Interim Results for the six months ended 31 Dec...
Pan African Resources PLC
('Pan African Resources' or the 'Company' or the 'Group')
(Incorporated and registered on 25 February 2000 in England and Wales under the
Companies Act 1985, registration number 3937466)
Share code on AIM: PAF
Share code on JSE: PAN
ISIN: GB0004300496
Interim unaudited results for the six months ended 31 December 2014
Key features and highlights
Key features reported in South African rand ('ZAR') and pound sterling ('GBP')
- Group headline earnings1 decreased by 62.8% to ZAR102.6 million (2013:
ZAR275.9 million). The low grade mining cycle at Evander Gold Mining (Pty) Ltd
('Evander Mines') is still expected to improve from February 2015, with the
operation returning to a higher grade mining cycle.
- Dividend paid of ZAR0.1410 or 0.82p per share (2013:ZAR0.1314 or 0.80p per
share), which equated to ZAR258 million (2013: ZAR240.3 million) or GBP14.9
million (2013: GBP14.7 million).
- Phoenix Platinum (Pty) Ltd ('Phoenix Platinum') PGE2 production
significantly increased by 57.7% to 4,711oz (2013: 2,987oz).
- Evander Tailings Retreatment Plant ('ETRP') construction was on budget and
schedule and the plant produced its first gold during January 2015, with steady
state production expected by 30 June 2015.
- Barberton Tailings Retreatment Plant ('BTRP') gold sold increased by 0.9% to
11,710oz (2013: 11,603oz).
- Significant improvement on safety with no fatalities reported (2013: three
fatalities).
For the six For the six
months months
Metric
ended 31 ended 31
December 2014 December 2013
Revenue (ZAR millions - GBP millions) 1,217.4 68.1 1,349.1 84.6
Average gold price received (ZAR/kg - USD/oz) 434,403 1,231 424,022 1,311
Cash costs (ZAR/kg - USD/oz) 351,461 996 269,670 834
All-in sustaining cash cost (ZAR/kg - USD/oz) 411,384 1,165 312,219 965
All-in costs7 (ZAR/kg - USD/oz) 453,068 1,283 337,673 1,044
Adjusted EBITDA3 (ZAR millions - GBP millions) 230.6 12.9 450.8 28.3
Attributable earnings (ZAR millions - GBP millions) 99.2 5.5 275.9 17.3
Earnings per share ('EPS') (cents - pence) 5.42 0.30 15.11 0.95
Headline earnings per share ('HEPS') (cents - pence) 5.61 0.31 15.11 0.95
Group capital expenditure (ZAR millions - GBP millions) 214.6 12.0 160.8 10.1
Net asset value per share (cents - pence) 143.4 8.2 142.5 9.4
Weighted average number of shares in issue (millions) 1,830.0 1,830.0 1,825.6 1,825.6
Average exchange rate (ZAR:GBP - ZAR:USD) 17.87 10.98 15.94 10.06
Closing exchange rate (ZAR:GBP - ZAR:USD) 18.03 11.60 17.29 10.49
Metric Movement
Revenue (ZAR millions - GBP millions) (9.8%) (19.5%)
Average gold price received (ZAR/kg - USD/oz) 2.4% (6.1%)
Cash costs (ZAR/kg - USD/oz) 30.3% 19.4%
All-in sustaining cash cost (ZAR/kg - USD/oz) 31.8% 20.7%
All-in costs7 (ZAR/kg - USD/oz) 34.2% 22.9%
Adjusted EBITDA3 (ZAR millions - GBP millions) (48.8%) (54.4%)
Attributable earnings (ZAR millions - GBP millions) (64.0%) (68.2%)
Earnings per share ('EPS') (cents - pence) (64.1%) (68.4%)
Headline earnings per share ('HEPS') (cents - pence) (62.9%) (67.4%)
Group capital expenditure (ZAR millions - GBP millions) 33.5% 18.8%
Net asset value per share (cents - pence) 0.6% (13.0%)
Weighted average number of shares in issue (millions) 0.2% 0.2%
Average exchange rate (ZAR:GBP - ZAR:USD) 12.1% 9.1%
Closing exchange rate (ZAR:GBP - ZAR:USD) 4.3% 10.6%
Ron Holding, CEO of Pan African Resources commented: "Despite a very
challenging six month period, we now have started seeing underground mining
grades at Evander Mines improve as previously predicted. We are also encouraged
by the completion of construction of the ETRP, where gold production has
commenced and will increase Evander Mines' gold output by an additional 10,000
ounces per annum. Our focus in the next six months will be to deliver on volume
and grade at our Evander and Barberton Mines, and to ensure the ETRP reaches
steady state production. We will also maintain our focus on generating cash
flows from our asset base to ensure the continuation of future dividend
payments.
Operational
Barberton Mines (Pty) Ltd ('Barberton Mines')6
- Production was negatively affected by oil contamination within the BIOX®
plant and by a Section 54 safety stoppage as reported during November 2014.
- Gold sold decreased by 7.1% to 52,942oz8 (2013: 57,008oz).
- Revenue decreased by 5.5% to ZAR714.3 million (2013: ZAR755.5 million).
- Adjusted EBITDA3 decreased by 25.6% to ZAR235.5 million (2013: ZAR316.7 million).
- Cash cost per kilogram increased by 20.0% to ZAR279,150/kg(2013: ZAR232,611/kg).
- All-in sustaining cash cost per kilogram increased by 22.6% to ZAR330,340/kg
(2013: ZAR269,526/kg).
- All-in cost per kilogram increased by 14.5% to ZAR337,814/kg (2013: ZAR295,134/kg).
- Average underground head grade of 11.6g/t (2013: 11.5g/t).
- The operation reports no fatalities for the period (2013: two fatalities).
Evander Mines
- Gold sold decreased by 21.8% to 33,733oz (2013: 43,164oz) due to the
expected low grade mining cycle and a Section 54 safety stoppage during
November 2014.
- Revenue decreased by 19.2% to ZAR456.8 million (2013: ZAR565.6 million).
- Construction of the ETRP is on schedule and budget, with production having
commenced in January 2015.
- Cash costs per kilogram increased by 45.9% to ZAR464,955/kg (2013: ZAR318,616/kg).
- All-in sustaining cash costs per kilogram increased by 46.1% to ZAR538,584/
kg (2013: ZAR368,604/kg).
- All-in cost7 per kilogram increased due to the low grade mining cycle and
capital spent on the ETRP by 61.0% to ZAR633,9607 (2013: ZAR393,854/kg).
- Adjusted EBITDA3 of ZAR6.2 million (2013: ZAR123.1 million).
- As result of the lower grade mining cycle the underground head grade
decreased to 4.3g/t (2013: 6.2g/t).
- The operation reports no fatalities for the period (2013: one fatality).
Phoenix Platinum
- Phoenix Platinum profitability and cash generation increased significantly
during the period under review.
- Phoenix Platinum headline earnings increased to ZAR6.1 million (2013: ZAR2.6
million headline loss).
- Cash generated by the operation before working capital changes amounted to
ZAR12.5 million (2013: ZAR1.9 million).
- PGE 2 production increased by 57.7% to 4,711oz (2013: 2,987oz).
- Revenue increased by 65.0% to ZAR46.2 million (2013: ZAR28.0 million).
- The average PGE net revenue price received increased by 4.6% to ZAR9,815/oz5
(2013: ZAR9,380/oz5).
- Cost per ton increased by 10.3% to ZAR236/t (2013: ZAR214/t).
- Cost per ounce of production decreased by 19.6% to ZAR6,817/oz (2013:
ZAR8,484/oz).
- Adjusted EBITDA3 increased by 694.1% to ZAR13.5 million (2013: ZAR1.7
million).
Notes:
Refer to the profit after taxation to headline earnings reconciliation in the
statement of profit or loss and other comprehensive income.
PGE's are platinum, palladium, rhodium, iridium, ruthenium and gold.
Adjusted EBITDA is represented by earnings before interest, taxation,
depreciation and amortisation, impairments, and loss on disposal of associate.
Barberton Mines surface mining operations refer to historical surface waste
rock dumps located at Fairview and Sheba Mines that are currently being
processed.
Phoenix Platinum's average PGE net revenue price received represents the value
received per ounce following refining and is therefore net of refining charges.
Combined Barberton Mines operations include Barberton Mines underground and
surface mining operations and the BTRP.
The all-in cost per kilogram includes once-off capital expenditure of ZAR88.3
million, spent on the construction of the ETRP. The capital expenditure
amounted to ZAR32,756/kg and ZAR84,163/kg of the Groups and Evander Mines
all-in cost per kilogram respectively. The construction of the ETRP is
currently funded by a gold loan facility (initially ZAR200 million) with a
remaining term of 3 years.
Barberton Mines gold sold during the current period includes 200 kilograms
(6,430oz) of gold sold to Rand Merchant Bank in concentrate form.
