http://moneyam.uk-wire.com/cgi-bin/articles/20050126070000PE650.html

A turning point for South African mining?
Sector Focus

The slow re-setting of commodity prices since Chinese demand peaked at the start of the decade has been painful for most economies that rely on metal exports. But even against that backdrop, the South African mining industry has had a torrid few years. The darkest pall may have been cast by the 2012 killings at Lonmin 's (LON) Marikana mine, but the sector can count a litany of issues - from job losses, economic strife and power shortages to regulatory uncertainty and political interference - that have discouraged investment, precipitated corporate collapse and prompted asset sales.

But now, as the country inches towards a new mining charter, and following this week's news of wage settlement at the largest platinum mines, we ask whether investors can expect anything approaching stability from the most volatile of industries in an, at times, unpredictable nation.

The possibility of a downgrade to South Africa's credit rating remains”

South Africa's mining industry currently accounts for around 7 per cent of the country's gross domestic product. Not only did this figure used to be much higher, but because much of the industry's output is exported, the long fall in demand in recent years has resulted in a disproportionate effect on the country's economy. Worse still, collapsing demand has often correlated with the rand. For example, the decision by the People's Bank of China in June 2015 to devalue the yuan by 2 per cent - which international markets took as a sign that Chinese growth and resource consumption were both slowing - led to a 26 per cent drop in the value of the rand against the dollar in just six months. And the fall only accelerated last December when South Africa's president, Jacob Zuma, fired his finance minister Nhlanhla Nene, in a decision that shocked markets and rocked confidence in the government's management of the economy.

Currency falls and wage inflation
The rand's devaluation - which in recent months has softened - has had a mixed impact on miners' costs. Pan African Resources (PAF), which operates in the historic gold mining region of Mpumalanga, has certainly benefited. Financial results for the year to June show that all-in sustaining costs - the most comprehensive measure of a miner's outgoings - were essentially flat in rand terms at ZAR405,847 per kilogramme. However, those costs were a fifth lower when priced in dollars, which for a gold producer is probably a fairer yardstick. That's all the more impressive given that rand-denominated labour and energy costs edged up 12.5 per cent and 16.8 per cent during the year, neither of which was solely down to increased production.

Others less buffeted by 2016's ballooning gold price have found the rand's depreciation a more complicated factor. Desperate to avoid a repeat of a 2014 strike that crippled production, yet hamstrung by domestic inflation, the country's three dominant platinum miners - Lonmin, Impala Platinum (SA:IMP) and the Anglo American (AAL)-owned Amplats (SA:AMS) - have been under considerable pressure to settle a wage negotiation with the Association of Mineworkers and Construction Union (AMCU) this year. That's despite next to no support from platinum prices, which remain subdued thanks to surplus production and tepid demand for catalytic converters.

This week, the AMCU and Lonmin reached a three-year wage settlement at an average annual salary increase of 7.6 per cent. Impala and Amplats are both in the process of striking similar deals. But while the rhetoric from both sides of the negotiating table suggests peace has broken out, the possibility of a downgrade to South Africa's credit rating remains. Were that to occur, the inflationary challenges would be likely to test any agreement in its current form, and could yet haunt a key chuck of the country's mining industry.
To add to the concern, few platinum watchers are predicting a strong rebound in prices in the next three years.

Legal shifts and human rights
Despite this, platinum group metals remain a central component of Anglo American's rationalised strategy which, alongside the cash-generating power of diamond miner De Beers, represents something of a retrenchment to the Johannesburg-headquartered group's roots. However, the company's commitment to platinum may soon face a significant test, in the shape of a long-overdue revision to the mining charter. At present, any mining operation must be at least 26 per cent owned by a black economic empowerment partner, as part of legislation to address historic disadvantages faced by black South Africans. That 12-year-old law and its implementation have faced criticism, particularly over the interpretation of mining company equity, and whether an operation can divest its empowerment stake.
In the case of Amplats, empowerment deals involving some of its older divisions were based on units of production rather than equity, which some analysts think may be challenged under a new charter. And following Amplats' sale of its Rustenburg mines - which completed this week - there could be complications if courts rule that mining companies must be empowered in perpetuity. While these questions appear to be a matter of legal debate, South Africa's department of mineral resources will be aware of the trade-offs in asking any company to relinquish equity, given the need for desperately-sought investment.

