Pan African Resources Share Discussion Threads

[stonedyou] 10/12/2024 09:11

Nobles project

The Nobles project currently comprises reserves of 0.4Moz gold contained within a resource of 1.3Moz Au (Exhibit 1). At Pan African’s full consideration price of US$54.2m for TCMG, this equates to a purchase price of US$42.15 per resource ounce of gold or US$139.21 per reserve ounce.


Exhibit 1: Nobles resources and reserves

[stonedyou] 10/12/2024 09:02

Tennant Creek acquisition

On 5 November, Pan African announced that it is to acquire privately owned TCMG for a total consideration of US$54.2m in an all-share deal that involves it issuing an additional US$50.8m in shares for the 92% of TCMG that it does not already own. At Pan African’s current price, we calculate that, all other things being equal, this will involve the issue of 125.4m new shares – or 6.5% of the current effective total – to take PAF’s outstanding share capital to 2,041.9m shares (excluding 306.4m shares in treasury).

Tennant Creek is a town located roughly in the geographical centre of the Northern Territory of Australia, approximately 1,000km south of Darwin and c 500km north of Alice Springs.

The Tennant Creek goldfield was discovered in the early 1930s and was mined until the early 2000s when the gold price fell to a monthly low of US$276.80/oz in January 2002, resulting in the termination of large swathes of mines in this region. Prior to that, however, the Tennant Creek goldfield was known as one of the highest-grade goldfields in Australia, with production over the c 70 years of its life yielding 5.5Moz Au, 348kt Cu, 1.9Moz Ag and 21,600t bismuth.

After 30 years of mining at the Nobles underground mine, the crown pillar collapsed in 1967 owing to erosional degradation of the iron oxide lithologies. The broken material was excavated from the failure zone and stockpiled on what is now known as the Crown Pillar Stockpile (CPS), with some of this material being treated while a new plant was being constructed during 1967–68. Thereafter, Nobles was mined as an open pit mine (Australia’s largest until 1985), albeit the balance of the CPS remained untreated.

As a result of past activity, the mineral deposits in the Tennant Creek goldfield are well understood and form part of the hematite and magnetite end members of an iron oxide copper gold (IOCG) style of mineralisation and express themselves as cone-like or blanket-like breccia sheets within granitic margins, or as long ribbon-like breccia or massive iron oxide deposits within faults or shear zones. Continuity of these deposits is proven with strike lengths of more than 50m, widths of 2–24m or more and down-dip extents of hundreds of meters. Typically, these deposits are enriched in copper, gold, cobalt, silver, uranium and bismuth. In addition to brownfields exploration, the goldfield is also very prospective for greenfield discoveries such as the Mauretania and Marathon deposits on the Emmerson Resources exploration joint venture (a JV agreement between TCMG and Emmerson Resources) and the Bluebird deposit. In 2022, realising the consolidation opportunity present in the area, TCMG acquired 100% of the tenements around the historical highest-grade and largest producers of the region, namely, Nobles, Warrego and Juno, with the intent to expedite exploration and increase the conversion of mineral resources into mineral reserves.

[stonedyou] 10/12/2024 08:32

Valuation: Steady but inclined upwards

Our overall valuation of Pan African has risen by 3.1% in the aftermath of the TCMG acquisition, to 42.21c per share (33.32p), albeit this reflects the recent ‘above trend’ strength of the rand against both the US dollar and sterling, as much as anything else. However, this valuation rises by a further 22.42–27.44c (17.70–21.66p) if other assets, such as Egoli and the Soweto cluster, are taken into account. It also reflects Edison’s relatively conservative gold price assumptions (US$2,124/oz nominal on average for the period CY25–30). At the current gold price, all other things being equal, our valuation almost doubles to 83.52c (65.92p). Alternatively, if PAF’s historical average price to normalised HEPS ratio of 8.2x for the period FY10–24 is applied to our FY25 and FY26 forecasts, it implies a value of 45.71p in FY25, followed by 48.44p in FY26. As such, PAF’s current share price of 31.95p could be interpreted as discounting normalised HEPS rising to only 4.95c per share in FY25 and/or FY26 (cf 5.27c ‘adjusted̵7; in FY24 and our forecasts of 7.09c and 7.51c in FY25 and FY26, respectively). In the meantime, PAF remains cheaper than its principal London- and South African-listed gold mining peers on at least 83% of commonly used valuation measures if Edison forecasts are used or 91% if consensus forecasts are used. Finally, performing a relative valuation analysis, its peers imply a comparable valuation for PAF of 58.47p based on our year one EPS estimate and 49.52p based on our year two EPS estimate.

