| Mon 12 Sep 2011, 7:48 | | PAN - Pan African Resources PLC - Audited Annual Results For the year ended 30 |
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PAN
PAN
PAN - Pan African Resources PLC - Audited Annual Results For the year ended 30
June 2011
Pan African Resources PLC
(`Pan African` or the `Company` or the `Group`)
Incorporated and registered in England and Wales under Companies Act 1985 with
the registered number: 3937466 on 25 February 2000
Share Code on AIM: PAF
Share code on JSE: PAN
ISIN: GB0004300496
Audited Annual Results
For the year ended 30 June 2011
Pan African is pleased to announce its audited annual results for the year
ended 30 June 2011 (`2011`).
Highlights and Key Matters
- Final dividend of GBP7.4 million proposed (2010: GBP5.4 million dividend
paid).
- Proposed dividend increased by 37.93% to of 0.5135p per share (2010:
Final dividend of 0.3723p declared).
Group
- Gross revenue for gold sales increased by 15.62% to GBP79.2 million
(2010: GBP68.5 million).
- Earnings Before Interest, Taxation, Depreciation and Amortisation
(`EBITDA`) increased by 14.00% to GBP28.5 million (2010: GBP25.0 million).
- Attributable profit increased by 20.28% to GBP17.2 million (2010: GBP14.3
million).
- Earnings per share (`EPS`) increased by 15.38% to 1.20p (2010: 1.04p).
- Headline earnings per share (`HEPS`) increased by 12.15% to 1.20p (2010:
1.07p).
- Profit margin increased by 30.36% to US$ 584/oz (2010: US$ 448/oz).
- Resource inventory increased by 22.46% to 5.67 Moz (2010: 4.63 Moz).
- Reserve inventory increased by 51.29% to 1.0 Moz (2010: 661 Koz).
- The Group`s cash balance was GBP10.1 million (2010: GBP12.8 million) at
year-end.
- Increased Group capital expenditure by 255.93% to GBP21.0 million (2010:
GBP5.9 million).
Mining Operations - Barberton Mines (Pty) Ltd (`Barberton Mines`)
- Gold sold decreased by 6.01% to 92,197oz (2010: 98,091oz), mainly due to
a reduction in tonnes mined at Barberton.
- Sustaining and increasing production profile at Barberton Mines through
continued capital investment of GBP6.8 million (2010: GBP5.9 million).
- Safety performance showed a significant improvement with Lost Time Injury
Frequency Rate (`LTIFR`) improving by 47.62% to 2.2 (2010: 4.2) and Serious
Injury Frequency Rate (`SIFR`) by 40.00% to 0.66 (2010: 1.1).
- Achieved one million fatality-free shifts over a 15-month period post
financial year.
- Increase in total cost of production, in South African Rands, contained
to 4.09%, which is below the South African rate of inflation.
- Increase of the Barberton Mines Life of Mine (`LOM`) from 10 to 17 years.
Near Term Production Projects - Phoenix Platinum Mining (Pty) Ltd (`Phoenix
Platinum`) and the Bramber Tailings Project (`Bramber`)
- Completing construction of Phoenix Platinum Chrome Tailings Retreatment
Plant (`CTRP`), which will generate revenue from Platinum Group Metals
(`PGM`s`): Platinum, Palladium, Rhodium and Gold. Production forecast to
commence in December 2011.
- Defined a total indicated resource of 147,500oz (3.130Mt @ 1.47g/t in
situ) at indicated recoveries of 52.00% for the Bramber Tailings Project at
Barberton Mines.
Growth Projects -Manica Gold Project
- Announced intention to list Manica as a stand-alone entity in order to
unlock shareholder value and fast-track development.
Nature of Business
Pan African is a precious metals, African focused mining Group.
The Company remains unhedged and debt free, which means the Group has total
leverage to the gold price and the ability to fund all on-mine capital
expenditure internally. In addition, the Group has access to a GBP13.7 million
revolving credit facility.
The Company`s strategy of targeting low cost, high margin projects, which are
either near or at production stage, enables it to consistently improve not
only its resource base but also its profit margins. This also enables the
Group to pay a dividend and ensures continued growth in shareholder value.
Financial Performance
Pan African is incorporated in England and Wales, and its reporting currency
is pounds sterling (`GBP`). In the current financial year, Pan African
changed its functional currency from GBP to South African Rand (`ZAR` or
`Rand`), due to the fact that the Company`s primary economic environment is
now South Africa. The reporting currency has remained unchanged in GBP.
Barberton Mines and Phoenix Platinum are South African incorporated companies,
and their functional and reporting currency is ZAR. Manica is a Mozambican
incorporated company and its functional and reporting currency is Meticals
("MZN").
When Barberton Mines, Phoenix Platinum and the Company financial statements
are translated into GBP for the purposes of Group consolidation and reporting,
the annual average and year-end closing ZAR:GBP exchange rates affect the
Group consolidated financial results. In the current financial year, the
average prevailing ZAR:GBP exchange rate was 11.11:1 (2010: 11.93:1), and the
closing ZAR:GBP exchange rate was 10.94:1 (2010: 11.53:1). The year-on-year
change in the average and closing exchange rates of 6.87% and 5.12%
respectively should be taken into account for the purposes of comparing year-
on-year results.
When Manica financial statements are translated into GBP for the purposes of
Group consolidation and reporting, the year-end closing MZN:GBP exchange rate
affects the Group consolidated financial results. In the current financial
year, the closing MZN:GBP exchange rate was 45.33:1 (2010: 50.86:1). The year-
on-year change in the average and closing exchange rate of 10.87%, should be
taken into account for the purposes of comparing year-on-year results.
