Manica - Pro Forma Financial Effects Statement

Pan African Resources PLC                           

  (Incorporated and registered in England and Wales under Companies Act 1985   

              with registered number 3937466 on 25 February 2000)              

                                 AIM Code: PAF                                 

                                 JSE Code: PAN                                 

                              ISIN: GB0004300496                               

            ISIN for Nil Paid Rights: GB00B85FJG40 (JSE Code: PANN)            

                   ISIN for Fully Paid Rights: GB00B8RCBP62                    

                       ("Pan African" or the "Company")                        

UPDATE REGARDING THE DISPOSAL OF THE MANICA GOLD PROJECT ("MANICA") TO AUROCH  
       MINERALS NL ("AUROCH") AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT        

 1. INTRODUCTION
   
Pan African shareholders ("Shareholders") are referred to the announcement
published by the Company on 29 August 2012 ("Announcement") regarding the
disposal of 100% of Manica to Auroch Minerals Mozambique (Pty) Ltd, a wholly
owned subsidiary of Auroch (Auroch was previously named Terranova Minerals NL)
("Transaction"). Certain terms of the Transaction have now been amended as
detailed below and the unaudited pro forma financial effects of the Transaction
("Financial Effects") are set out below.

Jan Nelson, CEO of Pan African commented:

"The board of Pan African believes that the management team at Auroch will add
significant value to this project and that Pan African shareholders will
realise value from this transaction in time."

 2. AMENDMENT TO THE TRANSACTION TERMS
   
Pan African and Auroch have agreed to amend the terms and conditions of the
Transaction as follows:

  * Pan African was to receive the first portion of the Purchase Consideration
    comprising AUD2 million ("Initial Cash Consideration") and 25 million
    shares in Auroch ("Consideration Shares") upon the fulfilment or, where
    possible, waiver of the conditions precedent to the Transaction ("
    Completion"). However, payment of the cash portion of the Initial Cash
    Consideration has now been deferred for a period of up to 18 months from
    Completion and the issue of 4,100,000 of the Consideration Shares shall
    only be issued to Pan African upon the receipt by Auroch of the requisite
    approval by its shareholders to issue such shares ("Shareholder Approvals
    "). Auroch has undertaken to obtain the Shareholder Approvals by the end of
    February 2013; and
   
  * the total purchase consideration payable by Auroch in terms of the
    Transaction ("Purchase Consideration") to Pan African in cash and new
    shares in Auroch ("AOU Shares"), shall be limited to a maximum of
    AUD80 million. The value of the Purchase Consideration shall be calculated
    with reference to the aggregate value of the cash paid and the value of the
    AOU Shares (calculated with reference to the closing price of such shares
    the day before their issue) issued to Pan African as payment of the
    Purchase Consideration. Any adjustment required shall only be made through
    a reduction in the number of AOU Shares issued to Pan African i.e. the cash
    portion of the Purchase Consideration shall remain unchanged and only the
    number of AOU Shares to be issued in terms of the Transaction may be
    adjusted.
   
The adjustments to the Transaction terms described above were agreed so as to
allow Auroch to comply fully with its obligations in terms of the Transaction
agreements whilst obtaining further certainty with respect to the extent that
its shareholders would be diluted through the future issue of AOU Shares for
purposes of settling the Purchase Consideration.

 3. FINANCIAL EFFECTS OF THE TRANSACTION
   
The table below sets out the Financial Effects. The Financial Effects have been
prepared for illustrative purposes only, in order to provide information about
how the Transaction might have affected Shareholders had the Transaction been
implemented on the dates indicated in the notes below.

Due to their nature, the Financial Effects may not fairly present the financial
position or the effect on earnings of Pan African after the Transaction. The
preparation of the Financial Effects is the responsibility of Pan African's
directors.


The Financial Effects have been prepared using accounting policies that comply
with International Financial Reporting Standards ("IFRS") and that are
consistent with those applied in the published audited results of Pan African
for the year ended 30 June 2012.

The figures included in the "Before the Transaction" column of the Financial
Effects have been extracted from the "After the Transaction and Rights Offer"
column of the pro forma financial effects pertaining to the acquisition of
Evander Gold Mines Limited and the related rights offer ("Acquisition and
Rights Offer") by the Company as contained in the announcement published by the
Company on 7 November 2012 ("Evander Announcement"). The Financial Effects are
therefore presented after accounting for the pro forma financial effects of the
Acquisition and Rights Offer.

