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Mike - how do you see production in 28 - 30?

Cheers

Mark

Obviously a tremendous jump in the share price today which will have made us all smile. At the risk of being the Jeremiah, it’s as well to remember that this stock has always been a bumpy ride and will continue to be so. Expect down days, especially tomorrow. The spread on the shares at close, if this website is to be believed, is 7p which often portends a fall in the morning.

That said, everyone knows I’ve been a £2 per share man for a long time and, absent a collapse in Au price or something unforeseen, believe this will happen.

But I suggest it’s unwise to bet on the Au price rising much more than where it is today, though that’s obviously a personal view and others of you will have a very different opinion. Au price forecasts are no better than slightly educated guesses.

Turning to today's results, the bit I've tried to focus on, and with not a huge amount of success, is the production outlook for 27 and beyond. The company, as Mike has pointed out earlier, have made a forecast for 27 and it's rather underwhelming – less than both he and I were expecting, and I think less that has been mentioned previously by the company (not 100% sure about that last point). Anyway essentially, the production forecast for next year (2027)is pretty much the same as this 2026 – slightly higher but so close to not make much difference.

To my mind, what is going to power this share onwards beyond £2, absent another jump in the gold price, is good cost control and increased production.

Trying to put numbers on production for 28 and onwards is very difficult though there are lots of encouraging observations in the report about further capital investment.

This is not a definite list of revenue opportunities and the timings are VERY unclear:

• Tenant in Australia should grow to 100k oz pa from c 50k in 27 (the words in the report are ambiguous because they talk about this growth “excluding growth in operations in Australia detailed elsewhere”

•there will also be a 10k to 15k tonne pa copper production in Australia (at c. $12k per tonne current market value). ie $120 - $180m. of incremental revenue. Unclear whether PAF figures are tons or tonnes, but numbers big regardless. No idea of the costs associated with this, but presumably potentially very profitable incremental income.

• Evander mine currently produces c 50k oz pa.. Feasibility study underway to double this to 100k in relation to the Poplar deposit

•Barberton currently produces c.70k and there’s work underway with the Royal Sheba deposit which should increase production - Mike; you understand these resource figures translate into future production better than me. I don’t have a handle on how the production can increase

•Soweto cluster tailings should increase production by c 35k oz pa - approval expected shortly for development.

ie Exc. c, royal sheba there’s c. 135k oz extra production plus copper.

What have I missed?

Mike - how do you see production i

I think Johnnytaffia is saying that he thought about buying PAF when it was 10p in a fantasy game. He isn’t writing that it was 10p three months ago. At least, not how I read it.

We all occasionally make mistakes in what we read on this particular blog, or even what we write, but we all try and be polite to each other, so best not to lecture others about getting their facts right.

It’s mutual respect which makes it a great chat.

Thanks for observations about GGP - I will have a look

Thanks Mike

I eagerly read the headlines at 7.00am and was generally very pleased. AISC was the only slight disappointment, but even that looks like it might improve a bit with increased production. There's an obvious emphasis in the report on how a significant proportion of production is at a much lower AISC which suggests a small proportion is at much higher levels. There are also, as we've commented previously, some funny non-recurring numbers in AISC which makes it a bit of a mish-mash to properly understand. I'm pleased though how mgt. seem focussed on costs. You have also made the good point previously that if we achieve these much higher gold prices, then the odd hundred pounds on AISC doesn't matter that much.

I also liked that the average price we sold Au was £3812 - ie far below the current prevailing price. Good news for H2

I can't so far find the '27 production guidance which you quote as 280-302, which is certainly disappointing if that is the outcome, as it is hardly improved on the current year. Where did you find the figure?

As I've said previously, the key to this business SP doubling and more from where it is today comes down to essentially four considerations:

1. What happens to the gold Price? This is a tide that rises and lowers all boats and is outside our control.

2.Keeping AISC well managed – I feel pretty good about this

3. Production volumes. At fixed gold price, this is what will drive exponential growth of this company. It's the key statistic / driver within mgt control.

4. Strategic and operational focus by management, and the absence of bad luck with things outside our control, like strikes or electricity problems in South Africa.

