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  -0.0256p -0.26% 9.7244p 9.00p 10.50p 9.7244p 9.7244p 9.7244p 435 16:01:31

Pan African Resources Plc Operational Update for 9 Months ended March 2019

17/05/2019 7:00am

UK Regulatory (RNS & others)

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 
Pan African is pleased to provide an operational update for the nine months 
ended 31 March 2019 ("Current Reporting Period") as well as detail on progress 
with internal growth projects and initial production guidance for the 2020 
financial year. 
Pan African CEO Cobus Loots commented: 
"The Group's performance over the past nine months reflects our efforts to 
maintain Pan African's position as a safe, low-cost and long-life gold 
producer. Safe, highly profitable and sustainable ounces at Elikhulu have 
replaced those of Evander's loss-making underground operations. We continue to 
optimise Elikhulu, which delivered a throughput of 1.3-million tonnes in March 
2019, 100,000 tonnes above the name plate capacity. The focus is now on 
maximising sustainable margins from this world-class operation. 
We have commenced the development and equipping of Evander Mines' 8 Shaft 
Pillar ("Evander Pillar operation"), with first gold expected in August 2019. 
The Evander 8 Shaft Pillar is expected to contribute an additional 20,000oz to 
30,000oz per annum for three years, at an all-in sustaining costs ("AISC") of 
approximately US$900 per ounce, therefore making a meaningful contribution to 
the Group's near-term production and profitability. The operation will be mined 
by a specialised and experienced independent contractor given the nature of 
pillar mining. 
We have completed extensive feasibility work on Barberton Mines' Royal Sheba 
project ("Royal Sheba Project"). Due to the Group's disciplined capital 
allocation criteria and the capital cost estimates to develop this mine, the 
Company will not pursue the Royal Sheba Project on a stand-alone basis. The 
existing Barberton Mines' processing plant infrastructure can be upgraded to 
process ore from this orebody. The benefits of this approach is the ability to 
expedite the environmental licencing process, shorten the timeline to 
production, enhance returns from mining this orebody and negate the requirement 
for external capital funding. We look forward to updating the market on this 
project in the months ahead. 
We are confident the Group remains on track to meet its gold production 
guidance of 170,000oz for the full financial year to end 30 June 2019. With 
Elikhulu producing at a steady state for a full year and the incremental 
contribution from Evander's Pillar operation, we expect to produce 
approximately 185,000oz of gold for the 2020 financial year, which is a 
sizeable increase in our gold production profile." 
Key highlights for the current reporting period 
Operational results: 
  * Gold production from the Group's continuing mining operations (note 1) 
    increased by 51.4% to 123,771oz (2018: 81,729oz), with robust performances 
    from Barberton Mines' underground operations and the Group's tailings 
    retreatment plants. 
      + Gold production from the Barberton complex increased by 11.7% to 
        72,944oz (2018: 65,297oz) 
          o Underground and surface mining increased by 3.4% to 54,857oz (2018: 
            53,034oz); and 
          o Barberton tailings retreatment plant ("BTRP") increased by 47.5% to 
            18,087oz (2018: 12,263oz) due to an improved tonnage throughput and 
            recoveries following the successful commissioning of the BTRP 
            regrind mill in May 2018. 
      + The Elikhulu tailings retreatment plant ("Elikhulu") processed 
        6,915,113 tonnes from September 2018 to March 2019 at a recovered grade 
        of 0.135g/t with 29,881oz (929.4kg) of gold sold. This excludes the 
        pre-production gold of 736oz (22.9kg) capitalised as pre-production 
        income and gold inventory locked-up in the Elikhulu circuit; 
      + As previously communicated, the incorporation of the historical Evander 
        tailings retreatment plant's ("ETRP") throughput of 200,000 tonnes per 
        month into Elikhulu was completed in December 2018, which increased 
        Elikhulu's processing capacity to 1.2-million tonnes per month; 
      + Elikhulu's all-in sustaining cost of production continues to be lower 
        than previously anticipated, at less than US$600/oz; and 
      + Evander Mines' remnant mining and surface sources contributed a further 
        20,946oz (2018: 16,432oz). 
Note 1: The continuing mining operations include: Barberton Mines, Evander 
Mines, Elikhulu and Evander's tailings retreatment plant ("ETRP") as well as 
the mining and vamping of the remnant high-grade stopes as part of the phased 
closure of the underground mining operation. The continuing mining operations 
exclude the discontinued Evander Mines' large-scale underground mining 
operation, which produced 42,118oz in the corresponding nine months ended 31 
March 2018 ("corresponding reporting period"). The Group's corresponding 
reporting period gold production, including discontinued operations, was 
  * The Group's focus on safety and related ongoing improvements continues to 
    bear fruit, with material improvements in all categories of safety 
    statistics during the current reporting period: 
      + The Group had no fatalities in this quarter (2018: no fatalities); 
      + The Group's lost-time injury frequency rate improved substantially to 
        1.75 (2018: 3.79); and 
      + The reportable injury frequency rate improved substantially to 0.58 
        (2018: 1.17). 
Evander 8 Shaft Pillar: 
  * The feasibility study into the merits of mining the Evander 8 Shaft Pillar 
