Company Pan African Resources plc
Headline Unaudited Interim Results
Released 26 February 2009
Pan African Resources PLC
(`Pan African' or the `Company')
(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
Unaudited Interim Results
For the six months ended 31 December 2008
Pan African Resources PLC (AIM: PAF, Altx: PAN), the African gold mining
company, is pleased to report its unaudited interim results for the six-months
ended 31 December 2008.
* Gross gold production up 7.8% to 51,186 oz (2007: 47,486 oz)
* Cash-flow positive with gold sales of £24.9m up 71%.
* EBITDA up 114% to £8.5 million (2007: £4.0m)
* Headline earnings of £3.9 million (2007: £1.29m), an increase of 202%
* Headline EPS 0.36 pence (2007: 0.13 pence), an increase of 173%
* Total cash cost of US$451/oz sold (2007: US$514/oz sold), down 12%
* Significant improvement in safety
* Total Manica resource increased to 2.571Moz (2007 : 1.701Moz), an increase
* Dividend of 0.2555 pence per share declared
Financial review for six-months ending 31 December 2008
Six months Six months
ended ended 31
31 December 2007
Revenue (GBP**) 24,940,383 14,596,037
EBITDA (GBP**) 8,552,011 4,000,872
Attributable profit (GBP**) 2,569,804 1,294,286
EPS (pence) 0.23 0.13
HEPS* (pence) 0.36 0.13
Weighted average number of 1,100,517,684 965,777,998
shares in issue
* HEPS - Headline Earnings Per Share (refer to calculation under
Consolidated Income Statement)
**GBP - Pounds Sterling
Nature of the business
Pan African is a self-funding, unhedged gold mining and development company
increasingly focusing on mining and near-term-production assets that will yield
low-cost, high-margin projects on the African continent.
In addition to its 74% stake in Barberton (Shanduka Resources is a 26%
shareholder), Pan African has been exploring and developing concessions in
Mozambique, the Central African Republic and Ghana.
We were pleased that for the six months under review EBITDA increased by 114%
up to £8.5 million. This resulted in a profit after tax of £4.2 million despite
a £1.3 million impairment arising from the decision to terminate exploration
activity in Ghana. The Company's profit is a result of higher grades and a
robust gold price achieved at Barberton Mines.
The Company's tax charge increased from £1.3 million to £3.7 million, equating
to an effective tax rate of 37%.
Capital expenditure increased by 49% to £2.2 million and exploration costs
increased by 32% to £1.7 million.
Safety and Training
We are pleased to report no fatalities were recorded in the period under
review, with the operations achieving 556,669 (2007: 95,226) fatality-free
shifts. Reportable incidents for the period were zero (2007: 4). This
improvement resulted from more active communication and training for employees
and a more determined focus by management on accountability across the mines.
In addition, the Presidential Safety Audit was completed and the mine has
addressed all outstanding issues.
Review of the Barberton Mining Operations
Production at Barberton Mines remained unhedged and an average spot gold price
of US$824/oz was received (2007: US$721/oz). Total cash cost of US$451/oz* was
down 12% (2007: US$514). Tons milled were slightly down on plan and an
unsustainable, exceptionally high grade was achieved. Recovered grade is
expected to be more in line with the historic average going forward.
The three operating mines in the Barberton area, Fairview, Sheba and New
Consort, together with final production from the calcine dump retreatment
operation produced 51,186 oz of gold, an improvement on the previous comparable
period. Gold production from underground mining resulted in 47,634 oz and
surface operations delivering 3,545 oz.
*Total cash cost excludes depreciation and capital expenditure
Reserve replacement projects
Sheba - Southwell adit
The capital project was completed during the period and is now at the
working-cost development stage.
Sheba - 35 ZK Decline
The winder installation has been completed and the decline was advanced 17.9
meters from the uppermost level - sinking continues.
Sheba - Edwin Bray to Thomas & Joe's Luck area
Total development on the two ends amounted to 385 metres. The target area of
Joe's Luck requires a further 600 meters advance on each end.
