Pan African Resources Share Discussion Threads

[stonedyou] 26/9/2024 08:48

The 5 Best Gold Stocks to Buy in 2024

With the price of gold hitting an all-time high in 2024, it is worth once again considering investing in the precious metal. This movement is in line with an increasing number of predictions made in 2023, suggesting a predictability that provides a safe investment option for investors looking to diversify their risks. As global instability seems to be increasing, the markets remain volatile for various other potential investments. Gold provides an asset that has shown consistent growth and an ability to be a store of value over a long period of time. This suggests that the stable and consistent precious metal may be a wise choice for investors. Looking at the time value of gold, there are numerous comparisons being made, where for example in 1975, one could purchase a medium sized house for around 250 ounces of gold. A similar investment today would require less than 200 ounces of gold!

Investing in gold stocks has a number of benefits such as inflation protection, diversification and it can serve as a safe haven for your investment portfolio. There are a few potential pitfalls, but these can be mitigated by investing in the most reliable gold mining stock which returns value to shareholders through regular dividends, as well as providing leverage to the increasing price of gold. We have collated a list of some of the best gold stocks that you can invest in. This will help you assess the benefits of the different stocks, their mines, risk profile, capital allocation track record, reserve and production growth potential, evaluation and initiatives. This should give you a more holistic approach to the gold mining companies you may choose to invest in.

Table Of Contents

How To Choose the Best Gold Stocks
Pan African Resources (PAR)
Newmont Corporation (NEM)
Barrick Gold Corporation (GOLD) Gold price forecasts according to J.P. Morgan
Kinross Gold Corporation (KGC)
Harmony Gold Mining Limited (HMY)

1. Pan African Resources (PAR)

If you’re seeking a gold stock with exceptional value and growth potential, Pan African Resources (PAR) is a standout choice. PAR is listed on the Johannesburg Stock Exchange, the AIM market in London as well as on the OTCQX exchange in the USA. Not only has PAR maintained a consistent “buy” rating and attractive dividend yield, but it also offers a compelling investment story grounded in environmental sustainability and robust ESG initiatives.

PAR operates key mines in Barberton and Evander in Mpumalanga, and will soon commission Mintails in Gauteng, South Africa. This strategic location is promising politically as it has recently successfully navigated a transition of power for the second time in its democratic history. As the global markets suggest instability, South Africa has shown great potential to find peaceful and sustainable solutions to governmental changes. This suggests a potentially robust nation to consider for investment. South Africa also has a relatively weak currency, which allows high prices to be received in rand terms when the currency weakens while costs remain stable as they are incurred in rands. In addition, despite having the world’s largest producer status for a number of years South Africa still has some of the largest gold mineral resources, and PAR has over 30 million ounces within its mining rights, which are secured up to 2051 in Barberton and 2038 at Evander.

A significant concern for South African gold mines is an unstable power grid as a result of load-shedding, which causes damage to aging infrastructure (the mines are not load shed due to safety reasons). However, PAR proactively addresses this by investing in renewable energy projects. In 2021, they built a 22-ha solar plant on rehabilitated mine ground at Evander Mines. They continued this green energy push in 2023, constructing an 8.75MW solar plant at Barberton mines and will be expanding the Evander Plant from 12MW to 22MW, and is busy with a feasibility study for a renewable energy plant at Mintails. There are also wheeling agreements in place with private producers for other solar and wind projects and PAR is aiming for 50% of its power requirements from renewable sources by 2030.

Beyond their innovative energy solutions, PAR invests heavily in the surrounding communities. They’ve allocated $6,000,000 to social and community projects like Barberton Blue (a 15ha blueberry farm employing over 200 locals), various schools and clinic infrastructure projects and the Barberton mines bursaries, demonstrating a genuine commitment to improving local livelihoods.

Investing in PAR means supporting a company that prioritizes sustainability and community development. This approach not only mitigates potential risks but also enhances long-term stock value. PAR’s blend of financial strength, growth potential, gold resource base, dividend track record and unwavering dedication to ESG principles makes it a compelling choice for investors looking to achieve positive returns while making a meaningful impact.

Conclusion

FAQ’s
Is Pan African Resources a good buy?
What is the best physical gold stock?
Which gold stock pays the highest dividend?

[stonedyou] 26/9/2024 08:38

Simply Wall St.

Investors Should Be Encouraged By Pan African Resources' (LON:PAF) Returns On Capital

[e-mail] (Simply Wall St)

April 3, 2024 2 min read

In This Article:

PAFRY
0.00%

If you're looking for a multi-bagger, there's a few things to keep an eye out for. One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. So when we looked at the ROCE trend of Pan African Resources (LON:PAF) we really liked what we saw.

What Is Return On Capital Employed (ROCE)?
If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. The formula for this calculation on Pan African Resources is:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)

0.24 = US$124m ÷ (US$574m - US$60m) (Based on the trailing twelve months to December 2023).

