| Wed 22 Feb 2012, 9:00 | | PAN - Pan African Resources plc - Interim Results for the 6 months ended 31 |
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PAN
PAN
PAN - Pan African Resources plc - Interim Results for the 6 months ended 31
December 2011
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` or the `company`)
Interim Results for the 6 months ended 31 December 2011
1. Highlights for the 6 months ended 31 December 2011 Corporate
- Revenue increased by 33.7% to GBP51.23 million (2010: GBP38.33 million).
- Earnings and Headline earnings per share increased by 88.7% to 1.00 pence
(2010: 0.53 pence).
- Earnings before interest, taxes, depreciation and amortisation (`EBITDA`)
increased by 86.6% to GBP24.17 million (2010: GBP12.95 million).
- Attributable profit increased by 90.5% to GBP14.44 million (2010: GBP7.58
million).
- Cash on hand GBP4.9 million (2012: GBP 10.6 million) *
- Unhedged and debt-free.
Mining Operations
Barberton Gold Mining Operations (`BGMO`)
- Gold sold increased 0.6% to 46,927oz (2010: 46,655oz).
- Tons milled increased by 3.6% to 154,643t (2010: 149,231t)
- Head grade increased 0.9% to 10.65g/t (2010: 10.55g/t).
- Total cash cost of ZAR192,397/kg (2010: ZAR176,199/kg) for the period under
review but improved to ZAR158,925/kg for the quarter ended 31 December 2011.
Phoenix Platinum Group Metals (`PGM`) Retreatment Plant (from Chrome tailings)
- Plant commissioned two months ahead of schedule and on budget during October
2011.
- 438oz of PGM contained in concentrate was produced and despatched by the end
of December 2011.
Near-Term Mining Projects - Barberton Gold Tailings Retreatment Project (`BTRP`)
- Commenced with a Definitive Feasibility Study (`DFS`).
- Acquired the Harper Gold Tailings dumps representing over 3Mt of material at a
grade of 1.3g/t for total consideration of GBP830,000.
Development projects - Manica Gold Project
- Established a separate management team with the aim of listing the Manica Gold
project as a separate exploration company on an international exchange in April
2012.
Significant post period acquisition - Evander Gold Mines (Pty) Ltd
- Pan African Resources and Witwatersrand Consolidated Mines entered into a
50:50 joint venture on 30 January 2012 to acquire 100% of the Evander Gold
Mines from Harmony Gold Mining Company for a total conditional consideration of
up to ZAR 1.7 billion (GBP139 million).
* Cash on hand as at 17 February 2012 at the closing rate of 12.24 was GBP16.0
million.
Financial Summary:
Six months ended 31 Six months ended 31
December 2011 December 2010
(Unaudited) (Unaudited)
Revenue (GBP) 51,229,660 38,326,410
EBITDA (GBP) 24,166,658 12,947,012
Attributable profit (GBP) 14,437,217 7,584,317
EPS (pence) 1.00 0.53
HEPS (pence) 1.00 0.53
Weighted average 1,444,225,674 1,421,399,407
number of shares in
issue
2. Nature of Business
Pan African is a South African based precious metals mining group that produces
approximately 95,000oz of gold and 12,000oz* of Platinum Group Metals (`PGM`)
per annum. The company`s strategic focus is on delivering attractive shareholder
returns by exploiting ore-bodies that yield high margins through a highly
skilled and experienced management team. The company recently commissioned the
Phoenix chrome tailings retreatment plant that extracts PGM`s from chrome
tailings and is planning to build a 1.2Mt per annum gold tailings retreatment
plant at BGMO. This plant could increase gold production from BGMO by a further
25,000oz per annum from August 2013. The group is debt free, unhedged and is
able to fund all current capital expenditure from internal cash flows. The Group
is generating significant cash from operations and as at 31 December 2011 had
GBP 4.9 million cash on hand.
* Full production build-up is expected from May 2012
3. Financial Performance
Pan African is incorporated in England and Wales, its reporting currency is
pound sterling (`GBP`) and its functional currency is South African Rand
(`ZAR`). Barberton Mines (Pty) Ltd (`Barberton Mines`) is a South African
Company and its financial statements are prepared in South African Rand (`ZAR`).
When Barberton Mines` financial statements are translated into pound sterling
for the purpose of Group consolidation and reporting, the average and closing
ZAR:GBP exchange rates for the period affect the Group consolidated financial
results.
During the current period, the average ZAR: GBP exchange rate was ZAR12.06
(2010: ZAR11.18) and the closing ZAR: GBP exchange rate was ZAR12.54 (2010:
ZAR10.28). The period-on-period change in the average and closing exchange rates
of 7.9% and 22.0% respectively should be taken into account when comparing the
period-on-period results.
Gross revenue from gold sales increased by 33.7% to GBP51.23 million (2010:
GBP38.33 million). The increase in revenue was mainly attributed to a 34.9%
period-on-period increase in the average gold spot price received of US$1,736/oz
(2010: US$1,286/oz) however the appreciation of the pound sterling against the
ZAR had a negative impact on the Pound revenue. The average GBP:ZAR exchange
rate strengthened by 7.9% to ZAR12.06 (2010: ZAR11.18). Revenue expressed in ZAR
terms increased by 44.2% to ZAR 617. 80 million (2010: ZAR 428.49 million).
