Pan African Resources — Taking the rough with the smooth

Pan African Resources (AIM: PAF)

Last close As at 12/07/2024

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0.25 (0.91%)

Market capitalisation

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Research: Metals & Mining

Pan African Resources — Taking the rough with the smooth

In its operational update, released last week, Pan African Resources (PAF) reduced its production guidance for FY23 by c 12.5% from 195–205koz to 175koz. The reduction was due to instability and disruptions in the electricity supply to PAF’s operations (c 10koz), a slower ramp up to continuous operations at Barberton and faulting at the Kimberley reef at Evander, coupled with a delay in transitioning to full production at 24 Level. In addition, we anticipate that PAF will record a small loss of US$5.3m on account of the synthetic forward sale of ounces announced in February regarding its Mintails financing. However, these effects have also been mitigated by a weak rand and a strong gold price such that, while we have reduced our FY23 normalised EPS forecast by 8.4% (from 4.17c/share to 3.82c/share) our core valuation of PAF has risen by 4.8% (see below).

Lord Ashbourne

Written by

Lord Ashbourne

Director of Content, Mining

Metals & Mining

Pan African Resources

Taking the rough with the smooth

Operational update

Metals and mining

30 May 2023

Price

13.50p

Market cap

£259m

ZAR24.3107/£, ZAR19.7255/US$, US$1.2322/£

Net debt (US$m) at end-December 2022

53.7

Shares in issue

(effective 1,916.5m postconsolidation, excluding treasury)

2,222.9m

Free float

85%

Code

PAF

Primary exchange

AIM/JSE

Secondary exchanges

Level 1 ADR, OTCQX Best Market and A2X

Share price performance

%

1m

3m

12m

Abs

(23.7)

(0.4)

(30.8)

Rel (local)

(22.7)

3.8

(32.3)

52-week high/low

21.2p

12.8p

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

FY23 results

13 September 2023

AGM

November 2023

Ex-dividend date

November 2023

FY23 dividend payment

December 2023

Analyst

Lord Ashbourne

+44 (0)20 3077 5700

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

In its operational update, released last week, Pan African Resources (PAF) reduced its production guidance for FY23 by c 12.5% from 195–205koz to 175koz. The reduction was due to instability and disruptions in the electricity supply to PAF’s operations (c 10koz), a slower ramp up to continuous operations at Barberton and faulting at the Kimberley reef at Evander, coupled with a delay in transitioning to full production at 24 Level. In addition, we anticipate that PAF will record a small loss of US$5.3m on account of the synthetic forward sale of ounces announced in February regarding its Mintails financing. However, these effects have also been mitigated by a weak rand and a strong gold price such that, while we have reduced our FY23 normalised EPS forecast by 8.4% (from 4.17c/share to 3.82c/share) our core valuation of PAF has risen by 4.8% (see below).

Year

end

Revenue
(US$m)

PBT*
(US$m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

06/21

368.9

117.7

4.54

1.27

3.7

7.6

06/22

376.4

117.2

4.44

1.04

3.7

6.3

06/23e

314.9

97.4

3.82

0.91

4.4

5.5

06/24e

325.0

105.0

4.71

0.91

3.5

5.5

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

Lower production guidance but net debt reduction

Net senior debt is anticipated by PAF to decrease to US$25–35m in FY23 (cf US$49.9m in H123), which we interpret to reflect tight control of capital and operating expenditure in H223. As per its announcement of 15 May 2023, PAF is aggressively rolling out its renewable energy plans in order to mitigate the impact of an inconsistent electricity supply on output. In deference to the current situation, it has reduced its production guidance for FY24 by 10.2%, from 205koz to 178–190koz, which has caused us to reduce our forecast from 199.6koz to 189.7koz. With Mintails still targeting commissioning in H125, however, we are still anticipating a material increase in group production in FY25 towards 250koz.

