Mid-tier gold miner Pan African Resources bucked a trend of general pressure on its JSE-listed peers on Friday, after it said it would buy back as much as R50m of its own shares, indicating the market has undervalued it.
While small, potentially affecting less than 0.5% of what it has in issue, Pan African said it was a signal it was prepared to consider buybacks as a means to unlock value for shareholders.
The shares of the group, which is valued at R9.7bn on the JSE, rose as much as 5% in response, but pared gains to close up 3.33% to R4.35.
“The company has a demonstrable track record of circumspect capital allocation and this share buyback is compelling in its returns for shareholders, given the prevailing share price,” CEO Cobus Loots said in a statement.
The miner, which is dual listed in London and Johannesburg, will spend up to R25m on each exchange to buy back the shares throughout April.
Pan African operates an underground and tailings retreatment operation in Barberton, Mpumalanga, as well as the large Elikhulu tailings retreatment plant and Evander underground mine in the same province.
It produced a record 108,085oz of gold in its half-year to end-December and is eyeing full-year production of 200,000oz.
Net debt had more than halved to $28.2m to end-December, while cash generated from operations had also risen by more than half, to $43.4m.
The group had declared a record dividend, paying out $21.6m, which was up more than a fifth year on year.
So far in 2022, the gold price has risen about 5% in dollar terms, but the rand has strengthened almost 10% against the US currency.
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