Provisional audited results for the year ended ...
Pan African Resources PLC
('Pan African Resources' or the 'Company' or the 'Group')
(Incorporated and registered in England and Wales under the Companies Act 1985
with a registered number 3937466 on 25 February 2000)
Share code on AIM: PAF
Share code on JSE: PAN
ISIN: GB0004300496
Provisional audited results for the year ended 30 June 2013
Highlights and key features
"Increased earnings and headline earnings with a proposed dividend to
shareholders, and a solid performance from both major operations"
Group highlights reported in South African rand ('ZAR')
- The Group's gold sold increased by 38.2% to 130,493oz (2012: 94,449oz).
- Gross revenue increased by 49.0% to ZAR1,848.1 million (2012: ZAR1,240.3
million).
- EBITDA 1 increased by 33.1% to ZAR735.2 million (2012: ZAR552.5 million).
- Headline earnings2 increased by 35.4% to ZAR487.0 million (2012: ZAR359.7
million).
- Earnings per share ('EPS') increased by 39.0% to 34.51c (2012: 24.83c).
- Headline earnings per share ('HEPS') increased by 20.8% to 30.07c (2012:
24.89c).
- Net debt of ZAR93.6 million at year end (2012: Net cash of ZAR255.5
million), and an undrawn revolving credit facility ('RCF') balance of ZAR434.8
million.
- The Group repaid ZAR184.8 million (of ZAR350.0 million initial drawdown) of
its RCF, resulting in a balance of ZAR165.2 million at year end.
- Gold resource inventory 3 increased by 494.9% to 35.1Moz (2012: 5.9Moz).
- Gold reserve inventory 3 increased by 666.7% to 9.2Moz (2012: 1.2Moz).
- Group capital expenditure incurred on sustaining and expansion capital
amounted to ZAR381.6 million (2012: ZAR213.9 million).
- Except for the two fatalities at Barberton Mines (Pty) Ltd ('Barberton
Mines'), the Group had improved safety statistics at both underground
operations.
- Final dividend of ZAR0.1314 per share, approximating ZAR240.0 million
(1,825.8 million issued shares) proposed by board of directors (2012: Nil).
Group highlights reported in Pound sterling ('GBP')
- Gross revenue increased by 32.0% to GBP133.5 million (2012: GBP101.1
million).
- EBITDA1 increased by 18.0% to GBP53.1 million (2012: GBP45.0 million).
- Headline earnings2 increased by 20.1% to GBP35.2 million (2012: GBP29.3
million).
- EPS increased by 30.2% to 2.63p (2012: 2.02p).
- HEPS increased by 6.9% to 2.17p (2012: 2.03p).
- Net debt of GBP6.2 million at year end (2012: Net cash of GBP19.8 million),
and an undrawn RCF balance of GBP29.0 million.
- The Group repaid GBP12.3 million of its RCF, with remaining balance of
GBP11.0 million at year end.
- Group capital expenditure incurred on sustaining and expansion capital
amounted to GBP27.6 million (2012: GBP17.4 million).
- Final GBP dividend will be confirmed prior to the AGM, based on prevailing
ZAR:GBP exchange rate.
Evander Gold Mines Ltd ('Evander Mines') acquisition
- Concluded acquisition of Evander Mines on 28 February 2013 for effectively
ZAR1,313.1 million from Harmony Gold Mining Company Ltd ('Harmony').
- Transaction was funded by combination of funds received for a rights issue,
RCF drawdown and internally generated cash.
- The acquisition effectively doubles the Group's gold production profile to
approximately 200,000oz per annum.
Gold mining operations - Barberton Mines
- Gold sold increased by 2.0% to 96,296oz (2012: 94,449oz).
- Revenue increased by 8.9% to ZAR1.35 billion (2012: ZAR1.24 billion).
- EBITDA increased by 2.6% to ZAR622.9 million (2012: ZAR606.9 million).
- Cash cost per kilogram increased by 14.5% to ZAR221,424/kg(2012: ZAR193,360/
kg).
- Sustainable capital expenditure4 amounted to ZAR87.2 million (2012: ZAR76.4
million).
- Sustained an underground head grade in excess of 10g/t at 11.8g/t (2012:
11.2g/t).
- The operation regretfully reports two fatalities during the year under
review.
- Lost time injury frequency rate ('LTIFR') decreased to 2.6 (2012: 3.3) and
reportable injury frequency rate ('RIFR') increased to 1.5 (2012: 0.7).
Gold mining operations - Evander Mines (effective 4 months of consolidated
results in the current year)
- Effective ownership of Evander Mines from 28 February 2013.
- Gold sold for the 4 months amounted to 34,197oz.
- Additional contribution to Group revenue of ZAR438.9 million.
- Cash costs achieved were ZAR259,640/kg, in comparison to an average gold
price received of ZAR412,641/kg.
- Evander generated EBITDA of ZAR152.3 million during this period.
- Sustainable capital expenditure amounted to ZAR38.7 million.
- Maintained an underground head grade of 7.8g/t.
- For the full year the LTIFR decreased to 2.9 (2012:4.0) and the RIFR
decreased to 1.7 (2012: 3.1).