Nature of business
Pan African Resources is a mid-tier African-focused precious metals producer
with a production capacity in excess of 200,000oz gold and 12,000oz platinum
per annum. The Group's assets include:
Barberton : three gold mines and the BTRP in Mpumalanga
Mines
Evander Mines : a gold mine and the ETRP in Mpumalanga
Phoenix : a Chrome Tailing Retreatment Plant ('CTRP') in the North West
Platinum province
Pan African Resources' growth strategy is aimed at achieving and improving
margins while driving on-going growth in our Mineral Reserve base. We aim to
capture the full precious metals mining value chain and maximise shareholder
value by exploiting opportunities within the Group and in the broader sector.
The Group remains profitable and cash generative at the current gold price,
with the ability to fund all on-mine sustaining capital expenditure internally
and also meet its other funding and growth commitments.
Financial Performance
Key external drivers of the Group's results
Exchange rates and their impact on results
All of the Group's subsidiaries are incorporated in South Africa and their
functional currency is the ZAR. The Group's business is conducted in ZAR and
the accounting records are maintained in this same currency, with the exception
of precious metal product sales, which are conducted in USD prior to conversion
into ZAR. The on-going review of the operational results conducted by executive
management and the board is also performed in ZAR.
The Group's presentation currency is GBP due to its ultimate holding company,
Pan African Resources plc, being incorporated in England and Wales and also
being dual-listed in the United Kingdom and South Africa.
During the period under review the average ZAR/GBP exchange rate was ZAR17.87:1
(2013: ZAR15.94:1) and the closing ZAR/GBP exchange rate was ZAR18.03:1 (2013:
ZAR17.29:1). The period-on-period change in the average and closing exchange
rates of 12.1% and 4.3%, respectively, must be taken into account for the
purposes of translating and comparing period-on-period results.
The Group converts and records its revenue from precious metals sales in ZAR,
and the deterioration in the value of the ZAR/USD exchange rate during the
period had a compensating effect on the weaker USD metals price revenue
received. The average ZAR/USD exchange rate was 9.1% weaker at ZAR10.98:1
(2013: ZAR10.06:1).
The commentary below analyses the current and prior period's results. Key
aspects of the Group's ZAR results appear in the body of this commentary and
have been used as the basis against which its financial performance is
measured. The gross GBP equivalent figures can be calculated by applying the
exchange rates as detailed above.
Commodity prices
During the period under review, a lower average USD gold price was achieved
relative to the prior period. The Group realised an average gold price of
USD1,231/oz, a decrease of 6.1% from the USD1,311/oz achieved in the prior
period.
The market PGE basket price received (applying the Phoenix Platinum prill
split) during the period decreased by 3.8% to USD1,079/oz (2013: USD1,122/oz).
Phoenix Platinum's average PGE price received decreased by 4.1% to USD894/oz
(2013: USD932/oz), after taking into account the terms of its off-take
agreement with Western Platinum Limited.
The weakening of the ZAR against the USD also contributed to a higher gold
price being achieved. The average ZAR gold price received by the Group
increased by 2.4% to ZAR434,403/kg (2013: ZAR424,022/kg).
The average ZAR PGE price received by the Group increased by 4.6% to ZAR9,815/
oz (2013: ZAR9,380/oz), attributable, in part, to the weaker ZAR/USD exchange
rate.
Statement of Profit or Loss and Other Comprehensive Income
For the six months For the six months
ended 31 December ended 31 December Movement
2014 2013
ZAR GBP ZAR GBP ZAR GBP
(millions) (millions) (millions) (millions)
Revenue 1,217.4 68.1 1,349.1 84.6 (9.8%) (19.5%)
Cost of production (974.3) (54.5) (862.5) (54.1) 13.0% 0.7%
Mining profit 154.2 8.6 402.5 25.2 (61.7%) (65.9%)
EBITDA 230.6 12.9 450.8 28.3 (48.8%) (54.4%)
Profit after taxation 99.2 5.5 275.9 17.3 (64.0%) (68.2%)
Headline earnings 102.6 5.7 275.9 17.3 (62.8%) (67.1%)
EPS (cents/pence) 5.42 0.30 15.11 0.95 (64.1%) (68.4%)
HEPS (cents/pence) 5.61 0.31 15.11 0.95 (62.9%) (67.4%)
Weighted average number of shares in issue (millions) 1,830.0 1,830.0 1,825.6 1,825.6 0.2% 0.2%
Group revenue period-on-period decreased by 9.8% to ZAR1,217.4 million (2013:
ZAR1,349.1 million). The individual operations contributions to the total
decrease are summarised as follows:
Operational Mine Change in contribution Percentage change in contribution
Barberton Mines (ZAR41.2) million (3.1%)
Evander Mines (ZAR108.8) million (8.1%)
Phoenix Platinum ZAR18.3 million 1.4%
(ZAR131.7) million (9.8)%
Barberton Mines generated reduced revenues, as a result of the technical
difficulties at the BIOX® plant and Section 54 safety stoppages during November
2014 as previously reported. Evander Mines' revenue decreased due to the lower
grade mining cycle. The low grade mining cycle at Evander Mines is expected to
continue until February 2015, where after the operation will return to
higher-grade mining. Phoenix Platinum recorded an increase in revenue due to
significantly higher ounces of PGE's produced, compared to the corresponding
period.
Pan African Resources' period-on-period total cost of production reflects an
increase of ZAR111.8 million to ZAR974.3 million (2013: ZAR862.5 million), of
which operations contributions are summarised as follows:
Operational Mine Change in contribution1 Percentage change in contribution
Barberton Mines ZAR47.3 million 5.5%
Evander Mines ZAR60.8 million 7.0%
Phoenix Platinum ZAR3.7 million 0.5%
ZAR111.8 million 13.0%
NOTE 1: Refer to the operational performance per mine for detailed cost
explanations.
The Group's cost of production per kilogram gold increased by 30.3% to
ZAR351,461/kg (2013: ZAR269,670/kg). Evander Mines' cost of production averaged
ZAR464,955/kg compared to Barberton Mines' average cost of production of
ZAR279,150/kg.
The Group's all-in sustaining cash cost of production per kilogram (including
direct cost of production, royalties, associated corporate costs and overheads
and sustaining capital expenditure) increased by 31.8% to ZAR411,384/kg (2013:
ZAR312,219/kg), significantly impacted by Evander Mines' lower grade mining
cycle.
The all-in cost per kilogram (sustaining cost of production and once-off
expansion capital) increased by 34.2% to ZAR453,068/kg (2013: ZAR 337,673/kg),
due to inter alia:
Lower gold ounces sold as a result of the Evander Mines' lower grade mining
cycle and Barberton Mines' reduced underground gold ounces sold as result of
contamination in the BIOX® Plant and Section 54 safety stoppages during
November 2015; and
Once-off capital expenditure required to construct the ETRP, which amounted to
ZAR88.3 million. The construction of the ETRP is currently funded by a gold
loan facility (initially ZAR200 million) with a remaining term of 3 years and
balancing outstanding of ZAR171.8 million.
Although overall production performance was lower at Barberton Mines, the BTRP
plant's production increased by 0.9% to 11,710oz (2013: 11,603oz). The Group's
Adjusted EBITDA decreased by 48.8% to ZAR230.6 million (2013: ZAR450.8
million).
Profit after taxation decreased by 64.0% to ZAR99.2 million (2013: ZAR ZAR275.9
million), primarily due to decreased revenue as a result of less gold ounces
sold.
The Group's EPS in ZAR was 5.42 cents (2013: 15.11 cents), a decrease of 64.1%
from the comparable period.
The Group posted a 62.8% decrease in headline earnings to ZAR102.6 million
(2013: ZAR275.9 million). The Group's HEPS in ZAR terms decreased by 62.9% to
5.61 cents (2013: 15.11 cents).
The Group's total taxation charge decreased by 53.2% to ZAR41.3 million (2013:
ZAR88.3 million) largely due to a reduction in taxable income as a consequence
of the reduced gold production.
Statement of Financial Position
31 December 2014 30 June 2014 Movement
ZAR GBP ZAR GBP
ZAR GBP
(millions) (millions) (millions) (millions)
Non-current assets 4,085.1 230.7 3,941.5 223.4 3.6% 3.3%
Current assets 419.1 23.2 423.4 23.5 (1.0%) (1.3%)
Total equity 2,624.1 149.7 2,788.4 159.4 (5.9%) (6.1%)
Non-current liabilities 1,463.9 81.2 1,144.1 63.5 28.0% 27.9%
Current liabilities 416.3 23.1 432.4 24.0 (3.7%) (3.7%)
Non-current assets increased by 3.6% to ZAR4,085.1 million (2013: ZAR3,941.5
million). The increase was partly attributable to capital expenditure at
Evander Mines for the construction of the ETRP, which commenced production in
January 2015. The Group's total capital expenditure for the period was ZAR214.6
million (2013: ZAR160.8 million) and the split per operation is disclosed
below. Included in non-current assets is also the rehabilitation trust fund
balance of ZAR292.1 million (30 June 2014: ZAR278.4 million), which increased
by ZAR13.7 million as a result of growth in the underlying investments, which
comprises a combination of guaranteed equity linked notes, bonds, equity
managed funds and cash.