Valuation: Still closer to 30p than 20p

Notwithstanding our earnings forecast reduction, PAF remains cheap relative to both its historical trading record and its peers. Our core (absolute) valuation of the company has risen by 4.8% to 34.17c (cf 32.59c previously), based on projects either sanctioned or already in production, with all of the increase effectively attributable to the recent decline in the value of the rand against the US dollar. Moreover, this valuation rises by a further 17.06–22.08c (16.09–21.11c preciously) once other assets (eg Egoli) are also taken into account. Alternatively, if PAF’s historical average price to normalised HEPS ratio of 8.6x in the period FY10–22 is applied to our FY23 and FY24 forecasts, it implies a share price of 26.56p in FY23 (cf 29.53p previously), followed by one of 32.74p in FY24. As such, PAF’s current share price of 13.50p could be interpreted as discounting normalised HEPS falling to 1.94c per share in FY23. In the meantime, PAF remains cheaper than its principal London- and South African-listed gold mining peers on at least 83% of commonly used valuation measures, which collectively imply a share price of 35.06p in FY23 and one of 35.09p in FY24. Finally, we estimate that PAF still has the 13th highest dividend yield of any precious metals mining company, globally.

HY23 and FY23 operational results

In the light of PAF’s announcement, a summary of our updated half year production expectations for the period to end-June relative to our prior expectations is provided in the exhibit below:

Exhibit 1: Pan African production, H220–H223e (oz)

Operation

H220

H121

H221

H122

H222

H123

H223e

(prior)

H223e

FY23e

FY23e

(prior)

Change

(%)

Change

(oz)

Barberton UG

31,392

42,350

42,476

39,991

35,747

32,022

41,500

31,978

64,000

73,522

-13.0

-9,522

BTRP

9,516

10,004

8,235

9,126

10,434

10,012

11,000

8,988

19,000

21,012

-9.6

-2,012

Barberton

40,908

52,354

50,711

49,117

46,181

42,034

52,500

40,966

83,000

94,534

-12.2

-11,534

Evander UG

9,117

12,607

23,409

27,312

21,538

19,173

21,950

11,701

30.874

41,123

-24.9

-10,249

Evander surface

6,176

6,560

4,677

5,756

3,564

5,270

5,856

5,856

11,126

11,126

0.0

0

Evander

15,293

19,169

28,086

33,068

25,102

24,443

27,806

17,557

42,000

52,249

-19.6

-10,249

Elikhulu

30,315

26,863

24,596

25,900

26,320

25,830

28,000

24,170

50,000

53,830

-7.1

-3,830

Total

86,516

98,386

103,391

108,085

97,603

92,307

108,306

82,693

175,000

200,613

-12.8

-25,613

Source: Edison Investment Research, Pan African Resources. Note: Totals may not add up owing to rounding. UG = underground. BTRP = Barberton Tailings Retreatment Project.

In addition to changes to our immediate output assumptions, we have increased our estimate of the gold price for the remainder of the financial year to June from US$1,835/oz previously (see our note, Forecast upgrade, published on 16 February 2023) to US$1,940/oz (ie that prevailing at the time of writing).

At the same time, we have adjusted our foreign exchange rates:

From ZAR21.7126/£ to ZAR24.3107/£ (+12.0%)

From ZAR17.9554/US$ to ZAR19.7255/US$ (+9.9%)

From US$1.2096/£ to US$1.2322/£ (+1.9%)


Updated FY23 financial forecasts

In the light of these changes, our revised forecasts for the group for H223 and FY23 are as follows:

Exhibit 2: Pan African P&L statement by half year (H220–H223e)

US$000s*

H220

H121

H221

H122

H222

H123

H223e

(prior)

H223e

FY23e

FY23e

(prior)

Revenue

141,258

183,751

185,164

193,574

182,797

156,489

198,497

158,439

314,928

354,986

Cost of production

(71,956)

(98,245)

(110,570)

(108,368)

(118,077)

(99,282)

(103,185)

(80,355)

(179,637)

(202,467)

Depreciation

(10,977)

(12,741)

(19,333)

(13,268)

