By Andrew Aloia BBC Sport Last updated on 11 October 2021 11 October 2021 . From the section Football Watson was a trailblazer who helped transform how football was played There are two murals of black footballers facing one another across an alleyway in Glasgow. One helped shape football as we know it, the other is Pele. Andrew Watson captained Scotland to a 6-1 win over England on his debut in 1881. He was a pioneer, the world's first black international, but for more than a century the significance of his achievements went unrecognised. Research conducted over the past three decades has left us with some biographical details: a man descended of slaves and of those who enslaved them, born in Guyana, raised to become an English gentleman and famed as one of Scottish football's first icons. And yet today, 100 years on from his death aged 64, Watson remains something of an enigma, the picture built around him a fractured one. His grainy, faded, sepia image evokes many differen
Get link
Facebook
X
Pinterest
Email
Other Apps
An underappreciated gold mine that’s worth a closer look
Get link
Facebook
X
Pinterest
Email
Other Apps
-
Pan African Resources may be relatively small, but its strengths are worth noting.
The Pan African Resources operation in Barberton in Mpumalanga. Image: Supplied
Of all the JSE-listed gold miners, I get the sense that Pan African Resources plc is just simply underappreciated.
Why? Probably because it is relatively small. Yet size is not necessarily correlated with quality, and the gold junior stacks up well against even the majors.
Despite its modest R7.5 billion market cap, the group’s latest operational update reveals that it managed to produce 201 608 ounces of gold in its 2021 financial year. This is a better production profile than DRDGold’s latest annualised production despite DRD having a market cap of R12.8 billion.
Perhaps more important than ounces are profitable ounces (something the mining industry seems to have only recently remembered).
At the last reported date, Pan African Resources was the second lowest cost producer on the local bourse (beaten only by Gold Fields).
No surprise, but the legacy operations of Sibanye-Stillwater are the most expensive per ounce produced.
JSE-LISTED GOLD MINERS
ANNUALISED LAST PRODUCTION
LATEST ALL-IN SUSTAINING COST (USD/OZ)
GOLD FIELDS
2 164 000 oz
$1 078/oz
PAN AFRICAN RESOURCES
201 608 oz
$1 252/oz
ANGLOGOLD ASHANTI
2 352 000 oz
$1 287/oz
DRDGOLD
177 732 oz
$1 343/oz
HARMONY
1 499 032 oz
$1 416/oz
SIBANYE-STILLWATER (GOLD)
997 568 oz
$1 606/oz
Source: Various company reports
For some background, perhaps listen to Pan African Resources’S latest update in this MoneywebNOW podcast.
The two key highlights are:
FY21 gold production is 12.3% higher year on year; and
Net senior debt has basically halved (down 45% year on year).
Additional upsides
Beyond this, Pan African Resources has a range of projects that either derisk its operations (such as solar power that should be operational in Q3 this year) or expand its production (such as its Mintails transaction) – or which support the communities in which it operates above and beyond the environmental, social and governance minimums, such as its Project Blue initiative (it is converting land into a modern blueberry farm to provide sustainable employment for the community of Barberton).
All positives, all likely to incrementally add value, and all – probably – not appreciated by the market.
Listen to Simon Brown’s interview with Pan African Resources CEO Cobus Loots in this MoneywebNOW podcast (or read the transcript here):
Adding to this attractiveness is Pan African Resources’s strong dividend policy: other than FY18, it has consistently paid out a generous portion of its profits as a dividend to shareholders, and management has reiterated its intention to keep doing this.
Its excellent dividend history sets a high benchmark against which many other gold miners fail.
More subtly, this dividend flow from Pan Africa Resources allows investors to hold what is effectively a (dividend) yielding investment in a geared exposure to the rand-gold price. There is a lot in that sentence, so let me break it down in my conclusion:
Pan African Resources offers a domestic investor the following exposure:
Rand-gold exposure: Its revenue is earned by selling gold priced in US dollars and translating this back to rands. Thus, you get both gold price and currency movements (so-called ‘rand-gold price’) embedded in this revenue stream.
Geared exposure to this rand-gold price: Its mine running costs are largely fixed and do not change with the changes in the rand-gold price. Thus, the group has strong operating leverage; if the rand-gold price moves higher, this change drops to the bottom line creating a leveraged effect on its profits. Thus, if the rand-gold price is running higher, Pan African Resources can outperform this movement.
(Dividend) Yielding rand-gold play: If you bought an ounce of gold in South Africa, you would have one-to-one exposure to the rand-gold price. That said, no matter how long you held that ounce of gold, you would still only have an ounce of gold and would have earned no interest on the capital invested. Pan African Resources pays dividends from its profits; thus you get the (geared) exposure to rand-gold, but also earn a yield on your capital here (imagine a bank account offering your capital exposure to rand-gold with an attractive interest rate attached!).
7/19/2021, 4:55:40 PM
In closing, I get the sense that Pan African Resources is often underappreciated – and honestly, I don’t think it should be.
It is a good quality junior gold miner with strong management, and the latest operational update further illustrates this.
Keith McLachlan is investment officer at Integral Asset Management.
He holds shares in Pan African Resources.
Integral Asset Management’s clients may hold shares in Pan African Resources.
By Andrew Aloia BBC Sport Last updated on 11 October 2021 11 October 2021 . From the section Football Watson was a trailblazer who helped transform how football was played There are two murals of black footballers facing one another across an alleyway in Glasgow. One helped shape football as we know it, the other is Pele. Andrew Watson captained Scotland to a 6-1 win over England on his debut in 1881. He was a pioneer, the world's first black international, but for more than a century the significance of his achievements went unrecognised. Research conducted over the past three decades has left us with some biographical details: a man descended of slaves and of those who enslaved them, born in Guyana, raised to become an English gentleman and famed as one of Scottish football's first icons. And yet today, 100 years on from his death aged 64, Watson remains something of an enigma, the picture built around him a fractured one. His grainy, faded, sepia image evokes many differen
Academic rigour, journalistic flair COVID-19 Arts + Culture Business + Economy Education Environment + Energy Health + Medicine Politics Science + Technology In French Artist illustration of an exoplanet. dottedhippo/iStock via Getty Images Are there any planets outside of our solar system? July 19, 2021 2.06pm SAST Author Jean-Luc Margot Professor of Earth, Planetary, and Space Sciences, University of California, Los Angeles Disclosure statement Jean-Luc Margot receives funding from the National Aeronautics and Space Administration, the National Science Foundation, and philanthropists. Partners University of California provides funding as a founding partner of The Conversation US. The Conversation is funded by the National Research Foundation, eight universities, including the Cape Peninsula University of Technology, Rhodes University, Stellenbosch University and the Universities of Cape Town, Johannesburg, Kwa-Zulu Natal, Pretoria, and South Africa. It is hosted by the
There are a lot of people, but the oceans are very big. Rosley Majid/EyeEm via Getty Images If everyone on Earth sat in the ocean at once, how much would sea level rise? March 29, 2021 2.07pm SAST Author Tony E. Wong Assistant Professor of Mathematical Sciences, Rochester Institute of Technology Disclosure statement Tony E. Wong does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment. Partners Rochester Institute of Technology provides funding as a member of The Conversation US. The Conversation is funded by the National Research Foundation, eight universities, including the Cape Peninsula University of Technology, Rhodes University, Stellenbosch University and the Universities of Cape Town, Johannesburg, Kwa-Zulu Natal, Pretoria, and South Africa. It is hosted by the Universities of the Witwatersrand and Western Cape, the African
COMMENTS 5
You must be signed in to comment.
SIGN IN SIGN UP