| Tue 1 Sep 2009, 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 year ended 30 June 2009
Pan African Resources PLC
(`Pan African` or the `Company` or the `Group`)
(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
Consolidated unaudited provisional results for the year ended 30 June 2009
Pan African Resources PLC (AIM: PAF, Altx: PAN), the African focused gold mining
company, is pleased to report its results for the year ended 30 June 2009.
SALIENT FEATURES
Corporate:
- EBITDA increased 30% to GBP17.8 million (2008: GBP13.7 million);
- Unhedged and debt-free;
- Strengthened management team;
- Dividend of 0.02555p per share declared at the Interim results.
Mining Operations:
- Underground gold production increased by 15% to 94,909oz (2008: 82,436oz);
- Headgrade improved by 16% to 10.32g/t (2008: 8.9g/t);
- Reserve base increased by 22% to 600koz (2008: 490koz);
- Total cash cost decreased to US$469/oz (2008: US$476/oz).
Growth Projects:
- Acquisition of 100% stake in Phoenix Platinum Mining (Pty) Ltd (`Phoenix
Platinum`), a tailings retreatment project in South Africa;
- Exploration projects in the Central African Republic (`CAR`) and Ghana
terminated, as drilling results did not meet Company`s criteria to continue
with exploration, resulting in the impairment and cessation of exploration
costs in these countries.
Jan Nelson, Chief Executive Officer, commented: "The ability of the Company to
continue to demonstrate year-on-year growth in productivity, together with
encouraging cost control measures, will ensure we continue to deliver
shareholder value. Early-stage exploration expenditure has been terminated,
Phoenix Platinum is on schedule to further grow the revenue stream and
additional productivity improvement initiatives at Barberton are set to increase
the profitability of the Company. We are favourably positioned to take
advantage of further value-enhancing growth opportunities."
Presentation and conference call details:
Pan African Resources will host a presentation today, 1 September 2009, at
10.00am South African time (9:00am UK time) at the Grace Hotel in Rosebank.
The conference call dial- in numbers are:
UK: 0808 234 6771
SA: 0800 200 648
PLAYBACK will be available from 11:30am on 1 September 2009 on + 27 11 305 2030
with code 29992#
12 Months 12 Months
ended ended
30 June 2009 30 June 2008
Revenue (GBP) 53,000,352 39,254,557
EBITDA (GBP) 17,864,321 13,710,819
Attributable Profit (GBP) 4,403,535 5,460,067
EPS (pence) 0.40 0.52
HEPS (pence) 0.85 0.52
Weighted average number of 1,104,367,219 1,043,789,285
shares in issue
NATURE OF BUSINESS
Pan African is a gold mining company that produces approximately 100,000oz per
year. Its focus is on developing low cost, high margin production or near
production projects. The Company has no debt, is unhedged and is able to fund
all of its current on-mine capital from current cashflows.
OVERALL PERFORMANCE
FINANCIAL PERFORMANCE
Gross Revenue from gold sales amounted to GBP53 million (2008: GBP39 million),
with the total cost of production being GBP28.5 million (2008: GBP25.1 million).
Tax amounted to GBP8.2 million (2008: GBP4.4 million), other expenses were
GBP1.4 million (2008: GBP0.3 million), and an exploration expenditure impairment
charge was GBP5 million (2008: GBPnil).
EBITDA for the year under review was GBP17.8 million (2008: GBP13.7 million).
Cash operating profit at Barberton Mines (Pty) Ltd (`Barberton Mines`) increased
to GBP20.5 million (2008: GBP11.7 million), despite an increase in the cost of
production to GBP28.5 million (2008: GBP25.1 million). Higher costs were linked
to increases in the prices of consumables, electricity and wages.
The increase in mining profit is a direct result of the average spot gold price
increasing to US$867/oz (2008: US$823/oz) and an average US$:ZAR exchange rate
of ZAR9.00 (2008: ZAR7,30). The effective ZAR gold price achieved was
ZAR251,829/kg (2008: ZAR187,000/kg).
Income tax increased to GBP8.2 million (2008: GBP4.4 million) as a result of an
increase in the profit margin as well as the unredeemed capital balance being
fully utilised in 2008.
Basic headline earnings per share improved by 63% from 0.52 pence reported in
2008 to 0.85 pence for the current year.
Safety and Training
The safety results have improved year-on-year, apart from the lost time
injuries. Shifts lost and the number of reportable accidents have decreased.