In order to comply with the requirements of the JSE Limited Listings
Requirements, the Financial Effects have been prepared on the assumption that
all the milestones (as more fully described in the Announcement), in terms of
which the deferred portions of the Purchase Consideration shall be paid to Pan
African, are met. The Financial Effects therefore account for the entire
Purchase Consideration, comprising AOU Shares and cash, being received by Pan
African on 1 July 2011 for purposes of the Statement of Comprehensive Income
and 30 June 2012 for purposes of the Statement of Financial Position. This
results in Auroch being consolidated as a subsidiary of Pan African in
accordance with IFRS for purposes of the Financial Effects. The resultant
effect is that any profit on the sale of Manica is not accounted for in the
Financial Effects. Pan African therefore emphasises that it is highly unlikely
that Auroch will become a subsidiary of Pan African in the near future and as
such, the Financial Effects presented below may not truly reflect the actual
outcome of the Transaction.

                              Before the       After the          Change
                             Transaction      Transaction            
                                                                       %
                                                                     
Earnings per share (pence)             5.32            5.23       (1.69)
                                                                     
Diluted earnings per share             5.30            5.21       (1.70)
(pence)                                                              
                                                                     
Headline earnings per                  2.37            2.28       (3.80)
share (pence)                                                        
                                                                     
Diluted headline earnings              2.36            2.27       (3.81)
per share (pence)                                                    
                                                                     
Net asset value per share             10.02            9.93       (0.90)
(pence)                                                              
                                                                     
Tangible net asset value               8.14            7.91       (2.83)
per share (pence)                                                    
                                                                     
Number of shares in issue     1 818 334 263   1 818 334 263            -
                                                                     
Weighted average number of    1 815 274 388   1 815 274 388            -
shares in issue                                                      
                                                                     
Diluted number of shares      1 823 359 844   1 823 359 844            -
in issue                                                             

  Notes:

   1. The "Before the Transaction" column has been extracted from the "After the
      Transaction and Rights Offer" column contained in the Evander Announcement.
   
   2. The Financial Effects have been prepared on the assumption that the
      Transaction was concluded and all the deferred payments were paid in full
      on 1 July 2011 for purposes of the Statement of Comprehensive Income and by
      30 June 2012 for purposes of the Statement of Financial Position.
   
   3. The Financial Effects are prepared on the assumption that Pan African
      received 96 666 668 AOU Shares at an average price of AUD0.29 (GBP0.19) per
      share (being the closing price for an AOU Share the day before the
      Announcement) and cash in the amount of AUD6 000 000 (GBP3 900 000) as full
      payment of the Purchase Consideration. The Financial Effects have therefore
      been prepared on the assumption that the total value of the Purchase
      Consideration amounts to AUD34 033 334 (GBP22 121 667).
   
   4. The Financial Effects have been prepared on the assumption that Pan African
      controls Auroch following the issue of AOU Shares to the Company as part
      payment of the Purchase Consideration. Auroch has therefore been
      consolidated by Pan African in accordance with IFRS.
   
   5. For purposes of this announcement and the Financial Effects, Australian
      Dollars have been converted to British Pounds using an exchange rate of
      AUD1.54:GBP1.00.
   
 4. CATEGORISATION AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
   
The Transaction has been categorised as a category 2 transaction in accordance
with the JSE Limited Listings Requirements.

Holders of Pan African securities are referred to the cautionary announcement
published by the Company on 7 November 2012 and are advised that caution is no
longer required to be exercised when dealing in the Company's securities.


Johannesburg
14 December 2012

Sponsor
One Capital





Enquiries                          
                                  
South Africa                      UK                                     
                                                                       
Pan African Resources             Canaccord Genuity Limited - Nomad and
                                  Joint Broker                                                                    
Jan Nelson, Chief Executive       Rob Collins / Peter Stewart /        
Officer                           Sebastian Jones / Joe Weaving   
[phone]               [phone]                 
                                                                       
One Capital                       finnCap Limited - Joint Broker       
Sholto Simpson / Megan Young      Elizabeth Johnson / Joanna Weaving   
[phone]               [phone]                 
                                                                       
Vestor Investor Relations         St James's Corporate Services Limited
Louise Brugman                    Phil Dexter                          
[phone]               [phone]                 
[phone]                                                        
                                                                       
                                  Gable Communications                 
                                  Justine James                        
                                  [phone] /
                                  [phone]                               


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