Platinum tailings operations - Phoenix Platinum Mining (Pty) Ltd ('Phoenix
Platinum')
- Commissioned in July 2012 for accounting purposes.
- Production of 6,480oz PGE 6E 5 (2012:3,474oz PGE 6E).
- The average PGE 6E basket price received increased by 21.3% to ZAR9,093/oz
(2012: ZAR7,499/oz)6.
- Cost per ounce of production decreased by 3.8% to ZAR7,550/oz (2012:
ZAR7,847/oz) 6.
Near-term production - Barberton Tailings Retreatment Plant ('BTRP')
- Inaugural gold pour completed on 28 June 2013, plant commissioned on
schedule and within budget in July 2013.
- Capital expenditure incurred on the BTRP in the current financial year of
ZAR229.6 million (2012: ZAR43.3 million)7.
- Capital expenditure to date of ZAR272.9 million, funded internally from cash
generated by Barberton Mines.
Notes:
EBITDA is represented by earnings before interest, taxation, depreciation,
amortisation, bargain purchase gain, impairments and loss on disposal of asset
held for sale.
Headline earnings exclude a bargain purchase gain of ZAR 322.4 million (GBP24.1
million), impairments of ZAR242.3 million (GBP16.1 million) and loss on
disposal of asset held for sale of ZAR8.2 million (GBP0.6 million).
Movement in the reserve and resource inventory includes Manica in the prior
year.
Sustainable capital expenditure includes normal sustainable capital expenditure
but excludes once-off projects such as the BTRP.
PGE 6E's are platinum, palladium, rhodium, gold, ruthenium and iridium.
Phoenix Platinum costs and revenues were capitalised in the prior year, while
the plant was being ramped up to steady state production.
BTRP capital expenditure relates directly to plant and tailings storage
facility construction, and excludes the purchase of additional Harper tailings
and the associated land purchased in the prior year for ZAR12.1 million.
Financial Summary
For the year ended 30 June 2013 For the year ended 30 June 2012
Revenue (ZAR millions/GBP millions) 1,848.1 133.5 1,240.3 101.1
EBITDA (ZAR millions/GBP millions) 735.2 53.1 552.5 45.0
Attributable earnings (ZAR millions/GBP millions) 558.9 42.6 358.9 29.2
EPS (cents/pence) 34.51 2.63 24.83 2.02
HEPS (cents/pence) 30.07 2.17 24.89 2.03
Proposed dividend (cents/pence) 13.14 0.83 (estimate) - -
Net asset value per share (cents/pence) 140.93 9.45 93.74 7.09
Weighted average number of shares in issue (millions) 1,619.8 1,619.8 1,445.2 1,445.2
Note 1: The GBP approximate proposed dividend was calculated based on 13
September2013 closing exchange rate of ZAR15.76:1. The UK shareholders are to
note that a revised exchange rate will be communicated prior to dividend
approval at the AGM. Therefore the proposed dividend is approximately 0.83p.
Ron Holding, CEO of Pan African Resources commented, "Pan African Resources
exceeded most of its targets for the financial year ended 30 June 2013,
delivering growth with pleasing operational and financial performances. Evander
Mine's acquisition and the commissioning of the new BTRP have positioned Pan
African Resources to produce approximately 200,000 profitable ounces of gold a
year. There is also further growth potential through the exploitation of other
near term organic projects. The board of Pan African Resources has decided to
recommend a dividend approximating ZAR0.1314 per share or ZAR240 million to
shareholders, for approval at the annual general meeting".
Nature of business
Pan African Resources is a precious metals, African-focused mining company.
Pan African Resources delivered a good operational performance with all
operations being cash generative. It has a strong statement of financial
position which enables it to fund all on-mine capital expenditure requirements
from internally generated funds.
The Company's strategy of targeting long life, high grade projects with
attractive margins and low cash cost profiles, which are either near or at the
production stage, enables it to consistently maintain and improve its resource
base and its profit margins, with the primary objective of ensuring continued
growth in shareholder value.
Successful acquisition of Evander Mines
On 30 May 2012, Pan African Resources advised shareholders that it had entered
into an agreement with Harmony to acquire the entire issued share capital and
claims against Evander Mines for a purchase consideration of ZAR1,500.0
million. The acquisition was concluded by a wholly-owned subsidiary of the
Company, Emerald Panther Investments 91 (Pty) Ltd ('Emerald Panther'). In terms
of the sale and purchase agreement, the purchase price increased effectively
from 1 October 2012, until the date that all conditions precedent had been met,
resulting in the purchase price increasing by ZAR23.1 million to ZAR1,523.1
million.
The Group assumed effective control over Evander Mines on 28 February 2013 and
settled the balance owing to Harmony of ZAR1,523.1 million in the following
manner:
- Funds raised from the shareholder rights issue of ZAR707.3 million.
- Debt funded from a drawdown on the Group's RCF of ZAR350.0 million (total RCF
facility available of ZAR600m).
- Cash funded from Group operational cash flows of ZAR255.8 million.
- Cash generated by Evander Mines prior to Emerald Panther taking control of
ZAR210.0 million.
