| Thu 26 Feb 2009, 9:00 | | PAN - Pan African Resources PLC - Unaudited interim results For the six months |
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PAN
PAN
PAN - Pan African Resources PLC - Unaudited interim results For the six months
ended 31 December 2008 and dividend declaration
Pan African Resources PLC
(`Pan African` or the `Company`)
(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
Unaudited Interim Results For the six months ended 31 December 2008
Pan African Resources PLC (AIM: PAF, Altx: PAN), the African gold mining
company, is pleased to report its unaudited interim results for the six-months
ended 31 December 2008.
Highlights
- Gross gold production up 7.8% to 51,186 oz (2007: 47,486 oz)
- Cash-flow positive with gold sales of GBP24.9m up 71%.
- EBITDA up 114% to GBP8.5 million (2007: GBP4.0m)
- Headline earnings of GBP3.9 million (2007: GBP1.29m), an increase of 202%
- Headline EPS 0.36 pence (2007: 0.13 pence), an increase of 173%
- Total cash cost of US$451/oz sold (2007: US$514/oz sold), down 12%
- Significant improvement in safety
- Total Manica resource increased to 2.571Moz (2007 : 1.701Moz), an increase
of 51%
- Dividend of 0.2555 pence per share declared
Financial review for six-months ending 31 December 2008
Six months ended 31 Six months
December 2008 ended 31
(Unaudited) December
2007
(Unaudited)
Revenue (GBP**) 24,940,383 14,596,037
EBITDA (GBP**) 8,552,011 4,000,872
Attributable (GBP**) 2,569,804 1,294,286
profit
EPS (pence) 0.13
0.23
HEPS* (pence) 0.13
0.36
Weighted 1,100,517,684 965,777,998
average
number of
shares in
issue
* HEPS - Headline Earnings Per Share (refer to calculation
under Consolidated Income Statement)
**GBP - Pounds Sterling
Nature of the business
Pan African is a self-funding, unhedged gold mining and development company
increasingly focusing on mining and near-term-production assets that will yield
low-cost, high-margin projects on the African continent.
In addition to its 74% stake in Barberton (Shanduka Resources is a 26%
shareholder), Pan African has been exploring and developing concessions in
Mozambique, the Central African Republic and Ghana.
Financial Results
We were pleased that for the six months under review EBITDA increased by 114% up
to GBP8.5 million. This resulted in a profit after tax of GBP4.2 million despite
a GBP1.3 million impairment arising from the decision to terminate exploration
activity in Ghana. The Company`s profit is a result of higher grades and a
robust gold price achieved at Barberton Mines.
The Company`s tax charge increased from GBP1.3 million to GBP3.7 million,
equating to an effective tax rate of 37%.
Capital expenditure increased by 49% to GBP2.2 million and exploration costs
increased by 32% to GBP1.7 million.
Safety and Training
We are pleased to report no fatalities were recorded in the period under review,
with the operations achieving 556,669 (2007: 95,226) fatality-free shifts.
Reportable incidents for the period were zero (2007: 4). This improvement
resulted from more active communication and training for employees and a more
determined focus by management on accountability across the mines.
In addition, the Presidential Safety Audit was completed and the mine has
addressed all outstanding issues.
Overview
MINING
Review of the Barberton Mining Operations
Production at Barberton Mines remained unhedged and an average spot gold price
of US$824/oz was received (2007: US$721/oz). Total cash cost of US$451/oz* was
down 12% (2007: US$514). Tons milled were slightly down on plan and an
unsustainable, exceptionally high grade was achieved. Recovered grade is
expected to be more in line with the historic average going forward.
The three operating mines in the Barberton area, Fairview, Sheba and New
Consort, together with final production from the calcine dump retreatment
operation produced 51,186 oz of gold, an improvement on the previous comparable
period. Gold production from underground mining resulted in 47,634 oz and
surface operations delivering 3,545 oz.
*Total cash cost excludes depreciation and capital expenditure
Reserve replacement projects
Sheba - Southwell adit
The capital project was completed during the period and is now at the working-
cost development stage.
Sheba - 35 ZK Decline
The winder installation has been completed and the decline was advanced 17.9
meters from the uppermost level - sinking continues.
Sheba - Edwin Bray to Thomas & Joe`s Luck area
Total development on the two ends amounted to 385 metres. The target area of
Joe`s Luck requires a further 600 meters advance on each end.
