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Good article today in the Lex column in the FT.

If you have a subscription here is the link:

https://www.ft.com/content/91856dda-a054-409d-a693-f47361acf75a

The article begins:

“Picks and shovels never looked so good. Gold miners are trouncing the shiny metal: while gold has barely budged over the past three months, share prices of those that hack it out of the ground are up by as much as a third.

The relative fortunes make textbook sense. A chunk of fixed costs means miners’ profits should increase beyond the price of gold, thanks to the financial magic of operational leverage. But for years, those benefits were shredded by miners’ penchant for squandering cash on vainglorious acquisitions and forays into geopolitically risky corners of the globe.

That is changing. Many miners have amassed cash piles and are sitting on healthy balance sheets. Free cash flow yields were running as high as 8 per cent three months or so ago, before the latest rally took off.”

Alas PAF doesn’t get it mentioned; just some of the big boys. But the sentiment is excellent.

If you have an FT subscription this is a good article on illegal gold mining :

https://www.ft.com/content/cc4f6203-4d78-4b1d-a431-82d0e10e7c47

It begins:

As global gold prices took off, residents of Stilfontein, a sleepy South African town surrounded by abandoned shafts from the country’s mining heyday, began noticing some intimidating newcomers.

“We see their cars loaded with guns and equipment,” one store owner said of the armed criminals who began frequenting Stilfontein’s hardware shops. “They’re not from here. They just come for a few days and then disappear again.”

The gangsters were there to profit from a brutal but thriving underground economy, in which thousands of impoverished wildcat miners are put to work deep in South Africa’s disused mines — once among the world’s most profitable — while criminals battle for control.

I hope Peel Hunt buy all the shares they can. The cheaper they buy them the better it is for the rest of us, by reducing the number of shares in issue. I wish there had been a larger buyback.

Thank you. I hadn’t seen it. Very encouraging. Just one more example of the professionalism of the management team.

I agree with pretty much all you write, Mike. I’m less worried about the need for yet more of a rise in the Au price to drive the PAF price upwards as I believe the company will print cash at the current price (and lower).

Can the share price double ? I’m sure it’s possible; even likely, though I don’t expect it quickly. 18 months is an optimistic hope and a volatile ride on the way. It will require the Au price to hold up, production to rise, no operational hiccups and an excellent 2026. Plenty of opportunities to lose one’s nerve…..

Well done Offler, buying and selling. I don’t have the nerve. I’m up comfortably over 100% having first bought at 10.6 in 2019 and all the way up to 56p this July. I may well buy some more.

Hubris so often precedes Nemesis so it’s probably very unwise to disclose these figures. Let’s hope we are not crying when the results emerge.

I have been buying since 10p have no intention of selling. In percentage terms, I judge they are far more likely to double than to halve. The results for this year will be important, but even more so will be the outlook for next year. Also, if a generous dividend policy is adopted (perfectly feasible) this too will underpin the stock price. Of course, there are risks – that always are and it’s not one for widows and orphans. But it’s not often you come across a stock which is so clearly primed to go upwards. With most companies, it’s hard to judge what the future holds. With this one it’s largely about the gold price, production volumes and production costs.

Cross your fingers and sit tight is my feeling - looking to the future for what will be a volatile, but I anticipate upward, ride.

Not just a 52 week high.

A 13.8 billion year high….

Hi Viable.

For the gamblers amongst us, do you recommend these three shares?

Cheers!

Let’s hope you’re correct, Patryk.

Trying to work out what this year‘s profit number will be is very tricky / near impossible to do confidently. Mike and others have tried earlier this year and I suspect Mikes’s estimates are pretty good.

The problem is there are a lot of variables: How much gold is produced? How much gold is sold? What price was achieved for the sold gold, especially given the impact of the hedge? How quickly has the Australian acquisition taken off (I suspect slowly)? Have there been production hiccups in South Africa? Etc. etc. Then there is the strange revaluation credited to the P&L account in H1 which muddies the waters.

I’m basing my investment on the belief that the business is well managed and that CL is a good leader . He is a CA and he seems to have his feet firmly fixed on the ground . The company has made great progress under his leadership (I’ve been invested for five years, steadily building my holding ) and I think the Australian acquisition is very astute and cheap. My only criticism management is that I think their communication of the figures has been poor and confusing - especially H1 this year. But good management combined with soaring gold prices and a clear strategy should result in considerably improved profits. Quite what they will be this year, I don’t know, but I’ll be disappointed if they aren’t much improved and don’t point towards a potentially very successful 26 - even if gold prices were to drift back 10 or even 20%. If gold holds up, or improves even more, then the profits could be spectacular.

Thanks Mike.

Yes, I remember that conversation and I agree that the hedge was essentially an opportunity cost.

My earlier question was a bit daft because the hedge was almost certainly fixed to the sale of a certain amount of gold , as you confirm.

I had just got a question in my head about whether the company had deferred sales in the first half because of the hedge, but I think that is unlikely - though they were carrying some gold at cost of production.

I’m hoping for some very good full year figures but they’re still likely to be clouded by some of the strange accounting that we saw in the first half, in particular the Australian reevaluation.

I’m long-term Holder and I’m already excited about the 26 results😂😂

Let’s hope you’re correct, Patryk.

Do you or anybody else know whether the hedge that recently expired was a time based hedge or an amount based hedge? ie. Was it about selling a certain amount of gold at a certain price, or all the gold we sold up to a certain date?

Because if the latter, it would’ve made sense to hold back sales until the option date had passed.

