PAN AFRICAN RESOURCES PLC - Trading Statement

Pan African Resources PLC

("Pan African" or “the Company" or “the Group”)

(Incorporated and registered in England and Wales under Companies Act 1985 with registered number 3937466 on 25 February 2000)

Share code on AIM: PAF

Share code on JSE: PAN

ISIN: GB0004300496

TRADING STATEMENT AND OPERATIONAL UPDATE FOR THE SIX MONTHS REPORTING PERIOD ENDED 31 DECEMBER 2016

TRADING STATEMENT

In terms of paragraph 3.4(b) of the Listings Requirements of the JSE Limited, a listed company is required to publish a trading statement as soon as it is satisfied that a reasonable degree of certainty exists that the financial results for the period to be reported upon next, will differ by at least
20 percent from those of the previous corresponding period.

Pan African is incorporated in England and Wales under the Companies Act 1985 and accordingly, its presentation currency is Pounds Sterling (“GBP”).

The average ZAR:GBP exchange rate affect the reporting of Group results in GBP. For the six month’s reporting period ended 31 December 2016 (“current reporting period”), the average prevailing ZAR:GBP exchange rate is used to translate earnings per share (“EPS”) and headline earnings per share (“HEPS”) from ZAR to GBP. 

For the reporting period ended 31 December 2015 (“prior reporting period”), the average ZAR:GBP exchange rate was ZAR20.83:1. For the current reporting period, the ZAR appreciated against the GBP, with an average exchange rate of ZAR17.88:1. This 14.2 percent period-on-period appreciation in the average exchange rate should be taken into account for the purposes of comparing results with the prior reporting period.

Pan African advises shareholders that its EPS and HEPS for the current reporting period are expected to be between:

1. EPS in ZAR terms: 23 percent to 43 percent higher than the 12.43 cents EPS for the prior reporting period (therefore estimated EPS of 15.34 cents to 17.82 cents).

2. HEPS in ZAR terms: 21 percent to 41 percent higher than the 12.43 cents HEPS for the prior reporting period (therefore estimated HEPS of 15.08 cents to 17.56 cents).

   Using the average ZAR:GBP 17.88:1 exchange rate that prevailed during the current reporting period, the Group’s EPS and HEPS in GBP terms for the current reporting period are expected to be between:

3. EPS in GBP terms: 45 percent to 65 percent higher than the 0.60 pence EPS for the prior reporting period (therefore estimated EPS of 0.87 pence to 0.99 pence).

4. HEPS in GBP terms: 42 percent to 62 percent higher than the 0.60 pence HEPS for the prior reporting period (therefore estimated HEPS of 0.85 pence to 0.97 pence).

The following items had a significant impact on the profit after taxation during the current reporting period:

PAR Gold Proprietary Limited, previously known as Shanduka Gold Proprietary Limited, transaction (“PAR Gold transaction”)

The materially earnings accretive PAR Gold transaction was finalised on 7 June 2016, which has resulted in the weighted average number of shares in issue reducing significantly by 17.7 percent period-on-period. Disclosed below is the Pan African share reconciliation, illustrating the effect of the PAR Gold transaction on the weighted average number of shares in issue, which is used to calculate the EPS and HEPS.

Pan African Shares Reconciliation	Shares
Shares in issue at 31 December 2015	1,831,494,763
Issue of shares – 7 June 2016	111,711,791
Shares in issue at 31 December 2016	1,943,206,554
Elimination of shares held by PAR Gold	(436,358,058)
Shares used to calculate the EPS and HEPS	1,506,848,496
Net reduction in number of weighted average shares	17.7%

Uitkomst Colliery

The Uitkomst Colliery, acquired on the 31 March 2016, has performed well during the current reporting period, contributing approximately 8.5 percent of the Group’s EPS and HEPS. If the current favourable coal price environment continues, the payback period for this acquisition is expected to be less than the four years previously forecast.

Gold price hedge – fair value adjustment

Barberton Mines entered into a short term strategic hedge (“the Cost Collar”) in July 2015, when the prevailing spot gold price was ZAR440,000/kg, to protect its cash flows and the Group’s annual dividend against severe adverse movements in the ZAR gold price. During the current reporting period, the Group recorded a pre-tax mark-to-market fair value gain of ZAR90 million on the Cost Collar (2015: pre-tax mark-to-market fair value loss of ZAR40.6 million). The mark-to-market fair value gain was due to a reduction in the gold price of ZAR625,000/kg at 30 June 2016 to ZAR505,000/kg at 31 December 2016.

Increase in the average ZAR gold price received

The average ZAR gold price received by the Group period-on-period increased by 16.5 percent to R565,298/kg (2015: R485,215/kg), as a result of the weakening of the ZAR/USD exchange rate by 2.9 percent to R13.99:1 (2015: R13.60:1) and an increase in the USD gold price received by 13.2 percent to USD1,257/0z (2015: USD1,110/0z).

OPERATIONAL UPDATE

The Group previously informed shareholders on 5 December 2016 of its revised gold production guidance for the 2017 financial year of 195,000oz. The gold production in the second half of the financial year is forecasted to exceed the first half performance.  

Six months ended 31 December	Mining and tailings operations
	Barberton Mines (Gold ounces)	Evander Mines (Gold ounces)	Uitkomst Colliery (Coal tonnes)	Phoenix Platinum (PGE ounces)
2015	56,447	45,350	-	4,493
2016	49,212	42,401	327,202	4,575
Percentage	(12.8%)	(6.5%)	100%	1.8%

For further information on Pan African, please visit the Company’s website at www.panafricanresources.com

27 January 2017

Contact information
Corporate Office The Firs Office Building 1st Floor, Office 101 Cnr. Cradock and Biermann Avenues Rosebank, Johannesburg South Africa Office:   + 27 (0) 11 243 2900 Facsimile: + 27 (0) 11 880 1240	Registered Office Suite 31 Second Floor 107 Cheapside London EC2V 6DN United Kingdom Office:   + 44 (0) 207 796 8644 Facsimile: + 44 (0) 207 796 8645
Cobus Loots      Pan African Resources PLC    Chief Executive Officer  Office: + 27 (0) 11 243 2900	Deon Louw Pan African Resources PLC Financial Director Office: + 27 (0) 11 243 2900
Phil Dexter St James's Corporate Services Limited Company Secretary Office: + 44 (0) 207 796 8644	John Prior / Paul Gillam Numis Securities Limited Nominated Adviser and Joint Broker Office: [phone]
Sholto Simpson One Capital JSE Sponsor Office: + 27 (0) 11 550 5009	Matthew Armitt / Ross Allister Peel Hunt LLP Joint Broker Office: [phone]
Julian Gwillim Aprio Strategic Communications Public & Investor Relations SA Office: [phone]	Jeffrey Couch/Neil Haycock/Thomas Rider BMO Capital Markets Limited Joint Broker Office: [phone]
Website: www.panafricanresources.com

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