The Company is pleased to report no fatalities for the year. The Consort
section achieved a million fatality free shifts over a seven year period and the
Fairview section is approaching two million fatality free shifts. The safety of
the Group`s employees is of paramount importance and the Company runs approved
training programmes at its mining operations.
REVIEW OF BARBERTON MINING OPERATIONS
OPERATING PERFORMANCE
A total of 97,353oz (2008: 99,078oz) of gold was sold from the Barberton mining
operation (which comprises the Fairview, Sheba, and New Consort sections), a
decrease of 1.7% from the previous year. Total underground gold production
however increased by 15% to 94,909oz (2008: 82,436oz). This was despite a 0.4%
decrease in tons milled to 313,952t (2008: 315,305t), which was offset by an
increase in headgrade of 15.9% to 10.32g/t (2008: 8.9g/t).
Production from the Calcine tailings dam retreatment project yielded 3,955oz of
gold. No further production is expected from this project. Total mine cash
costs decreased marginally by 1.47% to US$469/oz (2008: US$476/oz).
2009 2008 2007 2006 2005
Tons Milled (t) 313,952 315,305 330,367 313,779 316,094
Headgrade (g/t) 10.32 8.9 9.2 10.7 11.1
Overall (%) 91 91 92 92 92
Recovery
Production: (oz) 94,909 82,436 90,022 99,281 103,847
Underground
Production: (oz) 3,955 13,513 - - -
Calcine Dump
Gold Sold (oz) 97,353 99,078 89,572 99,924 102,914
Average Price: (US$/oz) 867 823 640 528 433
Spot
Average Price: (US$/oz) - 451 415 438 511
Hedge
Total Cash Cost (US$/oz) 469 476 465 429 427
US$/oz sold
Capital (GBP) 4,052,440 2,901,792 1,637,359 1,091,965 1,021,04
Expenditure 1
Exchange rate - (ZAR/GBP) 14.39 14,68 13,95 n/a n/a
average
Exchange rate - (ZAR/GBP) 12.66 15,56 14,18 n/a n/a
closing
Reserve Replacement Projects
Sheba - Southwell adit
The re-equipping of the Western Cross and Birthday areas was completed
successfully and plans are in place to commence mining in this area.
Sheba - 35 ZK Decline
The 35 ZK decline was sunk 71.7 metres and station development has commenced. A
further 180m of development is required to access the main ZK orebody.
Sheba - Edwin Bray to Thomas & Joe`s Luck orebodies
Exploration drilling at the Thomas orebody has been completed. The development
of the 7 level haulage and the return airway continued during the year and a
total of 740 metres of development was completed. The Eureka orebody was
exposed and further drilling is planned in the coming year to define additional
orezones. A further 600 metres of development remains to the Thomas and Joe`s
Luck orebodies
Consort - 45 level exploration drive
On 45 level, 227 metres of exploration development was completed and exploration
drilling confirmed the up dip extension of the Bullion orebody currently being
mined on 50 level. Further drilling is planned in the coming year to continue
definition of the Bullion orebody.
Consort - 50 level declines
At Consort, mining flexibility remains problematic and capital development to
replace ore reserves continue. At the 50W1 area, 224 metres were sunk in the two
declines which are on target to open up the east and west ore bodies below 50
level. Sinking in the coming year will continue to expose the next levels.
Fairview - 60/62 level development
Development on 60 and 62 level to replace ore reserves progressed well and a
total of 817 metres was completed. A further 535m development is required to
complete the development required to access the MRC orebody.
58 ZK and MRC Horizon exploration development
A total of 128 metres was completed on 58 level and 72 metres on the 60 level to
access the ZK and MRC ore bodies respectively. A further 800 metres of
development is required to access the down-dip extension of the ZK orebody on 60
level. The 58 level development is approximately 100 metres from the ZK
orebody.
Fairview - 3 Shaft deepening
Work to open up the No.3 sub-incline shaft bottom, to enable the deepening of
the shaft, is progressing satisfactorily. Cleaning to below 64 level elevation
was completed during the year. The widening of the bottom portion, between 62
and 64 levels of the No.3 sub-incline shaft, is planned whereafter shaft sinking
to 68 level will commence. A further 180 metres of shaft sinking is required to
reach 69 level, whereafter access to the le Roux and hope orebodies will require
200 metres of development.
Electricity
Barberton Mines embarked on power saving initiatives to reduce total demand by
10%. The largest consumer of energy is compressed air generation and the mine is
in the process of replacing older compressors with modern efficient units.
