| Tue 19 Aug 2008, 9:00 | | PAN - Pan African Resources Plc - Consolidated unaudited provisional results for |
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PAN
PAN
PAN - Pan African Resources Plc - Consolidated unaudited provisional results for
the financial year ended 30 June 2008
Pan African Resources Plc
(`Pan African` or the `Company`)
(Incorporated and registered in England and Wales under the Companies Act 1985
with registered number 3937466 on 25 February 2000)
Share code on AIM: PAF
Share code on AltX: PAN
ISIN: GB0004300496
SALIENT FEATURES
- EBITDA of GBP13,7 million
- Gold sales of 99,078 oz
- Total cash cost of US$ 476/oz sold
- Acquisition of Barberton Mines
- Now an unhedged gold company
- Considerable progress and encouraging results from exploration projects
- Geological footprint in West Africa enhanced through the acquisition of three
gold properties in Ghana
FINANCIAL PERFORMANCE
12 months ended 12 months ended
30 June 2008 30 June 2007
(Unaudited) (Unaudited)
Revenue (GBP) 39,254,557 26,684,796
Cash Mining Profit (GBP) 13,710,819 5,804,036
Attributable profit (GBP) 5,460,067 2,067,985
EPS (pence) 0.52 0.35
HEPS (pence) 0.52 0.35
Weighted average number of 1,043,789,285 593,740,476
shares in issue
* HEPS - Headline Earnings Per Share - refer to calculation under Consolidated
Income Statement
Comparative information for the previous year incorporates 12 months of
Barberton in terms of IFRS 3: Business Combinations as the Company`s acquisition
of Barberton represents a reverse takeover. The figures for the year ended 30
June 2008 incorporates 12 months of Barberton and 11 months of Pan African.
OVERVIEW
Pan African is a gold mining, development and exploration Company on the African
continent with both production ounces and a portfolio of exploration assets.
The acquisition of Barberton Mines (Pty) Ltd ("Barberton") in South Africa
during 2007 transformed the Company from a junior exploration company to a mid-
tier gold producer with a pipeline of exploration projects. The resultant cash
flow and enhanced metallurgical, engineering and mining skills base enable the
Company to pursue mining and exploration projects to further grow the Company.
In addition to its 74% stake in Barberton (Shanduka Resources is a 26%
shareholder), Pan African is exploring concessions in Mozambique, the Central
African Republic, South Africa and Ghana. The Company is also actively seeking
partnerships and Joint Ventures with other gold mining companies.
Pan African has been given first right of refusal on any gold project discovered
in Africa by both Pangea Exploration (Pty) Ltd and Metorex Limited (Metorex
Limited owns 55% of Pan African), the Company`s largest shareholder.
Pan African is quoted on AIM, the international market for smaller growth
companies operated by the London Stock Exchange under the share code "PAF", with
a secondary listing on the Alternative Exchange (AltX), a division of the JSE
Limited, under the share code "PAN".
OVERALL PERFORMANCE
Pan African today announces that for the year ended 30 June 2008, EBITDA was GBP
13.7 million, which incorporates 12 months of Barberton and 11 months of Pan
African. The Company has benefited from the robust gold price at its operations.
The EBITDA was reduced by a hedging loss of GBP 2.2 million. No further hedges
have been entered into on gold sales after 30 June 2008. Pan African has
accelerated the capital expenditure at Barberton to replace ore reserves as well
as its spending at its projects in Mozambique, Ghana and the Central African
Republic.
SAFETY AND TRAINING
While the Company conducts its activities with due regard for the safety of its
employees and runs approved training programmes through training centres located
at its mining operations, we regret to report that two fatal accidents occurred
during the past 12 months. Both accidents were on the Sheba operation, one
accident involved a contractor on 20 September 2007 and the other, an employee
of the mine on 19 February 2008. Our sincere condolences are extended to the
families of the deceased.
REVIEW OF BARBERTON MINING OPERATIONS
The three operating gold mines in the Barberton area; Fairview, Sheba and New
Consort together with the Calcine dump retreatment operation produced 99,078oz
of gold, an improvement on the previous year. Gold production from the mines was
incremented by the retreatment of the Calcine dump. This production, together
with a buoyant gold price and well controlled cost management, resulted in a
strong cash flow from the operations. During the year, Barberton sold 99,078 oz,
of which 10,696 oz were sold against its hedge, realising a hedging loss of
GBP2.2 million. At the end of the current reporting period all hedge contracts
had been met and gold sales in the new year will be at the spot price.