Capital expenditure during the year amounted to ZAR214.6 million (2013:
ZAR160.8 million), and is detailed by operation below:
For the six months ended 31 For the six months ended 31 Movement
Group capital expenditure December 2014 December 2013
ZAR (millions) GBP (millions) ZAR (millions) GBP (millions) ZAR GBP
Barberton Mines 54.8 3.0 48.7 3.1 12.5% (3.2%)
BTRP 1.1 0.1 35.8 2.2 (96.9%) (95.5%)
Evander Mines 69.3 3.9 74.8 4.7 (7.4%) (17.0%)
ETRP 88.3 4.9 - - 0.0% 0.0%
Phoenix Platinum 0.1 - 0.2 - (50.0%) 0.0%
Corporate 1.0 0.1 1.3 0.1 (23.1%) 0.0%
Total capital expenditure 214.6 12.0 160.8 10.1 33.5% 18.8%
Current assets decreased by 1.0% to ZAR419.1 million (30 June 2014: ZAR423.4
million), mainly as a result of a decrease in cash on hand to ZAR88.2 million
(2013: ZAR101.2 million) and an increase in accounts receivable to ZAR229.7
million (30 June 2014: ZAR210.7 million). The Group's net debt position
increased to ZAR458.6 million (30 June 2014: ZAR101.0 million) at the end of
the period, which includes the gold loan outstanding with ABSA (ZAR171.8
million) and the revolving credit facility ('RCF') loan of ZAR375.0 million (30
June 2014: nil).
The decrease in the Group's equity result from a reduction in retained earnings
as a consequence of the reporting period's profit after tax of ZAR99.2 million
being reduced by the dividend of ZAR258.0 million, which related to the 30 June
2014 financial year-end and was paid in December 2014.
Non-current liabilities increased by 28.0% to ZAR1,463.9 million (30 June 2014:
ZAR1,144.1 million). The increase is primarily as a result of a drawdown of the
revolving credit facility during the current reporting period.
Current liabilities decreased by 3.7% to ZAR416.3 million (30 June 2014:
ZAR432.4 million). The majority of the decrease is attributable to a lower
current taxation liability due to the reduced profits realised in the current
period.
Operational Performance
Review of Group gold operations production summary
6 months Units Undergroundandsurfaceoperations
ended 31
December BarbertonMines EvanderMines Total
Tonnes milled - underground 2014 (t) 124,185 197,879 322,064
2013 (t) 134,381 200,272 334,653
Tonnes milled - surface 2014 (t) 2,528 198,578 201,106
2013 (t) 15,208 111,225 126,433
Tonnes milled - total underground and surface 2014 (t) 126,713 396,457 523,170
2013 (t) 149,589 311,497 461,086
Tonnes processed - tailings 2014 (t) - - -
2013 (t) - - -
Head grade - underground 2014 (g/t) 11.6 4.3 7.1
2013 (g/t) 11.5 6.2 8.3
Head grade - surface 2014 (g/t) 1.4 1.4 1.4
2013 (g/t) 1.2 1.3 1.3
Head grade - total underground and surface 2014 (g/t) 11.4 2.9 4.9
2013 (g/t) 10.4 4.5 6.4
Head grade - tailings 2014 (g/t) - - -
2013 (g/t) - - -
Recovered grade 2014 (g/t) 10.1 2.6 4.5
2013 (g/t) 9.4 4.3 6.0
Overall recovery 2014 (%) 89% 93% 91%
2013 (%) 91% 97% 93%
Gold production - underground 2014 (oz) 42,666 26,024 68,690
2013 (oz) 41,849 38,710 80,559
Gold production - surface 2014 (oz) 76 7,831 7,907
2013 (oz) 390 3,955 4,345
Gold production - tailings 2014 (oz) - - -
2013 (oz) - - -
Gold sold 2014 (oz) 41,232 33,733 74,965
2013 (oz) 45,405 43,164 88,569
Average ZAR gold price received 2014 (ZAR/KG) 433,778 435,376 434,497
2013 (ZAR/KG) 426,101 421,273 423,748
Average USD gold price received 2014 (USD/oz) 1,229 1,233 1,231
2013 (USD/oz) 1,317 1,302 1,310
ZAR cash cost 2014 (ZAR/KG) 312,502 464,955 381,040
2013 (ZAR/KG) 254,506 318,616 285,750
ZAR all-in sustaining cash costs 2014 (ZAR/KG) 376,211 538,584 449,200
2013 (ZAR/KG) 300,854 368,604 333,872
ZAR all-in cost 2014 (ZAR/KG) 385,812 549,796 459,523
2013 (ZAR/KG) 307,604 393,854 349,638
USD cash cost 2014 (USD/oz) 885 1,317 1,079
2013 (USD/oz) 787 985 883
USD all-in sustaining cash cost 2014 (USD/oz) 1,066 1,526 1,272
2013 (USD/oz) 930 1,140 1,032
USD all-in cost 2014 (USD/oz) 1,093 1,557 1,302
2013 (USD/oz) 951 1,218 1,081
ZAR cash cost per tonne 2014 (ZAR/t) 3,161 1,230 1,698
2013 (ZAR/t) 2,403 1,373 1,707
Capital expenditure 2014 (ZAR million) 54.8 69.3 124.1
2013 (ZAR million) 48.7 74.8 123.4
Average exchange rate 2014 (ZAR/USD) 10.98 10.98 10.98
2013 (ZAR/USD) 10.06 10.06 10.06
Revenue 2014 (ZAR million) 556.3 456.8 1,013.1
2013 (ZAR million) 601.6 565.6 1,167.3
Cost of Production 2014 (ZAR million) 400.6 487.8 888.4
2013 (ZAR million) 359.4 427.8 787.2
All-in sustainable cost of production 2014 (ZAR million) 482.3 565.1 1,047.4
2013 (ZAR million) 424.9 483.7 908.6
All-in cost of production 2014 (ZAR million) 494.6 576.8 1,071.4
2013 (ZAR million) 434.4 517.6 952.0
EBITDA 2014 (ZAR million) 155.3 6.2 161.5
2013 (ZAR million) 231.6 123.1 354.7
6 months Units Tailingsoperations Totalcontinuingoperations
ended 31
December BTRP ETRP Barberton Evander Group
Mines Mines Total
Total Total
Tonnes milled - underground 2014 (t) - - 124,185 197,879 322,064
2013 (t) - - 134,381 200,272 334,653
Tonnes milled - surface 2014 (t) - - 2,528 198,578 201,106
2013 (t) - - 15,208 111,225 126,433
Tonnes milled - total underground and surface 2014 (t) - - 126,713 396,457 523,170
2013 (t) - - 149,589 311,497 461,086
Tonnes processed - tailings 2014 (t) 484,315 - 484,315 - 484,315
2013 (t) 343,137 - 343,137 - 343,137
Head grade - underground 2014 (g/t) - - 11.6 4.3 7.1
2013 (g/t) - - 11.5 6.2 8.3
Head grade - surface 2014 (g/t) - - 1.4 1.4 1.4
2013 (g/t) - - 1.2 1.3 1.3
Head grade - total underground and surface 2014 (g/t) - - 11.4 2.9 4.9
2013 (g/t) - - 10.4 4.5 6.4
Head grade - tailings 2014 (g/t) 1.5 - 1.5 - 1.5
2013 (g/t) 1.7 - 1.7 - 1.7
Recovered grade 2014 (g/t) 0.8 - 2.7 2.6 2.7
2013 (g/t) 1.1 - 3.6 4.3 3.9
Overall recovery 2014 (%) 51% - 77% 93% 82%
2013 (%) 60% - 82% 97% 88%
Gold production - underground 2014 (oz) - - 42,666 26,024 68,690
2013 (oz) - - 41,849 38,710 80,559
Gold production - surface 2014 (oz) - - 76 7,831 7,907
2013 (oz) - - 390 3,955 4,345
Gold production - tailings 2014 (oz) 11,710 - 11,710 - 11,710
2013 (oz) 11,603 - 11,603 - 11,603
Gold sold 2014 (oz) 11,710 - 52,942 33,733 86,675
2013 (oz) 11,603 - 57,008 43,164 100,172
Average ZAR gold price received 2014 (ZAR/KG) 433,799 - 433,783 435,376 434,403
2013 (ZAR/KG) 426,101 - 426,101 421,273 424,022
Average USD gold price received 2014 (USD/oz) 1,229 - 1,229 1,233 1,231
2013 (USD/oz) 1,317 - 1,317 1,302 1,311
ZAR cash cost 2014 (ZAR/KG) 162,203 - 279,150 464,955 351,461
2013 (ZAR/KG) 146,928 - 232,611 318,616 269,670
ZAR all-in sustaining cash costs 2014 (ZAR/KG) 169,396 - 330,340 538,584 411,384
2013 (ZAR/KG) 146,928 - 269,526 368,604 312,219
ZAR all-in cost 2014 (ZAR/KG) 169,396 - 337,814 633,960 453,068
2013 (ZAR/KG) 246,333 - 295,134 393,854 337,673
USD cash cost 2014 (USD/oz) 459 - 791 1,317 996
2013 (USD/oz) 454 - 719 985 834
USD all-in sustaining cash cost 2014 (USD/oz) 480 - 936 1,526 1,165
2013 (USD/oz) 454 - 833 1,140 965
USD all-in cost 2014 (USD/oz) 480 - 957 1,796 1,283
2013 (USD/oz) 762 - 912 1,218 1,044
ZAR cash cost per tonne 2014 (ZAR/t) 122 - 752 1,230 940
2013 (ZAR/t) 155 - 837 1,373 1,045
Capital expenditure 2014 (ZAR million) 1.1 88.3 55.9 157.6 213.5
2013 (ZAR million) 35.8 - 84.5 74.8 159.3
Average exchange rate 2014 (ZAR/USD) 10.98 - 10.98 10.98 10.98
2013 (ZAR/USD) 10.06 - 10.06 10.06 10.06
Revenue 2014 (ZAR million) 158.0 - 714.3 456.8 1,171.1
2013 (ZAR million) 153.9 - 755.5 565.6 1,321.1
Cost of Production 2014 (ZAR million) 59.1 - 459.7 487.8 947.5
2013 (ZAR million) 53.0 - 412.4 427.8 840.2
All-in sustainable cost of production 2014 (ZAR million) 61.7 - 544.0 565.1 1,109.1
2013 (ZAR million) 53.0 - 477.9 483.7 961.6
All-in cost of production 2014 (ZAR million) 61.7 - 556.3 576.8 1,133.1
2013 (ZAR million) 88.9 - 523.3 517.6 1,040.9
EBITDA 2014 (ZAR million) 80.2 - 235.5 6.2 241.7
2013 (ZAR million) 85.1 - 316.7 123.1 439.8
Note:1: Adjusted EBITDA is represented by earnings before interest, taxation,
depreciation and amortisation, bargain purchase gain, impairments and loss on
disposal of associate.