The ZAR210.0 million above represents cash generated by Evander Mines between 1
April 2012 and 28 February 2013 and was paid as a dividend to Harmony prior to
Pan African Resources assuming effective control of Evander Mines. For
accounting purposes, this amount was deducted in determining the final purchase
price consideration and investment held by Emerald Panther in Evander Mines,
with the final investment amount calculated as ZAR1,313.1 million.
A preliminary analysis of the fair value of assets and liabilities of Evander
Mines at acquisition appears in the following purchase price allocation (PPA)
table, prepared in accordance with IFRS3 Business combinations. This analysis
resulted in a bargain purchase gain of ZAR322.4 million (GBP24.1 million),
included in Pan African Resources earnings for the year.
Reconciliation of the purchase consideration ZAR GBP
and fair value at acquisition: (millions) (millions)
Net assets acquired at fair value 1,635.5 122.3
Bargain purchase gain 322.4 24.1
Effective purchase consideration 1,313.1 98.2
Evander Mines dividend to Harmony 210.0 15.7
Original Purchase Consideration 1,523.1 113.9
Financial Performance
Key external drivers of the Group's results:
Exchange rates and their impact on results
All of the Group's subsidiaries are incorporated in South Africa and their
functional currency is ZAR. The Group's books of prime entry are maintained in
ZAR and, with the exception of product sales, which are conducted in US dollars
('USD') prior to conversion into ZAR, business is conducted in ZAR. The
on-going review of the results of operations conducted by executive management
and by the board of directors is also performed in ZAR.
The Group's presentation currency is GBP, due to its ultimate holding Company,
Pan African Resources PLC, being incorporated in England and Wales and
dual-listed in the United Kingdom and South Africa.
In the current financial year, the average ZAR/GBP exchange rate was ZAR13.84:1
(2012: ZAR12.27:1), and the closing ZAR/GBP exchange rate was ZAR15.01:1 (2012:
ZAR12.91:1). The year-on-year change in the average and closing exchange rates
of 12.8% and 16.3% respectively must be taken into account for the purposes of
translating and comparing year-on-year results.
The Group converts and records its revenue from precious metals sales in ZAR,
and the deterioration in the value of the ZAR/USD exchange rate during the
financial year had a compensating effect on the weaker USD metals price
revenue. The average ZAR/USD exchange rate was 13.9% weaker at ZAR8.83:1 (2012:
ZAR7.75:1).
The commentary below analyses the current and prior year's results. Key aspects
of the Group's ZAR results appear in the body of this commentary and have been
used as the basis against which its financial performance is measured. The
gross GBP equivalent figures can be calculated by applying the exchange rates
as listed above.
Commodity prices
During the course of the 2013 financial year, higher gold prices were achieved
for sales over the first three financial quarters, when compared to prior year
prices. Gold prices retreated considerably during the last quarter of the
financial year, impacting the average USD gold price received for the year. The
Group realised an average gold price of USD1,553/oz for the year, a decrease of
8.3% from the USD1,694/oz achieved in the prior year.
The average ZAR gold price received by the Group increased by 4.4% to
ZAR440,824/kg (2012: ZAR422,215/kg), shielded by the weakening in the ZAR
against the USD.
The PGM 6E basket market price during the 2013 financial year decreased by 3.4%
to USD1,552/oz (2012: USD1,606/oz). Phoenix Platinum achieved an average PGM 6E
basket price of USD1,030/oz (2012: USD968/oz), after taking into account the
terms of its off-take agreement with Western Platinum Limited.
The average ZAR PGE 6E basket price received by the Group increased by 21.3% to
ZAR9,093/oz (2012: ZAR7,499/oz).
Inflation and cost escalation
During the financial year, the consumer price index ('CPI'), (a primary
indicator of South Africa's inflation) was reported at 5.5% (2012: 5.5%). The
main indicator of producer price inflation ('PPI') was at 5.9% (2012: 6.6%).
Interest rates
The Group pays a margin of 280bps above the Johannesburg interbank agreed rate
('JIBAR') on its RCF balance outstanding, and receives interest on cash on hand
at quoted call account rates.
Statement of Comprehensive Income
Pan African Resources consolidated results including Evander Mines.
2013 2012 Movement
ZAR GBP ZAR GBP ZAR GBP
(millions) (millions) (millions) (millions)
Revenue 1,848.1 133.5 1,240.3 101.1 49.0% 32.0%
Cost of production (985.1) (71.2) (566.0) (46.1) 74.0% 54.4%
Mining profit 776.8 56.1 632.3 51.5 22.9% 8.9%
EBITDA 735.2 53.1 552.5 45.0 33.1% 18.0%
Profit after taxation 558.9 42.6 358.9 29.2 55.7% 45.9%
Headline earnings 487.0 35.2 359.7 29.3 35.4% 20.1%
EPS (cents/pence) 34.51 2.63 24.83 2.02 39.0% 30.2%
HEPS (cents/pence) 30.07 2.17 24.89 2.03 20.8% 6.9%
Group revenue year-on-year increased by 49.0% to ZAR1,848.1 million (2012:
ZAR1,240.3 million). Evander Mines contributed ZAR438.9 million, Phoenix
Platinum contributed ZAR58.9 million and Barberton Mines contributed ZAR110
million, resulting in a ZAR607.8 million increase in revenue. Barberton Mines
recorded an increase in revenue due to an increase in gold ounces sold and
higher ZAR gold prices achieved. The Group realised an average gold price of
ZAR440,824/kg (2012: ZAR422,215/kg) and an average price for PGM 6E of
ZAR292,355/kg.
