CLH_1 - thanks for your comments - I have never been to SA, but my sister has, and her daugter has a very close friend who is a medical Consultant from SA, and it seems that there are a lot of good people and things going on out there, and its important to encourage them along an enlightened route - being disparaging and dismissive will not encourage them - I just hope that SA can get over its past without too much trauma - we give counselling to individuals who have had a traumative time to help them get on top of their problems, so its for that reason I feel that we need to be encouraging and try to understand their point of view. I am certianly no 'bleedig heart liberal', but there will always be folks who will try and use that phrase to disparage a view they dont agree with! Anyway - thanks again, and the best of luck with PAF - AR
You are so right ....I am no bleeding heart liberal more a red blooded capitalist but having spent time and done business in SA.......it has so much potential to be a brilliant country to work and live in but they need good and honest leadership so that everybody benefits. I am hopeful that Ramaphosa will be a good influence and that he believes that the best means to enrich the country including the poorest is to create wealth and jobs through a perhaps modified capitalist system.
TDK - I dont know much about the first guy you mention, but I know Ramaphosa has a pretty good grasp of financial things/realities, and he certainly isnt clueless' as you suggest (I dont think it helps to adopt such a view). The problem with SA is that it needs to find a balance between Capital and the workforce - more radical views will destroy confidnce, and its economy will go down the tube if it frightens off investors.... but it wasnt helped by the corrupt Zuma (and who Ramaphosa was instrumental in getting him out!).
The problem is that the ANC didnt do nearly enough to improve the standard of living of their own people in the years since independance, and if it takes the Zimbabwean route that will be bad news. Hopefully wiser coucel will prevail (Ramaphosa?) and SA will start to improve and a black middle class will develope more fully. It is dreadful that the Apartheid state set about dehumanising the black population, and there is still a lot of anger and poverty entrenched, which is a real political problem for SA, and the rest of the world.
Understanding and sympathy are required, and it took the UK a hell of a long time to even begin to approach that outlook, having plundered the world with its colonial power for so long... so adopting a view too reliant on Colonial thinking certainly wont help in my view.
SA is a young country and its people have had a hell of a job getting rid of the problems that arose out of Apartheid - it will take time BUT I hope more thoughtful politicians can prevail, and that they dont destroy the economy, and frighten off investors... its all part of the risk of investing in SA.
Well if SA carry on the way they are with this nationalisation talk, taking land off white farmers without compensation, harsh mining charters, increased BEE + clueless Mantashe and Ramaphosa....well SA will destroy their own economy and drive away foreign investment. The miners with such activist talk are actually shooting themselves in the foot.
They would not even have a job if it was not for the shareholders of PAF
tDK - I hope you heart isnt as dark as your name implies - and worrying about your investment is fair enough, BUT such worries dont come close to the life and death health issues facing the workforce! I wish you well, but a bit of 'perspective' is in order here! ATB AR
PAF is one of the three smaller gold producers yet to settle but if it needs to compensate in proportion to what has been resolved it implies the impact will be around 1/3 of 1/6th of the figure quoted ... so maybe $20-25M.
I can't see whether the silicosis class action has a provision in the 2017 PAF annual report, if not it will have a material effect on 2018 results.
The NUM in South Africa are still arguing against the Evander closure, obviously concerned at its impact on the workforce and those living in company houses. The government has not responded to the suggestion that it takes over a massively loss-making operation to preserve jobs:
"The NUM said if Pan African Resources cannot continue operating Evander Gold Mine the company should surrender its mining licence to government instead of closing down."
The legal approvals have been given to retrench (cut) the workforce, including compensation and resettlement plans, by the end of May. It sounds abrupt but this is long overdue, PAF have spent months exploring all the options with stakeholders including the NUM and government departments. PAF has been subsidising Evander for too long already. Local disruption would damage ongoing employment on the tailings projects. No amount of protest will make this go away. Previous protest activity so far has come from local businesses at consequential risk, not the miners themselves.
PAF have said they could revisit Evander in the future, but by my calculations it would take the price of gold to double in Rand terms.
I don't know what might happen in the months ahead, but I think the share price has already dropped sharply to reflect the risk and uncertainty. The outlook is now more certain, positive numbers from PAF on the way, any wobble in the sp will be another buying opportunity.
I think you may be over-playing fears about any impact on PAF from the silicosis settlement
The following extracts from a Reuters press release
"JOHANNESBURG (Reuters) - South African gold producers agreed a 5 billion rand (294.39 million pounds) class action settlement on Thursday with law firms representing thousands of miners who contracted the fatal lung diseases silicosis and tuberculosis, officials said on Thursday.
