| Thu 21 Feb 2008, 8:45 | | PAN - Pan African Resources Plc - Interim Results for the six months |
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PAN
PAN
PAN - Pan African Resources Plc - Interim Results for the six months
ended 31 December 2007 and Change of Directorship
Pan African Resources Plc
(Incorporated and registered in England and Wales under Companies Act 1985
with registered number 3937466 on 25 February 2000)
Share code on AIM: PAF
Share code on JSE: PAN
ISIN: GB0004300496
("Pan African" or the "Company" or "the Group")
The Gold Mining and Exploration Company
Interim Results for the six months ended 31 December 2007 and Change of
Directorship
HIGHLIGHTS
Mining Operations
- Concluded acquisition of 74% of Barberton Mines (Pty) Limited in
South Africa ("Barberton") effective 31 July 2007
- EBITDA increased by GBP4,7 million to GBP4,0 million
- Cash flow positive following the Barberton acquisition
Exploration Projects
- Positive drilling results from exploration projects including an
increased resource at the Manica gold project, Mozambique to 1,550 Moz in situ
- Exploration progress at Barberton ahead of schedule and showing signs of
positive geological results
- Re-evaluation of Barberton resource showing encouraging geological
results
- Exploration activity accelerated on all projects as result of cash flow
generated by mining operations
- Geographic footprint enhanced by acquisition of Ghana projects
Pan African Resources PLC (AIM: PAF, Altx: PAN), the African- based gold mining
and exploration company is pleased to report its interim results for the six-
month period ended 31 December 2007.
Six months ended Nine months ended
31 December 2007 31 December 2006
(Unaudited) (Audited)
Revenue (GBP)** 14,596,037 -
EBITDA (GBP)** 4,000,872 (685,805)
Attributable profit (GBP)** 1,294,286 (685,805)
EPS (pence) 0.13 (0.08)
HEPS* (pence) 0.13 (0.08)
Weighted average number of shares in issue 965,777,998 407,753,235
*HEPS - Headline Earnings Per Share (refer to calculation under Consolidated
Income Statement)
**GBP - Great British Pound
Nature of Business
Pan African is a mining, exploration and development company with operations
solely on the African continent with a focus on gold. The six months to 31
December 2007 represent the first reporting period for the Company following
the acquisition of 74% of Barberton Mines (Pty) Ltd, completed 31 July 2007
after which the Company was granted a secondary listing on the Alternative
Exchange (AltX) of the JSE Limited in South Africa.
In addition to the Barberton assets, the Company has developed a prospective
portfolio of exploration assets that provide a balance between a project with
near- term production potential (the Manica project in Mozambique) and, in the
Central African Republic, two projects that provide a large ground holding in
a previously unexplored region with the potential to develop into a major new
gold camp (Bogoin and Dekoa). Pan African acquired one exploration licence
(Akrokerri) prior to the period under review and one post-Balance Sheet
(Kyereboso) in Ghana. Both are near Obuasi, one of the world`s largest gold
fields situated 200 kilometres Northwest of Accra.
Interim Results for the period ended 31 December 2007
We are pleased to announce that for the six months under review EBITDA was
increased by GBP4.7 million compared to the nine months ended 31 December 2006
to GBP4.0million. The focus on accelerating capital expenditure at Barberton
has paid off with several projects delivering beyond initial expectations.
With the revenue derived from the Barberton operations, we have been able to
accelerate activities in Mozambique and the Central African Republic. We have
benefited from the strong gold price and believe our profitability is
sustainable at current gold prices.
Safety and Training
While the Company conducts its activities with due regard for the safety and
health of its employees and runs approved training programmes through
respective training centres at its mining operations, we regret to report that
a contract worker at Sheba Mine was fatally injured on 20 September 2007.
Review of Barberton Mining Operations
The three operating gold mines at Barberton - Fairview, Sheba and New Consort,
together with the calcine slimes dam re-treatment referred to below, produced
47,486 oz for the period under review at a cash cost of US$521 per ounce.
