Pan African Resources

SPECULATIVE BUY

01/07/2010 Robert Tyerman

Pan African Resources clalms a potential gold resource of 2.4m oz for its Barbeton Mines subsidiary in South Africa, including 506,000 oz at the Royal Sheba prospect.

The company, chaired by former South African mineworkers' union leader Cyril Ramaphosa, says the measured and indicated component of this is now 1.8m oz at a grade of 5.99 grammes of gold per tonne of ore, while established mineral reserves now stand at 661,000 oz. 

AIM counter Pan African, steered by chief executive officer Jan Nelson, suggests a possible mine life of more than 15 years, producing 100,000 oz a year. The group, which floated on AIM ten years ago, has interests in exploration assets in Mozambique and the Central African Republic and has recently moved into platinum group metals tailings.

Shares in Pan African have been unexciting performers hitherto. In the six months to last December, pre-tax profiits slid by £600,000 to £7.3m on turnover up 16.4% to £29m.

However, followers believe that the company could be entering a new phase after the recent drilling results. They could be worth a strong-nerved punt for the risk-friendly.

Tags: AIM, Commodities, Speculative punts

Sector: Mining

Companies: Pan African Resources

Market cap: £8.8m

PE Forecast: 8.0

Share price: 6.25p