Although the average spot gold price in the period under review increased by
34.9% to US$ 1,736 (2010: US$ 1,286), the average US$: ZAR exchange rate
strengthened by 6.2% to ZAR7.58 (2010: ZAR 7.14) which had a negative impact on
the ZAR revenue. The effective ZAR gold price per kilogram achieved increased by
43.3% to ZAR 423, 276/kg (2010: ZAR 295, 281/kg). Mining profit at BGMO
increased by 113.4% to GBP28.6 million (2010: GBP13.4 million).
Other expenses were GBP1.76 million (2010: GBP1.35 million), and there were no
impairments in the current or prior reporting period.
Cost of production increased by 1.1% to GBP23.20 million (2010: GBP22.95
million). In ZAR terms the cost of production increased by 9.0% to ZAR279.79
million (2010: ZAR256.58 million). The increase was primarily due to a hike in
electricity rates by 29.6% to ZAR32.06 million, engineering and technical
services up 14.8% to ZAR25.64 million and salaries and wages up 11.1% to
ZAR131.43 million.
The Royalty tax charge increased 99.0% to GBP2.01 million (2010: GBP1.01
million). Income tax increased by 123.7% to GBP8.39 million (2010: GBP3.75
million) as a result of the increase in profit before tax. The effective tax
rate increased by 3.1% to 36.8%.
EBITDA increased by 86.6% to GBP24.17 million (2010: GBP12.95 million) and
attributable profit increased by 90.5% to GBP14.44 million (2010: GBP7.58
million). Cash on hand decreased to GBP4.9 million (2010: GBP10.6 million)
mainly due to capital expenditure of GBP4.57 million associated with the Phoenix
Platinum Group Metals Retreatment Plant and the dividend payment of GBP7.42
million made during the period under review.
The increase in attributable profit is primarily due to the favourable gold
price. The profit margin in ZAR terms increased by 93.9% to ZAR230,879/kg (2010:
ZAR119,082/kg).The total unit production cash cost increased by 9.2% to
ZAR192,397/kg (2009: ZAR 176,199/kg), but improved to ZAR 158,925/kg for the
quarter ended 31 December 2011.
Basic earnings per share increased by 88.7% to 1.00 pence (2010: 0.53 pence) and
basic headline earnings per share increased by 88.7% to 1.00 pence (2010: 0.53
pence). In ZAR terms the basic earnings per share increased by 102.0% to 12.06
cents (2010: 5.97 cents), and basic headline earnings per share increased by
102.0% to 12.06 cents (2010: 5.97 cents).
4. Review of Barberton Mines
a. Safety & Training
We are pleased to report no fatalities occurred for the period under review. To
date fatality free shifts totalled 1,329,723 and the safety performance at BGMO
for the first six months of the 2012 financial year as measured by the All
Injury Frequency rate (`AIFR`) at 21.25 (2011: 24.82) indicates that the total
number of incidents decreased during this period. However, in the period under
review, the Lost Time Injury Frequency rate (`LTIFR`) deteriorated to 3.09 vs.
2.61 in 2011 and Reportable Injury Frequency Rate (`RIFR`) to 1.03 vs. 0.33 in
2011. In order to address these slight increases a Mining Qualification
Authority accredited training program for supervisors is being implemented in
order to identify and correct safety hazards.
b. Operating Performance
A total of 46,927oz (2010: 46,655oz) of gold was sold from BGMO (which comprises
the Fairview, Sheba and New Consort sections), a slight increase of 0.6% from
the previous year. Total underground production remained consistent at 45,209oz
(2010: 45,385oz). Tons milled increased by 3.6% to 154,643t (2010: 149,231t).
The tonnage increase was mainly due to the additional surface dump material
planned during the period under review to make up for the BIOXRegistered
problems. Head grade remained constant at 10.65g/t (2010: 10.55g/t).
Operating problems were experienced in the BIOXRegistered plant during July and
August 2011 which negatively affected gold production, when the cumulative
effect of breakdowns to the old high pressure blowers in the process and excess
oil from a collapsed crusher bearing. These breakdowns created a lack of oxygen
supply to the reactors and resulted in poor recoveries.
To ameliorate the above, electronic oil pressure controls were installed in the
crusher and the outdated blowers were replaced with more efficient low pressure
blowers at a capital cost of ZAR2.4 million (GBP0.199 million).