Review of Barberton Mines
Safety
Safety is a key priority at Barberton Mines and we are pleased to report that
no fatalities occurred during the period under review.
Barberton Mines' total recordable injury frequency rate ('TRIFR') decreased to
12.93 (2013: 15.59) per 1,000,000 man hours worked, and the lost time injury
frequency rate ('LTIFR') improved to 1.50 (2013: 1.56) per 1,000,000 man hours
worked. The reportable injury frequency rate ('RIFR') improved to zero (2013:
0.94) per 1,000,000 man-hours worked.
Operating performance
Barberton Mines' (including BTRP) gold sold decreased by 7.1% to 52,942oz
(2013: 57,008oz).
The total combined USD cash costs per ounce increased by 10.0% to USD791/oz
(2013: USD719/oz). In ZAR per kilogram terms, total cash costs increased by
20.0% to ZAR279,150/kg (2013: ZAR232,611/kg).
The total cost of production (including off-mine costs) increased by 11.5% to
ZAR459.7 million (2013: ZAR412.4 million).
The main year-on-year cost contributors were the following:
Salary and wages increased by 6.5% to ZAR194.8 million (2013: ZAR182.9
million). The increase was driven by basic salary increases, effective 1 July
2014, consistent with the two-year wage agreement.
Mining costs increased by 12.4% to ZAR57.9 million (2013: ZAR51.5 million), due
to additional costs associated with mining consumables and vamping costs.
Processing costs increased by 5.6% to ZAR79.2 million (2013: ZAR75.0 million),
principally due to an increase of 41.1% in tonnes milled by the BTRP to
484,315t (2013: 343,137t).
Engineering and technical services costs increased by 7.5% to ZAR31.4 million
(2013: ZAR29.2 million) mainly due to expenditure incurred on the secondary
support at Fairview Mine's high grade 11
block.
Electricity costs increased by 10.7% to ZAR47.7 million (2013: ZAR43.1
million), due to Eskom tariff increases.
Security costs were well controlled and only increased by 2.3% to ZAR13.6
million (2013: ZAR13.3 million).
Administration and other costs increased by 7.8% to ZAR16.6 million (2013:
ZAR15.4 million). The higher than consumer price index ('CPI') increase was
mainly due to an increase in training costs, which increased by 35.3% to ZAR2.3
million (2013: ZAR1.7 million).
The total combined USD all-in cash cost per ounce increased by 5.0% to USD957/
oz (2013: USD912/oz). Barberton Mines' ZAR combined all-in cash cost per
kilogram increased by 14.5% to ZAR337,814/kg (2013: ZAR295,134/kg). This
increase in all-in cash costs was as a result of the 7.1% decrease in gold
sold, an increase in cash costs of 20.0% and sustaining capital increasing by
46.7% to ZAR20.1 million (2013: ZAR13.7 million).
Mining operations
Barberton Mines' gold sold (excluding BTRP) decreased by 9.2% to 41,232oz
(2013: 45,405oz). The mining operations tonnes milled decreased by 15.3% to
126,713t (2013: 149,589t).
On 21 November 2014 Pan African announced to shareholders that a Section 54
notice of order was issued by the South African Department of Mineral Resources
("DMR") to Barberton Mines. This notice was issued after the DMR's Mine Health
and Safety Inspectorate identified deviations from operating procedures and
administrative processes pertaining to Barberton Mines' lamp room, self-rescuers
and gas monitors. The stoppage resulted in 5 production days being lost at
Barberton Mines.
The Group, together with the operations' Safety and Health Committees, have since
corrected the deviations and action plans were presented to the DMR, which resulted
in approval being granted to re-commence production.
The decrease in gold sold from Barberton Mines underground and surface mining
operations therefore primarily resulted from:
Oil contamination at the BIOX® plant; and
The Section 54 safety stoppage.
Barberton Mines mining operations were affected by the following power outages,
which resulted from load clipping and Eskom load shedding programmes during the
period under review:
Sheba Mine experienced 4 instances of load shedding averaging between 2-3
hours, whilst there were 12 other instances of power outages averaging between
2-3 hours at a time.
Fairview Mine experienced no instances of load shedding but experienced 8
instances of power interruptions averaging between 1-3 hours at a time.
Consort Mine experienced two instances of load shedding averaging between 2-3
hours, whilst there were 16 other instances of power interruptions averaging
between 2-3 hours at a time.
The underground head grade increased marginally to 11.6g/t (2013: 11.5g/t), and
gold recoveries decreased to 89% (2013: 91%) as a result of the BIOX® plant oil
contamination mentioned above.
The total underground and surface USD cash costs per ounce increased by 12.5%
to USD885/oz (2013: USD787/oz). In ZAR per kilogram terms, total cash costs
increased by 22.8% to ZAR312,502/kg (2013: ZAR254,506/kg).
Tailing operations - BTRP
BTRP gold sold increased to 11,710oz (2013: 11,603oz) for the period. Tonnage
processed by the plant increased by 41.1% to 484,315t (2013: 343,137t) and the
head grade decreased to 1.5g/t (2013: 1.7g/t). Overall recoveries decreased by
15.0% to 51% (2013: 60%).
The BTRP USD cash costs per ounce increased by 1.1% to USD459/oz (2013: USD454/
oz). In ZAR per kilogram terms, total cash costs increased by 10.4% to
ZAR162,203/kg (ZAR146,928/kg). This cost increase is mainly due to lower
recoveries obtained.
Capital expenditure
Total capital expenditure at Barberton Mines decreased by 33.8% to ZAR55.9
million (2013: ZAR84.5 million). Maintenance capital expenditure of ZAR20.1
million (2013: ZAR13.7 million) and development capital expenditure of ZAR25.5
million (2013: ZAR25.4 million) was incurred. The BTRP was completed during the
first quarter of the 2014 financial year and therefore no expansion capital was
incurred on the BTRP during the period (2013: ZAR35.9 million). Capital
expenditure for the development of four new raise boreholes at Fairview Mine,
to improve underground environmental conditions, amounted to ZAR10.3 million
(2013: ZAR9.5 million).
Review of Evander Mines
Safety
Evander Mines reported that no fatalities occurred during the period under
review, and the 'Vuka Sizwe' safety initiative continues to improve safety
performance.
Evander Mines' TRIFR increased to 7.55 (2013: 5.12) per 1,000,000 man hours
worked, and the LTIFR improved to 2.86 (2013: 3.62) per 1,000,000 man hours
worked. The RIFR improved to 1.82 (2013: 2.71) per 1,000,000 man-hours worked.
Operating performance
Evander Mines' gold sold decreased by 21.8% to 33,733oz (2013: 43,164oz).
Tonnes milled increased by 27.3% to 396,457t (2013: 311,497t). The increase in
tonnes milled was due to an increase in surface stockpiles processed of 78.5%
to 198,578t (2013: 111,225t), whilst underground tonnes milled decreased by
1.2% to 197,879t (2013: 200,272t).
As a result of the low grade mining cycle and increased low grade surface
tonnages processed, the underground head grade decreased to 4.3g/t (2013: 6.2g/
t) and surface head grade increased to 1.4g/t (2013: 1.3g/t). Overall average
recovery decreased by 4.1% to 93% (2013: 97%), due to the additional surface
stockpile processed.
