Pan African Resources Plc Revised Production Guidance for the year ending 30 June 2023

 
TIDMPAF 
 
Pan African    Pan African Resources Funding 
Resources PLC  Company Limited 
 
(Incorporated  Incorporated in the Republic of 
and            South Africa with limited 
registered in  liability 
England and 
Wales under    Registration number: 
the Companies  2012/021237/06 
Act 1985 with 
registered     Alpha code: PARI 
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") 
 
REVISED PRODUCTION GUIDANCE FOR THE YEARING 30 JUNE 2023, OPERATIONAL UPDATE 
AND COMMENCEMENT OF MINTAILS PROJECT CONSTRUCTION 
 
Pan African wishes to provide shareholders and noteholders with revised 
production guidance and an operational update for the financial year ending 30 
June 2023 (current financial year). It is also pleased to announce the imminent 
commencement of the Mintails project's construction, with site clearance 
activities having commenced. 
 
Group production guidance 
 
  · Production guidance for the current financial year reduced to approximately 
175,000oz (previously 195,000oz to 205,000oz), primarily as a result of: 
    · Challenges related to Eskom generated electricity supply, resulting in a 
production loss of approximately 10,000oz of gold 
    · Slower than anticipated ramp-up of continuous operations at Barberton 
Mines, largely addressed as highlighted below 
    · Lower than expected production from Evander Mines' underground operations. 
 
  · Tailings operations at Barberton and Elikhulu are performing in line with 
expectations 
  · Group production guidance for the financial year ending 30 June 2024 of 
178,000oz to 190,000oz, with a further production increase in the 2025 financial 
year, following the Mintails project's commissioning during the first half of 
this financial year. 
 
Safety performance 
 
  · The Group regrets to report a fatal accident that occurred as a result of a 
fall of ground at Evander Mines in March 2023, following one million fatality 
free shifts achieved at the operation prior to the accident 
  · Despite this tragic setback, the Group expects an improvement in overall 
group safety rates for the full year compared to the first half of the current 
financial year as a result of the implementation of various initiatives to 
further improve its safety performance 
 
Electricity supply 
 
  · The Group estimates a production loss of approximately 10,000oz for the 
current financial year as a result of issues related to Eskom generated 
electricity supply impacting all of the Group's operations 
    · In addition to load curtailment, power outages and surges, difficulties 
related to transformers and other Eskom infrastructure contributed to production 
disruptions. 
 
  · As per the announcement released on 15 May 2023, Pan African is aggressively 
rolling out its renewable energy plans in order to mitigate the impact of this 
challenge. 
 
Barberton Mines 
 
  · After a slower than anticipated ramp-up of continuous operations at 
Barberton Mines' Fairview Mine and Sheba operations, the Group is pleased to 
report the following improvements in recent months: 
    · A marked improvement in Fairview Mine's production tonnes has been noted. 
The average tonnes produced for the preceding three months to April 2023 have 
increased by more than 10% to approximately 9,100t per month, compared to an 
average of 8,100t per month in the first seven months of the current financial 
year. Projected tonnage is expected to further increase in excess of 5% in the 
remaining two months of the current financial year 
    · Optimisation of mining methods at Sheba Mines' MRC and ZK stopes, to 
reduce dilution and the increased availability of trackless mining machinery 
(TMM), has improved underground grade and production, with an increase in 
monthly production to approximately 8,700t per month during February to April 
2023, compared to an average of 6,600t per month for the prior seven months. 
Projected tonnage is expected to further increase in excess of 10% in the 
remaining two months of the current financial year. 
 
  · Implementation of the Consort Mine contractor model has progressed slower 
than expected, with challenges encountered with the recruitment of skilled 
employees adversely affecting production. A full production ramp-up is expected 
during June 2023, with the operation returning to profitability thereafter. 
 
Evander Mines' underground operations 
 
  · Evander Mines' underground operations have underperformed as a result of 
geological challenges due to faulting of the Kimberley Reef at the tail end of 
the 8 Shaft Pillar mining area, and a slower than anticipated transition to full 
production from 24 Level 
    · Infrastructure development for 24 Level mining is progressing well, with 
the equipping of the ventilation shaft for hoisting to relieve the constraints 
currently being experienced with the conveyor belt system. This development is 
expected to be completed by the end of March 2024. 
 
