Pan African Resources Plc Provisional Summarised Audited Results

 
TIDMPAF 
 
Pan African Resources PLC 
 
(Incorporated and registered in England and Wales under the Companies Act 1985 
with registered number 3937466 on 25 February 2000) 
 
Share code on AIM: PAF 
 
Share code on JSE: PAN 
 
ISIN: GB0004300496 
 
ADR ticker code: PAFRY 
 
(Pan African or the Company or the Group) 
 
(Key features are reported in US dollar (US$) and South African rand (ZAR)) 
 
Provisional summarised audited results for the year ended 30 June 2020 - SHORT 
FORM ANNOUNCEMENT 
 
KEY FEATURES 
 
  * The Group responded swiftly in implementing stringent policies and 
    protocols to mitigate the impact of the COVID-19 pandemic on its employees 
    and operations 
  * Gold production increased by 4.1% to 179,457oz after final refinery 
    adjustments (2019: 172,442oz), exceeding the revised full-year production 
    guidance of 176,000 oz 
  * Industry-leading safety performance, both in terms of lost-time injury and 
    reportable injury frequency rates 
  * Revenue increased by 25.9% to US$273.7 million (2019: US$217.4 million) 
  * Profit after taxation increased by 16.6% to US$44.3 million (2019: US$38.0 
    million) 
  * Headline earnings increased by 93.0% to US$44.2 million (2019: US$22.9 
    million) 
  * Headline earnings per share increased by 92.4% to US 2.29 cents per share 
    (2019: US 1.19 cents per share) 
  * Earnings per share increased by 16.8% to US 2.30 cents per share (2019: US 
    1.97 cents per share) 
  * Net cash generated by operating activities increased by 42.7% to US$53.8 
    million (2019: US$37.7 million) 
  * Net senior debt* decreased by 51.9% to US$62.0 million (2019: US$129.0 
    million) 
  * Improved net debt to net adjusted EBITDA ratio of 0.7 (2019: 2.2) 
  * Low-cost operations (including Elikhulu, BTRP and Barberton Mines' Fairview 
    Mine) achieved an AISC of US$826/oz for the Reporting Period 
  * The development of Evander Mines' Egoli project has commenced. The 
    project's payback is estimated at less than five years from inception of 
    construction, with funding provided on a non-dilutive basis by means of a 
    dedicated debt facility 
  * Production guidance increased to 190,000oz for the year ending 30 June 2021 
  * The board has proposed a record final dividend of ZAR 312.9 million or 
    approximately US$18.7 million, at prevailing exchange rates, subject to 
    approval by shareholders at the annual general meeting (AGM) 
 
(*Net senior debt includes senior interest-bearing debt and the outstanding 
gold loan balance, net of available cash) 
 
CHIEF EXECUTIVE OFFICER'S STATEMENT 
 
"Over the past year, our Group's operations demonstrated their resilience, with 
gold production in excess of the revised guidance for the year ended 30 June 
2020 (Reporting Period). This operational performance was achieved despite the 
impact of the COVID-19 pandemic and the resultant restrictions imposed to curb 
the spread of the virus - a testament to the robustness and operational 
flexibility of our diversified portfolio of assets. 
 
Gold production from Elikhulu and the Barberton Tailings Retreatment Plant 
(BTRP), our low-cost surface retreatment operations, have contributed 
significantly to the profitability of the Group and demonstrated the benefit of 
multiple producing operations. 
 
We are pleased to confirm that we remain firmly on track to deliver into our 
guided gold production of 190,000oz for the year ending 30 June 2021, a 
substantial increase compared to the revised production guidance of 176,000oz 
for the Reporting Period. 
 
We successfully levered the Group's operational execution capability to bring 
Evander Mines' 8 Shaft (8 Shaft) pillar project and the Prince Consort (PC) 
Shaft's Level 42 development at Barberton Mines' New Consort Mine into 
steady-state production, and these operations are now an integral part of our 
strategy to further reduce costs and increase margins at our underground mines. 
 
Our Group's safety performance during the Reporting Period is commendable and 
we will remain unrelenting in the pursuit of our ultimate goal of zero harm in 
the years ahead. We are deeply saddened by the fatality that occurred after the 
Reporting Period, as outlined in the subsequent events section further in the 
announcement. 
 
Pan African's earnings for the Reporting Period were adversely affected by 
COVID-19. This impact was however largely offset by the robust gold price and 
by our ability to expeditiously ramp up gold production, in line with 
government directives, post the initial hard lockdown period. Despite the 
impact of COVID-19, we are pleased to report increased earnings for the Group 
this year. 
 
