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Summary
- Pan African Resources generated revenue of USD 273.7 million, which increased by 25.9 percent year on year in FY2020.
- The average gold price was up 25.9 percent year on year, and gold sold increased by 1.3 percent year on year in FY2020.
- Central Asia Metal's revenue fell by 16.1 percent year on year to USD 75.4 million in H1 FY2020.
- The volumes sales increased, but the commodity prices remained low in H1 FY2020.
Pan African Resources PLC (LON:PAF) and Central Asia Metals PLC (LON:CAML) are two FTSE listed mining stocks. Shares of PAF and CAML were up by around 1.59 percent and 2.90 percent, respectively from their last closing price (as on 16 September 2020, before the market close at 11:55 AM GMT+1). It is mindful to note that share price of CAML fell by around 16.89 percent on 14 September 2020, when it reported tailings leakage at Sasa project located in North Macedonia.
Pan African Resources PLC (LON:PAF) - Expects to produce 190,000 ounces of gold in FY2021
Pan African Resources PLC is a UK based gold producer. The Company is engaged in exploration, development, mining, processing and sale of gold. It has an interest in Barberton and Evander gold projects in South Africa.
FY2020 results (ended 30 June 2020) as reported on 16 September 2020
In FY20, the Company reported revenue of USD 273.7 million, which increased by 25.9 percent year on year from USD 217.4 million in FY19. The net adjusted EBITDA increased from USD 56.8 million in FY19 to USD 86.5 million in FY20. The profit after tax increased by 16.6 percent year on year to USD 44.3 million in FY20. The Company reported earnings per share of 2.30 USD cents per share, which was up 16.8 percent year on year. The FY20 earnings were supported by robust gold prices and increased gold production. The Company sold 173,864 ounces of gold at an average gold price of USD 1,574 per ounces in FY20. The average gold price was up 25.9 percent year on year, and gold sold increased by 1.3 percent year on year in FY20. The all-in sustaining costs stood at USD 1,147 per ounces in FY20, including the hedge losses. As on 30 June 2020, Pan African Resources had net debt of USD 76.4 million, and it has proposed a final dividend of USD 18.7 million for FY20.
Operational Performance in FY2020
(Source: Company website)
The Company produced 179,457 ounces of gold in FY20, which increased by 4.1 percent year on year from 172,442 ounces produced in FY19. Elikhulu project produced 59,616 ounces of gold in FY20, which increased by 29 percent year on year. The gold production at Evander increased from 16,879 ounces in FY19 to 20,670 ounces in FY20. The gold output at Barberton mines declined from 72,864 ounces in FY19 to 63,884 ounces in FY20.
Gold production Profile of Pan African Resources
(Source: Company website)
Share Price Performance Analysis
1-Year Chart as on September-16-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Pan African Resources PLC's shares were trading at GBX 25.50 and were up by close to 1.59 percent against the previous closing price (as on 16 September 2020, before the market close at 11:55 AM GMT+1). PAF's 52-week High and Low were GBX 28.15 and GBX 8.32, respectively. Pan African Resources had a market capitalization of around £482.44 million.
Business Outlook
The Company had an excellent operational and financial performance in FY20, and it is hopeful of a healthy performance in FY21. It expects to produce 190,000 ounces of gold in FY21. It also plans to bring down the all-in sustaining costs to USD 1,000 per ounces through operational efficiency and targets to deleverage the balance and improve the shareholder returns via increased dividend payments. The Company highlighted that the scheduling and planning of Egoli project would complete in Q1 FY21.
Central Asia Metals PLC (LON:CAML) - Processing plant at Sasa was closed due to tailing leakage
Central Asia Metals PLC is a UK based mining company. The Company deals in base metals, and it has an interest in Kounrad copper project in Kazakhstan and Sasa zinc and lead project in Macedonia. Central Asia Metals is listed on the FTSE AIM UK 50 index.
H1 FY2020 results (ended 30 June 2020) as reported on 16 September 2020
(Source: Company website)
Central Asia Metals reported revenue of USD 75.4 million in H1 FY20, which declined by 16.1 percent year on year from USD 89.9 million in H1 FY19. The EBITDA stood at USD 42.5 million in H1 FY20, which was lower than USD 56.7 million reported in H1 FY19. The EBITDA margin was 56 percent during the reported period. The financial performance was impacted due to subdued commodity prices and higher treatment expense. As on 30 June 2020, Central Asia Metal's net debt was USD 58.8 million which was lower than the net debt of USD 80.2 million at the end of H1 FY19 as it repaid USD 19.2 million in H1 FY20. The cash, including the overdraft facility, was USD 44 million. It deferred the decision on dividend payment due to the leakage incident at Sasa. The Company did a capital expenditure of USD 4.3 million, of which USD 3.7 million was done on Sasa and USD 0.6 million on Kounrad. The production of copper and zinc was 6,607 tonnes and 12,203 tonnes, which increased by 0.2 percent and 5.9 percent, respectively year on year in H1 FY20. The production of lead was up by 5.4 percent year on year to 15,140 tonnes.
Performance of Kounrad and Sasa
Metal production at Sasa Copper production at Kounrad
Kounrad project generated revenue of USD 37.0 million in H1 FY20, which fell from USD 39.9 million a year ago. The EBITDA was USD 27.1 million that reflected an EBITDA margin of 73 percent. Kounrad produced 6,607 tonnes of copper in H1 FY20. Sasa project reported revenue of USD 38.4 million, which declined from USD 49.4 million in H1 FY19. It generated an EBITDA of USD 19.5 million with an EBITDA margin of 51 percent. Sasa produced 12,203 tonnes of zinc and 15,140 tonnes of lead in H1 FY20.
Tailing Dam Leakage at Sasa
On 14 September 2020, the Company announced a tailing dam leakage at the Sasa's TSF4 into the river. The leakage was stopped in less than 2 hours, and Central Asia Metals is currently assessing the reason for leakage and the quantity of material lost. Mine is operational, but the processing plant was shut down after the incident. The Company would repair the facility so that the operations could be resumed as early as possible.
Share Price Performance Analysis
1-Year Chart as on September-16-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Central Asia Metals PLC's shares were trading at GBX 156.00 and were up by close to 2.90 percent against the previous closing price (as on 16 September 2020, before the market close at 11:55 AM GMT+1). CAML's 52-week High and Low were GBX 233.00 and GBX 100.20, respectively. Central Asia Metals had a market capitalization of around £265.99 million.
Business Outlook
The Company had a strong operational performance in H1 FY20. In conjunction with H1 FY20 performance, it expects the copper production Kounrad to be in between 12,500 - 13,500 tonnes for the full year. The production at Sasa is under review, but it expects zinc production to be in the range of 23,000 - 25,000 tonnes and lead production in between 30,000 – 32,000 tonnes in FY20. The Company would focus on lowering the cost of production and improving operational efficiency.