Looking after three grandchildren today so can't study the numbers properly yet. But my focus will be on 27 production because that now is really what will drive this business forward, absent luck with even higher gold prices.

Welcome Bearded Dragon. You will enjoy the chat here and learn a lot about mining. There are a few experts who make great contributions – not me!

Cheers

Mark

Thanks Patryk

PAF is £2+ if gold can hold anywhere near 5000 an ounce. Key is production volumes steadily increasing and AISC being held in control. Also be nice to read about increasing potential production. For instance, taking over more tailings or expansion in Australia. Absent a huge further surge in Au price, (which we shouldn’t reckon on, but would be nice it happened) the value of this share will depend on future production and profitability. i.e. Old-fashioned measures.

My underlying belief in this company is based upon what I judge to be good management delivering projects successfully. I don’t especially like the South African exposure but I love Australia. Would be great if we could get our hands on more profitable opportunities there.

Mark

I feared today would be a bloodbath. Shows how impossible this thing is to guess.

I still believe £2 is doable here. 🤞🏻🤞🏻🤞🏻💪🏻💪🏻💪🏻

So looking forward to seeing the H1 figures in full

There are two key numbers:

The outlook for production next year and how is AISC progressing?

Thanks Mike

The day before I arrived in the Bahamas, they had a dusting of snow on one of the islands. No one had ever seen this previously. People Also found frost on their cars and wondered what it was. It soon warmed up and was in the mid 20s, although the wind was chilly.

I agree with your analysis of AISC although find it’s hard to predict what the second half number is going to be because of the exceptionals and volume increases. As you say, let’s see what’s announced next week.

Thanks Mike

It’s the following comment from mgt. in the Jan 26 update which confuses me re AISC:

“All in sustaining cost (AISC) of production for H1FY26 is expected in the range of US$1,825/oz -US$1,875/oz at US$/ZAR17.37, (FY26 full year guidance: US$1,525/oz to US$1,575/oz at US$/ZAR18.50)”

That seems to state the the full year AISC for 26 will be very substantially lower than the H1.

I found it hard to believe it would be so much lower unless H1 includes a lot of exceptionals such as start up costs and staff bonuses. We know some of those are in the total for the half year. Also maybe new production ramping up with lower AISC?

Anyway, I haven’t studied AISC carefully, simply been confused by the statement above from mgt. and taken optimistic view of its meaning.

Fishing was terrible. Water exceptionally cold so Bones were not eating

All the best

Mark

Hi Mike,

I agree with your analysis. The only issue I’m not so sure about is where the AISC is going to be in H2. The company seem confident that it will improve. I understand your caution but I also don’t understand why the company would be confident unless they had good grounds to be so.

It’s also a slightly strange measure as it includes start-up costs another irregular expenditure. So I remain optimistic that despite the types of increases which you rightly identify, the figure will remain under a good control.

All that said, I do agree that a PE of 10 is starting to look fairly full. I wonder when the company will start to give us indication to what they expect production to be in the next financial year? That is the really interesting number.

Cheers

Mark (aka Bustard - A very large bird😂) Send

It looks like we will see a cracking set of figures when the full interims are announced, and exactly what we were hoping for / expecting .

What I found particularly encouraging is:

• the average gold price achieved was $ 3812 - should be materially higher than the second half with a fair wind.

•. Production guidance for the year is 275,000–290,000 ounces. Bang on what we’re hoping for and demonstrating a continued increase in output.

• need to wait till we see the figures, but it feels as if a AISC is under control.

All this leads to yet more profit in H2

Fascinating. Thanks, Mike.

I flew to the Bahamas today for some bone Fishing. Fortunately, I was unable. / unwilling to watch the bloodbath and subsequent recovery. I looked at my Stockopedia valuation this evening fearing the worst . I can’t believe the journey you PAF watchers have been on today.

Thank goodness I missed it.

I’ve always said this was going to be a bumpy ride, and as long as the gold price can hold up north of 4000, ideally 4500, the shares will go up in due course. That’s my belief. All the usual caveats are applying..