REVIEW OF NEAR-TERM PRODUCTION PROJECTS
Phoenix Platinum - South Africa
Effective May 2009, the Company acquired 100% of Phoenix Platinum Mining, for
GBP5.2 million. Phoenix Platinum was acquired from Metorex Limited (`Metorex`)
and is now a wholly owned subsidiary.
The recent acquisition of Phoenix Platinum does not change the gold focus of the
Company. Preliminary sampling and recovery results have exceeded expectations
and management`s proactive actions could see plant construction as early as
February 2010, with production likely in December 2010. However, this
production outlook is sensitive to management`s ability to secure plant
location.
REVIEW OF GROWTH PROJECTS
Manica Gold Project - Mozambique
Since Pan African acquired the Manica gold project the resource has been
increased over a three year period, from 0.50Moz to 2.571Moz. An in-house pre-
feasibility study was completed in the year under review. The results of the
study, as announced on 4 June 2009, indicated that a change of strategy was
necessary in order to optimise project value. Work planned for the coming year
will focus on regional consolidation of oxide resources with the objective to
define significant non-refractory ore that can be mined from surface, requiring
less capital and fast tracking potential production.
REVIEW OF EXPLORATION PROJECTS
Ghana and the Central African Republic (`CAR`)
The results from the first phase of drilling on the projects in Ghana and the
CAR have not met the Company`s criteria to continue with further exploration
activity. As a result exploration activity has been terminated, leading to an
impairment charge of GBP5 million.
CAPITAL EXPENDITURE AND COMMITMENTS
Capital expenditure at Barberton Mines totalled GBP4 million, of which GBP2.1
million was spent on development and drilling to replace current depleted gold
reserves and to grow the mineable resource base. The balance of GBP1.9 million
was spent on equipment and the maintenance of current infrastructure on the
mine.
Exploration expenditure at the Company`s projects in Mozambique, Central African
Republic and Ghana totalled GBP1.8 million for the financial year.
Contracted capital commitments at the end of the financial year amounted to
GBP62,231. Operating lease commitments, which fall due within the next year,
amount to GBP176,651 whilst interest bearing commitments of GBP20,669 fall due
during the following year.
DIRECTORSHIP CHANGES
The board announced the resignation of Mr Simon Malone, effective 20 January
2009 and the resignation of Mr Charles Needham, effective 26 June 2009.
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 2009.
The financial information included in this preliminary announcement has been
prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards (`IFRS`), this announcement does not
itself contain sufficient disclosure information to comply fully with IFRS. The
Company expects to publish full financial statements which comply with IFRS in
October 2009. This preliminary announcement was approved by the board on 28
August 2009.
SHARE CAPITAL CHANGES
1. 722 724 shares were issued to Goldiam SARL at 5.5p per share in relation to
the Novation Agreement dated 21 July 2008.
2. 12 000 000 shares were issued to SEMS Exploration Services Limited and Birim
Goldfields (Ghana) Limited at 6p in exchange for the licence rights of the
Akrokerri exploration property, dated 6 March 2009.
DIRECTORS DEALINGS
The Company was informed on 26 and 27 November 2008 that Mr Jan Nelson, the
Company`s Chief Executive Officer, registered the acquisition of 30,000 and
17,308 ordinary shares of 1 pence each in the Company on that day at a price of
50 South African cents per share.
DIVIDEND
A dividend of 0.2555 pence per share was declared at the Interim Results. The
dividend was declared in the currency of the United Kingdom and paid on
Wednesday, 8 April 2009. No further dividend is being declared. Future
dividends will be determined by the Board, after considering the Group`s
cashflow requirements and growth options.
POST BALANCE SHEET EVENTS
On 19 June 2009, the Company announced that it had concluded an agreement with
Shanduka Gold (Pty) Ltd (`Shanduka`) whereby Pan African would acquire
Shanduka`s 26% shareholding in Barberton Mines in exchange for the issue of new
295,751,549 ordinary shares to Shanduka.
This share exchange transaction with Shanduka became effective on 21 August 2009
and allows Shanduka to appoint two representatives to the Board of Pan African
in a non-executive capacity.
On 26 June 2009, Metorex announced that it had engaged in a book building
exercise to dispose of its 53,4% shareholding in Pan African. In addition to
its 21% shareholding in Pan African issued via the share exchange transaction
detailed above, Shanduka announced that it would acquire an additional 5% of the
enlarged share capital of Pan African through the book build. As a result,
Shanduka increased its shareholding in Pan African to 26%. The balance of the
shares sold by Metorex was taken up by institutional investors.
