Final Results
Regulatory Announcement
Company Pan African Resources plc
TIDM PAF
Headline Year End Results
Released 1 September 2009
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
Consolidated unaudited provisional results for the year ended 30 June 2009
Pan African Resources PLC (AIM: PAF, Altx: PAN), the African focused gold
mining company, is pleased to report its results for the year ended 30 June
2009.
SALIENT FEATURES
Corporate:
* EBITDA increased 30% to £17.8 million (2008: £13.7 million);
* Unhedged and debt-free;
* Strengthened management team;
* Dividend of 0.02555p per share declared at the Interim results.
Mining Operations:
* Underground gold production increased by 15% to 94,909oz (2008: 82,436oz);
* Headgrade improved by 16% to 10.32g/t (2008: 8.9g/t);
* Reserve base increased by 22% to 600koz (2008: 490koz);
* Total cash cost decreased to US$469/oz (2008: US$476/oz).
Growth Projects:
* Acquisition of 100% stake in Phoenix Platinum Mining (Pty) Ltd (`Phoenix
Platinum'), a tailings retreatment project in South Africa;
* Exploration projects in the Central African Republic (`CAR') and Ghana
terminated, as drilling results did not meet Company's criteria to continue
with exploration, resulting in the impairment and cessation of exploration
costs in these countries.
Jan Nelson, Chief Executive Officer, commented: "The ability of the Company to
continue to demonstrate year-on-year growth in productivity, together with
encouraging cost control measures, will ensure we continue to deliver
shareholder value. Early-stage exploration expenditure has been terminated,
Phoenix Platinum is on schedule to further grow the revenue stream and
additional productivity improvement initiatives at Barberton are set to
increase the profitability of the Company. We are favourably positioned to take
advantage of further value-enhancing growth opportunities."
Presentation and conference call details:
Pan African Resources will host a presentation today, 1 September 2009, at
10.00am South African time (9:00am UK time) at the Grace Hotel in Rosebank.
The conference call dial- in numbers are:
UK: 0808 234 6771
SA: 0800 200 648
PLAYBACK will be available from 11:30am on 1 September 2009 on + 27 11 305 2030
with code 29992#
12 Months 12 Months
ended ended
30 June 2009 30 June 2008
Revenue (GBP) 53,000,352 39,254,557
EBITDA (GBP) 17,864,321 13,710,819
Attributable Profit (GBP) 4,403,535 5,460,067
EPS (pence) 0.40 0.52
HEPS (pence) 0.85 0.52
Weighted average number of shares in 1,104,367,219 1,043,789,285
issue
Nature of Business
Pan African is a gold mining company that produces approximately 100,000oz per
year. Its focus is on developing low cost, high margin production or near
production projects. The Company has no debt, is unhedged and is able to fund
all of its current on-mine capital from current cashflows.
Overall Performance
Financial performance
Gross Revenue from gold sales amounted to £53 million (2008: £39 million), with
the total cost of production being £28.5 million (2008: £25.1 million). Tax
amounted to £8.2 million (2008: £4.4 million), other expenses were £1.4 million
(2008: £0.3 million), and an exploration expenditure impairment charge was £5
million (2008: £nil).
EBITDA for the year under review was £17.8 million (2008: £13.7 million). Cash
operating profit at Barberton Mines (Pty) Ltd (`Barberton Mines') increased to
£20.5 million (2008: £11.7 million), despite an increase in the cost of
production to £28.5 million (2008: £25.1 million). Higher costs were linked to
increases in the prices of consumables, electricity and wages.
The increase in mining profit is a direct result of the average spot gold price
increasing to US$867/oz (2008: US$823/oz) and an average US$:ZAR exchange rate
of ZAR9.00 (2008: ZAR7,30). The effective ZAR gold price achieved was
ZAR251,829/kg (2008: ZAR187,000/kg).
Income tax increased to £8.2 million (2008: £4.4 million) as a result of an
increase in the profit margin as well as the unredeemed capital balance being
fully utilised in 2008.
Basic headline earnings per share improved by 63% from 0.52 pence reported in
2008 to 0.85 pence for the current year.
Safety and Training
The safety results have improved year-on-year, apart from the lost time
injuries. Shifts lost and the number of reportable accidents have decreased.
The Company is pleased to report no fatalities for the year. The Consort
section achieved a million fatality free shifts over a seven year period and
the Fairview section is approaching two million fatality free shifts. The
safety of the Group's employees is of paramount importance and the Company runs
approved training programmes at its mining operations.
