Interim Results for the 6 months ended 31 Decem...
Pan African Resources plc
(Incorporated and registered in England and Wales under Companies Act 1985
with registered number 3937466 on 25 February 2000)
Share code on AIM: PAF
Share code on JSE: PAN
ISIN: GB0004300496
('Pan African' or the 'company')
Interim Results for the 6 months ended 31 December 2011
Highlights for the 6 months ended 31 December 2011
Corporate
Revenue increased by 33.7% to £51.23 million (2010: £38.33 million).
Earnings and Headline earnings per share increased by 88.7% to 1.00 pence
(2010: 0.53 pence).
Earnings before interest, taxes, depreciation and amortisation ('EBITDA')
increased by 86.6% to £24.17 million (2010: £12.95 million).
Attributable profit increased by 90.5% to £14.44 million (2010: £7.58 million).
Cash on hand £4.9 million (2012: £ 10.6 million) *
Unhedged and debt-free.
Mining Operations
Barberton Gold Mining Operations ('BGMO')
Gold sold increased 0.6% to 46,927oz (2010: 46,655oz).
Tons milled increased by 3.6% to 154,643t (2010: 149,231t)
Head grade increased 0.9% to 10.65g/t (2010: 10.55g/t).
Total cash cost of ZAR192,397/kg (2010: ZAR176,199/kg) for the period under
review but improved to ZAR158,925/kg for the quarter ended 31 December 2011.
Phoenix Platinum Group Metals ('PGM') Retreatment Plant (from Chrome tailings)
Plant commissioned two months ahead of schedule and on budget during
October 2011.
438oz of PGM contained in concentrate was produced and despatched by the end of
December 2011.
Near-Term Mining Projects - Barberton Gold Tailings Retreatment Project
('BTRP')
Commenced with a Definitive Feasibility Study ('DFS').
Acquired the Harper Gold Tailings dumps representing over 3Mt of material at a
grade of 1.3g/t for total consideration of £830,000.
Development projects - Manica Gold Project
Established a separate management team with the aim of listing the Manica Gold
project as a separate exploration company on an international exchange in April
2012.
Significant post period acquisition - Evander Gold Mines (Pty) Ltd
Pan African Resources and Witwatersrand Consolidated Mines entered into a 50:50
joint venture on 30 January 2012 to acquire 100% of the Evander Gold Mines
from Harmony Gold Mining Company for a total conditional consideration of up to
ZAR 1.7 billion (£139 million).
* Cash on hand as at 17 February 2012 at the closing rate of 12.24 was £16.0
million.
Financial Summary:
Six months ended Six months ended
31 December 2011 31 December 2010
(Unaudited) (Unaudited)
Revenue (£) 51,229,660 38,326,410
EBITDA (£) 24,166,658 12,947,012
Attributable profit (£) 14,437,217 7,584,317
EPS (pence) 1.00 0.53
HEPS (pence) 1.00 0.53
Weighted average number of shares in issue 1,444,225,674 1,421,399,407
Nature of Business
Pan African is a South African based precious metals mining group that produces
approximately 95,000oz of gold and 12,000oz* of Platinum Group Metals ('PGM')
per annum. The company's strategic focus is on delivering attractive
shareholder returns by exploiting ore-bodies that yield high margins through a
highly skilled and experienced management team. The company recently
commissioned the Phoenix chrome tailings retreatment plant that extracts PGM's
from chrome tailings and is planning to build a 1.2Mt per annum gold tailings
retreatment plant at BGMO. This plant could increase gold production from BGMO
by a further 25,000oz per annum from August 2013. The group is debt free,
unhedged and is able to fund all current capital expenditure from internal cash
flows. The Group is generating significant cash from operations and as at 31
December 2011 had £ 4.9 million cash on hand.
* Full production build-up is expected from May 2012
Financial Performance
Pan African is incorporated in England and Wales, its reporting currency is
pound sterling (`£') and its functional currency is South African Rand ('ZAR').
Barberton Mines (Pty) Ltd (`Barberton Mines') is a South African Company and
its financial statements are prepared in South African Rand (`ZAR'). When
Barberton Mines' financial statements are translated into pound sterling for
the purpose of Group consolidation and reporting, the average and closing ZAR:£
exchange rates for the period affect the Group consolidated financial results.
During the current period, the average ZAR: £ exchange rate was ZAR12.06 (2010:
ZAR11.18) and the closing ZAR: £ exchange rate was ZAR12.54 (2010: ZAR10.28).
The period-on-period change in the average and closing exchange rates of 7.9%
and 22.0% respectively should be taken into account when comparing the
period-on-period results.
Gross revenue from gold sales increased by 33.7% to £51.23 million (2010: £
38.33 million). The increase in revenue was mainly attributed to a 34.9%
period-on-period increase in the average gold spot price received of US$1,736/
oz (2010: US$1,286/oz) however the appreciation of the pound sterling against
the ZAR had a negative impact on the Pound revenue. The average £:ZAR exchange
rate strengthened by 7.9% to ZAR12.06 (2010: ZAR11.18). Revenue expressed in
ZAR terms increased by 44.2% to ZAR 617. 80 million (2010: ZAR 428.49 million).