Gross revenue from gold sales increased by 15.62% to GBP79.2 million (2010:
GBP68.5 million). The increase in revenue was mainly attributed to a 24.41%
increase in the average US$ gold spot price received to US$1,366/oz (2010:
US$1,098/oz), and the depreciation of the GBP against the ZAR during the
reporting period. The average US$:ZAR exchange rate was 7.91% stronger at
ZAR6.99 compared to the previous year (2010: ZAR7.59), which negatively
impacted revenue received in ZAR. The effective ZAR gold price was 14.51%
higher at ZAR306,757/kg (2010: ZAR267,876/kg). Mining profit at Barberton
Mines grew by 24.70% to GBP30.8 million (2010: GBP24.7 million).
Cost of production increased by 11.58% to GBP45.3 million (2010: GBP40.6
million). In Rand terms, cost of production increased by 4.09% to ZAR503.6
million (2010: ZAR483.8 million). This increase is mainly attributable to a
17.34% increase in electricity costs to ZAR49.4 million (2010: ZAR42.1
million), security costs increasing by 4.01% to ZAR33.7 million (2010: ZAR32.4
million) and salary, wages and other staff expenses increasing by 7.84% to
ZAR232.4 million (2010: ZAR215.5 million).
Barberton Mines absorbed the first full year effect of the cost of the new
South African mining royalty tax implemented in March 2010, which amounted to
GBP2.4 million (2010: GBP0.8 million). EBITDA for the year under review was
GBP28.5 million (2010: GBP25.0 million), an increase of 14.00%. EPS increased
by 15.38% to 1.20p (2010: 1.04p) and HEPS were up 12.15% to 1.20p (2010:
1.07p), supported by increased revenue from gold sales. Net asset value
(`NAV`) per share increased by 20.54% to 6.28p (2010: 5.21p) and tangible NAV
per share was up 37.50% to 3.85p (2010: 2.80p). The upturn was primarily due
to increase in property, plant and equipment related to the Phoenix plant
under construction.
Other expenses increased 47.37% to GBP2.8 million (2010: GBP1.9 million).
Group income tax increased by 19.48% to GBP9.2 million (2010: GBP7.7 million),
due to increased revenue and profits before tax.
Financial Summary
2011 2010
GBP GBP
Gold sales (GBP) 79,208,399 68,506,394
EBITDA (GBP) 28,540,323 25,022,552
Attributable profit - Owners of the (GBP) 17,168,665 14,277,232
parent
EPS (pence) 1.20 1.04
HEPS (pence) 1.20 1.07
Weighted average number of shares in 1,432,666,73 1,366,268,709
issue 8
Review of Barberton Mines
Safety & Training
Barberton Mines is pleased to report no fatalities for the year under review.
Post the reporting period, during the month of July 2011, Barberton Mines
achieved one million fatality free shifts.
The Barberton Mines operating sections, comprising the Fairview, Sheba and New
Consort mines, showed further improvement year-on-year. The Lost Time Injury
Frequency Rate (`LTIFR`) improved to 2.2 (2010: 4.2) and the Serious Injury
Frequency Rate (`SIFR`) decreased to 0.66 (2010: 1.1). The Total Recordable
Injury Frequency Rate(`RIFR`) also decreased to 22.6 (2010: 33.3).
During the year a Safety, Health, Environment and Communities (`SHEC`)
management system was fully implemented. This system provides for two specific
functional levels - strategic and operational. The strategic function focuses
on risk management of global and national concerns and issues, inclusive of
legal and regulatory requirements, whilst the operational management drives
the systems` foundations, implementation, compliance and monitoring functions.
The continued success of the SHEC system is highly dependent on the attention
of the different role players, including: corporate and operational
management, employees, contractors and employee representative bodies. The
training of management and employees as identified by the Risk Management
Framework segment of the SHEC programme is an ongoing process. The Company is
of the opinion that this management system is delivering the intended outputs.
Operating Performance
Barberton Mines sold 92,197oz of gold during the year, a decrease of 6.01%
from the previous year (2010: 98,091oz). This decrease is the result of the
mining operations milling 296,200 tonnes, a decrease of 5.42% from the prior
year (2010: 313,167 tonnes). Head grade and overall recoveries remained
relatively constant at 10.55g/t (2010: 10.61g/t) and 90.80% (2010: 91.21%)
respectively.
Production was affected by a strike at the Fairview section in the first
quarter of the reporting year, which impacted the operations by an estimated
3,000oz. Management made significant progress during the year in making up the
lost production and was on schedule to produce close to 100,000oz by year end.
Production however had to be stopped in one of the most significant production
contributing sections at the Fairview mine in April 2011, in order to address
poor rockwall conditions. As a result additional long anchors had to be
inserted into the roof of the mining area to ensure safe mining. Despite the
impact on production, operations in the section were halted, as the safety of
our employees cannot be compromised. The stoppage had a further negative
impact of 3,000oz on planned production.
Management intends to undertake the following corrective actions to address
the risk of similar production problems:
- Surface stockpiles have been identified and are being evaluated
(representing 288,675 tonnes at a grade of 2.23 g/t) and where viable will
be
trucked to processing plants with capacity for additional tonnes, to counter
any negative underground deficit in volume during the coming year.
- The development of two additional access platforms into the high-grade
ore-zone at Fairview mine to increase mining flexibility is ongoing.
- Re-evaluating certain calcine stockpiles on surface, which could be re-
treated through the Segalla plant (additional capital will be required to
ensure the plant is refurbished).
Total cash costs per ounce increased by 20.15% to US$781/oz (2010: US$650/oz).
In Rand per kilogram terms, total cash costs increased by 10.59% to
ZAR175,520/kg (2010: ZAR158,711/kg).
Total capital expenditure at the mine increased by 15.25% to GBP6.8 million or
6.82% to ZAR75.2 million (2010: GBP5.9 million or ZAR70.4 million).
Maintenance capital expenditure of GBP3.6 million (2010: GBP2.9 million) and
development capital expenditure of GBP3.2 million (2010: GBP3.0 million) was
incurred.
