A R500m share buyback could be money well spent for Pan African Resources, the JSE-listed gold miner. Most analysts think the company is on the cusp of a rerate following its best year yet in 2026. It is debt free and has an abundance of organic, brownfield growth projects.
The past three years have been a time of plenty for nearly all gold miners owing to the 123% increase in the metal’s dollar price. For Pan African the period has been transformative, given its relatively low base. Gold output has more than doubled and will rise again in its financial 2027. Its production risk profile has also changed: in 2023, most gold was mined underground. In 2026, however, 60% came from surface sources, which means cheaper and safer.
Peel Hunt analyst Peter Mallin-Jones estimates Pan African’s production will be 377,000 ounces a year by 2030. If it gets there, it will take ebitda to $785m. That compares with $609.4m in 2026 on production of 272,310 oz – itself a 37% year-on-year increase.
Pan African CEO Cobus Loots is noncommittal on the long-term outlook, however. “We’re a small team working day to day,” he says in an interview. Shareholders should work on guidance of 280,000-320,000 oz for the foreseeable future, he says. Mallin-Jones is more upbeat: “In our view, this [gold production increase] does not look priced in,” he says.
Giovanni Holmes, an analyst for the New York-based bank Jefferies, says Pan African is reshaping its portfolio by “materially growing production from lower-risk surface sources and by diversifying its earnings mix in favour of tier 1 jurisdictions. We expect shares to rerate over the next 12 months as an earnings and free cash flow inflection in the 2028 financial year approaches.”
Driving this growth is Pan African’s acquisition of the Mintails gold tailings reprocessing operation in Joburg, which it is hoping to expand, as well as pockets of its historic Barberton Gold Mines in Mpumalanga that it can continue to develop owing to the rand gold price. While not factored into current growth plans, the same is true of Evander Gold Mines, another Mpumalanga mine, where a satellite deposit known as Poplar – which could cost billions of rand to develop – offers long-term growth.
Up the creek
But it is recently acquired gold properties about 500km north of Alice Springs in Australia’s Northern Territories that are catching the eye. Known collectively as the Tennant Creek goldfield, this is a colony of mothballed open-pit and underground mines. After the divestment from the region of Normandy Mining in 2001 amid one of the worst meltdowns in gold price history, the operations fell into the hands of smaller, less well-capitalised miners. What remains today is a series of brownfield projects that have become economic thanks to the gold price surge.
Pan African bought an initial 8% stake in Tennant Consolidated Mining Group, the main operator, for $3.4m in early 2024 ahead of a full buyout for $55m later that year. The plan is to operate the region “spoke and wheel” with a main plant servicing satellite mines. First production has been from Nobles, one of the largest open-pit mines.
Production ramp-up at Nobles to about 50,000 oz/year has been slower than planned, but Loots is confident the mine is just the first in what will be a major gold province. “It’s only a matter of time before we find new, massive deposits, and we can expand quite materially,” he says. “That’s really the vision.” It’s also the reason Pan African paid a hefty premium for 100% control of the remainder of the Tennant Creek assets.
TCMG controlled 75% of Tennant Creek, with the balance held by Emmerson Resources. In March, Pan African announced a $222m buyout with the listing of Pan African shares in Australia thrown into the bargain.
Asked about the premium paid to Emmerson, Loots reasons the gold price was “in a different place”. It’s worth the layout, he adds. A minority joint venture with a smaller balance sheet is a hindrance when financing expansion falls due. “We were able to justify the purchase price on the back of just the White Devil cash flows,” he says — a reference to a nearby mine next in line after Nobles. A larger discovery in Tennant improves the return “massively”, he says.
Copper
In June, Pan African bought a minority share in the only other operator in Tennant Creek, the copper-gold miner CuFe. Loots says CuFe could be a partner in Warrego, another Tennant Creek mine the group plans to develop. CuFe’s operations border Warrego, which opens the possibility of copper production, though he’s cautious about expanding into the red metal. “Some of our South African shareholders specifically aren’t that keen on copper-gold, for reasons I won’t elaborate on too much,” he says.
Harmony Gold seems to have been penalised for its Australian copper-gold expansion plans, partly because of the capital expenses involved. Loots says local shareholders like the pure gold exposure of Pan African, though copper has a strong outlook.
“This is a structurally different business,” says RBC Capital Markets analyst Laura Chan, describing the company as having “the strongest growth profile in our Europe, Middle East & Africa precious metal coverage”. Given the firm’s relatively modest origins, that’s a major feather in the cap.
A version of this story first appeared in the FM.