We reduced net debt during the Reporting Period by 41.2% to US$76.4 million 
(2019: US$129.9 million), which resulted in a significantly improved net debt 
to net adjusted EBITDA ratioAPM of 0.7 (2019: 2.2). 
 
Group all-in sustaining costs (AISC) of US$1,147/oz includes realised hedge 
losses of US$12.0 million. Excluding these realised losses, the Group's AISC 
decreased to US$1,078/oz (2019: US$988/oz), which is more reflective of the 
actual operational costs and in line with the Group's targeted AISC of US$1,000 
/oz. The AISC for the Group's low-cost operations, comprising Elikhulu, BTRP 
and Barberton Mines' Fairview Mine, was US$826/oz for the Reporting Period. We 
believe the Group is well on track to produce at an AISC of below US$1,000/oz 
for the 2021 financial year. 
 
Our robust operational and financial performance over the past year, together 
with a positive outlook for the year ahead, has enabled the board to recommend 
a record dividend of ZAR312.9 million, or US 0.83582 cents per share, for 
approval by shareholders at the upcoming AGM. 
 
The Group will continue to invest in our compelling organic growth projects, 
most notably the recently announced long-life Egoli project, which capitalises 
on the substantial existing shaft and plant infrastructure, and is also fully 
licenced and 'shovel-ready'. We are pleased to announce that following the 
successful completion of the feasibility study, the Group has obtained credit 
approval from Rand Merchant Bank for the full debt funding of the project's 
capital expenditure. Additional detail on the Egoli project's development and 
funding is provided further in the announcement. 
 
We have prioritised our environmental, social and governance initiatives, as 
evidenced by the level of rehabilitation spend for the Reporting Period, and 
board approval for the implementation of a number of significant and 
sustainable development projects. These include the 10MW renewable energy solar 
photovoltaic plant at Elikhulu and a large-scale agriculture project at 
Barberton Mines.  The merits of a similar solar photovoltaic plant are also 
being considered for Barberton Mines, as well as new agriculture projects on 
rehabilitated land at Evander Mines. 
 
We are acutely conscious of the ongoing impact of the COVID-19 pandemic and 
will continue to implement stringent preventative and precautionary measures to 
limit incidences of infection among our employees and in our host communities, 
and minimise the potential adverse impact of the pandemic on the Group 's 
operations. 
 
In the year ahead, aligned to our strategy of delivering safe, sustainable and 
high-margin gold production, we will continue to direct our focus on creating 
shareholder value by optimising our operations, further de-gearing our balance 
sheet and increasing dividend distributions. Furthermore, we will also continue 
investing in our host communities to improve the living conditions of these 
critical stakeholders. 
 
My sincere thanks and gratitude to all of the management and employees of Pan 
African for their contribution to the Group through this difficult time and for 
ensuring the sustainability of our operations, now and into the future." 
 
PROPOSED DIVID FOR THE FINANCIAL YEARED 30 JUNE 2020 
 
The board has proposed a final dividend of ZAR312.9 million for the 2020 
financial year (approximately US$18.7 million), equal to ZA 14.00000 cents per 
share or approximately US 0.83582 cents per share (0.65451 pence per share). 
The dividend is subject to approval by shareholders at the AGM, which is 
convened for Thursday, 26 November 2020. 
 
In light of the robust results for the Reporting Period and the favourable 
financial prospects for the operations in the 2021 financial year, the board 
has applied its discretion and has proposed a dividend in excess of the 
Company's dividend policy's guidelines, which provide for a 40% payout ratio of 
net cash generated from operating activities. 
 
Assuming shareholders approve the final dividend, the following salient dates 
would apply: 
 
Currency conversion date                                    Thursday, 26 November 2020 
 
Annual General Meeting                                      Thursday, 26 November 2020 
 
Currency conversion announcement released by 11:00 (SA        Friday, 27 November 2020 
time) 
 
Last date to trade on the JSE                                 Tuesday, 1 December 2020 
 
Last date to trade on the LSE                               Wednesday, 2 December 2020 
 
Ex-dividend date on the JSE                                 Wednesday, 2 December 2020 
 
Ex-dividend date on the LSE                                  Thursday, 3 December 2020 
 
Record date on the JSE and LSE                                 Friday, 4 December 2020 
 
Payment date                                                 Tuesday, 15 December 2020 
 
The pound sterling (GBP) and US$ proposed final dividend was calculated based 
on a total of 2,234,687,537 shares in issue and an illustrative exchange rate 
of US$/ZAR:16.75 and GBP/ZAR:21.39, respectively. Shareholders on the London 
register should note that a revised exchange rate will be communicated before 
approval at the AGM. 
 