Therefore, Pan African Resources has an ROCE of 24%. In absolute terms that's a great return and it's even better than the Metals and Mining industry average of 7.5%.

Check out our latest analysis for Pan African Resources

In the above chart we have measured Pan African Resources' prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering Pan African Resources for free.

So How Is Pan African Resources' ROCE Trending?
Pan African Resources is displaying some positive trends. The data shows that returns on capital have increased substantially over the last five years to 24%. Basically the business is earning more per dollar of capital invested and in addition to that, 66% more capital is being employed now too. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.

Our Take On Pan African Resources' ROCE
To sum it up, Pan African Resources has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. Since the stock has returned a staggering 194% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if Pan African Resources can keep these trends up, it could have a bright future ahead.

On a final note, we've found 1 warning sign for Pan African Resources that we think you should be aware of.

High returns are a key ingredient to strong performance, so check out our free list of stocks earning high returns on equity with solid balance sheets.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.


This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

[stonedyou] 26/9/2024 08:18

Pan African Resources PLC's analyst rating consensus is a Strong Buy. This is based on the ratings of 3 Wall Streets Analysts.

[stonedyou] 25/9/2024 15:08

Pan African Resources Plc - Holding(s) in Company


TR-1: Standard form for notification of major holdings


Full name of shareholder(s) (if different from 3.)v

Name

ESB Pension Fund GDX

VanEck Gold Miners ETF

VanEck Gold Miners ETF (AU)

VanEck Gold Miners UCITS ETF



Common Stock GB0004300496

113,098,953 5.901%



SUBTOTAL 8. A

113,098,953

5.901%

[cinoib] 25/9/2024 14:07

$2,662 now and holding steady with more to come I still have $3,000 penciled in for year end.

[stonedyou] 24/9/2024 19:46

Live Gold Price

Low| High

Bid|Ask 2,662.70 2,662.82

2,622.64 2,663.18

Change $18.66 0.71%

[stonedyou] 24/9/2024 15:22

Mogale (MTR)

On 1 August 2023, PAF announced that all conditions precedent for its ZAR1.3bn senior debt facility, designated for funding the group’s MTR project, had been fulfilled, thereby completing the full upfront funding package of ZAR2.5bn. Since then, PAF reports that construction is progressing on time and within budget, with commissioning and steady state production on track for December 2024.

In addition, PAF reported that it had updated its financial model (relative to the initial definitive feasibility study model) to reflect the latest operating cost updates, as well as a ZAR19.00/US$ forex rate and a US$2,200/oz gold price. Given these changes, the pertinent results of the updated financial model were:

■
A near threefold increase in pre-tax NPV from US$63m to US$183m.

■
A doubling of the ungeared real internal rate of return from 20.1% to 41.7%

■
A two-year payback on upfront capital investment of c US$135.1m (cf an initial DFS model estimate of 3.5 years), post commissioning.

[stonedyou] 24/9/2024 15:22

Once again, we expect deferred taxes to account for the majority of the total tax charge for the year, with cash taxes paid amounting to less than half the total tax charge.

Growth projects

PAF has two organic growth projects currently underway (namely the MTR project within the Mintails Soweto Cluster and the Evander 24 to 26 Level expansion project) and one more immediately in prospect (the Sheba Fault project). Beyond these, it has the Egoli and Fairview sub-vertical shaft projects at feasibility study stage followed by Rolspruit, Poplar and Evander South also available for development.

[stonedyou] 24/9/2024 13:09

Updated FY24 financial forecasts

Relative to our prior forecast for H224e – and all other things being equal – we expect these changes to result in a positive variance to revenue of US$20.6m, partially offset by an additional US$6.6m in ‘other’ expenses (in this case, a contract liability for the ZAR400m upfront payment that PAF received in March 2023 for its Mintails funding at rand gold prices in excess of ZAR1,025,000/kg – see our note Innovative funding avoids dilution, published on 17 March 2023) and a US$5.5m negative variance in tax to result in a positive variance of US$11.2m, or 44.4%, at the post-tax level:

[stonedyou] 24/9/2024 13:02

In addition to changes to our immediate output assumptions, we have increased our estimate of the gold price for the remainder of the financial year to June from US$2,017/oz previously (see our note A happy valentine, published on 20 February 2024) to US$2,347/oz (ie that prevailing at the time of writing).

At the same time, we have adjusted our foreign exchange rates to reflect the recent relative strength of the rand against both the US dollar and sterling:

■
from ZAR23.8998/£ to ZAR23.0097/£ (-3.7%),

■
from ZAR18.9774/US$ to ZAR18.3215/US$ (-3.4%), and

■
from US$1.2593/£ to US$1.2554/£ (-0.3%).

