Conditional amendment to Manica disposal agreement

Pan African Resources PLC                           

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

                                 AIM Code: PAF                                 

                                 JSE Code: PAN                                 

                              ISIN: GB0004300496                               

                       ("Pan African" or "the Company")                        

                                                     

   CONDITIONAL AMENDMENT TO THE TERMS OF THE MANICA GOLD EXPLORATION PROJECT   
                         ("MANICA") DISPOSAL AGREEMENT                         

 

INTRODUCTION

 

Pan African shareholders ("Shareholders") are referred to the announcements
published by the Company on 29 August 2012 and 14 December 2012
("Announcements") regarding the disposal by Pan African of Manica to a
wholly-owned subsidiary of Auroch Minerals NL ("Auroch") ("Transaction"). Pan
African and Auroch have agreed to amend the terms of the Transaction as
explained below.

 

Pursuant to the original Transaction agreement and amendments thereto
("Original Agreement"), Pan African received 25 million shares in Auroch
("Consideration Shares") and an AUD 2,000,000 cash payment is payable to Pan
African within 18 months of completion of the Transaction ("Transaction
Purchase Consideration"). Pan African is also entitled to a deferred
consideration consisting of further shares and cash payments ("Future
Consideration").  The Future Consideration is subject to Auroch achieving
certain future milestones, which at this stage is uncertain. A detailed
description of the terms of the Original Agreement is provided in the
Announcements. The Company's carrying value for the Auroch investment is
currently GBP1,182,606.

 

Pan African considers Manica as a non-core asset which will require
considerable future development capital.  Currently Pan African's shares in
Australian Securities Exchange ("ASX") quoted Auroch are subject to an embargo
arrangement with the ASX, whereby these shares may not be sold or otherwise
transferred until January 2015.

 

AMENDMENT

 

Pan African is intent to remain focused on operating assets and now wishes to
expedite the realisation of value pursuant to the Transaction. For this reason,
Pan African entered into an agreement with Auroch on 25 November 2013
("Amendment") in terms of which:

 1. Auroch shall pay Pan African an amount of AUD 2,000,000 in cash, as full
    and final settlement of the Transaction Purchase Consideration and Future
    Consideration ("Cash Consideration") as follows:

Auroch shall pay Pan African AUD 150,000 of the Cash Consideration by no later
than 30 November 2013; and

Auroch shall settle the remaining portion of the Cash Consideration by
1 March 2014 ("Payment Date"), but may extend the Payment Date by a further 2
months by paying Pan African an amount of AUD 50,000 per month of extension
prior to the Payment Date, as extended, and such payments shall serve as part
payment of the Cash Consideration; and

 2. if Auroch settles the Cash Consideration in accordance with the Amendment,
    Pan African shall allow Auroch to reacquire or cancel the Consideration
    Shares at no additional cost or consideration.

 

In the event that Auroch fails to settle the Cash Consideration pursuant to the
Amendment, the Amendment will expire and the provisions of the Original
Agreement will be restored. The Amendment is not subject to any other
conditions.

 

PRO FORMAFINANCIAL EFFECTS

 

As a result of the pro forma financial effects of the Transaction having
previously being published in the Announcements, the pro forma financial
effects of the Amendment ("Financial Effects") have been set out in the table
below. The Financial Effects have been prepared for illustrative purposes only
in order to provide information about how the Amendment might have affected
Shareholders, had the Amendment been implemented on the dates indicated in the
notes below.

Due to their nature, the Financial Effects may not fairly present the financial
position, changes in equity, results of operations or cash flows of Pan African
after the Amendment. The preparation of the Financial Effects is the
responsibility of Pan African's directors.

The Financial Effects have been prepared using accounting policies that comply
with International Financial Reporting Standards ("IFRS") and that are
consistent with those applied in the published audited results of Pan African
for the year ended 30 June 2013.

The figures included in the "Before the Amendment" column of the Financial
Effects have been extracted from Pan African's annual financial statements for
the financial year ended 30 June 2013 ("2013 Financial Statements"), which
accounted for the Transaction in accordance with the terms and conditions of
the Original Agreement. The Financial Effects are therefore presented after
accounting for the Transaction in the 2013 Financial Statements.

                                                       Before the     After the    Percentage
                                                       Amendment      Amendment      Change  
                                                                                           
                                                                                      (%)    
                                                                                           
Earnings per share (pence)                                   2.63           2.65       0.76
                                                                                           
Diluted earnings per share (pence)                           2.62           2.64       0.76
                                                                                           
Headline earnings per share (pence)                          2.17           2.17          -  
                                                                                           
Diluted headline earnings per share (pence)                  2.16           2.16          -  
                                                                                           
Net asset value per share (pence)                            9.45           9.45          -
                                                                                           
Tangible net asset value per share (pence)                   3.77           3.77          -
                                                                                           
Weighted average number of shares in issue          1 619 756 902  1 619 756 902          -  
                                                                                           
Diluted weighted average number of shares in issue  1 625 933 891  1 625 933 891          -  
                                                                                           
Number of shares in issue                           1 822 834 263  1 822 834 263          -  
                                                                                           

 

Notes:

The figures included in the  "Before the Amendment" column have been extracted
from the 2013 Financial Statements.

The Financial Effects have been prepared on the assumption that the Amendment
was concluded on and all payments in terms thereof received on 1 July 2012 for
purposes of the Statement of Comprehensive Income and by 30 June 2013 for
purposes of the Statement of Financial Position.

The Financial Effects are prepared on the assumption that Pan African received
the Cash Consideration amounting to AUD 2,000,000 (GBP 1,162,791) as full and
final settlement of the Transaction Purchase Consideration and Future
Consideration.

The Financial Effects have been prepared on the assumption that Pan African
disposed of the Consideration Shares to Auroch for no consideration.

The 2013 Financial Statements accounted for the impairment to nil value of all
amounts due to, but not received by, Pan African pursuant to the Transaction.
Accordingly, as a result of the Amendment, those impairment charges pertaining
to the Cash Consideration of GBP 1,162,791 were reversed for purposes of
preparing the Financial Effects.

None of the adjustments will have a continuing effect on Pan African.

For purposes of the Financial Effects, Australian Dollars have been converted
to South African Rand at a rate of AUD 1.00 : ZAR  8.73 and South African Rand
have been converted to British Pounds using the relevant exchange rates
applicable in the 2013 Financial Statements.

 

Johannesburg

 

26 November 2013

 

JSE Sponsor                                                                             
                                                                                        
One Capital                                                                             
                                                                                        

 

PAN AFRICAN ENQUIRIES                                                             
South Africa                   UK                                                 
                                                                                  
                                                                                  
                                                                                  
Pan African Resources          Canaccord Genuity Limited                          
Ron Holding                    Nomad and Joint Broker                             
Chief Executive Officer        Peter Stewart / Joe Weaving/Neil Elliot            
[phone]            [phone]                               
                                                                                  
                                                                                  
                                                                                  
Vestor Investor Relations      finnCap Limited                                    
Louise Brugman                 Joint Broker                                       
[phone]            Elizabeth Johnson / Joanna Weaving                 
[phone]                [phone]                               
                                                                                  
                                                                                  
                                                                                  
One Capital                    St James's Corporate Services Limited              
Liezl Gildenhuys               Phil Dexter                                        
[phone]            [phone]                               
                                                                                  
                                                                                  
                                                                                  
                               Gable Communications                               
                               Justine James                                      
                               [phone] / [phone]         
                                                                                  

 

For further information on Pan African, please visit the website at 
www.panafricanresources.com