Production Summary
Financial Year: 2011 2010 2009 2008 2007
Tonnes Milled (t) 296,200 313,167 313,952 315,305 330,367
Headgrade (g/t) 10.55 10.61 10.32 8.90 9.20
Overall Recovery (%) 91 91 91 91 92
Production: (oz) 92,043 97,483 94,909 82,436 90,022
Underground
Production: Calcine (oz) - - 3,955 13,513 -
Dump
Gold Sold (oz) 92,197 98,091 97,353 99,078 89,572
Average Price: Spot (R/kg) 306,757 267,876 251,740 193,159 148,151
Average Price: (R/kg) - - - 105,850 96,067
Hedge
Average Price: Spot (US$/oz) 1,366 1,098 867 823 640
Average Price: (US$/oz) - - - 451 415
Hedge
Total Cash Cost (US$/oz) 781 650 469 476 465
US$/oz sold
Total Cash Cost (R/Kg) 175,520 158,711 136,178 111,272 107,656
R/Kg sold
Total Cost per Ton (R/t) 1,707 1,537 1,313 1,088 908
Total Mining Cost (R/t) 1,648 1,486 1,256 1,045 858
per Ton
Capital Expenditure (GBP)
6,773,72 5,918,271 4,052,66 2,901,79 1,637,35
9 5 2 9
Exchange rate - (ZAR/GBP) 11.11 11.93 14.39 14.68 13.95
average
Exchange rate - (ZAR/GBP) 10.94 11.53 12.66 15.56 14.18
closing
Exchange rate - (ZAR/US$) 6.99 7.59 9.03 7.30 7.20
average
Exchange rate - (ZAR/US$) 6.83 7.65 7.72 7.80 7.00
closing
Capital Expenditure
Organic Growth Projects
During the year under review, a total of GBP 6,8 million was spent on capital
expenditure, of which GBP 3,12 million was for capital development projects.
The development results and progress of the projects are summarised below:
Ke Project Year ended Year ended Potential
y 30 June 2011 30 June resource
(Metres) 2010 target
(Metres) (Oz)
I Sheba - 36ZK 294 140 6,000
II Sheba - Edwin Bray to 491 1056 17,000
Thomas and Joe`s Luck area
II 54 Level Rossiter orebody (Level 0 11,000
I equipping
completed)
IV Fairview - 3 Shaft 149 278,000
Deepening 36
V Consort - 40 level station 34 0 10,000
establishment
VI Consort - 50 Level Decline 123 100 26,000
West
VI Consort - 37 Level 74 97 (new
I Development target
area)
I. Sheba - 36 ZK
Good progress has been made with the development on the hanging wall contact
on 36 Level. The establishment of a second escape access way to improve
ventilation to 35 Level was also completed during the year. The horizontal
development along the hanging wall contact will continue during the financial
year, reaching the ZK target area towards the end of 2012 financial year.
II. Sheba - Edwin Bray, Thomas and Joe`s Luck area
Incline development towards the high grade surface borehole intersections was
carried out during the financial year. It is expected that the elevation of
these free gold intersections will be reached by the end of the 2012 financial
year. This development will be done in conjunction with exploration drilling
to determine the potential down dip extension of the Thomas fracture.
Development towards the Joe`s Luck area is planned for the 2013 financial
year.
III. Fairview - 54 Level Rossiter Orebody
Equipping of 54 Level was completed during the year. Horizontal development of
120 meters is planned for the 2012 financial year to reach the mineralised
zone.
IV. Fairview - 3 Shaft Deepening
A winder cross cut and 95% of the shaft slipping was completed during the
financial year. The establishment of return airways and shaft equipping below
62 Level has commenced and will be completed in the 2012 financial year. A
total of 186 metres of development, inclusive of shaft sinking is planned for
the 2013 financial year.
V. Consort - 40 Level Development
Equipping of the level was completed during the financial year and development
into the pegmatite commenced. Developing through the pegmatite will target
the possible upward extension of the high grade Bullion mineralised zone.
VI. Consort - 50 Level Decline West
The second station landing was established during the year and was followed up
with horizontal development exposing a known zone of mineralisation. Decline
shaft sinking towards the final station has commenced and will be completed
during the 2012 financial year.
VII. Consort - 37 Level Development
The 37 Level East haulage was re-equipped during the financial year and
horizontal development extended towards the Bullion mineralised zone. This
capital project has subsequently been put on hold until the 40 Level
Development intersects the upward projected extension of the Bullion
mineralised zone.
On-Mine Development
The on-mine developments are summarised below:
On-Mine Development New Consort Fairview Sheba
for 2011
metres g/t metres g/t metres g/t
Reef Development 483 3.83 626 3.14 874 4.51
Stope Development 455 7.09 229 6.41 92 13.67
Waste Development 1,080 - 1,044 - 2,276 -
Total Development 2,018 - 1,899 - 3,242 -
Capital 377 - 331 - 789 -
Maintenance Capital
The maintenance capital at Barberton Mines amounted to GBP3.6 million.
Expenditure on processing plant maintenance was GBP0.6 million for the year,
as a result of purchasing of a new Knelson concentrator at the Sheba plant and
installation of new blowers and compressors in the BIOXRegistered plant at
Fairview. A new BIOXRegistered Elution Column replacement was purchased for
GBP0.1 million. The extension of the tailings dam at the Fairview section of
Barberton Mines was completed at a cost of GBP0.7 million. The total
metallurgical maintenance and replacement expenditure for the year under
review amounted to GBP1.3 million.
The capital expenditure on the maintenance of engineering equipment and
infrastructure totaled GBP1.1 million for the year. Upgrading the mining
equipment fleet was a key focus area during the year, with expenditure of
GBP0.2 million to re-build load haul dumpers. The purchase of new hoppers cost
GBP0.1 million.
Expenditure on the refurbishment of shafts and headgears at the mine amounted
to GBP0.1 million. The replacement of obsolete compressors with modern, more
efficient units and the upgrading of pumping and reticulation systems amounted
to GBP0.1 million for the year. The old mobile crane was replaced by the
purchase of a new mobile crane for GBP0.2 million.