Although the average spot gold price in the period under review increased by
34.9% to US$ 1,736 (2010: US$ 1,286), the average US$: ZAR exchange rate
strengthened by 6.2% to ZAR7.58 (2010: ZAR 7.14) which had a negative impact on
the ZAR revenue. The effective ZAR gold price per kilogram achieved increased
by 43.3% to ZAR 423, 276/kg (2010: ZAR 295, 281/kg). Mining profit at BGMO
increased by 113.4% to £28.6 million (2010: £13.4 million).
Other expenses were £1.76 million (2010: £1.35 million), and there were no
impairments in the current or prior reporting period.
Cost of production increased by 1.1% to £23.20 million (2010: £22.95 million).
In ZAR terms the cost of production increased by 9.0% to ZAR279.79 million
(2010: ZAR256.58 million). The increase was primarily due to a hike in
electricity rates by 29.6% to ZAR32.06 million, engineering and technical
services up 14.8% to ZAR25.64 million and salaries and wages up 11.1% to
ZAR131.43 million.
The Royalty tax charge increased 99.0% to £2.01 million (2010: £1.01 million).
Income tax increased by 123.7% to £8.39 million (2010: £3.75 million) as a
result of the increase in profit before tax. The effective tax rate increased
by 3.1% to 36.8%.
EBITDA increased by 86.6% to £24.17 million (2010: £12.95 million) and
attributable profit increased by 90.5% to £14.44 million (2010: £7.58 million).
Cash on hand decreased to £4.9 million (2010: £10.6 million) mainly due to
capital expenditure of £4.57 million associated with the Phoenix Platinum Group
Metals Retreatment Plant and the dividend payment of £7.42 million made during
the period under review.
The increase in attributable profit is primarily due to the favourable gold
price. The profit margin in ZAR terms increased by 93.9% to ZAR230,879/kg
(2010: ZAR119,082/kg).The total unit production cash cost increased by 9.2% to
ZAR192,397/kg (2009: ZAR 176,199/kg), but improved to ZAR 158,925/kg for the
quarter ended 31 December 2011.
Basic earnings per share increased by 88.7% to 1.00 pence (2010: 0.53 pence)
and basic headline earnings per share increased by 88.7% to 1.00 pence (2010:
0.53 pence). In ZAR terms the basic earnings per share increased by 102.0% to
12.06 cents (2010: 5.97 cents), and basic headline earnings per share increased
by 102.0% to 12.06 cents (2010: 5.97 cents).
Review of Barberton Mines
Safety & Training
We are pleased to report no fatalities occurred for the period under review. To
date fatality free shifts totalled 1,329,723 and the safety performance at BGMO
for the first six months of the 2012 financial year as measured by the All
Injury Frequency rate ('AIFR') at 21.25 (2011: 24.82) indicates that the total
number of incidents decreased during this period. However, in the period under
review, the Lost Time Injury Frequency rate ('LTIFR') deteriorated to 3.09 vs.
2.61 in 2011 and Reportable Injury Frequency Rate ('RIFR') to 1.03 vs. 0.33 in
2011. In order to address these slight increases a Mining Qualification
Authority accredited training program for supervisors is being implemented in
order to identify and correct safety hazards.
Operating Performance
A total of 46,927oz (2010: 46,655oz) of gold was sold from BGMO (which
comprises the Fairview, Sheba and New Consort sections), a slight increase of
0.6% from the previous year. Total underground production remained consistent
at 45,209oz (2010: 45,385oz). Tons milled increased by 3.6% to 154,643t (2010:
149,231t). The tonnage increase was mainly due to the additional surface dump
material planned during the period under review to make up for the BIOX®
problems. Head grade remained constant at 10.65g/t (2010: 10.55g/t).
Operating problems were experienced in the BIOX® plant during July and August
2011 which negatively affected gold production, when the cumulative effect of
breakdowns to the old high pressure blowers in the process and excess oil from
a collapsed crusher bearing. These breakdowns created a lack of oxygen supply
to the reactors and resulted in poor recoveries.
To ameliorate the above, electronic oil pressure controls were installed in the
crusher and the outdated blowers were replaced with more efficient low pressure
blowers at a capital cost of ZAR2.4 million (£0.199 million).
