Pan African Resources PLC (PAF.L): BCG Matrix [Dec-2025 Updated]

Pan African Resources' portfolio pits fast-growing, high-return stars-Mogale MTR, Tennant/Nobles and Evander 8 Shaft-against reliable cash cows like Elikhulu, Barberton TRP and Fairview that bankroll expansion; critical capital-allocation decisions now hinge on whether to convert question marks (Soweto, Egoli and the renewables rollout) into scale generators or let them languish, while underperformers (Sheba, Consort and legacy TSFs) sap management focus and cash-read on to see how these trade-offs will shape growth, margins and shareholder returns.

Pan African Resources PLC (PAF.L) - BCG Matrix Analysis: Stars

Stars

Mogale Tailings Retreatment (MTR) - flagship high-growth asset reached steady-state production in December 2024 and contributed 22,063 oz to Group FY2025 output. Forecasts target ~50,000 oz in FY2026 and c.60,000 oz following the current US$6.5m throughput expansion (800 ktpm → 1 Mtpm). Delivered under budget (project capex US$135.1m) and operating with a projected long-life, low unit-cost profile, MTR has a 20-year life-of-mine and a feasibility-confirmed additional 600 ktpm expansion module for the Soweto Cluster. The asset is a primary driver of Group production growth, underpinning management's 20% p.a. production growth target.

Tennant Mines (Nobles operation, Australia) - high-growth geographic diversification following a US$54.2m acquisition. First gold pour achieved May 2025. Forecast annual production 46,000-50,000 oz pa over the next three years with an expected AISC ≈ US$1,500/oz. At prevailing gold prices (assume US$1,950/oz as a working figure), projected cash margin ≈ US$450/oz, implying payback of <3 years on acquisition and ramp-up capital. The facility is the only operational gold processing plant in the region, creating local processing scale, feed optionality and a platform for regional consolidation and M&A.

Evander Mines - 8 Shaft underground expansion entered high-growth phase after commissioning the sub-vertical hoisting shaft in January 2025; full hoisting capacity (40 ktpm) reached April 2025 enabling sustained access to high-grade 24 and 25 Levels. Current sustainable run-rate positioned at ~65,000 oz pa with an 11-year remaining mine life; planned integration of the Egoli project targets production growth from a baseline ~50,000 oz toward 100,000 oz as development capital is deployed. Rapid capex deployment accelerated uplift in recoverable tonnes and materially reduced historical hoisting bottlenecks, improving unit-cost trajectory and margin capture amid record gold prices.

• MTR: high capital efficiency - original project under US$135.1m budget, incremental US$6.5m expansion yields ~20% additional throughput and ~20%+ production uplift from FY2026 → improved return on capital employed (ROCE).
• Tennant/Nobles: de‑risked Tier 1 jurisdiction exposure, positive cashflow profile (projected payback <3 years), strategic processing monopoly in region enabling feed consolidation and bolt‑on acquisitions.
• Evander 8 Shaft: infrastructure unlocks high‑grade inventory (24/25 Levels), delivers steep production ramp, compresses unit costs as hoisting reaches design capacity and Egoli synergies are realised.
• Collective impact: Stars cluster drives near‑term and medium‑term volume growth, supporting Group target of ~20% annual production growth and improved margin leverage at prevailing gold prices.

Key performance metrics and sensitivities: production contribution from Stars expected to rise from ~22,063 oz (MTR alone FY2025) to >160,000-175,000 oz pa across the three Stars by FY2027 under current expansion schedules; approximate weighted AISC range across Stars US$1,000-1,600/oz depending on stage and jurisdictional cost base; sensitivity to gold price movement: every US$100/oz change in gold price translates to ~US$(10-18)m EBITDA swing across Stars portfolio at forecast production levels.

Pan African Resources PLC (PAF.L) - BCG Matrix Analysis: Cash Cows

Cash Cows

Elikhulu Tailings Retreatment Plant remains the Group's premier low-cost cash generator with a consistent production profile of approximately 50,000 ounces per year. In FY2025 the operation produced 52,606 ounces at a highly competitive all-in sustaining cost (AISC) of US$1,077/oz, significantly lower than the Group's underground averages. The plant processes 1.2 million tonnes of historical tailings monthly and has a remaining mine life of eight years. As a mature, low-capital-intensity asset it requires minimal sustaining capital, enabling high free cash flow conversion that is being directed to debt reduction and dividend payments. The integration of a 9.9 MW solar plant supplies ~30% of the plant's power needs, providing a hedge against escalating South African utility tariffs and protecting margins.