Production 6 6 6 6 months 6 months
Summary months months months ended ended
ended ended ended
31 Dec 11 31 Dec 31 Dec 31 Dec 31 Dec
10 09 08 07
Tons Milled (t) 154,643 149,231 152,584 159,919 161,455
Head grade (g/t) 10.65 10.55 10.11 11.40 9.05
Overall (%) 89 91 91 91 92
Recovery
Production: (oz) 43,355 45,209 45,385 47,634 43,145
Underground *
Production: (oz) - - 3 545 3 601
Calcine Dumps 264
/ Surface Ops
Gold Sold * (oz) 46,927 46,655 45,971 51,186 47,486
Average price: (US$/oz) 1,736 1,286 1,032 824 721
spot
Average price: (US$/oz) - - - - 460
hedge
Average price: (ZAR/KG) 423,276 295,281 253,510 235,338 165,782
spot
Total cash (US$/oz) 786 767 670 451 521
cost
Total cash (ZAR/KG) 192,397 176,199 164,697 134,581 114,640
cost
EBITDA GBP `000 24,167 12,947 8,598 8,552 4,001
Depreciation GBP `000 1,536 1,909 1,375 1,066 806
Capital GBP `000 4,567 4,076 2,199 2,282 1,532
Expenditure
Exchange rate ZAR/GBP 12.06 11.18 12.48 15.13 14.05
- average
Exchange rate ZAR/GBP 12.54 10.28 11.94 13.78 13.77
- closing
Exchange rate (ZAR/US$) 7.58 7.14 7.64 8.88 6.94
- average
Exchange rate (ZAR/US$) 8.12 6.65 7.39 9.55 6.86
- closing
* The variance between gold produced and sold is higher than the historical
figure of between 1% to 3% and is due to the dumping of the high grade contents
of the BIOXRegistered reactors during June 2011, which was then fed back into
the system during the period under review.
c. Capital Expenditure - Growth Projects
Project Metres/ % % Complete Potential Comments
Equipping of budget Resource
completed (Progressive
to YTD)
36 ZK 197.4 101.23% 5,000 The footwall drive
Sheba will reach the target
area in June 2012 and
development along the
cross fractures.
Edwin Bray 190.7 105.94% 15,000 Targets exceeded and
continuing
development towards
the Thomas ore body.
Exploration drilling
to commence in
February 2012 to
determine mining plan
and layouts.
Pillar 75.3 82% In * 25 - 560 Main
Development reserve Fracture area -
Sheba 1,960t @ 24,71g/t has
been established.
*27-360 Stoping area
- 6,860t @ 21,14g/t
exposed with 90m of
re-equipping
remaining to gain
access for stoping.
*35 - 10 - 382
Prospect - 40m of
development completed
and a structure
carrying a value of
9,94g/t has been
intersected.
40 Level 126.1 110.61% 8,500 *Development has
Development progressed through
Consort the pegmatite and
subsequent cover
drilling indicates a
second splay of
pegmatite (+/- 30m
thick), which still
has to be traversed.
*The target zone is
virgin area with very
good potential to
pick up the upward
extension of the ore
body.
SI 22 88.0 99.32% 30,000 *50 W1 decline is to
50W1 be sunk for one
Decline level.
Consort *The opening up of 53
level has exposed
potential high grade
reserves that have
potential for mining
and are currently
being evaluated.
Pillar 58% 0.00% In 52 Level at 49 Sub-
Development reserve Vertical Shaft:
Consort 80% *Re-equipment from 50
to 52 level is
completed.
*Secondary support in
the form of sets has
been completed.
*Decline development
to commence in
February 2012.
33 Level
*Ventilation doors
and access services
from station to
ventilation door
completed.
*80m of service
piping required prior
to de-watering.
*Sampling to be
carried out once this
is completed.
SI 14 55.9 147.11% In The decline shaft
Equipping reserve rope raise and box
Consort hole are 95%
complete.
Shaft equipping down
to 40 level is to be
completed in the 3rd
quarter of the 2012
financial year.
Mineable reserves on
38 level has been
identified for the
2013 financial year.
Project Metres/ % % Complete Potential Comments
Equipping of budget Resource
completed (Progressive
to YTD)
3# 89.3 119.07% 350,000 The development of
Deepening the 64 to 62 level
Fairview return airways is on-
going with, 55m
remaining.
Shaft sinking to
commence in the new
financial year, with
the opening up of the
downward extension of
the Hope reef.
58 Hope 85% 80.00% In Equipping is
Reef reserve progressing well and
Equipping should be completed
by April 2012.
54 Rositer 122.9 122.90% 11,000 The Rositer reef has
Reef been intersected and
reef development is
under way.
16 Level 100% 100.00% In Re-equipping on 16
Opening Up reserve level is complete and
Fairview new blocks for
stoping are being
evaluated and brought
into the mining plan.
d. Maintenance Capital
- Metallurgy Plants
Metallurgical Cost Category Impact on production
Plants
Sheba - ZAR1,300,000 Replacement Safety and
Concentrate maintenance
truck improvement.
Sheba - Pump ZAR200,000 Replacement To improve mine water
replacements run off control.
BIOX Registered ZAR2,250,000 Replacement To improve Biox
- Air equipment recoveries.
machinery
BIOX Registered ZAR500,000 Replacement To improve Biox
Instrumentation recoveries.
equipment
- Engineering
Engineering Cost Category Impact on
production
Winder ropes ZAR1,190,000 Replacement Legal and safety
requirement.