6
months
Production Summary ended 6 months ended 6 months ended 6 months ended 6 months ended
31 Dec
11 31 Dec 10 31 Dec 09 31 Dec 08 31 Dec 07
Tons Milled (t) 154,643 149,231 152,584 159,919 161,455
Head grade (g/t) 10.65 10.55 10.11 11.40 9.05
Overall Recovery (%) 89 91 91 91 92
Production: Underground * (oz) 43,355 45,209 45,385 47,634 43,145
Production: Calcine Dumps / Surface Ops (oz) 264 - - 3 545 3 601
Gold Sold * (oz) 46,927 46,655 45,971 51,186 47,486
Average price: spot (US$/oz) 1,736 1,286 1,032 824 721
Average price: hedge (US$/oz) - - - - 460
Average price: spot (ZAR/KG) 423,276 295,281 253,510 235,338 165,782
Total cash cost (US$/oz) 786 767 670 451 521
Total cash cost (ZAR/KG) 192,397 176,199 164,697 134,581 114,640
EBITDA £ '000 24,167 12,947 8,598 8,552 4,001
Depreciation £ '000 1,536 1,909 1,375 1,066 806
Capital Expenditure £ '000 4,567 4,076 2,199 2,282 1,532
Exchange rate - average ZAR/£ 12.06 11.18 12.48 15.13 14.05
Exchange rate - closing ZAR/£ 12.54 10.28 11.94 13.78 13.77
Exchange rate - average (ZAR/US$) 7.58 7.14 7.64 8.88 6.94
Exchange rate - closing (ZAR/US$) 8.12 6.65 7.39 9.55 6.86
* The variance between gold produced and sold is higher than the historical
figure of between 1% to 3% and is due to the dumping of the high grade contents
of the BIOX® reactors during June 2011, which was then fed back into the system
during the period under review.
Capital Expenditure - Growth Projects
Project Metres/ % Equipping completed % Complete of budget Potential Resource Comments
(Progressive to YTD)
The footwall
drive will
reach the
target area
36 ZK in June 2012
197.4 101.23% 5,000 and
Sheba development
along the
cross
fractures.
Targets
exceeded and
continuing
development
towards the
Thomas ore
body.
Edwin Bray 190.7 105.94% 15,000
Exploration
drilling to
commence in
February
2012 to
determine
mining plan
and layouts.
25 - 560
Main
Fracture
area -
1,960t @
24,71g/t has
been
established.
27-360
Stoping area
- 6,860t @
21,14g/t
exposed with
Pillar Development 90m of
75.3 82% In reserve re-equipping
Sheba remaining to
gain access
for stoping.
35 - 10 -
382 Prospect
- 40m of
development
completed
and a
structure
carrying a
value of
9,94g/t has
been
intersected.
Development
has
progressed
through the
pegmatite
and
subsequent
cover
drilling
indicates a
second splay
of pegmatite
(+/- 30m
40 Level thick),
Development which still
126.1 110.61% 8,500 has to be
Consort traversed.
The target
zone is
virgin area
with very
good
potential to
pick up the
upward
extension of
the ore
body.
50 W1
decline is
to be sunk
for one
level.
The opening
up of 53
SI 22 level has
50W1 Decline exposed
88.0 99.32% 30,000 potential
Consort high grade
reserves
that have
potential
for mining
and are
currently
being
evaluated.
52 Level at
49
Sub-Vertical
Shaft:
Re-equipment
from 50 to
52 level is
completed.
Secondary
support in
the form of
sets has
58% been
completed.
Decline
development
to commence
in February
2012.
Pillar
Development
0.00% In reserve
Consort 33 Level
Ventilation
doors and
access
services
from station
to
ventilation
80% door
completed.
80m of
service
piping
required
prior to
de-watering.
Sampling to
be carried
out once
this is
completed.
The decline
shaft rope
raise and
box hole are
95%
complete.
Shaft
equipping
down to 40
SI 14 level is to
Equipping be completed
55.9 147.11% In reserve in the 3rd
Consort quarter of
the 2012
financial
year.
Mineable
reserves on
38 level has
been
identified
for the 2013
financial
year.
Project Metres/ % Equipping completed % Complete of budget Potential Resource Comments
(Progressive to YTD)
The
development
of the 64 to
62 level
return
airways is
on-going
with, 55m
remaining.
3# Deepening Shaft
89.3 119.07% 350,000 sinking to
Fairview commence in
the new
financial
year, with
the opening
up of the
downward
extension of
the Hope
reef.
Equipping is
progressing
58 Hope Reef 85% 80.00% In reserve well and
Equipping should be
completed by
April 2012.
The Rositer
reef has
been
intersected
54 Rositer Reef 122.9 122.90% 11,000 and reef
development
is under
way.
Re-equipping
on 16 level
is complete
16 Level and new
Opening Up blocks for
100% 100.00% In reserve stoping are
Fairview being
evaluated
and brought
into the
mining plan.
Maintenance Capital
Metallurgy Plants
Metallurgical Plants Cost Category Impact on production
Sheba - Concentrate ZAR1,300,000 Replacement Safety and maintenance
truck improvement.
Sheba - Pump ZAR200,000 Replacement To improve mine water run off
replacements control.
BIOX ® - Air equipment ZAR2,250,000 Replacement To improve Biox recoveries.
machinery
BIOX ® Instrumentation ZAR500,000 Replacement To improve Biox recoveries.
equipment
Engineering
Engineering Cost Category Impact on production
Winder ropes ZAR1,190,000 Replacement Legal and safety
requirement.
Compactors and ZAR1,070,000 Replacement Safety and grade control
utility vehicles in 11 block.
12 Ton tipper truck ZAR1,101,000 Replacement Safety and maintenance
improvement.
Fairview 2# ZAR2,004,000 Maintenance Safety and legal
refurbishment requirement.