Mintails project 
 
  · The Group has been informed by the South African Department of Mineral 
Resources and Energy (DMRE) of the imminent issuing of the Mintails project's 
integrated environmental authorisation 
  · Commencement of plant construction is therefore expected in the next month, 
and ground clearing activities have commenced, with steady state production from 
the commissioned project expected by December 2024. 
 
Financial 
 
  · The impact of the lower than expected gold production for the current 
financial year has been partially mitigated by the increased year to date rand 
gold price received of ZAR1,003,374/kg (2022: ZAR892,431/kg), relative to the 
prevailing gold price of approximately ZAR1,220,000/kg 
  · As a result of the reduced production guidance, the Group's all-in 
sustaining costs (AISC) for the current financial year is now expected to be 
between US$1,325/oz and US$1,350/oz, at an average exchange rate of ZAR:US$ 
17.70 
  · Net senior debt (comprising secured, interest bearing debt, net of available 
cash) is expected to decrease to between US$25 to US$35 million at the end of 
the current financial year, relative to US$49.9 million at the end of the six 
month period, ended 31 December 2022. This decrease is despite project 
expenditure of US$10.4 million already being incurred during the current 
financial year on the Mintails project 
  · With manageable group debt levels and the Mintails project's funding 
secured, the group is well positioned to continue making cash distributions to 
shareholders in the future. 
 
Pan African CEO Cobus Loots commented: 
 
"The safety of our people and contractors remains our number one priority and we 
continue to implement a number of programmes to further improve the safety 
performance at our operations. We are deeply saddened by the fatal accident that 
occurred at Evander Mines as a result of a fall of ground incident. 
 
Whilst we are disappointed with the production performance of our underground 
operations for the current financial year, the turnaround at Barberton Mines is 
now evident, especially in the past two months, following a longer than 
anticipated ramp-up after the implementation of continuous operations at 
Fairview Mine and Sheba Mine and implementation of the contractor mining model 
at Consort Mine. Barberton Mines' underground production tonnes have 
demonstrated a notable increase during the past two months, with further 
increases expected during the remainder of the current financial year. 
Implementation of the contractor mining model at Consort Mine is also bearing 
fruit and the operation is expected to return to profitability in the short 
term. 
 
Pan African is leading the way in terms of rolling out renewable energy projects 
and reducing our dependency on Eskom. In the coming years, we believe this 
strategy will greatly benefit all of our stakeholders. 
 
The development of the 24 Level project at Evander Mines is progressing well, 
with crews redeployed to the 24 Level area as the 8 Shaft pillar mining nears 
completion. Improved mining flexibility, together with the other initiatives 
being implemented to ensure that infrastructure availability is optimised, will 
ensure sustainable production from this long life underground operation. 
 
Ground clearing at the Mintails project has commenced in anticipation of the 
senior debt component of the funding package being closed by June 2023. 
Commissioning of the plant is expected in the fourth quarter of the 2024 
calendar year, which will result in a significant increase in the Group's 
production profile from the 2025 financial year onwards. 
 
Despite lower than expected production, the Group is positioned to deliver a 
robust financial performance for the current financial year as a result of the 
excellent rand gold prices being received and also disciplined operational cost 
control. 
 
 
 
Pan African is committed in its resolve to continued value creation for its 
stakeholders by positioning the Group as a sustainable, safe, high-margin and 
long-life gold producer with an attractive pipeline of growth projects. We look 
forward to presenting our final results in September 2023, which will include 
further details on our operational and financial performance, as well as 
information on progress being made with our growth projects." 
 
Safety 
 
As previously communicated, the Group has implemented initiatives during the 
second half of the 2023 financial year to further improve its safety 
performance. 
 
Barberton Mines has seen a progressive improvement in safety performance for 
both lost-time injury frequency rate (LTIFR) and reportable injury frequency 
rate (RIFR), compared to the first half of the current financial year. 
 
Despite the regrettable fatal accident, we remain confident that the safety 
performance at Evander Mines will improve as it continues to implement safety 

initiatives to reinforce a zero-tolerance approach towards safety incidents. 
Elikhulu operations have seen a slight regression in safety performance during 
the current financial year, resulting from two recorded contractor lost-time 
injuries. 
 