For better or worse, I have never once used a stock loss arrangement. But with this volatility, and misleading intra day pricing, surely there’s a risk of bailing out when you don’t want to?

My position isn’t help by a substantial capital gain liability. Selling and coming back in again doesn’t make a lot of sense unless there is a very price big gap.

Got it hand it to those that got out at 1:51.

But I think we’ll see that price and more sometime later this year. Hopefully, we will also see an aggressive dividend policy, or maybe share buy back?

Surely a stop loss at 1:30 runs the bigger risk of bailing out at the bottom of a bump?

We’ve always said this ride was going to be volatile and I’m sure it will continue to be so.

Today may be painful

Now up again! How can it move by four or five pence time?

This is a complete mystery to me. I won’t look anymore.🤣🤣🤣

Now down

All part of the fun that is being aboard to the yo-yo that is PAF🤣

I also like buying shares which I think of the potential to be multi baggers. They’re hard to spot but a few winners can more than make up for a couple of losers.

When PAF was (say) a 30p It was easy to understand why the price could multiply severalfold. I find it much harder to see that type of % increase now the price has reached £1.40, unless the gold price were to rise again very significantly (which isn’t out of the question, but less likely).

But do I think the share price is more likely to go upwards than downwards? The answer to that is certainly yes. Another 50% is a distinct possibility. Another 200% is much less likely.

.

It’s a good question you ask, Patryck, about exit price.

I don’t know the answer, but I’m confident that if gold were to hold around 5000, there’s a lot more upside in these shares. £2 is well with range, though expect the ride to be bumpy.

The problem we have is the SP is more determined on a day-to-day basis by market emotions and the trend of the gold price - not by the fundamental future profitability of this business at a steady gold price.

Ultimately, the perfect time to get out will be around when the gold price peaks in its current cycle. Goodness knows when that will be or what price will be reached. I guarantee that what goes up, can come down.

I’ve started to model 2027 and on an assumption of 325,000 ounces of gold sales at $5100 an ounce and an AISC of $1800; then the post tax profit would be over $700,000,000. On a PE of 8 (not especially ambitious) that would give a share price of about £2.30.

It’s important to remember that mines are different from regular manufacturing companies. A mine has a finite amount of resources unless it finds more. That’s why a valuation based simply on how much theoretical gold a company owns, discounted back to a present value after all the costs of extraction, is not a daft one. It’s not like a manufacturing company that can carry on making, say, computers, and sell them on into the distant future. So one of the important keys to the valuation of PAF is whether new sources of gold can be found. For example, by acquiring more valuable spoil heaps or opening new mines. The pipeline of future gold production is very very important to the valuation and is what would justify a higher PE.

Great announcement. Nothing there to scare the horses. The AISC is higher than I anticipated, but for explicable, hopefully exceptional, reasons. The whole year AISC still looks sensible.

Very encouraging☺️☺️☺️

Closed at 138. That will please Patryk in particular☺️

Viable – I am not at all sure that my portfolio is a good one to follow.

And Hubris definitely proceeds nemesis…

I am heavily in Polar capital, Apple and Nvidia, out of which I have done extremely well over the years.

Last year I went back into some UK stocks - Aviva, Lloyds bank, easyJet and Marks & Spencer’s. I thought we looked cheap.I sold down a ⅔ of my Nvidia to buy them and I would’ve been better sticking to Nvidia.😂😂😂. Even though I’m up on all four, Nvidia did even better.

Last month I bought Safestore because a friend of mine has a small storage business and he tells me business is booming😂. Up 11% so far….

At the same time I also bought AMD - a Nvidia competitor and I’m up 50% on that. Will never be as good as Nvidia because Nvidia has their own proprietary software CUDA which is a fantastic moat. On the other hand, can you really picture Nvidia doubling again anytime soon?

I like Japan and have a JP Morgan fund JFJ

PAF is >20% of my total🤣🤣🤣🤣🤣

I’ve had two excellent years, which means it’s about to come to an end……

This is basically fancy guess work. The other point is, there has to be a big correction at some point. Many stocks will be cheaper at some point in the future than they are today. I think we can be fairly confident at that.