Load haul dumpers ZAR2,426,000 Maintenance Safety and production
requirement.
Mineral Resources Management
Exploration Drilling
During the period under review a total of 7,740m (2010: 7,604.5m) of
exploration drilling was completed underground at Barberton Mines and the
following significant intersections are reported:
Section Borehole Drill Grade Description
Number width (g/t)
(cm)
Bh 5849 1,626 50.22 MRC ore body down-dip extension
Fairview Bh 5864 1,383 43.82 MRC ore body down-dip extension
Bh 5861 77 21.20 Rositer down-dip extension
24-460 - 01 104 13.45 Stope prospect drilling
29 ST 20 764 15.70 Stock work extension
29Stock23 63 30.08 Stock work extension
29Stock24 113 34.14 Stock work extension
33 MRC W37 86 10.30 MRC footwall structure
3340-W42 100 14.80 Prospect drilling for Birthday Northern Limb
3340-W42 91 15.13 Prospect drilling for Birthday Northern Limb
Sheba
3340-W42 73 10.82 Prospect drilling for Birthday Northern Limb
36 ZK W01 82 42.71 ZK ore body below 35 level
36 ZK W02 74 35.20 ZK ore body below 35 level
36 ZK W02 34 15.98 ZK ore body below 35 level
36 ZK W02 40 10.04 ZK ore body below 35 level
36ZK 02 75 11.32 ZK ore body below 35 level
EB 09 64 13.64 Mineralised structure in the Moodies quartzite
20IV-4 188 21.45 Ivora mineralisation below 20 level
3#7-1 64 25.20 3 Shaft resource extension
3#7-1 64 88.90 3 Shaft resource extension
3#7-1 64 72.70 3 Shaft resource extension
3#7-2 256 33.78 3 Shaft resource extension
3#7-3 256 19.93 3 Shaft resource extension
3#7-3 64 44.70 3 Shaft resource extension
3#7-5 87 23.20 3 Shaft resource extension
3#7-6 246 19.71 3 Shaft resource extension
3#7-6 87 14.40 3 Shaft resource extension
New 3#7-7 97 69.15 3 Shaft resource extension
Consort
3#7-8 82 21.80 3 Shaft resource extension
3#7-9 164 26.45 3 Shaft resource extension
3#CT-6 192 55.77 3 Shaft resource extension
3#CT-8 64 10.50 3 Shaft resource extension
37NE-2 97 30.30 37 Level new ore body exploration
37NE-3 97 17.50 37 Level new ore body exploration
37NE-3 97 32.40 37 Level new ore body exploration
37NE-4 97 29.50 37 Level new ore body exploration
37NE-5 100 111.00 37 Level new ore body exploration
37XC-16 87 11.00 37 Level new ore body exploration
37XC-18 91 23.80 37 Level new ore body exploration
Development results
A total of 1,617.6 m (2010: 1,636.7m) of development was completed on working
cost. Capital development totalled 1,095.8 m (2010: 429.6m) of which the
majority, 481.9m (44%) was done at Sheba with 348.8m (32%) at Fairview and
265.1m (24%) at Consort. The capital development at Fairview was focussed at
deepening of the number 3 sub-vertical shaft, the Hope and Rositer reefs.
New Consort Fairview Sheba
Metres g/t Metres g/t Metres g/t
Reef 241.4 6.15 198.0 2.89 531.8 3.71
Stope Development 187.7 6.76 176.4 5.5 31.1 8.49
Capital 265.1 - 348.8 - 481.9 -
Waste working cost 441 - 434 - 742.6 -
Waste Total 706.1 - 782.8 - 1,224.5 -
Review of Phoenix Platinum
Construction of the Phoenix Plant by Basil Read Matomo Projects exceeded
expectations when cold commissioning commenced in October 2011. First
concentrates were produced on 29 November 2011 two months ahead of schedule.
Frazer Alexander carried out the construction of the Tailings Storage Facility
Extension and the completion thereof dovetailed with the early commencement of
tailings treatment by the plant. Some 150,000 man hours where expended during
the construction phase without a time lost accident.
A five year Sale of Concentrate Agreement was concluded with Western Platinum
Limited (a subsidiary of Lonmin Plc) in November 2011.
The plant is in the process of progressing towards full production. During
this period various practical feedstock blends will be bulk treated and
conditions examined for optimisation and enhancements tested to maximise the
process. Full production is expected from May 2012.
Near-Term Mining projects - BTRP
During the period under review, Basil Read - Matomo commenced with a DFS on the
final design for the BTRP. The detailed design for the new tailings storage
facility has also commenced, while the Environmental Impact Assessment study is
progressing on schedule.
The Harper Gold Tailings dumps which are situated within close proximity to the
Bramber Tailings dump, and representing over 3Mt of material at a grade of 1.3g
/t, was acquired for total consideration of £830,000.
Development Projects - Manica Gold Project
During the period under review a separate management team was established to
list the Manica Gold project as a separate exploration company on an
international exchange. Good progress has been made to achieve a separate
listing in April 2012.