[stonedyou] 24/9/2024 12:34

FY24 guidance

On 9 May, Pan African announced that it was narrowing its production guidance for the year ending 30 June to 186–190koz (cf 180–190koz), notwithstanding the end of processing marginal surface sources at Evander during H224. Nonetheless, group all-in sustaining cost (AISC) guidance was maintained at US$1,325–1,350/oz (at an assumed exchange rate of ZAR18.50/US$). Production guidance was also provided for FY25 of 215–225koz, which compares with Edison’s unchanged (and, in the event, relatively conservative) forecast of 216.6koz.

In the light of PAF’s announcement, we have updated our half year and full year production expectations for FY24 to those shown below:

[stonedyou] 24/9/2024 12:28

Valuation: Nosing in towards 40p

Given our revised forecasts, our core (absolute) valuation of Pan African has

increased by a material 16.8% to 48.08c/share (38.30p), based on projects either

sanctioned or already in production. This valuation rises by a further 22.17–27.19c

if other assets (eg Egoli and the Soweto cluster) are also taken into account.

Alternatively, if PAF’s historical average price to normalised headline earnings per

share (HEPS) ratio of 8.4x in the period FY10–23 is applied to our FY24 and FY25

forecasts, it implies a value of 38.30p in FY24, followed by 41.94p in FY25. As

such, PAF’s current share price of 26.70p could be interpreted as discounting

normalised HEPS falling to 4.00c per share (cf our forecasts of 5.73c/share for FY24

and 6.28c/share for FY25), which is barely above FY23’s level. In the meantime, PAF

remains cheaper than its principal London- and South African-listed gold mining

peers on at least 66% of commonly used valuation measures regardless of whether

Edison or consensus forecasts are used. Performing a relative valuation analysis,

its peers imply a comparable valuation for PAF of 63.21p based on our year one EPS

estimate and one of 48.06p based on our year two EPS estimate. Separately, we

estimate that PAF has the 18th highest dividend yield of the 62 precious metals

mining companies expected to pay dividends to shareholders in the next 12 months (globally). Finally, we calculate that it is trading at an enterprise value that

equates to just US$17.39 per resource ounce of gold.

[stonedyou] 24/9/2024 12:26

MTR on time and on budget

In addition to its guidance upgrade, PAF also reported that construction at its new Mogale Tailings Retreatment (MTR) project is progressing on time and within budget. Commissioning and steady state production are still on track for December 2024, thereby confirming our longer-term production and EPS forecasts of >250koz pa and >6c/share, respectively, from FY26.

[stonedyou] 24/9/2024 12:26

Pan African Resources — Upgraded FY24 production guidance

On 9 May, Pan African announced that it was narrowing its production guidance for the year ending 30 June 2024 to 186–190koz (cf 180–190koz previously), notwithstanding the cessation of production from surface sources at Evander in H2. Group AISC guidance was maintained at US$1,325–1,350/oz (at ZAR18.50/US$) however. Consequently, we have increased our H2 production forecast by 2.5% as well as increasing our H224 gold price by 9.2% to result in a US$20.6m positive variance in H224e revenue, only partially offset by incidental higher costs, to result in a 41.7% increase in H224e normalised EPS and a 19.1% increase in FY24e normalised EPS. Production guidance was also provided for FY25 of 215–225koz, which compares with Edison’s prior (and unchanged – and, in the event, relatively conservative) forecast of 216.6koz.

[stonedyou] 24/9/2024 12:10

India Reports Record Gold Imports in August

Mike Maharrey


India reported record gold imports in August after the country slashed its import duty the month before.

India ranks as the world's second-largest gold consumer behind China.

In July, the Indian government cut taxes on gold and silver imports by more than half, lowering duties from 15 percent to 6 percent. The domestic gold price fell 6 percent month-on-month after the lower duty went into effect, even as the dollar price of gold increased. As expected, the government's move spurred a big jump in gold demand.

India reported record gold imports in dollar terms, totaling $10 billion in August. It was over a three-fold increase over the previous month. The World Gold Council estimates the country imported 140 tons of gold, tripling July’s total.

So far, in 2024, Indian gold imports are up 30 percent.

After falling sharply after the import duty cut, the gold price in rupees stabilized and largely moved in tandem with the international price. Gold was up 3.9 percent in rupee terms in August.

Despite the August price gains, the domestic gold price remains about 2 percent lower than it was before the reduction in the import duty.

According to the World Gold Council, domestic demand for gold coins, bars, and jewelry surged after the duty cut and has since stabilized. Market reports indicate that buying momentum remains “healthy,̶1; with an overall uptick before the import duty reduction.

“Purchases previously deferred are now materializing, and there is increased interest in heavier pieces of jewelry. Industry participants anticipate that this momentum will continue, though they are closely monitoring the crucial festive and wedding season sales that run through late August to December.”

Anecdotal evidence suggests that festival buying kicked off on a strong note.

