Pan African Resources PLC Trading Statement

 
TIDMPAF 
 
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 PRODUCTION UPDATE FOR THE FINANCIAL YEARED 
                                 30 JUNE 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 results in GBP. For 
the reporting period ended 30 June 2016 ("current reporting period"), the 
average prevailing ZAR:GBP exchange rate will be used to translate earnings per 
share ("EPS") and headline earnings per share ("HEPS") from ZAR to GBP. 
 
For the reporting period ended 30 June 2015 ("prior reporting period"), the 
average ZAR:GBP exchange rate was ZAR18.00:1. For the current reporting period, 
the ZAR depreciated against the GBP, with an average exchange rate of ZAR21.45: 
1. This 19.2 percent year-on-year depreciation in the average exchange rate 
should be taken into account for the purposes of a comparison with the prior 
reporting period. 
 
1. EPS and HEPS 
 
Pan African advises shareholders that its EPS and HEPS for the current 
reporting period are expected to be between: 
 
    1. EPS: 157 percent to 177 percent higher than the 11.48 cents EPS for the 
prior reporting period (being EPS of 29.47 cents to 31.77 cents). 
 
    2. HEPS: 152 percent to 172 percent higher than the 11.67 cents HEPS for 
the prior reporting period (being HEPS of 29.45 cents to 31.79 cents). 
 
Using the average ZAR:GBP 21.45:1 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: 
 
    1. EPS: 114 percent to 134 percent higher than the 0.64 pence EPS for the 
prior reporting period (being EPS of 1.37 pence to 1.50 pence). 
 
    2. HEPS: 111 percent to 131 percent higher than the 0.65 pence HEPS for the 
prior reporting period (being HEPS of 1.37 pence to 1.50 pence). 
 
2) Normalised illustrative EPS and HEPS 
 
EPS and HEPS include certain non-operational gains and losses on financial 
instruments, referred to hereunder. When the Group's earnings are adjusted for 
these gains and losses (the "normalised illustrative EPS and HEPS") are 
expected to be between: 
 
    1. EPS: 275 percent to 295 percent higher than the 11.48 cents EPS for the 
prior reporting period (being EPS of 43.10 cents to 45.40 cents). 
 
    2. HEPS: 269 percent to 289 percent higher than the 11.67 cents HEPS for 
the prior reporting period (being HEPS of 43.08 cents to 45.42 cents). 
 
The normalised illustrative EPS and HEPS in GBP terms for the current reporting 
period would have been between: 
 
     1. EPS: 213 percent to 233 percent higher than the 0.64 pence EPS for the 
prior reporting period (being EPS of 2 pence to 2.13 pence). 
 
     2. HEPS: 208 percent to 228 percent higher than the 0.65 pence HEPS for 
the prior reporting period (being HEPS of 2 pence and 2.13 pence). 
 
The following adjustments were made to EPS and HEPS to derive this normalised 
illustrative EPS and HEPS: 
 
2.1) Financial instruments 
 
Cost Collar 
 
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 post-tax unrealised mark-to-market fair value loss of ZAR82 million on the 
Cost Collar (2015: post-tax realised Cost Collar derivative income of ZAR32.3 
million). The economic consequence of the mark-to-market fair value adjustment 
is to lock in revenue on 25,000oz of gold production from Barberton Mines at 
ZAR625,000/kg (the closing ZAR gold price at 30 June 2016) for the twelve month 
period commencing 1 October 2016. 
 
Share options 
 
The share price increased significantly from ZAR1.80 to ZAR3.75 during the 
current reporting period (an increase of 108 percent), which resulted in an 
increase in the Group's cash settled share option costs. The post-tax effect of 
cash settled share option costs for the current reporting period amounted to 
ZAR65.2 million (2015: post-tax ZAR4.4 million gain). 
 
The fair value adjustment of the Group's rehabilitation liability and 
associated investment resulted in the rehabilitation liability reducing by 
ZAR38.2 million (2015: increased by ZAR19.7 million) and the rehabilitation 
investment increased by ZAR9.4 million (2015: ZAR33.9 million). 
 
2.2) Shanduka Gold Proprietary Limited ("Shanduka Gold") transaction 
 
Shareholders were advised on 26 May 2016 and 1 June 2016 that the Company had 
entered into agreements to acquire Standard Bank of South Africa Limited's 
("SBSA") 16.9 percent and Jadeite Limited's ("Jadeite") 33.6 percent interest 
in Shanduka Gold ("the Transaction"). The Transaction was concluded on 
                  7 June 2016 for a total consideration of ZAR547 million, 
which equates to a Pan African share price of ZAR1.25 per share. 
 
