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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Pan African Resources Plc | LSE:PAF | London | Ordinary Share | GB0004300496 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.55 | 2.27% | 24.80 | 24.65 | 24.80 | 24.80 | 24.25 | 24.40 | 2,980,778 | 16:28:56 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Gold Ores | 321.61M | 60.74M | 0.0317 | 7.82 | 475.29M |
Hot Features
Premium
TIDMPAF
Pan African Resources PLC
(Incorporated and registered on 25 February 2000 in England and Wales under the
Companies Act 1985, registration number 3937466)
Share code on AIM : PAF
Share code on JSE : PAN
ISIN : GB0004300496
("Pan African Resources" or the "company" or the "group")
Unaudited interim results for the six months ended 31 December 2017
Key features reported in South African Rand ("ZAR" or "R") and Pound Sterling
("GBP")
Overview
The six months ended 31 December 2017 ("current reporting period") saw the
group further implement its strategy to provide not only a platform of
stability at our operations at Barberton Mines and Evander Mines, but also one
of improved and sustainable cash flows and production for the second half of
this year and beyond. The measures taken have seen substantial changes at all
of our underground operations, with the restructuring at Evander Mines and the
increased investment in development at Barberton Mines.
The Elikhulu tailings retreatment plant ("Elikhulu") project remains on track
to commence commercial production a number of weeks ahead of schedule, whilst
the operational challenges at Barberton tailings retreatment plant ("BTRP") and
the lower than anticipated recoveries are expected to be resolved following the
installation of a regrind mill to assist with the processing of the coarser
material encountered. The commissioning of Elikhulu will significantly advance
Pan African's strategy of sourcing a substantial portion of its annual gold
production from long-life, low-cost surface tailings operations. These surface
tailings operations ensure sustainability in the challenging South African
operating environment.
The delivery of 85,282oz for the half year, down 6.9% (2016: 91,613oz) is a
credible performance in the light of the substantial challenges faced during
the current reporting period. The group remained profitable despite the
currency volatility, the lost production days from industrial disputes, and the
technical challenges at the BTRP. The group today is positioned for a stronger
second half with the results of our investment in the BTRP regrind mill and
improved grades from Barberton Mines set to deliver strong production growth
and lower costs over the next 12 months. The group's production guidance for
the full financial year is now approximately 177,000oz-181,000oz.
Operational key features
- The group's gold production for the current reporting period reduced by
6,331oz to 85,282oz (2016: 91,613oz), primarily as a result of operational
challenges encountered at Barberton Mines. Barberton Mines is positioned for an
improved performance in the second half of the financial year.
- Improved overall operational and financial performance from Evander Mines.
- The Elikhulu Project is on track for commissioning early in the 2019
financial year, ahead of schedule and below budget.
- Improved safety performance from both Barberton Mines and Evander Mines.
- Barberton Mines' Royal Sheba Project's feasibility study will be completed
in the 2018 financial year, with this project having the potential of
increasing Barberton Mines' production by approximately 30,000oz per annum.
- Evander Mines' Egoli Project (previously 2010 Pay Channel project) mining
feasibility study has been completed, with a pre-taxation internal rate of
return of 46% and net present value of R1.74 billion.
- Reduced production from Barberton Mines as a result of:
o processing challenges at the BTRP, which produced 6,289oz less compared
to the prior reporting period; and
o underground production impacted by delays in developing into Fairview's
high-grade 272 and 358 platforms, as well as 11 production days lost
(equivalent to 3,000oz) due to industrial action by employees and protests
directed by community pressure groups.
- The group's detailed operational and financial summaries per entity are
disclosed on the Pan African Resources website at http://
www.panafricanresources.com/investors/financial-reports/.
Financial key features
- The group's earnings before interest taxation, depreciation and amortisation
("EBITDA") decreased to R185.6 million (2016: R476.5 million), while in GBP
terms it decreased to GBP10.5 million (2016: GBP26.6 million). The EBITDA in
the prior reporting period included a mark-to-market fair value gain on
financial derivatives of R94.7 million compared to R19.4 million in the current
reporting period.
- The group's profit after taxation in ZAR terms decreased to R58.2 million
(2016: R249.8 million), while in GBP terms, the group's profit after taxation
decreased to GBP3.3 million (2016: GBP14.0 million).
- Earnings per share ("EPS") decreased to 3.23 cents per share (2016: 16.58
cents per share), while in GBP terms, EPS decreased to 0.18 pence per share
(2016: 0.93 pence per share).
- Group revenue from continuing operations decreased to R1,462.9 million
(2016: R1,610.8 million) and, in GBP terms, group revenue decreased to GBP82.9
million (2016: GBP90.1 million) as a result of a decrease in the ZAR gold price
received and gold ounces sold.
- Effective ZAR gold price received decreased by 2.4% to R551,506/kg (2016:
R565,298/kg) and, in USD terms, it increased by 1.9% to USD1,281/oz (2016:
USD1,257/oz).
- Due to the lower gold production, cash cost per kilogramme increased in ZAR
terms to R473,187/kg (2016: R418,764/kg) and, in USD terms, the cash cost per
ounce increased to USD1,099/oz (2016: USD931/oz).
- All-in sustaining cost per kilogramme increased in ZAR terms to R545,908/kg
(2016: R487,765/kg) and, in USD terms, the all-in sustaining cost per ounce
increased to USD1,268/oz (2016: USD1,084/oz).
- The group paid a final dividend of R185 million or GBP10.0 million (2016:
R300 million or GBP17.1 million) on 21 December 2017, relating to the 2017
financial year. This dividend equated to R0.08279 per share or 0.44561 pence
per share (2016: R0.1544 per share or 0.87668 pence per share).
- The sale of Phoenix Platinum Mining Proprietary Limited ("Phoenix") to
Sylvania Platinum Limited for R89 million was concluded on 7 November 2017.
- Net debt remained well contained at R653 million (2016: R497 million).
Movement For the For the Metric Salient features Metric For the For the Movement
six six six six
months months months months
ended 31 ended 31 ended 31 ended 31
December December December December
2017 2016 2016 2017
(6.9%) 2,653 2,849 (Kilogrammes) Gold sold (Oz) 91,613 85,282 (6.9%)
(9.2%) 1,462.9 1,610.8 (R millions) Revenue - continuing (GBP 90.1 82.9 (8.0%)
operations millions)
(2.4%) 551,506 565,298 (R/kg) Average gold price received (USD/oz) 1,257 1,281 1.9%
13.0% 473,187 418,764 (R/kg) Cash costs (USD/oz) 931 1,099 18.1%
11.9% 545,908 487,765 (R/kg) All-in sustaining costs ( (USD/oz) 1,084 1,268 17.0%
note 1)
8.8% 554,890 509,909 (R/kg) All-in costs (note 1) (USD/oz) 1,134 1,289 13.7%
(61.1%) 185.6 476.5 (R millions) Adjusted EBITDA (note 2) (GBP 26.6 10.5 (60.5%)
millions)
(76.7%) 58.2 249.8 (R millions) Attributable earnings (GBP 14.0 3.3 (76.4%)
millions)
(74.4%) 63.0 246.0 (R millions) Headline earnings (GBP 13.8 3.6 (73.9%)
millions)
(80.5%) 3.23 16.58 (cents) EPS (pence) 0.93 0.18 (80.6%)
(78.5%) 3.51 16.32 (cents) Headline earnings per share (pence) 0.91 0.20 (78.0%)
("HEPS")
31.4% 653.0 497.0 (R millions) Net debt (GBP 29.4 39.2 33.3%
millions)
10.5% 155.2 140.5 (R millions) Total sustaining capital (GBP 7.9 8.8 11.3%
expenditure millions)
242.5% 697.0 203.5 (R millions) Total capital expenditure (GBP 11.5 39.5 243.5%
millions)
1.4% 194.3 191.7 (cents) Net asset value per share (pence) 11.5 11.7 1.7%
19.3% 1,798.3 1,506.8 (millions) Weighted average number of (millions) 1,506.8 1,798.3 19.3%
shares in issue
(4.3%) 13.39 13.99 (R/USD) Average exchange rate (R/GBP) 17.88 17.65 (1.3%)
(9.8%) 12.36 13.70 (R/USD) Closing exchange rate (R/GBP) 16.90 16.67 (1.4%)
Note 1: The all-in sustaining cost per kilogram and all-in cost per kilogram
excludes the Elikhulu capital expenditure as well as derivative fair value
mark-to-market gains / expenses and relates directly to the current gold mining
operations.
Note 2: Adjusted EBITDA is represented by earnings before interest, taxation,
depreciation and amortisation, profit/(loss) on asset held for sale and profit/
(loss) on disposal of investments.
CEO STATEMENT
Pan African Resources CEO Cobus Loots commented:
"Our group is positioned to deliver into our objective of mining relatively
low-cost, high-margin and sustainable gold ounces. The past 12 months has been
a watershed period during which we reassessed the sustainability of all our
operations and dealt with issues causing operational disruptions. We expect
improved production and cost savings in the next reporting period.