The balance of the maintenance capital was principally spent on the final
implementation of the SHEC system for GBP0.16 million, replacement of light
vehicles for GBP0.04 million, a new X-Ray unit for GBP0.04 million, a new
Symons crusher to the value of GBP0.05 million and new pump replacements
costing GBP0.06 million.
Mineral Resources Management (`MRM`)
MRM strategy
The MRM initiative will continue to be a key strategic corporate focus for the
Group and forms an integral part of our sustainable business pillar, enabling
management to ensure:
- that the economic value of mineral assets is optimally managed and
extracted;
- integration of technical and associated functional disciplines along the
business value chain;
- increased levels of corporate governance through continued audit and
quality control; and
- the creation of shareholder value.
Gold inventory
The total South African Code for Reporting of Exploration Results, Mineral
Resources and Mineral Reserves ("SAMREC") compliant resource inventory for the
Group increased, when measured in terms of gold content, by 22.46% to 5.67Moz
(63.15Mt @ 2.79g/t in situ), compared to 4.63Moz (41.85Mt @ 3.45g/t in situ)
in 2010. The increase at Barberton resulted from additional drilling and
underground development, which led to a re-definition of geological envelopes
and geostatistical re-evaluation. At Manica a geostatistical re-evaluation
provided greater geological confidence to project indicated and inferred
mineralised envelopes further along dip.
During the year under review, the Group`s reserve in gold content that is
attributable to Barberton Mines increased significantly by 51.29% to 1Moz
(3.83Mt @ 8.12g/t), compared to 661,000oz (2.318Mt @ 8.87g/t) in 2010. Based
on a historical conversion factor of 85% of the Measured and Indicated blocks
to Proved and Probable, LOM has been increased from 10 to 17 years. This
clearly shows that the Group`s focus on Mineral Resource Management is bearing
fruit in terms of building a long-term sustainable business.
The focus on the identification of shallow, low cost mineral resources, which
can be brought to account in the near term, has resulted in the delineation of
the Bramber surface tailings resource. The Bramber tailings project represents
a Measured and Indicated Resource of 147,500oz (3.128Mt @ 1.47g/t in situ) and
a proved and probable reserve of 76,000oz (3.128Mt @ 0.76g/t based on tested
recoveries of 52%). This approach may not only see the production profile
grow, but could also impact positively on the cost structure at Barberton
Mines. The focus will remain on growing shallow low cost mineral resources.
As part of this focus the Group will be drilling several surface boreholes
towards the south of the Fairview mine, where near-surface geophysical targets
have been identified that could represent a surface area footprint equal to
all the mining that have taken place at the Fairview section. The Fairview
section has mined over 4Moz of gold over its life.
Platinum inventory
The Phoenix Platinum project represents SAMREC compliant PGM Mineral Resource
of 470,300oz (4.64Mt @3.15g/t).
Of the total Mineral Resource, 154,700oz is classified as surface sources
(1,964kt @ 2.45g/t) and 315,600oz (2,682kt @ 3.66g/t) as current arisings.
Current feasibility work indicates a LOM of 17 years at a depletion rate of
approximately 12,000oz PGM`s per annum.
Projects
Review of Phoenix Platinum
The Company is pleased to report that the following significant milestones
have been achieved:
- Conclusion of the agreement to construct the CTRP on the International
Ferro Metals (Pty) Limited (`IFM`) Lesedi property
- Award of the Lump Sum Turn Key contract to Matomo Projects (Pty) Ltd
(`Matomo`) to construct the plant
- Completion of the final engineering design
- Commencement of bulk earthworks
- Start of plant construction
Plant construction is underway and the first concentrate is expected to be
produced ahead of schedule, by the end of December 2011. This is a significant
milestone for the Group, as it distinguishes Pan African as both a primary
gold and PGM producer, and further demonstrates the Group`s project
development ability. The commencement of production by December 2011 will
result in an additional revenue contribution for the 2012 financial year, and
will further strengthen the statement of comprehensive income and increase our
margins.
Review of Manica Gold
The Group announced on 19 August 2011 that it was considering listing the
Manica project as a stand-alone entity on an international exchange, for the
following reasons:
- The Group`s capital is currently committed to bringing its organic growth
projects (Phoenix Platinum, Bramber Tailings and Amira) to account at an
estimated capital cost of GBP35.0 million,
- Shareholders have indicated that they do not favour a mixture of mining
assets and exploration/early development projects, and
- Key strategic partners identified as partners in developing Manica
require access to a separate and independent entity.
- In order to fast track the project, it is envisaged that a separate
listing will benefit all stakeholders because:
- The new entity will have its own dedicated management team,
- Separate access to capital to fund an aggressive project development
plan,
- Operational flexibility, and
- Attract strategic development partners.
Should this strategy for Manica prove viable, the Group will initially retain
a shareholding and board position on the newly listed entity. Shareholders
will be kept informed on the progress made in due course.
Bramber Tailings project
A total of 308 auger drill holes were drilled on a grid of 20 metres by 20
metres, representing a total of approximately 6,074 metres. Samples of each
hole were taken at 1.5 metres intervals and composited at 3 metres intervals,
representing a total of 2,344 samples taken for assaying. Modelling and
geological profiling of the boreholes confirmed two distinct positional
populations across the tailings dam which is the result of historical
deposition that took place in two separate compartments, a higher grade
BIOXRegistered tail section and a lower grade concentrator/flotation tail
section.
Geostatistical modelling indicates 74,600oz (758kt @ 3.06g/t in situ) for the
BIOXRegistered section and 72,900oz (2.369Mt @ 0.96g/t in situ) for the
concentrator/flotation section. This represents a total resource of 147,500oz
(3.130Mt @ 1.47g/t in situ).
A total of 10 composite samples representative of the tailings dam were
submitted for metallurgical recovery test work. Initial excess cyanide test
work indicated recoveries varying between 45% and 55%. Kinetic test work was
also done to determine residence time, which guides the process flow design
for optimum plant configuration. Indicative recoveries of 52% have been
determined.