(13,160)

(11,122)

(18,336)

(15,705)

(26,827)

(29,458)

Mining profit

58,325

72,766

55,260

71,938

51,560

46,085

76,976

62,379

108,464

123,061

Other income/(expenses)

(27,720)

(6,704)

(6,115)

(7,711)

(2,117)

(3,610)

(3,610)

(5,330)

(8,940)

(7,220)

Loss in associate etc

0

0

0

0

0

0

0

0

0

0

Loss on disposals

0

0

0

0

0

0

0

0

0

0

Impairments

(20)

0

0

0

(467)

0

0

0

0

0

Royalty costs

(266)

(2,404)

(1,050)

(1,316)

(780)

(468)

(7,530)

(4,580)

(5,048)

(7,998)

Net income before finance

30,319

63,657

48,096

62,910

48,197

42,007

65,836

52,469

94,476

107,843

Finance income

258

300

456

661

434

456

Finance costs

(5,587)

(3,946)

(3,729)

(1,945)

(3,381)

(3,464)

Net finance income

(5,329)

(3,646)

(3,273)

(1,285)

(2,946)

(3,008)

(3,007)

(3,007)

(6,015)

(6,015)

Profit before taxation

24,990

60,011

44,823

61,626

45,250

38,999

62,829

49,462

88,461

101,828

Taxation

(2,602)

(19,239)

(10,903)

(15,573)

(16,351)

(10,063)

(19,187)

(14,248)

(24,311)

(29,250)

Effective tax rate (%)

10.4

32.1

24.3

25.3

36.1

25.8

30.5

28.8

27.5

28.7

PAT (continuing ops)

22,388

40,773

33,920

46,053

28,899

28,936

43,642

35,213

64,150

72,578

Minority interest

(185)

(136)

0

0

(136)

(136)

Ditto (%)

(0.6)

(0.5)

0.0

0.0

(0.2)

(0.2)

Attributable profit

29,084

29,072

43,642

35,213

64,286

72,714

Headline earnings

22,416

40,772

33,919

46,053

29,551

29,072

43,642

35,214

64,286

72,714

Est. normalised headline earnings

50,136

47,476

40,034

53,764.1

31,668

32,682

47,252

40,544

73,226

79,934

EPS (c)

1.16

2.11

1.76

2.39

1.51

1.52

2.28

1.84

3.35

3.79

HEPS** (c)

1.16

2.11

1.76

2.39

1.54

1.52

2.28

1.84

3.35

3.79

Normalised HEPS (c)

2.60

2.46

2.08

2.79

1.65

1.71

2.47

2.12

3.82

4.17

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

Once again, we expect deferred taxes to account for the majority (81%) of the total tax charge for the year, with cash taxes paid amounting to less than half the total tax charge.

Growth projects

Following completion of its transaction to buy Mintails’ assets last October, PAF has at least two immediate organic growth projects in prospect (namely the Mintails’ Soweto Cluster and Royal Sheba) for development in the future. Beyond these, it also has at least the Fairview sub-vertical shaft, Rolspruit, Poplar and Evander South assets available for potential development.

Mintails

The group has been informed by the South African Department of Mineral Resources and Energy that the issuing of the Mintails project’s integrated environmental authorisation is imminent. The start of plant construction is therefore expected in the next month and ground clearing activities have commenced to this end, with steady state production expected by December 2024.

Royal Sheba

Mine layout optimisation and scheduling has now been finalised at Royal Sheba and requests for quotations issued for initial development and production activities. Preliminary optimisation work for life-of-mine planning has been completed at a cut-off grade of 1.7g/t, which implies an average mining grade of approximately 3.0g/t and c 235,000oz gold recovered over the life of the project, with the orebody still open at depth. In the meantime, DRA Global has finalised the feasibility study for placing a crushing and milling circuit at the Royal Sheba Mine site, together with the design to enable slurry pumping from the milling plant at Royal Sheba to the Barberton Tailings Retreatment Project (BTRP). The processing plant’s feasibility study and the project’s financial model is being updated and reviewed. A phased approach to capital spending, based on the availability of material to feed the BTRP plant, is also being considered, which will entail the phased development of the decline and production levels as well as the ventilation infrastructure required for initial stoping operations. 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 twelve months thereafter in line with a set lateral and vertical development schedule. A trucking cost trade-off analysis indicates that the onsite crushing and milling circuit and pipeline will only be required to be completed once production rates reach 45,000t per month. The internal feasibility study for the project is expected to be completed later in CY23.