    and high-grade areas in proximity to the pillar has been completed and the 
    Pan African board of directors has approved the development of the project. 
  * Development and equipping of this area has already commenced, with first 
    gold expected during August 2019. 
  * The Evander 8 Shaft Pillar will replace the current remnant underground 
    mining and vamping production and is expected to contribute, on average, 
    30,000oz per annum over the next three financial years, with approximately 
    20,000oz of production forecast for FY2020. 
  * The Evander 8 Shaft Pillar mining feasibility highlights are: 
      + An average all-in sustaining cost of approximately R415,000/kg or 
        US$900/oz over the life of the project (assuming US$/ZAR1:14.30); 
      + The existing Kinross processing plant and Evander's 7 Shaft 
        infrastructure will be used to treat and hoist the mined ore from the 
        Evander 8 Shaft Pillar; 
      + Capital expenditure of approximately R70 million is to be incurred over 
        the life of the project, of which R40 million is to be incurred 
        upfront. All capital for the Evander 8 Shaft Pillar's development will 
        be funded from existing Group facilities; and 
      + A forecast payback period on the initial capital investment of less 
        than one year, from commencement of mining, and a net present value of 
        R369 million (US$25.8 million) at a 10% real discount rate and an 
        assumed gold price of R600,000/kg or US$1,305/oz. 
Royal Sheba Project: 
  * The Group has completed the Royal Sheba project feasibility study and 
    concluded that the merits of mining the near-surface resource, using an 
    opencast mining method, did not meet the Group's disciplined capital 
    allocation criteria. This was as a result of higher than anticipated 
    capital expenditure, largely due to the challenging topography of the Sheba 
  * The emphasis is now to assess the merits of using an underground sub-level 
    open stoping mining method by developing haulages from surface into the 
    orebody. The existing Barberton Mines' processing plant infrastructure can 
    be upgraded to process ore from this orebody, which will substantially 
    reduce the originally contemplated capital expenditure, and shorten the 
    environmental licensing approval process. 
  * Shareholders will be updated on progress with Royal Sheba development plans 
    in the coming months. 
Restructure of Revolving Credit Facility ("RCF"): 
  * The Group has received final credit approvals from its consortium of 
    bankers and is finalising the legal agreements with the intent of having 
    the restructured facility effective by 30 June 2019. The proposed 
    restructured RCF will amortise according to the following repayment 
Amortisation profile  RCF available      Repayments 
                      balance            (R million) 
                      (R million) 
Up to 15 June 2020                 1,000               250 
15 June 2020                         750                25 
15 December 2020                     725                25 
15 June 2021                         700                50 
15 September 2021                    650                50 
15 December 2021                     600                50 
15 March 2022                        550                50 
15 June 2022                         500               500 
  * The repayment profile of the Elikhulu project's term debt facility, 
    comprising 10 semi-annual, equal principal instalments of R100 million, 
    commencing in December 2019, is unaffected by the restructuring of the RCF. 
The financial and other information contained in this announcement has neither 
been reviewed nor audited by the Company's external auditors. 
For further information on Pan African, please visit the Company's website at 
17 May 2019 
Contact information 
Corporate Office                              Registered Office 
The Firs Office Building                      Suite 31 
2nd Floor, Office 204                         Second Floor 
Cnr. Cradock and Biermann Avenues             107 Cheapside 
Rosebank, Johannesburg                        London 
South Africa                                  EC2V 6DN 
Office:   + 27 (0)11 243 2900                 United Kingdom 
                                              Office:   + 44 (0)20 7796 8644 
Cobus Loots                                   Deon Louw 
Pan African Resources PLC                     Pan African Resources PLC 
Chief Executive Officer                       Financial Director 
Office: + 27 (0)11 243                        Office: + 27 (0)11 243 2900 
Phil Dexter                                   John Prior 
St James's Corporate Services Limited         Numis Securities Limited 
Company Secretary                             Nominated Adviser and Joint Broker 
Office: + 44 (0)20 7796 8644                  Office: +44 (0)20 7260 1000 
Ciska Kloppers                                Ross Allister/David McKeown 
Questco Corporate Advisory Proprietary        Peel Hunt LLP 
Limited                                       Joint Broker 
JSE Sponsor                                   Office: +44 (0)20 7418 8900 
Office: + 27 (0)11 011 9200 
Julian Gwillim                                Jeffrey Couch/Thomas Rider/Neil 
Aprio Strategic Communications                Elliot 
Public & Investor Relations SA                BMO Capital Markets Limited 
Office: +27 (0)11 880 0037                    Joint Broker 
                                              Office: +44 (0)20 7236 1010 
Bobby Morse/Chris Judd                        Website: 
Public & Investor Relations UK 
Office: +44 (0)20 7466 5000 

(END) Dow Jones Newswires

May 17, 2019 02:00 ET (06:00 GMT)




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