I need to have another go at modelling the numbers. I did it a few years ago I’ve not updated recently. I found the half year results very confusing with the profit on the revaluation of Australia and some other funnies. It’ll be good to get a set of figures which doesn’t include these peculiarities.

But I do believe this is a cash printing machine. That’s the basis of my confidence in it. 🤞🏻🤞🏻🤞🏻🤞🏻🤞🏻

i don’t recall, in a lifetime of amateur investing, that i’ve ever had a stronger feeling that a stock price should rise substantially than i currently do with paf.

🤞🏻🤞🏻these words don’t come back to haunt me. which is not to say that **** can’t happen, but with a fair wind and no bad luck, the prospects look excellent. i’d thought (and previously written here) that we would see the share price sticking in the 50s until the results come out. maybe patryk is correct and we will experience a continued upward trend.

the gold price obviously peps the price, but the truth is this thing should churn out huge amounts of cash even at $2800.

if the gold price holds anywhere around where it is now, australia successfully comes on stream and south africa doesn’t go down the pan politically and economically, a trebling of the share price is eminently doable.

I believe (happily to be corrected) that you are confusing two companies:

Tennant Consolidated Mining Group (TCMG)

• The entity acquired by PAF in November 2024 for around US$54 million to develop the Tennant Creek gold project in Australia.

🔸 Tennant Minerals Limited (ASX: TMS)

• A publicly-listed exploration company in Australia focused on copper and gold, including the Bluebird Copper‑Gold Project in the Tennant Creek region.

• Its CEO, Vincent Algar, resigned effective July 31, 2025 to pursue other opportunities and will continue in a consultancy capacity .

• His departure was a described as a voluntary (!) resignation, and is unrelated to PAF or the Tennant Creek goldfield as operated by TCMG.

Apologies, but I have copied the piece about PAF from the article attached below. Thank you so much for drawing it to our attention. It’s very encouraging.

Midtier gold miner Pan African Resources says it is in a “particularly advantageous position”, as it has executed new high-margin surface retreatment projects and completed its capital-intensive expansion projects as the gold price began its upward trajectory.

Pan African CEO Cobus Loots says the company has commissioned the Mogale Tailings Retreatment (MTR) surface retreatment operation, in Johannesburg, valued at about R2.5-billion, and the Noble’s mine, in Australia, with a price tag of about R600-million, within a 12-month period. The two operations will add about 40% to the company’s yearly production, improving its production profile to about 300 000 oz in the 2026 financial year.

The company has also spent about R100-million at its Evander underground development projects, in Mpumalanga, which will ensure steady production for the next 13 years.

Pan African expects Evander to reach steady-state production following infrastructure upgrades that entailed equipping a subvertical shaft for hoisting, replacing the cumbersome conveyor belt system and significantly improving efficiencies.

Loots says the new production asset at MTR, including the Soweto Cluster tailings storage facilities, will produce about 60 000 oz/y at an all-in sustaining cost of just over $1 000/oz.

With the addition of the Elikhulu tailings retreatment operation at Evander and the shallow openpit operations at Tennant Mines, in Australia, over 60% of Pan African’s production will be from lower-cost surface mining operations.

Loots notes that production ramp-up has been ahead of schedule at MTR, while Tennant Mines is expected to achieve steady state early in its first few months of operation.

The company anticipates just under 200 000 oz/y in production for the 2025 financial year ended June, noting that this will increase substantially, approaching 300 000 oz in financial year 2026 as the company will include a full year’s production from MTR, and with the Tennant Mines fully ramped-up.

“Not every gold mining company can claim to commission two producing gold mining operations within a year, and subsequently grow high-margin yearly production by some 40%. As this has been undertaken in a rising gold price environment, it will substantially improve returns to our shareholders, improve our balance sheet and benefit other stakeholders impacted [on] by our operations,” says Loots.

Great to see your confidence, Patryk.

I feel £1 is well within our range, and the key will be this year‘s results and the outlook for 26.

Will the results live up to our expectations? Let’s keep our fingers crossed. Roll on September.

There’s been a nice bit of momentum over the last few weeks which suggests others are waking up to the opportunity.

I added again today. I have bought steadily over the last five years from 10p. PAF now represents 10% of my total portfolio. For a stock which I feel so positively about, that probably still isn’t too high a percentage,

but it’s enough for now – until we hear the results and get a good sense of what next financial year might bring.

I tend to prefer for concentrated portfolios, although including some focused funds like polar technology, for example.

Apologies for a few weird typos. I dictate these and inevitably don’t correct all my errors.

We seem to be on a strong upward trend at the moment, although history tells us to expect volatility. I have feared that buyer might emerge and fingers crossed that doesn’t happen.

For me, the Australian acquisition is a bonus. Great to diversify political and economic risk. The gold price when the acquisition was announced was around 2 1/2 2500 dollars per ounce, so presumably the negotiations occurred at an even lower number. Assuming company did the maths correctly, and they seem a diligent bunch led by an accountant, they should’ve been able to print profits at the acquisition price, let alone with gold where it is today - Assuming the gold was there and the production could be satisfactorily organised. It 1,796,747 be fascinating to see how production rolls out, but there could be a $$$ bonanza down the line - as various commentators here have noted.

To my mind, PAF feels like one to hold for the long-term, even if the gold price drifts back.

I’m tempted to buy more, although I have an awful lot (by my standards) already.

I believe we’ll see approaching a pound £1 in the next 12 months. The share price could easily rise very quickly, especially if the company moves off AIM which I sense is a distinct possibility.

I’ve enjoyed reading everyone’s commentary over the last few days. Well done and very useful.

Any thoughts on what dividend per share we might see this year?