| Mon 30 Jan 2012, 16:30 | | PAN - Pan African Resources plc - Press announcement |
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PAN
PAN
PAN - Pan African Resources plc - Press announcement
Pan African Resources plc
(Incorporated and registered in England and Wales under Companies Act 1985
with registered number 3937466 on 25 February 2000)
Share code on AIM: PAF
Share code on JSE: PAN
ISIN: GB0004300496
("Pan African")
Press announcement
Pan African Resources, together with Wits Gold to acquire the operating
Evander Gold Mine from Harmony for R1.7 billion
Pan African Resources plc (`Pan African`) and Witwatersrand Consolidated
Gold Resources Limited (`Wits Gold`), collectively the `Consortium`
announced today that they have entered into an agreement with Harmony Gold
Mining Company Limited (`Harmony`) to acquire 100% of Harmony`s interest in
Evander Gold Mines Limited (`Evander`), in a 50/50 joint venture, for a
total Transaction consideration of ZAR1.7 billion (GBP139 million1).
The Transaction represents an attractive value proposition to the
Consortium and will provide Pan African with an immediate increase in
attributable gold resources and reserves. Undertaking this Transaction as a
Consortium has created the opportunity for Pan African to bid for a better
quality asset, at lower risk and financial exposure to the company.
The Evander operations are located in Mpumalanga, South Africa, and
comprise the operating Evander 8 shaft, and several significant development
projects namely Rolspruit, Poplar, Evander South, Libra (surface tailings
resource) and the Kinross metallurgical processing plant. The total
underground resource represents 32.5Moz (147Mt @ 6.88g/t)2 and a reserve of
7.6Moz (29.5Mt @ 8.02g/t)2. Evander 8 shaft currently has an expected life
of mine of more than ten years. Evander is expected to produce between
85,000 and 95,000 ounces per annum. The Transaction adds significantly to
Pan African`s reserve and resource base, and provides an annual
attributable share of production of approximately 45,000 ounces per annum.
The board of directors of Pan African believes that the Transaction further
represents an opportunity for Pan African to materially increase its gold
production profile from 95,000 to approximately 140,000 ounces per annum.
In addition the Transaction provides Pan African with a significant project
pipeline for future growth. The deal is expected to be significantly
earnings per share accretive with minimal shareholder dilution, depending
on the Transaction structure.
The purchase consideration of ZAR1.7 billion (GBP139 million )1, less any
distributions made by Evander to Harmony between 1 April 2012 and the
closing date of the Transaction ("Closing Date") by way of dividends,
capital reduction or share repurchases, will be payable as follows:
- ZAR1.4 billion (GBP115 million)1 less certain distributions, in cash
on the Closing Date of the Transaction;
- Four cash payments of ZAR25 million (GBP2million)1 each, payable
quarterly and commencing three months after the Closing Date,
amounting to a total of ZAR100 million;
- A further ZAR100 million (GBP8 million)1 payable 19 months after
Closing Date, provided the average rand gold price exceeds ZAR410,000
per kg* over the 12 preceding months. This payment can be made in
either cash or shares (or a combination of both) at the election of
the Consortium and should the Consortium elect to make payment wholly
or partially in shares, each of Pan African and Wits Gold will issue
shares to Harmony in equal rand value proportions; and
- ZAR100 million (GBP8 million)1 payable 31 months after Closing Date,
provided the average rand gold price exceeds ZAR450,000 per kg* during
the preceding 12 months. This payment can be made in either cash or
shares (or a combination of both) at the election of the Consortium
and should the Consortium elect to make payment wholly or partially in
shares, each of Pan African and Wits Gold will issue shares to Harmony
in equal value rand proportions.
* No payment will be due if the average gold price for the period was not
achieved.
The individual Consortium members intend utilising a combination of debt,
equity and operational cash flows to settle the Transaction consideration.
The Consortium will benefit from Pan African`s specialist operational skill
set and from Wits Gold`s specialist exploration expertise, as well as the
mining experience of both Companies` CEOs. The Consortium partnership will
jointly control and manage the operations through a steering committee with
equal representation from both Companies.
Jan Nelson CEO of Pan African commented: "Evander meets our investment
criteria in all aspects and has the same ability to yield high margins as
our Barberton Mining Operations. The Evander 8 Shaft orebody has gold
grades in excess of 14g/t in the measured and indicated resource category,
an extremely experienced management team and workforce, as well as good
infrastructure. Together with Barberton, Evander will respectively
increase our resource by 304% to 22.9Moz and our reserve by 390% or 4.9Moz.
In addition, we will also increase our production by at least 45,000 ounces
per annum. Many of our management team have been involved with the asset in
the past and so we know it well. The smart solution of a partnership with
Wits Gold gives us the necessary momentum to continue to deliver profitable
sustainable stakeholder growth and returns and represents a first in the
junior gold sector in South Africa".
Please refer to the detailed SENS announcements released by each of the
Companies earlier today for further details of the Transaction.
1. Exchange rates quoted as at close of business 27 January 2012 of
GBP1.00:ZAR12.20
2. Reserves and Resources quoted from Harmony 2011 Annual Report
which is SAMREC and JORC compliant.
ENDS
About Pan African
Pan African is a South African based precious metals mining group that
produces approximately 100,000 ounces of gold and 12,000 ounces of Platinum
Group Metals per annum, with a focus on low costs and high margin. The
company is focused on increasing productivity through stringent efficiency
and safety improvements. Recently the company announced that headline
earnings per share for the six months ended 31 December 2011 are expected
to be between 83 per cent and 93 percent higher than the 0.52 pence per
share generated for the six months ended 31 December 2010, due to the
current gold price and also as a result of managements operational
improvements and cost control at their gold producing asset, Barberton. The
company has recently commissioned the Phoenix chrome tailings retreatment
plant that extracts Platinum Group metals from chrome tailings and is
planning to build a 1.2Mt per annum gold tailings retreatment plant at its
Barberton Mining Operations.
About Wits Gold
Wits Gold is a gold and uranium company which holds 14 new order
Prospecting Rights over 1,195km2 in the southern Free State, Potchefstroom
and Klerksdorp goldfields of the Witwatersrand Basin. These areas contain
SAMREC compliant total resources of 157Moz Au and 271Mlbs U3O8. The Company
is currently focused on fast-tracking the development of its shallow DBM
Project in the southern Free State goldfield, where a pre-feasibility study
is currently in progress. The acquisition of the share in Evander Gold
Mines will result in Wits Gold becoming South Africa`s newest gold
producer, and delivers into the Company`s strategy to acquire producing
assets with growth potential.
Johannesburg
30 January 2012
JSE Sponsor to Pan African
Macquarie First South Capital (Pty) Limited
For further information contact:
Jan Nelson
CEO: Pan African
+27 11 243 2900
(SA) Vestor Media and Investor Relations
Louise Brugman
083 504 1186
(UK) Gable Communications
Justine James
44 207 1937 463
For and on behalf of Pan African
Joint Transaction adviser and JSE Transaction Sponsor
Macquarie First South Capital (Pty) Limited
Joint Transaction adviser and JSE Transaction Sponsor
Nedbank Capital
Date: 30/01/2012 16:30:33 Produced by the JSE SENS Department.
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