Barberton Tailings Retreatment Plant (BTRP) serves as a stable, high-margin contributor to Group cash flow with an annual output of approximately 20,000 ounces. The operation's life-of-mine was recently extended from two to seven years following reassessment of feedstock and commissioning of a new pump station. BTRP operates a low-risk surface remining model and contributes to the 85% of Group production that falls within the lower-cost AISC bracket (US$1,425/oz). Its maturity and established infrastructure allow steady returns with limited incremental investment; this predictable cash flow underpins the Group's ZAR200 million share buyback program and supports a sector-leading dividend yield.

Fairview Mine at Barberton is the high-grade foundation of the Group's underground operations, producing 40,804 ounces in FY2025. Despite temporary production losses from Eskom transformer failures in late 2024, the operation achieved a 15% production increase in H2 FY2025. Supported by the high-grade MRC and Rossiter orebodies, Fairview sustains a 20-year life-of-mine and robust operating margins. The mine benefits from an 8.75 MW solar facility that yields approximately ZAR26 million in annual electricity cost savings. As a mature asset with well-understood geology and long reserve life, Fairview provides reliable volume that helps anchor the Group's annual revenue of US$540 million.

Summarised cash generation and role in portfolio:

• Total combined production from these cash cows in FY2025: 113,410 oz (Elikhulu 52,606 + BTRP ~20,000 + Fairview 40,804).
• Elikhulu AISC (US$1,077/oz) is materially lower than Group underground averages, improving overall margin profile.
• 85% of Group production sits within the lower-cost AISC bracket (~US$1,425/oz), driven largely by the tailings plants and Fairview.
• Renewable power installations (9.9 MW + 8.75 MW) reduce exposure to Eskom tariff inflation and deliver quantifiable savings (e.g., ~ZAR26m at Fairview).
• Low sustaining capital requirements of tailings operations allow high free cash flow conversion used for debt reduction, ZAR200m share buyback and dividend maintenance against Group revenue of US$540m.

Pan African Resources PLC (PAF.L) - BCG Matrix Analysis: Question Marks

Dogs

The Soweto Cluster Expansion Project is classified as a Question Mark within the Dogs chapter due to its high growth potential but substantial capital requirement and regulatory hurdles. The project is currently undergoing a definitive feasibility study (DFS) with completion expected in June 2026. Key quantified parameters are an estimated capital cost of US$160 million, projected annual production of 30,000-35,000 ounces of gold over a 15-year life, and an internal rate of return (IRR) of approximately 29% at a gold price assumption of US$2,800/oz. The project would be integrated into the Mogale complex on successful execution, potentially raising combined site output toward 100,000 ounces per annum. Major constraints include the need for significant upfront investment, permitting timelines, and the Group's decision on funding from its de-geared balance sheet.

The Egoli Project at Evander 7 Shaft is a Question Mark with material scale and margin potential but remains capital-consuming until commercial ramps. The project aims to deliver 60,000-80,000 ounces per annum at an all-in sustaining cost (AISC) below US$1,000/oz, leveraging the existing 7 Shaft infrastructure to reduce initial CAPEX. Mineral resources are substantial at approximately 3 million ounces. The development pathway requires replication of the successful 8 Shaft expansion model and further capital deployment to reach full production. At present, Egoli is not contributing to the Group's reported annual production of 196,527 ounces and therefore represents a growth-oriented but funding-dependent opportunity for increasing market share in the high-margin underground segment.

The Renewable Energy Portfolio expansion sits within Question Marks because it primarily delivers cost mitigation and ESG benefits rather than direct revenue growth. The Group targets 78.4 MW nameplate capacity, increasing the renewable percentage of its energy mix from 8.8% in FY2025 to 15% by FY2026 and 39% by 2030. Projects include the 20 MW Evander Phase 2 solar plant. Estimated average annual gross savings are around US$7 million. These initiatives require sizable initial capital outlays and complex 10-year power purchase agreements (PPAs), with long-term ROI contingent on South African utility price trajectories and successful implementation of wheeled power and grid integration solutions.