Consort - 50 Level Declines
Development and equipping of the two declines totalled 55.3 metres below the
uppermost level. The installation and commissioning of the winders was
completed in the previous reporting period. The project remains on schedule.
Fairview - MRC development
Total development of 376.5 metres was completed, enabling access to the
62-level ore bodies. Forty metres of the 3 sub-incline shaft bottom, below 62
level has been cleaned out, on completion of the cleaning this shaft will be
deepened to 68 level to provide future access to the MRC ore-body.
6months 6monthsended 6monthsended 6monthsended 6monthsended
31-Dec-08 31-Dec-07 31-Dec-06 31-Dec-05 31-Dec-04
TonsMilled (t) 159,919 161,455 166,377 157,452 161,980
Headgrade (g/t) 11.40 9.05 9.24 11.44 10.24
OverallRecovery (%) 91 92 92 92 91
Production: (oz) 47,634 43,145 45,332 53,369 48,547
Production: (oz) 3,545 3,601 - - -
Sold (USD/ 51,186 47,486 45,749 52,983 50,186
AveragePrice:Spot (USD/ 824 721 567 464 412
AveragePrice:Hedge (USD/ - 460 406 430 502
TotalCashcostUSD/ (USD/ 451 514 450 394 434
EBITDA GBP 8,552 4,001 3,049 2,153 1,157
Depreciation GBP 1,066 806 1,077 1,042 1,011
Capital Expenditure GBP 2,282 1,532 867 569 452
Exchange rate - 15.13 14.05 13.68 11.48 11.38
Exchange rate - 13.78 13.77 13.78 11.06 11.00
* 74% of the 2007 & 2008 results are attributable to the equity shareholders of
Pan African; 2004 - 2006 results were attributable to Metorex Limited
Due to the global economic uncertainty and disappointing drilling results in
Ghana, the management and board of Pan African have decided not to exercise the
Company's rights to the Kyereboso and U&N projects and are negotiating the sale
and retention of a free-carry of the Akrokerri project. The termination of
these projects results in a £1.3 million impairment on the balance sheet.
In the Central African Republic (`CAR'), at Bogoin, two targets have been
identified. The shear zone target and the banded-iron formation target. A
gold-in-soil sampling programme was completed on the shear zone target which
was followed up by an RC drilling programme totalling 16,213m. No significant
gold intersections were made. Adjacent to the shear-zone target, 12 kilometres
of banded-iron formation still remain untested and a gold-in-soil sampling
programme has been initiated over this target. At Dekoa, also in the Central
African Republic, infill gold and soil sampling has confirmed the presence of
gold anomalies presenting a strike-length in excess of 25 kilometres. A
bulk-sampling programme is being initiated over these anomalies.
Pan African has increased its stake in the CAR projects to a significant
majority as a result of the JV partner not contributing to the project funding.
The final dilution percentage is currently being audited and will be released
once finalised. Future planned expenditure in the CAR has declined for the next
six months to £173,600 on both projects as a result of the nature of
exploration work being carried out.
At Manica in Mozambique, preliminary work completed on the pre-feasibility
study indicates that the project is extremely sensitive to capital expenditure
and requires additional ore to be mined in the first 2 years to address this
issue. The resource estimate has been upgraded from 1.70Moz (11.5Mt @ 4.61g/t)
to 2.57Moz (33.8Mt @ 2.36g/t) encouraging a drive to try to consolidate further
oxide resources adjacent to the project, in an effort to make it more robust. £
1.04 million has been allocated for this consolidation process over the next 10
months, after which the viability of the project will be reviewed.
After the period under review, the company acquired an exclusive,
non-refundable option to purchase 100% of the shares in Phoenix Platinum Mining
(Pty) Limited (`Phoenix') from Metorex Limited (`Metorex'). This is a platinum
dump retreatment project. Test work is progressing and is expected to be
completed within the allocated four month period.
Estimates show the capital expenditure is expected to be £6.9 million,
resulting in a pay-back of less than one year; life of operation is estimated
to be between five and seven years from existing surface tailings, which can be
extended to 18 years with the addition of underground arisings. 4PGE*
production is anticipated at between 10,000 - 15,000 oz/annum, assuming
conservative 4PGE basket prices.