We look forward to commissioning the Elikhulu Project below budget and ahead of
schedule in the coming months. In terms of medium- to long-term gold production
growth, the feasibility study for the Evander Mines' Egoli Project (previously
called the 2010 Pay Channel) and the work completed to date on the Royal Sheba
Project at Barberton Mines, demonstrate robust economic returns in a relatively
low-risk mining environment.
In light of the prevailing low ZAR gold price environment, to ensure the
sustainable profitability of the group, we are reviewing our higher cost mining
operations."
Group safety
We are pleased to report an improved group safety performance across all
operations, with no fatalities in the current or prior reporting periods. The
reportable injury frequency rate improved significantly to 0.62 (2016: 1.61)
and the lost-time injury frequency rate increased marginally to 4.05 (2016:
3.96). The group's total recordable injury frequency rate reduced to 14.42
(2016: 14.81).
A notable achievement is the group-wide reduction in the number of Department
of Mineral Resources ("DMR") safety stoppages ("Section 54 regulatory notices")
during the current reporting period, evidencing the management team's focus on
addressing previously highlighted risks and the constructive relationship with
the DMR.
Evander Mines and ETRP
Evander Mines' return to profitability is encouraging and resulted from the
remedial action taken to address the critical shaft infrastructure and the cost
base of this operation. The 5.4% increase in gold production, and the lower
cost base, were the primary contributors to an improved operational
performance.
Evander Mines' underground gold operations delivered an improved performance,
with gold sold increasing to 32,734oz (2016: 26,477oz) due to tonnages milled
from underground mining increasing by 7.6% to 174,233t (2016: 161,872t), with
the head grade also increasing by 13.0% to 6.1g/t (2016: 5.4g/t).
The existing 8 Shaft pump column experienced a number of water bursts, which
contributed to lost production. This pump column will be fully reliable once
the refurbishment programme is completed in April 2018. As a result of the
2017 refurbishment programme, 7 Shaft pumping and other infrastructure
performed well in the current reporting period.
Development of the new high-grade "D raise" is being accelerated with the
intent of it being available for mining in March 2018. This raise will
contribute to increased mining flexibility and access to higher-grade areas of
the 8 Shaft orebody.
Gold production at the Evander Tailings Retreatment Plant ("ETRP") reduced to
11,937oz (2016: 15,924oz). In the prior reporting period the ETRP treated more
surface feedstock tonnages with additional milling capacity allocated for
surface material due to the 7 Shaft infrastructure repairs during October 2016
and the resultant reduced production from underground. The ETRP's current
all-in sustaining cost is R316,208/kg (2016: R245,569/kg) or USD735/oz (2016:
USD546/oz). The Elikhulu Project's all-sustaining costs are forecast to be
lower than the ETRP due to the economy of scale benefit. As a comparative to
the ETRP all-in sustaining costs, the Elikhulu Project's feasibility study real
all-in sustaining cost of R243,816/kg or USD523/oz at a ZAR:USD exchange rate
of R14.5:1, which equates to USD631/oz at the prevailing ZAR:USD exchange rate
of R12:1.
Barberton Mines and BTRP
Barberton Mines' gold production reduced by 8,601oz to 40,611oz (2016:
49,212oz), predominantly due to the following, with mitigating actions
addressed separately:
- BTRP gold production reduced to 8,452oz (2016: 14,741oz) due to the
re-mining operation moving to the lower-grade Harper dump following depletion
of the Bramber dump, and the head grade reducing from 2.2g/t to 1.4g/t. The
Harper dump material has a larger coarse fraction, which resulted in processing
problems and a reduction in plant recoveries to 41% (2016: 55%). A regrind mill
is being installed to reduce the Harper dumps coarse fraction material which
will improve material handling and recoveries. Barberton Mines' underground
mining production reduced to 32,159oz (2016: 34,471oz) due to a lack of grade
flexibility in the Fairview MRC orebody, which curtailed the mineable tonnes at
the targeted head grade. The underground tonnes milled increased to 124,969t
(2016: 123,168t), while the head grade reduced to 8.7g/t (2016: 9.4g/t).
- Gold production was adversely impacted by disruptions from pressure groups,
community unrest and protected and unprotected strike action at Barberton
Mines, which resulted in 11 lost production days, equivalent to approximately
3,000oz of gold. The source of the frustration from these stakeholders is
driven by issues unrelated to the mine and is symptomatic of the general
dissatisfaction with service delivery, inter-union conflict, and unemployment
issues that currently characterise the South African mining and other sectors.
A summary of the status of remedial actions taken by management at Barberton
Mines is as follows:
Segment Challenge Remedial action Status
BTRP Unexpected coarse Installation of a The regrind mill
fraction material regrind mill to assist will be
encountered, resulting with material handling commissioned by
in reduced throughput, and improved April 2018.
gold recoveries and gold recoveries from
production from the treating the Harper
BTRP. dump coarse fraction
material.
Fairview Limited grade Initial production The 358 and 272
underground flexibility within the make-up strategy was high-grade mining
mining Fairview MRC orebody, to mine pillars in platforms are
flexibility with development into previously mined available to mine
new platforms delayed. high-grade platforms in the second
Two high-grade platforms (116 and 195 half of the
are however now platforms). financial year.
available. In addition, Unfortunately gold These platforms
a portion of the production from these will be available
high-grade 101 platform platforms was less for the next two
was sterilised as a than anticipated. to three years,
result of an allowing
unanticipated geological Development of two sufficient time
roll. high-grade mining to ensure
platforms in the MRC development into
orebody to improve new mining areas
grade flexibility. is on schedule.
This development is
now complete.
Fairview mining The Fairview The R105 million
operation is restricted sub-vertical shaft project is
by the hoisting capacity project will improve scheduled for
of its No 3 Decline, ore handling completion over
which is also used by efficiencies and the next 24
employees to access significantly reduce months.
workings below 42 Level the time taken by
and its high-grade employees to access
11-block of the MRC. high-grade mining
platforms. The
sub-vertical shaft
project is estimated
to improve production
by approximately
7,000oz-10,000oz per
annum.
Barberton Community unrest and Barberton Mines - We continue
Mines protected and obtained court to engage with
unprotected strikes, interdicts: all stakeholders
resulting in lost - To halt the to limit
production shifts. communities from disruptions of
blocking road access this nature in
to the mining the future.
operations.
- To halt the union's
unprotected strikes
- National Union of
Mineworkers formally
put on terms, in terms
of allowing
unprotected and
illegal strike action.
- Section 189 process
in terms of the Labour
Relations Act has
commenced at Barberton
Mines. Management is
concerned that in the
current difficult
operating environment,
further disruptions to
operations may lead to
material loss in
employment.
Mineral reserves and resources
The group's mineral resources and reserves, in compliance with the South
African Code for Reporting of Mineral Resources and Mineral Reserves, are
summarised as follows:
- Gold reserves of 11.2Moz (2016: 10.0Moz)
* Gold resources of 34.4Moz (2016: 34.9Moz)
In determining our reserves and resources, gold reserves were modelled at
R550,000/kg and gold resources at R600,000/kg. During the current year the
group's mineral resources and reserves were independently reviewed by SRK
Consulting (South Africa) (Pty) Ltd.
There have been no material changes to the group's mineral reserves and
resources statement for the year ended
30 June 2017.
Near- to medium-term growth projects
Elikhulu Project
The project is on track for commissioning early in the 2019 financial year,
which is ahead of schedule and below budget. Capital expenditure of R671.4
million (excluding capitalised borrowing costs) has been incurred on the
Elikhulu Project to date.
Although the Elikhulu Project experienced community protests during the current
reporting period, the project remains ahead of plan and all capital has been
contracted, which materially reduces the risk of cost overruns due to price
escalations.
The re-mining contract for the project was awarded to Fraser Alexander
("Fraser"). The contract incentivises Fraser to deliver more than one-million
tonnes per month.
Barberton Mines' Royal Sheba Project
The group believes that Royal Sheba has the potential to deliver approximately
30,000oz per annum at a relatively low cost. The Royal Sheba orebody forms part
of the Barberton Mine complex and was historically mined on a small scale
(approximately 2,000 tonnes per month) to a depth of 340 metres below surface.
Due to poor economic returns resulting from the low tonnage mining profile, and
the prevailing low gold price at that time, it was closed during 1996.
In the 2010 financial year, a concept study was completed with the aim of
re-opening the mine as a larger, mechanised, standalone operation. The study
found it was a viable proposition, but required a significant amount of capital
expenditure for a new shaft system to be sunk from surface and the construction
of a new gold plant.
Since the prior Royal Sheba study was completed, several synergies have been
identified at the Barberton Mines complex, which indicates that the Royal Sheba
orebody could be a viable economic proposition with materially lower capital
investment than previously envisaged. These synergies include:
Proposed new mining method
The orebody is conducive to sub-level open stoping, a massive mechanised mining
method, which can be used to extract the entire orebody at lower grades but
with significantly more volumes and better efficiencies. Using this mining
method, production volumes of approximately 30,000-40,000 tonnes per month can
be mined.
