Agreement to acquire an interest in Shanduka Gold

PAN AFRICAN RESOURCES PLC

(Incorporated and registered in England and Wales under Companies Act 1985 with registered number 3937466 on 25 February 2000)

Share code on AIM: PAF

Share code on JSE: PAN

ISIN: GB0004300496

(“Pan African” or the “Company”)

PAN AFRICAN AGREES TO ACQUIRE AN INTEREST IN SHANDUKA GOLD

1. INTRODUCTION

Pan African shareholders (“Shareholders”) were previously advised through a SENS announcement, dated 9 June 2015, that following the merger between Shanduka Group Proprietary Limited and the Pembani Group Proprietary Limited (“Merger”), the direct shareholding in Shanduka Gold Proprietary Limited (“Shanduka Gold”) is held by the following entities:

• The Mabindu Business Development Trust (“Mabindu”) (49.5%);
• Jadeite Limited (33.6%), an investment vehicle of the China Investment Corporation; and
• The Standard Bank of South Africa Limited (16.9%) (“Sale Shares”).

Pan African has today entered into a sale of shares agreement (“Agreement”) in terms of which it has agreed to acquire the Sale Shares (“Acquisition”). The value of the Sale Shares may be determined with reference to the Sale Share’s pro rata interest, net of liabilities, in the Pan African shares held by Shanduka Gold. This value is further augmented pursuant to a notional vendor financing arrangement attached to the Shanduka Gold shares held by Mabindu.

The Acquisition purchase consideration will be settled in cash but remains, pursuant to the Agreement, confidential and will be disclosed and reported after the closing date. The Acquisition purchase consideration was agreed at a discount to the prevailing Pan African share price and considers valuation adjustments ordinary to a transaction of this nature.

Funding for the Acquisition and related expenses shall be sourced from existing cash resources and facilities. The Acquisition will not affect the Company’s operations or its ability to continue paying dividends.

2. BACKGROUND TO AND RATIONALE FOR THE ACQUISITION

Shanduka Gold is Pan African’s primary black economic empowerment shareholder with its sole asset being a 23.8% interest in the issued share capital of Pan African. Following the Merger, Pan African engaged with the Shanduka Gold shareholders to establish a structure through which the existing relationship between the Company and Shanduka Gold may be preserved.

The Acquisition represents a unique opportunity for Pan African to enhance Shareholder value by indirectly investing in its own shares via Shanduka Gold whilst pro-actively reducing the potential risk of future Shareholder value dilution that could arise if the existing Shanduka Gold structure were to be dissolved.

3. OTHER SALIENT TERMS AND SUSPENSIVE CONDITIONS

The Agreement remains subject to termination at the Company’s election until the fulfilment or waiver, as the case may be, of the suspensive conditions to the Agreement on or before 15 April 2016.

Although Pan African is actively pursuing the successful implementation of the Acquisition, the Company emphasises that fulfilment of the Acquisition’s suspensive conditions is highly dependent upon the successful negotiation and agreement of various matters with the Shanduka Gold shareholders.

4. CATEGORISATION OF THE ACQUISITION

Pursuant to the JSE Limited Listings Requirements, the Acquisition purchase consideration represents less than 5% of the Company’s current market capitalisation and the Acquisition is therefore not classified as a categorised transaction.

23 February 2016

Corporate advisor and JSE sponsor to Pan African

One Capital

Legal advisor to Pan African

Webber Wentzel

CONTACT INFORMATION

Corporate Office

The Firs Office Building

1st Floor, Office 101

Cnr. Cradock and Biermann Avenues

Rosebank, Johannesburg

South Africa

Facsimile: + 27 (0)11 880 1240

Registered Office

Suite 31

Second Floor

107 Cheapside

EC2V 6DN

United Kingdom

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 / James Black
St James's Corporate Services Limited	Numis Securities Limited
Company Secretary	Nominated Adviser & Joint Broker
Office: + 44 (0)207 796 8644	Office: [phone]
Sholto Simpson	Matthew Armitt / Ross Allister
One Capital	Peel Hunt LLP
Corporate Advisor and JSE Sponsor	Joint Broker
Office: + 27 (0)11 550 5009	Office: [phone]
Julian Gwillim	Daniel Thöle
Aprio Strategic Communications	Bell Pottinger PR
Public & Investor Relations SA	Public & Investor Relations UK
Office: [phone]	Office: + 44 (0)203 772 2500