Miner Pan African Resources (PAF) has entered its new financial year “with confidence, a firm grasp on our cost base, and in a good position to benefit from the current gold price environment”, reckons chief executive Cobus Loots.
In turn, long-term investors might well reply that confidence is expected, a tight grasp on costs needs to be demonstrated over years not months, and that a higher gold price offers more benefits without the straight-jacketing of a hedging programme.
Still, with the gold price now at ZAR22,198 (£1,217) an ounce, and equivalent all-in sustaining costs in the 12 months to June down 27 per cent to $988 (£793), Pan African can once again lay claim to the dubious moniker as “one of South Africa’s lowest-cost gold producers”. The reinstatement of dividends underlines the turnaround since 2018, when negative currency movements conspired with rising costs and production issues to batter the balance sheet and income statement.
This time around, the latter was flattered by a $17.9m impairment reversal of the carrying value of the Evander mine, thereby appearing to offset a more than tripling in finance costs to $13m, the result of debts taken on to fund construction at Elikhulu.
Analysts at Peel Hunt expect adjusted earnings per share of 4.2¢ for the year to June 2020, and 3.7¢ in FY2021.
| PAN AFRICAN RESOURCES (PAF) | ||||
| ORD PRICE: | 12.2p | MARKET VALUE: | £272m | |
| TOUCH: | 12.2-12.3p | 12-MONTH HIGH: | 14.7p | LOW: 7.53p |
| DIVIDEND YIELD: | 1% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 8.2¢ | NET DEBT: | 71% | |
| Year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
| 2015 | 141 | 15.8 | 0.60 | 0.53 |
| 2016 | 161 | 33.9 | 1.41 | 0.88 |
| 2017 | 125 | 44.9 | 2.60 | 0.49 |
| 2018 | 146 | 12.8 | -6.79 | nil |
| 2019 | 218 | 46.2 | 1.97 | 0.13 |
| % change | +49 | +262 | – | - |
| Ex-div: | 11 Dec | |||
| Payment: | 30 Dec | |||
| £1=$1.25 | ||||