The following changes to the Board of Pan African have been proposed and will be
confirmed at the upcoming Board meeting:
- Mr. Cyril Ramaphosa, Executive Chairman of Shanduka Group
(Proprietary) Limited, will be appointed as Non-Executive Chairman.
- Mr. Keith Spencer will remain on the Board as independent, Non-
Executive Deputy Chairman.
- Mr. Rowan Smith from Shanduka Group will be appointed as a Non-
Executive Director.
- Mr. Maritz Smith, previously a representative of Metorex, has resigned
with immediate effect as Financial Director; Mr. Cobus Loots will
replace him as Financial Director.
- Mr. John Hopwood, Mr. Rob Still and Mr. Jan Nelson remain members of
the Board.
On 1 July 2009, the Company announced that Barberton Mines had cancelled the
Metorex management agreement for a consideration of GBP314,000. The Company
also announced that the outstanding consideration of GBP954,759 to acquire 100%
of Phoenix Platinum would be paid to Metorex by no later than 30 September 2009.
During August 2009, Barberton Mines reached 2-year agreements with both the
National Union of Mineworkers (`NUM`) and the Underground Association of South
Africa (`UASA`) on wage increases. The percentage increases which include all
the changed benefits came to 13% for NUM and 11% for UASA employees. The second
year increase will be the average Consumer Price Index (`CPI`) plus 1 % with a
guaranteed minimum of 7.5%. The Company and Unions will also return to the
negotiation table if the gold price falls below ZAR190,000/kg.
FUTURE PROSPECTS
The Company is now a fully independent business and operator with a newly
structured and empowered board. Full ownership of the flagship Barberton Mines
and the near-term production Phoenix Platinum project will not only be future
earnings enhancing, but will also sustain self-funding, profitable growth and
the pursuit of opportunistic acquisitions.
By order of the Board
K C Spencer J P Nelson
Chairman Chief Executive Officer
1 September 2009
FINANCIAL STATEMENTS
Consolidated Income Statement
Year ended Year ended
30 June 09 30 June 08
(Unaudited) (Audited)
GBP GBP
Revenue
Gold sales 53 000 352
39 254 557
Realisation costs (140 546)
(106 277)
On - mine revenue 52 859 806
39 148 280
Cost of production (28 504 686)
(25 163 675)
Depreciation (2 360 431)
(1 965 872)
Mining Profit 21 994 689
12 018 733
Other (expenses) / income (1 465 336) (273 786)
Operating income before 20 529 353 11 744 947
finance costs
Finance income 816 754
217 288
Finance costs (9 933) (17 006)
Impairment costs (5 025 463)
Profit before taxation
16 310 711 11 945 229
Taxation (8 219 425)
(4 366 543)
Profit after taxation 8 091 286
7 578 686
Attributable to:
Equity holders of the parent 4 403 535
5 460 067
Minority interests 3 687 751
2 118 619
8 091 286 7 578 686
Earnings per share (pence)
0.40 0.52
Diluted earnings per share
(pence) 0.39 0.51
Weighted average number of 1 104 367 219 1 043 789 285
shares in issue
Diluted number of shares in 1 117 367 219 1 073 789 285
issue
Headline earnings per share is
calculated :
Headline earnings 9 428 998 5 460 067
Headline earnings per share
(pence) 0.85 0.52
Diluted headline earnings per
share (pence) 0.84 0.51
Consolidated Balance Sheet
30 June 2009 30 June 2008
(Unaudited) (Audited)
GBP GBP
ASSETS
Non-current assets
Property, plant and 31 801 235 20 069 814
equipment and Mineral
Rights
Rehabilitation trust 2 357 266 1 739 522
fund
Intangible assets 12 038 616 12 837 045
Goodwill 21 000 714 21 000 714
67 197 831 55 647 095
Current assets
Inventories 358 363 377 974
Trade and other 2 201 213 2 972 776
receivables
Cash and cash 2 389 301 5 419 489
equivalents
4 948 877 8 770 239
TOTAL ASSETS 72 146 708 64 417 334
EQUITY AND
LIABILITIES
Capital and reserves
