Member Info for Mike1959

BeardedDragon,CL owns a substantial number of PAF shares and under the incentive scheme will have considerable shares coming through in the next few years which are obviously at risk of market movement.

A collar structure is an options strategy to partly limit the risk of market movement. He has bought a put option or the option to sell 500,000 shares at ZAR 23.72 or about 109p, he does not have to do this, it iis in his option to be nominated before 30th Nov 2027, if the future share price is below 109p then you would expect him to take up the option and sell at the agreed strike price of ZAR 23.72 or 109p The problem is that there is an up front cost to this put option. To avoid this up front cost, at the same time CL has sold a call option at ZAR 33.61 or about 154p which entitles the buyer of the call option to buy 500,000 shares before 30th Nov 2027, in return CL receives an upfront payment. In theory if the up front payment for the put option equals the up front payment to CL then net there is no overall cost.

So it is called a collar because CL has no risk if the share price falls below 109p but he forgoes the possibility that the share price could go above 154p. It is a perfectly legal and practical hedging strategy but it does suggest that in his mind ,CL believes the price could possibly fall and he is willing to trade off the chance that the price could rise above 154p.It is worth remembering we are talking about 500,000 shares here which is only 15% of his current holding .

BeardedDragon,CL owns a substantial number of PAF shares and under the incentive scheme will have considerable shares coming through in the next few years which are obviously at risk of market movement.

A collar structure is an options strategy to partly limit the risk of market movement. He has bought a put option or the option to sell 500,000 shares at ZAR 23.72 or about 109p, he does not have to do this, it iis in his option to be nominated before 30th Nov 2027, if the future share price is below 109p then you would expect him to take up the option and sell at the agreed strike price of ZAR 23.72 or 109p The problem is that there is an up front cost to this put option. To avoid this up front cost, at the same time CL has sold a call option at ZAR 33.61 or about 154p which entitles the buyer of the call option to buy 500,000 shares before 30th Nov 2027, in return CL receives an upfront payment. In theory if the up front payment for the put option equals the up front payment to CL then net there is no overall cost.

So it is called a collar because CL has no risk if the share price falls below 109p but he forgoes the possibility that the share price could go above 154p. It is a perfectly legal and practical hedging strategy but it does suggest that in his mind ,CL believes the price could possibly fall and he is willing to trade off the chance that the price could rise above 154p.It is worth remembering we are talking about 500,000 shares here which is only 15% of his current holding .

Https://www.miningmx.com/top-story/65675-pan-african-gold-project-draws-investor-interest/

Viable, yes you are right that in the presentation, CL, advised that the capex is not in tablets of stone and could be flexed accordingly. But the bulk of the 2027 capex is in Australia and needed to hit the planned expansion. Also the current planned capex includes little for the Soweto Cluster, which I can understand as the project has not officially been approved but we do not want to delay this when it adds 30,000 to 35,000 oz of production for 15 years with a AISC of just $1000-1200/oz and pay back in less than 2 years, so this will be added to the capex requirements with the likely new $175 m cost spread over 2 years starting October so we do not want to delay this. In fact the vast majority of the 2027 capex will be for growth plus a relatively small amount on sustainability and renewables ( common sense at current oil prices). So for me the current 2027 capex might be trimmed a little but will increase when the Soweto Cluster capex is added. Don't forget this currently assumes very little capex on Poplar. That leaves hoping for a higher gold price to increase cash flow, run down 0t0he $220 m net cash at the end of FY26 to say $100 m at the end of FY27 or reduce the dividend policy in for the next few years. Let us have a serious discussion on the 2027 expected net cash flow and see what the consensus is. You do not see any danger of overreach but the Company is increasingly putting itself in a corner if the gold price does not return above say $4500.

I think the Cu Fe Ltd deal gets PAF's foot in the door, encourages Cu Fe to send their ore from Gecko to Nobles processing plant and the ore from Orlando to the yet to be built processing plant at Warrego. In the presentation this week, CL seemed very confident of finding more in Australia. The 2027 growth capex at Tennant is massive. Further down the line that investment in CuFe could grow.

Copter, that 13 million is the uncrossed trades that i mentioned, although I did wrongly say 14 m.

viable, as always thanks for the info. Yes, gold climbing back to $5000 would certainly help.

Hi Mark, good to have your reassurance and comments but I am still nervous.

