On the face of it, these half-year figures from South Africa-focused gold miner Pan African Resources (PAF) don’t look good - revenues, gold production and profits all fell slightly in the period. But they don't reflect Pan African’s pending acquisition of Harmony Gold’s 100,000-ounce-per-year Evander gold mine, which is about to complete.
Pan African is waiting on one final approval from the Minister of Mineral Resources, but that should be forthcoming in a matter of weeks. When it is, Pan African will be transformed into a 200,000-ounce-per-year, mid-tier gold miner focused on growing profit margins and resuming dividend payments.
Nevertheless, the first half saw a mildly disappointing performance from the company's existing producing assets. The cost of production rose roughly 16 per cent year-on-year on rising South African energy and labour costs. This was compounded by lower-than-expected tonnes mined at the flagship Barberton gold operation and a poor ramp-up from the new Phoenix platinum tailings treatment operation, where metal recoveries averaged 19 per cent versus the planned 33 per cent.
Broker Canaccord Genuity forecasts adjusted full-year EPS of 3p (2012: 1.96p).
PAN AFRICAN RESOURCES (PAF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 19p | MARKET VALUE: | £346m | |
| TOUCH: | 19-19.3p | 12-MONTH HIGH: | 21p | LOW: 12.4p |
| DIVIDEND YIELD: | nil | PE RATIO: | 10 | |
| NET ASSET VALUE: | 5.9p | NET CASH: | £48.3m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 51.1 | 22.8 | 1.00 | 0.51 |
| 2012 | 49.4 | 17.6 | 0.85 | nil |
| % change | -3 | -23 | -15 | -100 |