Share capital 11 125 891 10 998 664
Share Premium 37 899 997 37 267 475
Translation Reserve 2 531 639 (1 118 262)
Share Option Reserve 549 690 285 312
Retained income 11 537 551 9 946 021
Merger Reserve (10 705 308) (10 705 308)
Equity attributable 52 939 460 46 673 902
to equity holders of
parent
Minority interest 3 420 942 3 694 869
Total equity 56 360 402 50 368 771
Non - Current
liabilities
Long term liabilities 16
- Interest bearing - 822
Long term Provisions 2 933 105 2 219 954
Deferred Taxation 6 752 432 5 201 245
9 685 537 7 438 021
Current liabilities
Trade and other 3 719 787 2 754 795
payables
Short term 89
liabilities - 20 669 269
Interest bearing
Short term Provisions 1 151 895 711 085
Payable to another 954 759
Group Company -
Current Tax 253 659 3 055 393
Liabilities
6 100 769 6 610 542
TOTAL EQUITY AND 72 146 708 64 417 334
LIABILITIES
Group Consolidated Cash Flow Statement
Group
GBP
2009 2008
NET CASH FROM/(USED IN) 7 582 060 11 239 529
OPERATING ACTIVITIES
INVESTING ACTIVITIES
Dividends received
Additions to property, (4 318 424) (3 031 659)
plant and equipment,
mineral rights
Additions to intangibles (1 580 349) (2 652 270)
Loans to subsidiaries
Funding of rehabilitation 193 347 4 126
trust fund
Cash (outflow) / inflow (4 205 144) 226 164
on acquisition of
subsidiary
NET CASH USED IN (9 910 571) (5 453 639)
INVESTING ACTIVITIES
FINANCING ACTIVITIES
Borrowings Raised 1 145
710
Borrowings repaid (190 952) (179 591)
Shares Issued 784 624
NET CASH (USED IN)/FROM 954 759 605 033
FINANCING ACTIVITIES
NET INCREASE / (DECREASE) (1 373 752) 6 390 923
IN CASH AND CASH
EQUIVALENTS
Cash and cash equivalents 5 419 490 422 416
at the beginning of the
period
Effect of foreign (1 656 437) (1 393 850)
exchange rate changes
CASH AND CASH EQUIVALENTS 2 389 301 5 419 489
AT THE END OF THE PERIOD
Group Statement of Changes in Equity
Share Share Prefe Hedging Retai Share Merg Minor Total
Capital Premium rence and ned optio er ity
account share translat earni n rese Inter
capit ion ngs reser rve est
al reserve ve
and
premi
um
Balance 4 180 4 076 5 (1 041 4 128 (6 1 12
at 30 032 769 578 234) 485 360 189 576 794
June 175 954 702) 250 604
2007
Issue 6 33 190 40
of 818 632 706 - - - - - - 009
shares 338
Redempt (5 (5
ion of - - 578 - - - - - 578
shares 175) 175)
Current (77 028) (77
year - - - - - - - 028)
movemen
t
Profit 5 2 7 578
/ - - - - 460 - - 118 686
(loss) 067 619
for the
year
Share 156 156
Based - - - - - 952 - - 952
payment
-
Charge
for the
year
Current (4 (4
year - - - - - - 515 - 515
merger 606) 606)
Balance 10 37 267 (1 118 9 946 285 (10 3 694
at 30 998 664 475 - 262) 021 312 705 869 50
June 308) 368
2008 771
Issue
of 127 227 632 522 - - - - - - 759
shares 749
Redempt
ion of - - - - - - - - -
shares
Current 3
year - - - 649 901 - - - - 3 649
movemen 901
t
Profit 4 403 3 687
/ - - - - 535 - - 751 8 091
(loss) 286
for the
year
Dividen (2 (3 (6
d Issue - - - - 812 - - 961 773
005) 678) 683)
Share 264
Based - - - - - 378 - - 264
payment 378
-
Charge
for the
year
Current
year - - - - - - - - -
merger
Balance 11 125 37 899 - 2 531 11 549 (10 3 420
at 30 891 997 639 537 690 705 942 56
June 551 308) 360
2009 402
ENDS
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
Nicole Spruijt, Public Relations
+27 (0) 11 243 2900
RBC Capital Markets
Martin Eales
+44 (0) 20 7029 7881
Barnard Jacobs Mellet Corporate
Finance (Proprietary) Limited
Natalie Di-Sante +27 (0)
11 750 0207
Sholto Simpson
+27 (0) 11 750 0213
St James`s Corporate Services Limited
Phil Dexter
+44 (0) 20 7499 3916
FD Beachhead Media & Investor
Relations
Jennifer Cohen
+27 (0) 11 214 2401
Louise Brugman
+27 (0) 11 214 2415
+27 (0) 83 504 1186
Date: 01/09/2009 09:00:01 Produced by the JSE SENS Department.
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