I agree we are betting on good management and the gold price not collapsing. With 10 days of FY 2026 remaining I expect PAT to be $410 to 413 million say 20.2c EPS (which works out at a current PE of 6.95 when earlier this year we have been over 9 )based on an average gold price for the 12 months of about $4271 which is higher than the current level. So the FY 2026 result will be absolutely superb, the 2026 net cash flow will be superb (we have already been advised that net cash will be about $220 m at the end of June) and on paper if the Company sticks with its latest dividend policy then the total dividend jut looking in isolation at FY2026, should be about 6c (part already paid as the interim dividend).

But F72027 is looking considerably tougher, using the mid production of 291,000 oz and the mid AISC of $2125 to hit PAT of $410m, the gold price needs to average $4348 and allowing for the 4.8% ERM share dilution to hit EPS of 20.2c the gold price needs to average $4466.Then if they pay out 6c dividend for 2026 of $128m plus capex of say $380m then the 2027 net cash flow could be negligible and possibly lead to more borrowing or jeopardise the dividend for 2027. Hence I think the prospective dividend for 2026 may have to be trimmed to project the numbers for 2027.

Wow, Kyrgyzstan, Uzbekistan, Turkmenistan and Kazakhstan all in one go, enjoy! Last week I went to the Lake District!

Over 14 million uncrossed trades today and late on a massive 4 million share purchase.

Thanks GoldBlend. I should have worked that out myself.

I agree with Mikodx about the long run but I do admit to being nervous about the short term.

MIKODX, is this for me or someone else/ another board? I am still well invested here.

MIKODX, is this for me or someone else/ another board? I am still well invested here.

Viable, another confident and reassuring presentation by CL, we already knew much of the information but there were a few snippets of extra and updated information.

The processing plant at Tennant has had teething problems and was operating at 75% in H1 but is now up to 90% and with the planned investment should get up to 100%.

The Soweto Cluster DFS will be ready in a "couple of weeks". The original capex was ZAR 2.8 billion (at 17.50 = USD 160 m) and will be updated in the 2026 fy accounts on 16th September. At todays exchange rate of 16.45 that ZAR 2.8 b increases to $170 m and I think we need to expect further inflationary increases so the number will probably be $175 m+ but still amazingly profitable with less than a 2 year payback (generally looking for payback of investment of less than 3 years or up to 5 years for some bigger projects)so it remains "only a matter of time". But the final approval will not be until October when the required piping and deposition licences are approved, so we should expect production starting Oct 2028.

Although asked several times on when the Poplar project at Evander might start he commented " one step at a time" and would take capex over 5-6 years. Other than saying they would allocate some resources next year he was non-committed. Reading between the lines I think the capex cost is just too big with everything else going on and it is looking like 2034 or later.

He did say that they have been "conservative"with 2027 expected AISC.

On dividends he said they realise this is important to some shareholders but there has to be a balance between continuing to grow production and continuing to increase dividends. Based on the dividend policy in the 2025 accounts I had hoped that the total dividend for this FY might be 6 c but now wonder as a result of the 4.8% Emmerson dilution and the increased capex spend in 2027 (the capex could be up to $400m, not far short of my expected FY2026 PAT of $413m) could it be nearer 4c?

They have been talking about this in S Africa for several years (although a similar scheme already operates in Zimbabwe and led to the Salene Chrome operation being mothballed) so I am sceptical but we will have to wait and see.

Nice one viable. As the advert goes " every little helps".

Mark/ hedgehog, the PAF share price generally moves about x2 the gold price. I am still confident that the gold price can recover when the Iran conflict ends but the longer it goes on the lower we could go and the tougher the recovery will be. I have bought a few small purchases on the way down but and agree that this is a fantastic buy at the current price but I said that at 120p so I will hold off at the moment.

The biggest factor in the rising AISC is the weaker USD which is a two edge sword and has increased the gold price, this is the same for all gold producers. Likewise royalty payments and staff bonuses are increasing on the back of higher gold prices but are beyond the control of PAF. Ironically a lower gold price will lower royalty and staff bonus costs and so reduce the AISC.The Company is investing rapidly on the back of shareholder demands and the ecomomics still work out at a considerably lower gold price, it is the right thing to do to spend $400 m on capex in 2027.

We just have to wait for Trump to get out of this corner and then reaccess the damage. GLA.