* PGE = Platinum Group Elements (4PGE = Platinum, Palladium, Rhodium and Gold)
Capital expenditure and commitments
Capital expenditure at Barberton mines totalled £2.28 million (this excludes
surface exploration costs at Barberton Mines) of which roughly half was spent
on underground development and the rest on engineering, maintenance and repair.
Exploration expenditure on all our projects totalled £1.68 million.
There were no material contracted capital commitments at the end of the period.
Operating lease commitments, which fall due within the next year, amount to £
Shares Issued July 2008 - December 2008
722,274 shares were issued to Goldiam SARL at 5.5 pence per share for the
acquisition of gold exploration licences in the Central African Republic.
Mr Simon Malone retired from the Pan African Board on 20 January 2009. The
Company would like to thank him for his valued efforts and assistance and
wishes him all the best for his retirement.
The financial information set out in this announcement does not constitute the
Company's statutory accounts for the half year ended 31 December 2008.
The financial information included in this preliminary announcement 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 unaudited interim results have been prepared and presented in accordance
with, and containing the information required by IFRS on Interim Financial
Reporting, IAS 34.
Dividend No 1 of 0.2555 pence per share has been declared in respect of the six
months ended 31 December 2008. The last day to trade ("cum" the dividend) on
the JSE in order to participate in the dividend will be Friday, 13 March 2009.
The shares will commence trading "ex" the dividend from the commencement of
business on Wednesday, 18 March 2009 on the LSE and on Monday, 16 March 2009 on
the JSE. The record date on the LSE and JSE will be Friday 20 March 2009.
The dividend is declared in the currency of the United Kingdom and will be paid
on Wednesday, 8 April 2009. Shareholders whose shares are held on the United
Kingdom register will receive payment in sterling. Shareholders whose shares
are held on the South African register will receive payment in South African
rand at the ruling rate on Thursday, 5 March 2009.
Share certificates may not be lodged with the South African transfer
secretaries for dematerialisation / rematerialisation from Monday, 16 March
2009 to Friday, 20 March 2009, both dates inclusive.
The focus of Pan African continues to move up the value chain to projects at
the point of pre-feasibility to assets near / in production. The Company's
mining operations at Barberton provide funding to find and develop new projects
and advanced-staged mining opportunities.
The Directors believe global macroeconomic fundamentals support a favourable
gold price in the medium-term and the combination of activities at our mining,
and more advanced exploration assets are expected to deliver satisfactory
results for the next reporting period. Production plan is sustainable and the
Company remains on track to produce 100,000 oz/annum.
The Company continues to evaluate and acquire projects that will deliver high
margins and low costs with significant upside potential and believe that in the
current environment of tight credit, the strong balance sheet compares Pan
African favourably to its peers.
By order of the Board
K C Spencer J P Nelson
Chairman Chief Executive Officer
26 February 2009
Consolidated Income Statement
6 months ended 6 months ended
31 Dec 08 31 Dec 07
Gold sales 24,940,383 14,596,037
Realisation costs 63,532 70,630
On - mine revenue 24,876,851 14,525,407
Cost of production 14,099,512 9,995,471
Depreciation 1,065,720 806,369
Mining Profit 9,711,619 3,723,567
Other (expenses) / income (885,413) (529,064)
Operating income before finance costs 8,826,206 3,194,503
Finance income 434,700 99,479
Finance costs (6,007) (9,696)
Impairment of Intangible Asset (1,339,915)
Profit before taxation 7,914,984 3,284,286
Taxation 3,705,065 1,347,912
