Group Trading Statement for the six months ended 31 December 2025 (current reporting period)

Pan African Resources expects EPS of US$0.0718–0.0743 for the six months ended 31 Dec 2025 (weighted average shares 2,027,345,177), a 187–197% increase versus the restated prior period, and HEPS of US$0.0728–0.0740, up 507–517%. The outperformance is driven by a 157.3% revenue increase owing to a 61.6% higher average gold price (US$3,812/oz v US$2,359) and 51.5% higher production (128,296oz v 84,705oz); management expects further H2 production growth from the MTR expansion and Tennant Mines with full-year guidance of 275,000–292,000oz. The prior period was restated after finalising the Tennant acquisition accounting; FX movements (average US$/ZAR 17.37 v 17.95) are noted as impacting USD-reported results. The Group will release audited results on 18 Feb 2026.

Analysis

Market structure: Pan African (PAF/PAFRY) is a clear winner—EPS guidance implies a ~190% lift and H1 production +51.5% to 128.3koz with FY guide 275–292koz, giving the stock asymmetric re-rating potential versus peers. Winners include mid-tier gold producers with high operational leverage and ZAR-cost bases; losers are streaming/royalty names and highly hedged producers that miss gold-price appreciation. Cross-asset: improved cashflows reduce credit stress on SA miner high-yield bonds (tightening spreads) and should compress implied equity volatility; renewed gold price strength supports commodities and inflation hedges, while ZAR moves (watch USD/ZAR 16–19 range) drive USD-reported earnings volatility.

Risk assessment: Tail risks—gold mean reversion below $2,800/oz or a ZAR re-strengthening to <US$/ZAR16 would materially cut USD EPS (a ~30% gold decline roughly translates to similar revenue pressure). Operational risk: MTR expansion or Tennant integration delays could shave 30–50koz from FY output, reversing the valuation cushion. Time horizons: immediate catalyst = results on 18 Feb 2026; short-term (1–3 months) hinge on confirmation of H2 ramp; long-term (12–24 months) depends on sustained gold price and successful MTR/Tennant execution.

Trade implications: Implement concentrated, event-driven long exposure to PAF ahead of 18 Feb with tight risk controls: the high EPS leverage vs peers supports a 20–35% upside target if guidance is confirmed. Use pair trades (long PAF / short AU or NEM) to isolate company/operational upside versus macro gold moves and use 3–9 month call spreads to limit capital at risk around the results window. Rotate from streaming/royalty names into mid-tier producers with confirmed production growth; reduce exposure if realized gold < $3,200 or if company downgrades FY guide below 275koz.

Contrarian angles: Consensus likely underestimates currency leverage—if USD/ZAR reverts higher (weaker ZAR), USD EPS improves further, providing upside surprise; conversely, consensus may be over-enthusiastic about sustainability of near-term gold price and one-off accounting adjustments (Tennant measurement-period restatement). Historical parallels: post-acquisition provisional accounting often inflates early EPS until integration capex and sustaining costs surface. Unintended consequence: market may bid PAF on headline EPS while neglecting looming capex/sustaining cost increases at Tennant, creating a mid-term downside beyond a simple gold-price shock.

Key Decisions for Investors

• Establish a 2–3% long position in Pan African Resources (LSE: PAF / ADR: PAFRY) within 5 trading days ahead of the 18 Feb 2026 results; set a hard stop-loss at 12% below entry and target 20–35% upside over 3–6 months if results confirm guidance and realized gold > $3,200/oz.
• If options/liquidity permit, buy a 6–9 month PAF call spread sized to 1–1.5% of portfolio (buy ATM call, sell 30% OTM call) to express upside with defined max loss; close or roll if share rises >35% or company trims FY guidance below 275koz.
• Implement a relative-value pair trade: long PAF (2%) / short AngloGold Ashanti (NYSE: AU) or Newmont (NYSE: NEM) (1.5%) to isolate operational and ZAR-exposure upside; unwind in 3–6 months or if gold price falls below $3,000/oz.
• Reduce exposure to streaming/royalty equities (e.g., Franco-Nevada FNV) by 1–2% and reallocate to mid-tier producers with confirmed production ramps (including PAF); exit the rotate if MTR expansion is not commissioned by end-Q3 FY26 or if company revises FY guide < 260koz.