending actual results on 14 February. However, we note that the gold price is currently trading almost US$200/oz above our assumed H224 level.

Lord Ashbourne

Written by

Lord Ashbourne

Director, Energy & Resources

Pan-African-Resources_resized

Metals & Mining

Pan African Resources

Anticipating a happy valentine

H124 production update

Metals and mining

26 January 2024

Price

17.22p

Market cap

£330m

ZAR23.6501/£, ZAR18.7240/US$, US$1.2633/£

Net debt (US$m) at end-June 2023

22.1

Shares in issue

1,916.5m

Free float

85%

Code

PAF

Primary exchanges

AIM/JSE

Secondary exchanges

Level 1 ADR, OTCQX Best Market and A2X

Share price performance

%

1m

3m

12m

Abs

2.1

10.1

(7.2)

Rel (local)

4.4

6.4

(4.3)

52-week high/low

20.2p

12.0p

Business description

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 30koz, rising to >100koz).

Next events

Site visits

2–3 February 2024

H124 results

14 February 2024

FY24 results

September 2024

Mintails first production

Late 2024

Analyst

Lord Ashbourne

+44 (0)20 3077 5700

Pan African Resources is a research client of Edison Investment Research Limited

Pan African Resources’ (PAF’s) production update of 22 January revealed H124 production of 98,458oz gold, compared with prior guidance of 94,000–98,000oz, Edison’s expectation of 96,000oz and a figure of 92,307oz in H123. For the moment, we have left our financial forecasts for H124 unchanged, seeing roughly equally balanced upside and downside risks to our estimates pending actual results on 14 February. However, we note that the gold price is currently trading almost US$200/oz above our assumed H224 level.

Year end

Revenue (US$m)

PBT*
(US$m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

06/22

376.4

117.2

4.44

1.04

4.9

4.8

06/23

321.6

92.9

3.54

0.96

6.1

4.4

06/24e

367.4

135.4

5.31

0.96

4.1

4.4

06/25e

406.7

150.4

6.00

0.96

3.6

4.4

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.

Mogale continuing on time and within budget

At the same time as announcing its production update, PAF reported that significant progress has been made with its new tailings retreatment plant at Mogale, with project construction progressing on time and within budget and commissioning still on track for the latter half of CY24. As such, we are continuing to forecast that PAF’s production will reach c 250koz per year in 2026.

Valuation: Steady at 42.27c (33.46p)

Given our unchanged expectations for H124 and FY24 ahead of interim results on 14 February, our core (absolute) valuation of Pan African has remained unchanged at 42.27c (33.46p), based on projects either sanctioned or already in production. This valuation rises by a further 20.77–25.79c if other assets (eg Egoli) are also taken into account. Alternatively, if PAF’s historical average price to normalised headline earnings per share (HEPS) ratio of 8.4x in the period FY10–23 is applied to our FY24 and FY25 forecasts, it implies a value of 35.29p in FY24, followed by 39.82p in FY25. As such, PAF’s current share price of 17.22p could be interpreted as discounting normalised HEPS falling to 2.59c per share (cf 5.31c/share and 6.00c/share forecast for FY24 and FY25, respectively). In the meantime, PAF remains cheaper than its principal London- and South African-listed gold mining peers on at least 97% of commonly used valuation measures regardless of whether Edison or consensus forecasts are used. Performing a relative valuation analysis, PAF’s peers’ ratings imply a comparable valuation for PAF of 51.04c based on our year one EPS estimate and one of 43.90c based on our year two EPS estimate. Separately, we estimate that PAF has the 13th highest dividend yield of the 62 precious metals mining companies expected to pay dividends to shareholders in the next 12 months, globally. Finally, we calculate that its enterprise value equates to just US$11.36 per resource ounce of gold (ie on a par with most cash consuming junior exploration companies, rather than reflecting it as a profitable, cash-flow positive, multi-asset producer).

