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.

Pan African Resources (LON:PAF) is to buy the operating Evander gold mine from Harmony Gold for £139 million (R1.7 billion).

In a consortium with Wits Gold, the firm is to acquire 100 per cent of Harmony's interest in Evander Gold Mines in a 50:50 joint venture.

The company believes that the deal further represents an opportunity for Pan African to materially increase its gold production profile from 95,000 to around 140,000 ounces a year.

The Evander operations are in Mpumalanga, South Africa, and comprise the operating Evander 8 shaft, and several significant development projects namely Rolspruit, Poplar, Evander South, Libra, a surface tailings resource and the Kinross metallurgical processing plant.

The total underground resource represents 32.5 million ounces and a reserve of 7.6 million ounces

The Evander 8 shaft currently has an expected life of mine of more than ten years.

Evander is expected to produce between 85,000 and 95,000 ounces per year and the deal adds significantly to the firm's reserve and resource base, and provides an annual attributable share of production of around 45,000 ounces per annum, said Pan African.

£115 million is due in cash on the closing date of the transaction while four payments of £2 million each will be payable quarterly - beginning three months after the closing date.

A further £8 mln million is payable 19 months after the closing date, today's statement said, provided the average rand gold price exceeds R410,000 per kg over the 12 preceding months.

R100N million will be payable 31 months after the closing date provided the average rand gold price exceeds R450,000 per kg during the preceding 12 months.

The consortium members intend to utilise a combination of debt, equity and operational cash flows to settle the transaction, said the statement.

Chief executive Jan Nelson said this afternoon: "Evander meets our investment criteria in all aspects and has the same ability to yield high margins as our Barberton mining operations. The Evander 8 Shaft orebody has gold grades in excess of 14g /t in the measured and indicated resource category, an extremely experienced
management team and workforce, as well as good infrastructure.

"Together with Barberton, Evander will respectively increase our resource by 304 per cent to 22.9Moz and our reserve by 390 per cent or 4.9Moz."

He added: "The smart solution of a partnership with Wits Gold gives us the necessary momentum to continue to deliver profitable sustainable stakeholder growth and returns and represents a first in the junior gold sector in South Africa."

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Pan African Resources (LON:PAF) shares gained almost 10 per cent in early deals after it revealed strong figures for the six months just ended.

The South African precious metals producer told investors that it expects earnings to double.

Earnings per share and headline earnings per share for the half year to 31 December 2011 are expected to be between 83 per cent and 93 per cent higher than the 0.53p per share in the previous first half, Pan African said.

In rand terms, earnings will be between 97 per cent and 107 per cent higher.

“With a weakening rand the company is well positioned for further strength in 2012,” Collins Stewart’s mining analyst John Mcgloin said in a note to clients today. 

“The company is the highest yielding gold play in the gold sector currently yielding 5.2%. We expect to see the shares up in London today.”

The improvement comes ahead of an expected boost from its first major capital project, Phoenix, which will kick in the second half of the year.

Phoenix, a chrome tailings treatment plant, came on stream in November and will contribute to revenues in the third quarter of the current financial year.

Planned production for the third and fourth quarters taking into consideration a build-up phase, is estimated to be 4,500 ounces of PGM's (platinum group metals). Phoenix is located on the site of International Ferro Metals’ (LON:IFL) Lesedi mine in South Africa.

In November, Pan African also revealed it had entered discussions on a deal that would have a material effect on the share price if successful, though there has been no further developments on this.

Pan African is a gold mining company focused on projects in South Africa and Mozambique and produces around 100,000 ounces per year.

Its strategy is to develop low cost, high margin production or near-production projects. 

At 10:30 on AIM Pan African Resources shares were up 0.75p, or 5 per cent, trading at 16.25p.

Earnings per share and headline earnings per share for the half year to 31 December 2011 are expected to be between 83 per cent and 93 per cent higher than the 0.53p per share in the previous first half, Pan African said.

In rand terms, earnings will be between 97 per cent and 107 per cent higher.

The improvement comes ahread of an expected boost from its first major capital project, Phoenix, which will kick in the second half of the year.

Phoenix, a chrome tailings treatment plant, came on stream in November and will contribute to revenues in the third quarter of the current financial year.

Planned production for the third and fourth quarters taking into consideration a build-up phase, is estimated to be 4,500 ounces of PGM's (platinum group metals). Phoenix is located on the site of International Ferro Metals’ (LON:IFL) Lesedi mine in South Africa. 

In November, Pan African also revealed it had entered discussions on a deal that would have a material effect on the share price if successful, though there has been no further developments on this.

Pan African is a gold mining company focused on projects in South Africa and Mozambique and produces around 100,000 ounces per year.

Its strategy is to develop low cost, high margin production or near-production projects.

The firm released a cautionary announcement on November 17 this year, which told investors that the firm had entered into negotiations.

Today, in a stock exchange statement, it said: "Shareholders are advised that negotiations are still in progress, which if successfully concluded may have a material effect on the price of the securities of the company. 

"Accordingly, shareholders are advised to exercise caution when dealing in the company's securities, until a full announcement has been made."

Pan African is a gold mining company focused on projects in South Africa and Mozambique and that produces around 100,000 ounces per year.

Its focus is on developing low cost, high margin production or near-production projects.

Phoenix is a chrome tailings retreatment plant located on the site of International Ferro Metals’ (LON:IFL) Lesedi mine in South Africa. 