Capital Expenditure and Commitments
Capital expenditure at Barberton totalled £4.57 million of which Development
Capital was £2.47 million and Maintenance Capital was £2.10 million.
Capital expenditure on Phoenix Platinum totalled £4.57 million.
There were £0.57 million outstanding orders contracted for capital commitments
at the end of the period at Barberton and £0.5 million outstanding at Phoenix.
Operating lease commitments, which fall due within the next year, amounted to £
0.147 million (2010: £0.179 million)
9. Directorship Change
The Following changes took place in December 2011:
Non-Executive Directors:
Mr. Cyril Ramaphosa resigned as chairman of the board.
Mr. Keith Spencer replaced Mr. Cyril Ramaphosa as chairman of the board.
Ms. Phuti Malabi replaced Mr. Keith Spencer as Deputy Chairman of the board.
Executive Directors:
Mr. Cobus Loots resigned as Financial Director but will remain as a
non-executive director.
Ms. Busi Sitole has been appointed as Financial Director.
10. Shares Issued
During the period under review the company announced the issue and allotment of
923,650 new ordinary shares in respect of share options exercised:
On 28 October 2011, 200,000 shares issued to Mr. F. Chadwick at 6 pence per
share.
On 24 November 2011, 723,650 shares issued to Mr. D. Negri at 6 pence per
share.
11. Dividend
The Company has adopted a policy whereby dividends are considered and, deemed
appropriate by the Board, declared on an annual basis. Pan African will
consider a final dividend subsequent to the finalisation of financial year-end
results. The consideration of any dividend will take account of cash flow
requirements and growth plans, whilst recognising that where possible, the
payment of a dividend on a consistent basis increases shareholder value.
During the period under review the company declared and paid a final dividend
for 2011 of 0.5135 pence per share totalling £7.42 million.
1. Going Concern
The board is satisfied that the Group is a going concern for the foreseeable
future, and have adopted the going-concern basis in preparing these interim
results.
2. Accounting Policies
The financial information set out in this announcement does not constitute the
Company's statutory accounts for the half year ended 31 December 2011.
The interim results have been prepared and presented in accordance with, and
containing the information required by IFRS on Interim Financial Reporting, 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.
Johannesburg Stock Exchange (JSE) Limited listing
The Company has a dual primary listing on 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 ("APB") and the
information as required by International Accounting Standards ("IAS") 34:
Interim Financial Reporting.
AIM Listing
The financial information for the period ended 31 December 2011 does not
constitute statutory accounts as defined in sections 435 (1) and (2) of the
United Kingdom ("UK") Companies Act 2006.
The Group announcement (the Group's financial statements) has been prepared in
accordance with IFRS and International Financial Reporting Interpretation
Committee ("IFRIC") interpretations adopted for use by the European Union, with
those parts of the Companies Act 2006 applicable to companies reporting under
IFRS.
Segmental Reporting
A segment is a distinguishable component of the Group that is engaged in
providing products or services in a particular business sector (operating
segment), which is subject to risk and rewards that are different to those of
other segments. The segments which the Group reviews the business activities of
are: Mining Operations, Near-Term Mining Operations and Development Projects.
Directors' Dealings
The Company was notified on Tuesday 18 October 2011 that Pangea Exploration
(Pty) Ltd ("Pangea"), a private company of which Mr Rob Still is a director,
had declared a dividend in specie (the "Dividend") to its shareholders on 1
October 2011.
Mr Still is also a trustee of the Alexandra Trust a major shareholder of
Pangea. The Alexandra Trust received 12,430,900 ordinary shares of 1 pence each
in the Company ("Shares") at a price of ZAR1.46 per Share, with a total value
of ZAR18,149,114 as a consequence of the Dividend.
Following this off-market transaction Mr Still's total direct, beneficial
interest in Pan African remains unchanged at 2,000,000 Shares, representing
0.14% of the issued share capital of the Company as well as his total indirect,
non-beneficial interest of 16,755,308 Shares representing 1.16% of the issued
share capital of the Company. Mr Still did not receive any direct or indirect
benefit from this off-market transaction.
The Company was notified between Friday 28 October and Tuesday 1 November 2011
that Pangea Exploration (Pty) Ltd ("Pangea"), a private company of which Mr Rob
Still is a director, had sold the following Shares at the following prices:
277,863 Shares at R1.7056 per share
322,137 Shares at R1.7131 per share
45,708 Shares at R1.72 per share
54,292 Shares at R1.70 per share
300,000 Shares at R1.70 per share
The above shares were sold by Pangea in order to provide funding for other
potential projects. Following the above on market transactions Pangea holds
3,324,408 Shares, representing 0.23% of the issued capital of the Company. Mr
Still's total direct, beneficial interest in Pan African remains unchanged at
2,000,000 Shares, representing 0.14% of the issued share capital of the Company
as well as his total indirect, non-beneficial interest of 15,755,308 Shares
representing 1.09% of the issued share capital of the Company.
Mr Still did not receive any direct or indirect benefit from the above
transactions.