2008 2007 2006 2005 2004
Tons Milled (t) 315,305 330,367 313,779 316,094 349,219
Headgrade (g/t) 8.9 9.2 10.7 11.1 10.4
Overall (%) 91 92 92 92 91
Recovery
Production: (oz) 82,436 90,022 99,281 103,847 106,258
Underground
Production: (oz) 13,513 - - - -
Calcine
Dump
Gold Sold (oz) 99,078 89,572 99,924 102,914 106,773
Average (USD/oz) 823 640 528 433 397
Price: Spot
Average (USD/oz) 451 415 438 511 455
Price:
Hedge
Total Cash (USD/oz) 476 465 429 427 340
Cost USD/oz
sold
Capital (GBP) 2,901,792 1,637,359 1,091,965 1,021,041 1,054,288
Expenditure
Exchange (ZAR/GBP) 14,68 13,95 n/a n/a n/a
rate -
average
Exchange (ZAR/GBP) 15,56 14,18 n/a n/a n/a
rate -
closing
* 74% of the 2008 results are attributable to the equity shareholders of Pan
African
CALCINE SLIMES DAM RETREATMENT PROJECT
The calcine project commenced during the last quarter of 2007, utilising an
existing treatment plant. Capital expenditure of GBP600,000 was spent on a new
tailings facility for the project. This year it yielded 13,513oz of gold at a
cash cost of US$ 291/oz. The calcine project reached the end of its life during
July 2008.
RESERVE REPLACEMENT PROJECTS
Sheba - Southwell Adit
The re-equipping of the adit, inter-levels and incline shaft was completed and
the necessary development done to access a reserve block of reef. Raising on
this orebody will start in the new financial year.
Sheba - 35 ZK Decline
The decline to access the Zwartkoppies reef below 35 level has commenced. The
headgear section is complete and a winder is in the process of being installed.
During the next financial year sinking will commence and the development of the
first level will take place.
Sheba - Edwin Bray to Thomas & Joe`s Luck area
The Edwin Bray adit was re-equipped and the necessary services and
infrastructure were reinstalled. Development of the cross-cut and airway has
commenced to access Joe`s Luck and Thomas orebodies. A further 800m of flat
development is required, however it is envisaged that this development will
enable the operation to prospect a number of prospective geological structures
along the way.
Consort - 50 Level Declines
The east and west orebodies below 50 level at Consort are being accessed by two
decline shafts. The headgears, inclines and infrastructure at both declines
have been completed and sinking started. Both these orebodies have been drilled
and evaluated. This new infrastructure to access these orebodies will be
completed in 2010.
Fairview - MRC development
The development of the ramp system at Fairview continues below 60 level to
access the MRC reef and stoping continues. This ramp will take mining to the 62
level, thereafter plans are being investigated to deepen the No. 3 sub-incline
shaft down to 68 level.
POWER SUPPLY
Barberton has been affected by power outages in South Africa, however these have
occurred mainly during off shift periods and this has not had a significant
effect on underground production. In line with the rest of the mining industry
power saving initiatives are being put in place to reduce total demand by 10%.
EXPLORATION PROJECTS
Manica gold project, Mozambique
Geological work continued on the Fairbride prospect area. Work comprised
exploration drilling and orebody outline drilling on both the Fairbride East &
West orebodies. Drilling results confirmed orebody continuation in both dip and
strike extension down to a depth of 350m below surface. Resource remodelling was
completed during April 2008 defining a total resource of 1.7Moz (11.45mt@
4.61g/t), which forms the basis for the Pre-Feasibility study which is currently
underway. In this study the size of the possible mine, the location and the
future economic factors are being considered. The relevant departments within
the Government of Mozambique are being engaged so as to understand the financial
parameters under which mining could take place. Further studies are currently
underway to assess the availability and reliability of power, water and other
requirements within the country.
Bogoin & Dekoa gold projects, Central African Republic
At Bogoin the 8,200m Rotary Air Blast (`RAB`) drilling programme was completed
leading to the narrowing down of the soil geochemical anomaly. A widely spaced
29,062m Reverse Circulation (`RC`) programme has commenced over an area in
excess of 800kmSquared to test the geochemical anomalies identified. To date
2,062 m of RC drilling has been completed.
