On 12 July 2018, Pan African Resources PLC (LON:PAFR) announced that production to the end of June was 160,421oz cf prior guidance of 157-160koz for the year, with the outperformance exclusively attributable to underground operations at Evander (EGM). More significantly, for the first time management provided guidance of 170koz for FY19, which was materially above our prior expectation of 140koz on account of construction at Elikhulu continuing to progress “ahead of schedule”, such that it is now entering the commissioning phase with first gold expected in August ahead of a two-month ramp-up to full production. As a result, we have increased our EPS forecasts modestly for FY18 (although large in percentage terms) and materially for FY19.
Rand weakness compensates for gold weakness
In the near term, our gold price forecast for FY19 remains unchanged at US$1,291/oz. However, Pan African will benefit from the recent 8.6% decline in the value of the South African rand against the US dollar since H218.
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