Significant events post the reporting period
Acquisition of Evander Gold Mines
On 30 January 2012 Pan African and Witwatersrand Consolidated Mines ('Wits
Gold') announced that the parties had entered into a 50:50 joint venture to
acquire 100% of the Evander Gold Mines from Harmony Gold Mining Company for a
total conditional consideration of up to ZAR 1.7 billion (approximately £
139 million). The transaction represents an opportunity for Pan African to
materially increase its gold production profile by 50,000 ounces as well as
adding a significant project pipeline for future growth. The implementation of
the Transaction is subject to the fulfilment of a number of conditions as set
out in the transaction announcement of 30 January 2012.
Barberton Gold Tailings Retreatment Project ('BTRP')
On 1 February 2012 the Company announced that the Board had approved Phase One
of the BTRP, which will recover gold from the retreatment of the gold tailings
situated close to BGMO. It is anticipated that the BTRP will increase the
production profile at Barberton by 25,000 ounces per annum.
The Future
Despite falling short on planned gold production, due to operating problems
experienced in the BIOX® plant during the start of the reporting period, a high
gold price and significant effort by the Barberton team to increase production
and manage cash cost allowed us to report record earnings for the Group.
Barberton remains one of the lowest cash cost producers in the South African
Mining industry. Despite significant inflationary pressures the cash cost
reported for the second quarter of the reporting period fell to ZAR158, 000/kg.
This once again highlights that our focus on mining and developing quality
ore-bodies with experienced management teams and a skilled workforce remains a
competitive advantage that will allow us to continue to grow our profit margin
and dividend.
The commissioning of the Phoenix CTRP ahead of schedule and on budget further
demonstrates the Group's ability to develop projects in addition to managing
mining operations. The Group now produces both gold and PGM's and offers
investors this unique investment exposure. At an expected operating cash cost
of US$466/oz of 4E this project will be one of the lowest cash cost producers
of PGM's in the South African industry - again highlighting our competitive
advantage in terms margin delivery.
The BTRP is the next organic growth project to be developed and once
commissioned should increase Barberton's annual production by 25,000oz from
August 2013. Although the project will recover gold, it is similar to Phoenix
in that it will reclaim surface tailings that requires no underground mining
and as a result places it on the lower end of the cost curve. This project will
allow us to grow our profit margin once again.
The announcement post the reporting period of the acquisition of Evander Gold
Mines from Harmony in a 50:50 Joint Venture with Wits Gold, gives the Group;
Access to 50,000oz of attributable production at a cash cost of less than
ZAR215,000/kg
Additional attributable profits
Newly upgraded underground infrastructure (ZAR256 million invested by Harmony
on Evander 8 Shaft over the last year)
An attributable underground reserve of 3.8Moz at a recovered grade of 8.02g/t
An attributable underground resource of 16.26Moz at a grade of 6.88g/t in situ
Two shallow development projects at depths of between 225m and 1000m below
surface
A significant surface tailings resource - 100Mt grading 0.29g.t on an
attributable basis
A further highly experienced management team and skilled workforce
This acquisition of the asset removes the concentrated asset risk of the Group
and the partnership with Wits Gold and payment structure will allow the Group
to acquire a sizeable, quality asset without:
Negatively impacting any potential dividend
Requiring any issuing of equity subject to cash flow from Evander and the
quantum of debt funding secured.
The group believes that managements proven track record for extracting value at
BGMO can be duplicated at Evander.
Our objective for the remainder of the financial year is to improve on the
reported results for the period under review.
Jan Nelson Busi Sitole
Chief Executive Officer Financial Director
22 February 2012
Consolidated Statement of Comprehensive Income for the period ended 31 December
2011
Group
31 December 2011 31 December 2010
(Unaudited) (Unaudited)
£ £
Revenue
Gold sales 51,229,660 38,326,410
Realisation costs (84,965) (75,604)
On - mine revenue 51,144,695 38,250,806
Cost of production - Gold (23,201,120) (22,949,762)
Depreciation (1,536,448) (1,908,836)
Mining Profit 26,407,127 13,392,208
Other expenses (1,762,357) (1,346,045)
Royalty costs (2,014,560) (1,007,987)
Net income before finance income and finance costs 22,630,210 11,038,176
Finance income 223,324 414,657
Finance costs (26,069) (19,868)
Profit before taxation 22,827,465 11,432,965
Taxation (8,390,248) (3,848,648)
Profit after taxation 14,437,217 7,584,317
Other comprehensive income:
Foreign currency translation differences (8,533,732) 4,676,586
Total comprehensive income for the year 5,903,485 12,260,903
Profit attributable to:
Owners of the parent 14,437,217 7,584,317
Non-controlling interest - -
14,437,217 7,584,317
Earnings per share 1.00 0.53
Diluted earnings per share 0.99 0.53
Weighted average number of shares in issue 1,444,225,674 1,421,399,407
Diluted number of shares in issue 1,452,808,064 1,426,159,912
Headline earnings per share is calculated :
Basic earnings 14,437,217 7,584,317
Adjustments: Impairment - -
Headline earnings 14,437,217 7,584,317
Headline earnings per share 1.00 0.53
Diluted headline earnings per share 0.99 0.53
Consolidated Statement of Financial Position as at 31 December 2011
Group
31 December 2011 31 December 2010 30 June 2011
(Unaudited) (Unaudited) (Audited)
£ £ £
ASSETS
Non-current assets
Property, plant and equipment and mineral rights 59,516,827 44,422,134 59,052,015
Other intangible assets 13,332,945 17,247,371 14,214,426
Goodwill 21,000,714 21,000,714 21,000,714
Rehabilitation trust fund 2,669,022 3,073,793 3,013,385
96,519,508 85,744,012 97,280,540
Current assets
Inventories 1,487,066 1,740,777 1,457,202
Trade and other receivables 7,000,352 4,886,229 4,254,401
Cash and cash equivalents 4,994,854 10,630,963 10,123,822
13,482,272 17,257,969 15,835,425
TOTAL ASSETS 110,001,780 103,001,981 113,115,965
EQUITY AND LIABILITIES
Capital and reserves
Share capital 14,449,643 14,440,406 14,440,406
Share premium 50,982,790 50,752,830 50,932,830
Translation reserve (223,190) 9,172,451 8,310,542
Share option reserve 799,227 807,924 861,450
Retained income 44,628,324 28,022,935 37,607,283
Realisation of equity reserve (10,701,093) (10,701,093) (10,701,093)
Merger reserve (10,705,308) (10,705,308) (10,705,308)
Equity attributable to owners of the parent 89,230,393 81,790,145 90,746,110
Total equity 89,230,393 81,790,145 90,746,110
Group
31 December 2011 31 December 2010 30 June 2011
(Unaudited) (Unaudited) (Unaudited)
£ £ £
Non - Current liabilities
Long term provisions ** 2,994,493 3,735,682 3,386,591
Long term liabilities ** 237,357 - 181,285
Deferred taxation 9,320,441 9,717,443 9,841,695
12,552,291 13,453,125 13,409,571
Current liabilities -
Trade and other payables * 6,947,074 5,437,913 8,193,750
Short term provisions - 1,689,122 -
Current tax liability 1,272,022 631,676 766,534
8,219,096 7,758,711 8,960,284
TOTAL EQUITY AND LIABILITIES 110,001,780 103,001,981 113,115,965
* Trade and other payables at 30June 2011 includes an amount of £1,465,299
(£41,411 for the Company) relating to the leave pay accrual which was
classified as a short term provision in the prior year. This is in accordance
with IAS: 19 Employee Benefits. The leave pay accrual balance as at 30 June
2010 was £1,151,895.
** Long term liabilities at 30June 2011 include an amount of £115,418
relating to the post-retirement benefits which was classified as a long term
provision in the prior year. This is in accordance with IAS: 19 Employee
Benefits. The post-retirement benefits balance as at 30 June 2010 was £136,602.
Consolidated Cash flow Statement for the period ended 31 December 2011
Six months ended Six months ended
31 December 2011 31 December 2010
(Unaudited) (Unaudited)
£ £
Cash Generated by operations 23,585,992 15,928,379
Taxation paid (6,824,551) (3,587,061)
Royalty paid (1,724,084) (1,065,267)
Dividends paid (7,416,175) (5,376,165)
Net Finance Income 197,255 394,789
Cash inflow from operating activities 7,818,437 6,294,675
Cash outflow from investing activities (9,140,205) (8,500,858)
Cash inflow from finance activities 59,197 1,365,000
Net decrease in cash equivalents (1,262,571) (841,183)
Cash at the beginning of period 10,123,822 12,756,262
Effect of foreign currency rate changes (3,866,396) (1,284,116)
Cash at end of year 4,994,855 10,630,963
Consolidated Statement of Changes in Equity for the period ended
31 December 2011
31 December 2011 31 December 2010
(Unaudited) (Unaudited)
Shareholders equity at start of period 90,746,110 73,486,877
Share Issue 59,197 1,365,000
Share Option Reserve (62,223) 53,530
Other Comprehensive Income (8,533,732) 4,676,586
Profit for the period 14,437,217 7,584,317
Dividend (7,416,176) (5,376,165)
Total Equity 89,230,393 81,790,145
Consolidated Segment Report for the period ended 31 December 2011
31 December 2011
Barberton
Mines
Phoenix Corporate Group
Platinum and Growth
Projects
£ £ £ £
Revenue
Gold sales 51,229,660 - - 51,229,660
Realisation costs (84,965) - - (84,965)
On - mine revenue 51,144,695 - - 51,144,695
Cost of production (23,201,120) - - (23,201,120)
Depreciation (1,536,448) - - (1,536,448)
Mining Profit 26,407,127 - - 26,407,127
Other expenses (1,203,656) (131,801) (426,900) (1,762,357)
Royalty costs (2,014,560) - - (2,014,560)
Net income/(loss) before finance income and finance costs 23,188,911 (131,801) (426,900) 22,630,210
Finance income 29,227 4,998 189,099 223,324
Finance costs (26,069) - - (26,069)
Profit/(loss) before taxation 23,192,069 (126,803) (237,801) 22,827,465
Taxation (8,392,325) 2,077 - (8,390,248)
Profit/(loss) after taxation 14,799,744 (124,726) (237,801) 14,437,217
31 December 2011
Segmental Assets 55,310,901 18,656,764 15,033,401 89,001,066
Segmental Liabilities 20,344,317 89,565 337,505 20,771,387
Goodwill - - - 21,000,714