Compactors and ZAR1,070,000 Replacement Safety and grade
utility control in 11
vehicles block.
12 Ton tipper ZAR1,101,000 Replacement Safety and
truck maintenance
improvement.
Fairview 2# ZAR2,004,000 Maintenance Safety and legal
refurbishment requirement.
Load haul ZAR2,426,000 Maintenance Safety and
dumpers production
requirement.
e. Mineral Resources Management
Exploration Drilling
During the period under review a total of 7,740m (2010: 7,604.5m) of exploration
drilling was completed underground at Barberton Mines and the following
significant intersections are reported:
Section Borehole Drill Grade Description
Number width (g/t)
(cm)
Fairview Bh 5849 1,626 50.22 MRC ore body down-dip
extension
Bh 5864 1,383 43.82 MRC ore body down-dip
extension
Bh 5861 77 21.20 Rositer down-dip extension
Sheba 24-460 - 104 13.45 Stope prospect drilling
01
29 ST 20 764 15.70 Stock work extension
29Stock23 63 30.08 Stock work extension
29Stock24 113 34.14 Stock work extension
33 MRC 86 10.30 MRC footwall structure
W37
3340-W42 100 14.80 Prospect drilling for
Birthday Northern Limb
3340-W42 91 15.13 Prospect drilling for
Birthday Northern Limb
3340-W42 73 10.82 Prospect drilling for
Birthday Northern Limb
36 ZK W01 82 42.71 ZK ore body below 35 level
36 ZK W02 74 35.20 ZK ore body below 35 level
36 ZK W02 34 15.98 ZK ore body below 35 level
36 ZK W02 40 10.04 ZK ore body below 35 level
36ZK 02 75 11.32 ZK ore body below 35 level
EB 09 64 13.64 Mineralised structure in the
Moodies quartzite
New 20IV-4 188 21.45 Ivora mineralisation below 20
Consort level
3#7-1 64 25.20 3 Shaft resource extension
3#7-1 64 88.90 3 Shaft resource extension
3#7-1 64 72.70 3 Shaft resource extension
3#7-2 256 33.78 3 Shaft resource extension
3#7-3 256 19.93 3 Shaft resource extension
3#7-3 64 44.70 3 Shaft resource extension
3#7-5 87 23.20 3 Shaft resource extension
3#7-6 246 19.71 3 Shaft resource extension
3#7-6 87 14.40 3 Shaft resource extension
3#7-7 97 69.15 3 Shaft resource extension
3#7-8 82 21.80 3 Shaft resource extension
3#7-9 164 26.45 3 Shaft resource extension
3#CT-6 192 55.77 3 Shaft resource extension
3#CT-8 64 10.50 3 Shaft resource extension
37NE-2 97 30.30 37 Level new ore body
exploration
37NE-3 97 17.50 37 Level new ore body
exploration
37NE-3 97 32.40 37 Level new ore body
exploration
37NE-4 97 29.50 37 Level new ore body
exploration
37NE-5 100 111.00 37 Level new ore body
exploration
37XC-16 87 11.00 37 Level new ore body
exploration
37XC-18 91 23.80 37 Level new ore body
exploration
Development results
A total of 1,617.6 m (2010: 1,636.7m) of development was completed on working
cost. Capital development totalled 1,095.8 m (2010: 429.6m) of which the
majority, 481.9m (44%) was done at Sheba with 348.8m (32%) at Fairview and
265.1m (24%) at Consort. The capital development at Fairview was focussed at
deepening of the number 3 sub-vertical shaft, the Hope and Rositer reefs.
New Consort Fairview Sheba
Metres g/t Metres g/t Metres g/t
Reef 241.4 6.15 198.0 2.89 531.8 3.71
Stope 187.7 6.76 176.4 5.5 31.1 8.49
Development
Capital 265.1 - 348.8 - 481.9 -
Waste working 441 - 434 - 742.6 -
cost
Waste Total 706.1 - 782.8 - 1,224.5 -
5.Review of Phoenix Platinum
Construction of the Phoenix Plant by Basil Read Matomo Projects exceeded
expectations when cold commissioning commenced in October 2011. First
concentrates were produced on 29 November 2011 two months ahead of schedule.
Frazer Alexander carried out the construction of the Tailings Storage Facility
Extension and the completion thereof dovetailed with the early commencement of
tailings treatment by the plant. Some 150,000 man hours where expended during
the construction phase without a time lost accident.
A five year Sale of Concentrate Agreement was concluded with Western Platinum
Limited (a subsidiary of Lonmin Plc) in November 2011.
The plant is in the process of progressing towards full production. During this
period various practical feedstock blends will be bulk treated and conditions
examined for optimisation and enhancements tested to maximise the process. Full
production is expected from May 2012.
6. Near-Term Mining projects - BTRP
During the period under review, Basil Read - Matomo commenced with a DFS on the
final design for the BTRP. The detailed design for the new tailings storage
facility has also commenced, while the Environmental Impact Assessment study is
progressing on schedule.
The Harper Gold Tailings dumps which are situated within close proximity to the
Bramber Tailings dump, and representing over 3Mt of material at a grade of
1.3g/t, was acquired for total consideration of GBP830,000.
