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).
The trading statement from Pan African Resources today may not be as catastrophic as it first read, after the share price initially dived and at one point was down 8.5%, but ended the day up 1.7% to 15p.
The Company advised that it expects its 2014 full year EPS in Sterling terms to be between 42% and 47% lower than last year's 2.63p, so between 1.39p to 1.53p. Current expectations before the announcement had already factored in a 39% decline to 1.60p. This expectation reflected the impact associated with the low grade mining cycle at Evander Mines and only partially the weaker gold price received in sterling terms, that Pan African say has fallen by 19% . PAF's income in GBP has suffered the double hit of a stronger pound and a weaker gold price that is set in US Dollars.
The Board has committed to propose a final dividend not lower than that paid in 2013 in ZAR terms of 0.134c, which equated to 0.8033p at the time, but would be 0.7575p at today’s rate, a yield of 5.1%.
With so much uncertainty in the world, I'm surprised that the gold price, with a rise of only 7% over the past 12 months, has not seen a greater return to favour as a safe haven.
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