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Trading statement for the financial year ended 30 June 2018, production update for 2019 financial year and Elikhulu
Pan African Resources PLC
("Pan African" or “the company" or “the group”)
(Incorporated and registered in England and Wales under Companies Act 1985 with registered number
3937466 on 25 February 2000)
Share code on AIM: PAF
Share code on JSE: PAN
ISIN: GB0004300496
TRADING STATEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018, PRODUCTION UPDATE
FOR 2019 FINANCIAL YEAR AND ELIKHULU COMMISSIONING
Pan African CEO Cobus Loots commented:
“The group results for the 2018 financial year are reflective of both the incredibly challenging operational
environment and the specific issues that confronted the group over the past year. These issues, as well as
the definitive remedial actions we implemented, were well disseminated to the market. The operational
update and the commissioning of the Elikhulu plant demonstrates that we are well on track to deliver into
our 2019 targets and look forward to the year ahead”.
TRADING STATEMENT
In terms of paragraph 3.4(b) of the Listings Requirements of the JSE Limited, a listed company is required
to publish a trading statement as soon as it is satisfied that a reasonable degree of certainty exists that the
financial results for the period to be reported upon next, will differ by at least 20% from those of the previous
corresponding period.
Pan African is incorporated in England and Wales and, accordingly, its presentation currency is Pounds
Sterling (“GBP”) with a functional currency in South African Rands (“ZAR” or “R”).
The ZAR:GBP exchange rate affects the reporting of results in GBP. For the reporting period ended 30 June
2018 (“current reporting period”), the average prevailing ZAR:GBP exchange rate is used, and, in the event
of material transactions, the exchange rate on the date of the material transaction is used to translate
earnings from ZAR to GBP.
For the reporting period ended 30 June 2017 (“prior reporting period”), the average ZAR:GBP exchange rate
was ZAR17.25:1. For the current reporting period, the ZAR marginally depreciated against the GBP to an
average exchange rate of ZAR17.27:1. This 0.1% year-on-year depreciation in the average exchange rate
should be taken into account for the purposes of a comparison with the prior reporting period.
The group records its revenue from precious metals sales in ZAR. The strength in the value of the ZAR/USD
exchange rate during the current reporting period had an adverse impact on the USD revenue received
when translated into ZAR. In the current reporting period, the average ZAR/USD exchange rate appreciated
by 5.4% to R12.86:1 (2017: R13.59:1).
Due to the cessation of mining at Evander Gold Mining Proprietary Limited (“Evander Mines”) underground
operations which includes 8 Shaft, 7 Shaft and the run-of-mine circuit in the Kinross metallurgical plant, the
financial results from the Evander Mines’ underground operations were classified as discontinued operations
(“discontinued operations”) during the current reporting period. The prior reporting period’s figures have been
re-presented to differentiate between the discontinued operations and the results from the remainder of the
operational portfolio comprising the continuing operations (“continuing operations”). The combined results
comprise the results of the continuing operations and discontinued operations (“combined operations”). As
result of the cessation of Evander Mines’ underground operations, the group recognised a once-off
impairment charge of R1.78 billion (GBP106.3 million) and incurred retrenchments costs of R161 million
(GBP9.3 million).
In the current reporting period, the group’s weighted average number of shares in issue increased by 15.7%
to 1,809,726,739 shares (2017: 1,564,346,115 shares). The increase in the weighted average number of
shares in issue is predominantly due to the full-year impact of the issuance of new shares to fund the equity
component of the Elikhulu tailings retreatment project’s (“Elikhulu”) construction late in the prior reporting
period. The disposal of 130-million Pan African shares held by PAR Gold Proprietary Limited, which had a
commensurate increase in the weighted average number of shares in issue, as these shares had previously
been treated as treasury shares. The proceeds from the disposal were partly utilised to fund the incorporation
of existing Evander tailing retreatment plant (“ETRP”) throughput into Elikhulu’s processing capacity, which
will result in an increased capacity of 1.2-million tonnes per month from December 2018.
Pan African advises shareholders that its headline earnings per share (“HEPS”) and earnings per share
(“EPS”) in ZAR terms from its continuing operations for the current reporting period are expected to be
between:
- HEPS: 57% to 47% lower than the 38.72 cents for the prior reporting period. Therefore the expected
HEPS range is between 16.77 cents to 20.65 cents.
- EPS: 80% to 70% lower than the 44.78 cents for the prior reporting period. Therefore the expected EPS
range is between 8.92 cents to 13.40 cents.
The group’s combined operations, EPS and HEPS in ZAR terms for the current reporting period are expected
to be between:
- HEPS: 42% to 32% lower than the 20.17 cents for the prior reporting period. Therefore the expected
HEPS range is between 11.65 cents to 13.67 cents.
- EPS is expected to decrease from 19.81 cents for the prior reporting period, to between (87.02) cents
to (85.04) cents.
