EUR 842.24 For Business Accounts Only

Pan African Resources (PAN) - Dramatic turnaround at Evander

Summary

Pan African Resources (PAN) prelims released this Wednesday (20 Sept 2017), contained several positive surprises, which are not yet reflected in its share price.

Evander Underground

• Boosted Gold production by 44% in the Sept quarter of the current financial year (F2018), vs. the same quarter of F2017. This equates to an annual run rate of 72,000 ozs.
• A near doubling in productivity of the average stoping crew.
• A reduction in dilution, with the mill width dropping from an unacceptable 2.5m to an almost respectable 1.95m.
• A threefold increase in development rates, which will finally provide management with the flexibility to mine the orebody at grades approximating the Ore Reserve grade.
• New management team, which is clearly delivering.
• A fascinating new orebody, Trichardt Channel, mentioned for the first time.

Barberton Underground

• Management forecasting a strong improvement in gold production for F2018, with continuing exceptional borehole values.

Investment Impact

In summary, we expect PAN to produce a sharp improvement in first half earnings, with more to follow. From a cash perspective, the dramatic improvement at E8 will drop straight into the bank account, given the capex being spent at Elikhulu. With the stock cum dividend, there is exceptional safety in the price at the current R2.35.