Evander Mines mining operations were affected by 19 instances of power
interruptions varying in length from 2 to 9 hours. Load clipping is carried
out on mine to assist Eskom in managing the regional grid demand.
The total cost of production including off-mine costs, increased by 14.0% to
ZAR487.8 million (2013: ZAR427.8 million). In ZAR per kilogram terms, total
cash costs increased by 45.9% to ZAR464,955/kg (2013: ZAR318,616/kg), mainly as
a result of the low grade mining cycle which resulted in lower gold sales.
The main year-on-year cost contributors were the following:
Salary and wages increased by 7.3% to ZAR237.5 million (2013: ZAR221.4 million)
consistent with the annual increase provided for in the collective wage
agreement.
Mining costs increased by 6.3% to ZAR45.7 million (2013: ZAR43.0 million), in
line with CPI rates.
Processing costs increased by 104.3% to ZAR52.7 million (2013: ZAR25.8
million), due to the increase of 78.5% to 198,578t (2013: 111,225t) of surface
sources being processed through the plant and the inclusion of the toll
treatment ore, ash and dredge projects.
Engineering and technical services costs increased by 10.7% to ZAR22.7 million
(2013: ZAR20.5 million) due inflation linked increases and higher maintenance
costs.
Electricity costs increased by 8.8% to ZAR97.4 million (2013: ZAR89.5 million),
in line with the average increase in Eskom's tariffs.
The security costs remained well controlled and decreased by 1.7% to ZAR5.6
million (2013: ZAR5.7 million), highlighting the cost benefits of a centralised
security monitoring team for both Barberton and Evander Mines.
Administration and other costs increased by 23.0% to ZAR24.6 million (2013:
ZAR20.0 million) due to higher information technology costs incurred as a
result of migrating to a new accounting system. Administration costs also
increased as a result of operational and accounting services.
The total combined USD all-in cash cost per ounce increased by 47.5% to
USD1,796/oz (2013: USD1,218/oz). Evander Mines' ZAR combined all-in cash cost
per kilogram increased by 61.0% to ZAR633,960/kg (2013: ZAR393,854/kg). This
increase in all-in cash costs was mainly as a result of the 21.8% decrease in
gold sold and the increase in cash costs of 45.9% as well as once-off expansion
capital on the ETRP of ZAR88.3 million. Also included in this increase was
ZAR11.7 million for once-off voluntary separation packages.
Capital expenditure
Total capital expenditure at Evander Mines was ZAR157.6 million (2013: ZAR74.8
million). Maintenance capital expenditure was ZAR25.0 million (2013: ZAR16.3
million) and development capital expenditure was ZAR44.3 million (2013: ZAR58.5
million). Expansion capital related to the ETRP plant construction was ZAR88.3
million (2013: Nil).
Review of platinum tailings operations
Review of Phoenix Platinum
Safety
Phoenix maintained its excellent safety record, with no injuries recorded.
Operating performance
A significantly improved performance at Phoenix Platinum in the period under
review resulted in PGE ounces sold increasing by 57.7% to 4,711oz (2013:
2,987oz).
During the current period under review, International Ferro Metals SA (Pty) Ltd
('IFM') resumed mining at its underground Lesedi Mine, providing sulphide
material for treatment in the CTRP. Plant recoveries increased by 41.7% to 34%
(2013: 24%), as a result of the improved reagent suite and the processing of
higher sulphide content tailings contained in dam number 4, as well as currents
arisings from Lesedi Mine.
In the year under review, the effective average PGE basket price received
increased by 4.6% to ZAR9,815/oz (2013: ZAR9,380/oz). Cost per ounce of
production decreased by 19.6% to ZAR6,817/oz (2013: ZAR8,484/oz). Plant feed
increased during the period by 15.0% to 135,963t (2013: 118,258t).
The total cost of production increased by 26.9% to ZAR32.1 million (2013:
ZAR25.3 million).
The main year-on-year cost contributors were the following:
Salary and wages increased by 11.9% to ZAR7.5 million (2013: ZAR6.7 million),
which was attributable to an 8.5% increase granted to employees and a new
incentive scheme linked to productivity.
Site production costs increased by 21.2% to ZAR6.3 million (2013: ZAR5.2
million) as result of increased plant feed tons, which attracted higher
re-mining costs.
Tailings costs increased by 10.3% to ZAR3.2 million (2013: ZAR2.9 million), due
to annual increases granted to tailings contractors and additional cyclones
that were purchased during the period.
Consumables increased by 21.2% to ZAR4.0 million (2013: ZAR3.3 million, which
is attributable to inflationary increases and costs associated with additional
reagents required for the higher tonnes treated in comparison to the
comparative period. .
Administration costs decreased by 53.8% to ZAR0.6 million (2013: ZAR1.3
million), as a result of a reduction in consultation fees.
Realisation and refining costs increased by 173.1% to ZAR7.1 million (2013:
ZAR2.6 million) during the period under review due to increased concentrate
tonnages delivered to Lonmin. This was as a result of increasing the mass pull
from the plant which then also results in higher chrome contents and additional
chrome charges.
Electricity and other utility costs remained constant at ZAR1.9 million (2013:
ZAR1.9 million), mainly as a result of optimisation of the plant's mill, which
resulted in lower electricity consumption offsetting the electricity rate
increases.
Phoenix Platinum achieved a headline profit of ZAR6.1 million (2013: ZAR2.6
million - headline loss) for the period under review.
PGE Production summary
For the six For the six
months ended months ended
Metric 31 December 2014 31 December 2013
Plant feed (t) 135,963 118,258
Head grade (g/t) 3.16 3.80
Plant recovery (%) 34 24
Chromium (iii) oxide (Cr203) (%) 3.41 2.47
Production and sales of PGE 6E (oz) 4,711 2,987
Basket price received (ZAR/oz) 9,815 9,380
Basket price received (USD/oz) 894 932
Exchange Rate (USD/ZAR) 10.98 10.06
Total cash costs per ounce (ZAR/oz) 6,817 8,484
Total cash costs per tonne (ZAR/t) 236 214
Total Cost of Production (ZAR million) 32.1 25.3
Total Capital Expenditure (ZAR million) 0.1 0.2
Capital expenditure
Total capital expenditure at Phoenix Platinum decreased to ZAR0.1 million
(2013: ZAR0.2 million).
Expansion/Growth projects
Evander Tailings Retreatment Plant
The Group has been upgrading and rehabilitating the Carbon-in-Leach ('CIL')
tanks of the Evander Mines Kinross plant. The construction of the ETRP will
yield an estimated 10,000oz of gold per annum with a life of mine of 17 years.
Due to the project leveraging off the existing plant infrastructure and labour
force, only a marginal incremental cost per ton to process the additional
tailings is anticipated. The ETRP project is progressing well and commenced
production in January 2015, with steady state production expected by 30 June
2015.
The capital expenditure for the ERTP is projected to be approximately ZAR200
million of which an amount of ZAR167.5 million had been spent at 31 December
2014.
Summary of ETRP capital expenditure
ETRP capital expenditure at 31 December 2014
Year ended Six months Amount Amount Total forecasted
30 June - 31 spent on forecasted to capital
2014 December project to project expenditure on
2014 date completion project
ZAR ZAR ZAR ZAR ZAR
(millions) (millions) (millions) (millions) (Millions)
Construction
and 65.9 53.3 119.2 25.0 144.2
Infrastructure
Tailings
storage 13.3 35.0 48.3 7.5 55.8
facility
Total 79.2 88.3 167.5 32.5 200.0
AurochMineral NL ("Auroch")
Auroch is an exploration company focusing on developing and exploring the
Manica Gold Project ('Manica') in Mozambique. Pan African previously owned
Manica. Manica was sold to Auroch during January 2013 and, as part of the
transaction consideration, Pan African was issued 42% of the total issued share
capital of Auroch.
On 17 November 2014, the Group announced the completion of the disposal of its
interest in Auroch for a total amount of ZAR8,114,681 (AUD850,000) in full and
final settlement of all amounts owing
Even though the total settlement was less than the AUD2,000,000 settlement
previously agreed upon, the transaction allowed for earlier payment and
provided completion certainty for the Group, enabling it to maintain its focus
on the core asset portfolio.
During the reporting period prior to the date of disposal, the Group
consolidated ZAR2.3 million (2013: ZAR1.4 million) of Auroch's exploration and
corporate costs, which is disclosed in the statement of profit or loss and
other comprehensive income under 'Loss in Associate'. In derecognising the 42%
investment in Auroch the Group further recognised an impairment of ZAR1.0
million and a loss on disposal of investment of ZAR2.4 million in the statement
of profit or loss and other comprehensive income.
Commitments
The Group's commitments have been presented in both ZAR and GBP for ease of
review for both UK and SA shareholders. The Group had identified no contingent
liabilities in the current financial period or prior financial period.
