Pan African unveils latest shy at value unlock with R50m in share buy-backs

PAN African Resources, the Johannesburg- and London-listed gold producer, is to buy back R50m worth of shares (£2.6m) despite the share having made substantial gains in the last year.

“Although it’s a small initial buyback, it signals that the company is prepared to consider share buyback as a means of retuning capital to shareholders, when it is commercial to do so,” said Cobus Loots, CEO of Pan African.

Shares in the company are about 17% higher so far this year and 28.4% higher on a 12 month basis amid a sustained gold price and a strong showing from Pan African financially. On the back of a 69% lift in full year earnings, the company said in September it would pay an 18 South African cents per share dividend.

Said Loots: “The company has a demonstrable track record of circumspect capital allocation and this share buyback is compelling in its returns for shareholders, given the prevailing share price”. The prospect of a share buy-back was raised in September.

Those financial results were supported by production of just over 200,000 ounces at a rand gold price of R903,849 per kilogram. Production for the current financial year (ended June 30) is at a similar level while the rand gold price since September has oscillated between R820,000 and (briefly) R1m/kg.

The buy-back will begin today with purchases each of R25m on the London and Johannesburg Stock exchanges. Peel Hunt and RMB Morgan Stanley will run the on-market purchases.

Pan African has built up an impressive number of growth options in the last two years including two gold retreatment projects that it is examining – Mintails and Blyvoor – as well as underground extension projects at its Evander Gold Mines and Barberton Mines in Mpumalanga province.

In addition to this, it took the unusual step earlier this month of setting aside $7m for exploration in Sudan over the first three years.

Sudan produced about 90 tons of gold last year, making it the third largest gold producer in Africa after Ghana and South Africa, and the tenth largest producer in the world with production in 2021 – equivalent to Peru’s gold production, said Pan African in support of its inaugural greenfields exploration strategy.