7. Development Projects - Manica Gold Project
During the period under review a separate management team was established to
list the Manica Gold project as a separate exploration company on an
international exchange. Good progress has been made to achieve a separate
listing in April 2012.
8. Capital Expenditure and Commitments
Capital expenditure at Barberton totalled GBP4.57 million of which Development
Capital was GBP2.47 million and Maintenance Capital was GBP2.10 million.
Capital expenditure on Phoenix Platinum totalled GBP4.57 million.
There were GBP0.57 million outstanding orders contracted for capital commitments
at the end of the period at Barberton and GBP0.5 million outstanding at Phoenix.
Operating lease commitments, which fall due within the next year, amounted to
GBP 0.147 million (2010: GBP0.179 million)
9. Directorship Change
The Following changes took place in December 2011:
Non-Executive Directors:
- Mr. Cyril Ramaphosa resigned as chairman of the board.
- Mr. Keith Spencer replaced Mr. Cyril Ramaphosa as chairman of the board.
- Ms. Phuti Malabi replaced Mr. Keith Spencer as Deputy Chairman of the board.
Executive Directors:
- Mr. Cobus Loots resigned as Financial Director but will remain as a non-
executive director.
- Ms. Busi Sitole has been appointed as Financial Director.
10. Shares Issued
During the period under review the company announced the issue and allotment of
923,650 new ordinary shares in respect of share options exercised:
- On 28 October 2011, 200,000 shares issued to Mr. F. Chadwick at 6 pence per
share.
- On 24 November 2011, 723,650 shares issued to Mr. D. Negri at 6 pence per
share.
11. Dividend
The Company has adopted a policy whereby dividends are considered and, deemed
appropriate by the Board, declared on an annual basis. Pan African will consider
a final dividend subsequent to the finalisation of financial year-end results.
The consideration of any dividend will take account of cash flow requirements
and growth plans, whilst recognising that where possible, the payment of a
dividend on a consistent basis increases shareholder value.
During the period under review the company declared and paid a final dividend
for 2011 of 0.5135 pence per share totalling GBP7.42 million.
12. Going Concern
The board is satisfied that the Group is a going concern for the foreseeable
future, and have adopted the going-concern basis in preparing these interim
results.
13. 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 2011.
The interim results have been prepared and presented in accordance with, and
containing the information required by IFRS on Interim Financial Reporting, IAS
34. The financial information included in the interim results 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 interim results have not been reviewed or reported on by the Company`s
external auditors.
Johannesburg Stock Exchange (JSE) Limited listing
The Company has a dual primary listing on JSE Limited ("JSE") and the
Alternative Investment Market ("AIM") of the London Stock Exchange.
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.
AIM Listing
The financial information for the period ended 31 December 2011 does not
constitute statutory accounts as defined in sections 435 (1) and (2) of the
United Kingdom ("UK") 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.
Segmental 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 segments which the Group reviews the business activities of
are: Mining Operations, Near-Term Mining Operations and Development Projects.
14. Directors` Dealings
The Company was notified on Tuesday 18 October 2011 that Pangea Exploration
(Pty) Ltd ("Pangea"), a private company of which Mr Rob Still is a director, had
declared a dividend in specie (the "Dividend") to its shareholders on 1 October
2011.
Mr Still is also a trustee of the Alexandra Trust a major shareholder of Pangea.
The Alexandra Trust received 12,430,900 ordinary shares of 1 pence each in the
Company ("Shares") at a price of ZAR1.46 per Share, with a total value of
ZAR18,149,114 as a consequence of the Dividend.
Following this off-market transaction Mr Still`s total direct, beneficial
interest in Pan African remains unchanged at 2,000,000 Shares, representing
0.14% of the issued share capital of the Company as well as his total indirect,
non-beneficial interest of 16,755,308 Shares representing 1.16% of the issued
share capital of the Company. Mr Still did not receive any direct or indirect
benefit from this off-market transaction.
The Company was notified between Friday 28 October and Tuesday 1 November 2011
that Pangea Exploration (Pty) Ltd ("Pangea"), a private company of which Mr Rob
Still is a director, had sold the following Shares at the following prices:
277,863 Shares at ZAR1.7056 per share
322,137 Shares at ZAR1.7131 per share
45,708 Shares at ZAR1.72 per share
54,292 Shares at ZAR1.70 per share
300,000 Shares at ZAR1.70 per share
The above shares were sold by Pangea in order to provide funding for other
potential projects. Following the above on market transactions Pangea holds
3,324,408 Shares, representing 0.23% of the issued capital of the Company. Mr
Still`s total direct, beneficial interest in Pan African remains unchanged at
2,000,000 Shares, representing 0.14% of the issued share capital of the Company
as well as his total indirect, non-beneficial interest of 15,755,308 Shares
representing 1.09% of the issued share capital of the Company.
Mr Still did not receive any direct or indirect benefit from the above
transactions.