Toxic waste dumps from mines around Johannesburg - a region dominated by gold production - has led to a human rights crisis for locals suffering the effects of contaminated water”

The government is also facing repeated calls to address the environmental and social impact of parts of the industry. A recent report by Harvard Law School found that toxic waste dumps from mines around Johannesburg - a region dominated by gold production - has led to a human rights crisis for locals suffering the effects of contaminated water. Investors should always consider the ethical trade-offs involved in mining, which in South Africa have sometimes proved enormous.

Favourites
The pains of South Africa's platinum industry are well-known, but for one recent debutante to London's market weak prices have been made much more comfortable thanks to low costs and chrome by-products. Tharisa (THS), which completed its secondary listing in June and is on track to issue a maiden dividend in 2017, is currently benefiting from a surge in chrome prices. That jump represents a clear vindication of the group's decision to more than double speciality chrome concentrate production during the 12 months to September 2016. Throw in excellent recent platinum group metals recovery rates in excess of 80 per cent, and the rally in Tharisa's share price since the company made its shares available to UK investors looks set to continue.

Outsiders
Less than a year after a heavily dilutive rights issue, platinum miner Lonmin remains in a pickle. Despite boasting some of the highest recovery rates in the industry, the company has laid off swathes of its workforce in efforts to bring down unit costs, which in the three months to June stood at ZAR10,596 an ounce, just 11 per cent below the average selling price. Unsurprisingly, such a tightrope walk is eating into the funds raised in the re-capitalisation; indeed cash had fallen to $91m by the middle of 2016. Consequently, Lonmin is somewhat reliant on - and operationally leveraged to – a recovery in platinum prices, which few in the industry are expecting any time soon.

The broker's view:
Exposure to iron ore and coking coal has been crucial to Anglo American's rally this year. But while bearish sentiment towards the stock has undoubtedly weakened it, there are still fundamental reasons why the company and investors should not want to be long of some of its higher-cost mines.

The Kumba iron ore stake, for example, is always going to be a tough asset to manage. Kumba's flagship mine at Sishen has done very well this year, thanks in part to improving prices, but this has also been due to some pretty drastic changes to the mine plan. Cash flows have been placed ahead of all other concerns, which has resulted in a deferral to stripping and a sharp decrease in the projected life of the mine. It's a decision that will come back to haunt the company.

Then there are labour costs and efficiency. It takes around 11 times the manpower to take a tonne of ore out of the ground at Kumba's mines than it does at Fortescue Metals ' (Au:FMG) operations in Western Australia, which is far more automated. What's more, the best wage negotiation a miner can hope for in South Africa is an annual increase of around 7 per cent, compared with Australia where wage inflation is currently non-existent. The South African unions' resistance to automation and the job losses they entail, make it very hard for a commodity like iron ore to remain profitable, at least against global competitors.

Consequently, it is not going to be easy for Anglo to dispose of its South African assets, although given how well the iron ore and coking coal divisions have done this year it is somewhat fortunate that the company failed to sell them straight away. Meanwhile copper, diamonds and platinum - Mark Cutifani's areas of long-term focus - have all been flat.

20.125p +0.125p

Pan African Resources PLC
DIRECTOR SHAREHOLDING
Name: Bertin McLeod
Nature of the transaction: Acquisition of ordinary shares
Price(s) ZAR3.40
Volume(s) 24,000

21.50p+1.50 (+7.50%)

Trump win on the US elections got the Gold price on the rise and with that the Metal prices doing much the same.


Ex-Dividend date on the LSE 08 December, Thursday
Record date 09 December, Friday
Payment date 22 December, Thursday

dividend of 0.82338p

Close the position T+14 @ 21.5625p

a good move today, but the gold price came down again to only $5 up after being at one time $50 up

Bought back @ 19.50p

Though the gold price has further moved down at this price is worth to pick them up
----------------
Gold
It was consolidating around its 200-day moving average – a popular measure of a market’s long-term trend – last month. But it has since climbed above the 200-day moving average and is now up 23 percent for the year.