The Group's year-on-year total cost of production reflects an increased by
ZAR419.1 million to ZAR985.1 million (2012: ZAR566.0 million), of which Evander
Mines contributed ZAR275.5 million, and Phoenix Platinum ZAR48.9 million of the
increase. Barberton Mines' costs increased by 16.7%, which contributed ZAR94.7
million to the Group's cost of production increase.
The Group has adopted reporting cash costs in line with the recommendation of
the World Gold Council, and the table below reflects the consolidated Group's
overall gold operations costs per kilogram.
World gold council cost analysis: Units 2013 2012 Movement
Cash cost (ZAR/kg) 231,439 193,360 19.7%
All-in sustaining cash costs (ZAR/kg) 281,551 246,801 14.1%
All-in costs (ZAR/kg) 343,949 265,713 29.4%
The Group's cost of production per kilogram increased by 19.7% to ZAR231,439/kg
(2012: ZAR193,360/kg). Evander Mines' cost of production averaged ZAR259,640/
kg, compared to Barberton Mines' average cost of production of ZAR221,424/kg.
Factors contributing to the average increase year-on-year were salary and wages
costs increases at Barberton Mines of 16.1%, an increase in the cost of
electricity of 15.0%, mining costs increasing by 32.3%, primarily due to higher
vamping contractor costs as a result of additional kilograms produced by this
contractor. The mining costs also included additional secondary support costs
incurred at Fairview to establish additional mineable panels.
The Group's all-in sustaining cash cost of production per kilogram (including
direct cost of production, royalties, associated corporate costs and overheads
and sustainable capital expenditure) increased by 14.1% to ZAR281,551/kg (2012:
ZAR 246,801/kg), largely impacted by higher on-mine maintenance and development
capital expenditure.
The Group's all-in cost per kilogram (sustaining cost of production plus
once-off expansion capital) increased by 29.4% to ZAR343,949/kg (2012: ZAR
265,713/kg), due to high capital expenditure incurred on the construction of
the BTRP and Evander shaft deepening project. The Group incurred overall lower
royalty costs as a result of the higher capital expenditure on the BTRP, which
is factored into the all-in cash costs for the royalty calculation. When costs
are compared to the average gold price received of ZAR440,824 during the year,
it demonstrates the Group's current overall available gold mining margins.
The Group's EBITDA increased by 33.1% to ZAR735.2 million (2012: ZAR552.5
million), mainly as a result of the inclusion of Evander Mines' EBITDA of
ZAR152.3 million.
Pan African Resources achieved an increase of 55.7% in profit after tax to
ZAR558.9 million (2012: ZAR358.9 million), due to inter alia, the following
reasons:
- An improved performance at Barberton Mines,
- Four months profit contribution from Evander Mines,
- Bargain purchase gain of ZAR322.4 million arising on the Evander Mines
acquisition.
The bargain purchase gain was largely offset by once-off costs, comprising of
Phoenix Platinum's impairment of ZAR100 million, an Auroch impairment of
ZAR142.3 million, a loss on disposal of asset held for sale of ZAR8.2 million
and once-off acquisition costs relating to Evander Mines of ZAR18.3 million.
The impairments arose as a result of, inter alia, lower precious metal price
forecasts and exploration and mining challenges in the current depressed mining
environment.
The Group's current tax charge increased marginally by 5.4% to ZAR167.9 million
(2012: ZAR159.3 million). The significant BTRP capital expenditure of ZAR229.5
million incurred in the year was fully tax deductible, resulting in the
effective current tax rate decreasing to 22.2% (2012: 30.7%). Phoenix Platinum
has unredeemed capital expenditure of ZAR133.2 million at year end, which will
be utilised in the future.
The Group's EPS in ZAR amounted to 34.51 cents (2012: 24.83 cents) resulting in
an increase of 39.0%. The rights issue during January 2013 resulted in the
weighted average number of shares in issue increasing by 12.1% during the year
to 1,619.8 million (2012: 1,445.2 million).
The Group's HEPS in ZAR terms amounted to 30.07 cents (2012: 24.89 cents), an
increase of 20.8%. The current year's HEPS differ from EPS due to the bargain
purchase gain, impairment charges and loss on sale of investment, which are
adjusted for when calculating the HEPS. This net adjustment amounted to ZAR71.9
million.