The feasibility study covering plant design, final process flow design, volume
throughput, chemical and reagent consumption, recoveries and capital and
operating expenditure will be completed by Q2 of the 2012 financial year. If
feasible, a new plant will be constructed to treat approximately 1.2Mt per
annum of tailings for three years. An Order of Magnitude estimate study
completed by Matomo estimates the capital cost of the project at approximately
ZAR250 million (approximately GBP22.9 million). Plant construction is
estimated to take 12 months.
The Company has also completed initial auger drilling on another 9Mt of
tailings, which if viable could extend the Life of Project from approximately
three to ten years and increase the annual production profile at the mine by
approximately 20,000oz. The initial drilling programme has been completed
and the associated metallurgical test work applicable to the completed
expansion is expected within the next quarter. The auger holes drilled
totalled 100 and equates to 1,804m. The 1,368 samples taken at 1.5m increments
were composited at 3m intervals, for a total of 872 combined samples submitted
for gold content determination. A total of 10 composites, representing the
various dumps, were submitted for metallurgical test work. Final results of
assays and metallurgical test work are still pending.
Of the total Mineral Resource, 24%, by volume (51% by gold content),
originated from the BIOXRegistered process. The flotation process produced the
balance.
New Business
The Group re-focussed its new business team during the year under review to
focus on the development on the Bramber tailings project as a "stand alone"
business. This strategy has paid off with the team busy evaluating a further
9Mt of tailings material to the current resource of 3.1Mt. The team will
remain focused on completing a definitive feasibility study by Q2 of the 2012
financial year, in order to bring the project to account and capitilise on
current high gold prices.
The company is currently reviewing gold and platinum opportunities that are
either in production or close to production in South Africa.
Capital Expenditure and Commitments
Capital expenditure at Barberton Mines totalled GBP6.8 million (2010: GBP5.9
million), of which development capital was GBP3.2 million (2010: GBP3.0
million) and maintenance capital was GBP3.6 million (2010: GBP2.9 million).
Capital expenditure on growth projects totalled GBP14.1 million (2010: GBP0.98
million), which was incurred on the development of Phoenix Platinum.
There were GBP3.7 million (2010: GBP0.11 million) in outstanding orders
contracted for capital commitments at the end of the financial year.
Authorised commitments for the new financial year not yet contracted for
totaled @9.6 million.
Operating lease commitments, which fall due within the next year, amounted to
GBP0.19 million (2010: GBP0.20 million).
The Group had no contingent liabilities in either the current or the prior
financial years.
The Group had guarantees of GBP13.7 million in favour of Nedbank Limited
(2010: GBPnil), as well as GBP0.35 million (2010: GBP0.33 million in favour of
the South African electricity public utility company (`Eskom`) and guarantees
of GBP0.27 million (2010: GBP0.25 million) in favour of the South African
Department of Mineral Resources (`DMR`).
Basis of Preparation of Financial Statements
Investors should consider non-Generally Accepted Accounting Principles
("GAAP") financial measures shown in this preliminary announcement in addition
to, and not as a substitute for or as superior to, measures of financial
performance reported in accordance with International Financial Reporting
Standards ("IFRS"). The IFRS results reflect all items that affect reported
performance and therefore it is important to consider the IFRS measures
alongside the non-GAAP measures.
JSE Limited listing
The Company has a dual primary listing on JSE Limited ("JSE") and the AIM
Market ("AIM") of the London Stock Exchange. The Company previously maintained
a secondary listing on the Alternative Exchange (Altx") market of the JSE. The
transfer to the Main Board of the JSE was implemented on 1 December 2009, in
the comparative period.
The preliminary announcement has been prepared in accordance with the
framework concepts and the measurement and recognition requirements of IFRS,
the AC 500 standards as issued by the Accounting Practices Board ("APB") and
the information as required by International Accounting Standards ("IAS") 34:
Interim Financial Reporting.
The Group`s South African external auditors, Deloitte & Touche, have issued
their opinion on the Group`s Annual Financial Statements for the year ended 30
June 2011. The audit was conducted in accordance with International Standards
on Auditing. They have expressed an unmodified opinion on the Annual Financial
Statements from which the Group`s preliminary announcement was derived. A copy
of their audit report is available for inspection at the Company`s registered
office. Any reference to future financial performance included in these Group
Financial Statements has not been reviewed or reported on by the Group`s South
African external auditors.
AIM Listing
The financial information for the year ended 30 June 2011 does not constitute
statutory accounts as defined in sections 435 (1) and (2) of the United
Kingdom ("UK") Companies Act 2006. Statutory accounts for the year ended 30
June 2010 have been delivered to the Registrar of Companies and those for 2011
will be delivered following the Company`s annual general meeting. The UK
external auditors (Deloitte LLP) have reported on these accounts. Their report
was unqualified, did not include a reference to any matters to which auditors
draw attention by way of emphasis of matter and did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006. The Group announcement
(the Group`s financial statements) has been prepared in accordance with IFRS
and International Financial Reporting Interpretation Committee ("IFRIC")
interpretations adopted for use by the European Union, with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS.
Directorship Change
No changes occurred during the year under review.
Shares Issued
During the year under review, the Company announced the issue and allotment of
34,500,000 new ordinary shares in respect of share options exercised:
On 25 August 2010 4,000,000 shares issued to N Steinberg at 4 pence per share.
On 6 October 2010 6,000,000 shares issued to J Nelson at 2 pence per share.
On 4 November 2010 4,000,000 shares issued to R Still at 4 pence per share.
On 4 November 2010 7,500,000 shares issued to Pangea Exploration (Pty) Ltd
("Pangea") at 4 pence per share.
On 10 November 2010 3,000,000 shares issued to J Yates at 5.5 pence per share.
On 25 November 2010 4,000,000 shares issued to M Bevelander at 7 pence per
share.
On 25 November 2010 4,000,000 shares issued to E Victor at 5.5 pence per
share.
