Pan African Resources PLC (AIM:PAF, OTCQX:PAFRY, JSE:PAN, OTCQX:PAFRF)'s production of 175,00 oz in its latest financials came in as expected but its debt position was better than predicted, says broker Peel Hunt.
Net senior debt closed at US$18.9 million, well under the US$25-35 million guided in May and a $30 million improvement over the position on 30 December, with the sustained high gold price and weaker Rand aiding cash generation over the period.
“This puts the group into a strong position going into the Mintails build,” said the broker.
Its reiterated guidance of 178-190,000 oz for this year suggests that while power supplier Eskom interruptions may continue, the change to continuous operations at Barberton, plus other changes at the site are delivering visible improvements to monthly production levels.
“As further solar projects come online (with the Barberton farm under construction), Eskom supply reliability should become less impactful on group supply.
“Once the Mintails project ramps (first 2025) we anticipate group output of 250,000oz pa, a significant step-up from the present production level.”
'Buy' with a target price of 24p is the broker’s view.