H124 production

On 22 January, Pan African provided the market with an operational update for the half year ended December 2023. Highlights of the update are as follows:

Production of 98,458oz in the period outperformed prior expectations of 94,000–98,000oz (cf 92,307oz in H123) by 0.5–4.7%. Within that:

Barberton Mines’ production was 36,779oz compared with 37,000–38,000oz expected – a variation of -0.6% to -3.2%, albeit the implementation of continuous operations has contributed to increases in mined tonnage and grade relative to the prior reporting period (when output was 32,022oz).

Evander Mines’ underground production was 21,307oz compared with 20,000–21,000oz expected – a variation of +1.5–6.5% as the ramping up of mining operations at 24 Level successfully replaced the depletion of 8 Shaft pillar ore resources, consistent with EGM’s mine plan. In the meantime, equipping the ventilation shaft to hoist ore and waste from 24 to 26 Levels remains on track for commissioning in Q1 CY24.

Elikhulu production of 28,106oz compared with 27,000–28,000oz expected – a variation of +0.4–4.1% – as a result of improved metallurgical recoveries.

Barberton Tailings Retreatment Project (BTRP) production of 9,864oz compared with 8,000–9,000oz anticipated – a variation of +9.6–23.3%.

Evander surface sources production of 2,401oz compared with 2,000oz expected – a variation of +20.0%.

A summary of these production figures relative to both historical results and our prior expectations is as follows:

Exhibit 1: Pan African production, H220–H224e (oz)

Operation

H220

H121

H221

H122

H222

H123

H223

FY23

H124e

H124a

Variation

(%)

H224e

(prior)

FY24e

(prior)

Barberton UG*

31,392

42,350

42,476

39,991

35,747

32,022

32,564

64,586

37,500

36,779

-1.9

36,500

74,000

BTRP*

9,516

10,004

8,235

9,126

10,434

10,012

9,863

19,875

8,500

9,864

+16.0

6,500

15,000

Barberton

40,908

52,354

50,711

49,117

46,181

42,034

42,427

84,461

46,000

46,643

+1.4

43,000

89,000

Evander UG

9,117

12,607

23,409

27,312

21,538

19,173

10,359

29,532

20,500

21,307

+3.9

27,225

47,725

Evander surface

6,176

6,560

4,677

5,756

3,564

5,270

5,373

10,643

2,000

2,401

+20.0

1,000

3,000

Evander

15,293

19,169

28,086

33,068

25,102

24,443

15,732

40,175

22,500

23,708

+5.4

28,225

50,725

Elikhulu

30,315

26,863

24,596

25,900

26,320

25,830

24,743

50,573

27,500

28,106

+2.2

22,500

50,000

Total

86,516

98,386

103,391

108,085

97,603

92,307

82,902

175,209

96,000

98,458

+2.6

93,725

189,725

Source: Edison Investment Research, Pan African Resources. Note: *Surface sources from Fairview mine included in BTRP production. Totals may not add up owing to rounding. UG, underground. BTRP, Barberton Tailings Retreatment Project.

In addition, the group reported:

An improvement in the total recordable injury frequency rate from 8.54 per million man hours in FY22 to 6.13 per million man hours.

An achieved gold price of US$1,961/oz (cf Edison’s prior forecast of US$1,940/oz).

That the Mogale Tailings Retreatment (MTR) project construction is proceeding on time and within budget, with commissioning still expected in the latter half of the 2024 calendar year.

That commissioning of further renewable energy generating capacity is on schedule.

Notwithstanding this H124 performance, PAF has left its FY24 production guidance unchanged at 180,000–190,000oz, albeit with the caveat that ‘revised guidance may be considered in due course’. However, Exhibit 1 demonstrates that FY24 production of 185,000oz in FY24 would require output of only 86,542oz in H224 and, while possible, appears conservative within the context of historical results.

At the same time, production costs in H124 were well managed, despite inflationary pressures, with the result that all-in sustaining costs (AISC) are expected to be approximately US$1,300/oz (at an average exchange rate of ZAR18.69/US$), which is below previous guidance of US$1,350/oz for the full year (at an assumed exchange rate of ZAR18.50/US$). Note that this compares with Edison’s (prior) AISC forecasts of US$1,222/oz in H124 and US$1,338/oz in H224 to give an average AISC of US$1,278/oz in FY24.

