Inteirm Results & Directorship Change
Regulatory Announcement
Company Pan African Resources plc
TIDM PAF
Headline Interim Results and Directorship Change
Released 21 February 2008
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
ISIN: GB0004300496
Interim Results
For the six months ended 31 December 2007
Change of Directorship
Pan African Resources PLC (AIM: PAF, Altx: PAN), the African based gold mining
and exploration company is pleased to report its interim results for the 6
month period ended 31 December 2007.
In the Chairman's Statement below, certain operating and financial data is
given for Barberton Mines (Pty) Limited (`Barberton') for the six months ended
31 December 2007. However, it should be noted that the Company completed the
acquisition of 74% of Barberton on 31 July 2007. Pan African's results for the
six months ended 31 December 2007 therefore include 74% of Barberton's results
for the five month period from the acquisition date.
HIGHLIGHTS
Mining Operations
* Concluded acquisition of 74% of Barberton Gold Mines (Pty) Limited in South
Africa (`Barberton') effective 31 July 2007
* EBITDA increased by £4,7 million to £4,0 million
* Cash-flow positive following the Barberton acquisition
Exploration Projects
* Positive drilling results from exploration projects including an increased
resource at the Manica gold project, Mozambique to 1,550 Moz in situ
* Exploration progress at Barberton ahead of schedule and showing signs of
positive geological results
* Re-evaluation of Barberton resource showing encouraging geological results
* Exploration activity accelerated on all projects as result of cash-flow
generated by mining operations
* Geographic footprint enhanced by acquisition of Ghana projects
Six months Nine months
ended 31 ended 31
December 2007 December 2006
(Unaudited) (Audited)
Revenue (GBP**) 14,596,037 -
EBITDA (GBP**) 4,000,873 -685,805
Attributable (GBP**) 1,294,286 -685,805
profit
EPS (pence) 0.13 -0.08
*HEPS (pence) 0.13 -0.08
*HEPS - Headline Earnings Per Share
**GBP - Great British Pound
CHAIRMAN'S STATEMENT
Interim Results for the period ended 31 December 2007
I am pleased to announce that for the six months under review, EBITDA was
increased by £4.7million compared to the 9 months ended 31 December 2006 to £
4.0million. The focus on accelerating capital expenditure at Barberton has paid
off with several projects delivering beyond initial expectations. With the
revenue derived from the Barberton operations, we have been able to accelerate
activities in Mozambique and the Central African Republic. We have benefited
from the strong gold price and believe our profitability is sustainable at
current gold prices.
Safety and Training
While the Company conducts its activities with due regard for the safety and
health of its employees and runs approved training programmes through
respective training centres at its mining operations, we regret to report that
a contract worker at Sheba Mine was fatally injured on 20 September 2007.
Review of Barberton Mining Operations
The three operating gold mines at Barberton - Fairview, Sheba and New Consort,
together with the calcine slimes dam re-treatment referred to below, produced
47,486 oz for the period under review at a cash cost of US$521 per ounce.
Despite a decline in underground gold production, total gold production on the
mine has increased. This is the result of the Company focusing on several
projects since it acquired the mining complex intended to replace current mined
reserves and grow them. A brief summary of these projects and the mining
operations is given below:
Barberton Mine
Limited - Six
months ended 31
December
2007 2006 2005 2004
Tons Milled (t) 161,455 166,377 157,452 161,980
Headgrade (g/t) 9.05 9.24 11.44 10.27
Overall recovery (%) 92 92 92 91
Production Underground (oz) 43,145 45,332 53,369 48,547
Calcine dump (oz) 3,601 - - -
Sold (oz) 47,486 45,749 52,983 50,186
Total cash cost (USD/ 521 516 415 392
USD/oz sold oz)
EBIDA (GBP) 4,001 3,049 2,153 1,157
Depreciation (GBP) 806 1,077 1,042 1,011
The contribution to Barberton revenues and operating costs for each of the
Fairview, Sheba and New Consort mines and the surface operations for the six
months ended 31 December 2007 were as follows:
Mine Contribution to Operating costs
revenues
% USD/ oz sold
Fairview 35% 431
Sheba 40% 307
New Consort 21% 572
Calcine dumps 4% 260
The effective gold price received by Barberton Mines during the six months to
31 December 2007 after the impact of hedging was US$726/oz. During that period,
4,179oz was hedged at a price of US$453/oz under the terms of a hedging
arrangement in place prior to the acquisition of Barberton by Pan African.