Statement of Financial Position
2013 2012 Movement
ZAR GBP ZAR GBP ZAR GBP
(millions) (millions) (millions) (millions)
Non-current assets 3,726.2 249.3 1,143.8 86.1 225.8% 189.5%
Current assets 401.5 26.7 367.8 28.5 9.2% -6.3%
Total equity 2,568.8 172.2 1,357.5 102.6 89.2% 67.8%
Non-current liabilities 1,200.9 80.0 180.8 14.0 564.2% 471.4%
Current liabilities 361.2 24.1 142.9 11.1 152.8% 117.1%
Notes:
1. At 30 June 2012, Phoenix Platinum had not reached steady state production,
therefore all income and expenditure was capitalised as per IAS16 property
plant and equipment.
2. Current assets at 30 June 2013 exclude non-current assets held for sale of
ZAR3.2 million (GBP0.2 million) and at 30 June 2012, ZAR169.6 million (GBP13.1
million).
Non-current assets increased by 225.8% to ZAR3,726.2 million. The majority of
this significant increase is attributable to the Evander Mines acquisition and
related fair value adjustments to the property plant and equipment acquired
(ZAR2,157.0 million), as well as capital expenditure at Barberton Mines of
ZAR316.8 million, of which ZAR229.6 million related to the BTRP and is
classified as a major project and therefore non-sustainable capital. Included
in non-current assets at 30 June 2013 is Evander Mines' rehabilitation trust
fund balance of ZAR218.7 million. The rehabilitation trust funds amount is
invested in interest-bearing short-term investments or medium-term equity
linked notes issued by commercial banks.
Current assets increased by 9.2% to ZAR401.5 million, as a result of increases
in inventory and accounts receivable. Inventory increased due to the inclusion
of Evander Mines' inventory balances, which included Evander Mines' gold stock
not yet sold. In addition, BTRP's reagent consumables were held for the first
time in the current year. The Group's debtor days increased to 30 days (2012:
15 days), due to larger debtor balances at year end.
Contributing to the increase in the Group's equity are the proceeds of ZAR707.3
million rights issue undertaken to fund the Evander Mines acquisition and the
increase in the current years retained income, as a result of profit of after
tax of ZAR558.9 million.
Non-current liabilities increased by 546.2% to ZAR1,200.9 million, due to the
inclusion of Evander Mines' rehabilitation provision of ZAR182.3 million and
Evander Mines' deferred tax liability of ZAR607.9 million. In addition, Pan
African Resources raised ZAR350 million in RCF debt to fund the Evander Mines
transaction. At 30 June 2013, an amount of ZAR165.2 million of this RCF debt
remains outstanding and is included in non-current and current liabilities. It
is pleasing to note that ZAR184.8 million was repaid within four months of the
initial ZAR350 million drawdown.
Current liabilities increased by 152.8% to ZAR361.2 million. The majority of
the increase relates to the inclusion of Evander Mines' trade and other
payables, amounting to ZAR192.1 million. The balance of the increase mainly
relates to Barberton Mines' increase in trade and other payables of ZAR58.3
million as a result of the BTRP construction contracts. The increase in the
accounts payable resulted in the creditor days increasing to 60 days (2012: 30
days).
Capital expenditure during the year amounted to ZAR381.5 million as detailed
per operation below:
For the Year Ended 30 June 2013 For the Year Ended 30 June 2012
Operational capital expenditure ZAR (millions) GBP (millions) ZAR (millions) GBP (millions)
Barberton Mines 87.2 6.3 76.4 6.2
BTRP 229.6 16.6 55.4 4.5
Evander Mines 62.4 4.5 - -
Phoenix Platinum 2.2 0.2 81.9 6.7
Corporate 0.2 - 0.2 -
Total capital expenditure 381.6 27.6 213.9 17.4
Statement of Cash Flow
The Group's cash and cash equivalents decreased to ZAR71.6 million (2012:
ZAR255.5 million) due to funding of both the Evander Mines acquisition and
construction of the BTRP. Despite these outflows, the Group was still able to
generate sufficient cashflows from operations to fund on-mine capital
expenditure and ZAR184.8 million in RCF repayments during the year.
The Group remains cash generative with a net debt position of only ZAR93.6
million at year-end. The cash generated by the operations is a reflection of
the quality gold assets and the available profit margins as a result of cost
control and improved production results.
Review of Gold Operations
The following figures represent the two gold operations, Barberton Mines and
Evander Mines. Evander Mines was consolidated from 1 March 2013, therefore
contributing 4 months to the Group's production and financial statistics.