On 25 November 2010 2,000,000 shares issued to E Victor at 7 pence per share.
Dividend
The Board of Directors proposes a final dividend for the year ended 30 June
2011 of GBP7.4 million (2010: 5.4 million), which was calculated on
1,444,040,711 issued shares currently outstanding, equates to 0.5135p per
share (2010: Final dividend of 0.3723p declared), and is to be approved by
shareholders at the forthcoming annual general meeting of the Company.
Going Concern
The board confirms that the business is a going concern and that it has
reviewed the business` working capital requirements in conjunction with its
future funding capabilities for at least the next 12 months and has found them
to be adequate. The Group is debt free and has secured a three-year revolving
credit facility with Nedbank Limited. The Group has not yet utilised the
facility as it currently has sufficient cash on hand. Management is not aware
of any material uncertainties that may cast significant doubt on the Group`s
ability to continue as a going concern. Should the need arise the Group can
cease most exploration and capital activities, and by doing so conserve cash.
Events After the reporting period
The only material changes to the business occurring after the reporting period
was the resignation of Mr. Rowan Smith from the board of directors, and the
subsequent appointment of Ms. Phuti Malabie (effective date: 20 July 2011),
and the Company`s announcements to investigate a separate listing for Manica.
Accounting Policies
The preliminary announcement has been prepared using accounting policies that
comply with the International Financial Reporting Standards (`IFRS`) adopted
by the European Union and South Africa, which are consistent with those
applied in the financial statements for the year ended 30 June 2011 and prior
year end 2010.
Effective 1 July 2010, the Company changed its functional currency from Pounds
Sterling to South African Rands to reflect the Company`s primary economic
environment and operating currency. For the purpose of the consolidated
financial statements, the results and financial position of each Group Company
is expressed in Pounds Sterling.
Directors` Dealings
Please see the detailed table for Directors` Dealings following the financial
statements.
Statement of Directors` Responsibilities
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. The Directors are required by the IAS Regulation to prepare
the Group financial statements under IFRS as adopted by the European Union and
have also elected to prepare the parent company financial statements in
accordance with IFRS`s as adopted by the European Union. The financial
statements are also required by law to be properly prepared in accordance with
the UK Companies Act 2006.
IAS 1 requires that financial statements present fairly for each financial
year the Group`s financial position, financial performance and cash flows.
This requires the faithful representation of the effects of transactions,
other events and conditions in accordance with the definitions and recognition
criteria for assets, liabilities, income and expenses set out in the IASB`s
Framework for the preparation and presentation of financial statements`. In
virtually all circumstances, a fair presentation will be achieved by
compliance with all applicable IFRS. However, directors are also required to:
- properly select and apply accounting policies;
- present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information; and
- provide additional disclosures when compliance with the specific
requirements in IFRSs are insufficient to enable users to understand the
impact of particular transactions, other events and conditions on the entity`s
financial position and financial performance.
The Directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
Group and enable them to ensure that the financial statements comply with the
UK Companies Act 2006. They are also responsible for safeguarding the assets
of the Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Segment Reporting
A segment is a distinguishable component of the Group that is engaged in
providing products or services in a particular business sector (operating
segment), which is subject to risk and rewards that are different to those of
other segments. The Group`s business activities were conducted through three
business segments, firstly in Barberton Mines located in Barberton South
Africa, and the Group`s corporate and exploration activities and Phoenix
Platinum. The Chief Executive Officer reviews the operations in this manner.
Pan African Outlook - The Future
The Group will continue to drive profitable, sustainable, stakeholder growth.
We have laid a solid foundation in terms of our mining and project development
skillset and we have grown the strength of our cashflows and Statement of
Financial Position. This will allow us to allocate significant resources in
building an organic pipe-line of projects at Barberton Mines which:
- Have cost structures of less than US$450/oz
- Have profit margins in excess of 35%
- Should be producing within 12 to 24 months
These projects will significantly grow our Group`s Statement of comprehensive
income during a period that should continue to see high commodity prices. The
timing of this growth could not be more opportune.
We have started building our precious metals mining house - still small, but
highly profitable and focused. We have developed a sound business model and
philosophy that have now been tried and tested. Together with our strategic
partners and stakeholders we will leverage this to our competitive advantage.
Once again our achievements have been a team effort and I would like to thank
everyone in the organisation for their passion, dedication and drive in
achieving the results presented in this report, and also for their commitment
moving forward.
To our fellow board members, thanks for your guidance and wise counselling.
We look forward to a year that will see us producing both platinum and gold!
