Everything fell into place for Pan African Resources (PAF) in the first half of its 2015-16 accounting year. A 12 per cent increase in the rand-denominated gold price came as the miner increased production and increased sales by 17 per cent to 102,000 ounces. At the same time, operational improvements and lower expansionary capital led to a steep drop in all-in costs to $910 an ounce, down from a whopping $1,283 a year before. Crucially, this fed through to the bottom line. Group earnings were up 98 per cent to £10.9m, and strong cash generation allowed Pan African to reduce net debt by 41 per cent in sterling terms.
Existing cash resources and facilities will also be enough to buy Standard Bank's 16.9 per cent stake in Shanduka, the primary black empowerment shareholder in Pan African. Although no figures were provided for the deal - which will not affect the dividend payout - the miner is effectively acquiring a 4 per cent beneficial interest in its own shares. That will reduce the risk of shareholder dilution if Shanduka is dissolved.
Prior to these results, Peel Hunt was forecasting full-year adjusted EPS of 2p and pre-tax profit of £50.4m for the June 2016 year-end.
PAN AFRICAN RESOURCES (PAF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 13.75p | MARKET VALUE: | £251.8m | |
| TOUCH: | 13-13.75p | 12-MONTH HIGH: | 14p | LOW: 6.3p |
| DIVIDEND YIELD: | 3.9%* | PE RATIO: | 15 | |
| NET ASSET VALUE: | 6.97p | NET DEBT: | 13% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 67.8 | 7.9 | 0.31 | nil |
| 2015 | 75.4 | 14.4 | 0.60 | nil |
| % change | +11 | +83 | +94 | - |
*Includes year-end cash payment | ||||
