Pan African Resources (LON:PAF) is a fast developing South African based miner with three key projects, says RBC Capital Markets, which rates the stock 'outperform'.

Those three projects are the Barberton gold mines, the Phoenix PGM bearing tailings reprocessing project and a 50 per cent interest in the Evander gold mine that is being acquired from Harmony Gold.

Last month the firm reported a 91 per cent spike in profits in the six months to December 31, thanks largely to the favourable and rising gold price and in January said it was teaming up with Witwatersrand Consolidated Mines in a 50:50 deal to acquire Evander Gold Mines for £139 million.

Analyst Jonathan Guy said today he believed PAF should see its attributable gold production increase from 92,000 ounces in 2011 to 143,000 ounces in 2014 estimates assuming that the Evander transaction completes and the Barberton mines are expended through the commissioning of the tailings re-treatment operation.

Evander could provide a template for the company to acquire other older underground mines that could be commercially operated on a relatively small scale by a Tier 3 producer such as PAF, the analyst also pointed out.

The firm also owns the Manica gold project in Mozambique, which it plans to spin out into a separate listed vehicle most likely during the second quarter of this year, he said.

Guy also points out that last year the firm successfully commissioned the new Phoenix tailings re-treatment operation and should achieve commercial production over the next six months.

The analyst has a target price of 22 pence on the stock - from 19 pence previously (current price: 16.50 pence).

Earlier today, the company said the  financial effects of the planned acquisition of the operating Evander gold mine from Harmony Gold (LON:HRM) are still being determined.

The outcome may have a material effect on its share price, and Pan African advises shareholders therefore to continue to exercise caution when dealing in its stock until a further announcement is made.

The group had issued similar statements advising caution in November and December last year while mentioning unspecified ‘negotiations’ regarding a transaction.

Then, at the end of January, it announced it was planning to buy the Evander mine for £139 million in a 50/50 consortium with Wits Gold.

The deal is expected to increase Pan African’s gold production profile from 95,000 to around 140,000 ounces a year.

Pan-African Resources (LON:PAF) posted a 91 per cent spike in profits thanks largely to the favourable and rising gold price.

Attributable profits were £14.44 million for the six months to December 31, which were achieved on sales of £51.23 million.

The group, which owns the Barberton gold mining operations in South Africa as well as the Phoenix platinum project in the country, also said it is unheged and has £4.9 million of cash.

It will consider whether to pay a dividend at the year-end. 

At Barberton gold sales increased by less than a percentage point to 46,927 ounces at a head grade of 10.65 grams per tonne.

At Phoenix the plant was commissioned was commissioned two years ahead of schedule last October.

A total of 438 ounces of platinum group metals contained in concentrate were dispatched by the year-end.  

Last month Pan-African said it was teaming up with Witwatersrand Consolidated Mines to acquire Evander Gold Mines for £139 million.