Underground access
A development drive is currently being developed from the Sheba Mine on 23
Level (600 metres underground) towards the Royal Sheba orebody, which obviates
the need for the new shaft system required by the 2010 study. A further 800
meters of development is required to access the orebody and multi-blasting is
being investigated to reduce the development period from 36 months to
approximately 18 months.
BTRP processing
The Royal Sheba ore is free milling and does not require Biox© processing,
therefore the existing BTRP plant can be expanded at minimal cost to treat
Royal Sheba's ore, resulting in a substantial capital saving.
These infrastructure synergies should contribute to progressing the Royal Sheba
Project as an attractive prospect. It presents the group with an opportunity to
increase its production in the medium term by an estimated 30,000oz per annum
at a low capital cost.
To improve confidence in the Royal Sheba Project, a development strategy is
being pursued, which entails a drilling programme of 14 surface holes totalling
12,000m, and a feasibility study, which is expected to be completed by the end
of this financial year.
Mineral resources of Royal Sheba as at 30 June 2017
Royal Sheba Resource
Category Tonnes g/t kg (Au) Oz
Measured 385,450 4.15 1,599 51,421
Indicated 1,354,240 4.35 5,891 189,398
Inferred 856,470 4.40 3,726 119,782
Total Resource 2,596,160 4.32 11,216 360,601
Evander Egoli Project (previously 2010 Pay Channel project) - Results from
mining feasibility study
The Egoli Project is adjacent to the No 7 Shaft infrastructure and extends from
the boundary of Taung Gold International Limited's No 6 Shaft mining right.
Shareholders were informed on 20 September 2017 that the group had initiated a
mining feasibility study, conducted by DRA Global, into the viability of the
Egoli Project.
The available resource of the Egoli Project orebody has increased materially
(as reported on 1 February 2018) and this, together with the study's findings,
are summarised as follows:
Updated resource Previous resource
statement Egoli Project statement Egoli Project
Category Tonnes Grade Contained Tonnes Grade Contained
gold gold
Million g/t Moz Million g/t Moz
Measured 0.36 8.97 0.10 0.45 8.94 0.13
Indicated 2.92 9.87 0.93 0.70 7.11 0.16
Inferred 6.12 9.74 1.92 4.13 8.93 1.19
Total 9.40 9.75 2.95 5.28 8.69 1.48
Mineral resources are reported in accordance with the South African Code for
the Reporting of Exploration Results, Mineral Resources and Mineral Reserves
guidelines. Cut-off values are reported applying a gold price of R600,000/kg
(USD1,370/oz and ZAR:USD 13.62:1). Mineral resources are reported inclusive of
mineral reserves. All mineral resources reported exclude geological structures,
regional pillars, middling pillars, safety pillars and shaft pillars. Mineral
resources are reported as in-situ tonnes. Any discrepancies in totals are due
to rounding. Mr HP Pretorius, of an independent Geological Consultant (Shango
Solutions Pty Ltd), and registered with the South African Council of Natural
Scientific Professionals (400051/11) was appointed as the Competent Person for
the mineral resource report. Mr HP Pretorius has reviewed and approved the
scientific and technical disclosures contained in this announcement.
The Egoli Project has more than one-million ounces of contained gold in
measured and indicated categories. The mining feasibility highlights for the
Egoli Project are:
§ Initial de-watering of the declines is expected to commence during 2018.
§ The mining operation will be planned to ensure waste and reef are hoisted
separately.
§ The life-of-mine is expected to be 14 years.
§ Average recoverable gold of approximately 13,000 ounces per annum during the
initial four-year development phase, and an average of approximately 65,000
ounces per annum for the remaining ten years thereafter is forecast.
§ Existing available plant and shaft capacity will be used to treat mined ore.
§ Peak funding requirement is forecast at approximately R572 million.
§ An internal rate of return (real, pre-taxation) of 46%, with a payback
period of two years following the initial four-year development period is
forecast. This projection is based on an assumed gold price of USD1,287/oz and
exchange rate ZAR:USD 12.50:1, equating to R517,194/kg.
§ Project, pre-taxation, net present value is R1.74 billion (USD139.4 million)
at a 10% real discount rate.
§ An incremental all-in sustaining cost per kilogramme of approximately
R275,000/kg, or USD684/oz, on average, over the life of the mine.
§ An average gold recovery rate of 95% and a mine call factor of 85%.
Barberton Mines' sub-vertical shaft project at Fairview
Shareholders were previously advised that the Fairview mining operation is
restricted by the hoisting capacity of its No 3 Decline, which is used to
access workings below 42 Level and the high-grade 11-block of the MRC. During
the period under review, Fairview started constructing a new sub-vertical shaft
at a cost of approximately R105 million over a two-year period. Following the
commissioning of this shaft, it is expected that productivity improvements will
yield an additional 7,000oz - 10,000oz of gold per annum.
Outlook
In the 2018 financial year, the remaining key focus areas for the group, from
an operational perspective, include:
* continuing with our safety and regulatory compliance improvement projects
across all operations;
* ensuring construction of the Elikhulu Project progresses ahead of schedule
and below budget;
* ensuring an improved sustainable and optimal operating performance at our
gold mining operations;
* further improving stakeholder engagement to minimise operational stoppages;
* operational review of higher cost operations in the group; and
* production guidance is now approximately 177,000oz-181,000oz.
The group continues to evaluate acquisitive opportunities, particularly within
other African jurisdictions, in accordance with the group's rigorous capital
allocation criteria.
We extend our appreciation to our management teams and all other staff for
their hard work and persistence during this period. Their commitment and
perseverance has enabled Pan African Resources to continue operating
successfully. We also thank our fellow directors and shareholders for their
support.
FINANCIAL PERFORMANCE
Exchange rates and their impact on results
All of the group's subsidiaries are incorporated in South Africa and their
functional currency is ZAR. The group's business is conducted in ZAR and the
accounting records are maintained in this same currency, with the exception of
precious metal product sales, which are conducted in USD prior to conversion
into ZAR. The ongoing review of the operational results by executive management
and the board is also performed in ZAR.
The group's presentation currency is GBP due to its ultimate holding company,
Pan African Resources, being incorporated in England and Wales and being
dual-listed in the United Kingdom ("UK") and South Africa.
During the period under review the average ZAR:GBP exchange rate was R17.65:1
(2016: R17.88:1) and the closing ZAR:GBP exchange rate was R16.67:1 (2016:
R16.90:1). The period-on-period change in the average and closing exchange
rates of 1.3% and 1.4%, respectively, must be taken into account for the
purposes of translating and comparing period-on-period results.
The group records its revenue from precious metals sales in ZAR and the
strength in the value of the ZAR:USD exchange rate during the period under
review had a negative impact on the USD revenue received when translated into
ZAR. The average ZAR:USD exchange rate was 4.3% stronger at R13.39:1 (2016:
R13.99:1).
The commentary below analyses the current and prior reporting period's results.
Key aspects of the group's ZAR results appear in the body of this commentary
and have been used as the basis against which its financial performance is
measured. The gross GBP equivalent figures can be calculated by applying the
exchange rates as detailed above.
Analysing the group's financial performance
Revenue
The group's total revenue from continuing operations, period-on-period,
decreased in ZAR terms by 9.2% to R1,462.9 million (2016: R1,610.8 million) and
in GBP terms decreased by 8.0% to GBP82.9 million
(2016: GBP90.1 million).
Group revenue was mainly impacted by:
1. The average ZAR gold price received decreasing by 2.4% to R551,506/kg
(2016: R565,298/kg), as a result of the average ZAR:USD exchange rate
strengthening by 4.3% to R13.39:1 (2016: R13.99:1) and the USD gold price
received increasing by 1.9% to USD1,281/oz (2016: USD1,257/oz).
2. Gold ounces sold decreased by 6.9% to 85,282oz (2016: 91,613oz).
Cost of production
Pan African Resources' cost of production inflation was well contained, with
the cost of production increasing by 5.4% to R1,228.0 million (2016: R1,165.6
million).
The main cost contributors that impacted the period-on-period cost increase
during the current reporting period are summarised as follows:
* Group gold operations' salaries and wages (represents 43.2% of the gold
cost of production) increased by 2.9% to R530.4 million (2016: R515.6
million). Salaries and wages increased in line with the gold labour
agreements signed at the respective operation, but this was off-set by the
reduction in labour costs at Evander Mines due to the retrenchment of
employees.
* The group's electricity costs (represents 15.6% of the gold cost of
production) increased by 4.6% to R191.5 million (2016: R183.0 million). The
increase is higher than the National Energy Regulator of South Africa's
approved average national increase of 2.2% from 1 April 2017, as a result
of increased tonnages mined by the respective underground mining
operations.