The Company successfully concluded a mining convention with the government of
the Central African Republic for the Dekoa prospecting area. Subsequent
geological work identified several large soil geochemical anomalies at Dekoa. A
60,000 RC drilling programme to test the identified anomalies is due to commence
during 2009.
Akrokerri gold project, Ghana
An infill soil sampling programme was completed and 7,600 m of core drilling
commenced to define possible extensions to the historical Akrokerri underground
mine workings. To date 2,978m of drilling has been completed. Laboratory results
are expected by Q1 of the new financial year.
Kyereboso gold project, Ghana
A 7,400 m RC drilling programme was initiated to test the proposed
mineralisation model. To date 3,600 m of drilling has been completed. Final
results of the first phase of the drilling programme are expected in Q2 of the
new financial year.
U&N gold project, Ghana
Pan African has concluded an Earn-In Agreement to acquire 85% of an exploration
property, the U&N property in Ghana from the U&N Company Limited.
The U&N property lies approximately 45km south-west of the town of Kumasi in
volcanics, interbedded with clastic and chemical sediments of the early
Proterozoic Birimian Supergroup. This is considered a highly prospective area
with several known gold occurrences.
Pan African can earn-in 40% of the project by spending not less than US$ 290,000
on a soil sampling exploration phase. Should the Company wish to continue work
after this phase, it must spend not less than US$ 300,000 to earn a further 45%.
On completion of the BFS (`Bankable Feasibility Study`) the Company may, at it`s
election acquire the remaining 15% at a cost based on the Net Present Value
(`NPV`).
Barberton gold project, South Africa
All available historical exploration & geological information was collated into
a spatially referenced database. This database has been used to define several
exploration targets. A comprehensive airborne geophysical survey of the project
will be completed to further refine these targets. Planned fieldwork for the
area during the remainder of 2008 and into the first half of 2009, includes;
detailed geological field mapping, stream sediment sampling as well as a
comprehensive soil sampling programme. Should the results of this work prove
positive, it will be followed by a drilling programme.
CAPITAL EXPENDITURE AND COMMITMENTS
Capital expenditure at Barberton totalled GBP2.9 million, which was mainly spent
on underground development.
Exploration expenditure at the Company`s projects in Mozambique, Central African
Republic and Ghana totalled GBP3.1 million for the financial year.
Contracted capital commitments at the end of the financial year amounted to
GBP187,643.
Operating lease commitments, which fall due within the next year, amount to
GBP89,269 whilst commitments of GBP16,822 fall due during the following four
years.
CORPORATE ACTIVITY
Effective 27 July 2007, the Company acquired 74% of Barberton, for GBP35.6
million satisfied by the issue of 593,740,476 new shares at 6p per share. The
transaction constituted a reverse takeover in terms of IFRS 3: Business
Combinations. Accordingly, Barberton has been treated for accounting purposes as
acquiring Pan African, the current year results incorporate a full year of
Barberton and 11 months of Pan African and prior year comparatives represent the
results of Barberton for 12 months prior to the transaction. IFRS 3 also
requires the cost of the transaction to represent the fair value of Pan African
immediately prior to the deal, being GBP25,7 million. The fair value of the
acquired net assets of Pan African amounted to GBP5.9 million at acquisition,
which gave rise to the recognition of goodwill amounting to GBP19.8 million,
which is to be tested for impairment on an annual basis against the net asset
value of the new Pan African group. In addition, transaction costs of GBP1.1
million formed part of the cost of acquisition and allocated to goodwill.
The net loss from Pan African since the date of acquisition was GBP 1.9 million.
If the above transaction had taken place at the beginning of the year, the
impact on the group`s net profit for the year would have been immaterial.
DIRECTORSHIP CHANGE
The board announced the resignation of Mr Nathan Steinberg, effective 21
February 2008, and in accordance with the undertaking given to shareholders on
the acquisition of Barberton in the Readmission document, announced the
appointment of Mr Maritz Smith as his successor. In addition, Mr John Hopwood
was appointed to the Board as an Independent, Non-Executive Director.
The board welcomes the two new directors to the board.