The World Gold Council also reported that rural gold buying has shown improvement in recent months. A favorable monsoon season is expected to increase crop production, and additional income for farmers will likely boost gold demand in the fall months.

Evidencing strong investor interest in gold, Indian ETFs continue to report inflows of metal. According to World Gold Council estimates, India-based funds experienced the highest monthly inflows of gold on record in August.

So far, in 2024, Indian gold ETFs have added about 9.5 tons of gold.

According to the WGC, total assets under management by Indian gold ETFs have increased to INR374 billion (US$4.4 billion), an 8 percent month-on-month rise and a 54 percent year-on-year increase.

The Reserve Bank of India (RBI) continues to add gold to its reserves. Based on the latest figures, the Indian central bank has increased its gold holdings by 50 tons this year.

The RBI has been buying gold since 2017. Over that period, it has increased its gold holding by over 260 tons.

The Indian central bank now holds a record 853.6 tons of gold. The yellow metal makes up 9 percent of its foreign reserves, up from 7.5 percent a year ago.

An Indian economist told the Times of India that the push to accumulate gold was based on both political and economic factors. He said that the "reliability" of the U.S. dollar has "diminished." He noted the "noticeable decline" in the confidence in U.S. dollar assets.

Another economist told the Times, “It makes a lot of sense (to invest in gold), given the increased volatility in the FX market, elevated interest rates in the U.S., and, of course, also as the central banks in each economy would like to diversify the asset classes in which they are parking their reserves.”

Last spring, the RBI transported 100 tons of its gold from the UK back into India.

Indians have historically had an affinity for gold. Indian households own an estimated 25,000 tons of gold, and that likely understates the amount given the large black market in the country. Gold is deeply interwoven into the country’s marriage ceremonies and cultural rituals. Indians have long valued the yellow metal as a store of wealth, especially in poorer rural regions. Around two-thirds of India’s gold demand comes from beyond the urban centers, where large numbers of people operate outside the tax system.

Gold isn't considered a luxury in India. Even poor Indians buy gold. According to a 2018 ICE 360 survey, one in every two households in India had purchased gold within the last five years. Overall, 87 percent of Indian households own some gold. Even households at the lowest income levels in India hold some of the yellow metal. According to the survey, more than 75 percent of families in the bottom 10 percent of income managed to buy some gold.

The yellow metal was a lifeline for Indians buffeted by the economic storm caused by the government's response to COVID-19. After the Indian government locked down the country, banks tightened credit to mitigate the default risk. Unable to secure traditional loans, Indians used gold to secure financing. As Indians endured a second wave of lockdowns, many Indians resorted to selling gold outright to make ends meet.

[stonedyou] 24/9/2024 11:42

Just How Good Is Gold Doing This Year? It's Beating Stocks!

Mike Maharrey

Anybody paying any attention at all knows that gold is setting records. But just how good is gold doing in 2024?

It is outperforming stocks.

And pretty much everything else.

Gold closed at yet another record high on Friday, ending the week at $2,622 per ounce. Year-to-date, gold is up 27.1 percent.

Meanwhile, the return on the S&P 500 so far in 2024 is 20.8 percent, and that includes reinvested dividends.

Gold is outperforming other stock indices well. The Dow is up 11.6 percent, and the NASDAQ is up 21.7 percent.

If things hold up for the rest of the year, gold is on track for its best return since 2010, in the midst of zero percent interest rates and the Federal Reserve’s three rounds of quantitative easing after the financial crisis. Gold is currently outpacing its gangbuster 25 percent gain during the pandemic.

You might think gold outperforming stocks is just a recent phenomenon, but gold has outgained the S&P 500 since the turn of the century. Gold is up 811 percent since January 2000, while the S&P 500 has charted a 517 percent return.

Forbes notes that the Fed’s “recalibration” to lower interest rates and easier money creates two tailwinds for gold.

“Lower rates of return on other non-stock assets which offer fixed payments tied to the Fed-set interest rates, like short-dated government bonds and certificates of deposit (CDs), may make gold a more popular diversification option, and gold is considered perhaps the most popular hedge against inflation, meaning if the Fed acted too swiftly and U.S. inflation gets worse again, gold prices should benefit.”

Forbes pointed out that gold has enjoyed “three distinct rallies” since 2000 – the years after the 2008 financial crisis, the COVID-19 pandemic, and the last two years’ bout of global inflation. The first two periods were marked by artificially low interest rates and quantitative easing. But the most recent gold rush is a little different. So far, it is based solely on the hope of easier money. Most of gold’s gains this year came before the Fed cut rates at all.

In other words, we’re seeing this kind of performance just based on the promise of Federal Reserve easing and one rate cut. Imagine what will happen if the economy cracks and the Fed returns, slashes rates to zero again, and ramps up the QE machine!

