Our opinion on the current state of PAN

2023年9月14日

Pan African Resources (PAN) is a London- and JSE-listed re-treatment gold producer. With its Elikhulu plant it will be able to produce about 700 000 ounces of gold a year at a cost of about R450 564 per kilogram against a current gold price of close to R1m. This means that over its life it will produce revenue of approximately R15bn of which R5,3bn will go back into the economy in the form of mine expenses, creating a highly profitable entity with minimal risks. It will also employ 350 people. The company has approved the construction of a 10mw solar power plant. In its results for the year to 30th June 2023 the company reported gold production of 175209oz compared with 205688oz in the previous year. Headline earnings per share (HEPS) was 3,15c (US) compared with 3,93c in the previous period. The company said, "Liquidity remains healthy, with access to immediately available cash and undrawn facilities of US$84.7 million (2022: US$69.4 million) at financial year-end". Technically, the share fell from a high of 623c in August 2020 to levels around 295c in September 2021. It then entered an upward trend which has taken it to a high 458c in March 2022. Since then it has been falling and is now trading for 328c. We see this as a marginal, volatile operation which involves considerable risk. We would advise investors to be cautious.