The Group's forecasted LTIFR and RIFR for the current financial year are 
expected to improve from the rates reported for the first half of the year. 
 
Group production 
 
Group production for the current financial year is expected to be approximately 
175,000oz, split per operation as follows: 
 
+-----------------------+----------+----------+-----------------+--------------- 
-+ 
|Operation              |Year ended|Year ended|Guidance for     |Guidance for 
| 
|                       |30 June   |30 June   |current financial|2024 financial 
| 
|                       |2021      |2022      |year             |year 
| 
+-----------------------+----------+----------+-----------------+--------------- 
-+ 
|Barberton Mines -      |84,826    |75,738    |64,000           |71,000 - 74,000 
| 
|Underground total      |          |          |                 | 
| 
+-----------------------+----------+----------+-----------------+--------------- 
-+ 
|BTRP                   |18,239    |19,560    | 19,000          |17,000 - 20,000 
| 
+-----------------------+----------+----------+-----------------+--------------- 
-+ 
|Elikhulu               |51,459    |52,220    |50,000           |49,000 - 51,000 
| 
+-----------------------+----------+----------+-----------------+--------------- 
-+ 
|Evander Mines -        |47,253    |58,170    |42,000*          |41,000 - 
45,000*| 
|Underground and surface|          |          |                 | 
| 
|sources                |          |          |                 | 
| 
+-----------------------+----------+----------+-----------------+--------------- 
-+ 
|Total ounces produced  |201,777   |205,688   |175,000          |178,000 - 
| 
|                       |          |          |                 |190,000 
| 
+-----------------------+----------+----------+-----------------+--------------- 
-+ 
 
* Includes gold equivalent PGM ounces produced by Evander Gold Mines' Osmiridium 
circuit 
 
Royal Sheba Project 
 
Mine layout optimisation and scheduling was finalised and requests for 
quotations were issued for the initial development and production activities. 
Preliminary optimisation work for the life-of-mine (LOM) planning has been 
completed at a cut-off grade of 1.7g/t, which translates into an average mining 
grade of approximately 3.0g/t and circa 235,000oz of gold recovered over the 
life of the project, with the orebody open at depth. 
 
DRA Global has finalised the feasibility study for placing a crushing and 
milling circuit at the Royal Sheba Mine site, together with the design to enable 
slurry pumping from the milling plant at Royal Sheba to the BTRP. The processing 
plant's feasibility study and the project's financial model is being updated and 
reviewed. A phased approach to capital spending, based on the availability of 
material to feed the BTRP plant, is also being considered. This will entail the 
phased development of the decline, production levels, as well as the ventilation 
infrastructure required for initial stoping operations. 
 
First stoped ore is planned in 2025 at 5,000t per month, ramping up to 10,000t, 
30,000t and 45,000t per month, every twelve months thereafter in line with a set 
lateral and vertical development schedule. A trucking cost trade-off analysis 
indicates that the onsite crushing and milling circuit and pipeline will only be 
required to be completed once production rates reach 45,000t per month. The 
internal feasibility study for the complete project is expected to be completed 
in the next months. 
 
Evander Mines' 8 Shaft pillar and 24, 25 and 26 Level and Egoli projects 
 
The opening up of mining areas on 24 Level continues, which will enable the 
phased transfer of crews from the pillar area as mining of the pillar resource 
is completed. Two crews are currently mining the 24 Level F-line, with an 
additional two crews mining the 24 Level D-line. Construction of phase 2 of the 
refrigeration plant for cooling 24 Level is ongoing. The development of the 
24_N1B drive towards 25 Level progressed slower than expected due to challenging 
ground conditions. As ground conditions progressively improved, development 
rates have now increased and multi-blasting is being considered to further 
accelerate development. 
 