Despite a decline in underground gold production, total gold production on the
mine has increased. This is the result of the Company focusing on several
projects since it acquired the mining complex intended to replace current mined
reserves and grow them. A brief summary of these projects and the mining
operations is given below:
Barberton Mine Limited
Six months ended 31 December 2007 2006 2005 2004
Tons milled (t) 161,455 166,377 157,452 161,980
Headgrade (g/t) 9.05 9.24 11.44 10.27
Overall recovery (%) 92 92 92 91
Production Underground (oz) 43,145 45,332 53,369 48,547
Calcine dump (oz) 3,601 - - -
Sold (oz) 47,486 45,749 52,983 50,186
Total cash cost
USD/oz sold (USD/oz) 521 516 415 392
EBITDA (GBP) 4,001 3,049 2,153 1,157
Depreciation (GBP) 806 1,077 1,042 1,011
The contribution to Barberton revenues and operating costs for each of the
Fairview, Sheba and New Consort mines and the surface operations for the six
months ended 31 December 2007 were as follows:
Mine
Contribution to revenues Operating costs
% US$/ oz sold
Fairview 35 431
Sheba 40 307
New Consort 21 572
Calcine dumps 4 260
The effective gold price received by Barberton Mines during the six months to
31 December 2007 after the impact of hedging was US$726/oz. During that period,
4,179oz was hedged at a price of US$453/oz under the terms of a hedging
arrangement in place prior to the acquisition of Barberton by Pan African. Under
the terms of this hedging arrangement, 5,787oz remains hedged at the same price.
Calcine Slimes Dam Re-Treatment Project
This project was commissioned in the last quarter of 2007 at a capital cost of
GBP500,000. Thus far the project has yielded 3601oz of gold at a cash cost of
approximately US$260 per ounce. At current treatment rates the project is
expected to run for a further 12 months.
Reserve Replacement Projects
Several projects have been initiated to access areas which will serve to
replace current mined areas over the course of the next two years. At the
Sheba mine major equipping and development programmes are underway at the
Southwell and Edwin Bray adits to access several prospective areas while
deepening the 35 ZK incline shaft to access the ZK orebody to depth.
At the New Consort mine development is underway on 50 level at 50W1 and 50E1
areas to access known ore shoot extensions. Exploration development is also
progressing well on 45 level to explore the eastern extension of the 15E16
orebody with encouraging drill intersections.
Development on the 60 and 62 levels at the Fairview mine is ongoing to open
the MRC orebody to depth.
Reserve Growth Projects
Three major exploration targets, the Amira, Eagles Nest and Thomas- Victory
Hill areas, have been identified within the current mine lease area as well as
within the contiguous prospect area to the mine. A geological team has been
assembled to compile all historical geological and sampling data within these
areas. Work is progressing well ahead of schedule and is planned for
completion by the end of Q2 2008. Based upon the results of the data
compilation an exploration team will be established on the mine to follow-up
prospective targets.
Power Supply
Though a post-Balance Sheet event, Barberton has to date not been affected by
power outages in South Africa. In line with the rest of the mining industry,
power saving initiatives are being put in place to reduce demand by ten
percent. This is being done to have minimal effect on underground production.
Review of Exploration Projects
Manica Gold Project - Mozambique
Geological work for the period has focused on the Fair Bride prospect where
the Company is currently completing a pre-feasibility study for what could
become Mozambique`s first commercial gold mine. Drilling results (as
previously reported) for the period under review have exceeded the Company`s
expectation in terms of both grade and size of the mineralised zone.
Additional target areas have been followed up with drilling at the Guy Fawkes
and Dots Luck prospects. A Resource upgrade is currently underway to update
the drill intersections reported during the review period and is expected to
be announced by Q1 2008.
Bogoin and Dekoa Gold Projects - Central African Republic
Drilling at the Bogoin project has firmed up on delineated targets. Two
additional drill rigs will be operational before the end of Q2 of 2008 to
accelerate exploration activity in the area. At the Dekoa project, stream
sediment sampling and subsequent soil sampling have delineated several major
target areas which will be followed up by drilling during Q3 and Q4 of 2008.
The Company signed a mining convention on 8 February 2007 with the Ministry of
Mines, Energy and Water Affairs in the Central African Republic for the Bogoin
Gold Project, providing additional comfort with political unrest in bordering
countries. A similar convention is expected to be entered into for the Dekoa
project in Q2 of 2008.
Akrokerri and Kyereboso Gold Projects - Ghana
Outside of South Africa, the most significant African gold province is found
in Ghana. The Company made one licence acquisition (Akrokerri) prior to the
reporting period, and one acquisition post- Balance Sheet (Kyereboso) and post-
Balance Sheet activities will see the commencement of data collection.
Capital Expenditure and Commitments
Capital expenditure at Barberton Mines totalled GBP1.5million, of which
GBP1.0 million was mainly spent on underground development and GBP500,000 on
the Calcine slimes dam project.
Exploration expenditure at Pan African`s projects in Mozambique, Central
African Republic and Ghana totalled GBP1,6 million for the period under review.
Contracted capital commitments at 31 December 2007 amounted to GBP56,500,
whilst uncontracted commitments amounted to GBP1,000,000.