Net Assets (excluding goodwill) 34,966,584 18,567,199 14,695,896 68,229,679
Capital Expenditure 4,566,352 4,566,448 7,405 9,140,205
31 December 2010
Barberton Phoenix Corporate Group
Mines Platinum and Growth
Projects
£ £ £ £
Revenue
Gold sales 38,326,410 - - 38,326,410
- - (75,604)
Realisation costs (75,604)
On - mine revenue 38,250,806 - - 38,250,806
- -
Cost of production (22,949,762) (22,949,762)
Depreciation (1,908,836) - - (1,908,836)
Mining Profit 13,392,208 - - 13,392,208
Other expenses (772,076) - (573,969) (1,346,045)
Royalty costs (1,007,987) - - (1,007,987)
Net income/(loss) before finance income and finance costs 11,612,145 - (573,969) 11,038,176
Finance income 10,252 - 404,405 414,657
Finance costs (19,868) - - (19,868)
Profit/(loss) before taxation 11,602,529 - (169,564) 11,432,965
Taxation (3,848,648) - - (3,848,648)
Profit/(loss) after taxation 7,753,881 - (169,564) 7,584,317
30 June 2011
Segmental Assets 43,333,140 16,990,521 31,791,590 92,115,251
Segmental Liabilities 20,212,973 1,556,006 600,876 22,369,855
Goodwill - - - 21,000,714
Net Assets (excluding goodwill) 23,120,167 15,434,515 31,190,714 69,745,396
Capital Expenditure 6,773,729 14,079,722 180,540 21,033,991
Contact Details
Pan African Resources
Jan Nelson, Chief Executive Officer
Office: +27 (0) 11 243 2900
RBC Capital Markets
Martin Eales/ Peter Barrett-Lennard/ James Kelly
Office: +44 (0) 207 653 4000
Macquarie First South (Pty) Ltd
Melanie de Nysschen/ Annerie Britz/ Yvette Labuschagne
Office: +27 (0) 11 583 2000
St James's Corporate Services Limited
Phil Dexter
Office: +44 (0) 20 7499 3916
Gable Communications
Justine James
Office: +44 (0)20 7193 7463
Mobile: +44 (0) 7525 324431
Vestor Media and Investor Relations
Louise Brugman
Office: +27 (0) 11 787 3015
Disclaimer
Statements in this presentation, other than historical facts, that address,
without limitation, exploration activities, mining potential and future plans
and objectives of Pan African Resources plc ("Pan African") are
"forward-looking statements" and "forward looking information" that involve
various risks. Assumptions and uncertainties and are not statements of fact.
The directors and management of Pan African are of the belief that the
expectations expressed in such forward-looking statements or forward looking
information are based on reasonable assumptions, expectations, estimates and
projections, however such statements should not be construed as being
guarantees or warranties (whether express or implied) of future performance.
There can be no assurance that such statements will prove to be accurate and
actual values, results and future events could differ materially from those
anticipated in such statements. Important factors that could cause actual
results to differ materially from statements expressed in this presentation
include, among others, the actual results of exploration activities, technical
analysis, the lack of availability to Pan African of necessary capital on
acceptable terms, general economic, business and financial market conditions,
political risks, industry trends, competition, changes in government
regulations, delays in obtaining governmental approvals, interest rate
fluctuations, currency fluctuations, changes in business strategy or
development plans and other risks. Although Pan African has attempted to
identify important factors that could cause actual results to differ
materially, there may be other factors that cause results not to be as
anticipated, estimated or intended.
Neither Pan African nor its directors, management and its affiliates represent
guarantee that the assumptions underlying such statements are free from errors
nor do they accept any responsibility for the future accuracy of the opinions
expressed in this presentation. Any statements in this presentation speak only
at the time of issue. Pan African does not undertake to update any
forward-looking statements that are included in this presentation, or revise
any changes in events, conditions or circumstances on which any such statements
are based, except in accordance with applicable securities laws and stock
exchange requirements.
No representation or warranty, expressed or implied, is made and no reliance
should be placed on the accuracy, actuality, fairness, or completeness of the
information presented. None of Pan African or any of its affiliates, directors,
officers, employees and advisers or any other person shall have any liability
whatsoever for any losses arising, directly or indirectly, from any information
contained in the presentation. This presentation does not constitute an offer
or invitation to purchase or subscribe for any shares of Pan African and no
part of this presentation shall form the basis of or be relied upon in
connection with any contract or commitment.
By accepting this presentation the recipient acknowledges that it will be
solely responsible for its own assessment of the market position of Pan African
and that it will conduct its own analysis and be solely responsible for forming
its own view of the potential future performance of Pan African.
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