Review of Barberton Mining Operations
Operating performance
A total of 97,353oz (2008: 99,078oz) of gold was sold from the Barberton mining
operation (which comprises the Fairview, Sheba, and New Consort sections), a
decrease of 1.7% from the previous year. Total underground gold production
however increased by 15% to 94,909oz (2008: 82,436oz). This was despite a 0.4%
decrease in tons milled to 313,952t (2008: 315,305t), which was offset by an
increase in headgrade of 15.9% to 10.32g/t (2008: 8.9g/t).
Production from the Calcine tailings dam retreatment project yielded 3,955oz of
gold. No further production is expected from this project. Total mine cash
costs decreased marginally by 1.47% to US$469/oz (2008: US$476/oz).
2009 2008 2007 2006 2005
Tons Milled (t) 313,952 315,305 330,367 313,779 316,094
Headgrade (g/t) 10.32 8.9 9.2 10.7 11.1
Overall Recovery (%) 91 91 92 92 92
Production: (oz) 94,909 82,436 90,022 99,281 103,847
Underground
Production: Calcine (oz) 3,955 13,513 - - -
Dump
Gold Sold (oz) 97,353 99,078 89,572 99,924 102,914
Average Price: Spot (US$/oz) 867 823 640 528 433
Average Price: Hedge (US$/oz) - 451 415 438 511
Total Cash Cost US$/ (US$/oz) 469 476 465 429 427
oz sold
Capital Expenditure (GBP) 4,052,440 2,901,792 1,637,359 1,091,965 1,021,041
Exchange rate - (ZAR/ 14.39 14,68 13,95 n/a n/a
average GBP)
Exchange rate - (ZAR/ 12.66 15,56 14,18 n/a n/a
closing GBP)
Reserve Replacement Projects
Sheba - Southwell adit
The re-equipping of the Western Cross and Birthday areas was completed
successfully and plans are in place to commence mining in this area.
Sheba - 35 ZK Decline
The 35 ZK decline was sunk 71.7 metres and station development has commenced. A
further 180m of development is required to access the main ZK orebody.
Sheba - Edwin Bray to Thomas & Joe's Luck orebodies
Exploration drilling at the Thomas orebody has been completed. The development
of the 7 level haulage and the return airway continued during the year and a
total of 740 metres of development was completed. The Eureka orebody was
exposed and further drilling is planned in the coming year to define additional
orezones. A further 600 metres of development remains to the Thomas and Joe's
Luck orebodies
Consort - 45 level exploration drive
On 45 level, 227 metres of exploration development was completed and
exploration drilling confirmed the up dip extension of the Bullion orebody
currently being mined on 50 level. Further drilling is planned in the coming
year to continue definition of the Bullion orebody.
Consort - 50 level declines
At Consort, mining flexibility remains problematic and capital development to
replace ore reserves continue. At the 50W1 area, 224 metres were sunk in the
two declines which are on target to open up the east and west ore bodies below
50 level. Sinking in the coming year will continue to expose the next levels.
Fairview - 60/62 level development
Development on 60 and 62 level to replace ore reserves progressed well and a
total of 817 metres was completed. A further 535m development is required to
complete the development required to access the MRC orebody.
58 ZK and MRC Horizon exploration development
A total of 128 metres was completed on 58 level and 72 metres on the 60 level
to access the ZK and MRC ore bodies respectively. A further 800 metres of
development is required to access the down-dip extension of the ZK orebody on
60 level. The 58 level development is approximately 100 metres from the ZK
orebody.
Fairview - 3 Shaft deepening
Work to open up the No.3 sub-incline shaft bottom, to enable the deepening of
the shaft, is progressing satisfactorily. Cleaning to below 64 level elevation
was completed during the year. The widening of the bottom portion, between 62
and 64 levels of the No.3 sub-incline shaft, is planned whereafter shaft
sinking to 68 level will commence. A further 180 metres of shaft sinking is
required to reach 69 level, whereafter access to the le Roux and hope orebodies
will require 200 metres of development.
Electricity
Barberton Mines embarked on power saving initiatives to reduce total demand by
10%. The largest consumer of energy is compressed air generation and the mine
is in the process of replacing older compressors with modern efficient units.