* The group's mining and processing costs (represents 25.6% of gold cost of
production) increased by 3.9% to R314.4 million (2016: R302.6 million).
* The group's engineering and technical costs (represents 8.3% of gold cost
of production) increased by 11.3% to R101.4 million (2016: R91.1 million).
The above-inflation increase is predominantly due to the additional
maintenance work on Evander Mines, specifically the repairs associated with
Evander Mines 8 Shaft's 10 stage pump column repairs.
The group's cost of gold production per kilogramme increased by 13.0% to
R473,187/kg (2016: R418,764/kg).
The increase is mainly attributed due to the group's sold gold decreasing by
6.9% to 85,282oz (2016: 91,613oz) and the 5.4% increase in cost of production.
The group's all-in sustaining cost of gold production per kilogramme (including
direct cost of production, royalties, associated corporate costs and overheads,
and sustaining capital expenditure, excluding cost-collar mark-to-market
expenses) increased by 11.9% to R545,908/kg (2016: R487,765/kg). In USD terms
the all-in sustaining cost per ounce increased to USD1,268/oz (2016: USD1,084/
oz). The group's all-in sustaining costs were primarily impacted by an increase
in gold production costs and a decrease in gold sold.
The all-in gold cost per kilogramme (sustaining cost of production and once-off
expansion capital, but excluding the Elikhulu Project capital) increased by
8.8% to R554,890/kg (2016: R509,909/kg). The groups once-off capital
period-on-period decreased by 62.6% to R23.5 million (2016: R62.9 million), due
to the completion of the BTRP cyanide detoxification plant and Fairview's
ventilation refrigeration and infrastructure.
Realisations costs
The group's realisation costs decreased marginally to R27.1 million (2016:
R27.7 million). The realisation costs relate predominantly to refining charges
rendered by refiners.
Depreciation costs
Depreciation from continuing operations increased by 3.3% to R104.8 million
(2016: R101.5 million). The depreciation charge is based on the available units
of production over the life of the operations.
Other expenditure and income
Other expenditure reduced to R13.3 million (2016: R34.9 million other income).
In the current reporting period, the group recorded lower mark-to-market
fair-value gains of R19.4 million (2016: R94.7 million) on financial
derivatives.
Finance costs decreased to R14.3 million (2016: R19.0 million), predominantly
due to the group's average debt in the reporting period declining relative to
the prior reporting period. Interest incurred on the Elikhulu Project is
capitalised, which further contributed to a reduced finance cost.
Discontinued operation
The group's discontinued operations represent Phoenix in the current reporting
period and both Phoenix and Uitkomst Colliery Pty Ltd ("Uitkomst") in the prior
reporting period as both of these operations have been disposed of.
The group's discontinued operations recorded a loss of R6.8 million in the
current reporting period represented by Phoenix's loss for the period 1 July -
7 November 2017. This loss comprised of R1.9 million in operational losses and
a R4.9 million loss on asset held for sale. In the prior reporting period
Phoenix and Uitkomst collectively contributed R19.3 million to the group.
Taxation
The group's total taxation charge decreased to R17.6 million (2016: R90.4
million) as result of a decrease in the group's profit before taxation.
The taxation charge comprised of:
- a decrease in the current taxation charge by 96.8% to R1.8 million (2016:
R56.8 million); and
- a decrease in the deferred taxation to R15.8 million (2016: R33.6
million), mainly due to the reduction of the long-term deferred taxation rate
to 23.1% from 28% and 25.5% for Barberton Mines and Evander Mines,
respectively.
EPS and HEPS
The group's EPS in ZAR decreased by 80.5% to 3.23 cents (2016: 16.58 cents).
The group's HEPS in ZAR decreased by 78.5% to 3.51 cents (2016: 16.32 cents).
The difference between the EPS and HEPS is reconciled below.
The EPS and HEPS are calculated by applying the group's weighted average number
of shares in issue to the attributable and headline earnings. The weighted
average number of shares in issue increased by 19.3% to
1,798.3 million shares (2016: 1,506.8 million shares). The increase in shares
was attributed to the additional 291.5 million shares issued in the equity
raise concluded on 12 April 2017 for the equity tranche of the Elikhulu
Project.
The weighted average number of shares period-on-period in issue for calculating
earnings per share is reconciled below:
31 December 31 December
2017 2016
Shares in issue at beginning of the calendar year 1,506.8 1,943.2
Elimination of shares held by PAR Gold - (436.4)
Issue of shares - vendor placement (date 12 April 2017) 291.5 -
Weighted average shares in issue at end of six months period 1,798.3 1,506.8
Total headline earnings per share is calculated as follows:
31 31 31 31 December
December December December 2016
2017 2016 2017
GBP GBP ZAR ZAR million
million million million
Basic earnings all operations 3.3 14.0 58.2 249.8
Adjustments:
Profit on disposal of investment - (0.2) - (4.6)
Taxation on profit realised on disposal of - - - 1.0
investment
Profit on disposal of property plant and - - - (0.3)
equipment
Taxation on profit realised on property - - - 0.1
plant and equipment sale
Loss on asset held for sale 0.3 - 4.9 -
Headline earnings 3.6 13.8 63.1 246.0
Headline earnings per share 0.20 0.91 3.51 16.32
Diluted headline earnings per share 0.20 0.91 3.50 16.31
Continuing operations headline earnings per share is calculated as follows:
31 31 31 31 December
December December December 2016
2017 2016 2017
GBP GBP ZAR ZAR million
million million million
Basic earnings continuing operations 3.7 12.9 65.0 230.5
Adjustments:
Profit on disposal of investment - (0.2) - (4.6)
Taxation on profit realised on disposal of - - - 1.0
investment
Profit on disposal of property plant and - - - (0.3)
equipment
Taxation on profit realised on property - - - 0.1
plant and equipment sale
Headline earnings 3.7 12.7 65.0 226.7
Headline earnings per share 0.21 0.84 3.61 15.05
Diluted headline earnings per share 0.21 0.84 3.61 15.04
Net debt
The group net debt increased to R653.0 million (2016: R497.0 million). This
comprised of total debt facilities utilised at 31 December 2017 of R771.7
million (2016: R565.4 million), and cash holdings of R118.7 million (2016:
R68.4 million).
The increase in net debt was largely due to R511.7 million of capital
expenditure being incurred on the Elikhulu Project in the current reporting
period.
Summary of the long-term debt liabilities:
Revolving credit Evander Mines gold Elikhulu term Total
facility loan facility
31 31 31 31 31 31 31 31
December December December December December December December December
2017 2016 2017 2016 2017 2016 2017 2016
ZAR ZAR ZAR ZAR ZAR ZAR ZAR ZAR
(millions) (millions) (millions) (millions) (millions) (millions) (millions) (millions)
Non-current portion 610.5 458.7 - - 95.1 - 705.6 458.7
Current portion 66.1 52.8 - 53.9 - - 66.1 106.7
Total 676.6 511.5 - 53.9 95.1 - 771.7 565.4
The group's performance against the revolving credit facility debt covenant
limits are summarised below:
Measurement December December
2017 2016
Net-debt-to-equity ratio Must be less than 1:1 0.19 0.17:1
Net-debt-to-adjusted EBITDA ratio Must be less than 2.5: 2.25 0.48:1
1
Interest cover ratio Must be greater than 4 4.62 21.99
times
Debt service cover ratio Must be greater than 1.85 -
1.3 times
Capital expenditure
Group capital expenditure for the current reporting period has been summarised
per operation in the table below:
Continuing Operations Discontinued Group
Operations Total
Barberton Evander Elikhulu Corporate Phoenix
Mines Mines
ZAR ZAR ZAR ZAR ZAR million ZAR
million million million million million
Development capital 35.2 30.4 - - - 65.6
Maintenance capital 17.5 72.1 - 0.6 6.0 96.2
Sustaining capital 52.7 102.5 - 0.6 6.0 161.8
total
Expansion capital 18.7 4.8 511.7 - - 535.2
Total capital 71.4 107.3 511.7 0.6 6.0 697.0
expenditure
Cash flow summary
Cash generated by operations (after dividends) decreased by R14.6 million to
R29.1 million (2016: R43.7 million), due to the lower gold production and
operating cash costs increasing by 13.0% to R473,187/kg (2016: R418,764/kg).
The 2017 financial year dividend payment of R185.0 million (2016: R300.0
million) was made on 21 December 2017.
The cash outflows from investing activities increased to R634.2 million (2016:
R173.1 million), largely due to:
* capital expenditure incurred on Elikhulu of R511.7 million (2016: R17.8
million);
* capital expenditure incurred on operations of R185.3 million (2016: R185.7
million);
* contributions into the rehabilitation trust of R26.2 million (2016: nil);
and
* cash received from the sale of Phoenix of R89.0 million (2016: R30.4
million proceeds from the sale of a listed investment and property plant
and equipment).
Net cash inflows from financing activities increased to R563.6 million (2016:
R145.2 million), largely due to the utilisation of the debt facilities to fund
operational and project capital expenditure.