Our detailed financial forecasts at the time of our December update note were as shown in Exhibit 2, below, and we have decided to leave these unchanged ahead of actual H124 results, which are scheduled for release on 14 February.

Exhibit 2: Pan African P&L statement by half year (H220–FY24e)

US$000s*

H220

H121

H221

H122

H222

H123

H223

FY23

H124e

FY24e

Revenue

141,258

183,751

185,164

193,574

182,797

156,489

165,117

321,606

189,033

367,366

Cost of production

(71,956)

(98,245)

(110,570)

(108,368)

(118,077)

(99,282)

(99,508)

(198,790)

(99,726)

(197,963)

Depreciation

(10,977)

(12,741)

(19,333)

(13,268)

(13,160)

(11,122)

(9,277)

(20,399)

(9,611)

(26,533)

Mining profit

58,325

72,766

55,260

71,938

51,560

46,085

56,332

102,417

79,696

142,870

Other income/(expenses)

(27,720)

(6,704)

(6,115)

(7,711)

(2,117)

(3,610)

(3,737)

(7,347)

(7,189)

(12,327)

Loss in associate etc

0

0

0

0

0

0

0

0

0

Loss on disposals

0

0

0

0

0

0

0

0

0

Impairments

(20)

0

0

0

(467)

0

0

0

0

Royalty costs

(266)

(2,404)

(1,050)

(1,316)

(780)

(468)

(495)

(963)

(5,325)

(2,926)

Net income before finance

30,319

63,657

48,096

62,910

48,197

42,007

52,100

94,107

67,183

127,617

Finance income

258

300

456

661

434

456

683

1,139

Finance costs

(5,587)

(3,946)

(3,729)

(1,945)

(3,381)

(3,464)

(6,228)

(9,692)

Net finance income

(5,329)

(3,646)

(3,273)

(1,285)

(2,946)

(3,008)

(5,545)

(8,553)

(2,272)

(4,557)

Profit before taxation

24,990

60,011

44,823

61,626

45,250

38,999

46,555

85,554

64,911

123,060

Taxation

(2,602)

(19,239)

(10,903)

(15,573)

(16,351)

(10,063)

(14,754)

(24,817)

(21,717)

(33,562)

Effective tax rate (%)

10.4

32.1

24.3

25.3

36.1

25.8

31.7

29.0

33.5

27.3

PAT (continuing ops)

22,388

40,773

33,920

46,053

28,899

28,936

31,801

60,737

43,194

89,497

Minority interest

(185)

(136)

(266)

(402)

0

0

Ditto (%)

(0.6)

(0.5)

(0.8)

(0.7)

0.0

0.0

Attributable profit

29,084

29,072

32,067

61,139

43,194

89,497

Headline earnings

22,416

40,772

33,919

46,053

29,551

29,072

31,392

60,464

43,194

89,497

Est. normalised headline earnings

50,136

47,476

40,034

53,764.1

31,668

32,682

35,129

67,811

50,383

101,825

EPS (c)

1.16

2.11

1.76

2.39

1.51

1.52

1.67

3.19

2.25

4.67

HEPS** (c)

1.16

2.11

1.76

2.39

1.54

1.52

1.63

3.15

2.25

4.67

Normalised HEPS (c)

2.60

2.46

2.08

2.79

1.65

1.71

1.83

3.54

2.63

5.31

Source: Pan African Resources, Edison Investment Research. Note: As reported basis. *Unless otherwise indicated. **HEPS, headline earnings per share (company adjusted basis).

In the light of Pan African’s production update however, we note the potential for the following variations/risks relative to our forecasts for H124:

2,458oz of additional gold production at a higher gold price worth, in aggregate, an additional US$6.9m to revenue in H124.

Indicated AISC of US$1,300/oz in H124 (cf Edison’s prior forecast of US$1,222/oz) worth negative US$7.7m to sustaining free cash flows (note that this and the potential variation in revenue approximately cancel one another out).

Royalty costs that are calculated by formula, but appear high within the context of historical royalty costs.

Net finance costs, which are calculated on the basis of the closing net debt balance at the end of the prior period and therefore may not fully reflect the increase in group net senior debt from US$18.9m to US$60.0m in H124. Note that we regard this increase as fully consistent with our net debt forecast for PAF of US$78.7m as at end-FY24 given a second half with no dividend payable (see Exhibit 8).