Shanduka Gold is, from an accounting perspective, deemed to be controlled by 
Pan African and Shanduka Gold's full shareholding of 436,358,059 shares in Pan 
African will eliminate upon consolidation for accounting purposes. As the 
Transaction only became effective on 7 June 2016, the issued shares are 
weighted in the current reporting period resulting in 1,811,427,377 shares 
being taken into account for purposes of calculating EPS and HEPS for the 2016 
financial year. 
 
Had the Transaction been effective on 1 July 2015, the number of shares taken 
into account for calculating EPS and HEPS would have been reduced as follows: 
 
Pan African Shares                                            Shares         % Change 
 
Opening balance shares - 1 July 2015                        1,831,494,763              - 
 
Issue of shares - vendor placement                            111,711,791           6.1% 
 
Elimination of shares held by Shanduka Gold                 (436,358,059)        (23.8%) 
 
Closing balance                                             1,506,848,495              - 
 
Reduction in number of shares                                 324,646,268          17.7% 
 
This reduction in the number of shares was incorporated into the normalised 
illustrative EPS and HEPS reported above. 
 
PRODUCTION UPDATE 
 
Earnings for the current reporting period improved relative to the prior 
reporting period due to the robust operating performances from Barberton Mines 
and Evander Mines. The improved operational performance was supported by an 
increase in the realised ZAR gold price of 21.6 percent to ZAR542,850/kg (2015: 
ZAR446,274/kg) during the current reporting period. The Group's earnings were 
further enhanced by consolidating the Uitkomst Colliery's results for the three 
months effective from 1 April 2016. Phoenix Platinum production was however 
adversely impacted by the curtailment of current arisings following 
International Ferro Metals (SA) Proprietary Limited being placed into business 
rescue. 
 
 Year ended  30                   Mining operations production summary 
   June 2016 
                 Barberton Mines   Evander Mines      Phoenix      Uitkomst Colliery¹ 
                                                     Platinum 
 
                    (Gold oz)        (Gold oz)       (PGE oz)         (Coal tonnes) 
 
      2016           113,281          91,647           8,339             136,102 
 
      2015           105,776          70,081          10,245                - 
 
   % movement           7%              31%            (19%)                - 
 
¹The Uitkomst Colliery coal sales relates directly to underground coal 
production sales and excludes coal bought in from third parties for blending 
and further processing. The Uitkomst Colliery production is consolidated from 1 
April 2016. 
 
GROUP NET DEBT 
 
The Group's operations are robust in their cash generation and its net debt 
position at 30 June 2016 was ZAR347 million (2015: ZAR321 million), after the 
cash share buy-back of ZAR182 million for SBSA's interest in Shanduka Gold, the 
acquisition of the Uitkomst Colliery for ZAR148 million in cash and the ZAR210 
million dividend payment in December 2015. 
 
At the date of this trading statement, the Group's net debt had reduced to 
ZAR255 million, which included an amortising ZAR82 million gold loan entered 
into in 2014 to finance the Evander tailings retreatment plant. 
 
ELIKHULU PROJECT UPDATE 
 
Following receipt of a positive high-level assessment of the Elikhulu tailings 
retreatment project, the Company has mandated DRA Projects (Pty) Limited to 
conduct a definitive feasibility study on the project. The results of the study 
will be available in November 2016, where after shareholders will be appraised. 
 
The financial information contained in this trading statement has neither been 
reviewed nor audited by the Company`s auditors. Pan African anticipates that it 
will release its provisional audited results for the period ended 
30 June 2016 on or about 21 September 2016. 
 
For further information on Pan African, please visit the Company's website at 
www.panafricanresources.com 
 
2 August 2016 
 
Contact Details 
 
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                                 Deon Louw 
 
Pan African Resources PLC                   Pan African Resources PLC 
 
Chief Executive Officer                     Financial Director 
 
Office: + 27 (0) 11 243 2900                Office: + 27 (0) 11 243 2900 
 
Phil Dexter                                 John Prior / Paul Gillam 
 
St James's Corporate Services Limited       Numis Securities Limited 
 
Company Secretary                           Nominated Adviser and Joint Broker 
 
Office: + 44 (0) 207 796 8644               Office: [phone] 
 
Sholto Simpson                              Matthew Armitt / Ross Allister 
 
One Capital                                 Peel Hunt LLP 
 
JSE Sponsor                                 Joint Broker 
 
Office: + 27 (0) 11 550 5009                Office: [phone] 
 
Julian Gwillim                              Daniel Thole 
 
Aprio Strategic Communications              Bell Pottinger PR 
 
Public & Investor Relations SA              Public & Investor Relations UK 
 
Office: [phone]                  Office: + 44 (0) 203 772 2500 
 
Jeffrey Couch/Neil Haycock/Thomas Rider 
 
BMO Capital Markets Limited 
 
Joint Broker 
 
Office: [phone] 
 
www.panafricanresources.com 
 
 
 
END 
 

(END) Dow Jones Newswires

August 02, 2016 05:30 ET (09:30 GMT)