COMMITMENTS REPORTED IN ZAR AND GBP
The group identified no material contingent liabilities in the current or prior
reporting period.
The group had contracted outstanding open orders at period end of R1.1 billion
(2016: R106.3 million), or GBP64.3 million (2016: GBP6.3 million). Outstanding
orders in the current reporting period related primarily to the Elikhulu
Project.
Authorised commitments for the remainder of the 2018 financial period, not yet
contracted for, totalled R170.4 million (2016: R169.9 million) or GBP10.2
million (2016: GBP10.1 million).
At 31 December 2017, the group had guarantees in place of R24.6 million (2016:
R24.6 million) or GBP1.5 million
(2016: GBP1.4 million) in favour of Eskom Holdings SOC Limited, and R14.0
million (2016: R33.5 million) or
GBP0.8 million (2016: GBP2 million) in favour of the DMR.
Operating lease commitments, which fall due within the next financial year,
amounted to R1.8 million
(2016: R3.7 million) or GBP0.1 million (2016: GBP0.2 million).
FAIR VALUE INSTRUMENTS
Financial instruments measured at fair value are grouped into levels 1 to 3
based on the extent to which fair value is observable.
The levels are classified as follows:
Level 1: Fair value is based on quoted prices in active markets for identical
financial assets or liabilities.
Level 2: Fair value is determined using inputs, other than quoted prices
included within level 1, which are observable for the asset or liability.
Level 3: Fair value is determined on inputs not based on observable market
data.
Level 1 financial instruments:
Pan African Resources holds 13,064,381 shares in MC Mining Ltd (Previously
known as Coal of Africa Ltd). The investment was fair valued at R91.5 million
or GBP5.5 million (2016: nil), at the reporting date. The fair value of the
listed investment is treated as Level 1 of the fair value hierarchy, as the
share price is quoted on a stock exchange.
The group's rehabilitation trust funds are valued at R357.5 million (2016:
R319.5 million) or GBP21.4 million (2016: GBP18.9 million), which comprise
investments in guaranteed equity-linked notes and interest-bearing call
accounts.
Level 2 financial instruments:
During the current and prior reporting period, the group had exposure to
financial derivatives comprising a cost-collar hedge. The mark-to-market value
of this cost collar asset at 31 December 2017 was R5.8 million or GBP0.3
million (2016: R20.2 million liability or GBP1.2 million liability)
The group's cash settled share option liability, which is valued on a
mark-to-market basis according to the company's quoted share price, amounted to
R46.3 million or GBP 2.8 million (2016: R57.8 million or GBP3.4 million).
Level 3 financial instruments:
The group's employee share ownership plan ('ESOP') liability is accounted for
on a cash settled share option basis and valued on a mark-to-market basis on
the net present value of the discounted future cash flows applicable to the
beneficiaries of the schemes. The ESOP liability was R1.9 million or GBP0.1
million (2016: R5.6 million or GBP0.3 million).
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS AND ACCOUNTING POLICIES
The accounting policies applied in compiling the interim results are in terms
of International Financial Reporting Standards ("IFRS") adopted by the European
Union and South Africa, which are consistent with those applied in preparing
the group's annual financial statements for the year ended 30 June 2017.
The financial information set out in this announcement does not constitute the
company's statutory accounts for the period ended 31 December 2017.
The interim results have been prepared and presented in accordance with, and
containing the information required by IAS 34: Interim Financial Reporting, as
well as the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee and Financial Pronouncements as issued by Financial
Reporting Standards Council.
The interim results have not been reviewed or reported on by the company's
external auditors.
JSE LIMITED LISTING
The company has a dual primary listing on the main board of the 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 and the information as
required by IAS 34: Interim Financial Reporting.
AIM LISTING
The financial information for the period ended 31 December 2017 does not
constitute statutory accounts as defined in sections 435 (1) and (2) of the
Companies Act 2006.
The group's announcement has been prepared in accordance with IFRS and
International Financial Reporting Interpretation Committee interpretations
adopted for use by the European Union, with those parts of the Companies Act
2006 applicable to companies reporting under IFRS.
DIRECTORSHIP CHANGES AND DEALINGS
No directorship changes took place during the period under review.
However, the following director dealings in securities took place:
- On 29 September 2017, Mr JAJ Loots entered into a contract for difference
derivative ("CFDs") for 200,000 shares at average of GBP12.747p per share. Mr
JAJ Loots had 688,765 shares at period end, representing 0.03% of total issued
shares.
- On 29 September 2017, Mr GP Louw purchased 45,000 shares at an average
price of R2.35 per share. Mr GP Louw had 182,450 shares outstanding at period
end, representing 0.01% of total issued shares.
- On 6 October 2017, Mr T Mosololi purchased 20,000 shares at R2.30. Mr T
Mosololi had 50,000 shares outstanding at period end, representing 0.01% of
total issued shares.
SHARES ISSUED
No additional issuance of shares during the current reporting period.
GOING CONCERN
The board confirms that the business is a going concern and that it has
reviewed the group's working capital requirements in conjunction with its
future funding capabilities for at least the next twelve months and has found
them to be adequate. The group has a R1 billion revolving credit facility from
a consortium of South African banks as well as access to general banking
facilities of R100 million. At 31 December 2017, the group had borrowing
capacity on the revolving credit facility of R325 million (GBP19.5 million) to
assist in funding working capital requirements. The group is exposed to a
number of macro-economic risk, including the gold price and the prevailing ZAR:
USD exchange rate. Furthermore, the group is exposed to industrial action and
an uncertain regulatory environment, which may have an adverse impact on the
group's future results. Management is not aware of any other material
uncertainties which may cast significant doubt on the group's ability to
continue as a going concern. Should the need arise, the group can cease
discretionary exploration and certain capital expenditure activities to
conserve cash on the short to medium term and curtail loss making operations.
EVENTS AFTER THE REPORTING PERIOD
The group entered into a restructured BEE transaction on 16 January 2018 in
terms of which the current BEE equity shareholdings in the company (held via
interests in PAR Gold Proprietary Limited ("PAR Gold")) was replaced with BEE
shareholdings in Emerald Panther Investments 91 Proprietary Limited ("SA
Holdco"), a subsidiary of the Company (the "Transaction"). SA Holdco will house
all Pan African's South African mining operations, following implementation of
the Transaction. Where the previous BEE ownership structure terminates during
December 2018, the new BEE structure will only terminate on 31 December 2021,
which is a three-year extension of the original BEE transaction. Refer to the
groups' new organisational structure at https://www.panafricanresources.com/
about-overview/company-structure/.
SEGMENT REPORTING
A segment is a distinguishable component of the group engaged in providing
products or services in a particular business sector or segment, which is
subject to risks and rewards different from those of other segments. The
group's business activities were conducted through the following business
segments:
Continuing operations:
- Barberton Mines (including BTRP), located in Barberton, South Africa;
- Evander Mines (including ETRP and Elikhulu), located in Evander, South
Africa;
- Corporate; and
- Pan African Resources Funding Company Proprietary Limited ("Funding
Company").
Discontinued operations:
- Phoenix, located near Rustenburg, South Africa, disposed of during the
current reporting period; and
- Uitkomst Colliery, located in Newcastle, South Africa, disposed of during the
prior reporting period.
The executive committee reviews the operations in accordance with the
disclosures presented above.
Cobus Loots Deon Louw
Chief Executive Officer Financial Director
13 February 2018
Pan African Resources Plc
Condensed statement of profit or loss and other comprehensive income for the
six month period ended 31 December 2017
#DIV/0!