Fed policy isn’t the only thing driving gold higher. The initial stages of this gold bull run got a boost from high demand in Asian and Middle Eastern markets. In fact, we saw a significant movement of gold from the West to the East.

De-dollarization and central bank gold buying are also boosting demand for the yellow metal.

Dollar reserves globally have dropped by 14 percent since 2002. And de-dollarization accelerated after the U.S. and her Western allies aggressively sanctioned Russia and froze the country’s assets after it invaded Ukraine. As dollar reserves have dropped, gold reserves have grown. According to Goldman Sachs, the rate of central bank gold buying has tripled since the invasion.

Simply put, the United States’s weaponization of the dollar is undermining its strength and role as a reserve currency. This is boosting gold demand, and there’s no reason to think the situation will change any time soon.

According to the most recent World Gold Council survey released in June, 29 percent of central banks plan to add more gold to their reserves in the next 12 months. The WGC said it was the highest level since the survey began in 2018.

That means there are plenty of reasons to believe this gold bull still has plenty of legs.

About the Author

Mike Maharrey


Mike Maharrey is a journalist and market analyst for MoneyMetals.com with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.

[stonedyou] 20/9/2024 13:17

Record imports by India help drive gold rally

Submitted by admin on Fri, 2024-09-20 08:00 Section: Daily Dispatches

The Indian government's jettisoning its longstanding hostility to gold is a major indicator of dramatically changing times for the monetary metals.

* * *

By Leslie Hook and Chris Kay
Financial Times, London
Thursday, September 19, 2024

A surge in demand among Indian consumers for gold jewellery and bars after a recent cut to tariffs is helping to drive global bullion prices to a series of fresh highs.

India's gold imports hit their highest level on record by dollar value in August at $10.06 billion, according to government data released Tuesday. That implies roughly 131 tonnes of bullion imports, the sixth-highest total on record by volume, according to a preliminary estimate from consultancy Metals Focus.

The high gold price -- which is up by one-quarter since the start of the year -- has traditionally deterred price-sensitive Asian buyers, with Indians reducing demand for gold jewellery in response.

But the Indian government cut import duties on gold by 9% at the end of July, triggering a renewed surge in demand in the world's second-largest buyer of gold.

"The impact of the duty cut was unprecedented. It was incredible," said Philip Newman, managing director of Metals Focus in London. "It really brought consumers in." ...

. For the remainder of the report:

[stonedyou] 20/9/2024 13:07

Live Gold Price

Bid|Ask 2,614.58 2,614.77

Change 23.81 0.92%

Low|High 2,584.78 2,619.32

[stonedyou] 13/9/2024 13:58

Question-and-Answer Session


A - Hethen Hira

Thank you very much again for taking time. In terms of questions, we will first go to the conference call and see if we have any query or questions from the conference call, and then we'll go to the webcast.

Operator

First question comes from Cody Hayden of Berenberg. Please go ahead.

Cody Hayden

Good morning. Thank you for taking my question. And congratulations on the results. First, I have two questions. First, on the Evander underground expansion project, can you speak a bit more to the delays and how confident you are the Evander 8 Shaft project won't be further delayed beyond September? And then second, on costs. Can you get any insight into your inflation assumptions? And with MTR, can you bring costs lower further as well as with some of the renewable energy deployment?

Cobus Loots

Thanks, Cody. Yes. So definitely, the delay in the commissioning of sub-vertical shaft at Evander has set us back somewhat. But it's a temporary delay. I think generally, the team has done well in terms of managing. And yes, we're pretty confident that we are sort of weeks away now from commissioning. Fortunately, your project is progressing much better now. And that's just sort of the nature of underground operations. It's sometimes a bit more difficult, and that was the case here.

So -- we -- as we've said, I mean, we expect to make up. There's a lot of gold sitting underground in the decline sections, which we'll be ramping and then doubling the hoisting capacity, obviously, will have a massive impact on the operation. In terms of inflation, we sort of -- when we do our budgets, we look quite carefully at all of the cost drivers. And then so we have a good understanding of sort of escalations, et cetera. So, I think we're fairly comfortable in terms of managing inflation, [indiscernible] in terms of the budgets because of the effect that we're running Elikhulu, we understand the cost structure and what it entails.

So, we think we're quite comfortable with our guidance in terms of Mintel's costs. And then yes, definitely, renewable energy projects have a quite significant impact on the group. I mean we see the savings that we are currently banking at Evander on the first 10 megawatts. And obviously, Barberton is coming in should be steady state in terms of production -- solar production in the next month. So, as we expand this footprint, definitely, I think it will stand a good group and good stead.

Operator

At this stage, we have no further questions from the lines.

Unidentified Company Representative

Shall we even go to the webcast?