Consort - 50 Level Declines
Development and equipping of the two declines totalled 55.3 metres below the
uppermost level. The installation and commissioning of the winders was completed
in the previous reporting period. The project remains on schedule.
Fairview - MRC development
Total development of 376.5 metres was completed, enabling access to the
62-level ore bodies. Forty metres of the 3 sub-incline shaft bottom, below 62
level has been cleaned out, on completion of the cleaning this shaft will be
deepened to 68 level to provide future access to the MRC ore-body.
Production
Summary
6 months 6 months 6 months 6 months 6 months
ended ended ended ended ended
31-Dec-08 31-Dec-07 31-Dec-06 31-Dec-05 31-Dec-04
Tons Milled (t)
159,919 161,455 166,377 157,452 161,980
Headgrade (g/t)
11.40 9.05 9.24 11.44 10.24
Overall (%)
Recovery 91 92 92 92 91
Production: (oz)
Underground 47,634 43,145 45,332 53,369 48,547
Production: (oz)
Calcine Dump 3,545 3,601 - - -
Sold (USD/oz)
51,186 47,486 45,749 52,983 50,186
Average (USD/oz) 721 567 464 412
Price: Spot 824
Average (USD/oz)
Price: Hedge - 460 406 430 502
Total Cash (USD/oz) 514 450 394 434
cost USD/oz 451
sold
EBITDA GBP
(000) 8,552 4,001 3,049 2,153 1,157
Depreciation GBP
(000) 1,066 806 1,077 1,042 1,011
Capital GBP 2,282 1,532 867 569 452
Expenditure (000
Exchange
rate - 15.13 14.05 13.68 11.48 11.38
average
Exchange
rate - 13.78 13.77 13.78 11.06 11.00
closing
* 74% of the 2007 & 2008 results are attributable to the equity shareholders
of Pan African; 2004 - 2006 results were attributable to Metorex Limited
EXPLORATION PROJECTS
Due to the global economic uncertainty and disappointing drilling results
in Ghana, the management and board of Pan African have decided not to
exercise the Company`s rights to the Kyereboso and U&N projects and are
negotiating the sale and retention of a free-carry of the Akrokerri project.
The termination of these projects results in a GBP1.3 million impairment on the
balance sheet.
In the Central African Republic (`CAR`), at Bogoin, two targets have
been identified. The shear zone target and the banded-iron formation
target. A gold-in-soil sampling programme was completed on the shear zone
target which was followed up by an RC drilling programme totalling 16,213m.
No significant gold intersections were made. Adjacent to the shear-zone
target, 12 kilometres of banded-iron formation still remain untested and
a gold-in-soil sampling programme has been initiated over this target. At
Dekoa, also in the Central African Republic, infill gold and soil sampling
has confirmed the presence of gold anomalies presenting a strike-length in
excess of 25 kilometres. A bulk-sampling programme is being initiated over
these anomalies.
Pan African has increased its stake in the CAR projects to a significant
majority as a result of the JV partner not contributing to the project
funding.The final dilution percentage is currently being audited and will
be released once finalised. Future planned expenditure in the CAR has
declined for the next six months to GBP173,600 on both projects as a result
of the nature of exploration work being carried out.
At Manica in Mozambique, preliminary work completed on the
pre-feasibility study indicates that the project is extremely sensitive to
capital expenditure and requires additional ore to be mined in the first
2 years to address this issue. The resource estimate has been upgraded from
1.70Moz (11.5Mt @ 4.61g/t) to 2.57Moz (33.8Mt @ 2.36g/t) encouraging a drive
to try to consolidate further oxide resources adjacent to the project, in an
effort to make it more robust. GBP1.04 million has been allocated for this
consolidation process over the next
10 months, after which the viability of the project will be reviewed.
After the period under review, the company acquired an exclusive,
non-refundable option to purchase 100% of the shares in Phoenix Platinum
Mining (Pty) Limited (`Phoenix`) from Metorex Limited (`Metorex`). This is a
platinum dump retreatment project. Test work is progressing and is expected
to be completed within the allocated four month period.
Estimates show the capital expenditure is expected to be GBP6.9 million,
resulting in a pay-back of less than one year; life of operation is estimated
to be between five and seven years from existing surface tailings, which can
be extended to 18 years with the addition of underground arisings. 4PGE*
production is anticipated at between 10,000 - 15,000 oz/annum, assuming
conservative 4PGE basket prices.
