Pan African Resources poised for growth as gold prices soar above $5 000 per ounce

Higher gold prices of over $5 000 (more than R80 000) per ounce will help Pan African Resource, which expects the current pricing levels to be sustained for long, to invest further into production and reduce its debt obligations.

Gold prices reached a new all-time high and surpassed $5 000 per ounce this week, notching up a rally of about 50% year to date and bringing excitement to precious metals markets as investors shifted focus to safe haven assets in light of global economic and geopolitical upheavals.

For Pan African Resources, the higher gold price rally represents a structural change and pricing in of the metal’s full potential.

“This gold rally means that our margins can improve significantly and we can invest more in our operations to grow production, as well as reduce our debt and increase returns to shareholders through dividends,” Hethen Hira, the head of investor relations at Pan African Resources, told Business Report in an interview on Tuesday.

The company’s net debt for the half year to December declined by over 65%  to $49.9 million. It raised gold production for the interim period by 51% to 128 296 ounces, with further production increases expected for the current six month trading period, putting it on track to attain its  full year production guidance of between 275 000 ounces and 292 000 ounces.

The current higher gold price environment comes as a boon for the company, with Hira saying Pan African Resources has long believed that “gold has been undervalued” until now.

In the outlook, Pan African expects the gold price to appreciate furthermore.

“We believe gold is a currency and a store of value that surpasses commodities or paper money and these fundamentals form the basis to support the price,” said Hira.

“We do not see these prices as a cyclical increase this time, but more of a structural change and expect an increased basic price of gold to be sustained for longer.”

Analysts at SP Angel said in a research note that the Monday’s gold price rally came amid “a strong rally across the precious metals spectrum,” with the price of platinum, of which South Africa is a big producer also quickening by 2.68% to around $2 814.

Silver also hit new record highs of $110 per ounce, pacing up 7% palladium also rallied.

Greg Davies, head of wealth at Cratos Capital, said in an interview that gold’s current rally can “be mostly put down to the possibility that the dollar could lose its status as the reserve currency of the world so central banks are buying safe havens” such as bullion.

“In simple terms, gold is rallying because investors are paying up for insurance against political, geopolitical, and monetary‑policy instability, not because of one narrow data point like a single CPI print,” explained Davies.

For Pan African, the rally in the gold price could not have come at a better time; two of the firm’s newer operations, the Mogale Tailings Retreatment (MTR) plant and Tennant Mines in Australia, have come into production. The two assets are projected to help Pan African raise its annual production by some 40%.

“These operations have significant growth potential and our Evander underground operations have resources of over 30 million ounces of gold. We also therefore do not need to make expensive acquisitions to increase our production profile in the long term,” said the company.

Pan African has been hedging its operations against high costs that have hammered other SA gold producers. Hira said the gold miner has pivoted its production profile on low cost surface re-mining which constitute about 50% of its portfolio. 

With other local gold miners also gearing up to report their December 2025 half-year earnings and trading updates, all eyes across the industry will be on how sustained the current rally in the bullion price will be.

In the year on year comparative, gold prices are up a significant 48%, according to Bruce Williamson, resource analyst at Integral Asset Management.

BUSINESS REPORT