Has anyone been watching PAF.L?
Pan African is a mid tier gold miner based in South Africa, it’s had a tough year but has recovered well, and I reckon it respresents a bit of a bargain.
Bull Case:
1- Forward p/e in low single digits, industry average is 10.
2- Potential for takeover (see recent Wheaton International deal)
3- Smart management. Moves to invest fairly heavily in solar panels; and plans to invest in wind power look very smart now, and save the company a few £100,000 a year. Projects are delivered consistently on time and on budget.
4- Oversold due to lowered production guidance (~185,000 this year, rather than 200,000oz) which was mostly caused by South African national grid problems.
5- Reliable dividend (~5% yield at current prices.
6- High gold price at the moment ($2,000 per oz) and decently low aisc (all in sustaining cost) around ~$1400 per oz.
7- Organic growth. Mintails project set to deliver in 2024 will increase production by 50,000oz
8- Rock solid finances, high margins, low debt, consistent positive cash flows.
Risks:
1- Price of gold could go down.
2- South African national grid (partly mitigated by solar panel projects)
3- South African currency risk
4- Geo-political risk for it project in Sudan.
Just today this has broken through 17p a share, but has recently been trading around 15p. This seems ridiculously cheap.
Am I missing something or is this stock a bit of a bargain?
Leave a Reply