* PGE = Platinum Group Elements (4PGE = Platinum, Palladium, Rhodium and Gold)
Capital expenditure and commitments
Capital expenditure at Barberton mines totalled GBP2.28 million (this excludes
surface exploration costs at Barberton Mines) of which roughly half was spent
on underground development and the rest on engineering, maintenance and repair.
Exploration expenditure on all our projects totalled GBP1.68 million.
There were no material contracted capital commitments at the end of the period.
Operating lease commitments, which fall due within the next year, amount to
GBP48,010.
Shares Issued July 2008 - December 2008
722,274 shares were issued to Goldiam SARL at 5.5 pence per share for the
acquisition of gold exploration licences in the Central African Republic.
Directorship Change
Mr Simon Malone retired from the Pan African Board on 20 January 2009. The
Company would like to thank him for his valued efforts and assistance and
wishes him all the best for his retirement.
Accounting Policies
The financial information set out in this announcement does not constitute
the Company`s statutory accounts for the half year ended 31 December 2008.
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.
The unaudited interim results have been prepared and presented in accordance
with, and containing the information required by IFRS on Interim Financial
Reporting, IAS 34.
Dividend declaration
Dividend No 1 of 0.2555 pence per share has been declared in respect of the
six months ended 31 December 2008. The last day to trade ("cum" the dividend)
on the JSE in order to participate in the dividend will be Friday, 13 March
2009. The shares will commence trading "ex" the dividend from the commencement
of business on Wednesday, 18 March 2009 on the LSE and on Monday, 16 March 2009
on the JSE. The record date on the LSE and JSE will be Friday 20 March 2009.
The dividend is declared in the currency of the United Kingdom and will be
paid on Wednesday, 8 April 2009. Shareholders whose shares are held on the
United Kingdom register will receive payment in sterling. Shareholders whose
shares are held on the South African register will receive payment in South
African rand at the ruling rate on Thursday, 5 March 2009.
Share certificates may not be lodged with the South African transfer
secretaries for dematerialisation / rematerialisation from Monday, 16 March
2009 to Friday, 20 March 2009, both dates inclusive.
Future Prospects
The focus of Pan African continues to move up the value chain to projects at
the point of pre-feasibility to assets near / in production. The Company`s
mining operations at Barberton provide funding to find and develop new
projects and advanced-staged mining opportunities.
The Directors believe global macroeconomic fundamentals support a favourable
gold price in the medium-term and the combination of activities at our mining,
and more advanced exploration assets are expected to deliver satisfactory
results for the next reporting period. Production plan is sustainable and the
Company remains on track to produce 100,000 oz/annum.
The Company continues to evaluate and acquire projects that will deliver
high margins and low costs with significant upside potential and believe that
in the current environment of tight credit, the strong balance sheet compares
Pan African favourably to its peers.
By order of the Board
K C Spencer J P Nelson
Chairman Chief Executive Officer
26 February 2009
Consolidated Income Statement
6 months ended 6 months ended
31 Dec 08 31 Dec 07
(Unaudited) (Unaudited)
GBP GBP
Revenue
Gold sales 24,940,383 14,596,037
Realisation costs 63,532 70,630
On - mine revenue 24,876,851 14,525,407
Cost of production 14,099,512 9,995,471
Depreciation 1,065,720 806,369
Mining Profit 9,711,619 3,723,567
Other (expenses) / income (885,413) (529,064)
Operating income before finance 8,826,206 3,194,503
costs
Finance income 434,700 99,479
Finance costs (6,007) (9,696)
Impairment of Intangible Asset (1,339,915)
Profit before taxation 7,914,984 3,284,286
Taxation 3,705,065 1,347,912
Profit after taxation 4,209,919 1,936,374
Attributable to:
Equity holders of the parent 2,569,804 1,294,286
Minority interests 1,640,115 642,088
4,209,919 1,936,374
Earnings per share (pence) 0.23 0.13