Under the terms of this hedging arrangement, 5,787oz remains hedged at the same
price
Calcine Slimes Dam Re-Treatment Project
This project was commissioned in the last quarter of 2007 at a capital cost of
£500,000. Thus far the project has yielded 3601oz of gold at a cash cost of
approximately US$260 per ounce. At current treatment rates the project is
expected to run for a further 12 months.
Reserve Replacement Projects
Several projects have been initiated to access areas which will serve to
replace current mined areas over the course of the next two years. At the Sheba
mine major equipping and development programmes are underway at the Southwell
and Edwin Bray adits to access several prospective areas while deepening the 35
ZK incline shaft to access the ZK orebody to depth.
At the New Consort mine development is underway on 50 level at 50W1 and 50E1
areas to access known ore shoot extensions. Exploration development is also
progressing well on 45 level to explore the eastern extension of the 15E16
orebody with encouraging drill intersections.
Development on the 60 and 62 levels at the Fairview mine is ongoing to open the
MRC orebody to depth.
Reserve Growth Projects
Three major exploration targets, the Amira, Eagles Nest and Thomas-Victory Hill
areas have been identified within the current mine lease area as well as within
the contiguous prospect area to the mine. A geological team has been assembled
to compile all historical geological and sampling data within these areas. Work
is progressing well ahead of schedule and is planned for completion by the end
of Q2 2008. Based upon the results of the data compilation an exploration team
will be established on the mine to follow-up prospective targets.
Power Supply
While following the period under review a number of mining companies in South
Africa have been impacted by power outages, Barberton has to date not been
affected. In line with the rest of the South African Mining industry, power
saving initiatives are being put in place which aim to reduce electricity
demand by ten percent. These initiatives are being implemented so as to have
minimal impact on underground production.
Review of Exploration Projects
Manica Gold Project - Mozambique
Geological work for the period has focussed on the Fair Bride prospect where
the Company is currently completing a pre-feasibility study for what could
become Mozambique's first commercial gold mine. Drilling results (as previously
reported) for the period under review have exceeded the Company's expectation
in terms of both grade and size of the mineralised zone. Additional target
areas have been followed up with drilling at the Guy Fawkes and Dots Luck
prospects. A Resource upgrade is currently underway to update the drill
intersections reported during the review period and is expected to be announced
by Q1 2008.
Bogoin & Dekoa Gold Projects - Central African Republic
Drilling at the Bogoin project has firmed up on delineated targets. Two
additional drill rigs will be operational before the end of Q2 of 2008 to
accelerate exploration activity in the area. At the Dekoa project, stream
sediment sampling and subsequent soil sampling have delineated several major
target areas which will be followed up by drilling during Q3 and Q4 of 2008.
The Company signed a mining convention on 8 February 2007 with the Ministry of
Mines, Energy and Water Affairs in the Central African Republic for the Bogoin
Gold Project, providing additional comfort with political unrest in bordering
countries. A similar convention is expected to be entered into for the Dekoa
project in Q2 of 2008.
Akrokerri & Kyereboso Gold Projects - Ghana
Outside of South Africa, the most significant African gold province is found in
Ghana. The Company made one licence acquisition (Akrokerri) prior to the
reporting period in June 2007 and on 20 February 2008 announced an earn-in
agreement for the Kyereboso project. The Company will commence data collection
and drilling programs for both projects during 2008.
Capital Expenditure and Commitments
Capital expenditure at Barberton Mines totalled £1.5million, of which £
1,0million was mainly spent on underground development and £500,000 on the
Calcine slimes dam project.
Exploration expenditure at Pan African's projects in Mozambique, Central
African Republic and Ghana totaled £1,6million for the period under review.
Contracted capital commitments at 31 December 2007 amounted to £56,500, whilst
uncontracted commitments amounted to £1,000,000.
Operating lease commitments, which fall due within the next year, amount to £
82,770, whilst commitments of £123,140 fall due during the next four years.
Directorship Change
The Board is pleased to announce the appointment of Mr Maritz Smith effective
21 February 2008 as the Company's Finance Director on a full time basis in line
with the undertaking given to shareholders on the completion of the Barberton
acquisition. Mr Smith replaces Mr Nathan Steinberg who has held the position of
Finance Director on a part time basis. Mr Smith was principally involved in the
maintenance and preparation of these interim financial statements.
