Pan African Resources Plc Trading Statement and Production Update

 
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 FOR THE FINANCIAL YEARED 30 JUNE 2018, PRODUCTION UPDATE 
              FOR 2019 FINANCIAL YEAR AND ELIKHULU COMMISSIONING 
 
Pan African CEO Cobus Loots commented: 
 
"The group results for the 2018 financial year are reflective of both the 
incredibly challenging operational environment and the specific issues that 
confronted the group over the past year.  These issues, as well as the 
definitive remedial actions we implemented, were well disseminated to the 
market. The operational update and the commissioning of the Elikhulu plant 
demonstrates that we are well on track to deliver into our 2019 targets and 
look forward to the year ahead". 
 
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% 
from those of the previous corresponding period. 
 
Pan African is incorporated in England and Wales and, accordingly, its 
presentation currency is Pounds Sterling ("GBP") with a functional currency in 
South African Rands ("ZAR" or "R"). 
 
The ZAR:GBP exchange rate affects the reporting of results in GBP. For the 
reporting period ended 30 June 2018 ("current reporting period"), the average 
prevailing ZAR:GBP exchange rate is used, and, in the event of material 
transactions, the exchange rate on the date of the material transaction is used 
to translate earnings from ZAR to GBP. 
 
For the reporting period ended 30 June 2017 ("prior reporting period"), the 
average ZAR:GBP exchange rate was ZAR17.25:1. For the current reporting period, 
the ZAR marginally depreciated against the GBP to an average exchange rate of 
ZAR17.27:1. This 0.1% 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. 
 
The group records its revenue from precious metals sales in ZAR. The strength 
in the value of the ZAR/USD exchange rate during the current reporting period 
had an adverse impact on the USD revenue received when translated into ZAR. In 
the current reporting period, the average ZAR/USD exchange rate appreciated by 
5.4% to R12.86:1 (2017: R13.59:1). 
 
Due to the cessation of mining at Evander Gold Mining Proprietary Limited 
("Evander Mines") underground operations which includes 8 Shaft, 7 Shaft and 
the run-of-mine circuit in the Kinross metallurgical plant,  the financial 
results from the Evander Mines' underground operations were classified as 
discontinued operations ("discontinued operations") during the current 
reporting period. The prior reporting period's figures have been re-presented 
to differentiate between the discontinued operations and the results from the 
remainder of the operational portfolio comprising the continuing operations 
("continuing operations"). The combined results comprise the results of the 
continuing operations and discontinued operations ("combined operations"). As 
result of the cessation of Evander Mines' underground operations, the group 
recognised a once-off impairment charge of R1.78 billion (GBP106.3 million) and 
incurred retrenchments costs of R161 million (GBP9.3 million). 
 
In the current reporting period, the group's weighted average number of shares 
in issue increased by 15.7% to 1,809,726,739 shares (2017: 1,564,346,115 
shares). The increase in the weighted average number of shares in issue is 
predominantly due to the full-year impact of the issuance of new shares to fund 
the equity component of the Elikhulu tailings retreatment project's 
("Elikhulu") construction late in the prior reporting period. The disposal of 
130-million Pan African shares held by PAR Gold Proprietary Limited, which had 
a commensurate increase in the weighted average number of shares in issue, as 
these shares had previously been treated as treasury shares. The proceeds from 
the disposal were partly utilised to fund the incorporation of existing Evander 
tailing retreatment plant ("ETRP") throughput into Elikhulu's processing 
capacity, which will result in an increased capacity of 1.2-million tonnes per 
month from December 2018. 
 
Pan African advises shareholders that its headline earnings per share ("HEPS") 
and earnings per share ("EPS") in ZAR terms from its continuing operations for 
the current reporting period are expected to be between: 
 
  * HEPS: 57% to 47% lower than the 38.72 cents for the prior reporting period. 
    Therefore the expected HEPS range is between 16.77 cents to 20.65 cents. 
 
  * EPS: 80% to 70% lower than the 44.78 cents for the prior reporting period. 
    Therefore the expected EPS range is between 8.92 cents to 13.40 cents. 
 
The group's combined operations, EPS and HEPS in ZAR terms for the current 
reporting period are expected to be between: 
 
  * HEPS: 42% to 32% lower than the 20.17 cents for the prior reporting period. 
    Therefore the expected HEPS range is between 11.65 cents to 13.67 cents. 
 
  * EPS is expected to decrease from 19.81 cents for the prior reporting 
    period, to between (87.02) cents to (85.04) cents. 
 
The HEPS and EPS in GBP terms from its continuing operations for the current 
reporting period are expected to be between: 
 
  * HEPS: 56% to 46% lower than the 2.24 pence for the prior reporting period. 
    Therefore the expected HEPS range is between 0.97 pence to 1.20 pence. 
 