Commitments reported in ZAR
The Group had outstanding open orders contracted for at period end of ZAR32.4
million (2013: ZAR32.6 million).
Authorised commitments not yet contracted for totalled ZAR133.2 million (2013:
ZAR107.5 million).
The Group had guarantees of ZAR24.6 million (2013: ZAR24.6 million) in favour
of Eskom, and ZAR14.0 million (2013: ZAR14.0 million) in favour of the DMR at
the end of the reporting period.
Operating lease commitments, which fall due within the next year, amounted to
ZAR2.9 million (2013: ZAR1.6 million).
Commitments reported in GBP
The Group had outstanding open orders contracted for at period end of GBP1.8
million (2013: GBP1.9 million).
Authorised commitments not yet contracted for totalled GBP7.4 million (2013:
GBP6.2 million).
The Group had guarantees of GBP1.4 million (2013: GBP1.6 million) in favour of
Eskom and GBP0.8 million (2013: GBP0.8 million) in favour of the DMR at
reporting period end.
Operating lease commitments, which fall due within the next year, amounted to
GBP0.2 million (2013: GBP0.1 million).
Basis of preparation of financial statements
The accounting policies applied in compiling the interim results are in terms
of International Financial Reporting Standards ('IFRS') and consistent with
those applied in preparing the Group's annual financial statements for the year
ended 30 June 2014.
The financial information set out in this announcement does not constitute the
Company's statutory accounts for the half-year ended 31 December 2014.
The interim results have been prepared and presented in accordance with, and
containing the information required by IFRS on Interim Financial Reporting,
International Accounting Standards ('IAS') 34. The financial information
included in the interim results has been prepared in accordance with the
recognition and measurement criteria of IFRS. This announcement does not itself
contain sufficient disclosure information to comply fully with IFRS.
The interim results have not been reviewed or reported on by the Company's
external auditors.
JSE Limited listing
The Company has a dual primary listing on the main board of the JSE Limited
('JSE') and the Alternative Investment Market ('AIM') of the London Stock
Exchange.
The preliminary announcement has been prepared in accordance with the framework
concepts and the measurement and recognition requirements of IFRS, the AC 500
standards as issued by the Accounting Practices Board and the information as
required by IAS 34: Interim Financial Reporting.
AIM listing
The financial information for the period ended 31 December 2014 does not
constitute statutory accounts as defined in sections 435 (1) and (2) of the
Companies Act 2006.
The Group announcement has been prepared in accordance with IFRS and
International Financial Reporting Interpretation Committee interpretations
adopted for use by the European Union, with those parts of the Companies Act
2006 applicable to companies reporting under IFRS.
Directorship Changes
The following changes took place during the period under review:
Appointments:
- Mr R Smith was appointed as an independent non-executive director, with
effect from 8 September 2014.
Resignations:
- Mr RG Still resigned as a non-executive director, with effect from 1 July
2014.
Shares Issued
During the financial period under review no shares were issued.
Dividend
The Group paid a dividend of ZAR258.0 million or GBP14.9 million (2013:
ZAR240.3 million or GBP14.7 million) for the 2014 year, equating to ZAR0.1410
or 0.82p (2013: ZAR0.1314 or 0.80p per share).
Going concern
The board confirms that the business is a going concern and that it has
reviewed the business' working capital requirements in conjunction with its
future funding capabilities for at least the next 12 months, and has found them
to be adequate. The Group has a revolving credit facility with Nedbank Limited,
ABSA Limited and Rand Merchant Bank. The Group at 31 December 2014 had
unutilised RCF facilities of ZAR225 million and cash on hand of ZAR88.2 million
to assist in funding working capital requirements. Management is not aware of
any material uncertainties, which may cast significant doubt on the Group's
ability to continue as a going concern. Should the need arise the Group can
cease most exploration and capital activities, and by doing so conserve cash.
Events after the reporting period
On 5 February 2015, it was announced that Mr R Holding will retire as Chief
Executive Officer of the Group with effect from 1 March 2015. Mr C Loots, who
is currently the Financial Director, will succeed him as CEO.
On 20 February 2015, the Group announced that Mr G Louw would replace Mr C
Loots as the Financial Director, effective 1 March 2015.
Accounting policies
The provisional announcement has been prepared using accounting policies that
comply with the IFRS adopted by the European Union and South Africa, which are
consistent with those applied in the financial statements for the year ended 30
June 2014 and 30 June 2013.
Directors' dealings
There were no director dealings during the reporting period.
Segment Reporting
A segment is a distinguishable component of the Group that is engaged in
providing products or services in a particular business sector or segment,
which is subject to risk and rewards that are different to those of other
segments. The Group's business activities were conducted through five business
segments:
- Barberton Mines (Including BTRP), located in Barberton South Africa,
- Evander Gold Mining (Pty) Ltd and Evander Gold Mines Ltd ('collectively known
as Evander Mines'), located in Evander South Africa,
- Phoenix Platinum, located near Rustenburg South Africa,
- Corporate and growth projects and,
- Pan African Resources Funding Company (Pty) Ltd ('Funding Company').
The Executive committee reviews the operations in accordance with the
disclosures presented above.
Pan African Resources Outlook
The production and grade challenges experienced during the period under review
at Evander and Barberton Mines had a considerable adverse effect on the
operating and financial results of the Group. Management focus on remedial
action to mitigate these production and grade impediments have however started
yielding results, with improved grades and production volumes being experienced
at all operations subsequent to the period under review.
Furthermore, the Group successfully commissioned the ETRP at Evander Mines,
within schedule and on budget during the period under review. Production from
the ETRP tailings operation is expected to increase Evander Mines gold output
by 10,000 ounces per annum.
Increased production from the gold and PGE operations is also expected to
support higher profitability over the coming six months. In addition, the 25
level at Evander Mines' 8 Shaft has been successfully established and equipped
and the higher grade mining cycle will reflect positively in the next six
months' performance.
The Phoenix Platinum plant has matured into a cash generative operation and the
outlook is positive based on its current operating environment, which remains
dependant on the continued supply of sulphide rich material.
Pan African's strategy is to continue growing organically and through
acquisitions, which are value accretive to our shareholders, whilst maximising
margins from current operations. With strong cash flows and funding capacity,
the Group is well positioned to take advantage of such opportunities in the
current depressed commodity cycle.
Our thanks again go out to all the staff of Pan African, for their daily
contributions that continue to drive our success.
Ronald Holding
Chief Executive Officer
Cobus Loots
Financial Director
26 February 2015
Financial statements: Summarised financial information
Consolidated Statement of Financial Position as at 31 December 2014
31 December 2014 30 June 2014 31 December 2013
(Unaudited) (Audited) (Unaudited)
GBP GBP GBP
ASSETS
Non-current assets
Property, plant and equipment and mineral rights 192,380,120 185,375,968 186,421,320
Other intangible assets 211,682 214,330 241,093
Deferred taxation 274,873 366,567 227,991
Goodwill 21,000,714 21,000,714 21,000,714
Investments 674,268 - -
Investments in associate - 1,009,545 707,114
Rehabilitation trust fund 16,199,996 15,458,291 15,667,223