Review of Near-Term Production Projects
Phoenix Platinum - South Africa
Effective May 2009, the Company acquired 100% of Phoenix Platinum Mining, for £
5.2 million. Phoenix Platinum was acquired from Metorex Limited (`Metorex') and
is now a wholly owned subsidiary.
The recent acquisition of Phoenix Platinum does not change the gold focus of
the Company. Preliminary sampling and recovery results have exceeded
expectations and management's proactive actions could see plant construction as
early as February 2010, with production likely in December 2010. However, this
production outlook is sensitive to management's ability to secure plant
location.
Review of Growth Projects
Manica Gold Project - Mozambique
Since Pan African acquired the Manica gold project the resource has been
increased over a three year period, from 0.50Moz to 2.571Moz. An in-house
pre-feasibility study was completed in the year under review. The results of
the study, as announced on 4 June 2009, indicated that a change of strategy was
necessary in order to optimise project value. Work planned for the coming year
will focus on regional consolidation of oxide resources with the objective to
define significant non-refractory ore that can be mined from surface, requiring
less capital and fast tracking potential production.
Review of Exploration Projects
Ghana and the Central African Republic (`CAR')
The results from the first phase of drilling on the projects in Ghana and the
CAR have not met the Company's criteria to continue with further exploration
activity. As a result exploration activity has been terminated, leading to an
impairment charge of £5 million.
Capital Expenditure and Commitments
Capital expenditure at Barberton Mines totalled £4 million, of which £2.1
million was spent on development and drilling to replace current depleted gold
reserves and to grow the mineable resource base. The balance of £1.9 million
was spent on equipment and the maintenance of current infrastructure on the
mine.
Exploration expenditure at the Company's projects in Mozambique, Central
African Republic and Ghana totalled £1.8 million for the financial year.
Contracted capital commitments at the end of the financial year amounted to £
62,231. Operating lease commitments, which fall due within the next year,
amount to £176,651 whilst interest bearing commitments of £20,669 fall due
during the following year.
Directorship Changes
The board announced the resignation of Mr Simon Malone, effective 20 January
2009 and the resignation of Mr Charles Needham, effective 26 June 2009.
Accounting Policies and basis of preparation
The financial information set out in this announcement does not constitute the
Company's statutory accounts for the year ended 30 June 2009.
The financial information included in this preliminary announcement has been
prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards (`IFRS'), this announcement does
not itself contain sufficient disclosure information to comply fully with IFRS.
The Company expects to publish full financial statements which comply with IFRS
in October 2009. This preliminary announcement was approved by the board on 28
August 2009.
Share Capital changes
1. 722 724 shares were issued to Goldiam SARL at 5.5p per share in relation to
the Novation Agreement dated 21 July 2008.
2. 12 000 000 shares were issued to SEMS Exploration Services Limited and Birim
Goldfields (Ghana) Limited at 6p in exchange for the licence rights of the
Akrokerri exploration property, dated 6 March 2009.
Directors Dealings
The Company was informed on 26 and 27 November 2008 that Mr Jan Nelson, the
Company's Chief Executive Officer, registered the acquisition of 30,000 and
17,308 ordinary shares of 1 pence each in the Company on that day at a price of
50 South African cents per share.
Dividend
A dividend of 0.2555 pence per share was declared at the Interim Results. The
dividend was declared in the currency of the United Kingdom and paid on
Wednesday, 8 April 2009. No further dividend is being declared. Future
dividends will be determined by the Board, after considering the Group's
cashflow requirements and growth options.
Post Balance Sheet Events
On 19 June 2009, the Company announced that it had concluded an agreement with
Shanduka Gold (Pty) Ltd (`Shanduka') whereby Pan African would acquire
Shanduka's 26% shareholding in Barberton Mines in exchange for the issue of new
295,751,549 ordinary shares to Shanduka.
This share exchange transaction with Shanduka became effective on 21 August
2009 and allows Shanduka to appoint two representatives to the Board of Pan
African in a non-executive capacity.
On 26 June 2009, Metorex announced that it had engaged in a book building
exercise to dispose of its 53,4% shareholding in Pan African. In addition to
its 21% shareholding in Pan African issued via the share exchange transaction
detailed above, Shanduka announced that it would acquire an additional 5% of
the enlarged share capital of Pan African through the book build. As a result,
Shanduka increased its shareholding in Pan African to 26%. The balance of the
shares sold by Metorex was taken up by institutional investors.