31 31 December 31 31 December
December 2016 December 2016
2017 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
GBP GBP ZAR ZAR
millions millions millions millions
Revenue 82.9 90.1 1,462.9 1,610.8
Gold sales 82.9 90.1 1,462.9 1,610.8
Realisation costs (1.5) (1.5) (27.1) (27.7)
On - mine revenue 81.4 88.6 1,435.8 1,583.1
Gold cost of production (69.6) (65.2) (1,228.0) (1,165.6)
Mining depreciation (5.9) (5.7) (104.8) (101.5)
Mining profit 5.9 17.7 103.0 316.0
Other (expenses)/income (0.8) 1.9 (13.3) 34.9
Profit on disposal of investment - 0.3 - 4.6
Royalty costs (0.3) (0.9) (6.1) (16.7)
Net income before finance income and 4.8 19.0 83.6 338.8
finance costs
Finance income 0.7 0.1 13.3 1.1
Finance costs (0.8) (1.1) (14.3) (19.0)
Profit before taxation 4.7 18.0 82.6 320.9
Taxation (1.0) (5.1) (17.6) (90.4)
Profit after taxation 3.7 12.9 65.0 230.5
Discontinued operations
(Loss)/profit from discontinued (0.4) 1.1 (6.8) 19.3
operations
Profit after taxation 3.3 14.0 58.2 249.8
Other comprehensive income:
Fair value movement on available for (2.2) (0.3) (36.1) (6.3)
sale investment
Foreign currency translation differences 2.7 22.4 - -
Total comprehensive income for the 3.8 36.1 22.1 243.5
period
Profit attributable to:
Owners of the parent 3.3 14.0 58.2 249.8
Total comprehensive income attributable
to:
Owners of the parent 3.8 36.1 22.1 243.5
Earnings per share 0.18 0.93 3.23 16.58
Diluted earnings per share 0.18 0.93 3.23 16.57
Weighted average number of shares in 1,798.3 1,506.8 1,798.3 1,506.8
issue
Diluted number of shares in issue 1,798.9 1,507.6 1,798.9 1,507.6
Condensed consolidated statement of financial
position as at 31 December 2017
31 30 June 31 December 31 30 June 31 December
December 2017 2016 December 2017 2016
2017 2017
(Unaudited) (Audited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GBP million GBP GBP million ZAR million ZAR million ZAR million
million
ASSETS
Non-current assets
Property, plant and 263.7 224.7 228.0 4,396.0 3,810.7 3,854.0
equipment and mineral rights
Other intangible assets 0.1 0.1 0.1 1.8 1.2 2.1
Deferred taxation asset 0.5 0.8 1.6 7.7 12.9 27.1
Long-term inventory 0.7 0.7 0.2 11.6 11.6 3.7
Long-term receivables 2.6 2.5 - 42.8 43.0 -
Goodwill 21.0 21.0 21.0 303.5 303.5 303.5
Investments 5.5 7.5 - 91.5 127.6 -
Rehabilitation trust fund 21.3 18.9 19.0 357.5 320.6 319.5
315.4 276.2 269.9 5,212.4 4,631.1 4,509.9
Current assets
Inventories 4.0 5.1 6.2 66.0 85.6 105.4
Current taxation asset 0.8 1.1 0.9 13.5 18.1 14.9
Trade and other receivables 14.7 13.7 16.4 244.7 233.1 276.8
Financial instruments assets 0.3 0.0 0.0 5.8 - -
Cash and cash equivalents 7.1 9.4 4.0 118.7 160.2 68.4
26.9 29.3 27.5 448.7 497.0 465.5
Non-current assets held for - 5.6 0.1 - 95.2 1.3
sale
TOTAL ASSETS 342.3 311.1 297.4 5,661.1 5,223.3 4,976.7
EQUITY AND LIABILITIES
Capital and reserves
Share capital 22.3 22.3 19.4 318.8 318.8 269.7
Share premium 145.4 145.4 108.9 2,261.4 2,261.4 1,638.6
Translation reserve (34.2) (36.8) (36.2) - - -
Share option reserve 1.2 1.2 1.2 17.2 17.2 17.2
Retained earnings 126.6 131.3 127.4 1,776.4 1,867.0 1,806.9
Realisation of equity (10.7) (10.7) (10.7) (140.6) (140.6) (140.6)
reserve
Treasury capital reserve (25.4) (25.4) (25.4) (548.6) (548.6) (548.6)
Merger reserve (10.7) (10.7) (10.7) (154.7) (154.7) (154.7)
Other reserves (2.2) - - (36.1) - -
Equity attributable to 212.3 216.6 173.9 3,493.8 3,620.5 2,888.5
owners of the parent
Non-current liabilities
Long-term provisions 11.9 11.7 12.1 198.1 197.7 205.8
Long-term liabilities 43.7 12.3 29.6 729.1 208.4 499.9
Deferred taxation liability 40.3 38.9 49.7 671.1 660.5 839.3
95.9 62.9 91.4 1,598.3 1,066.6 1,545.0
Current liabilities
Trade and other payables 27.6 27.1 21.6 460.2 458.9 365.7
Financial instruments - - 1.2 - - 20.2
liabilities
Current portion of long-term 5.6 4.1 7.7 93.3 70.3 130.0
liabilities
Current taxation liability 0.9 - 1.6 15.5 0.8 27.3
34.1 31.2 32.1 569.0 530.0 543.2
Liabilities directly - 0.4 - - 6.2 -
associated with assets held
for sale
TOTAL EQUITY AND LIABILITIES 342.3 311.1 297.4 5,661.1 5,223.3 4,976.7
Condensed consolidated statement of changes in equity for the six month period
ended 31 December 2017
Six months ended 31 Six months ended 31 Six months ended Six months ended
December 2017 December 2016 31 December 2017 31 December 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
GBP million GBP million ZAR million ZAR million
Shareholder's equity as start period 216.6 151.0 3,620.5 2,874.4
Share option reserve - 0.1 - 3.2
Other comprehensive income/(expense) 0.4 22.1 (36.1) (6.3)
Profit for the period 3.3 14.0 58.2 249.8
Dividends paid (10.0) (17.1) (185.0) (300.0)
Reciprocal dividend 2.0 3.8 36.2 67.4
Total equity 212.3 173.9 3,493.8 2,888.5
Condensed consolidated cash flow statement for the six month
period ended 31 December 2017
Six months Six months Six months Six months
ended ended ended ended
31 December 31 December 31 December 31 December
2017 2016 2017 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
GBP million GBP million ZAR million ZAR million
Profits before tax continuing 4.7 18.3 82.6 328.4
operations
(Losses)/profits from discontinued (0.2) 1.1 (7.6) 19.3
operations
Profits from operations 4.5 19.4 75.0 347.7
Summary of adjustments:
Royalties 0.3 1.0 6.1 17.3
Depreciation (note 1) 6.0 6.5 105.2 115.8
Gold loan deliveries (1.5) (1.6) (26.6) (27.9)
Fair value adjustments - (5.0) 4.0 (89.3)
Net finance costs 0.1 1.0 1.0 18.0
Operating profit before working 9.4 21.3 164.7 381.6
capital changes
(Increase)/decrease in trade and (0.9) (2.3) (11.5) 0.9
other receivables
Increase/(decrease) in inventory 1.1 (1.8) 19.6 (18.3)
Increase in trade and other 0.5 3.3 14.7 7.4
payables
Effect of foreign exchange rate (0.6) (0.3) - -
changes on working capital
Net cash generated by operations 9.5 20.2 187.5 371.6
before taxation, royalty and
finance costs
Taxation refund/(paid) 0.4 (3.5) 7.6 (59.6)
Royalty paid (0.4) (1.1) (6.5) (18.7)
Net finance costs paid (0.6) (1.0) (10.6) (17.0)
Net cash generated by operations 8.9 14.6 178.0 276.3
after taxation, royalty and finance
costs
Dividends paid (10.2) (17.1) (185.0) (300.0)
Reciprocal dividend 2.1 3.9 36.1 67.4
Cash inflow from operating 0.8 1.4 29.1 43.7
activities
Cash outflow from investing (36.2) (9.5) (634.2) (173.1)
activities
Cash inflow from financing 32.3 8.8 563.6 145.2
activities
Net (decrease)/increase in cash (3.1) 0.7 (41.5) 15.8
equivalents
Cash at the beginning of period 9.4 2.6 160.2 52.6
Effect of foreign currency rate 0.8 0.7 - -
changes
Cash and cash equivalents at end of 7.1 4.0 118.7 68.4
period
Note 1: Depreciation comprises mining and non-mining depreciation.