230,741,653 223,425,415 224,265,455
Current assets
Inventories 5,041,034 5,341,128 6,517,923
Current tax asset 573,472 854,568 272,718
Trade and other receivables 12,738,850 11,696,380 7,990,615
Cash and cash equivalents 4,893,687 5,618,323 4,250,619
23,247,043 23,510,399 19,031,875
Non-current assets held for sale - - 185,078
TOTAL ASSETS 253,988,696 246,935,814 243,482,408
EQUITY AND LIABILITIES
Capital and reserves
Share capital 18,299,947 18,299,947 18,278,972
Share premium 94,792,516 94,792,516 94,724,429
Translation reserve (47,553,353) (47,545,320) (42,941,677)
Share option reserve 1,223,380 1,154,891 1,036,890
Retained income 104,727,781 114,106,005 104,625,492
Realisation of equity reserve (10,701,093) (10,701,093) (10,701,093)
Merger reserve (10,705,308) (10,705,308) (10,705,308)
Other reserves (375,464) (5,529) -
Equity attributable to owners of the parent 149,708,406 159,396,109 154,317,705
Total equity 149,708,406 159,396,109 154,317,705
Non-current liabilities
Long term provisions 12,617,747 12,033,167 13,224,945
Long term liabilities 25,339,623 8,141,317 11,817,447
Deferred taxation 43,234,799 43,353,577 48,390,525
81,192,169 63,528,061 73,432,917
Current liabilities
Trade and other payables 15,941,132 17,219,749 14,815,975
Current portion of long term liabilities 6,309,900 4,754,803 -
Current tax liability 837,089 2,037,092 915,811
23,088,121 24,011,644 15,731,786
TOTAL EQUITY AND LIABILITIES 253,988,696 246,935,814 243,482,408
Consolidated Statement of Profit or Loss and Other Comprehensive Income for the
period ended 31 December 2014
31 December 2014 31 December 2013
(Unaudited) (Unaudited)
GBP GBP
Revenue
Gold sales 65,538,251 82,879,800
Platinum sales 2,587,645 1,757,696
Realisation costs (294,589) (190,799)
On - mine revenue 67,831,307 84,446,697
Gold cost of production (52,727,136) (52,519,449)
Platinum cost of production (1,797,188) (1,589,715)
Mining depreciation (4,676,292) (5,088,266)
Mining profit 8,630,691 25,249,267
Other income/(expenses) 522,797 (222,825)
Loss in associate (128,217) (89,287)
Loss on disposal of associate (139,970) -
Impairments (56,253) -
Royalty costs (794,882) (1,746,627)
Net income before finance income and finance costs 8,034,166 23,190,528
Finance income 321,046 381,452
Finance costs (498,013) (725,259)
Profit before taxation 7,857,199 22,846,721
Taxation (2,309,652) (5,536,882)
Profit after taxation 5,547,547 17,309,839
Other comprehensive income:
Fair value adjustment on investments (369,935) -
Foreign currency translation differences (8,033) (20,775,332)
Total comprehensive income for the year 5,169,579 (3,465,493)
Profit attributable to:
Owners of the parent 5,547,547 17,309,839
Total comprehensive income attributable to:
Owners of the parent 5,169,579 (3,465,493)
Earnings per share 0.30 0.95
Diluted earnings per share 0.30 0.95
Weighted average number of shares in issue 1,829,994,763 1,825,556,279
Diluted number of shares in issue 1,834,126,382 1,828,190,319
Headline earnings per share is calculated :
Basic earnings 5,547,547 17,309,839
Adjustments:
Loss on disposal of associate 139,970 -
Impairments 56,253 -
Headline earnings 5,743,770 17,309,839
Headline earnings per share 0.31 0.95
Diluted headline earnings per share 0.31 0.95
Condensed consolidated cash flow statement for the period ended 31 December 2014
Six months ended Six months ended
31 December 2014 31 December 2013
(Unaudited) (Unaudited)
GBP GBP
Cash Generated by operations 9,002,000 26,785,843
Taxation paid (1,870,216) (2,923,513)
Royalty paid (1,276,984) (1,260,454)
Dividends paid (14,283,924) (14,683,712)
Net finance expense (241,484) (343,807)
Cash inflow from operating activities (8,670,608) 7,574,357
Cash outflow from investing activities (12,757,686) (8,682,654)
Cash inflow from financing activities 20,984,891 1,429,581
Net increase/(decrease) in cash equivalents (443,403) 321,284
Cash at the beginning of period 5,618,323 4,768,916
Effect of foreign currency rate changes (281,233) (839,581)
Cash at end of year 4,893,687 4,250,619
Condensed Consolidated Statement of Changes in Equity for the period ended 31
December 2014
Six months ended 31 December Six months ended 31 December
2014 (Unaudited) 2013 (Unaudited)
GBP GBP
Shareholder's equity 159,396,109 172,208,237
as start period
Net share (costs)/ - 259,497
issues
Share option reserve 68,489 4,935
Other reserves - (5,759)
Other comprehensive (377,968) (20,775,332)
income
Profit for the year 5,547,547 17,309,839
Dividends (14,925,771) (14,683,712)
Total Equity 149,708,406 154,317,705
Consolidated Segment Report for the period ended 31 December 2014
31 December 2014
Barberton Evander Phoenix Corporate Funding Group
Mines Mines Platinum and Growth Company
Projects
GBP GBP GBP GBP GBP GBP
Revenue
Gold sales* 39,974,054 25,564,197 - - - 65,538,251
Platinum Sales - - 2,587,645 - - 2,587,645
Realisation costs (224,787) (69,802) - - - (294,589)
On - mine revenue 39,749,267 25,494,395 2,587,645 - - 67,831,307
Gold cost of production (25,498,210) (27,228,926) - - - (52,727,136)
Platinum cost of production - - (1,797,188) - - (1,797,188)
Depreciation (1,974,383) (2,518,367) (183,542) - - (4,676,292)
Mining Profit 12,276,674 (4,252,898) 606,915 - - 8,630,691
Other inome/(expenses) ** (388,757) 2,194,174 (32,298) (1,250,322) - 522,797
Loss from associate - - - (128,217) - (128,217)
Loss on disposal of associate - - - (139,970) - (139,970)
Impairment costs - - - (56,253) - (56,253)
Royalty costs (685,073) (109,809) - - - (794,882)
Net income / (loss) before 11,202,844 (2,168,533) 574,617 (1,574,762) - 8,034,166
finance income and finance
costs
Finance income 169,894 111,577 562 32,743 6,270 321,046
Finance costs (6,448) (18,407) - (11,167) (461,991) (498,013)
Profit /(loss) before taxation 11,366,290 (2,075,363) 575,179 (1,553,186) (455,721) 7,857,199
Taxation (2,819,986) 769,390 (166,951) (92,105) - (2,309,652)
Profit /(loss) after taxation 8,546,304 (1,305,973) 408,228 (1,645,291) (455,721) 5,547,547
Segmental Assets (Total assets
excluding goodwill) 62,151,080 156,520,573 12,000,194 2,276,381 39,754 232,987,982
Segmental Liabilities 21,973,563 59,351,154 843,668 1,151,504 20,960,401 104,280,290
Goodwill 21,000,714 - - - - 21,000,714
Net Assets (excluding goodwill) 40,177,517 97,169,419 11,156,526 1,124,877 (20,920,647) 128,707,692
Capital Expenditure 3,128,148 8,819,532 5,596 55,960 - 12,009,236
31 December 2013
Barberton Evander Phoenix Corporate Funding Group
Mines Mines Platinum and Growth Company
Projects
GBP GBP GBP GBP GBP GBP
Revenue
Gold sales* 47,398,175 35,481,625 - - - 82,879,800
Platinum Sales - - 1,757,696 - - 1,757,696
Realisation costs (127,660) (63,139) - - - (190,799)
On - mine revenue 47,270,515 35,418,486 1,757,696 - - 84,446,697
Gold cost of production (25,747,227) (26,772,222) - - - (52,519,449)
Platinum cost of production - - (1,589,715) - - (1,589,715)
Depreciation (1,954,645) (2,838,254) (295,367) - - (5,088,266)
Mining Profit 19,568,643 5,808,010 (127,386) - - 25,249,267
Other inome/(expenses) ** (619,959) (215,491) (60,988) 673,613 - (222,825)
Loss from associate - - - (89,287) - (89,287)
Loss on disposal of associate - - - - - -
Impairment costs - - - - - -
Royalty costs (1,036,088) (710,539) - - - (1,746,627)
Net income / (loss) before 17,912,596 4,881,980 (188,374) 584,326 - 23,190,528
finance income and finance
costs
Finance income 34,569 240,669 - 106,214 - 381,452
Finance costs (2,834) (383,105) - - (339,320) (725,259)
Profit /(loss) before taxation 17,944,331 4,739,544 (188,374) 690,540 (339,320) 22,846,721
Taxation (4,788,802) (691,065) 25,889 (73,137) (9,767) (5,536,882)
Profit /(loss) after taxation 13,155,529 4,048,479 (162,485) 617,403 (349,087) 17,309,839
Segmental Assets (Total assets
excluding goodwill) 78,365,626 150,576,780 11,750,929 (18,213,261) 1,620 222,481,694
Segmental Liabilities 20,841,692 55,114,119 270,051 1,315,425 11,623,416 89,164,703
Goodwill 21,000,714 - - - - 21,000,714
Net Assets (excluding goodwill) 57,523,934 95,462,661 11,480,878 (19,528,686) (11,621,796) 133,316,991
Capital Expenditure 5,201,824 4,695,367 10,789 82,328 - 9,990,308
*All gold sales were made in the Republic of South Africa and the majority of
revenue was generated from a single customer, Rand Refinery (Pty) Ltd.