  * EPS: 81% to 71% lower than the 2.60 pence for the prior reporting period. 
    Therefore the expected EPS range is between 0.50 pence to 0.76 pence. 
 
The group's combined operations HEPS and EPS in GBP terms for the current 
reporting period are expected to be between: 
 
  * HEPS: 43% to 33% lower than the 1.17 pence for the prior reporting period. 
    Therefore the expected HEPS range is between 0.67 pence to 0.79 pence. 
 
  * EPS is expected to decrease from 1.14 pence for the prior reporting period, 
    to between (5.21) pence to (5.10) pence. 
 
PRODUCTION UPDATE FOR THE 2019 FINANCIAL YEAR 
 
Following the operational updates released during July 2018, Pan African is 
pleased to provide a production update and guidance for quarter one of the 2019 
financial year ("quarter one"), and further information on the group's 
prospects for the remainder of the new financial year. 
 
Barberton Mines Proprietary Limited ("Barberton Mines") 
 
  * Barberton Mines is benefitting from increased underground mining 
    flexibility due to, inter alia, both the high-grade 272 and 358 platforms 
    being available at Barberton Mines' Fairview operation. The Barberton 
    tailings retreatment plant ("BTRP") is also benefiting from the 
    installation of the regrind mill at the end of the 2018 financial year. 
 
  * Barberton Mines is forecast to produce approximately 26,000oz for quarter 
    one, with underground mining operations contributing more than 20,500oz, 
    and the BTRP more than 5,000oz. Barberton Mines is therefore on track to 
    deliver its annual production guidance of approximately 100,000oz for the 
    2019 financial year. 
 
  * Fairview commendably achieved one-million fatality free shifts during July 
    2018. 
 
  * The conclusion of a three-year wage agreement with the National Union of 
    Mineworkers and the United Association of South Africa, which was announced 
    on 7 September 2018, is expected to assist with operational stability and 
    productivity at Barberton Mines. 
 
  * As per the announcement of 6 September 2018, phase one and two of the Royal 
    Sheba drilling campaign, comprising 20 drill holes, has been completed with 
    excellent results confirming the extension of the Sheba orebody to surface. 
    An updated mineral reserve's report on Royal Sheba is expected by November 
    2018, and a definitive feasibility study by February 2019. 
 
Evander Mines 
 
  * The ETRP and surface-source operations are expected to produce 
    approximately 4,000oz the first quarter. The ETRP and surface-source 
    production remains on track, despite production being impacted by 
    lower-quality surface sources being treated during the quarter. 
 
  * The group is reviewing the merits of mining Evander Mines' 8 Shaft pillar. 
    Further information on this initiative will be communicated in the near 
    future. 
 
ELIKHULU COMMISSIONING 
 
  * The Elikhulu Project is progressing according to schedule with all phases 
    of the five-phase technical commissioning processes now successfully 
    completed. This commissioning includes the successful completion of the 
    "C5" or final contractual certificate dealing with production requirements, 
    in that the plant's tonnage throughput was achieved and the dissolved gold 
    content in the final leach tank has been met for a continuous period of 72 
    hours. In line with previous guidance, Elikhulu is expected to produce at 
    steady-state from October 2018. 
 
  * The incorporation of the existing ETRP's throughput into Elikhulu's 
    processing capacity, which will result in an increased capacity totalling 
    1.2-million tonnes per month, is in progress as previously communicated. 
 
The financial information contained in this announcement has neither been 
reviewed nor audited by the company's auditors. The group's audited year-end 
results for the year ended 30 June 2018 will be released on 19 September 2018. 
 
For further information on Pan African, please visit the company's website at 
www.panafricanresources.com 
 
 
14 September 2018 
 
 
 
Contact information 
 
Corporate Office                       Registered Office 

The Firs Office Building               Suite 31 
2nd Floor, Office 201                  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) 20 7796 8644 
                                       Facsimile: + 44 (0) 20 7796 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) 20 7796 8644          Office: [phone] 
 
Sholto Simpson                         Ross Allister/James Bavister/David 
One Capital                            McKeown 
JSE Sponsor                            Peel Hunt LLP 
Office: + 27 (0) 11 550 5009           Joint Broker 
                                       Office: [phone] 
 
Julian Gwillim                         Jeffrey Couch/Neil Haycock/Thomas Rider 
Aprio Strategic Communications         BMO Capital Markets Limited 
Public & Investor Relations SA         Joint Broker 
Office: [phone]             Office: [phone] 
 
Bobby Morse 
Buchanan 
Public & Investor Relations UK 
Office: [phone] 
Email: [e-mail] 
 
Website: www.panafricanresources.com 
 
 
 
END 
 

(END) Dow Jones Newswires

September 14, 2018 04:18 ET (08:18 GMT)