Diluted earnings per share (pence) 0.23 0.11
Weighted average number of shares 1,100,517,684 965,777,998
in issue
Diluted number of shares in issue 1,111,517,684 1,136,689,165
Headline earnings per share is
calculated using the following :
Headline earnings 3,909,719 1,294,286
Headline earnings per share (pence)
0.36 0.13
Diluted headline earnings per share
(pence) 0.35 0.11
Consolidated Balance Sheet
6 months ended Year ended
31 December 2008 30 June 2008
(Unaudited) (Audited)
GBP GBP
ASSETS
Non-current assets
Property, plant and equipment 24,031,808 20,069,814
Rehabilitation trust fund 1,964,278 1,739,522
Intangible assets 13,311,565 12,837,045
Goodwill 21,000,714 21,000,714
60,308,365 55,647,095
Current assets
Inventories 374,345 377,974
Trade and other receivables 3,138,027 2,972,776
Cash and cash equivalents 7,717,725 5,419,489
11,230,097 8,770,239
Total Assets 71,538,462 64,417,334
EQUITY AND LIABILITIES
Capital and reserves
Share capital 11,005,891 10,998,664
Share Premium 37,299,997 37,267,475
Translation Reserve 1,046,373 -1,118,262
Share Option Reserve 363,812 285,312
Retained income 12,515,825 9,946,021
Merger Reserve (10,705,308) (10,705,308)
Equity attributable to equity 51,526,590 46,673,902
holders of parent
Minority interest 4,444,153 3,694,869
Total Equity 55,970,743 50,368,771
Non - Current liabilities
Long term liabilities - Interest - 16,822
bearing
Long term Provisions 2,500,017 2,219,954
Deferred Taxation 6,150,434 5,201,245
Total Non-Current Liabilities 8,650,451 7,438,021
Current liabilities
Trade and other payables 2,754,795
3,048,417
Short term liabilities - 48,010 89,269
Interest bearing
Short term Provisions 711,085
1,011,417
Financial Instruments -
Current Tax Liabilities 3,055,393
2,809,425
Total Current Liabilities 6,917,269 6,610,542
TOTAL EQUITY AND LIABILITIES 71,538,463 64,417,334
Condensed Consolidated Cash Flow Statement
Six months ended Six months
ended
31 December 2008 31 December
2007
(Unaudited) (Unaudited)
GBP GBP
Cash Generated by operations 4,604,148
10,401,503
Minorities Distributions (49,379)
(890,831)
Taxation Paid (607,085)
(4,240,562)
Finance Cost, net 89,783
428,693
Cash inflow from operating 4,037,467
activities 5,698,803
Cash outflow from investing (3,982,702)
activities (4,056,420)
Cash (outflow) from finance (69,668)
activities (44,374)
Net Increase/ (Decrease) in cash (14,903)
equivalents 1,598,009
Cash at the beginning of period 326,847
5,419,489
Reverse Acquisition 733,101
-
Effect of Foreign Currency rate -
changes 700,227
Cash at end of year 1,045,045
7,717,725
Condensed Statement of Changes in Equity
Six months ended Six months ended
31 December 2008 31 December 2007
(Unaudited) (Unaudited)
Shareholders equity at start of period
50,368,771 5,906,749
Share Issue
39,749 -
Reverse Acquisition
- 24,818,679
Translation and Share Option Reserve -
2,243,135 313,850
Net Income for the period
2,569,804 1,294,286
Minorities Interest
749,284 2,632,217
Total Equity
55,970,743 34,338,081
ENDS
Martin Bevelander: a registered competent person with the South African
Council for Natural Science Professions (`SACNASP`), signed off on the resource
statement for Manica.
Deon van der Heever: an independent competent person registered with SACNASP,
signed off on the block and geostatistical model for Manica.
Frans Chadwick: a professional surveyor and registered with the Professional
Land and Technical Surveyors (`PLATO`) signed off on the resource statement
for Barberton Mines Limited.
For further information on Pan African Resources plc, please visit the
website at www.panafricanresources.com
Enquiries:
Pan African Resources
Jan Nelson, CEO
+27 (0) 11 243 2900
Keith Spencer, Chairman
+27 (0) 11 880 3155
Nicole Spruijt, Public Relations
+27 (0) 11 243 2900
RBC Capital Markets
Martin Eales
+44 (0) 20 7029 7881
Macquarie First South Advisers (Pty) Limited
Thato Morojele
+27 (0) 11 583 2379
Annerie Britz
+27 (0) 11 583 2328
Melanie de Nysschen
+27 (0) 11 583 2316
St James`s Corporate Services Limited
Phil Dexter
+44 (0) 20 7499 3916
FDBeachhead Media & Investor Relations
Jennifer Cohen
+27 (0) 11 214 2401
Louise Brugman
+27 (0) 83 504 1186
Date: 26/02/2009 09:00:01 Produced by the JSE SENS Department.
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