The effective tax rate, which is also calculated by formula, but which again appears high within the context of the historical effective tax rate experienced by PAF.

Beyond H124, our forecasts for H224 are likely to require adjustment for the gold price (currently a somewhat conservative US$1,822/oz assumed) – worth an additional c US$18.8m to revenue relative to the current spot price of gold in the second six-month period of FY24. Note that we will address this at the time of PAF’s interim results on 14 February.

Growth projects

PAF has two organic growth projects currently underway (namely the Mintails Soweto Cluster and the Evander 25 and 26 Level expansion project) and one more immediately in prospect (Royal Sheba). Beyond these, it has at least the Fairview sub-vertical shaft, Rolspruit, Poplar and Evander South assets also available for development.

Mintails

On 1 August 2023, PAF announced that all conditions precedent for its ZAR1.3bn senior debt facility, designated for funding the group’s Mintails project, had been fulfilled, thereby completing the full upfront funding package of ZAR2.5bn. Since then, PAF reports that significant progress has been made with the MTR plant at Mogale, with commissioning still on track for the latter half of CY24. Within that:

Project construction is reported to be progressing on time and within budget.

Foundations for all nine of the CIL tanks are now in place and the tower crane’s construction has been completed.

Environmental rehabilitation is ongoing, including the clean-up of historical spillages and pipelines, wetland remediation and removal of alien vegetation.

Evander 25 and 26 Level expansion project

Progress at Evander’s 24 to 26 Level underground expansion project remains on track, with the following notable achievements during H124:

Construction of Phase 2 of the refrigeration plant on 24 Level at Evander’s 8 Shaft is currently at an advanced stage, with completion anticipated this financial year, as 25 Level mining operations commence.

Development to access 25 and 26 Level mining areas has commenced.

Equipping of the existing 17 Level underground ventilation shaft – with a hoisting capacity of up to 40,000tpm – is expected to be completed during FY24, improving efficiencies and eliminating the existing cumbersome conveyor system.

At the same time, dewatering of Evander’s 7 Shaft Egoli project is ongoing. Once dewatered to below 20 Level, reserve delineation drilling will commence to further define the ore pay-shoot and its grade variability.

BTRP life of mine extension and Royal Sheba

The remaining life of mine from the BTRP’s current tailings sources is estimated at three years, with a declining production profile over the last two years of its life. In the coming years, production at the BTRP is expected to be supplemented with ore from Barberton Mines’ Western Cross and Royal Sheba orebodies, where the extraction and processing of a 10,000t bulk sample was recently, and successfully, completed.

Preliminary optimisation work estimates an eight-year lifespan at Royal Sheba, with production of around 235,000oz of gold at an average mining grade of 3g/t over the life of mine, with the potential for further extensions as the orebody remains open at depth. First stoped ore is planned in 2025 at 5,000t per month, ramping up to 10,000t, 30,000t and 45,000t per month, every 12 months thereafter in line with a set lateral and vertical development schedule.

The Western Cross orebody at Sheba Mine is a lower-grade (3-4g/t) 10m wide free-milling orebody that is currently accessed via the Southwall Adit and forms part of the mine’s production profile. The orebody is amenable to bulk mining, similar to that planned at the Royal Sheba project, and will further supplement feed material to the BTRP.

Group production

In the wake of the company’s production update, our longer-term forecasts remain, to all intents and purposes, unchanged. As such, we are continuing to forecast that group production at PAF will reach c 250koz per year in 2026 and drive normalised HEPS beyond 6.00c per share and potentially as high as 9.00c per share (see Exhibit 4, below).

Exhibit 3: Estimated Pan African group gold production profile, FY18–29e

Source: Edison Investment Research, Pan African Resources

PAF absolute valuation

Given our unchanged expectations for H124 and FY24, our absolute valuation of Pan African (based on its existing four producing assets plus the Evander 25 and 26 Level project and Mogale) remains unchanged at 42.27c, based on the present value of the estimated maximum potential dividend stream payable to shareholders over the life of its mining operations (applying a 10% discount rate to US dollar dividends).