Condensed GBP Segment Report for the six month period ended 31 December 2017
31 December 2017
Continuing operations Discontinued operations
Barberton Evander Corporate Funding Phoenix Reclassification Group
Mines Mines Company (Note 4)
GBP GBP GBP GBP GBP GBP million GBP
million million million million million million
Revenue
Gold sales (Note 1) 39.7 43.2 - - - - 82.9
Platinum sales - - - - 1.4 (1.4) -
Coal sales - - - - - - -
Realisation costs (0.2) (1.3) - - - - (1.5)
On - mine revenue 39.5 41.9 - - 1.4 (1.4) 81.4
Gold cost of (32.0) (37.6) - - - - (69.6)
production
Platinum cost of - - - - (1.6) 1.6 -
production
Coal cost of - - - - - - -
production
Depreciation (2.2) (3.7) - - - - (5.9)
Mining Profit 5.3 0.6 - - (0.2) 0.2 5.9
Other (expenses)/ (0.4) 1.1 (1.5) - - - (0.8)
income (Note 2)
Profit on disposal of - - - - - - -
investment
Loss on sale of asset - - - - (0.3) 0.3 -
held for sale
Royalty costs (0.2) (0.1) - - - - (0.3)
Net income / (loss) 4.7 1.6 (1.5) - (0.5) 0.5 4.8
before finance income
and finance costs
Finance income 0.1 0.4 0.2 - - - 0.7
Finance costs - - - (0.8) - - (0.8)
Profit /(loss) before 4.8 2.0 (1.3) (0.8) (0.5) 0.5 4.7
taxation
Taxation (0.5) (0.1) (0.4) - 0.1 (0.1) (1.0)
Profit /(loss) after 4.3 1.9 (1.7) (0.8) (0.4) 0.4 3.7
taxation before
inter-company charges
Profit/(loss) after - - - - - (0.4) (0.4)
taxation from
discontinued
operations
Profit /(loss) after 4.3 1.9 (1.7) (0.8) (0.4) - 3.3
taxation before
inter-company charges
Inter-company
transactions
Management fees (0.8) (0.2) 1.1 (0.1) - - -
Inter-company interest (0.2) (0.3) (0.2) 0.7 - - -
charges
Profit /(loss) after 3.3 1.4 (0.8) (0.2) (0.4) - 3.3
taxation after
inter-company charges
Segmental assets 75.5 230.4 10.3 5.2 - - 321.4
(Total assets
excluding goodwill)
Segmental liabilities 27.8 52.8 2.7 46.6 - - 129.9
Goodwill 21.0 - - - - - 21.0
Net assets (excluding 47.7 177.6 7.6 (41.4) - - 191.5
goodwill)
Capital expenditure 4.0 35.1 - - 0.3 - 39.1
31 December 2016
Continuing operations Discontinued
operations
Barberton Evander Corporate Funding Phoenix Uitkomst Reclassification Group
Mines Mines Company (Note 3)
GBP GBP GBP GBP GBP GBP GBP million GBP
million million million million million million million
Revenue
Gold sales (Note 48.8 41.3 - - - - - 90.1
1)
Platinum sales - - - - 2.4 - (2.4) -
Coal sales - - - - - 12.6 (12.6) -
Realisation costs (0.3) (1.2) - - - - - (1.5)
On - mine revenue 48.5 40.1 - - 2.4 12.6 (15.0) 88.6
Gold cost of (29.4) (35.8) - - - - - (65.2)
production
Platinum cost of - - - - (2.3) - 2.3 -
production
Coal cost of - - - - - (10.6) 10.6 -
production
Depreciation (2.5) (3.2) - - (0.4) (0.3) 0.7 (5.7)
Mining Profit 16.6 1.1 - - (0.3) 1.7 (1.4) 17.7
Other (expenses)/ 4.5 (0.5) (2.1) - 0.1 - (0.1) 1.9
income (Note 2)
Profit on - - 0.3 - - - - 0.3
disposal of
investment
Loss on sale of - - - - - - - -
asset held for
sale
Royalty costs (0.7) (0.2) - - - - - (0.9)
Net income / 20.4 0.4 (1.8) - (0.2) 1.7 (1.5) 19.0
(loss) before
finance income and finance costs
Finance income - - - 0.1 - - - 0.1
Finance costs - - - (1.1) - - - (1.1)
Profit /(loss) 20.4 0.4 (1.8) (1.0) (0.2) 1.7 (1.5) 18.0
before taxation
Taxation (5.4) 0.1 0.2 - 0.1 (0.5) 0.4 (5.1)
Profit /(loss) 15.0 0.5 (1.6) (1.0) (0.1) 1.2 (1.1) 12.9
after taxation
before
inter-company
charges
Profit/(loss) - - - - - - 1.1 1.1
after taxation
from discontinued
operations
Profit /(loss) 15.0 0.5 (1.6) (1.0) (0.1) 1.2 - 14.0
after taxation
before
inter-company
charges
Inter-company
transactions
Management fees (0.6) (0.6) 1.4 - (0.1) (0.1) - -
Inter-company - (0.3) - 0.5 - (0.2) - -
interest charges
Profit /(loss) 14.4 (0.4) (0.2) (0.5) (0.2) 0.9 - 14.0
after taxation
after
inter-company
charges
Segmental assets 69.4 174.0 7.9 (2.4) 11.4 16.2 - 276.5
(Total assets
excluding
goodwill)
Segmental 28.2 57.0 2.9 30.3 0.7 4.6 - 123.7
liabilities
Goodwill 21.0 - - - - - - 21.0
Net assets 41.2 117.0 5.0 (32.7) 10.7 11.6 - 152.8
(excluding
goodwill)
Capital 4.7 6.2 - - 0.2 0.3 - 11.4
expenditure
Note 1: All gold sales were made in the Republic of South Africa and the
majority of revenue was generated from selling gold to South African financial
institutions through the group's Funding Company.
Note 2: Other (expenses)/income exclude inter-company management fees and
dividend received.
Note 3: The disposal of Pan African Resources Coal Holdings Proprietary Limited
and Uitkomst was completed on 30 June 2017.
Note 4: The disposal of Phoenix was completed on 7 November 2017.
Condensed GBP Segment Report for the six month period ended 31 December 2017
31 December 2017
Continuing operations Discontinued operations
Barberton Evander Corporate Funding Phoenix Reclassification Group
Mines Mines Company (Note 4)
GBP GBP GBP GBP GBP GBP million GBP
million million million million million million
Revenue
Gold sales (Note 1) 39.7 43.2 - - - - 82.9
Platinum sales - - - - 1.4 (1.4) -
Coal sales - - - - - - -
Realisation costs (0.2) (1.3) - - - - (1.5)
On - mine revenue 39.5 41.9 - - 1.4 (1.4) 81.4
Gold cost of (32.0) (37.6) - - - - (69.6)
production
Platinum cost of - - - - (1.6) 1.6 -
production
Coal cost of - - - - - - -
production
Depreciation (2.2) (3.7) - - - - (5.9)
Mining Profit 5.3 0.6 - - (0.2) 0.2 5.9
Other (expenses)/ (0.4) 1.1 (1.5) - - - (0.8)
income (Note 2)
Profit on disposal of - - - - - - -
investment
Loss on sale of asset - - - - (0.3) 0.3 -
held for sale
Royalty costs (0.2) (0.1) - - - - (0.3)
Net income / (loss) 4.7 1.6 (1.5) - (0.5) 0.5 4.8
before finance income
and finance costs
Finance income 0.1 0.4 0.2 - - - 0.7
Finance costs - - - (0.8) - - (0.8)
Profit /(loss) before 4.8 2.0 (1.3) (0.8) (0.5) 0.5 4.7
taxation
Taxation (0.5) (0.1) (0.4) - 0.1 (0.1) (1.0)
Profit /(loss) after 4.3 1.9 (1.7) (0.8) (0.4) 0.4 3.7
taxation before
inter-company charges
Profit/(loss) after - - - - - (0.4) (0.4)
taxation from
discontinued
operations
Profit /(loss) after 4.3 1.9 (1.7) (0.8) (0.4) - 3.3
taxation before
inter-company charges
Inter-company
transactions
Management fees (0.8) (0.2) 1.1 (0.1) - - -
Inter-company interest (0.2) (0.3) (0.2) 0.7 - - -
charges
Profit /(loss) after 3.3 1.4 (0.8) (0.2) (0.4) - 3.3
taxation after
inter-company charges
Segmental assets 75.5 230.4 10.3 5.2 - - 321.4
(Total assets
excluding goodwill)
Segmental liabilities 27.8 52.8 2.7 46.6 - - 129.9
Goodwill 21.0 - - - - - 21.0
Net assets (excluding 47.7 177.6 7.6 (41.4) - - 191.5
goodwill)
Capital expenditure 4.0 35.1 - - 0.3 - 39.1
31 December 2016
Continuing operations Discontinued
operations
Barberton Evander Corporate Funding Phoenix Uitkomst Reclassification Group
Mines Mines Company (Note 3)
GBP GBP GBP GBP GBP GBP GBP million GBP
million million million million million million million
Revenue
Gold sales (Note 48.8 41.3 - - - - - 90.1
1)
Platinum sales - - - - 2.4 - (2.4) -
Coal sales - - - - - 12.6 (12.6) -
Realisation costs (0.3) (1.2) - - - - - (1.5)
On - mine revenue 48.5 40.1 - - 2.4 12.6 (15.0) 88.6
Gold cost of (29.4) (35.8) - - - - - (65.2)
production
Platinum cost of - - - - (2.3) - 2.3 -
production
Coal cost of - - - - - (10.6) 10.6 -
production
Depreciation (2.5) (3.2) - - (0.4) (0.3) 0.7 (5.7)
Mining Profit 16.6 1.1 - - (0.3) 1.7 (1.4) 17.7
Other (expenses)/ 4.5 (0.5) (2.1) - 0.1 - (0.1) 1.9
income (Note 2)
Profit on - - 0.3 - - - - 0.3
disposal of
investment
Loss on sale of - - - - - - - -
asset held for
sale
Royalty costs (0.7) (0.2) - - - - - (0.9)
Net income / 20.4 0.4 (1.8) - (0.2) 1.7 (1.5) 19.0
(loss) before
finance income
and finance costs
Finance income - - - 0.1 - - - 0.1
Finance costs - - - (1.1) - - - (1.1)
Profit /(loss) 20.4 0.4 (1.8) (1.0) (0.2) 1.7 (1.5) 18.0
before taxation
Taxation (5.4) 0.1 0.2 - 0.1 (0.5) 0.4 (5.1)
Profit /(loss) 15.0 0.5 (1.6) (1.0) (0.1) 1.2 (1.1) 12.9
after taxation
before
inter-company
charges
Profit/(loss) - - - - - - 1.1 1.1
after taxation
from discontinued
operations
Profit /(loss) 15.0 0.5 (1.6) (1.0) (0.1) 1.2 - 14.0
after taxation
before
inter-company
charges
Inter-company
transactions
Management fees (0.6) (0.6) 1.4 - (0.1) (0.1) - -
Inter-company - (0.3) - 0.5 - (0.2) - -
interest charges
Profit /(loss) 14.4 (0.4) (0.2) (0.5) (0.2) 0.9 - 14.0
after taxation
after
inter-company
charges
Segmental assets 69.4 174.0 7.9 (2.4) 11.4 16.2 - 276.5
(Total assets
excluding
goodwill)
Segmental 28.2 57.0 2.9 30.3 0.7 4.6 - 123.7
liabilities
Goodwill 21.0 - - - - - - 21.0
Net assets 41.2 117.0 5.0 (32.7) 10.7 11.6 - 152.8
(excluding
goodwill)
Capital 4.7 6.2 - - 0.2 0.3 - 11.4
expenditure
Note 1: All gold sales were made in the Republic of South Africa and the
majority of revenue was generated from selling gold to South African financial
institutions through the group's Funding Company.