The equipping of the ventilation shaft to enable hoisting of waste and ore 
produced on 24 Level will reduce reliance on the ageing conveyor belt system and 
simplify the ore handling process. Installation of pipes for equipping the 
ventilation shaft at 17 Level has commenced, with the development of the winder 
chamber and shaft station ongoing. Completion of the ventilation shaft's 
equipping is expected by the end of the first quarter of the 2024 calendar year 
and will provide a hoisting capacity of up to 40,000t per month. Additional 
crews have been deployed to the conveyor belts in order to improve maintenance 
and breakdown reaction times, which is expected to increase conveyor belt 
availability until such time that ore hoisting will commence through the 
ventilation shaft. 
 
Construction of an additional grout plant (for pseudo-pack support) is expected 
to be completed in June 2023. This plant will supply 24 Level and future mining 
on 25 and 26 Levels with the required output for mining support. The use of 
pseudo-packs in the 8 Shaft pillar area has proven to be effective in 
controlling mining subsidence and enabling clean mining practices, and these 
benefits will also be replicated through the utilisation of pseudo-packs as 
mining support on the 24, 25 and 26 Level projects. 
 
Dewatering of the 3 Decline infrastructure to 19 Level at the 7 Shaft Egoli 
project is progressing well. The completion of the dewatering is projected to 
take place in the next months, which will enable a more accurate assessment of 
potential mining of remnant areas within the Egoli complex. 
 
Mintails project progress and funding 
 
Progress on the Mintails project and expected milestones include: 
 
  · Mineral Resource estimation on the Soweto Cluster 2L16 and 2L24 TSFs was 
completed at the end of March 2023, resulting in these TSFs being upgraded to 
the indicated Mineral Resource category. The remainder of the Soweto Cluster 
TSFs remain classified in the Inferred Mineral Resource category 
  · Concept engineering work on the Soweto Cluster TSFs is underway, following 
completion of the mineral resource estimation 
  · Completion of optimisation and value engineering activities in preparation 
for construction 
  · Integrated environmental authorisation from the DMRE expected in the next 
weeks, with commencement of construction imminent 
  · Steady state production forecast by December 2024. 
 
A derivative funding structure was implemented during March 2023, to complete 
the funding package for the Mintails project. The structure provided a US$22.6 
million (ZAR400 million) upfront premium which, together with the proceeds of 
US$47.3 million from the sustainability bond raised during December 2022 and the 
debt funding package of US$73.4 million in the form of a credit approved term 
loan facility underwritten by FirstRand Bank Limited, acting through its Rand 
Merchant Bank division, ensure that the project is fully funded at commencement 
of construction. Independent technical reviews of the project together with 
legal drafting are currently underway in anticipation of the debt funding 
package being closed by June 2023. 
 
Blyvoor conditional acquisition - update 
 
The due diligence and fulfilment of other conditions precedent for the 
acquisition of the Blyvoor Gold Operations Proprietary Limited historical TSFs 
was not completed within the required timeframe, and this transaction has 
therefore lapsed. Although the Group is currently focused on the construction of 
the Mintails Project, it continues to engage with the current owners of Blyvoor 
Gold Operations to evaluate options to further develop this project. 
 
Sudan exploration project 
 
Following the outbreak of violence in the Republic of Sudan, all expatriate 
employees working on the exploration project were safely repatriated. All of the 
Group's assets situated in the Republic of Sudan, including the fire assay multi 
-element analytical laboratory, are currently guarded and have been placed under 
care and maintenance until such time as the situation stabilises and the Group 
can resume its exploration programme. The carrying value of the Group's 
investment in the Sudan exploration project to date, including the acquisition 
of the exploration concessions and other assets, amounts to approximately US$5.0 
million. Limited expenditure is currently being incurred on securing the Group's 
assets and their care and maintenance, until such time as exploration activities 
can recommence. 
 
The Group successfully commissioned the first commercial fire assay multi 
-element analytical laboratory within the Republic of Sudan during 2022. This 
laboratory is used to analyse all exploration samples extracted from the Block 
12 exploration concessions granted to Pan African by the Sudan Ministry of Mines 
and any regional exploration work by other explorers. 
 
