Pan African Resources forecasts up to 78% EPS increase on gold prices

Pan African Resources PLC forecasts a substantial 68-78% increase in earnings per share for FY25, projecting 6.95-7.37 cents, fueled by a 44.5% revenue rise driven by higher gold prices at $2,735/oz and increased gold sales. Despite hedging transactions limiting profit realization by approximately 23% in the past, the company will be fully unhedged from July 1, 2025. This strategic shift, alongside an expected production increase to 275,000-292,000 ounces for FY26, positions Pan African to more directly benefit from future gold price movements.

Analysis

Pan African Resources PLC (PAF) has issued exceptionally strong guidance for its fiscal year ending June 30, 2025, forecasting earnings per share to increase by 68-78% to a range of 6.95-7.37 U.S. cents. This projection is underpinned by robust current-year performance, where revenue grew 44.5% on the back of a 35.7% increase in the average gold price to $2,735 per ounce and a 6.5% rise in gold sales volume. Notably, these results were achieved despite significant headwinds from the company's hedging program, which limited profit realization by approximately 23% and represented a $26.2 million opportunity cost. The key strategic development is the company's decision to become fully unhedged from July 1, 2025, which will give it full exposure to spot gold prices going forward. This shift, combined with a forward production forecast of 275,000 to 292,000 ounces for FY2026—driven by contributions from its new MTR operation and recently acquired Tennant Mines—positions the company for potentially higher, though more volatile, earnings.

Key Decisions for Investors

• Investors with a bullish view on gold should consider that Pan African Resources will become a more direct, leveraged play on the commodity's price starting in FY2026 due to the removal of all hedging instruments.
• The strong FY2025 earnings growth, achieved even with a 23% profit reduction from hedging, suggests the company's underlying operational performance is robust; however, the move to an unhedged strategy significantly increases downside risk should gold prices decline.
• It is critical to monitor the company's full financial results on September 10, 2025, and subsequent operational reports for confirmation that the guided production ramp-up to 275,000-292,000 ounces is on schedule, as this volume growth is a key component of the future investment thesis.