Exhibit 4: PAF estimated life of operations’ diluted EPS and (maximum potential*) DPS

Source: Pan African Resources, Edison Investment Research. Note: *From FY26. Excludes discretionary exploration investment.

Stated alternatively, based on our long-term dividend forecasts, we calculate that an investment in PAF’s shares at a price of 17.22p today (ex-dividend) offers investors a (real) internal rate of return of 23.0% per year in US dollar terms to at least the end of FY39.

Including its other growth projects and assets, our updated total valuation of PAF as a whole is provided in Exhibit 5, below.

Exhibit 5: PAF absolute valuation summary

Project

Current valuation
(USc/share)

Previous valuation
(USc/share)

Existing producing assets (including 24 Level and 25 and 26 Level and Mogale projects)

42.27

42.27

FY23 dividend

-

0.96

Fairview Sub-Vertical Shaft project

1.03

1.03

Royal Sheba (resource-based valuation)

0.64

0.64

Sub-total

43.94

44.91

EGM underground resource

0.22–5.24

0.22–5.24

Sub-total

44.16–49.18

45.13–50.15

Egoli

16.99

16.99

MSC

1.89

1.89

Total

63.04–68.06

64.01–69.03

Source: Edison Investment Research. Note: Numbers may not add up owing to rounding.

Historical relative and current peer group valuation

Historical relative valuation

Exhibit 6 below depicts PAF’s average share price in each of the financial years from FY10 to FY23 and compares this with HEPS in the same year. For FY24 and FY25, the current share price (17.22p) is compared with our forecast normalised HEPS for those years. As is apparent from the chart, PAF’s price to normalised HEPS ratios of 4.1x and 3.6x for FY24 and FY25, respectively, are at and below the bottom of the range of recent historical P/E ratios of 4.1–14.8x for the period FY10–23:

Exhibit 6: PAF historical price to normalised HEPS** ratio, FY10–25e

Source: Edison Investment Research. Note: *Completed historical years calculated with respect to average share price within the year shown and normalised HEPS; zero normalisation assumed before 2016. **HEPS shown in pence prior to 2018 and US cents thereafter.

If PAF’s average year one price to normalised EPS ratio of 8.4x for the period FY10–23 is applied to our normalised earnings forecasts, it implies a share price for PAF of 35.29p in FY24, followed by one of 39.82p in FY25. Stated alternatively, PAF’s current share price of 17.22p, at prevailing foreign exchange rates, appears to be discounting FY24 and/or FY25 normalised HEPS falling to 2.59c per share, whereas we are forecasting it to rise, to 5.31c and 6.00c, respectively.

Relative peer group valuation

Simultaneously, PAF remains cheaper than its London- and South Africanlisted gold mining peers on at least 97% of comparable common valuation measures (35 out of 36 individual measures in the table below) regardless of whether Edison or consensus forecasts are used:

Exhibit 7: Comparative valuation of PAF with South African and London peers

Company

EV/EBITDA (x)

P/E (x)

Yield (%)

Year 1

Year 2

Year 1

Year 2

Year 1

Year 2

AngloGold Ashanti

6.3

4.3

14.1

9.4

1.2

2.0

Gold Fields

5.8

4.8

14.0

10.4

2.7

3.5

Sibanye Stillwater

3.4

3.0

9.9

9.5

2.7

4.1

Harmony

4.5

3.7

7.9

6.3

1.2

2.3

Centamin

3.4

2.8

9.6

8.1

3.3

3.6

Endeavour Mining (consensus)

4.8

4.3

17.2

11.8

4.4

4.6

Average (excluding PAF)

4.7

3.8

12.1

9.2

2.6

3.3

PAF (Edison)

2.6

2.3

4.1

3.6

4.4

4.4

PAF (consensus)

3.1

2.7

5.8

4.6

4.0

6.9

Source: Edison Investment Research, Refinitiv. Note: Consensus and peers priced at 25 January 2024.

Alternatively, applying PAF’s peer average year one P/E ratio of 12.1x to our normalised HEPS forecast of 5.31c per share for FY24 implies a share price for the company of 51.04p. Applying its peer average year two P/E ratio of 9.2x to our normalised HEPS forecast of 6.00c per share implies a share price of 43.90p.