The six companies involved had already set aside the settlement amount in provisions in previous financial statements and it should not affect future earnings, unless the number of claimants who come forward exceed the current provisions.
Estimates for the number of potential claimants range from tens of thousands to hundreds of thousands. Three smaller gold producers are not party to the settlement and the class action against them will continue.
In addition to the anticipated settlement payout, there is also close to 4 billion rand in a compensation fund which companies have been contributing to for years.
The companies involved are Harmony Gold, Gold Fields, African Rainbow Minerals, Sibanye-Stillwater, AngloGold Ashanti and Anglo American South Africa. The latter no longer has gold assets but historically was a bullion producer. "
Tdk - the health and well bing of the workforce is essential, and hopefully gone are the bad old days when life was cheap, and there was litte protection for workers. Yes it costs to deal with these issues, but that is no bad thing! Just look back at the days in the UK when a lot of Irish workers (my forefathers!) lost their lives bulding the railways in the 1840! The stock market boomed and then crashed..... railways were the latest and most up to date thing to invest in at the time.... it was just like the madness of the Internet Bubble! BUT any co., particularly in mining, should look after their workforce's well being and safety! AR
PAF announced yesterday an agreement (under a sort of unionised procedure) to close the Evander mine underground workings. It says the Evander underground part of PAF's activity was highly loss-making, partly due to the Rand strengthening against the dollar. I would say more fundamentally uneconomic, well past time it was shut down. I guess South Africa has government strictures which makes that more than just a simple commercial decision, PAF is under a statutory obligation to protect the workforce.
The rest of PAF's activity is said to be cash flow and net earnings positive, so there will be good news to follow despite an immediate restructuring cost, overall gold production in 2018 will be reduced by about 12%. Mining at Elikhulu the next big project coming on stream in Sep 2018 should put PAF back in good shape for 2019.
Well I have looked at USD:ZAR and the 2017 trend from 13.5 to 11.5 has reversed to 12.5 in the last 6 weeks. I can't see how that causes all the problems decscribed by CEO Loots (yes, Loots!!) but obviously PAF's fortunes are highly sensitive to exchange rates. We are rooting for a stronger dollar while the gold price holds up because that translates into lower production costs and higher margins, same as all gold miners.
PAF will carry higher debt as a result but I am hopeful this announcement signals the low point, I remain hopeful of a small dividend and sp recovery to 12-14p by the end of the year. Numis agree and project 16p.
Interesting article, and whilst sentiment indicators have some merit in the short term, one of the reasons I am here is the coming trade wars which are likely to be highly inflationary. We can but hope that they don't lead to real wars.
The exchange rate is currently drifting in a friendly direction.
1 USD =12.4869 ZAR
Which gives a gold price per oz of 16,463 ZAR
There is a fault with the trade prices for large transaction sizes, the value is being divided by 100.
For example on 25-04-2018 http://www.iii.co.uk/research/LSE:PAF/trades
0.07418 2,500,000 1,855
Should read as
7.418 2,500,000 185,450
Or perhaps some lucky person got a bit of a bargain.
It talkes a look at sentiment towards gold - which hasnt performed nearly as well as I had hoped - BUT I can afford to be patient.... Gold will have another spurt at some time (when?) Lets just hope it isnt on the back of dire news! Hope all goes well, and I feel that your buy is pretty well timed - AR
Just had my first nibble here too, although my 50k buy at 7.1 is shown as a sell on Money AM as the sneaky MM's moved up the offer as I bought. If you want a juicy and hopefully increasing yield as the POG moves up now is the time to pile in imo, and I will add once the breakout in POG is confirmed.
at 7.1p in the hope of better government and labour relations returning to SA, a more stable exchange rate, and sustained gold prices eg $1,250+. Can we look forward to eps sufficient for at least a 0.5p dividend and progress based on current outlook? Possibly.
Hes on the front page of Moneyweek which contains an article claiming SA is a good place to invest in. Chronic Investor, a few weeks ago, said his leadership would strengthen the Rand. Their sell recommendation was before the two excellent updates and they forgot to mention Elikhulu!
CAPE TOWN - President Cyril Ramaphosa has ruled out the nationalisation of mines which do not comply with the mining charter.
Answering questions in the National Assembly on Wednesday afternoon, Ramaphosa said a new Mining Charter would be drafted within the next three months, after the Chamber of Mines last month agreed to halt its court challenge against the reviewed charter.
Historically this has been our lucky gold stock. Having sold up I lost all the gains here on the other gold stocks since then. The current price of PAF is tempting me back into gold but I am strictly steering clear of the tiddlers!