SHARES ISSUED: July 2007 - June 2008
1. 593,740,476 shares issued to Metorex at 6p per share for the acquisition of
Barberton.
2. 60,000,000 shares issued to Pangea Exploration (Pty) Ltd at 6p per share for
the balance of Manica and the Central African Republic projects.
3. 28,122,727 share options exercised by past and current directors at an
average price of 2.79p per share.
ACCOUNTING POLICIES AND BASIS OF PREPARATION
The financial information set out in this announcement does not constitute the
Company`s statutory accounts for the year ended 30 June 2008.
In the current year, the Group adopted International Financial Reporting
Standards as adopted in the UK (`IFRS`). Barberton, which was acquired on 27
July 2007, applied IFRS for the year ended 30 June 2008.
While the financial information included in this preliminary announcement has
been prepared in accordance with the recognition and measurement criteria of
IFRS, this announcement does not itself contain sufficient disclosure
information to comply fully with IFRS. Expect for share capital, share premium
and the merger reserve, comparative information was extracted from the audited
financial statements of Barberton for the year ended 30 June 2007. The Company
expects to publish full financial statements which comply with IFRS in October
2008.
This preliminary announcement was approved by the board on 18 August 2008.
DIVIDEND
No dividend is proposed or declared (2007: nil).
FUTURE PROSPECTS
Subsequent to the acquisition of Barberton, the Company moved from being a
junior exploration company, to a self-funding mining group with a substantial
pipeline of exploration projects. Through the ongoing relationship with Metorex
and Pangea Exploration (Pty) Ltd, the Company has first right of refusal on any
gold projects discovered by these world-class companies.
Despite current turbulent markets, the Company has, through the Barberton
acquisition secured cash flow to not only continue its current exploration
activity, but to accelerate the exploration timetable. The exploration of highly
prospective areas together with a competent management team provides significant
opportunities going forward.
By Order of the Board
KC Spencer JP Nelson
Chairman Chief Executive Officer
19 August 2008
CONSOLIDATED INCOME STATEMENT
12 months ended 12 months ended
30 June 2008 30 June 2007
(Unaudited) (Unaudited)
GBP GBP
Revenue
Gold sales 39,254,557 26,684,796
Realisation costs (106,277) (60,783)
On - mine revenue 39,148,280 26,624,013
Cost of production (25,163,675) (21,623,538)
Depreciation (1,965,872) (1,865,997)
Mining Profit 12,018,733 3,134,478
Other (expenses)/income (273,786) 803,561
Operating income before finance costs 11,744,947 3,938,039
Finance income 217,288 49,018
Finance costs (17,006) (35,893)
Profit before taxation 11,945,229 3,951,164
Taxation (4,366,543) (1,156,590)
Profit after taxation 7,578,686 2,794,574
Attributable to:
Equity holders of the parent 5,460,067 2,067,985
Minority interests 2,118,619 726,589
7,578,686 2,794,574
Earnings per share (pence) 0.52 0,35
Diluted earnings per share (pence) 0.51 0,35
Weighted average number of shares in 1,043,789,285 593,740,476
issue
Diluted number of shares in issue 1,073,789,285 593,740,476
Headline earnings per share is
calculated using the following:
Headline earnings 5,460,067 2,067,985
Headline earnings per share (pence) 0.52 0.35
Diluted headline earnings per share 0.51 0.35
(pence)
CONSOLIDATED BALANCE SHEET
30 June 2008 30 June 2007
(Unaudited) (Unaudited)
GBP GBP
ASSETS
Non-current assets
Property, plant and equipment 20,069,814 20,731,502
Rehabilitation trust fund 1,739,522 1,743,648
Intangible assets 12,837,045 -
Goodwill 21,000,714 -
55,647,095 22,475,150
Current assets
Inventories 377,974 125,498
Trade and other receivables 2,972,776 2,185,552
Cash and cash equivalents 5,419,489 422,416