Readers’ attention is also drawn to the decline evident in the market’s year one yield estimate for PAF, which appears to suggest that it believes the company will cut its dividend in FY24 (or that the rand will fall very sharply versus the US dollar, but that this will otherwise not be reflected in the company’s results), which we regard as highly unlikely, except in extenuating circumstances.

Exhibit 8: Financial summary

US$'000s

2022

2023

2024e

2025e

Year end 30 June

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

376,371

321,606

367,366

406,673

Cost of sales

(226,445)

(198,790)

(197,963)

(212,896)

Gross profit

149,926

122,816

169,404

193,777

EBITDA

 

 

147,830

121,853

166,477

189,687

Operating profit (before amort. and excepts.)

 

 

121,402

101,454

139,944

157,457

Intangible amortisation

0

0

0

0

Exceptionals

(10,295)

(7,347)

(12,327)

(6,622)

Other

0

0

0

0

Operating profit

111,107

94,107

127,617

150,835

Net interest

(4,231)

(8,553)

(4,557)

(7,085)

Profit Before Tax (norm)

 

 

117,171

92,901

135,387

150,372

Profit before tax (FRS 3)

 

 

106,876

85,554

123,060

143,750

Tax

(31,924)

(24,817)

(33,562)

(35,459)

Profit after tax (norm)

85,247

68,084

101,825

114,913

Profit after tax (FRS 3)

74,952

60,737

89,497

108,291

Average Number of Shares Outstanding (m)

1,926.1

1,916.5

1,916.5

1,916.5

EPS - normalised (c)

 

 

4.44

3.54

5.31

6.00

EPS - FRS 3 (c)

 

 

3.90

3.19

4.67

5.65

Dividend per share (c)

1.04

0.96

0.96

0.96

Gross margin (%)

39.8

38.2

46.1

47.6

EBITDA margin (%)

39.3

37.9

45.3

46.6

Operating margin (before GW and except.) (%)

32.3

31.5

38.1

38.7

BALANCE SHEET

Fixed assets

 

 

401,139

439,676

562,677

556,237

Intangible assets

44,210

44,429

46,614

48,807

Tangible assets

355,802

395,247

516,063

507,430

Investments

1,127

0

0

0

Current assets

 

 

55,953

61,263

40,355

149,310

Stocks

9,977

9,567

12,255

13,565

Debtors

17,546

15,182

26,188

28,989

Cash

26,993

34,771

169

105,013

Current liabilities

 

 

(58,989)

(77,386)

(85,735)

(104,480)

Creditors

(57,117)

(65,884)

(74,233)

(97,348)

Short-term borrowings

(1,872)

(11,502)

(11,502)

(7,132)

Long-term liabilities

 

 

(103,494)

(128,957)

(151,627)

(145,532)

Long-term borrowings

(37,088)

(45,334)

(67,389)

(60,268)

Other long-term liabilities

(66,406)

(83,623)

(84,238)

(85,264)

Net assets

 

 

294,609

294,596

365,669

455,536

CASH FLOW

Operating Cash Flow

 

 

142,879

132,941

117,833

174,860

Net Interest

(2,794)

(5,121)

(4,557)

(7,085)

Tax

(8,520)

(7,722)

(9,885)

(14,346)

Capex

(81,951)

(109,952)

(149,534)

(25,790)

Acquisitions/disposals

563

(2,779)

0

0

Financing

(3,222)

0

0

0

Dividends

(21,559)

(19,975)

(21,200)

(18,424)

Net cash flow

25,396

(12,608)

(67,343)

109,215

Opening net debt/(cash)

 

 

23,553

11,967

22,065

78,722

Exchange rate movements

(4,401)

(4,481)

0

0

Other

(9,409)

6,991

10,686

7,121

Closing net debt/(cash)

 

 

11,967

22,065

78,722

(37,614)

Source: Company sources, Edison Investment Research


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Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

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United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Pan African Resources and prepared and issued by Edison, in consideration of a fee payable by Pan African Resources. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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