Pan African Resources - Roundabouts and swings

On 23 March, the South African government made the decision to lockdown the country for all but ‘essential services’ for a period of three weeks, which it later extended to the end of April. Since the lockdown, Pan African’s group surface mining operations (which account for the majority of its profitability) have been working at c 70% of normal capacity, while Barberton Mines produced enough from certain high-grade sections of its Fairview operation in order to ensure the required minimum feed for its BIOX® processing plant. While it is very early days as South Africa eases its lockdown protocols and Pan African recalls workers, it has estimated that production for FY20 will be c 176,000oz cf the 185,000oz it estimated prior to the coronavirus crisis (a 4.9% decline). Nevertheless, during the same period, the gold price has risen by 12.4% while the value of the rand has fallen by 23.9% versus the US dollar. For the moment, we are placing our forecasts and valuation for Pan African under review. In Exhibit 3 however, we provide a discussion and scenario analysis of how we believe the current crisis might affect PAF’s results to 30 June 2020, given information known to date.