**Other expenses exclude inter-management fees and dividend received
Consolidated ZAR Statement of Financial Position as at 31 December 2014
31 December 2014 30 June 2014 31 December 2013
(Unaudited) (Unaudited) (Unaudited)
ZAR ZAR ZAR
ASSETS
Non-current assets
Property, plant and equipment and mineral rights 3,468,613,567 3,338,621,179 3,223,224,620
Other intangible assets 3,816,624 3,860,082 4,168,496
Deferred taxation 4,955,969 6,601,879 3,941,956
Goodwill 303,491,812 303,491,812 303,491,812
Investments 12,157,054 - -
Investments in associate - 10,558,872 12,226,005
Rehabilitation trust fund 292,085,919 278,403,816 270,886,283
4,085,120,945 3,941,537,640 3,817,939,172
Current assets
Inventories 90,889,845 96,193,722 112,694,887
Current tax asset 10,339,700 15,390,775 4,715,290
Trade and other receivables 229,681,450 210,651,809 138,157,739
Cash and cash equivalents 88,233,175 101,186,004 73,493,211
419,144,170 423,422,310 329,061,127
Non-current assets held for sale - - 3,200,000
TOTAL ASSETS 4,504,265,115 4,364,959,950 4,150,200,299
EQUITY AND LIABILITIES
Capital and reserves
Share capital 244,480,271 244,480,271 244,100,505
Share premium 1,322,660,134 1,322,660,134 1,321,426,474
Translation reserve - - -
Share option reserve 17,189,849 15,965,957 13,957,178
Retained income 1,341,862,736 1,500,694,965 1,324,390,325
Realisation of equity reserve (140,624,130) (140,624,130) (140,624,130)
Merger reserve (154,707,759) (154,707,759) (154,707,759)
Other reserves (6,769,609) (99,569) -
Equity attributable to owners of the parent 2,624,091,492 2,788,369,869 2,608,542,593
Total equity 2,624,091,492 2,788,369,869 2,608,542,593
Non-current liabilities
Long term provisions 227,497,973 216,717,341 228,659,301
Long term liabilities 456,873,408 146,625,129 204,323,651
Deferred taxation 779,523,431 780,797,921 836,672,181
1,463,894,812 1,144,140,391 1,269,655,133
Current liabilities
Trade and other payables 287,418,606 310,127,663 256,168,197
Current portion of long term liabilities 113,767,493 85,634,001 -
Current tax liability 15,092,712 36,688,026 15,834,376
416,278,811 432,449,690 272,002,573
TOTAL EQUITY AND LIABILITIES 4,504,265,115 4,364,959,950 4,150,200,299
Consolidated ZAR Statement of Profit or Loss and Other Comprehensive Income
for the period ended 31 December 2014
31 December 2014 31 December 2013
(Unaudited) (Unaudited)
ZAR ZAR
Revenue
Gold sales 1,171,168,538 1,321,104,010
Platinum sales 46,241,219 28,017,677
Realisation costs (5,264,311) (3,041,330)
On - mine revenue 1,212,145,446 1,346,080,357
Gold cost of production (942,233,920) (837,160,015)
Platinum cost of production (32,115,757) (25,340,051)
Mining depreciation (83,565,346) (81,106,966)
Mining profit 154,230,423 402,473,325
Other income/(expenses) 9,342,380 (3,551,823)
Loss in associate (2,291,239) (1,423,228)
Loss on disposal of associate (2,429,880) -
Impairments (1,014,239) -
Royalty costs (14,204,537) (27,841,227)
Net income before finance income and finance costs 143,632,908 369,657,047
Finance income 5,737,089 6,080,350
Finance costs (8,899,485) (11,560,621)
Profit before taxation 140,470,512 364,176,776
Taxation (41,273,479) (88,257,907)
Profit after taxation 99,197,033 275,918,869
Other comprehensive income:
Fair value adjustment on investments (6,670,040) -
Total comprehensive income for the year 92,526,993 275,918,869
Profit attributable to:
Owners of the parent 99,197,033 275,918,869
Total comprehensive income attributable to:
Owners of the parent 92,526,993 275,918,869
Earnings per share 5.42 15.11
Diluted earnings per share 5.41 15.09
Weighted average number of shares in issue 1,829,994,763 1,825,556,279
Diluted number of shares in issue 1,834,126,382 1,828,190,319
Headline earnings per share is calculated :
Basic earnings 99,197,033 275,918,869
Adjustments:
Loss on disposal of associate 2,429,880 -
Impairments 1,014,239 -
Headline earnings 102,641,152 275,918,869
Headline earnings per share 5.61 15.11
Diluted headline earnings per share 5.60 15.09
Consolidated ZAR Segment Report for the period ended 31 December 2014
31 December 2014
Barberton Evander Phoenix Corporate Funding Group
Mines Mines Platinum and Growth Company
Projects
ZAR' million ZAR' million ZAR' million ZAR' million ZAR' million ZAR' million
Revenue
Gold sales* 714.3 456.8 - - - 1,171.1
Platinum Sales - - 46.2 - - 46.2
Realisation costs (4.0) (1.2) - - - (5.2)
On - mine revenue 710.3 455.6 46.2 - - 1,212.1
Gold cost of production (455.7) (486.6) - - - (942.3)
Platinum cost of production - - (32.1) - - (32.1)
Depreciation (35.3) (45.0) (3.2) - - (83.5)
Mining Profit 219.3 (76.0) 10.9 - - 154.2
Other income/(expenses)** (6.9) 39.2 (0.6) (22.3) - 9.4
Bargain purchase - - - - - -
Loss from associate - - - (2.3) - (2.3)
Loss on disposal of associate - - - (2.4) - (2.4)
Impairment costs - - - (1.0) - (1.0)
Royalty costs (12.2) (2.0) - - - (14.2)
Net income / (loss) before
finance income and finance
costs 200.2 (38.8) 10.3 (28.0) - 143.7
Finance income 3.0 2.0 - 0.6 0.1 5.7
Finance costs (0.1) (0.3) - (0.2) (8.3) (8.9)
Profit /(loss) before taxation 203.1 (37.1) 10.3 (27.6) (8.2) 140.5
Taxation (50.4) 13.7 (3.0) (1.6) - (41.3)
Profit /(loss) after taxation 152.7 (23.4) 7.3 (29.2) (8.2) 99.2
Segmental Assets (Total assets
excluding goodwill) 1,120.6 2,822.1 216.4 41.0 0.7 4,200.8
Segmental Liabilities 396.2 1,070.1 15.2 20.8 377.9 1,880.2
Goodwill 303.5 - - - - 303.5
Net Assets (excluding goodwill) 724.4 1,752.0 201.2 20.2 (377.2) 2,320.6
Capital Expenditure 55.9 157.6 0.1 1.0 - 214.6
*All gold sales were made in the Republic of South Africa and the majority of
revenue was generated from a single customer, Rand Refinery (Pty) Ltd.
**Other expenses exclude inter-management fees and dividend received
31 December 2013
Barberton Evander Phoenix Corporate Funding Group
Mines Mines Platinum and Growth Company
Projects
ZAR' million ZAR' million ZAR' million ZAR' million ZAR' million ZAR' million
Revenue
Gold sales* 755.5 565.6 - - - 1,321.1
Platinum Sales - - 28.0 - - 28.0
Realisation costs (2.0) (1.0) - - - (3.0)
On - mine revenue 753.5 564.6 28.0 - - 1,346.1
Gold cost of production (410.4) (426.8) - - - (837.2)
Platinum cost of production - - (25.3) - - (25.3)
Depreciation (31.2) (45.2) (4.7) - - (81.1)
Mining Profit 311.9 92.6 (2.0) - - 402.5
Other income/(expenses)** (9.9) (3.4) (1.0) 10.7 - (3.6)
Bargain purchase - - - - - -
Loss from associate - - - (1.4) - (1.4)
Loss on disposal of associate - - - - - -
Impairment costs - - - - - -
Royalty costs (16.5) (11.3) - - - (27.8)
Net income / (loss) before
finance income and finance
costs 285.5 77.9 (3.0) 9.3 - 369.7
Finance income 0.6 3.8 - 1.7 - 6.1
Finance costs - (6.1) - - (5.5) (11.6)
Profit /(loss) before taxation 286.1 75.6 (3.0) 11.0 (5.5) 364.2
Taxation (76.3) (11.0) 0.4 (1.2) (0.2) (88.3)
Profit /(loss) after taxation 209.8 64.6 (2.6) 9.8 (5.7) 275.9
Segmental Assets (Total assets
excluding goodwill) 1,354.9 2,603.5 203.2 314.9 - 3,846.7
Segmental Liabilities 360.4 952.9 4.7 22.7 201.0 1,541.7
Goodwill 303.5 - - - - 303.5
Net Assets (excluding goodwill) 994.6 1,650.5 198.5 337.7 200.9 2,305.0
Capital Expenditure 82.9 74.8 0.2 1.3 - 159.2
Contact Details
Corporate Office
The Firs Office Building
1st Floor, Office 101
Cnr. Cradock and Biermann Avenues
Rosebank, Johannesburg
South Africa
Office: + 27 (0) 11 243 2900
Facsimile: + 27 (0) 11 880 1240
Registered Office
Suite 31
Second Floor
107 Cheapside
London
EC2V 6DN
United Kingdom
Office: + 44 (0) 207 796 8644
Facsimile: + 44 (0) 207 796 8645
Ron Holding Cobus Loots
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
Matthew Armitt/Ross Allister Peter Stewart/Ryan Gaffney/Chris Fincken
Peel Hunt LLP Canaccord Genuity Limited
Joint Corporate Broker Nominated Adviser
Office: +44 (0)20 7418 8818 Office: +44 (0)207 523 8350
Nigel Gordon Sholto Simpson
Fasken Martineau LLP One Capital
Solicitors in the UK JSE Sponsor
Office: +44 (0)207 917 8500 Office: + 27 (0)11 550 5009
Julian Gwillim Daniel Thole
Aprio Strategic Communications Bell Pottinger PR
Public & Investor Relations SA Public & Investor Relations UK
Office: +27 (0)11 880 0037 Office: + 44 (0)203 772 2500
Phil Dexter
St James's Corporate Services Limited
Company Secretary
Office: + 44 (0)207 796 8644
www.panafricanresources.com
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