Blyvoor

The due diligence and fulfilment of other conditions precedent for the acquisition of the Blyvoor Gold Operations Proprietary Limited historical tailings storage facilities was not completed within the required timeframe, and this transaction has therefore lapsed. Although PAF is currently focused on the construction of the Mintails Project, it continues to engage with the current owners of Blyvoor Gold Operations to evaluate options to further develop this project.

Group

In the light of these developments, we continue to forecast that group production at PAF will reach c 250koz pa in 2026 and push normalised HEPS to around 6.00c per share.

Exhibit 3: Estimated Pan African group gold production profile, FY18–FY29e

Source: Edison Investment Research, Pan African Resources

Updated (absolute) valuation

In the light of PAF’s updated guidance (as well as revised external factors such as the gold price and forex rates, above), our absolute valuation of PAF (based on its existing four producing assets plus the 25 and 26 Level project and Mogale) is 34.17c (cf 32.59c previously), which is based on the present value of the estimated maximum potential stream of dividends payable to shareholders over the life of its mining operations (applying a 10% discount rate).

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

Source: Pan African Resources, Edison Investment Research. Note: *From FY25. 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 13.50p offers investors an internal rate of return of 22.5% per annum in US dollar terms to at least the end of FY39.

A summary of the changes to both Edison’s valuation and our FY23 earnings forecasts according to each factor considered in our analysis is as follows:

Exhibit 5: PAF valuation and EPS change summary

Factor

Valuation

(US$/share)

FY23e earnings forecast (US$/share)

Initial

32.59

4.17

Forex

+2.30

+0.09

FY23e gold price

+0.30

+0.28

FY23e production

-1.14

-0.97

FY24 production

-0.22

-

Other

+0.34

+0.25

Final

34.17

3.82

Source: Edison Investment Research

Note that Edison’s normalised EPS forecast for FY24 has increased by 9.5%, from 4.31c per share to 4.71c per share as a result of the changes considered, with the 9.9% decline in the value of the rand against the US dollar since our last note for the whole of FY24 more than offsetting the 5.0% decline in forecast production.

Including its other growth projects and assets, our updated total valuation of PAF as a whole is as follows:

Exhibit 6: Pan African absolute valuation summary

Project

Current valuation
(USc/share)

Previous valuation
(USc/share)

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

34.17

32.59

FY22 dividend

N/A

N/A

Fairview Sub-Vertical Shaft project

0.75

0.76

Royal Sheba (resource-based valuation)

0.53

0.58

MC Mining shares

0.07

0.12

Sub-total

35.53

34.05

EGM underground resource

0.22–5.24

0.22–5.24

Sub-total

35.75–40.77

34.27–39.29

Egoli

14.07

13.36

MSC

1.30

1.05

Total

51.12–56.14

48.68–53.70

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

Historical relative and current peer group valuation

Historical relative valuation

Exhibit 7 below depicts PAF’s average share price in each of its financial years from FY10 to FY22 and compares this with HEPS in the same year. For FY23e and FY24e, the current share price (13.50p) is compared with our forecast normalised HEPS for those years. As is apparent from the graph, PAF’s price to normalised HEPS ratios of 4.4x and 3.5x for FY23 and FY24 respectively (based on our forecasts, see Exhibits 2 and 9) remains at or below the bottom of the range of recent historical P/E ratios of 4.1–14.8x for the period FY10–22:

Exhibit 7: Pan African historical price to normalised HEPS** ratio, FY10–FY24e

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 8.6x for the period FY10–22 is applied to our normalised earnings forecasts, it implies a share price for PAF of 26.56p in FY23 (cf 29.53p previously) followed by one of 32.74p in FY24. Stated alternatively, PAF’s current share price of 13.50p, at prevailing forex rates, appears to be discounting FY23 and/or FY24 normalised HEPS falling to 1.94c per share (cf 4.44c reported in FY22 and 3.82c and 4.71c forecast in FY23 and FY24, respectively).