No transfers between the Johannesburg and London registers, between the 
commencement of trading on Wednesday, 2 December 2020 and close of business on 
Friday, 4 December 2020 will be permitted. 
 

No shares may be dematerialised or rematerialised between Wednesday, 2 December 
2020 and Friday, 4 December 2020, both days inclusive. 
 
The South African dividends taxation rate is 20% per ordinary share for 
shareholders who are liable to pay dividends taxation, resulting in a net 
dividend of ZA 11.20000 cents per share. Foreign investors may qualify for a 
lower dividend taxation rate, subject to completing a dividend taxation 
declaration and submitting it to Computershare Investor Services Proprietary 
Limited or Link Asset Services, who manage the South African and UK registers, 
respectively. The Company's South African income taxation reference number is 
9154588173. The proposed dividend will be paid out of the Company's retained 
earnings, without drawing on any other capital reserves. 
 
AUDIT OPINION 
 
The Group's external auditor, PricewaterhouseCoopers LLP ("PwC"), have issued 
their opinion on the consolidated annual financial statements for the year 
ended 30 June 2020. 
 
There have been two key audit matters identified by PwC which relate to the 
Impairment assessments of goodwill, intangible assets and property, plant and 
equipment and mineral rights - Group, and the Impact of COVID-19 - Group and 
Parent Company. Further details on these key audit matters can be found in the 
full auditor's report which is available on the Company's website https:// 
www.panafricanresources.com/wp-content/uploads/ 
Pan-African-Resources-integrated-annual-report-2020.pdf. 
 
The audit of the consolidated annual financial statements was conducted in 
accordance with the International Standards on Auditing. PwC has expressed an 
unmodified opinion on the consolidated annual financial statements. A copy of 
the audited annual financial statements and the audit report is available for 
inspection at the issuer's registered office. Any reference to future financial 
performance included in this provisional summarised audited results 
announcement has not been reviewed or reported on by the Group's external 
auditor. 
 
DIRECTORS' RESPONSIBILITY 
 
The information in this announcement has been extracted from the provisional 
summarised audited results for the year ended 30 June 2020, but this short-form 
announcement itself has not been reviewed by the Company's auditors. The 
provisional summarised audited results have been prepared under the supervision 
of the Financial Director, Deon Louw. This short-form announcement is the 
responsibility of the directors of Pan African and is only a summary of the 
information contained in the full announcement. 
 
Any investment decisions should be based on the full announcement and the 
group's detailed operational and financial summaries. 
 
AVAILABILITY OF FULL ANNOUNCEMENT 
 
The full announcement is accessible via the JSE link at https:// 
senspdf.jse.co.za/documents/2020/jse/isse/pan/FYE2020.pdf 
 
and via the Company's website at https://www.panafricanresources.com/wp-content 
/uploads/Pan-African-Resources-year-end-results-SENS-announcement-2020.pdf 
 
Copies of the full announcement may also be requested by emailing 
[e-mail] 
 
The Company has a dual primary listing on the JSE in South Africa and the AIM 
market of the London Stock Exchange (AIM) as well as a sponsored level 1 ADR 
programme in the USA through the Bank of New York Mellon 
 
For further information on Pan African, please visit the Company's website at 
 
www.panafricanresources.com 
 
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 
[e-mail]                                 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 2900                    Office: + 27 (0)11 243 2900 
 
Phil Dexter/Jane Kirton                        Ross Allister/David McKeown 
St James's Corporate Services Limited          Peel Hunt LLP 
Company Secretary                              Nominated Adviser and Joint Broker 
Office: + 44 (0)20 7796 8644                   Office: [phone] 
 
Ciska Kloppers                                 Thomas Rider/Neil Elliot 
Questco Corporate Advisory Proprietary Limited BMO Capital Markets Limited 
JSE Sponsor                                    Joint Broker 
Office: + 27 (0)11 011 9200                    Office: [phone] 
 
Hethen Hira                                    Website: www.panafricanresources.com 
Pan African Resources PLC 
Head: Investor Relations 
Tel: + 27 (0)11 243 2900 
E-mail: [e-mail] 
 
 
 
END 
 

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September 16, 2020 02:00 ET (06:00 GMT)