Group gold production summary
2013 2012 2011 2010 2009
Tonnes milled - underground (t) 402,355 282,041 296,200 313,167 313,952
Tonnes milled - surface (t) 110,514 26,054 - - -
Tonnes milled - total (t) 512,869 308,095 296,200 313,167 313,952
Head grade - underground (g/t) 10.5 11.2 10.6 10.6 10.3
Head grade - surface (g/t) 1.3 1.9 - - -
Head grade - total (g/t) 8.6 10.6 10.6 10.6 10.3
Recovered grade (g/t) 7.9 9.5 9.7 9.7 9.4
Overall recovery (%) 92% 91% 91% 91% 91%
Production - underground (oz) 126,657 93,381 92,043 97,483 94,909
Production - surface (oz) 3,836 1,068 - - 3,955
Gold sold (oz) 130,493 94,449 92,197 98,091 97,353
Average spot price received (ZAR/kg) 440,824 422,215 306,757 267,876 251,740
Total cash costs (ZAR/kg) 231,439 193,360 175,520 158,711 136,178
All-in sustaining cash costs (ZAR/kg) 281,551 246,801 217,524 189,308 155,910
All-in cost (ZAR/kg) 343,949 265,713 217,524 189,308 155,910
Total cash costs (ZAR/t) 1,832 1,844 1,707 1,537 1,313
Capital expenditure (ZAR millions) 379.1 131.8 75.2 70.6 58.7
Exchange rate - average (GBP) 13.84 12.27 11.11 11.93 14.39
Exchange rate closing (GBP) 15.01 12.91 10.94 11.53 12.66
Exchange rate - average (USD) 8.83 7.75 6.99 7.59 9.03
Exchange rate closing (USD) 9.87 8.27 6.83 7.65 7.72
Review of Barberton Mines
Safety
This past financial year was not without disappointments and challenges from a
safety perspective. Although safety is the top priority at Pan African
Resources, we are saddened to report the tragic loss of two employees at
Barberton Mines.
- On 17 November 2012, Gert Fourie passed away when the truck he was driving left
the road, overturned and rolled down a hill at Barberton's Sheba Mine.
- On 7 March 2013, Velly Malumane was fatally electrocuted while welding
underground.
Subsequent to these accidents, employees were counselled and engaged as to
possible causes and remedial actions to prevent similar accidents happening in
the future. To encourage them to work safe, each employee, supervisor and
manager also signed a commitment pledge.
In the 2013 financial year, Barberton Mines' total recordable injury frequency
rate (TRIFR) improved from 25.1 to 19.2 per 1,000,000 man hours worked, and the
lost time injury frequency rate (LTIFR) improved from 3.3 to 2.6 per 1,000,000
man hours worked. Due to two fatalities at the operation, the reportable injury
frequency rate (RIFR) has shown a regression from 0.7 to 1.5 per 1,000,000 man
hours worked.
Operating performance
Barberton Mines sold 96,296oz of gold during the year, an increase of 1.9% from
the previous year (2012: 94,449oz). Mining operations accounted for 310kt
milled, an increase of 1% from the prior year (2012: 308kt). The increase in
tonnes milled was mostly due to an increase in surface stockpiles processed of
35kt(2012: 26kt).
Head grade and overall recoveries remained relatively constant at 10.6g/t
(2012: 10.5g/t) and 91% (2012: 91%).
Total USD cash costs per ounce increased by 1% to USD780/oz (2012: USD776/oz).
However in ZAR per kilogram terms, total cash costs increased by 14.5% to
ZAR221,424/kg (2012: ZAR193,360/kg).
The Barberton Mines all-in cash cost increased by 31.8% to ZAR350,302/kg
(2012: ZAR 265,713/kg). This high percentage increase was as a result of
once-off non-sustainable capital invested in building the BTRP.
Production summary
Financial year: 2013 2012 2011 2010 2009
Tonnes milled: (t) 274,398 282,041 296,200 313,167 313,952
underground
Tonnes milled: surface (t) 35,086 26,054 - - -
Tonnes milled: total (t) 310,484 308,095 296,200 313,167 313,952
Head grade: underground (g/t) 11.8 11.2 - - -
Head grade: surface (g/t) 1.5 1.9 - - -
Head grade: total (g/t) 10.6 10.5 10.6 10.6 10.3
Recovered grade (g/t) 9.6 9.5 9.7 9.7 9.4
Overall recovery (%) 91 91 91 91 91
Production: underground (oz) 95,135 93,381 92,043 97,483 94,909
Production: surface (oz) 1,161 1,068 - - 3,955
Gold sold (oz) 96,296 94,449 92,197 98,091 97,353
Average price: spot (ZAR/kg) 450,829 422,215 306,757 267,876 251,740
Total cash cost (ZAR/kg) 221,424 193,360 175,520 158,711 136,178
All-in sustaining cash (ZAR/kg) 273,653 246,801 217,524 189,308 155,910
cost
All-in cash cost (ZAR/kg) 350,302 265,713 217,524 189,308 155,910
Total cash costs (ZAR/t) 2,153 1,844 1,707 1,537 1,313
Capital expenditure (ZAR 316.8 131.8 75.2 70.2 58.7
millions)
Capital expenditure
Total capital expenditure at Barberton Mines increased by 140.3% to ZAR316.8
million (2012: ZAR131.8 million). Maintenance capital expenditure of ZAR45.1
million (2012: ZAR38.7 million) and development capital expenditure of ZAR42.1
million (2012: ZAR37.7 million) was incurred. The BTRP capital expenditure at
the end of the financial year totalled 2013 ZAR229.6 million (2012: ZAR55.4
million).
Review of Evander Mines
Safety
Evander Mines' TRIFR improved from 8.0 to 7.7 per 1,000,000 man hours worked.
The LTIFR has shown a vast improvement from 4.0 to 2.9 per 1,000,000 man hours
worked, and its RIFR has improved from 3.1 to 1.7 per 1,000,000 man hours
worked.
