Back in 2023, Pan African Resources (LSE: PAF) wasn’t part of the FTSE 250. In fact, it was little more than a penny stock, trading at around 11p a share. Fast forward a few years and the company’s leading the UK’s mid-cap index by price performance. At 121p a share, it’s up over 250% in the past 12 months.
I’ll admit, mining isn’t a sector I pay much attention to as the potential volatility is outside of my usual risk tolerance. Still, it’s fair to say I regret missing this once-in-a-lifetime opportunity. So for those investors who did get in on the action, the question is: will it keep climbing, or is it time to cash in?
Let’s take a closer look.
The gold factor
Last year (2025) saw an historic 65% gold price rally, the strongest annual gain since 1979. But that alone wasn’t the only factor that drove Pan African’s success. The company compounded its gains with aggressive cost management and strategic execution of transformative production expansion projects.
Now, as the company prepares for 2026, the sustainability of these gains depends heavily on gold price stability — a variable beyond management control. Success hinges on how well it can weather the increasing likelihood of a gold price correction.
Operational strength
In 2025, Pan African’s revenue surged 44.5% to $540m while profit nearly doubled 78.4% to $140.6m. That was largely driven by a 35.7% increase in the average gold price to $2,730 per ounce. But more importantly, the company achieved a profit margin of 70.9% on AISC (all-in sustaining costs), compared to just 32.8% in FY2024 — a dramatic expansion of earning power.
Operationally, Pan African commissioned two major projects ahead of schedule. The Mogale Tailings Retreatment (MTR) plant contributed 22,000 ounces of low-cost production in H2 FY2025, and Tennant Mines in Australia achieved its first gold pour in May.
This positioned the company for 40% production growth to around 285,000 ounces in FY2026. With AISC expected to fall to around $1,500 per ounce while production scales, the company could be entering a period of exceptional profitability — if gold prices hold.
This is where the investment thesis becomes precarious. Analyst gold forecasts for 2026 range from bearish ($3,360) to ultra-bullish ($5,000), with meaningful probability assigned to each outcome. The World Gold Council identifies a 20% probability of a 5%-20% correction if the Trump administration’s policies succeed, triggering higher interest rates and USD strength.
Some fear this scenario could push gold below $4,000. On the bullish side, continued geopolitical risk and Fed rate cuts could support a push towards $4,800 or higher.
My verdict
This is a classic risk/reward play. For existing shareholders, locking in gains couldn’t hurt — but there may be more to come. For new investors, there’s a chance it could go either way.
In my opinion, what matters most is how well the company has exhibited operational efficiency in 2025. When thinking long-term, that’s what to look for in a company. Whether gold dips or not, I think Pan African Resources is a stock worth considering as a long-term gold play.
If it continues to operate with the same strength it exhibited in 2025, it could one day be a major FTSE 100 miner.