15. Significant events post the reporting period
Acquisition of Evander Gold Mines
On 30 January 2012 Pan African and Witwatersrand Consolidated Mines (`Wits
Gold`) announced that the parties had entered into a 50:50 joint venture to
acquire 100% of the Evander Gold Mines from Harmony Gold Mining Company for a
total conditional consideration of up to ZAR 1.7 billion (approximately GBP139
million). The transaction represents an opportunity for Pan African to
materially increase its gold production profile by 50,000 ounces as well as
adding a significant project pipeline for future growth. The implementation of
the Transaction is subject to the fulfilment of a number of conditions as set
out in the transaction announcement of 30 January 2012.
Barberton Gold Tailings Retreatment Project (`BTRP`)
On 1 February 2012 the Company announced that the Board had approved Phase One
of the BTRP, which will recover gold from the retreatment of the gold tailings
situated close to BGMO. It is anticipated that the BTRP will increase the
production profile at Barberton by 25,000 ounces per annum.
16. The Future
Despite falling short on planned gold production, due to operating problems
experienced in the BIOXRegistered plant during the start of the reporting
period, a high gold price and significant effort by the Barberton team to
increase production and manage cash cost allowed us to report record earnings
for the Group. Barberton remains one of the lowest cash cost producers in the
South African Mining industry. Despite significant inflationary pressures the
cash cost reported for the second quarter of the reporting period fell to
ZAR158, 000/kg. This once again highlights that our focus on mining and
developing quality ore-bodies with experienced management teams and a skilled
workforce remains a competitive advantage that will allow us to continue to grow
our profit margin and dividend.
The commissioning of the Phoenix CTRP ahead of schedule and on budget further
demonstrates the Group`s ability to develop projects in addition to managing
mining operations. The Group now produces both gold and PGM`s and offers
investors this unique investment exposure. At an expected operating cash cost of
US$466/oz of 4E this project will be one of the lowest cash cost producers of
PGM`s in the South African industry - again highlighting our competitive
advantage in terms margin delivery.
The BTRP is the next organic growth project to be developed and once
commissioned should increase Barberton`s annual production by 25,000oz from
August 2013. Although the project will recover gold, it is similar to Phoenix in
that it will reclaim surface tailings that requires no underground mining and as
a result places it on the lower end of the cost curve. This project will allow
us to grow our profit margin once again.
The announcement post the reporting period of the acquisition of Evander Gold
Mines from Harmony in a 50:50 Joint Venture with Wits Gold, gives the Group;
- Access to 50,000oz of attributable production at a cash cost of less than
ZAR215,000/kg
- Additional attributable profits
- Newly upgraded underground infrastructure (ZAR256 million invested by Harmony
on Evander 8 Shaft over the last year)
- An attributable underground reserve of 3.8Moz at a recovered grade of 8.02g/t
- An attributable underground resource of 16.26Moz at a grade of 6.88g/t in situ
- Two shallow development projects at depths of between 225m and 1000m below
surface
- A significant surface tailings resource - 100Mt grading 0.29g.t on an
attributable basis
- A further highly experienced management team and skilled workforce
This acquisition of the asset removes the concentrated asset risk of the Group
and the partnership with Wits Gold and payment structure will allow the Group to
acquire a sizeable, quality asset without:
- Negatively impacting any potential dividend
- Requiring any issuing of equity subject to cash flow from Evander and the
quantum of debt funding secured.
The group believes that managements proven track record for extracting value at
BGMO can be duplicated at Evander.
Our objective for the remainder of the financial year is to improve on the
reported results for the period under review.
Jan Nelson
Chief Executive Officer
Busi Sitole
Financial Director
17. Consolidated Statement of Comprehensive Income for the period ended 31
December 2011
Group
31 December 2011 31 December 2010
(Unaudited) (Unaudited)
GBP GBP
Revenue
Gold sales 51,229,660 38,326,410
Realisation costs (84,965) (75,604)
On - mine revenue 51,144,695 38,250,806
Cost of production - Gold (23,201,120) (22,949,762)
Depreciation (1,536,448) (1,908,836)
Mining Profit 26,407,127 13,392,208
Other expenses (1,762,357) (1,346,045)
Royalty costs (2,014,560) (1,007,987)
Net income before finance 22,630,210 11,038,176
income and finance costs
Finance income 223,324 414,657
Finance costs (26,069) (19,868)
Profit before taxation 22,827,465 11,432,965
Taxation (8,390,248) (3,848,648)
Profit after taxation 14,437,217 7,584,317
Other comprehensive income:
Foreign currency translation (8,533,732) 4,676,586
differences
Total comprehensive income for 5,903,485 12,260,903
the year
Profit attributable to:
