Mining shares can often be among the most exciting — and at the same time, most risky — growth shares out there.
Profits can soar when commodity prices move higher, creating enormous capital gains and sometimes large and growing dividends. Yet ever-present dangers — from production stoppages and disappointing exploration results to politically-motivated export bans — can also make them volatile investments.
With some careful research, though, investors can find mining shares that balance high-growth potential with levels of risk they are comfortable with. Pan African Resources (LSE:PAF) is one such company I think deserves serious consideration from growth investors.
Gold boom
Like other gold stocks, the Alternative Investment Market (AIM)-listed miner has risen sharply in value in 2025. It’s up 115%, driven by a 39% rise in the gold price, which has hit new record peaks in that time. It touched new highs above $3,676 an ounce this week.
Bullion values have surged as growing macroeconomic and geopolitical concerns have driven safe-haven investor interest. Latest World Gold Council (WGC) data showed total investment demand (including gold tracker funds, bars, and coins) soar 78% in the second quarter. Central banks are also buying up vast quantities of metal as they diversify their reserves.
But you’ll see that Pan African’s share price has risen more sharply than the gold price. This reflects the ‘leverage’ effect that investors can profit from with mining stocks: when commodity markets rise, company earnings often rise more sharply, as their turnover tracks market movements while costs remain relatively fixed.
Illustrating this, Pan African’s attributable profits rose 78% in the 12 months to June 2025. By comparison, gold prices rose a more modest (if still impressive 47%).
The leverage factor can mean earnings fall more markedly when metal prices drop, too.
Operational excellence
But leverage is only one reason for the company’s impressive profits growth. It also reflects Pan African’s robust operational performance, with production reaching 196,527 ounces in the 2025 financial year.
This was up 6% year on year, and reflected new contributions from its Mogale Tailings Retreatment (MTR) operation — where full-production ramp-up came in under budget and ahead of schedule — and Tennant Mines, which the firm acquired in November.
As I mentioned, though, mining is highly unpredictable business, and temporary infrastructure issues at Pan African’s Evander asset dented production growth. But on the whole, operational execution is robust. And with Endeavour back on track, the company expects further production growth in financial 2026, of 275,000–292,000 ounces.
Forecasts of higher low-cost production from MTR and Tennant also mean all-in sustaining costs (AISC) are tipped to fall this year, from $1,600 per ounce to $1,525-$1,575 per ounce. This is even further below the current gold price and puts the icing on the cake.
Too cheap to ignore?
Strong gold prices and operational robustness mean City analysts expect Pan African’s earnings to soar again this year. A 73% bottom-line increase is tipped, which means it also trades on a forward price-to-earnings (P/E) ratio of 6.6 times.
A sub-1 price-to-earnings-to-growth (PEG) ratio of 0.1 underlines Pan African’s excellent value for money.
While it’s not without risk, I think Pan African could be one of the UK’s hottest growth shares. And its plan to move from the AIM index to London’s main market later this year could give its shares an extra boost by raising its profile with global investors.
