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Pan African Resources PLC (PAF)

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Wednesday 31 March, 2010

Pan African Resources PLC

Conditional acquisition of 25% stake in RK1 Con...


31 March 2010

                           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                               

 Conditional acquisition of a 25% stake in the RK1 Consortium which operates a 
     Platinum Group Metals concentrator plant, and cautionary announcement     

1. INTRODUCTION

Pan African has signed a conditional Sale and Purchase Agreement with Ivanhoe
Nickel & Platinum Limited (`Ivanhoe') to acquire 100% of the issued share
capital Ivanhoe holds in GB Mining UK Limited (`GB Mining') and RKR Mining
Limited (`RKR Mining') for a total consideration of ZAR53 million
(approximately £4.8 million) (the `Transaction'). The consideration is payable
by Pan African in cash within three business days of the fulfilment of the last
of the conditions precedent set out in paragraph 4 below.

2. STRUCTURE AND NATURE OF BUSINESS

2.1 STRUCTURE

GB Mining and RKR Mining, through their wholly owned South African
subsidiaries, hold a 25% participating interest in the RK1 Consortium.

The other members of the RK1 Consortium are Aquarius Platinum Limited
(`Aquarius') and Sylvania Resources Limited (`Sylvania'). Aquarius holds a 50%
participating interest in the RK1 Consortium through its wholly owned
subsidiary Aquarius South Africa Corporate Services (Pty) Limited whilst
Sylvania holds a 25% participating interest in the RK1 Consortium through its
wholly owned subsidiary, Sylvania South Africa (Pty) Limited.

2.2. CHROMITE TAILINGS RETREATMENT PLANT

The RK1 Consortium owns a Chromite Tailings Retreatment Plant ('CTRP') situated
at Kroondal on the Western Limb of the Bushveld Complex in the North West
Province of South Africa, which produces Platinum Group Metals (`PGM')
concentrate.

2.3 CTRP PRODUCTION

The CTRP treats old dump material and current tailings streams derived from the
beneficiation processes employed by nearby chromite mines. Aquarius operates
the CTRP on behalf of the RK1 Consortium in terms of a management agreement.
The CTRP produced 6,824 ounces (246,600 tons at 2.34g/t) of four Platinum Group
Elements (Platinum (60.9%), Palladium (21.9%), Rhodium (16.9%) and Gold (0.2%)
(`4PGM')) at an average cost of US$332 per ounce for the 12-month period ended
30 June 2009. The profit before tax attributable to the CTRP for the same
period was approximately ZAR3.09 million (£243,040). For the 12-month period
ended 30 June 2008, the CTRP produced 9,849 ounces (274,000 tons at 4.20g/t) of
4PGM at an average cost of US$360/oz. Attributable profit before tax for the
same period was approximately ZAR50 million (£4.5 million). The reduction in
production from 2008 to 2009 was mainly the result of variations in the supply
of current tailings streams from the chromite processing plant currently
supplying the CTRP and secondly the relocation of the reclamation facilities on
the tailings dump. According to information in the public domain, significant
progress has been made in securing medium- and long-term tailings supply
sources.

3. TRANSACTION RATIONALE

The Transaction will allow Pan African to:

 a. Gain access to low cost attributable PGM ounces;
   
 b. Further strengthen its earnings and operating cash flows ;
   
 c. Gain further insight into operating skills and technical expertise with
    regard to CTRP operations;
   
 d. Benefit from anticipated strong medium and long term demand for PGM's; and
   
 e. Potentially unlock further growth opportunities and synergies.
   
4. CONDITIONS PRECEDENT

The Transaction is subject to the fulfilment of the following conditions
precedent:

  * The successful completion of a technical and financial due diligence
    investigation by Pan African into the affairs of GB Mining, RKR Mining, and
    their wholly owned South African subsidiaries; and
   
  * Such other statutory and regulatory approvals as are customary to a
    transaction of this nature.
   
It is anticipated that the due diligence investigation by Pan African will have
been completed by the end of April 2010. Shareholders will be kept informed of
the outcome of the due diligence investigation through the release of further
announcements on the JSE Limited ('JSE') Securities Exchange News Service
(`SENS') and the London Stock Exchange Regulatory News Service (`RNS').

5. PRO FORMA FINANCIAL EFFECTS IN TERMS OF THE LISTINGS REQUIREMENTS OF THE JSE

The pro forma financial effects of the Transaction will be announced in due
course. Until such time as the pro forma financial effects of the Transaction
have been announced, shareholders are referred to the cautionary announcement
set out in paragraph 7 below.

6. CATEGORISATION OF THE TRANSACTION IN TERMS OF THE LISTINGS REQUIREMENTS OF
THE JSE

The Transaction is deemed to constitute a Category II transaction in terms of
section 9.5 (a) of the Listings Requirements of the JSE.

7. CAUTIONARY ANNOUNCEMENT

Shareholders are advised that the pro forma financial effects of the
Transaction are currently being determined and may have a material effect on
the price of the securities of the Company. Accordingly, shareholders are
advised to exercise caution when dealing in the securities of the Company until
the pro forma financial effects of the Transaction have been announced on SENS
and RNS.

Jan Nelson, Chief Executive Officer of Pan African, stated:

"This Transaction not only brings PGM ounces to the Group but potentially
unlocks further PGM growth opportunities. The RK1 CTRP is a low cost platinum
operator with high margins. This strategic interest fits well with PAR's
objective."

                                     ENDS                                      

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

Enquiries:                                                                     
                                                                               
Pan African Resources                                                          
                                                                               
Jan Nelson, Chief Executive Officer                                            
                                                                               
+27 (0) 11 243 2900                                                            
                                                                               
Nicole Spruijt, Public Relations                                               
                                                                               
+27 (0) 11 243 2900                                                            
                                                                               
RBC Capital Markets                                                            
                                                                               
Martin Eales / Brett Jacobs                                                    
                                                                               
+44 (0) 20 7029 7881                                                           
                                                                               
Macquarie First South Advisers (Pty) Limited                                   
                                                                               
Melanie de Nysschen / Thembeka Mgoduso                                         
                                                                               
+27 (0) 11 583 2000                                                            
                                                                               
St James's Corporate Services Limited                                          
                                                                               
Phil Dexter                                                                    
                                                                               
+44 (0) 20 7499 3916                                                           
                                                                               
Nedbank Capital - Transaction Advisers                                         
                                                                               
Jan Geenen                                                                     
                                                                               
+27 (0) 11 294 1586