Hethen Hira

We've got a question from [indiscernible] from Truffle Asset Management. Thanks for the opportunity. Can you guide us on CapEx for FY '26, please? As Mintel's project CapEx falls off and forward sales runoff, and should be generating a lot of free cash flow. What are your plans with the cash?

Cobus Loots

Yes. So, it's correct. I mean if we -- certainly, the gold price holds -- I mean, we should be in for some very good times. It's also important to note that, I mean, this is the last year, FY '25, where we'll be spending so much money on the Evander underground. So, you have Mintails with the capital being done in the next couple of months. You have the Evander underground with the spend pretty much complete by the end of this year. Barberton is fairly stable.

So, your CapEx should go down. Also, Elikhulu, the capital is very fairly pedestrian in this next year and then it sort of ramps up again. So generally, I mean, in terms of the gearing, we can expect the group to dig year also, I mean, in the last year, the gold price received was $2,080 and is currently sitting at above $2,500 per ounce. So obviously, that's going to come through. So yes, I mean, I think generally, Pan African has been quite good in terms of capital allocation, and that will continue to be circumspect and balance growth, reinvestment in our assets with cash returns to shareholders in the form of dividends. And that's -- that was what we've done in the past, and there's no reason to change that going forward.

Hethen Hira

The next question is would you use the gold price windfall to accelerate the debt repayment, and that's from Arnold Van Graan at Nedbank.

Deon Louw

Yes and no. We'd obviously like to, at the same point in time, accelerate our dividends. So, shareholders participate in the upside of the gold price. So, it's not mutually exclusive one or the other. We have demonstrated in the past that we can do both by paying the debt on Elikhulu back to the bankers well before its 4-year term. I think we've paid it back in 3 years. So yes, if our projections are correct on Mintails, we should pay the debt back in roughly 2.5 years.

But at the same point in time, we want to balance that with increased returns in the form of cash to our shareholders.

Hethen Hira

Thanks very much, Deon. We've got a question from [indiscernible] at Investec Bank. Please can you give us color on the cash generation by operation.

Deon Louw

It's probably best to look at the segment analysis. But your two primary cash generation -- generators at this point in time, pre-Mintails commissioning is obviously Barberton, and Barberton generated an EBITDA of roughly $63 million relative to Evander's as a complex, $86 million. So that's really the gist of your cash generation at this point in time within the group and roughly the split between the two.

Hethen Hira

Thanks Deon. We've got a question from Lisa Stan at News 24. Please could you provide more color on the illegal minor issue around MTR? Have you encountered resistance or challenges related to [indiscernible] how exactly or practically are you managing to mitigate the threat? What kind of security do you have in place there?

Cobus Loots

Lisa, yes. So, we don't want to elaborate too much about what we're doing in terms of detailed security measures, but suffice to say that we have -- the security is a major focus for us in that area. Generally, I have to say our experience in terms of constructing MTR has been very positive. We've had a great impact in terms of the communities and cleaning up the site, working with law enforcement to reduce the issue of illegal miners. I mean we always say the safest place to keep your gold is actually in the tailing facilities.

I mean it's not [indiscernible] or illegal -- do not have the ability to process 0.3 grams per tonne, so they're sort of focused on old foot plant footprints and outcrop areas. But generally, I think the fact that we managed to construct and will now operate MTR -- mining. It shows you can get major projects done in a very short space of time. And yes, I mean, our approach has been certainly fair to say multifaceted in terms of working with communities, with other stakeholders, regulators and all interested parties. And it's really been a fantastic success for us.

Hethen Hira

Related question from Arnold Van Graan. Could you please elaborate on your experience with working with reinforcement? Have you seen positive developments on this front?

Cobus Loots

I think so. I think there is definitely a willingness from law enforcement to make a difference and to cooperate. And I mean that's a good model to work with law enforcement for the benefit of all of the legitimate stakeholders, and that's what we're doing pretty much at Barberton and MTR at this point.

Hethen Hira

We've got [indiscernible] from SBG Securities. Could you please expand on the BTRP Sheba Fault project? Are there any technical reasons for slowing down development? How does this impact CapEx over the next 3 years? Does this mean a different project or resource will be prioritized?

Cobus Loots

Well, I think -- I mean it's a great win for us, the fact that we have managed to now extend the life of the BTRP, which was our first tailings retreatment business in gold from 2 years to 7 years with very limited capital, about ZAR100 million for the pump station. And then we have to also construct a new Barberton tailings facility probably FY '27, '28. So, I mean the BTRP has been a stock performer. Obviously, costs will go up as we then reprocess both limited capital and very good returns. And there's nothing wrong with the Royal Sheba project. It's quite simply a question of capital allocation and capital priorities.

Many other places this deposit would have been developed 3 grams per tonne with a lot of prospectivity still. But I think that just speaks to the Pan African portfolio and the extent to the optionality, actually, we actually have and that means we have to rank projects because, again, we have to balance all of the sort of -- all the calls on capital.