Jan Nelson Cobus Loots
Chief Executive Officer Financial Director
12 September 2011
Condensed Consolidated Statement of Comprehensive Income for
the year ended 30 June 2011
Group
30 June 2011 30 June 2010
(Audited) (Audited)
GBP GBP
Revenue
Gold sales 79 208 399 68 506 394
Realisation costs (157 763) (162 791)
On - mine revenue 79 050 636 68 343 603
Cost of production (45 345 417) (40 553
886)
Depreciation (2 885 243) (3 125 093)
Mining Profit 30 819 976 24 664 624
Other expenses (2 796 657) (1 929 787)
Impairment - (335 401)
Royalty costs (2 368 239) (837 378)
Net income before finance 25 655 080 21 562 058
income and finance costs
Finance income 802 022 661 645
Finance costs (40 128) (67 915)
Profit before taxation 26 416 974 22 155 788
Taxation (9 248 309) (7 655 913)
Profit after taxation 17 168 665 14 499 875
Other comprehensive income:
Foreign currency translation 3 814 677 2 379 762
differences
Total comprehensive income for 20 983 342 16 879 637
the year
Profit attributable to:
Owners of the parent 17 168 665 14 277 232
Non-controlling interest - 222 643
17 168 665 14 499 875
Total comprehensive income
attributable to:
Owners of the parent 20 983 342 16 809 093
Non-controlling interest - 70 544
20 983 342 16 879 637
Earnings per share 1,20 1,04
Diluted earnings per share 1,19 1,03
Weighted average number of 1 432 666 738 1 366 268
shares in issue 709
Diluted number of shares in 1 438 824 573 1 379 880
issue 423
Headline earnings per share is
calculated :
Basic earnings 17 168 665 14 277 232
Adjustments: Impairment - 335 401
Headline earnings 17 168 665 14 612 633
Headline earnings per share 1,20 1,07
Diluted headline earnings per 1,19 1,06
share
Condensed Consolidated Statement of Financial Position at 30
June 2011
Group
30 June 2011 30 June 2010
(Audited) (Audited)
GBP GBP
ASSETS
Non-current assets
Property, plant and 59 052 015 37 495 010
equipment and
mineral rights
Other intangible 14 214 426 13 087 880
assets
Goodwill 21 000 714 21 000 714
Rehabilitation trust 3 013 385 2 740 546
fund
97 280 540 74 324 150
Current assets
Inventories 1 457 202 1 126 374
Trade and other 4 254 401 3 794 659
receivables
Cash and cash 10 123 822 12 756 262
equivalents
15 835 425 17 677 295
TOTAL ASSETS 113 115 965 92 001 445
EQUITY AND
LIABILITIES
Capital and reserves
Share capital 14 440 406 14 095 406
Share premium 50 932 830 49 732 830
Translation reserve 8 310 542 4 495 865
Share option reserve 861 450 754 394
Retained income 37 607 283 25 814 783
Realisation of (10 701 093) (10 701 093)
equity reserve
Merger reserve (10 705 308) (10 705 308)
Equity attributable 90 746 110 73 486 877
to owners of the
parent
Total equity 90 746 110 73 486 877
Non - Current
liabilities
Long term provisions 3 386 591 3 222 780
**
Long term 181 285 115 418
liabilities **
Deferred taxation 9 841 695 8 092 332
13 409 571 11 430 530
Current liabilities
Trade and other 8 193 750 6 507 053
payables *
Current tax 766 534 576 985
liability
8 960 284 7 084 038
TOTAL EQUITY AND 113 115 965 92 001 445
LIABILITIES
*Trade and other payables includes an amount of GBP1,465,299
relating to the leave pay accrual which was classified as a
short term provision in the prior year. This is in accordance
with IAS:19 Employee Benefits. The leave pay accrual balance
as at 30 June 2009 was GBP1,151,895.
** Long term liabilities includes an amount of GBP115,418
relating to the post retirement benefits which was classified
as long term provisions in the prior year. This is in
accordance with IAS:19 Employee Benefits. The post retirement
benefits balance as at 30 June 2009 was GBP136,602.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR
ENDED 30 JUNE 2011
Group
30 June 2011 30 June
2010
GBP GBP
NET CASH GENERATED FROM/(USED IN) 16 610 289 18 325 307
OPERATING ACTIVITIES
INVESTING ACTIVITIES
Additions to property, plant and (21 033 (5 935
equipment, mineral rights 991) 346)
Additions to intangibles (800 619) (976 373)
Funding of rehabilitation trust fund 122 145 147 458
NET (CASH USED IN) / GENERATED FROM (21 712 (6 764
INVESTING ACTIVITIES 465) 261)
FINANCING ACTIVITIES
Borrowings raised/(repaid) - (954 759)
Shares issued 1 545 000 48 000
Share issue costs - (5 866)
NET CASH FROM / (USED IN) FINANCING 1 545 000 (912 625)
ACTIVITIES
NET (DECREASE) / INCREASE IN CASH (3 557 176) 10 648 421
AND CASH EQUIVALENTS
Cash and cash equivalents at the 12 756 262 2 389 301
beginning of the year
Effect of foreign exchange rate 924 736 (281 460)
changes
CASH AND CASH EQUIVALENTS AT THE END 10 123 822 12 756 262
OF THE YEAR
Condensed Consolidated Statement of Changes in Equity for the year ended
30 June 2011
GROUP Share Share Translatio Share Retained
Capital Premium n reserve option earnings
account reserve
Balance at 11 125 891 37 899 997 1 964 004 549 690 11 537 551
30 June 2009
Issue of 2 969 515 11 838 699 - - -
shares
Share issue - (5 866) - - -
costs
Current year - - 2 531 861 - -
movement
Profit for - - - 14 277 232
the year
Share Based - - - 204 704 -
payment -
Charge for
the year
Balance at 14 095 406 49 732 830 4 495 865 754 394 25 814 783
30 June 2010
Issue of 345 000 1 200 000 - - -
shares
Current year - - 3 814 677 - -
movement
Profit for - - - - 17 168 665
the year
Dividends - - - - (5 376
paid 165)
Share Based - - - 107 056 -
payment -
Charge for
the year
Balance at 14 440 406 50 932 830 8 310 542 861 450 37 607 283
30 June 2011
Condensed Consolidated Statement of Changes in Equity for the year ended 30
June 2011
GROUP Realisation of Merger reserve Non- Total
equity reserve controlling
interest
Balance at 30 - (10 705 308) 3 988 577 56 360 402
June 2009
Issue of (10 701 093) - (4 059 121) 48 000
shares