Shanta Gold also down on Fri not sure if we haven't seen the bottom yet, looks a buying Opp to me as Gold is predicted to reach $1440 in 2017

comparing
---------------------------------- 7 days --------------------------------------------------- 3 month --------------------------------

Gold price forecast for next months and years.

http://longforecast.com/gold/gold-price-forecast-for-2015-2016-and-2017.html

RESULTS OF DEFINITIVE FEASIBILITY STUDY FOR THE ELIKHULU TAILINGS PROJECT AND GROUP PRODUCTION UPDATE

Pan African is pleased to announce positive results for the independent Definitive Feasibility Study (“DFS”) for its Elikhulu Tailings Project (“Elikhulu” or “the Project”). The Pan African board of directors (“Board”) has approved the construction of the Project, subject to finalisation of the Project financing package.

The Project DFS results indicate excellent recovered grades and gold production, attractive financial returns and a low execution risk, with the DFS results surpassing expectations of previous technical and financial assessments of the Project. The DFS was undertaken by DRA Projects SA Proprietary Limited who has reviewed and approved the information contained in this announcement in writing.

DFS highlights and key assumptions

The planned commencement date of the Project is January 2017, with first gold forecast for the final quarter of the 2018 calendar year and full commissioning in December 2018.

Annual recoverable gold production of approximately 56,000 ounces for its initial eight years of operations and 45,000 ounces of gold for the remaining five years thereafter.

Current arisings and inferred gold resource could extend Project life beyond the DFS estimated life of 13 years.

Optimal plant capacity for the Project allows 12-million tonnes per annum throughput.

The Project is expected to add approximately 25% to the Group’s current production profile and reduce the Group’s all-in sustaining cost (“AISC”) profile.

Initial capital cost is forecast at approximately R1.74 billion (US$119.9 million).

The Project internal rate of return (“IRR”) (real, post-tax) of 23.1% (30.6% nominal) with a payback period of less than four years, based on assumed gold price of US$1180/oz (R17,110/oz).

Return on equity (real, post-tax) of 34.3% (42.5% nominal)

Project net present value (“NPV”) of R1.1bn (US$75.9 million).

AISC of US$523/oz over the life of the Project.

Cash outflow per ounce over the life of the operation is sub $650/oz, inclusive of debt servicing, and amounts to approximately $805/oz, inclusive of debt servicing, over the five year debt redemption term.

Average gold recovery rate over the life of the Project of 47.77%.

Environmental Impact Assessment (“EIA”) and Water Usage Licence (“WULA”) processes are underway, with both approvals expected by late 2017.

DFS economic assumptions:

Gold price assumption: US$1,180/oz.
Rand/US Dollar exchange rate: ZAR/US$:14.50.
NPV discount rate: 9% real.
Debt to equity ratio: 115%, debt to total capital ratio of 53%.
Long term South African inflation rate of 6.1%.
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SA quote... 308 ZAR= SA quote - jse

from google .... https://www.google.com/finance?q=JSE:PAN

What FTSE 100 needs to trigger Santa rally

Bought some at 14.9375p

TIME TO BOUNCE

Has bottom at 14.625p this morning with a 6 month double bottom on the chart
edison report 13 December 16
http://c3352932.r32.cf0.rackcdn.com/content/pdf764a2ad0756e927d50afb1821e368d87.pdf

South African Rand Slides To Near 2-week Low Versus US Dollar
Thu, 15th Dec 2016 10:27

WASHINGTON (Alliance News) - The South African Rand lost ground against the US dollar in the European session on Thursday, as the latter was buoyed by the Fed's decision to raise interest rates by 25 basis points and indicating aggressive pace of tightening in 2017.

The Rand declined to near a 2-week low of 14.10 ( ZAR 0.706 ) against the greenback, from a high of 13.91 hit at 5:30 pm ET. The rand is likely to locate support around the 15.00 zone.

Serious unrest at Barberton, warns Pan African Resources
The producer says local groups fighting for dominance are disrupting production and destroying property
07 DECEMBER 2016 - 06:02 AM ALLAN SECCOMBE - Pan African Resources CEO Cobus Loots.