Operating performance
Evander Mines sold 34,197oz during the 4 months it was consolidated into the
Group. Mining operations accounted for 128kt of the tonnes milled and surface
operations for 74kt. For the full year, Evander Mines sold 95,089oz (2012:
108,123oz).
The underground head grade achieved during the first 4 months of ownership was
at 7.8g/t, in comparison to the full year's underground headgrade of 7.4g/t
(2012: 7.2g/t).
Evander Mines achieved a total USD cash costs per ounce of USD915/oz. In ZAR
per kilogram terms, total cash costs were ZAR259,640/kg.
Financial year: 2013 1
Tonnes milled: underground (t) 127,957
Tonnes milled: surface (t) 74,428
Tonnes milled: total (t) 202,385
Head grade: underground (g/t) 7.8
Head grade: surface (g/t) 1.2
Head grade: total (g/t) 5.4
Recovered grade (g/t) 5.1
Overall recovery (%) 96
Production: underground (oz) 31,522
Production: surface (oz) 2,675
Gold sold (oz) 34,197
Average price: spot (ZAR/kg) 412,641
Total cash cost (ZAR/kg) 259,640
All-in sustaining cash cost (ZAR/kg) 303,790
All-in cash cost (ZAR/kg) 326,061
Total cash costs (ZAR/t) 1,365
Capital expenditure (ZAR millions) 62.4
Note 1: Production and financial information relates to the four month period 1
March 2013 to 30 June 2013.
Capital expenditure
Total capital expenditure at Evander Mines was ZAR62.4 million for the 4 month
period. Maintenance capital expenditure of ZAR19.9 million and development
capital expenditure of ZAR42.5 million was incurred.
Review of platinum tailings operations
Review of Phoenix Platinum
Safety
Phoenix maintained its excellent safety record, with no injuries recorded since
turning the first sod in April 2010.
The Phoenix team strives to eliminate all potential hazards thus ensuring a
safe workplace for its employees through:
- The continuous mitigation of day to day operational risks
- Training and communication of identified challenges
- Visible felt leadership.
Operating performance
Phoenix Platinum sold 6,480oz PGE 6E (2012: 3,474oz PGE 6E). The average PGE 6E
basket price received increased by 21.3% ZAR9,093/oz (2012: ZAR7,499/oz). Cost
per ounce of production decreased by 3.8% to ZAR7,550/oz (2012: ZAR7,847/oz ).
The plant feed increased during the year due to processing additional tonnes
from the Buffelsfontein dumps.
The Chrome Tailing Retreatment Plant ('CTRP') was designed to treat sulphide
material from International Ferro Metals Ltd ('IFM') Lesedi Mine. IFM initially
supplied Phoenix Platinum with sulphide-rich material from its Lesedi
underground operations, however the ferrochrome producer cut back drastically
on operations at Lesedi in the prior year and started mining oxidised material
from their open cast section. This resulted in oxidised tailings being blended
into the Phoenix Platinum feedstock. The metallurgy of oxidised tailings
negatively affects recovery and concentrate grade in the CTRP. This in turn
results to poor PGM concentrate production.
Phoenix Platinum is currently doing the following to address the issue of
oxidised feedstock:
- Increase feed tonnages into the plant
- Investigating methods of chemically converting oxide material to improve
recoveries
- Expedite deliverables for the new tailings storage facility project to increase
bypass capacity
- Cost management to decrease operating costs
Financial year: 2013 20121
Plant feed - Lesedi (t) 16,216 58,185
Plant feed - IFM opencast (t) 76,258 33,627
Plant feed - IFM toll (t) 7,607 -
Plant feed - Buffelsfontein dumps (t) 174,109 32,652
Plant feed - Total (t) 274,190 124,464
Head grade (g/t) 3.68 4.16
Plant recovery (%) 21 21
Chromium(III) oxide (Cr2O3) (%) 2.20 2.49
Production and sales of PGE 6E (oz) 6,480 3,474
Basket price received (ZAR/oz) 9,093 7,499
Total cash costs (ZAR/oz) 7,550 7,847
Total cash costs (ZAR/t) 178 170
Capital Expenditure (ZAR millions) 2.2 81.9
Note 1: Phoenix Platinum was fully commissioned for accounting purposes on 1
July 2012, therefore all associated revenues and costs were capitalised in the
prior year.
Capital expenditure
Total capital expenditure at Phoenix Platinum decreased to ZAR2.2 million
(2012: ZAR81.9 million).
Near-term production
BTRP
As a consequence of successful metallurgical test work carried out on composite
drill hole samples drilled during the previous financial year, the potential of
retreating the Bramber tailings dam was assessed in a feasibility study for the
proposed construction of a tailings retreatment plant at Fairview Mine. The
viability of a retreatment plant was confirmed in an independent review by
Venmyn Rand (Pty) Ltd. Detailed engineering, process and flow design to treat
approximately 1.2 Mt per annum was carried out by Basil Read Matomo. When in
full production the BTRP will increase the annual production profile at
Barberton Mines by approximately 20,000 oz to 115,000 oz a year. With a
forecast cost structure of USD725/oz, this project falls well in line with the
Company's strategy of developing low cost, high margin projects. The LOM of the
BTRP has been augmented by auger drilling on an additional 6 Mt of tailings at
the Consort tailings dam, extending the life of the project from six to 12
years. Final commissioning was completed in June 2013 and production build-up
commenced. The commissioning of the BTRP project created 83 new jobs in the
Barberton area.