Owners of the parent 14,437,217 7,584,317
Non-controlling interest - -
14,437,217 7,584,317
Earnings per share 1.00 0.53
Diluted earnings per share 0.99 0.53
Weighted average number of 1,444,225,674 1,421,399,407
shares in issue
Diluted number of shares in 1,452,808,064 1,426,159,912
issue
Headline earnings per share is
calculated :
Basic earnings 14,437,217 7,584,317
Adjustments: Impairment - -
Headline earnings 14,437,217 7,584,317
Headline earnings per share 1.00 0.53
Diluted headline earnings per 0.99 0.53
share
18.Consolidated Statement of Financial Position as at 31 December 2011
Group
30 June 2011
31 December 31 December
2011 2010
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
ASSETS
Non-current assets
Property, plant and 59,516,827 44,422,134 59,052,015
equipment and mineral
rights
Other intangible assets 13,332,945 17,247,371 14,214,426
Goodwill 21,000,714 21,000,714 21,000,714
Rehabilitation trust fund 2,669,022 3,073,793 3,013,385
96,519,508 85,744,012 97,280,540
Current assets
Inventories 1,487,066 1,740,777 1,457,202
Trade and other 7,000,352 4,886,229 4,254,401
receivables
Cash and cash equivalents 4,994,854 10,630,963 10,123,822
13,482,272 17,257,969 15,835,425
TOTAL ASSETS 110,001,780 103,001,981 113,115,965
EQUITY AND LIABILITIES
Capital and reserves
Share capital 14,449,643 14,440,406 14,440,406
Share premium 50,982,790 50,752,830 50,932,830
Translation reserve (223,190) 9,172,451 8,310,542
Share option reserve 799,227 807,924 861,450
Retained income 44,628,324 28,022,935 37,607,283
Realisation of equity (10,701,093) (10,701,093) (10,701,093)
reserve
Merger reserve (10,705,308) (10,705,308) (10,705,308)
Equity attributable to 89,230,393 81,790,145 90,746,110
owners of the parent
Total equity 89,230,393 81,790,145 90,746,110
Group
31 December 31 December 30 June 2011
2011 2010
(Unaudited) (Unaudited) (Unaudited)
GBP GBP GBP
Non - Current liabilities
Long term provisions ** 2,994,493 3,735,682 3,386,591
Long term liabilities ** 237,357 - 181,285
Deferred taxation 9,320,441 9,717,443 9,841,695
12,552,291 13,453,125 13,409,571
Current liabilities -
Trade and other payables 6,947,074 5,437,913 8,193,750
*
Short term provisions - 1,689,122 -
Current tax liability 1,272,022 631,676 766,534
8,219,096 7,758,711 8,960,284
TOTAL EQUITY AND 110,001,780 103,001,981 113,115,965
LIABILITIES
*Trade and other payables at 30June 2011 includes an amount of GBP1,465,299
(GBP41,411 for the Company) 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 2010
was GBP1,151,895.
**Long term liabilities at 30June 2011 include an amount of GBP115,418 relating
to the post-retirement benefits which was classified as a long term provision in
the prior year. This is in accordance with IAS: 19 Employee Benefits. The post-
retirement benefits balance as at 30 June 2010 was GBP136,602.
19. Consolidated Cash flow Statement for the period ended 31 December 2011
Six months ended Six months ended
31 December 2011 31 December 2010
(Unaudited) (Unaudited)
GBP GBP
Cash Generated by operations 23,585,992 15,928,379
Taxation paid (6,824,551) (3,587,061)
Royalty paid (1,724,084) (1,065,267)
Dividends paid (7,416,175) (5,376,165)
Net Finance Income 197,255 394,789
Cash inflow from operating 7,818,437 6,294,675
activities
Cash outflow from investing (9,140,205) (8,500,858)
activities
Cash inflow from finance 59,197 1,365,000
activities
Net decrease in cash (1,262,571) (841,183)
equivalents
Cash at the beginning of period 10,123,822 12,756,262
Effect of foreign currency rate (3,866,396) (1,284,116)
changes
Cash at end of year 4,994,855 10,630,963
20. Consolidated Statement of Changes in Equity for the period ended 31 December
2011
31 December 2011 31 December 2010
(Unaudited) (Unaudited)
Shareholders equity at 90,746,110 73,486,877
start of period
Share Issue 59,197 1,365,000
Share Option Reserve (62,223) 53,530
Other Comprehensive (8,533,732) 4,676,586
Income
Profit for the period 14,437,217 7,584,317
Dividend (7,416,176) (5,376,165)
Total Equity 89,230,393 81,790,145
21. Consolidated Segment Report for the period ended 31 December 2011
31 December 2011
Barberton
Mines Phoenix Corporate and Group
Platinum Growth
Projects
GBP GBP GBP GBP
Revenue
Gold sales 51,229,660 - - 51,229,660
Realisation (84,965) - - (84,965)
costs
On - mine 51,144,695 - - 51,144,695
revenue
Cost of (23,201,120) - - (23,201,120)
production
Depreciation (1,536,448) - - (1,536,448)
Mining Profit 26,407,127 - - 26,407,127
Other expenses (1,203,656) (131,801) (426,900) (1,762,357)
Royalty costs (2,014,560) - - (2,014,560)
Net 23,188,911 (131,801) (426,900) 22,630,210
income/(loss)
before finance
income and
finance costs
Finance income 29,227 4,998 189,099 223,324
Finance costs (26,069) - - (26,069)
Profit/(loss) 23,192,069 (126,803) (237,801) 22,827,465
before taxation
Taxation (8,392,325) 2,077 - (8,390,248)
Profit/(loss) 14,799,744 (124,726) (237,801) 14,437,217
after taxation
31 December 2011
Segmental 55,310,901 18,656,764 15,033,401 89,001,066
Assets
Segmental 20,344,317 89,565 337,505 20,771,387
Liabilities
Goodwill - - - 21,000,714
Net Assets 34,966,584 18,567,199 14,695,896 68,229,679
(excluding
goodwill)
Capital 4,566,352 4,566,448 7,405 9,140,205