Yes, the new mine and the tailings will obviously reduce the overall AISC from the very high $1286 per oz. as mentioned in the operational update issued last week, which I thought was pretty dismal on most metrics overall - for me, anyway.
However, allowing for these benefits (impressive grades but over short / narrow strike data so far) my guesstimate for the AISC for this year would be to come in just shy of some $1000 per oz , given the relatively short contributory period involved. Better, obviously but more 'jam tomorrow', from next year onwards, if all goes well, I'd say.
In the meantime, there are the strike risks to be overcome and the new Government's passing of a highly contentious 'asset seizure without compensation' law, where appropriate, being introduced; that might not affect PAF directly but it hardly inspires confidence in my book and I'm very wary when I read that sort of thing...
Don't really know the new management's record, post Jan Nelson and I'm relatively out of touch with PAF generally, as I mentioned earlier. However, several brokers' forecasts are positive / upbeat about the outlook, so that's encouraging and thus I hope your renewed 'plunge' works out well for you - sasa.
I trust the management enough to have bought shares in PAF, yes. However, I have bought precious metal mining shares over a decent length of time to realise that a good result is not always guaranteed. There are lots of moving parts that are out of control of the Company's management such as currency values, mining difficulties, political interference, ore quality, staff issues...need I go on? PAF has had its fair share of these difficulties. Hopefully, a more tranquil business environment lies ahead particularly with the development and opening of the new mine.
Hi casa - yes, I was in this until a couple of years ago (sold at 17p I see from my records after a few years holding it) but I'm not that convinced that the 'sunny uplands' are yet looming into view. I'll study it a bit more when I have the time but for now...
Could well be wrong, of course and I'm less familiar with it than hitherto, I'll readily admit.
Your FXPO find at the time was clearly 'the one that got away' unfortunately but SQZ might emulate some of that, given the very cheap stats applicable, especially now. I like the debt - free balance sheet with monthly income simply accruing, meanwhile - sasa.
Thanks for your input, sasa. I didn't know that you had invested here in the past. I bought PAF about a couple of years ago at around 17p but hightailed it at 13p due to Zuma's economic ruination of the SA economy and the restrictions placed on miners which effectively made it difficult for them to turn a profit.
Yes, PAF much like many other Companies in SA have had labour problems which has effectively taken the sp down from 13 to under 8p. Hopefully these issues are behind them now together with a more business friendly political climate.
I admit that I was over excited about the progress with a new mine opening with excellent proved up resources and a history of good production before the Zuma hiatus.
The whole issue does depend on the actual gold extraction results against figures estimated as always with small miners. It looks good but atm, it's only a story.
As you can see, I have bought some shares but the house is still safe and with any luck, in spite of the many moving parts, a good result might see a doubling of the sp.
A comment on a totally unrelated issue is about FXPO. I looked at this steel maker at the height of the war in Ukraine. The sp dropped to 20p and I considered briefly whether to buy a small stake. Bear in mind that FXPO is domiciled in the Eastern part of Ukraine so effectively governed by proxy by Russia but who knows, so I backed off. No proper government and demand for steel at a low ebb. I looked at the sp yesterday and it stands at over 300.
I know it's unrelated but a producing gold miner with a future producing gold, not steel in a (hopefully) better politically free country ought to be able to emulate FXPO but probably not by 15 times lol.
Hi casa - been having another look at this after our recent chat, fwiw...
What do you think the current AISC is today? Seems a near marginal producer right now (great if AU turns sharply higher, of course but very costly if it doesn't). Been looking at the latest report and the figs look uninspiring to me, unless I've missed quite a few things.
Is Evander a problem now? That was their big 'coup' a while ago (after Jan Nelson moved on) and even Barberton seems rather problematic. Also, union squabbles recurring? Back in the day, PAF was almost invariably 'insulated' from strikes because they were inclined to pay 'over the odds to keep the peace' - a policy which Jan adhered to throughout his tenure (when I held a decent position in these) and it worked.
But now with union talks scheduled to avoid strike action? Dunno, about the current appeal even now, I have to say and I prefer the lower AISC producers to avoid negative gearing risks, as you know.
Just my initial take after a long absence but I could well be mis-reading the present situation, 'cos I know you like sound situations and good dividend payers when you come across them (which this certainly is right now) but hope it's not a yield trap - sasa.
Millionaires? Could we be that lucky? I'd settle for a 50 bagger lol. In reality, I will be very pleased if PAF performs well and that goes for the South African government too. If PAF ramps up production and pays a decent dividend, I think that will be sufficient for 2018. If all goes well then next year may be bubbly time.
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