Operating lease commitments, which fall due within the next year, amount to
GBP82,770, whilst commitments of GBP123,140 fall due during the next four
years.
Directorship Change
The Board announces the resignation of Mr Nathan Steinberg as Financial
Director effective 21 February 2008 and, in line with the undertaking given to
shareholders on the acquisition of Barberton in the Readmission Document, is
pleased to announce the appointment of Mr Maritz Smith in his stead. Mr Smith
was principally involved in the maintenance and preparation of these Interim
Financial Statements.
The Board of Directors wishes to thank Mr Steinberg for his dedication and
proficiency during his long tenure as Financial Director.
Mr Smith (aged 31) is an employee and alternate director of Metorex Limited.
He obtained a BComm (Hons) Accounting Degree from the University of
Johannesburg in 1998 and after completing his articles with Deloitte & Touche
in 2001, he qualified as a Chartered Accountant. Mr Smith remained with
Deloitte & Touche until 2002 when he joined the Metorex Group as Group
Accountant. After three years, Mr Smith was promoted to Chief Financial
Officer of Metorex Limited in 2005, the position he retains today.
The details of all current and past directorships within the last five years
for Mr Smith are as follows:
- Current Directorships: Alternate Director, Metorex Limited.
- Past Directorships: None.
The Company advises that there are no further details relating to the
appointment of Mr Smith which it is obliged to disclose under Schedule 2
paragraph (g) of the AIM rules.
Dividend
No dividend is declared for the six months ended 31 December 2007. Pan African
will focus on funding requirements for current and new exploration projects as
well as capital growth projects at Barberton.
Future Prospects
With the acquisition of Barberton, Pan African Resources moved from a junior
exploration company to a mid-tier exploration and gold producing company. Pan
African`s association with Pangea Exploration and Metorex brings additional
exploration capacity and mining skills. This positions the Company to actively
seek early and advanced stage mining opportunities to complement its own
greenfield portfolio.
We believe global macro-economic fundamentals support a favourable gold price
in the medium term and the combination of activities at our mining, grassroots
and more advanced exploration assets are expected to deliver robust results
for the next reporting period.
By order of the Board
K C Spencer J P Nelson
Chairman Chief Executive Officer
21 February 2008
Consolidated Income Statement
Six months ended Nine months ended
31 December 2007 31 December 2006
(Unaudited) (Audited)
GBP GBP
Revenue
Gold sales 14,596,037 -
Realisation costs 70,630 -
Net on - mine revenue 14,525,407 -
Cost of production 9,995,471 -
Depreciation 806,369 -
Mining profit 3,723,567 -
Other expenses (529,064) (713,514)
Operating income before finance
costs 3,194,503 (713,514)
Finance income 99,479 27,709
Finance costs (9,696) -
Profit before taxation 3,284,286 (685,805)
Taxation 1,347,912 -
Profit after taxation 1,936,374 (685,805)
Attributable to:
Equity holders of the parent 1,294,286 (685,805)
Minority interests 642,088 -
1,936,374 (685,805)
Earnings per share (pence) 0.13 (0.17)
Diluted earnings per share
(pence) 0.11 (0.17)
Weighted average number of
shares in issue 965,777,998 407,753,235
Diluted number of shares in issue 1,136,689,165 463,476,871
Headline earnings per share is
calculated using the following:
Income attributable to ordinary
shareholders 1,294,286 (685,805)
Discontinued operations - 345,208
Headline earnings 1,294,286 (340,597)
Headline earnings per share (pence) 0.13 (0.08)
Diluted headline earnings per
share (pence) 0.11 (0.08)
Condensed Consolidated Cash Flow Statement
Six months ended Nine months ended
31 December 2007 31 December 2006
(Unaudited) (Audited)
GBP GBP
Cash generated/(absorbed) by
operations 4,604,148 (274,639)
Minorities distributions (49,379) -
Taxation paid (607,085) -
Finance costs net 89,783 27,709
Cash inflow from operating
activities 4,037,467 (246,930)
Cash out flow from investing
activities (3,982,702) (877,066)
Cash inflow from financing
activities (69,668) -
Net decrease in cash equivalents (14,903) (1,123,996)
Cash at beginning of period 326,847 1,874,652
Reverse acquisition 733,101 -
Cash at end of period 1,045,045 750,656
Condensed Consolidated Balance Sheet
31 December 2007 30 June 2007
(Unaudited) (Audited)
GBP GBP
ASSETS
Non -current assets
Property, plant and equipment 21,980,856 -
