Pan African Resources PLC (JSE: PAN) has witnessed an impressive surge of more than 35% in its share price over the past six months, and the latest operational update for the first half of its 2024 financial year only adds to the positive outlook. The company revealed a noteworthy 6.7% year-over-year uptick in gold production, reaching 98,458 ounces, coupled with a 13.7% increase in the realized gold price, now standing at $1,961 per ounce. Despite grappling with inflationary pressures, Pan African Resources anticipates a decline in its all-in-sustaining costs for the financial year, targeting $1,300 per ounce compared to the previous guidance of $1,350 per ounce.
Maintaining its production guidance for the 2024 financial year at 180,000 to 190,000 ounces, the company hints at the potential for an upward revision considering the robust production in the current reporting period. Additionally, the anticipation of a significant production boost in the 2025 financial year, driven by the commissioning of the MTR project, is noteworthy. This project is expected to contribute an extra 50,000 ounces annually, translating to a remarkable 25% increase in the group’s annual output.
With optimism in full swing, all eyes will now be on the company’s interim results on February 14th, seeking confirmation of whether this strong operational performance has translated into impressive financial metrics.
Technical
On the daily chart, a breakout is underway at the ascending channel, hinting at the formation of a steeper bullish trend. From its prior bottom, the price has pushed through the 61.8% Fibonacci golden ratio at R4.09, but the RSI indicates potential overbought conditions, which could result in a temporary technical pullback.
Resistance at R4.34 could be the level to watch in the upcoming sessions. Failure to break through could trigger the pullback back toward R4.13. If support is found at this level, the breakout could be confirmed toward R4.51 in the longer term.
However, if the price falls below R4.13, there could be a continuation of the channel formation, opening the possibility of a more protracted pullback toward R3.85, the prior Fibonacci midpoint. This move will shift the price below the 25-SMA (green line) and 50-SMA (blue line), putting the dynamic support of the channel at risk of a breakdown, which could prolong the bearish trend.
Summary
Pan African Resources has recently unveiled an impressive operational update, triggering a bullish advance in its share price. As we advance, resistance at R4.34 could be crucial in gauging whether the recent breakout from its trend could be sustained.
Sources: Koyfin, Tradingview
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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