Once production has ramped up, the plant is expected to produce around 12,000 ounces of PGMs each year. The Phoenix operation has an estimate project life of 17 years.

This morning the group revealed that the plant has produced its first PGM concentrate.

PAF said it plans to produce a combined 4,500 ounces of PGMs in the third and fourth quarter of the financial year (ending June 30 2012).

"We are extremely pleased to announce the production of first concentrate from Phoenix, two months ahead of schedule,” said chief executive Jan Nelson. 

“Being our first major capital project it was imperative that we achieved our milestones on schedule and budget, a testament to the effort of the team and I would like to thank them.” 

Additionally PAF also revealed today that it has now signed an agreement to sell PGM concentrate to Western Platinum Limited (WPL), a subsidiary of Lonmin.

“The conclusion of the five year sale of PGM concentrate agreement with WPL and the early production of PGM concentrates, will provide the company with a platinum revenue stream commencing towards the end of the third quarter of this financial year,” Nelson added.

“We have now completed our transition into a producer of both gold and platinum group metals."

The firm said the completion of construction at the Phoenix CTRP (Chrome Tailings Retreatment Plant) within the planned schedule and budget had surpassed its expectations.

“Our next goal is to complete the commissioning of the plant in order to produce our first concentrate by end December this year," it said.

Pan African owns the Barberton Mine complex, a group of mines in South Africa that produce around 100,000 ounces of gold a year.

The wholly-owned Phoenix Platinum project represents somewhat of a departure from its gold-focused operations.

Located on the southern portion of the Western Limb of the Bushveld Igneous Complex, Phoenix owns the rights to exploit platinum group metals tailings from chromite mining.

Total resources spread over Phoenix’s three tailings locations are 4,646,000 tonnes at an average grade of 3.15g/t for 469,000 ounces of PGM 4E – platinum, palladium, rhodium and gold.  

The project will comprise the 240,000 tonnes per annum CTRP built at the Lesedi Mine operated by International Ferro Metals, which will generate PGM concentrates from chrome tailings at three locations where Phoenix has acquired exploitation rights: the IFM Tailings Dams and Current Arisings, located on the farm Buffelsfontein; the Elandskraal Dumps and Pits, and the Kroondal dump.

Pan African Resources (LON:PAF) has decided to spin out the Manica gold project as a separate entity which will be listed on an appropriate international stock exchange.

The company said it has been exploring optimal ways to bring the Manica gold project ‘to account’. 

It subsequently decided that the best option would be to separate the exciting exploration project from its South African mining operations and create a new Mozambique focussed explorer. The process to spin out Manica has already got underway, Pan African said.

“Pan African believes that the separate listing will allow it to focus its capital and human resources on pursuing organic growth opportunities around the company's mining operations in South Africa,” the company said in a stock exchange statement. 

“At the same time, a separate management team, which has been appointed by the company, will have the financial flexibility and focus to grow the Manica Project. Pan African intends to retain an equity stake in the new listed entity." 

The company believes that by creating this new company it will unlock optimal value for its shareholders.

Pan African owns the Barberton Mine complex, a group of mines in South Africa that produce around 100,000 ounces of gold a year. Barberton hosts total mineral resources of 2.55 million ounces of gold, of which 1.9 million ounces are in the measured and indicated resource categories. 

Meanwhile in central Mozambique, the Manica project hosts 2.96 million ounces of gold in all resource categories with a grade of 1.82 grams per tonne. This resource includes 1.38 million ounces in the measured and indicated categories, with a grade of 1.75 grams per tonne. 

The project is currently in the pre-feasibility stage. At the moment it is estimated that for around £50 million capex the project could be developed into a 30,000 ounce a year mining operation. 

In a presentation on the proposed spin-out Pan African explains that through the IPO it hopes to raise sufficient capital to develop a 20,000 tonne mining operation and bring it online by the third quarter of next year. 

It also wants to have enough capital to continue expanding Manica through exploration, with the AIM of establishing a total resource in excess of 5 million ounces of gold.

Once spun out the new company will also have a longer term goal of completing a bankable feasibility study for a much larger mine at the Manica site. In the longer term it wants to grow mining capacity to 125,000 tonnes per year, while also looking for other assets in the region to subsequently grow it mining operation to the 250,000 tonnes a year mark.

Gold miner Pan African Resources (LON:PAF) announced today that it had successfully negotiated with South Africa’s National Union of Mineworkers on wages and other conditions of employment at the firm’s Barberton mines for its 2012 financial year.

The one-year agreement amounts to an average wage increase of 11 per cent across the board.

The employees will also receive an increase to their housing allowance from 1,100 South African rand per month to 1,300 rand. The increases are effective from 1 July 2011.

Pan African also pointed out that it was not a member of the Chamber of Mines, and that as it has successfully concluded wage negotiations it will not be affected by any strike action by the NUM; this week the NUM issued a notice to the Chamber of Mines indicating that workers in the gold sector would this Thursday would join coal workers in a nationwide strike.

Pan African’s Barberton mining operation produces around 315,000 tonnes per annum at a grade of 10 grams of gold per tonne (approximately 100,000 ounces annually).

In May, the firm upgraded its mineral resources and reserves at Barberton. Total mineral resources increased by seven per cent to 2.55 million ounces of gold, while measured and indicated mineral resource increased by four per cent to 1.9 million ounces. 

By 10:24am today, shares in Pan African were sown 1.7 per cent at 13.15 pence each.