A small South African based precious mining group that produces gold and platinum from high grade ore bodies at a low cash cost. I have a holding in my growth portfolio (epic code: PAF).
Pan African Resources issued a trading statement today, declaring that EPS for the financial year ended 30 June 2013 is expected to be between 25% and 35% higher than the 2.02p per share generated last year.
Headline EPS is expected to be between 3% and 13% higher than the 2.03p per share reported last year. The net adjustment amount between HEPS and EPS is expected to be approximately £5.1m, due to the provisional purchase price allocation of Evander and, impairments as a result of lower precious metal price forecasts and exploration and mining challenges in the current depressed mining environment.
PAF produced 130,493 ozs. of gold in the year, with a four month contribution of 34,197 ozs. from Evander, its recent acquisition. Phoenix its platinum mine produced 6,480 ozs. and at the year end production commenced at the Barberton Tailings Treatment plant.
Despite a difficult environment this is a creditable performance. The highest estimate I have seen for the 2013 EPS is 2.3p, so an expected range of 2.52p to 2.73p puts them at 10-19% above the high end of the market's expectations and on an historic P/E of 5.5 to 5.0 at 13.75p. This looks to be good value for a low cost producer, even with the low gold price and do not deserve the discount to their peers, although I do recognise that they need to recruit a permanent replacement for the interim joint CEO's.
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