Pan African Resources PLC (JSE: PAN) surged over 5% at the start of this week, building on a remarkable 9% climb last week. This upward trajectory aligns with the flourishing gold market, riding the wave of market expectations around the Federal Reserve’s interest rate approach. This surge is a notable development following the recent fiscal report for the year culminating on June 30, 2023, revealing a decline in both pre-tax revenue and profit due to decreased gold sales.
The company’s revenue dropped significantly to $321.6M from the previous $376.4M, with a 15% decline in gold sales to 174,640 ounces. Consequently, pre-tax profits dipped from $106.9M in 2022 to $85.55M. All-in-sustaining costs also nudged up by 3.3% to $1,327 per ounce, while the average gold price stood at $1,836 per ounce for the year. Despite a drop in gold production from 205,688 ounces to 175,209 ounces, the company upheld its production projection for 2024 at 178,000 – 190,000 ounces in its commentary.
However, recent developments paint an optimistic picture, with the current gold price nearing $2,016 per ounce, significantly higher than the previous year’s average. Moreover, the company revised its production targets for the upcoming year to 180,000 – 190,000 ounces, signalling a potential upswing in its financial performance for the coming year.
After consolidating sideways for an extended period in a rectangle pattern, the price finally found a direction with a bullish breakout in recent weeks, confirmed by the crossing of the shorter-term 25-SMA (green line) above the 50-SMA (blue line) and 100-SMA (orange line).
Resistance is established at R4.05, which could be a crucial level to look out for in the upcoming sessions. If the price fails to remain above this resistance sustainably, a pullback from the recent run is possible. Support at R3.91 and R3.83 could then come into play to potentially prevent a retest of the rectangle breakout at R3.75.
However, a sustainable run above R4.05 could lead to further upside, with the first potential resistance established at R4.20. In the long term, the R4.34 resistance could be pivotal if the market can upkeep its current momentum and volumes.
After last week’s bullish rally, Pan African Resources faces resistance at R4.05, which could prevent the current momentum that has carried over into the new week. If the price fails to remain above this resistance, a pullback toward R3.91 remains possible in the upcoming sessions.
Sources: Koyfin, Tradingview, Reuters, Pan African Resources PLC
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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