Our opinion on the current state of PAN-AF(PAN)

Pan African Resources (PAN) is a gold producer listed on both the London and Johannesburg Stock Exchanges. With its Elikhulu plant, it is set to produce approximately 700,000 ounces of gold annually at a cost of roughly R450,564 per kilogram, against a current gold price near R1 million. Over its lifespan, the plant is projected to generate around R15 billion in revenue, with R5.3 billion of that reinvested into the economy via mining expenses. The operation is also expected to employ 350 people. The company has approved the construction of a 10MW solar power plant.

In its results for the six months to 31st December 2023, the company reported a 6.7% increase in gold production with all-in sustaining costs (AISC) of $1,287 per ounce, compared to a gold price exceeding $2,000. Headline earnings rose by 46.4%, and earnings per share (EPS) climbed by 46.1%. The company stated, "Liquidity remains healthy, with access to immediately available cash of US$31.3 million (2022: US$33.9 million) and undrawn facilities of US$86.4 million (2022: US$52.1 million) at the reporting period-end."

In a revised production guidance for the year ending 30th June 2024, the company anticipated production of 186,000 to 190,000 ounces at an AISC ranging from $1,325 to $1,350 per ounce.

Technically, the share has been in an upward trend since reaching a low of 288c in June 2023. While this is a promising operation, the volatility means there are considerable risks. Therefore, investors should proceed cautiously. However, with the gold price having convincingly broken above the long-term resistance of $2,060, this could be a favorable speculative opportunity.