Share issue - - - (5 866)
costs
Current year - - (152 099) 2 379 762
movement
Profit for the - - 222 643 14 499 875
year
Share Based - - - 204 704
payment -
Charge for the
year
Balance at 30 (10 701 093) (10 705 308) - 73 486 877
June 2010
Issue of - - - 1 545 000
shares
Current year - - - 3 814 677
movement
Profit for the - - - 17 168 665
year
Dividends paid - - - (5 376 165)
Share Based - - - 107 056
payment -
Charge for the
year
Balance at 30 (10 701 093) (10 705 308) - 90 746 110
June 2011
Segmental Analysis
30 June 2011
Barberton Phoenix Corporate Group
Mines Platinum* and Growth
Projects
GBP GBP GBP GBP
Revenue
Gold sales 79 208 399 - - 79 208 399
Realisation (157 763) - - (157 763)
costs
On - mine 79 050 636 - - 79 050 636
revenue
Cost of (45 345 417) - - (45 345 417)
production
Depreciation (2 885 243) - - (2 885 243)
Mining Profit 30 819 976 - - 30 819 976
Other (288 930) (12 943) (2 494 784) (2 796 657)
expenses **
Impairment - - - -
costs
Royalty costs (2 368 239) - - (2 368 239)
Net income / 28 162 807 (12 943) (2 494 784) 25 655 080
(loss) before
finance
income and
finance costs
Finance 29 065 - 772 957 802 022
income
Finance costs (40 128) - - (40 128)
Profit 28 151 744 (12 943) (1 721 827) 26 416 974
/(loss)
before
taxation
Taxation (9 251 933) 3 624 - (9 248 309)
Other
comprehensive
income:
Foreign 1 737 540 269 848 1 807 289 3 814 677
currency
translation
differences
Total 20 637 351 260 529 85 462 20 983 342
comprehensive
income /
(loss) for
the year
*Costs directly attributable to Phoenix Platinum, along with attributable
overheads, are capitalised to capital under construction
** Other expenses are excluding inter-company management fees and
dividends
Segmental 43 333 140 16 990 521 31 791 590 92 115 251
Assets
Segmental 20 212 973 1 556 006 600 876 22 369 855
Liabilities
Goodwill - - - 21 000 714
Net Assets 23 120 167 15 434 515 31 190 714 69 745 396
(excluding
goodwill)
Capital 6 773 729 14 079 722 180 540 21 033 991
Expenditure
30 June 2010
Barberton Phoenix Corporate and Group
Mines Platinum* Growth
Projects
GBP GBP GBP GBP
Revenue
Gold sales 68 506 394 - - 68 506 394
Realisation (162 791) - - (162 791)
costs
On - mine 68 343 603 - - 68 343 603
revenue
Cost of (40 553 886) - - (40 553 886)
production
Depreciation (3 125 093) - - (3 125 093)
Mining 24 664 624 - - 24 664 624
Profit
Other (173 988) - (1 755 799) (1 929 787)
expenses **
Impairment - - (335 401) (335 401)
costs
Royalty (837 378) - - (837 378)
costs
Net income / 23 653 258 - (2 091 200) 21 562 058
(loss)
before
finance
income and
finance
costs
Finance 193 155 - 468 490 661 645
income
Finance (67 836) - (79) (67 915)
costs
Profit 23 778 577 - (1 622 789) 22 155 788
/(loss)
before
taxation
Taxation (7 655 913) - - (7 655 913)
Other
comprehensiv
e income:
Foreign 1 936 738 443 024 - 2 379 762
currency
translation
differences
Total 18 059 402 443 024 (1 622 789) 16 879 637
comprehensiv
e income /
(loss) for
the year
*Costs directly attributable to Phoenix Platinum, along with
attributable overheads, are capitalised to capital under construction.
** Other expenses are excluding inter-company management fees and
dividends
Segmental 43 420 283 4 858 063 22 722 385 71 000 731
Assets
Segmental 18 049 443 85 206 379 919 18 514 568
Liabilities
Goodwill - - - 21 000 714
Net Assets 25 370 840 4 772 857 22 342 466 52 486 163
(excluding
goodwill)
Capital 5 918 271 - 17 075 5 935 346
Expenditure
All assets are held within South Africa, with the exception of GBP10.7 million
(2010: GBP8.7 million) relating to Manica which is held in Mozambique.
Directors` Dealings
Name Relations Date Exercise Shares No. of Remaining
hip to Price (if Issued in shares holding
Company applicabl relation sold after
e) to share sale
options
issued
JP CEO 6 October 2 pence 6,000,000
Nelson per share
12 October 2,500,000 3,622,442
8 November 2,500,000 1,122,442
R Non- 4 November 4 pence 4,000,000
Still Executive per share
Director
14 December 1,300,000 2,700,000
30 December 700,000 2,000,000
J Immediate 9 November 3,000,000
Yates family
member of
R Still`s
*
26 November 450,000 2,550,000
1 December 600,000 1,950,000
3 December 542,268 1,407,732
6 December 661,289 746,443
7 December 746,443 -
C Financial 11 November 65,000 65,000
Loots Director
Pangea ** 4 November 4 pence 7 500 000
Explor per share
ation
(Pty)
Ltd
(`Pang
ea`)
10 and 11 1, 43,876,60
November 250,000 5
17 and 18 567,126 43,309,47
November 9
17 and 18 1,021,071 42,288,40
November 8
19 and 22 331,193 41,957,21
November 5
23 November 132,807 41,824,40
8
* Mr R Still, a non-executive director of the Company, is an immediate family
member of Mrs J Yates. Mr R Still is therefore deemed to have an indirect, non-
beneficial interest in Mrs Yates`s holding in the Company.
** Mr R Still, a non-executive director of the Company, is also a director of
Pangea and a trustee of a family trust which owns 33.33% of Pangea. Mr Still
is therefore deemed to have an indirect, non-beneficial interest in Pangea`s
holding in the Company.
Johannesburg
12 September 2011
JSE Sponsor:
Macquarie First South Capital (Pty) Limited
Enquiries:
South Africa UK
Pan African RBC Capital Markets
Jan Nelson, Chief Executive Martin Eales
Officer +44 (0) 207 653 4000
+27 (0) 11 243 2900
Pan African St James`s Corporate
Nicole Spruijt, Public Services Limited
Relations Phil Dexter
+27 (0) 11 243 2900 +44 (0) 207 499 3916
Macquarie First South Gable Communications
Capital (Pty) Ltd Justine James
Annerie Britz/ Melanie de +44 (0)20 7193 7463
Nysschen/ Yvette Labuschagne
+27 (0) 11 583 2000
Date: 12/09/2011 07:48:16 Produced by the JSE SENS Department.
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