The Board of Directors wishes to thank Mr Steinberg for his dedication and
proficiency during his long tenure as Financial Director.
Mr Smith (aged 31) is an employee and alternate director of Metorex Limited. He
obtained a BComm (Hons) Accounting Degree from the University of Johannesburg
in 1998 and after completing his articles with Deloitte & Touche in 2001, he
qualified as a Chartered Accountant. Mr Smith remained with Deloitte & Touche
until 2002 when he joined the Metorex Group as Group Accountant. After three
years, Mr Smith was promoted to Chief Financial Officer of Metorex Limited in
2005, the position he retains today.
The Company advises that there are no further details relating to the
appointment of Mr Smith which it is obliged to disclose under Schedule 2
paragraph (g) of the AIM rules.
Dividend
No dividend is declared for the six months ended 31 December 2007. Pan African
will focus on funding requirements for current and new exploration projects as
well as capital growth projects at Barberton.
Future Prospects
With the acquisition of Barberton, Pan African Resources moved from a junior
exploration company to a mid-tier exploration and gold producing company. Pan
African's association with Pangea Exploration and Metorex brings additional
exploration capacity and mining skills. This positions the Company to actively
seek early and advanced stage mining opportunities to compliment its own
greenfield portfolio.
We believe global macroeconomic fundamentals support a favourable gold price in
the medium-term and the combination of activities at our mining, grassroots and
more advanced exploration assets are expected to deliver robust results for the
next reporting period.
By order of the Board
K C Spencer
Chairman
21 February 2008
Consolidated Income Statement
Six months ended Nine months ended
31 December 2007 31 December 2006
(Unaudited) (Audited)
£ £
Revenue
Gold sales 14,596,037 -
Realisation costs 70,630 -
Net on - mine revenue 14,525,407 -
Cost of production 9,995,471 -
Depreciation 806,369 -
Mining Profit 3,723,567 -
Other expenses (529,064) (713,514)
Operating income before finance 3,194,503 (713,514)
costs
Finance income 99,479 27,709
Finance costs (9,696) -
Profit before taxation 3,284,286 (685,805)
Taxation 1,347,912 -
Profit after taxation 1,936,374 (685,805)
Attributable to:
Equity holders of the parent 1,294,286 (685,805)
Minority interests 642,088 -
1,936,374 (685,805)
Earnings per share (pence) 0.13 (0.17)
Diluted earnings per share (pence) 0.11 (0.17)
Weighted average number of shares 965,777,998 407,753,235
in issue
Diluted number of shares in issue 1,136,689,165 463,476,871
Headline earnings per share is
calculated using the following :
Income attributable to ordinary 1,294,286 (685,805)
shareholders
Discontinued operations - 345,208
Headline earnings 1,294,286 (340,597)
Headline earnings per share (pence) 0.13 (0.08)
Diluted headline earnings per share 0.11 (0.08)
(pence)
Condensed Consolidated Balance Sheet
31 December 2007 30 June 2007
(Unaudited) (Audited)
£ £
BALANCE SHEET
ASSETS
Non-current assets
Property, plant and equipment 21,980,856 -
Rehabilitation trust fund 1,806,063 -
Intangible assets 20,998,818 6,312,030
44,785,737 6,312,030
Current assets
Inventories 295,178 -
Trade and other receivables 2,467,484 294,365
Bank balances and cash 1,045,045 326,847
3,807,707 621,212
TOTAL ASSETS 48,593,444 6,933,242
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 32,628,161 8,256,801
Hedging reserve, translation and (17,688) 296,162
option reserves
Retained income 5,285,072 (4,206,214)
Merger Reserve (6,189,681) 1,560,000
Equity attributable to equity holders 31,705,864 5,906,749
of parent
Minority interest 2,632,217 -
Total equity 34,338,081 5,906,749
Non - Current liabilities
Long term liabilities - Interest 47,553 -
bearing
Long term Provisions 2,358,875 -
Deferred Taxation 7,161,578 -
9,568,006 -
Current liabilities
Trade and other payables 2,603,939 1,026,493
Short term liabilities - Interest 157,779 -
bearing
Short term Provisions 768,444 -
Derivative instrument 1,157,195 -
4,687,357 1,026,493
TOTAL EQUITY AND LIABILITIES 48,593,444 6,933,242
Condensed Consolidated Cash Flow Statement