The following changes to the Board of Pan African have been proposed and will
be confirmed at the upcoming Board meeting:
* Mr. Cyril Ramaphosa, Executive Chairman of Shanduka Group (Proprietary)
Limited, will be appointed as Non-Executive Chairman.
* Mr. Keith Spencer will remain on the Board as independent, Non-Executive
Deputy Chairman.
* Mr. Rowan Smith from Shanduka Group will be appointed as a Non-Executive
Director.
* Mr. Maritz Smith, previously a representative of Metorex, has resigned with
immediate effect as Financial Director; Mr. Cobus Loots will replace him as
Financial Director.
* Mr. John Hopwood, Mr. Rob Still and Mr. Jan Nelson remain members of the
Board.
On 1 July 2009, the Company announced that Barberton Mines had cancelled the
Metorex management agreement for a consideration of £314,000. The Company also
announced that the outstanding consideration of £954,759 to acquire 100% of
Phoenix Platinum would be paid to Metorex by no later than 30 September 2009.
During August 2009, Barberton Mines reached 2-year agreements with both the
National Union of Mineworkers (`NUM') and the Underground Association of South
Africa (`UASA') on wage increases. The percentage increases which include all
the changed benefits came to 13% for NUM and 11% for UASA employees. The second
year increase will be the average Consumer Price Index (`CPI') plus 1 % with a
guaranteed minimum of 7.5%. The Company and Unions will also return to the
negotiation table if the gold price falls below ZAR190,000/kg.
Future Prospects
The Company is now a fully independent business and operator with a newly
structured and empowered board. Full ownership of the flagship Barberton Mines
and the near-term production Phoenix Platinum project will not only be future
earnings enhancing, but will also sustain self-funding, profitable growth and
the pursuit of opportunistic acquisitions.
.
By order of the Board
K C Spencer J P Nelson
Chairman Chief Executive Officer
1 September 2009
Financial Statements
Consolidated Income Statement
Year ended Year ended
30 June 09 30 June 08
(Unaudited) (Audited)
£ £
Revenue
Gold sales 53 000 352 39 254 557
Realisation costs (140 546) (106 277)
On - mine revenue 52 859 806 39 148 280
Cost of production (28 504 686) (25 163 675)
Depreciation (2 360 431) (1 965 872)
Mining Profit 21 994 689 12 018 733
Other (expenses) / income (1 465 336) (273 786)
Operating income before finance costs 20 529 353 11 744 947
Finance income 816 754 217 288
Finance costs (9 933) (17 006)
Impairment costs (5 025 463)
Profit before taxation 16 310 711 11 945 229
Taxation (8 219 425) (4 366 543)
Profit after taxation 8 091 286 7 578 686
Attributable to:
Equity holders of the parent 4 403 535 5 460 067
Minority interests 3 687 751 2 118 619
8 091 286 7 578 686
Earnings per share (pence) 0.40 0.52
Diluted earnings per share (pence) 0.39 0.51
Weighted average number of shares in 1 104 367 219 1 043 789 285
issue
Diluted number of shares in issue 1 117 367 219 1 073 789 285
Headline earnings per share is
calculated :
Headline earnings 9 428 998 5 460 067
Headline earnings per share (pence) 0.85 0.52
Diluted headline earnings per share 0.84 0.51
(pence)
Consolidated Balance Sheet
30 June 2009 30 June 2008
(Unaudited) (Audited)
£ £
ASSETS
Non-current assets
Property, plant and equipment and Mineral 31 801 235 20 069 814
Rights
Rehabilitation trust fund 2 357 266 1 739 522
Intangible assets 12 038 616 12 837 045
Goodwill 21 000 714 21 000 714
67 197 831 55 647 095
Current assets
Inventories 358 363 377 974
Trade and other receivables 2 201 213 2 972 776
Cash and cash equivalents 2 389 301 5 419 489
4 948 877 8 770 239
TOTAL ASSETS 72 146 708 64 417 334
EQUITY AND LIABILITIES
Capital and reserves
Share capital 11 125 891 10 998 664