Expenditure
31 December 2010
Barberton Phoenix Corporate and Group
Mines Platinum Growth
Projects
GBP GBP GBP GBP
Revenue
Gold sales 38,326,410 - - 38,326,410
Realisation (75,604) - - (75,604)
costs
On - mine 38,250,806 - - 38,250,806
revenue
Cost of (22,949,762) - - (22,949,762)
production
Depreciation (1,908,836) - - (1,908,836)
Mining Profit 13,392,208 - - 13,392,208
Other expenses (772,076) - (573,969) (1,346,045)
Royalty costs (1,007,987) - - (1,007,987)
Net 11,612,145 (573,969) 11,038,176
income/(loss) -
before finance
income and
finance costs
Finance income 10,252 - 404,405 414,657
Finance costs (19,868) - - (19,868)
Profit/(loss) 11,602,529 - (169,564) 11,432,965
before
taxation
Taxation (3,848,648) - - (3,848,648)
Profit/(loss) 7,753,881 - (169,564) 7,584,317
after taxation
30 June 2011
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
* All assets are held within South Africa, with the exception of assets relating
to Manica (31 December 2011 GBP 9,983,544 and 30 June 2011 GBP 10,865,478) which
are held in Mozambique.
22 February 2012
Johannesburg
JSE Sponsor
Macquarie First South Capital (Pty) Limited
For further information on Pan African Resources plc, please visit the website
at www.panafricanresources.com
Enquiries
South Africa UK
Pan African Resources RBC Capital Markets
Jan Nelson, Chief Executive Officer Martin Eales / Peter Barrett-Lennard
+27 (0) 11 243 2900 +44 (0) 20 7653 4000
Macquarie First South Capital (Pty) St James`s Corporate Services
Limited Limited
Melanie de Nysschen / Annerie Britz Phil Dexter
/ Yvette Labuschagne +44 (0) 20 7499 3916
+27 (0) 11 583 2000
Vestor Investor Relations Gable Communications
Louise Brugman Justine James
+27 (0) 11 787 3015 +44 (0) 20 7193 7463
Disclaimer
Statements in this presentation, other than historical facts, that address,
without limitation, exploration activities, mining potential and future plans
and objectives of Pan African Resources plc ("Pan African") are "forward-looking
statements" and "forward looking information" that involve various risks.
Assumptions and uncertainties and are not statements of fact. The directors and
management of Pan African are of the belief that the expectations expressed in
such forward-looking statements or forward looking information are based on
reasonable assumptions, expectations, estimates and projections, however such
statements should not be construed as being guarantees or warranties (whether
express or implied) of future performance.
There can be no assurance that such statements will prove to be accurate and
actual values, results and future events could differ materially from those
anticipated in such statements. Important factors that could cause actual
results to differ materially from statements expressed in this presentation
include, among others, the actual results of exploration activities, technical
analysis, the lack of availability to Pan African of necessary capital on
acceptable terms, general economic, business and financial market conditions,
political risks, industry trends, competition, changes in government
regulations, delays in obtaining governmental approvals, interest rate
fluctuations, currency fluctuations, changes in business strategy or development
plans and other risks. Although Pan African has attempted to identify important
factors that could cause actual results to differ materially, there may be other
factors that cause results not to be as anticipated, estimated or intended.
Neither Pan African nor its directors, management and its affiliates represent
guarantee that the assumptions underlying such statements are free from errors
nor do they accept any responsibility for the future accuracy of the opinions
expressed in this presentation. Any statements in this presentation speak only
at the time of issue. Pan African does not undertake to update any forward-
looking statements that are included in this presentation, or revise any changes
in events, conditions or circumstances on which any such statements are based,
except in accordance with applicable securities laws and stock exchange
requirements.
No representation or warranty, expressed or implied, is made and no reliance
should be placed on the accuracy, actuality, fairness, or completeness of the
information presented. None of Pan African or any of its affiliates, directors,
officers, employees and advisers or any other person shall have any liability
whatsoever for any losses arising, directly or indirectly, from any information
contained in the presentation. This presentation does not constitute an offer or
invitation to purchase or subscribe for any shares of Pan African and no part of
this presentation shall form the basis of or be relied upon in connection with
any contract or commitment.
By accepting this presentation the recipient acknowledges that it will be solely
responsible for its own assessment of the market position of Pan African and
that it will conduct its own analysis and be solely responsible for forming its
own view of the potential future performance of Pan African.
Date: 22/02/2012 09:00:01 Produced by the JSE SENS Department.
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