Common strategic considerations across these Question Mark assets (Soweto Cluster Expansion, Egoli, Renewable Energy expansion):

• Funding requirement: aggregate near-term CapEx exposure (Soweto US$160m + additional Egoli development capital + renewable CapEx) vs. Group de-geared balance sheet.
• Timing risk: DFS completion (Soweto) by June 2026, staged development timelines for Egoli, and multi-year renewable build-outs to 2030.
• Commodity and tariff sensitivity: gold price assumptions (US$2,800/oz) materially affect project IRR; utility price trajectories determine renewable ROI.
• Operational integration: potential to consolidate Soweto into Mogale for scale effects; leverage of existing 7 Shaft infrastructure at Evander to lower CAPEX.
• Regulatory and contractual complexity: permitting for mining expansions and 10-year PPAs/wheeling agreements for renewable projects.
• Value conversion pathway: projects require capital allocation decisions to move from Question Mark into Star (if high market share and growth captured) or be divested if returns do not meet thresholds.

Pan African Resources PLC (PAF.L) - BCG Matrix Analysis: Dogs

Sheba Mine (Barberton) is classified as a 'Dog' within the Group portfolio due to persistently high unit costs and operational volatility. A fatal underground accident in June 2025 intensified operational scrutiny and disrupted production continuity. Reported all-in sustaining costs (AISC) for Barberton underground operations reached approximately US$2,170/oz in early FY2025, materially above the Group target for low-cost assets. Management implemented a restructuring plan with a 20% workforce reduction during FY2025 to restore productivity and lower operating overheads. Despite a recovery in output to 10,600 oz in H2 FY2025 (up from c. 7,400 oz in H1 FY2025), Sheba remains a low-margin contributor compared with the Group's surface operations, delivering sub-par cash margins in a period when the Group achieved consolidated revenue of US$540 million for FY2025.

Consort Mine is the smallest and highest-cost producer in the Barberton complex and meets the 'Dog' criteria: low relative market share inside the portfolio and ongoing requirement for disproportionate management effort. Consort produced 3,242 oz in H1 FY2025 and, after a revised mine plan targeting higher-grade ore below 37 Level, saw production rise by c. 70% in H2 FY2025 (to ~5,510 oz), yet remains marginal on a per-ounce margin basis. Consort's contribution to Group revenue is immaterial (<1% of total Group revenue in FY2025) and it frequently fails to meet the Group's average profit margin benchmark of 26%.

Legacy Tailings Storage Facilities (TSFs) not included in current remining schedules represent non‑productive environmental liabilities classified as 'Dogs.' These TSFs require continuous monitoring, maintenance and compliance expenditure to meet the Global Industry Standard on Tailings Management. Examples include dormant facilities such as Bramber TSF at Barberton (recently scoped for potential reprocessing) and other legacy basins where only intermittent rehabilitation activity has been budgeted. These assets generate no current gold output, have negligible market share in the Group production portfolio, and constrain capital allocation due to ongoing environmental obligations.

Key operational and financial characteristics for these 'Dog' assets:

• High AISC: Barberton underground AISC ~US$2,170/oz vs Group low-cost target (sub-US$1,000/oz target range for surface operations).
• Production volatility: Sheba H2 FY2025 = 10,600 oz after H1 disruption; Consort H2 FY2025 +70% vs H1 but remains small absolute volumes (~5,510 oz).
• Workforce changes: Sheba restructuring includes a 20% headcount reduction implemented in FY2025 to reduce fixed costs.
• Revenue impact: Group FY2025 consolidated revenue ~US$540 million; combined contribution from these assets is marginal and falls well below proportional revenue per asset.
• Environmental & compliance spend: Legacy TSFs require recurring monitoring and capital for remediation; no immediate revenue offset.

Management levers and near‑term thresholds that determine survival or exit of 'Dog' assets:

• Cost control and productivity improvements (target: AISC convergence toward Group average or material reduction from US$2,170/oz baseline).
• Sustained higher-grade access (Consort mine plan success below 37 Level - must deliver consistent grades and yields to justify retention).
• Safety and operational stability (zero‑harm incident record to prevent production stoppages and regulatory penalties following the June 2025 fatality).
• Capital allocation discipline (prioritise spend where IRR exceeds hurdle; TSFs require funding for compliance, not growth).
• Contingency options: mothballing, divestment or targeted reprocessing projects where tailings have sufficient contained gold to be economic after rehabilitation costs).