Hethen Hira

Thanks for this question, I think, for Deon. What is the dividend policy as a percentage of cash flow or profit for this dividend and the coming years? Would Pan African considered by annual dividends? And that question is from Kevin King.

Deon Louw

The dividend policy is unchanged from last year, but still 40% of cash flow as defined by the policy, which is after capital, which has not been funded, essentially discretionary cash flow ratable to the company. So, this year, we -- given the circumstances, the imminent commissioning of the Mintails project, the group's cash flows, obviously, the gold price that Cobus referred to, we felt it's appropriate to be a little bit more aggressive and we have recommended a 52% payout of discretionary cash flow as is defined.

But yes, going forward, we think 40% is healthy. As it relates to the interim dividend, it's something we'll consider on an ongoing basis, especially once we are comfortable with the cash flow generation from Mintails then we have a third complex cash flow Geologica complex, and it's an easier decision to make at that any time.

Hethen Hira

Thanks a lot, Deon. Rene Hochreiter from Nova Capital or Severina Research. Now it says excellent results and congrats to you and Deon for a remarkable 10 years growing the business. Please, can you give us the CapEx guidance for FY '25 and as many years as possible thereafter?

Cobus Loots

Sure. There's a detailed slide. Thank you for those comments. There's a detailed slide in the presentation. So -- we're spending the last of Mintails' capital this year in the next couple of months actually. And then also pretty much the last big slug in terms of Evander underground. And then from FY '26, the capital will reduce with obviously, Mintails will very limited capital likely a bit more as we now sort of look to go sort of start constructing remining facilities [indiscernible] Evander underground capital will come down quite a lot because as I said, major capital is done and then Barberton is pretty stable.

So, I mean I do think that differentiates Pan African from many of our peers where you just have seen these capital build escalate and become larger and larger for guys to maintain production. And it's not the case for us. I think we're quite fortunate from that perspective.

Hethen Hira

A follow-up question from Rene is, what do you estimate your additional percentage costs over and above cash cost of security for reducing the impact of illegal miners?

Cobus Loots

More or less, it's in our cash cost already. So, it's quite a we don't foresee that sort of security cost to escalate by anything more than inflation in the years to come. I think we have that situation pretty much under control. Our teams do an excellent job and really the drive from our side is to use more technology-based solutions to combat illegal mining, and we're seeing that being very effective and actually also means that we can save costs. So, security costs are very much into our cash costs. So, I would not expect any huge surprises going forward from that perspective.

Hethen Hira

A few questions from [indiscernible]. Firstly, on Mintails, what Mintails volumes are you currently expecting for 2025? Did you not say in a recent report that Mintails can now produce 60,000 ounces per annum at $900 all-in sustaining and integrating the Soweto cluster, at $2,200 gold price, you said the payback was less than 2 years, not less than 3 years. Please confirm.

Cobus Loots

Yes. Well, look, I mean, whether it be 2 or 3 years. I mean I think we're trying to be a little bit conservative there, give ourselves a bit of headroom. I mean this is a new operation that is starting out. But I mean, where it's 2.5 or 3 years, I just think it's been an excellent success for us. So, in terms of the production, on a steady-state basis, full year production, probably about 55-odd ounces a year. So, 55,000, 60,000 ounces. Obviously, we're ramping up now with first gold being smelted in October. And then we've guided that we will be steady state by December. Hopefully, we can get there a bit sooner.

The teams on the job -- on the ground are doing an excellent job. And the Soweto cluster is quite interesting. I mean, in itself, it could justify the construction of a new facility or a stand-alone facility, as we've said, producing sort of 8 million tonnes per month. We have significant resources and reserves in Soweto. So, the fact that we now have that footprint that gives us a lot of optionality in that area. So certainly, what we've said in the past holds true. But I mean, we're not going to sort of pressurize ourselves into a sort of a 2-year payback. I think if we achieve a 2.5 year or 3-year payback on $2.5 billion or $135 million of upfront capital. It really is an excellent achievement.

Hethen Hira

In terms of consult, it seems that consort production fell to less than 6,000 ounces, implying well less than 15 kilograms per month of gold. Consort costs might be 2,500 to 3,000 all-in sustaining. What is the hope not to dramatically reduce costs here?

Cobus Loots

I mean it's fair to say, Ed, that the consort, I mean if we look at what we've done at Barberton, continuous operations really have benefited both Fairview and Sheba. Consort is a bit of a cash. It's the only operation in our group that from an operating perspective is negative and it's not great. But we continue to believe into the future console. I mean we're doing what we can. If we did not believe that there was certainly the ability to turn it around, we would close the mine. If you look at the history of Consort, it is unfortunately been boom and bust.

You have 2, 3 bad years, and then you have sort of 1 or 2 excellent years that sort of make up for the more difficult period. So yes, I mean, the gold is down there. We've had to do a lot of development now on that the PC shaft and development is done, so we should be able to get into better ground and ensure that console performs better going forward.

