Pan African Resources plc (LON:PAF) outperformance is discussed by Gervais Williams, Co-Fund Manager of Diverse Income Trust plc in an exclusive interview on the diversified and successful holdings in DIVI investment trust.
DirectorsTalk asked: Pan African Resources plc share price has been on a real upward trend in 2024 and 2025. What do investors need to know about this leading gold producer in Africa?
Gervais Williams commented:It’s a gold mining company: it’s got both deep mines and actually, on the surface, it gets its tailings and is refining some of the tailings, bringing a new mine into production called Mintails. But what’s interesting about companies like this is when you do get lucky, and the gold price has done extremely well over the last 12 months, then not only do you find that the profits you generate are very substantial, but as that’s annualised in the following year, then you find actually the upgrades continue.
So, what’s been interesting about this company is if you take it from December 2023, the share price is up something like 130%, which is a terrific return, don’t get me wrong, but what’s interesting is even now, having outperformed by that degree, if you take it through to June 2025, it’s on 5.5 times PE ratio, according to Bloomberg. If you look at it through to the following year, June 2026, it’s gone to 3.9 times, extraordinary.
So, it just shows that as you get these companies succeeding, they don’t just succeed this year; you get that annualised effect as they get a full year of the new gold price.
It’s a terrific company, it’s one of our largest holdings, many of these are pretty much the largest holdings. Now don’t get me wrong, we have to take some profits along the way, we have taken a bit of profit on Pan Africa Resources. Nothing wrong with it, it’s just that its valuation has moved. It’s a big part of the portfolio and we’ve taken some profits.
We’ve got some relatively chunky companies in the portfolio, and we’ve got some pretty exciting upside. Again, it’s just the nature of the range of companies. We’re not just looking for companies which happen to be in the manufacturing sector or companies which are in the software sector. It’s the range of companies.
And I think the Pan African Resources with its gold mining company also has an opportunity to succeed even at times of uncertainty. It also had an extremely successful period in the portfolio, for example, from March 2020 when we had the pandemic.
It’s that range of holdings together with the momentum, this cash surplus, good and growing income, which we think is contrasting with the exchange-traded funds (ETFs) out there and we think that’s what’s going to change. As people take money out of some of those ETFs, as they come into the UK market, we’ve got this long-term trend of UK outperformance.
These kinds of portfolios in the Diverse Income Trust we think are tremendously well-placed for the future.