8,770,239 2,733,466
TOTAL ASSETS 64,417,334 25,208,616
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 48,266,139 8,256,801
Hedging reserve, translation and option (956,948) (1,449,423)
reserves
Retained income 9,450,853 3,990,786
Merger Reserve (10,622,892) (116,560)
Equity attributable to equity holders of 46,137,152 10,681,604
parent
Minority interest 4,231,619 2,113,000
Total equity 50,368,771 12,794,604
Non - Current liabilities
Long term liabilities - Interest bearing 16,822 115,665
Long term Provisions 2,219,954 2,284,142
Deferred Taxation 5,201,245 5,526,973
7,438,021 7,926,780
Current liabilities
Trade and other payables 2,754,795 1,926,944
Short term liabilities - Interest bearing 89,269 170,017
Short term Provisions 711,085 711,903
Financial instruments - 1,092,232
Taxation 3,055,393 586,136
6,610,542 4,487,232
TOTAL EQUITY AND LIABILITIES 64,417,334 25,208,616
CONSOLIDATED CASH FLOW STATEMENT
12 months ended 12 months ended
30 June 2008 30 June 2007
(Unaudited) (Unaudited)
GBP GBP
Cash Generated by operations 11,971,149 5,731,600
Taxation paid (899,743) (16,703)
Finance costs,net 201,282 13,125
Cash inflow from operating activities 11,272,688 5,728,022
Capital Expenditure - Barberton Mines (2,901,792) (1,578,056)
Exploration Expenditure - Pan African (3,111,018) -
Shares Issued 784,909 -
Proceeds of disposal of assets - 17,302
Barberton Transaction Costs (1,156,630) -
Cash outflow from financing activities 146,379 (3,710,295)
Net increase in cash equivalents 5,034,536 456,973
Cash at the beginning of period 422,416 (27,590)
Effect of foreign exchange rates (37,463) (6,967)
Cash at end of year 5,419,489 422,416
STATEMENT OF CHANGES IN EQUITY
12 months ended 12 months ended
30 June 2008 30 June 2007
(Unaudited) (Unaudited)
GBP GBP
Share capital & premium
Balance at beginning of 8,256,801 8,055,710
year
Issue of shares 40,009,338 201,091
48,266,139 8,256,801
Hedging Reserve,
Translation & Option
Reserves
Balance at beginning of (1,449,423) (4,019,207)
year
Fair value losses for 1,092,172 2,765,674
the year
Share option expense for 338,240 34,265
the year
Foreign Exchange Reserve (937,937) (230,155)
(956,948) (1,449,423)
Minority Interest
Balance at beginning of 2,113,000 1,386,411
year
Attributable profit 2,118,619 726,589
4,231,619 2,113,000
Retained Income
Balance at beginning of 3,990,786 1,922,861
year
Net income for the year 5,460,067 2,067,985
9,450,853 3,990,786
Merger Reserve
Balance at beginning of (116,560) -
the year
Reverse acquisition (10,506,332) (116,560)
(10,622,892) (116,560)
TOTAL 50,368,771 12,794,604
CONTACT DETAILS
Jan Nelson
Pan African Resources PLC
Chief Executive Officer
E-mail: jnelson@paf.co.za
Office: + 27 (0) 11 777 7840
Keith Spencer
Pan African Resources PLC
Executive Chairman
E-mail: keith@metorexgroup.com
Office: + 27 (0) 11 880 3155
Nicole Spruijt
Pan African Resources PLC
Public Relations & Administration
E-mail: nicole@paf.co.za
Office: + 27 (0) 11 777 7840
Corporate Office
Viewpoint House
Cnr. Main Street & Orchard Avenue
Bordeaux, Randburg
South Africa
Office: + 27 (0) 11 777 7840
Facsimile: + 27 (0) 11 777 7843
Phil Dexter
St James`s Corporate Services
Company Secretary & Investor Relations
E-mail: phil.dexter@corpserv.co.uk
Office: + 44 (0) 207 499 3916
Martin Eales / Andrew Smith
RBC Capital Markets
Nominated Advisor & Broker (UK)
E-mail: martin.eales@rbccm.com
Office: + 44 (0) 207 029 7881
Amanda Markman / Thato Morojele
MacQuarie First South Corporate Finance
Sponsor (RSA)
Office: + 27 (0) 11 583 2000
E-mail: amanda.markman@macquarie.com
Registered Office
St James`s Corporate Services
6 St James`s Place
London
SW1A 1NP
Office: + 44 (0) 207 499 3916
Facsimile: + 44 (0) 207 491 1989
Date: 19/08/2008 09:00:01 Produced by the JSE SENS Department.
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