Viable, is yields are poor at Nobles they have the flexibility to add higher grade White Devil ore if available. But to hit the minimum 48,000 oz gold production in FY 2027, assuming the plant runs at name plate capacity of 840, 000 tonnes of ore and 94% budget recovery the average grade needs to be minimum 1.89 grams/tonne so we can blend some CPS containing say 1.3 g/ t with higher grades from the other mines , including over 4 g/ t from White Devil.

Yes, this is good news, the CFD is long so it is effectively a theoretical purchase of 100,000 shares that he will have to sell at a future date to close out the CFD . It shows he expects the share price to increase from here. Not sure why he did not just buy 100,000 shares.

Viable, good finds as usual. Promising numbers at the Cu Fe Ltd Gecko and Orlando sites particularly copper which would certainly compliment the eventual processing plant at Warrego. I would rather see reserves rather than resources but they will be working on that. It is worth adding that Cu Fe Ltd owns 55% of Gecko/Orlando in a JV and PAF has bought 15% of Cu Fe Ltd or effectively 8.25% of Gecko/Orlando plus a string of other exploratory projects.

I agree that the Soweto Cluster is a no brainer as it can add 30,000-35,000 oz of production, low AISC low risk, in under 3 years. If the DFS is completed and approved this month then I would expect the project to be fast tracked with construction taking 24 months. The sting in the tail is that the total capex for this will be $160m, say $80m each in FY 2027 and FY 2028 that will increase the 2027 capex from the stated $324m to $384m and that is without any capex for Poplar or new ESG projects.

Very much ditto.

Confidence and momentum with slowy but increasing grow over the next month when we should have confirmation on the ERM offer, the DFS on the Soweto

Cluster and news that production has started at White Devil. The FY 2026 around 16th September will also help, even better if the Iran conflict was to cease.

Mark, since the deal was proposed in March there was an arbitrage between PAF and ERM keeping the prices in tandem. But PAF is over 20 times bigger than ERM so it is very much the PAF share price first and then second the market/arbitrage adjusting the ERM share price, not the other way round. Just to be clear , the 100 m share purchases mentioned by hedgehogg are ERM shares and not PAF shares.

Like you and others I have looked for conspiracy theories but cannot see any. Rather as we have already said, I think it is the market reacting to 2026 production at the bottom end of the range and a surprisingly high 2027 AISC. Also as Hedgehogg has pointed out, the $57m increase in 2027 capex (which does not yet include any capex on the Soweto Cluster or Poplar) is very achievable if the gold price does not fall and the increased production happens but if the gold price was to fall and the increased production not happen then this would hurt the operating cash flow and dent the currently significantly growing net cash position and threaten future dividends. On top of this we have paid $10.3 m, a 10% premium to buy 15% of Cu Fe Ltd for relatively early stage resources which could take 5 years to get up and running. If the gold price plays ball (and increasingly copper too) over the next few years then all is well.

On checking in more detail I am particularly disappointed with the H2 performance at Tennant. Admittedly production started very late in H1 using only the historic Crown Pillar Stockpile containing around 1.3 grams/tonne gold but in H2 this should have increased to over 2g/t as other grades were mixed in but the actual H2 head grade is going to be around 1.5 g/t which is more than 25% down from the expected grade. But this just shows that in mining we should not take these things for granted!

HT, you are right that the PAF share price has fallen from 158p on 6th March to about 114p today, a drop of 28% . But the ERM share price was AuD 0.33 on 6th May and then jumped up 36.4% when the proposed deal was announced.. The proposed deal was to exchange 0 .1493 PAF shares for each ERM share. On ASX ERM has closed today at AuD 0.32 , at exchange rate 1.88 that is equivalent to 17p. The PAF share price is currently 114p x 0.1493 =17p so the two shares are perfectly aligned. Basically the ERM share price has fallen in tandem to the PAF share price.

For those voting a 75% majority is required to approve the deal. It is always possible that they say no thanks. But the ERM directors and the major institutional holders seem to be behind the deal so I would still expect the deal to go through. if the deal did not go through then I expect the ERM share price would drop , probably not by the full 36.4% but probably 5%+, the ASX200 has increased by just 1% since 6th March. The ERM shareholders vote on 15th June and if the acquisition is approved then further court approval is required on 19th June.