Relative peer group valuation

In the meantime, it may be seen that PAF remains cheaper than its London- and South Africanlisted gold mining peers on at least 88% of comparable common valuation measures (32 out of 36 individual measures in the table below) if Edison forecasts are used or 83% if consensus forecasts are used (30 out of 36 individual measures).

Exhibit 8: Comparative valuation of Pan African 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

5.9

5.0

12.1

9.8

1.3

1.9

Gold Fields

6.6

5.0

15.4

10.1

2.5

3.3

Sibanye Stillwater

1.9

2.0

4.4

3.9

8.1

9.6

Harmony

5.4

3.7

10.6

5.6

0.5

1.8

Centamin

3.5

3.5

10.4

11.4

3.5

4.3

Endeavour Mining (consensus)

4.8

4.7

14.9

14.3

3.8

3.8

Average (excluding PAF)

4.7

4.0

11.3

9.2

3.3

4.1

PAF (Edison)

2.9

2.9

4.4

3.5

5.5

5.5

PAF (consensus)

3.3

2.9

5.5

4.6

5.0

4.4

Source: Edison Investment Research, Refinitiv. Note: Consensus and peers priced at 26 May 2023.

Alternatively, applying PAF’s peers’ average year one P/E ratio of 11.3x to our forecast normalised HEPS forecast of 3.82c per share for FY23 implies a share price for the company of 35.06p at prevailing forex rates. Applying its peers’ average year two P/E ratio of 9.2x to our forecast normalised HEPS forecast of 4.71c per share implies a share price of 35.09p.

Exhibit 9: Financial summary

US$'000s

2018

2019

2020

2021

2022

2023e

2024e

2025e

Year end 30 June

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

145,829

218,818

274,107

368,915

376,371

314,928

325,008

405,847

Cost of sales

(107,140)

(152,980)

(158,457)

(208,815)

(226,445)

(179,637)

(190,716)

(211,111)

Gross profit

38,689

65,838

115,650

160,100

149,926

135,291

134,291

194,736

EBITDA

 

 

38,131

65,484

115,176

156,646

147,830

130,243

130,682

188,919

Operating profit (before GW and except.)

 

31,506

49,256

93,673

124,572

121,402

103,416

108,345

158,218

Intangible amortisation

0

0

0

0

0

0

0

0

Exceptionals

(16,521)

10,596

(28,593)

(12,819)

(10,295)

(8,940)

456

1,720

Other

0

0

0

0

0

0

0

0

Operating profit

14,985

59,852

65,079

111,753

111,107

94,476

108,801

159,938

Net interest

(2,222)

(12,192)

(12,881)

(6,919)

(4,231)

(6,015)

(3,347)

(9,988)

Profit before tax (norm)

 

 

29,284

37,064

80,791

117,653

117,171

97,401

104,998

148,230

Profit before tax (FRS 3)

 

 

12,763

47,660

52,198

104,834

106,876

88,461

105,454

149,950

Tax

2,826

(8,174)

(7,905)

(30,141)

(31,924)

(24,311)

(14,718)

(19,259)

Profit after tax (norm)

32,110

28,890

72,887

87,511

85,247

73,090

90,280

128,971

Profit after tax (FRS 3)

15,589

39,486

44,293

74,692

74,952

64,150

90,736

130,691

Average number of shares outstanding (m)

1,809.7

1,928.3

1,928.3

1,928.3

1,926.1

1,916.5

1,916.5

1,916.5

EPS - normalised (c)