Note 2: Other (expenses)/income exclude inter-company management fees and
dividend received.
Note 3: The disposal of Pan African Resources Coal Holdings Proprietary Limited
and Uitkomst was completed on 30 June 2017.
Note 4: The disposal of Phoenix was completed on 7 November 2017.
Condensed ZAR Segment Report for the six month period ended 31 December 2017
31 December 2017
Continuing operations Discontinued operations
Barberton Evander Corporate Funding Phoenix Reclassification Group
Mines Mines Company (Note 4)
ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million
Revenue
Gold sales (Note 1) 700.3 762.6 - - - - 1,462.9
Platinum sales - - - - 24.7 (24.7) -
Coal sales - - - - - - -
Realisation costs (2.9) (24.2) - - - - (27.1)
On - mine revenue 697.4 738.4 - - 24.7 (24.7) 1,435.8
Gold cost of production (564.1) (663.9) - - - - (1,228.0)
Platinum cost of production - - - - (28.2) 28.2 -
Coal cost of production - - - - - - -
Depreciation (38.3) (66.5) - - - - (104.8)
Mining Profit 95.0 8.0 - - (3.5) 3.5 103.0
Other (expenses)/income (Note 2) (7.7) 20.0 (25.6) - 0.7 (0.7) (13.3)
Profit on disposal of investment - - - - - - -
Loss on sale of asset held for sale - - - - (4.9) 4.9 -
Royalty costs (2.9) (3.2) - - - - (6.1)
Net income / (loss) before finance 84.4 24.8 (25.6) - (7.7) 7.7 83.6
income and finance costs
Finance income 1.2 7.5 3.2 1.4 0.2 (0.2) 13.3
Finance costs - - (0.2) (14.1) - - (14.3)
Profit /(loss) before taxation 85.6 32.3 (22.6) (12.7) (7.5) 7.5 82.6
Taxation (9.5) (2.1) (5.7) (0.3) 0.7 (0.7) (17.6)
Profit /(loss) after taxation 76.1 30.2 (28.3) (13.0) (6.8) 6.8 65.0
Profit/(loss) after taxation from - - - - - (6.8) (6.8)
discontinued operations
Profit /(loss) after taxation 76.1 30.2 (28.3) (13.0) (6.8) - 58.2
before inter-company charges
Inter-company transactions
Management fees (14.6) (3.3) 18.9 (1.0) - - -
Inter-company interest charges (4.4) (5.0) (3.0) 12.4 - - -
Profit /(loss) after taxation after 57.1 21.9 (12.4) (1.6) (6.8) - 58.2
inter-company charges
Segmental assets (Total assets 1,258.8 3,840.3 171.7 86.7 - - 5,357.5
excluding goodwill)
Segmental liabilities 463.9 882.4 43.8 777.3 - - 2,167.4
Goodwill 303.5 - - - - - 303.5
Net assets (excluding goodwill) 794.9 2,957.9 127.9 (690.6) - - 3,190.1
Capital expenditure 71.4 619.0 0.6 - 6.0 - 697.0
31 December 2016
Continuing operations Discontinued operations
Barberton Evander Corporate Funding Phoenix Uitkomst Reclassification Group
Mines Mines Company (Note 3)
ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million
Revenue
Gold sales (Note 1) 872.9 737.9 - - - - - 1,610.8
Platinum sales - - - - 42.5 - (42.5) -
Coal sales - - - - - 225.0 (225.0) -
Realisation costs (6.0) (21.7) - - - - - (27.7)
On - mine revenue 866.9 716.2 - - 42.5 225.0 (267.5) 1,583.1
Gold cost of production (526.2) (639.4) - - - - - (1,165.6)
Platinum cost of production - - - - (41.1) - 41.1 -
Coal cost of production - - - - - (189.0) 189.0 -
Depreciation (44.1) (57.3) - - (7.7) (6.2) 13.9 (101.4)
Mining Profit 296.6 19.5 - - (6.3) 29.8 (23.5) 316.1
Other (expenses)/income (Note 2) 80.1 (9.3) (36.4) 0.5 1.4 2.6 (4.0) 34.9
Profit on disposal of investment - - 4.6 - - - - 4.6
Loss on sale of asset held for sale - - - - - - - -
Royalty costs (13.0) (3.7) - - - (0.6) 0.6 (16.7)
Net income / (loss) before finance 363.7 6.5 (31.8) 0.5 (4.9) 31.8 (26.9) 338.9
income and finance costs
Finance income (0.2) 0.1 0.3 0.9 - 0.1 (0.1) 1.1
Finance costs - - - (19.0) - (0.3) 0.3 (19.0)
Profit /(loss) before taxation 363.5 6.6 (31.5) (17.6) (4.9) 31.6 (26.7) 321.0
Taxation (95.8) 1.5 4.0 - 0.9 (8.5) 7.6 (90.3)
Profit /(loss) after taxation 267.7 8.1 (27.5) (17.6) (4.0) 23.1 (19.1) 230.7
Profit/(loss) after taxation from - - - - - - 19.1 19.1
discontinued operations
Profit /(loss) after taxation 267.7 8.1 (27.5) (17.6) (4.0) 23.1 - 249.8
before inter-company charges
Inter-company transactions
Management fees (11.6) (10.2) 24.8 - (1.2) (1.8) - -
Inter-company interest charges (0.7) (5.8) (3.4) 9.1 0.8 - - -
Profit /(loss) after taxation after 255.4 (7.9) (6.1) (8.5) (4.4) 21.3 - 249.8
inter-company charges
Segmental assets (Total assets 1,172.3 2,941.4 133.1 (40.0) 192.6 273.3 - 4,672.7
excluding goodwill)
Segmental liabilities 476.0 962.9 47.0 512.0 11.3 79.3 - 2,088.5
Goodwill 303.5 - - - - - - 303.5
Net assets (excluding goodwill) 696.3 1,978.5 86.1 (552.0) 181.3 194.0 - 2,584.2
Capital expenditure 83.5 111.8 0.3 - 2.9 5.0 - 203.5
Note 1: All gold sales were made in the Republic of South Africa and the
majority of revenue was generated from selling gold to South African financial
institutions through the group's Funding Company.
Note 2: Other (expenses)/income exclude inter-company management fees and
dividend received.
Note 3: The disposal of Pan African Resources Coal Holdings Proprietary Limited
and Uitkomst was completed on 30 June 2017.
Note 4: The disposal of Phoenix was completed on 7 November 2017.
Contact information
Corporate Office Registered Office
The Firs Office Building Suite 31
1st Floor, Office 101 Second Floor
Cnr. Cradock and Biermann Avenues 107 Cheapside
Rosebank, Johannesburg London
South Africa EC2V 6DN
Office: + 27 (0) 11 243 2900 United Kingdom
Facsimile: + 27 (0) 11 880 1240 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: +44 (0) 20 7260 1000
Sholto Simpson Ross Allister/ James Bavister / David
One Capital McKeown
JSE Sponsor Peel Hunt LLP
Office: + 27 (0) 11 550 5009 Joint Broker
Office: +44 (0) 207 418 8900
Julian Gwillim Jeffrey Couch/Neil Haycock/Thomas
Aprio Strategic Communications Rider
Public & Investor Relations SA BMO Capital Markets Limited
Office: +27 (0)11 880 0037 Joint Broker
Office: +44 (0) 207 236 1010
Bobby Morse and Chris Judd Website: www.panafricanresources.com
Buchanan
Public & Investor Relations UK
Office: +44 (0)20 7466 5000
paf@buchanan.uk.com
END
(END) Dow Jones Newswires
February 13, 2018 02:00 ET (07:00 GMT)
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