Pan African Resources is looking at all options to minimise disruptions to its Barberton mine from community unrest, which has taken on a political element, with various parties demanding a say in hiring at the mine, says CE Cobus Loots.

Pan African had a major disruption at its Barberton mines near the Swaziland border a number of years ago to remove illegal miners from the underground workings and incurred hefty security costs.

It was now dealing with a problem outside its property that had become increasingly disruptive to production over the past six months as two political groups struggled for dominance in the area, Loots said without identifying the groups.

"We lost a lot of days to community issues and safety stoppages," he said. "There’s infighting in the communities and there are political issues between parties in the area.

"We are stuck in the middle when one party comes to us, saying ‘we insist you do recruitment via us because we represent these communities’, and the next day the road will be closed by the other party," he said. "It’s the worst we’ve ever seen."

The similarities between the Barberton communities and those around the platinum and chrome mines near Steelpoort are striking, with various community leaders demanding recruitment preference.

Some bounce today to 15.25p

comparing
---------------------------------- 7 days --------------------------------------------------- 3 month --------------------------------
---

Gold shares 3 month chart

Percentage fall on the last 3 month
PAF - 37%
CEY - 24%
SGH - 32%
HOC - 35%

Bought some more at 14.25p

Some improvement at the end of the day
There was a couple of large trades earlier

note - There was an "UT" @ 13.50p at opening, most likely was signaling the end of the drop

A good rise in SA

JSE: PAN - Dec 28, 2:03 PM

252.00ZAC Price increase 7.00 (2.86%)

Who do you believe this days.... with predictions none but mine ( short term ).........

Here’s when the new bull market starts for gold
By Barbara Kollmeyer - Published: Dec 28, 2016 9:57 a.m. ET

Carlson offers up the “amazing” chart below that shows the ride to the top and down again for one triple-leveraged miners ETF JNUG, -0.19% . By the numbers, the fund was up nearly 920% by late August, but has since lost 87% of that. It’s now up over 40% for the year.

A Wealth of Common Sense
That brings us to our call of the day — a prediction about precious metals. It’s from Lamoureux & Co.’s Yves Lamoureux, who thinks he knows how 2017 will roll out for those plays.

“Both gold and silver will go down for the first half then move into a new bull market that will last well into 2020. This is the way the market shakes off the last remaining weak hands, prior to resuming the bull trend,” said Lamoureux in emailed comments.

“Where most turned bullish in 2016, in reaction to higher prices, we did not. Our view was and is that the bounce was an echo bubble of the prior bubble,” he said.

One reason is that he says rising real rates will “kill precious metals.” So for silver SIH7, +0.17% , he says expect lower teens in the first half, while he’s still sticking to a gold GCG7, +0.18% target of $850 an ounce, which he’s held since February.

Note, gold could mark the first rise in 8 weekly sessions if the positive momentum we’ve seen thus far has legs. This year, the commodity is on pace to have halted a multiyear decline, in what some say has been a “pivotal year” for precious metals. Others say investors are riding a downward “slope of hope.”

Gold has slumped since August, but it still is around 7% higher as the year winds down, while silver SIH7, +0.17% has fared even better with a 14% gain.

14.875p +0.25p

Has been moving higher with a steady rise for the last fews days, today is no difference on looking at the order book.
well supported on the bid side 29 v 12, though things change fast sometimes and when one expect to move forward as there is not many shares left at offer price, suddenly more are added when one thought all are gone, those added where "iceberg" waiting on the order book but not showing.
what is the point then, one would say, there is always tricks for us not able to see the real thing, despite paying for Level 2.

As I said earlier, there was 25K left at 15p offer, and as soon it was taken with "AT"s, another 25K was added from the "iceberg"

note
• Recognising and trading off ‘iceberg orders’ that can be identified on a Level 2 screen.
An iceberg order is a large single order managed by an exchange that has been divided into equal
quantities by the use of an automated program, for the purpose of hiding the actual order quantity.
This can hold back the share price at a specific level as the full extent of the order gets executed.

15.25p +0.50p

It looks like the last of the Iceberg @ 15p offer is gone, as for 30 minutes the offer is at 15.50p and naturally the bid is gone to 15p after such a large buying 2M so far