Rehabilitation trust fund 1,806,063 -
Intangible assets 20,998,818 6,312,030
44,785,737 6,312,030
Current assets
Inventories 295,178 -
Trade and other receivables 2,467,484 294,365
Bank balances and cash 1,045,045 326,847
3,807,707 621,212
Total assets 48,593,444 6,933,242
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 32,628,161 8,256,801
Hedging reserve, translation and
option reserves (17,688) 296,162
Retained income 5,285,072 (4,206,214)
Merger reserve (6,189,681) 1,560,000
Equity attributable to equity
holders of parent 31,705,864 5,906,749
Minority interest 2,632,217 -
Total equity 34,338,081 5,906,749
Non -current liabilities
Long-term liabilities-interest
bearing 47,553 -
Long-term provisions 2,358,875 -
Deferred taxation 7,161,578 -
9,568,006 -
Current liabilities
Trade and other payables 2,603,939 1,026,493
Short term liabilities -
interest bearing 157,779 -
Short term provisions 768,444 -
Derivative instrument 1,157,195 -
4,687,357 1,026,493
Total equity and liabilities 48,593,444 6,933,242
Condensed Statement of Changes in Equity
Six months ended Nine months ended
31 December 2007 31 December 2006
(Unaudited) (Unaudited)
GBP GBP
Shareholders` equity at
beginning of period 5,906,749 6,330,902
Reverse acquisition 24,818,679 -
Hedging, translation and share
option reserves (313,850) 164,579
Net income for period 1,294,286 (685,805)
Minorities interest 2,632,217 -
Total equity 34,338,081 5,809,676
Notes to the Financial Statements
1. Accounting Policies
The Group has adopted International Financial Reporting Standards ("IFRS")
with the first set of financial information published under IFRS being the
financial statements for the six months ended 31 December 2007. The date of
transition was 1 July 2007. The first time adoption of IFRS had no impact on
the comparative figures as contained in the financial statements. The
unaudited interim results have been prepared and presented in accordance with
IAS 34: Interim Financial Reporting.
2. Share Capital
In summary, the ordinary shares issued by the Company in the six months ended
31 December 2007 were as follows:
(1) 31 July 2007: 593,740,476 shares to Metorex Limited at 6 pence per share -
To acquire the 74% Metorex stake in Barberton Mines Limited.
(2) 31 July 2007: 48,000,000 shares to Pangea Exploration (Pty) Ltd at 6 pence
per share - To acquire their 20% stake in the Manica Gold Project.
(3) 31 July 2007: 12,000,000 shares to Pangea Exploration (Pty) Ltd at 6 pence
per share - To extinguish all future obligations relating to the exploration
properties in the Central African Republic.
(4) 18 September 2007: 1,250,000 shares to Mr T Kroepelien (a previous director
of the Company) at 4 pence per share - Exercise of options granted.
(5) 18 September 2007: 2,750,000 to Mr T Kroepelien (a previous director of the
Company) at 4 pence per share - Exercise of options granted.
(6) 18 September 2007: 822,727 shares to Mr M A Burne at 4 pence per share -
Exercise of options granted as part of a subscription on 13 August 2004 when
White Knight Investments plc (previous name of Pan African Resources plc)
acquired Mistral Resource Development Corporation.
(7) 18 September 2007: 1,500,000 shares to Mr T A Ward at 4 pence per share -
Exercise of options granted as part of a subscription on 13 August 2004 when
White Knight Investments plc (previous name of Pan African Resources plc)
acquired Mistral Resource Development Corporation.
(8) 18 September 2007: 800,000 shares to Mr H Bellingham at 4 pence per share -
Exercise of options granted as part of a subscription on 13 August 2004 when
White Knight Investments plc (previous name of Pan African Resources plc)
acquired Mistral Resource Development Corporation.
For further information on Pan African Resources plc, please visit the website
at www.panafricanresources.com
Enquiries
Pan African Resources Ambrian Partners Limited
Jan Nelson, Chief Executive Officer Richard Brown
+27 (0) 11 777 7840 +44 (0) 20 7776 6417
Keith Spencer, Chairman Richard Greenfield
+27 (0) 11 880 3155 +44 (0) 20 7776 6418
Nicole Stoyell
Public Relations
+27 (0) 11 777 7840
Macquarie First South Corporate St James`s Corporate
Finance (Pty) Ltd Services Limited
Amanda Markman Phil Dexter
+27 (0) 11 343 2307 +44 (0) 20 7499 3916
Done Hattingh
+27 (0) 11 343 2308
FDBeachhead Media & Investor Relations
Jennifer Cohen
+27 (0) 11 214 2401
Louise Brugman
+27 (0) 11 214 2415
Sponsor
Macquarie
Date: 21/02/2008 08:45:01 Produced by the JSE SENS Department.
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