Six months ended Nine months
ended
31 December 2007 31 December 2006
(Unaudited) (Audited)
£ £
Cash Generated/(absorbed) by 4,604,148 (274,639)
operations
Minorities distributions (49,379) -
Taxation paid (607,085) -
Finance costs net 89,783 27,709
Cash inflow/(outflow) from operating 4,037,467 -246,930
activities
Cash outflow from investing (3,982,702) (877,066)
activities
Cash inflow from financing activities (69,668) -
Net decrease in cash equivalents (14,903) (1,123,996)
Cash at the beginning of year 326,847 1,874,652
Reverse acquisition 733,101 -
Cash at end of period 1,045,045 750,656
Condensed Statement of Changes in Equity
Six months ended Nine months
ended
31 December 2007 31 December 2006
(Unaudited) (Unaudited)
£ £
Shareholders' equity at start of 5,906,749 6,330,902
period
Reverse acquisition 24,818,679 -
Hedging, translation and share (313,850) 164,579
option reserves
Net income for the period 1,294,286 (685,805)
Minorities interest 2,632,217 -
Total equity 34,338,081 5,809,676
Notes to the Financial Statements
1. Accounting Policies
The Group has adopted International Financial Reporting Standards (IFRS) with
the first set of financial information published under IFRS being the financial
statements for the six months ended 31 December 2007. The date of transition
was 1 July 2007. The first time adoption of IFRS had no impact on the
comparative figures as contained in the financial statements. The unaudited
interim results have been prepared and presented in accordance with IAS 34,
Interim Financial Reporting.
2. Share Capital
In summary, the ordinary shares issued by the Company in the six months ended
31 December 2007 were as follows:
(1) 31 July 2007: 593,740,476 shares to Metorex Limited at 6 pence per share -
To acquire the 74% Metorex stake in Barberton Mines Limited.
(2) 31 July 2007: 48,000,000 shares to Pangea Exploration (Pty) Ltd at 6 pence
per share - To acquire their 20% stake in the Manica Gold Project.
(3) 31 July 2007: 12,000,000 shares to Pangea Exploration (Pty) Ltd at 6 pence
per share - To extinguish all future obligations relating to the exploration
properties in the Central African Republic.
(4) 18 September 2007: 1,250,000 shares to Mr. T Kroepelien (a previous
director of the Company) at 4 pence per share - Exercise of options granted.
(5) 18 September 2007: 2,750,000 to Mr. T Kroepelien (a previous director of
the Company) at 4 pence per share - Exercise of options granted.
(6) 18 September 2007: 822,727 shares to Mr. M A Burne at 4 pence per share -
Exercise of options granted as part of a subscription on 13 August 2004 when
White Knight Investments plc (previous name of Pan African Resources plc)
acquired Mistral Resource Development Corporation.
(7) 18 September 2007: 1,500,000 shares to Mr. T A Ward at 4 pence per share -
Exercise of options granted as part of a subscription on 13 August 2004 when
White Knight Investments plc (previous name of Pan African Resources plc)
acquired Mistral Resource Development Corporation.
(8) 18 September 2007: 800,000 shares to Mr. H Bellingham at 4 pence per share
- Exercise of options granted as part of a subscription on 13 August 2004 when
White Knight Investments plc (previous name of Pan African Resources plc)
acquired Mistral Resource Development Corporation.
ENDS
For further information on Pan African Resources plc, please visit the website
at www.panafricanresources.com
Enquiries:
Pan African Ambrian Partners Macquarie First St James's
Resources Limited South Corporate Corporate Services
Finance (Pty) Limited
Jan Nelson, CEO Richard Brown Limited
Phil Dexter
+27 (0) 11 777 7840 +44 (0) 20 7776 Amanda Markman
6417 +44 (0) 20 7499
Keith Spencer, +27 (0) 11 343 2307 3916
Chairman Richard Greenfield
Doné Hattingh FDBeachhead Media &
+27 (0) 11 880 3155 +44 (0) 20 7776 Investor Relations
6418 +27 (0) 11 343 2308
Nicole Stoyell Jennifer Cohen
Public Relations +27 (0) 11 214 2401
+27 (0) 11 777 7840 Louise Brugman
+27 (0) 11 214 2415
Latest directors dealings
- 1 day ago Close Brothers Group
- 1 day ago Savannah Energy
- 1 day ago Mid Wynd International Inv Trust
- 1 day ago Dillistone Group
- 1 day ago SSP Group