The HEPS and EPS in GBP terms from its continuing operations for the current reporting period are expected
to be between:
- HEPS: 56% to 46% lower than the 2.24 pence for the prior reporting period. Therefore the expected
HEPS range is between 0.97 pence to 1.20 pence.
- EPS: 81% to 71% lower than the 2.60 pence for the prior reporting period. Therefore the expected EPS
range is between 0.50 pence to 0.76 pence.
The group’s combined operations HEPS and EPS in GBP terms for the current reporting period are
expected to be between:
- HEPS: 43% to 33% lower than the 1.17 pence for the prior reporting period. Therefore the expected
HEPS range is between 0.67 pence to 0.79 pence.
- EPS is expected to decrease from 1.14 pence for the prior reporting period, to between (5.21) pence to
(5.10) pence.
PRODUCTION UPDATE FOR THE 2019 FINANCIAL YEAR
Following the operational updates released during July 2018, Pan African is pleased to provide a production
update and guidance for quarter one of the 2019 financial year (“quarter one”), and further information on
the group’s prospects for the remainder of the new financial year.
Barberton Mines Proprietary Limited (“Barberton Mines”)
- Barberton Mines is benefitting from increased underground mining flexibility due to, inter alia, both the
high-grade 272 and 358 platforms being available at Barberton Mines’ Fairview operation. The
Barberton tailings retreatment plant (“BTRP”) is also benefiting from the installation of the regrind mill at
the end of the 2018 financial year.
- Barberton Mines is forecast to produce approximately 26,000oz for quarter one, with underground
mining operations contributing more than 20,500oz, and the BTRP more than 5,000oz. Barberton Mines
is therefore on track to deliver its annual production guidance of approximately 100,000oz for the 2019
financial year.
- Fairview commendably achieved one-million fatality free shifts during July 2018.
- The conclusion of a three-year wage agreement with the National Union of Mineworkers and the United
Association of South Africa, which was announced on 7 September 2018, is expected to assist with
operational stability and productivity at Barberton Mines.
- As per the announcement of 6 September 2018, phase one and two of the Royal Sheba drilling
campaign, comprising 20 drill holes, has been completed with excellent results confirming the extension
of the Sheba orebody to surface. An updated mineral reserve’s report on Royal Sheba is expected by
November 2018, and a definitive feasibility study by February 2019.
Evander Mines
- The ETRP and surface-source operations are expected to produce approximately 4,000oz the first
quarter. The ETRP and surface-source production remains on track, despite production being impacted
by lower-quality surface sources being treated during the quarter.
- The group is reviewing the merits of mining Evander Mines’ 8 Shaft pillar. Further information on this
initiative will be communicated in the near future.
ELIKHULU COMMISSIONING
- The Elikhulu Project is progressing according to schedule with all phases of the five-phase technical
commissioning processes now successfully completed. This commissioning includes the successful
completion of the “C5” or final contractual certificate dealing with production requirements, in that the
plant’s tonnage throughput was achieved and the dissolved gold content in the final leach tank has been
met for a continuous period of 72 hours. In line with previous guidance, Elikhulu is expected to produce
at steady-state from October 2018.
- The incorporation of the existing ETRP’s throughput into Elikhulu’s processing capacity, which will result
in an increased capacity totalling 1.2-million tonnes per month, is in progress as previously
communicated.
The financial information contained in this announcement has neither been reviewed nor audited by the
company’s auditors. The group’s audited year-end results for the year ended 30 June 2018 will be released
on 19 September 2018.
For further information on Pan African, please visit the company’s website at www.panafricanresources.com
14 September 2018
Contact information
Corporate Office Registered Office
The Firs Office Building Suite 31
2nd Floor, Office 201 Second Floor
Cnr. Cradock and Biermann Avenues 107 Cheapside
Rosebank, Johannesburg London
South Africa EC2V 6DN
Office: + 27 (0) 11 243 2900 United Kingdom
Facsimile: + 27 (0) 11 880 1240 Office: + 44 (0) 20 7796 8644
Facsimile: + 44 (0) 20 7796 8645
Cobus Loots Deon Louw
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
Phil Dexter John Prior / Paul Gillam
St James's Corporate Services Limited Numis Securities Limited
Company Secretary Nominated Adviser and Joint Broker
Office: + 44 (0) 20 7796 8644 Office: +44 (0) 20 7260 1000
Sholto Simpson Ross Allister/James Bavister/David McKeown
One Capital Peel Hunt LLP
JSE Sponsor Joint Broker
Office: + 27 (0) 11 550 5009 Office: +44 (0) 20 7418 8900
Julian Gwillim Jeffrey Couch/Neil Haycock/Thomas Rider
Aprio Strategic Communications BMO Capital Markets Limited
Public & Investor Relations SA Joint Broker
Office: +27 (0)11 880 0037 Office: +44 (0) 20 7236 1010
Bobby Morse
Buchanan
Public & Investor Relations UK
Office: +44 (0)20 7466 5000
Email: PAF@buchanan.uk.com
Website: www.panafricanresources.com
Date: 14/09/2018 10:16:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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