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A rising tide.
Good numbers those. Can't argue with more gold and a higher price. On a much stronger footing than last year, it will be interesting to see the market reaction today!
Anyone think PAF could be a takeover target before the increased production comes online at the end of the year?
PAF is due for a re-rating.
According to data from Investing.com PAF is one of the best net profit margins out there at 20%, with gold price set to increase further, while the worries of increasing inflation and cost will subside.
Next year also production will increase, this is easily a double you money 12 months investment, I whish I bought more at recent 15p.
Their figures are underestimates.
Results in 2 weeks will beat.
EPS will also be higher.
Gold higher again today.
'Anticipating a happy valentine'
https://www.edisongroup.com/research/anticipating-a-happy-valentine/33168/
Valuation: Steady at 42.27c (33.46p)
As expected. lots of "Jam tomorrow" but we know Mintails is happening and the target of several 10s of 1000s above 200k annual production is where we are heading.
Page 7.
Alternatively, applying PAF’s peer average year one P/E ratio of 12.1x to our normalised HEPS forecast of 5.31c per share for FY24 implies a share price for the company of 51.04p. Applying its peer average year two P/E ratio of 9.2x to our normalised HEPS forecast of 6.00c per share implies a share price of 43.90p.
Readers’ attention is also drawn to the decline evident in the market’s year one yield estimate for PAF, which appears to suggest that it believes the company will cut its dividend in FY24 (or that the rand will fall very sharply versus the US dollar, but that this will otherwise not be reflected in the company’s results), which we regard as highly unlikely, except in extenuating circumstances.
I also prefer focus on dividends over buybacks. Otherwise there will be temptation to sell shares when price moves around 28p. Then regret when SP stabilizes in the range 32-35. Currently almost comfortable situation. The only problem is frequency of dividend payment which has already been under consideration at executive committee.
Gavster - That may be different if the board declared an intention to buy back stock. Sylvannia Platinum did it with free cash while continuing to pay a 12% dividend at the time. When conducted in tandem with regular dividend payments they don't reward sellers either.
To be clear nobody is against the dividend nor for scrapping it in favour of a buyback. However there comes a point when the share price is on it's knees and the yield is in double digits when a company acts to preserve shareholder value. That is exactly what a buyback is for.
Whether cheap 17-18p stock held in reserves is then raided for bonus payments down the line, offered to an institution looking to take a sizeable stake of the company at an attractive price or simply cancelled is secondary. Buying back stock is preferable to pursuing unsupported dividend hikes / special dividends etc, the like of which only encourages traders and not long term investors! AAZ pursued that hopeless policy and look at the share price now, on it's knees.
kenj - Well it does happen that way on occasion, I've been invested in a stock when it was announced following a buy back some time in the preceding months. That it happens less frequently than cancellation is true.
In terms of reducing the share capital (by buyback and cancellation) the short term effect is the same. Availability of 'cheap' shares reduces, the market awareness drives the price creating liquidity in a higher range, assuming all other factors being equal.
"Pan African buying back stock adds capital to it's reserves which can be released to an institutional investor at a later time for a premium and in the short term increases confidence in the stock at these low levels while maintaining liquidity at a higher price level."
the_shareminator,
That might be nice, but it doesn't happen that way!
PAF like most other companies who make buybacks, does not sell these shares at a profit, or even award them to staff or directors as a bonus, they simply cancel them.
The shares are destroyed.
The only benefit of this is that the company pays dividends on fewer shares.
RNS 12 April 2023
"Pan African, the South African gold producer, announces that on 11 April 2022, in accordance with the terms of its share buyback programme announced on 1 April 2022 (the “Programme”) it purchased the following number of ordinary shares of £0.01 each in the Company (“Ordinary Shares”) through Peel Hunt LLP (“Peel Hunt”) and RMB Morgan Stanley (“RMBMS”). The shares purchased will be cancelled."
They've done that for years. I don't see it elsewhere either, as the Dividend is supposed to be 40% of cashflow, but it is what it is and PAF has been a great investment for well over a decade.
It could be when invoices are due for payment, effecting the cash flow at dividend pay date.
Next period will shed some light on it.
And using loans to pay its $22m dividend is a strange one
Big increase in company debt
"net senior debt increased to US$60.0 million (June 2023: US$18.9 million), primarily as a result of the capital expenditure of US$23.2 million incurred on the MTR Project and the dividend of US$22.1 million paid to shareholders in December 2023"
Buybacks are out the question IMO. There's little appetite amongst the share holders going from the votes at PAF AGMs, perhaps non SA holders for tax-reasons as you say, but that's the minority.
They can be a red flag for me. They reward only sellers, and for example a BOD issuing themselves shares then having them bought using company money, like at BP. Much prefer dividends driving a higher SP.
UK shareholders would benefit more from a share buy-back than an increased dividend payment as already mentioned, we are being taxed for the latter. With that said, either or are preferable to the company fast tracking debt repayments at this point given ring-fencing of Mintails.
Pan African buying back stock adds capital to it's reserves which can be released to an institutional investor at a later time for a premium and in the short term increases confidence in the stock at these low levels while maintaining liquidity at a higher price level.
That was a really impressive H1 operational performance from Pan African with Gold production 98koz vs 92koz and AISC below guidance at $1300.
On track with the MTR Project and commissioning of Barberton’s solar PV plant.
Gold over $2,000 and with a low AISC we should be over 20p here.
Profit for the period = 98458oz x $660 (GP - AISC) = $65m approx.
Another 6 months like this then we're heading for PAF's best year.
Pre=tax Profit of $130m, current market cap of $380m (approx)...
That's a PE of lest than 3 !!!
Come on, surely a re-rate to the mid 20's, and that's before the Mintails gold starts to roll in.
IMO If it happens, it will happen suddenly and quickly, as these types of moves most often do.
Plenty to look out for in the future. Wont expand much on todays rns but I am ok to hold shares here. Gla
Amazing considering all the problems.
Such a pity.
Thus should be trading ar double the current share price but London has become a manipulators dream. So sad the FCA choose to ignore all the data and reports.
The lack of director buys is also disappointing.
Day traders toying with this.
Up all day, then last half hour sell and it ends red.
Just hope these people get caught out.
You have to be in it to win it.
Just had a nice jump north from being in the Red.
Don’t get this price action, below 16p is a true steal esp with results near the corner.
Agree ZAR/USD ratio correlation to PAF sp, possibly is not the main driving factor. If anything in order of importance there is POG, Production (whereas Production affect the sp more directly) then there is USD/GBP with the exponential of POG, which some time is not correlated to USD Index, all in the context of PAF sp been quoted in GBP.
But given the spread of PAF sp not sure if these data are worth following.
I got in recently a bit too hot on my entrance price. Planning to average down if/when the time is right.
Stage 2 is nothing mate.
It's stage 5 and 6 that causes most disruption.