Hethen Hira

Also, from Ed, what is the long-term aspiration for all-in sustaining costs at Evander? Has your increased output towards long-term target of 65,000 ounces per annum in after 2026?

Cobus Loots

Yes. I think we calculated that you're probably looking at about long-term $1,300 to $1,400 all-in sustaining for the Evander underground, which compares very well to the rest of the global sector. So that would be we would like to get to.

Hethen Hira

Lastly, from Ed. As net debt falls rapidly this year and becomes net cash in 2026. Can you promise investors that returns to shareholders in the form of dividends and buybacks at less than 5 PE based on your guidance will now take precedent over CapEx that has reached a historic record?

Cobus Loots

Well, the CapEx reached an historic record for the right reasons. I mean, we invested 2.5 -- $135 million into a massive project for the benefit of shareholders over the next 20 years. So that's CapEx for the right reasons. If you look at our return on equity, I think we can rival pretty much anybody in the sector as far as our returns are concerned, and that demonstrates the ability to allocate capital in the correct manner, I think, and that will continue. So yes, certainly, dividends will continue and any capital allocation will be done in a very [indiscernible] manner.

If you look at the cost of -- let's call it the opportunity cost or the structure we put in place to fund Mintails without any call on shareholders. That opportunity cost in the last year was in the order of ZAR200 million. So, if that wasn't there, then don't even this year with all of the capital would have been quite a bit higher.

Hethen Hira

Question from Jackson Martina. Given the current prices of gold, how much of a priority is given to the Sudanese exploration project? And when can the development feasibility be expected to conclude?

Cobus Loots

So, I mean, it's fair to say that, I mean, we -- Sudan at this point, I mean, exploration is continuing, but at a scale back -- on a scaled back basis, the war, obviously, is ongoing and it's a humanitarian crisis in the country. And we can't see ourselves investing large amounts of money until the situation stabilizes. So, it's unfortunate. Geologically, it's incredibly prospective but I mean, our exposure of the group is really limited. I think the carrying value of the Sudanese venture is in order of $5 million or $6 million on our balance sheet. So, it's not a huge exposure. And it doesn't make sense for us to invest hugely until the political environment stabilizes.

Hethen Hira

Arnold Van Graan from Nedbank again. Well done on the results and progress at Mintails. What's next to plan of Mintails in terms of growth for projects?

Cobus Loots

I think the nice thing for us, Arnold, is that we don't really have to go do a much more as we've mentioned, there's such a lot of opportunity in our own portfolio. And unlike many of the other producers, we don't have our production falling off of tiff anytime soon. I mean, we calculate we can sort of maintain the 250,000-odd ounces for many years. So yes, I mean, again, it comes down to assessing opportunities and making sure that whatever we do we can generate appropriate returns for shareholders. And I think that's a good position for us to be in.

Hethen Hira

And Arnold follows up with -- please share your views on M&A and geographical diversification. Are you looking at assets? Or do you have enough internal trust -- comfortable, sorry, are you comfortable with South African exposure?

Cobus Loots

Well, I guess we have to be comfortable with South Africa, given that all of our assets are here. Obviously, all of us know that there seems to be quite a bit more positivity around the country following the national elections and some progress it appears to be -- the country prepares to be making. And we have a long-demonstrated track record of operating successfully so we don't have to go and look elsewhere, just for the sake of diversification. It comes down to a specific opportunity. And again, if we can see the returns that we have demonstrated we can generate on investments. So that's what it really comes down to.

And obviously, at sort of the sort of gold price, which is elevated, but still with, I think, a lot of positivity and potentially some tailwinds -- you have to be very circumspect. You can't run models on $2,500 indefinitely and make investment decisions on that basis.

Hethen Hira

Last question. Congratulations on the positive results and project execution. This is from SBG Securities and [indiscernible] could you please expand on your investment in PC MG? How does this fit into your long-term strategy?

Cobus Loots

Yes, it's -- again, I mean, we have a number of tailwinds. It's quite exciting for us. It's a very good time. PC MG is a strategic stake in what we think is a prospective gold and copper area in Australia, and it's not big in any way. So, it's not a strategic focus or a large focus for us at this point. Again, we have so many things to do in our own portfolio, and that's really the focus in the next one.

Hethen Hira

And the last comment from Arnold at Nedbank. Deon, thank you for all your help and assistance over the years. I enjoyed our debates. All the best for the future.

Deon Louw

Thank you.

Hethen Hira

Thanks very much, Arnold. And I think we have one question on the conference call line.

Operator

Last question was asked and answered. Thank you.

Cobus Loots

Well, thank you again to everybody for making time and if there is anything else you know where to find us. Have a great day. Thank you.

Deon Louw

Thank you.