[stonedyou] 10/12/2024 08:30

Unique Tennant characteristics in a Tier 1 jurisdiction

Pan African’s purchase consideration of TCMG of US$54.2m compares with its principal project’s (Noble’s) NPV15 of US$79.3m (4.1c or 3.3p/share pre-dilution) at its feasibility study gold price of US$2,214/oz. At present, it has a relatively short formal life of five years. However, it will add an average of 56,967oz (21.4%) to PAF’s production profile in its first three years of operation and 108,600oz (38.9%) in its final two. Nevertheless, we estimate that it offers an IRR of at least 41.5% under even the most conservative gold price assumptions and could have commanded a valuation as high as US$85.7m based on its Tier 1 jurisdiction alone.

[stonedyou] 10/12/2024 08:29

Pan African Resources — Tennant Creek acquisition

On 5 November, Pan African Resources (PAF) announced that it is to acquire privately owned Tennant Consolidated Mining Group (TCMG) in Australia’s Northern Territory for a total consideration of US$54.2m in an all-share deal that involves it issuing an additional 125.4m shares (or 6.5% of its existing share capital). The acquisition price equates to an undemanding US$42.15 per resource ounce of gold or US$139.21 per reserve ounce. While we expect the acquisition to have little effect on PAF’s earnings in FY25 (apart from the increase in share capital), we estimate that it will increase FY26 earnings by US$24.6m (or 19.1%) and FY27 earnings by US$42.6m (or 29.6%) and, on this basis, will undoubtedly be accretive.

[astjgroom] 09/12/2024 13:08

There's every chance, probably, but who knows when...

[baldrick1] 06/12/2024 14:47

Gold bears across the pond.

[saint in exile] 05/12/2024 14:54

Yeah all looking good

[salisbury3] 05/12/2024 14:50

Dividend payable next week plus 5% increase in share price today. Happy days are here again!

[saint in exile] 03/12/2024 18:43

Underway again.Should break through into the 40s soon

[1_dma] 28/11/2024 10:31

Yes dividend is 0.95p but share price has been adjusted lower twice that and we have gold rising :-) nice top-up incoming !

[salisbury3] 28/11/2024 09:58

The dividend is 0.9594p less 20% SA withholding tax.

[baldrick1] 28/11/2024 09:57

I'm tempted at this price ..but maybe not .

[1_dma] 28/11/2024 09:17

XB6

Yes me too,have added another nice chunk to my holding on this drop :-) early xmas pressie.I think the next few quarters will see the company having record production at record gold prices and thus record revenues and profits.That 45p target by Berenberg is actually doable and if anything modest.

The chances of takeover are increasing on a daily basis now IMVHO

[xb6] 28/11/2024 08:52

Wow we just gone ex div with a payment of 0.24p but mm,s have lowered the share price by nearly 2p . Fill me boots time ! Thankyou mm,s :-)

Also upgraded yesterday to over 45p target price by Berenberg

[umik1] 28/11/2024 08:48

https://www.businesslive.co.za/fm/money-and-investing/2024-11-28-pan-africans-golden-year/

[dondee] 27/11/2024 15:28

(Sharecast News) - Analysts at Berenberg raised their target price on Pan African Resources from 34.0p to 45.0p on Tuesday after the group announced that it had agreed to acquire Australia's Tennant Consolidated Mining Group.
Pan African Resources will acquire TCMG for $54.2m, split between an initial cash investment of $3.4m, with the balance due in PAF shares. Berenberg noted that first production from the group's Nobles gold project in Australia was expected in Q225 and has calculated an all-in sustaining cost of $1,242 per ounce, which, given a high gold price of roughly $2,610 per ounce, points to "attractive margins".

The German bank, which reiterated its 'buy' rating on Pan African, expects the site's potential life to be extended to eight years, roughly 100,000 ounces of gold per year, approximately 10,000-15,000 tonnes of copper, and "other upside opportunities".

"We update our model for the TCMG transaction, which is due to close on 18 December, plus our revised gold price deck. We calculate a valuation of the acquisition of $71.0m," said Berenberg. "While the jurisdiction was not expected by the market (given that PAF has focused on Africa as its core market), we think the deal is sensible, and uses its paper as a currency when the shares are at their highs. We also think that as PAF integrates the assets into its business model, more upside will be realised."

[salisbury3] 26/11/2024 14:12

Saint - me too! The next interesting date will probably be 12/02/25 when we get the interim results report. I look forward to that!

[saint in exile] 26/11/2024 10:15

Thought we would be rising into divi

[baldrick1] 22/11/2024 13:28

Short termers now in action ;)