Profit after taxation 4,209,919 1,936,374
Equity holders of the parent 2,569,804 1,294,286
Minority interests 1,640,115 642,088
Earnings per share (pence) 0.23 0.13
Diluted earnings per share (pence) 0.23 0.11
Weighted average number of shares in issue 1,100,517,684 965,777,998
Diluted number of shares in issue 1,111,517,684 1,136,689,165
Headline earnings per share is calculated
using the following :
Headline earnings 3,909,719 1,294,286
Headline earnings per share (pence) 0.36 0.13
Diluted headline earnings per share (pence) 0.35 0.11
Consolidated Balance Sheet
6 months ended Year ended
31 December 2008 30 June 2008
Property, plant and equipment 24,031,808 20,069,814
Rehabilitation trust fund 1,964,278 1,739,522
Intangible assets 13,311,565 12,837,045
Goodwill 21,000,714 21,000,714
Inventories 374,345 377,974
Trade and other receivables 3,138,027 2,972,776
Cash and cash equivalents 7,717,725 5,419,489
Total Assets 71,538,462 64,417,334
EQUITY AND LIABILITIES
Capital and reserves
Share capital 11,005,891 10,998,664
Share Premium 37,299,997 37,267,475
Translation Reserve 1,046,373 -1,118,262
Share Option Reserve 363,812 285,312
Retained income 12,515,825 9,946,021
Merger Reserve (10,705,308) (10,705,308)
Equity attributable to equity holders of 51,526,590 46,673,902
Minority interest 4,444,153 3,694,869
Total Equity 55,970,743 50,368,771
Non - Current liabilities
Long term liabilities - Interest bearing - 16,822
Long term Provisions 2,500,017 2,219,954
Deferred Taxation 6,150,434 5,201,245
Total Non-Current Liabilities 8,650,451 7,438,021
Trade and other payables ,048,417 2,754,795
Short term liabilities - Interest bearing 48,010 89,269
Short term Provisions 1,011,417 711,085
Financial Instruments -
Current Tax Liabilities 2,809,425 3,055,393
Total Current Liabilities 6,917,269 6,610,542
TOTAL EQUITY AND LIABILITIES 71,538,463 64,417,334
Condensed Consolidated Cash Flow Statement
Six months ended Six months ended
31 December 2008 31 December 2007
Cash Generated by operations 10,401,503 4,604,148
Minorities Distributions (890,831) (49,379)
Taxation Paid (4,240,562) (607,085)
Finance Cost, net 428,693 89,783
Cash inflow from operating activities 5,698,803 4,037,467
Cash outflow from investing activities (4,056,420) (3,982,702)
Cash (outflow) from finance activities (44,374) (69,668)
Net Increase/ (Decrease) in cash 1,598,009 (14,903)
Cash at the beginning of period 5,419,489 326,847
Reverse Acquisition - 733,101
Effect of Foreign Currency rate changes 700,227 -
Cash at end of year 7,717,725 1,045,045
Condensed Statement of Changes in Equity
Six months ended Six months ended
31 December 2008 31 December 2007
Shareholders equity at start of period 50,368,771 5,906,749
Share Issue 39,749 -
Reverse Acquisition - 24,818,679
Translation and Share Option Reserve 2,243,135 - 313,850
Net Income for the period 2,569,804 1,294,286
Minorities Interest 749,284 2,632,217
Total Equity 55,970,743 34,338,081
Martin Bevelander: a registered competent person with the South African Council
for Natural Science Professions (`SACNASP'), signed off on the resource
statement for Manica.
Deon van der Heever: an independent competent person registered with SACNASP,
signed off on the block and geostatistical model for Manica
Frans Chadwick: a professional surveyor and registered with the Professional
Land and Technical Surveyors (`PLATO') signed off on the resource statement for
Barberton Mines Limited.
For further information on Pan African Resources plc, please visit the website
Pan African Resources
Jan Nelson, CEO
+27 (0) 11 243 2900
Keith Spencer, Chairman
+27 (0) 11 880 3155
Nicole Spruijt, Public Relations
+27 (0) 11 243 2900
RBC Capital Markets
+44 (0) 20 7029 7881
Macquarie First South Advisers (Pty) Limited
+27 (0) 11 583 2379
+27 (0) 11 583 2328
Melanie de Nysschen
+27 (0) 11 583 2316
St James's Corporate Services Limited
+44 (0) 20 7499 3916
FDBeachhead Media & Investor Relations
+27 (0) 11 214 2401
+27 (0) 83 504 1186