 

 

1.31

1.64

3.78

4.54

4.44

3.82

4.71

6.73

EPS - FRS 3 (c)

 

 

0.87

2.05

2.30

3.87

3.90

3.35

4.73

6.82

Dividend per share (c)

0.00

0.15

0.84

1.27

1.04

0.91

0.91

1.83

Gross margin (%)

26.5

30.1

42.2

43.4

39.8

43.0

41.3

48.0

EBITDA margin (%)

26.1

29.9

42.0

42.5

39.3

41.4

40.2

46.5

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

21.6

22.5

34.2

33.8

32.3

32.8

33.3

39.0

BALANCE SHEET

Fixed assets

 

 

315,279

361,529

314,968

398,533

401,139

468,002

617,295

599,367

Intangible assets

56,899

49,372

43,466

50,548

44,210

46,243

48,382

50,522

Tangible assets

254,247

305,355

270,286

346,922

355,802

420,632

567,786

547,719

Investments

4,134

6,802

1,216

1,064

1,127

1,127

1,127

1,127

Current assets

 

 

29,009

31,601

53,648

84,558

55,953

58,190

35,448

103,333

Stocks

4,310

6,323

7,626

11,356

9,977

10,546

10,842

13,539

Debtors

22,577

18,048

11,245

37,211

17,546

22,537

23,169

28,932

Cash

922

5,341

33,530

35,133

26,993

23,670

0

59,425

Current liabilities

 

 

(44,395)

(63,855)

(78,722)

(105,978)

(58,989)

(59,295)

(111,658)

(64,244)

Creditors

(37,968)

(39,707)

(62,806)

(75,303)

(57,117)

(57,423)

(59,670)

(63,804)

Short-term borrowings

(6,426)

(24,148)

(15,916)

(30,675)

(1,872)

(1,872)

(51,989)

(440)

Long-term liabilities

 

 

(152,906)

(145,693)

(106,276)

(93,482)

(103,494)

(125,626)

(126,567)

(128,241)

Long-term borrowings

(112,827)

(109,618)

(73,333)

(28,011)

(37,088)

(58,985)

(58,985)

(58,985)

Other long-term liabilities

(40,078)

(36,076)

(32,943)

(65,471)

(66,406)

(66,641)

(67,582)

(69,256)

Net assets

 

 

146,988

183,582

183,620

283,632

294,609

341,270

414,518

510,215

CASH FLOW

Operating cash flow

 

 

5,345

59,822

73,399

124,549

142,879

101,939

132,456

186,314

Net Interest

(6,076)

(14,685)

(10,834)

(5,623)

(2,794)

(6,015)

(3,347)

(9,988)

Tax

(1,634)

(4,497)

(5,804)

(18,902)

(8,520)

(4,354)

(13,777)

(17,585)

Capex

(127,279)

(52,261)

(30,849)

(44,151)

(81,951)

(93,690)

(171,630)

(12,774)

Acquisitions/disposals

6,319

466

207

3

563

0

0

0

Financing

11,944

(0)

0

0

(3,222)

0

0

0

Dividends

(11,030)

(2,933)

(2,933)

(17,782)

(21,559)

(23,100)

(17,489)

(34,994)

Net cash flow

(122,411)

(14,088)

23,186

38,095

25,396

(25,220)

(73,787)

110,974

Opening net debt/(cash)

 

 

3,138

118,332

128,424

55,719

23,553

11,967

37,187

110,974

Exchange rate movements

(619)

537

1,663

7,979

(4,401)

0

0

0

Other

7,836

3,459

47,856

(13,907)

(9,409)

0

0

(0)

Closing net debt/(cash)

 

 

118,332

128,424

55,719

23,553

11,967

37,187

110,974

0

Source: Company sources, Edison Investment Research. Note: *2,222.9m shares in issue, of which 306.4m held in treasury after share buyback programme, such that a net 1,916.5m are in issue post-consolidation.


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United Kingdom

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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 2023 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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