Share Premium 37 899 997 37 267 475
Translation Reserve 2 531 639 (1 118 262)
Share Option Reserve 549 690 285 312
Retained income 11 537 551 9 946 021
Merger Reserve (10 705 308) (10 705 308)
Equity attributable to equity holders of 52 939 460 46 673 902
parent
Minority interest 3 420 942 3 694 869
Total equity 56 360 402 50 368 771
Non - Current liabilities
Long term liabilities - Interest bearing - 16 822
Long term Provisions 2 933 105 2 219 954
Deferred Taxation 6 752 432 5 201 245
9 685 537 7 438 021
Current liabilities
Trade and other payables 3 719 787 2 754 795
Short term liabilities - Interest bearing 20 669 89 269
Short term Provisions 1 151 895 711 085
Payable to another Group Company 954 759 -
Current Tax Liabilities 253 659 3 055 393
6 100 769 6 610 542
TOTAL EQUITY AND LIABILITIES 72 146 708 64 417 334
Group Consolidated Cash Flow Statement
Group
£
2009 2008
NET CASH FROM/(USED IN) OPERATING ACTIVITIES 7 582 060 11 239 529
INVESTING ACTIVITIES
Dividends received
Additions to property, plant and equipment, (4 318 424) (3 031 659)
mineral rights
Additions to intangibles (1 580 349) (2 652 270)
Loans to subsidiaries
Funding of rehabilitation trust fund 193 347 4 126
Cash (outflow) / inflow on acquisition of (4 205 144) 226 164
subsidiary
NET CASH USED IN INVESTING ACTIVITIES (9 910 571) (5 453 639)
FINANCING ACTIVITIES
Borrowings Raised 1 145 710
Borrowings repaid (190 952) (179 591)
Shares Issued 784 624
NET CASH (USED IN)/FROM FINANCING ACTIVITIES 954 759 605 033
NET INCREASE / (DECREASE) IN CASH AND CASH (1 373 752) 6 390 923
EQUIVALENTS
Cash and cash equivalents at the beginning of 5 419 489 422 416
the period
Effect of foreign exchange rate changes (1 656 436) (1 393 850)
CASH AND CASH EQUIVALENTS AT THE END OF THE 2 389 301 5 419 489
PERIOD
Group Statement of Changes in Equity
Share Share Preference Hedging and Retained Share Merger Minority Total
Capital Premium share translation earnings option reserve Interest
account capital reserve reserve
and
premium
Balance at 30 4 180 4 076 5 578 175 (1 041 234) 4 128 360 (6 1 576 12 794
June 2007 032 769 485 954 189 702) 250 604
Issue of 6 818 33 190 - - - - - - 40 009
shares 632 706 338
Redemption of - - (5 578 - - - - - (5
shares 175) 578 175)
Current year - - - (77 028) - - - - (77 028)
movement
Profit / - - - - 5 460 - - 2 118 7 578
(loss) for 067 619 686
the year
Share Based - - - - - 156 952 - - 156 952
payment -
Charge for
the year
Current year - - - - - - (4 - (4
merger 515 606) 515 606)
Balance at 30 10 998 37 267 - (1 118 262) 9 946 285 312 (10 3 694 50 368
June 2008 664 475 021 705 308) 869 771
Issue of 127 227 632 522 - - - - - - 759 749
shares
Redemption of - - - - - - - - -
shares
Current year - - - 3 649 901 - - - - 3 649
movement 901
Profit / - - - - 4 403 - - 3 687 8 091
(loss) for 535 751 286
the year
Dividend - - - - (2 - - (3 (6
Issue 812 005) 961 678) 773 683)
Share Based - - - - - 264 378 - - 264 378
payment -
Charge for
the year
Current year - - - - - - - - -
merger
Balance at 30 11 125 37 899 - 2 531 639 11 537 549 690 (10 3 420 56 360
June 2009 891 997 551 705 308) 942 402
ENDS
For further information on Pan African Resources plc, please visit the website
at www.panafricanresources.com
Enquiries:
Pan African
Resources
Jan Nelson, CEO
+27 (0) 11 243 2900
Nicole Spruijt,
Public Relations
+27 (0) 11 243 2900
RBC Capital Markets
Martin Eales
+44 (0) 20 7029 7881
Barnard Jacobs
Mellet Corporate
Finance
(Proprietary)
Limited
Natalie Di-Sante
+27 (0) 11 750 0207
Sholto Simpson
+27 (0) 11 750 0213
St James's Corporate
Services Limited
Phil Dexter
+44 (0) 20 7499 3916
FD Beachhead Media &
Investor Relations
Jennifer Cohen
+27 (0) 11 214 2401
Louise Brugman
+27 (0) 11 214 2415
+27 (0) 83 504 1186
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