Prior to the conflict, the exploration team active within Block 12A South and 
Block 12A North conducted soil geochemistry and hard rock chip sampling 
programmes to further define the identified exploration anomalies. Initial 
assaying received from the exploration targets identified in the south-eastern 
corner of Block 12A South averaged 1.7g/t from 12 samples taken from quartz 
veins, rock debris and soil. However, some of the structures sampled indicated 
significantly higher gold mineralisation, with values ranging from 2.9g/t up to 
9.4g/t. These structures will be further defined as part of a confirmatory 
sampling programme. No Mineral Resources or Mineral Reserves are currently 
reported for any of the targets. 
 

Remote sensing imagery in Block 12A North detected a notable additional NE-SW 
anomaly approximately 11km long. Initial field investigations identified a 
siliceous unit hosting significant iron oxide alteration, with reported grades 
of 7.3, 0.19, and 0.58 g/t. Further sampling along the strike and down-dip of 
the unit, as well as subsequent mapping, revealed a potential extension of 
several kilometres towards the southwest. 
 
Pan African remains positive that the in-country situation will stabilise to the 
extent that it can resume exploration activities in the near future. 
 
Final results for the twelve months ended 30 June 2023 
 
Pan African anticipates announcing its final results for the current financial 
year on or about 13 September 2023. 
 
The information contained in this update is the responsibility of the Pan 
African board of directors and has not been reviewed or reported on by the 
Group's external auditors. 
 
Certain information communicated in this announcement was, prior to its 
publication, inside information for the purposes of Article 7 of Regulation 
596/2014. 
 
Rosebank 
 
26 May 2023 
 
For further information on Pan African, please visit the Company's website at 
 
www.panafricanresources.com 
 
+----------------------------------------------+-------------------------------- 
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|Corporate information 
| 
+----------------------------------------------+-------------------------------- 
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|Corporate office                              |Registered office 
| 
|                                              | 
| 
|The Firs Office Building                      |2nd Floor 
| 
|                                              | 
| 
|2nd Floor, Office 204                         |107 Cheapside 
| 
|                                              | 
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|Cnr. Cradock and Biermann Avenues             |London 
| 
|                                              | 
| 
|Rosebank, Johannesburg                        |EC2V 6DN 
| 
|                                              | 
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|South Africa                                  |United Kingdom 
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|                                              | 
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|Office: + 27 (0)11 243 2900                   |Office: + 44 (0)20 7796 8644 
| 
|                                              | 
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|[e-mail]                                |[e-mail] 
| 
+----------------------------------------------+-------------------------------- 
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|Chief executive officer                       |Financial director 
| 
|                                              | 
| 
|Cobus Loots                                   |Deon Louw 
| 
|                                              | 
| 
|Office: + 27 (0)11 243                        |Office: + 27 (0)11 243 
| 
|2900 
|2900                                         | 
+----------------------------------------------+-------------------------------- 
-------------+ 
|Head: Investor relations                      |Website: 
www.panafricanresources.com         | 
|                                              | 
| 
|Hethen Hira                                   | 
| 
|Tel: + 27 (0)11 243 2900                      | 
| 
|E-mail: [e-mail]                       | 
| 
+----------------------------------------------+-------------------------------- 
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|Company secretary                             |Nominated adviser and joint 
broker           | 
|                                              | 
| 
|Jane Kirton                                   |Ross Allister/David McKeown 
| 
|                                              | 
| 
|St James's Corporate Services Limited         |Peel Hunt LLP 
| 
|                                              | 
| 
|Office: + 44 (0)20 7796 8644                  |Office: [phone] 
| 
+----------------------------------------------+-------------------------------- 
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|JSE Sponsor and JSE debt sponsor              |Joint broker 
| 
|                                              | 
| 
|Ciska Kloppers                                |Thomas Rider/Nick Macann 
| 
|                                              | 
| 
|Questco Corporate Advisory Proprietary        |BMO Capital Markets Limited 
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|Limited                                       | 
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|Office: + 27 (0)11 011                        | 
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|9200 (https://www.google.co.za/search?q=questc| 
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+----------------------------------------------+-------------------------------- 
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|                                              |Joint broker 
| 
|                                              | 
| 
|                                              |Matthew Armitt/Jennifer Lee 
| 
|                                              | 
| 
|                                              |Joh. Berenberg, Gossler & Co KG 
| 
|                                              | 
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|                                              |Office: [phone] 
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May 26, 2023 02:00 ET (06:00 GMT)