It's rarely a good sign when a company issues a trading update in the middle of the day, but South African miner Pan African Resources (PAF) defiantly bucked that trend this week with a preview hinting at some very strong full-year results. And while this year's rally in the gold price was always going to support earnings, it's fair to say that analysts had underestimated the contribution of a continuingly weakened South African rand, which is likely to push headline EPS to between 2p and 2.13p in the six months to June, against 0.65p per share in 2015.
What's more, gold production pushed up 17 per cent, leading to good cash generation, a fall in net debt to ZAR255m (£13.6m) and the possibility of a shareholder return, if past form is a useful indicator. The elimination of the 23.8 per cent of shares previously held by Shanduka Gold - prior to the rally in the gold price - also bodes well for higher per-share earnings in the current financial year.
Accordingly, Peel Hunt has upgraded its forecasts to £36.4m of adjusted pre-tax profit and EPS of 2p for the 12 months to June 2016, and £91.1m and 4.5p this year.