BTRP capital expenditure
Barberton Mines spent ZAR229.6 million in the current financial year (2012:
ZAR43.3 million). The capital expenditure relates directly to the plant and
tailings storage facility construction and excludes the purchase of additional
Harper tailings and the associated land purchased in the prior year for ZAR12.1
million.
Historical capital Forecasted capital
Prior Year 12 months Amount spent Forecasted to Total
- 30 June ended 30 project to completion project
2012 June 2013 date costs forecast
costs
ZAR ZAR ZAR ZAR ZAR
BTRP Construction (millions) (millions) (millions) (millions) (millions)
Construction and
Infrastructure 42.8 185.4 228.2 10.8 239.0
Quantity
surveying - 1.9 1.9 0.7 2.6
Environmental 0.5 0.5 1.0 - 1.0
Tailings storage
facility - 41.8 41.8 20.6 62.4
Total 43.3 229.6 272.9 32.1 305.0
Auroch Minerals NL ('Auroch')
During the year, the Group divested of its 100% shareholding in Manica, its
gold exploration project in Mozambique, in exchange for a 42% equity share in
Australian-listed Auroch. No non-financial performance indicators are included
in this report for either Manica or Auroch. More information concerning Auroch
is available at www.aurochminerals.com.
Commitments
The Groups commitments have been presented in both ZAR and GBP for use of
review for both UK and SA shareholders.
The Group had no contingent liabilities in the current financial year or prior
year.
Commitments reported in ZAR
The Group had outstanding open orders contracted for at year end of ZAR72.7
million (2012: ZAR158.9 million).
The Group had guarantees of ZAR23.4 million (2012: ZAR3.8 million) in favour of
Eskom, and ZAR14.0 million (2012: ZAR2.9 million) in favour of the Department
of Mineral Resources at year end.
Operating lease commitments, which fall due within the next year, amounted to
ZAR1.6 million (2012: ZAR1.6 million).
Commitments reported in GBP
The Group had outstanding open orders contracted for at year end of GBP4.8
million (2012: GBP12.3 million).
The Group had guarantees of GBP1.6 million (2012: GBP0.3 million) in favour of
Eskom, and GBP0.9 million (2012: GBP0.2 million) in favour of the Department of
Mineral Resources at year end.
Operating lease commitments, which fall due within the next year, amounted to
GBP0.1 million (2012: GBP0.1 million).
Basis of preparation of financial statements
Investors should consider non-Generally Accepted Accounting Principles
('non-GAAP') financial measures shown in this provisional announcement in
addition to, and not as a substitute for or as superior to, measures of
financial performance reported in accordance with International Financial
Reporting Standards ('IFRS'). The IFRS results reflect all items that affect
reported performance and therefore it is important to consider the IFRS
measures alongside the non-GAAP measures.
JSE Limited listing
The Company has a dual primary listing on the JSE Limited ('JSE') and the AIM
market ('AIM') of the London Stock Exchange.
The provisional announcement has been prepared in accordance with SAICA
financial reporting guidelines as issued by the accounting practice committee
and financial reporting pronouncement as issued by the financial reporting
council, and the information as required by International Accounting Standards
('IAS') 34: Interim Financial Reporting.
The Group's South African external auditors, Deloitte & Touche, have issued
their opinion on the Group's Annual Financial Statements for the year ended 30
June 2013. The audit was conducted in accordance with International Standards
on Auditing. They have expressed an unmodified opinion on the Annual Financial
Statements from which the Group's provisional announcement was derived. A copy
of their audit report is available for inspection at the Company's registered
office. Any reference to future financial performance included in these Group
financial statements have not been reviewed or reported on by the Group's South
African external auditors.
The auditor's report does not necessarily report on all of the information
contained in this announcement/ financial results. Shareholders are therefore
advised that in order to obtain a full understanding of the nature of the
auditor's engagement they should obtain a copy of that report together with the
accompanying financial information from the issuer's registered office.
AIM listing
The financial information for the year ended 30 June 2013 does not constitute
statutory accounts as defined in sections 435 (1) and (2) of the United Kingdom
('UK') Companies Act 2006 but has been derived from those accounts. Statutory
accounts for the year ended 30 June 2012 have been delivered to the Registrar
of Companies and those for 2013 will be delivered following the Company's
annual general meeting. Deloitte & Touche UK, the external auditors have
reported on these accounts for the year ended 30 June 2013. Their report was
unqualified, did not include a reference to any matters to which auditors draw
attention by way of emphasis of matter and did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006. These statutory accounts have
been prepared in accordance with IFRS and IFRS Interpretations Committee
('IFRIC') interpretations adopted for use by the European Union, with those
parts of the Companies Act 2006 applicable to companies reporting under IFRS.
Directorship Changes
The following changes took place up to the announcement date of 17 September
2013:
Appointments:
- R Holding was appointed as the Chief executive officer with effect from 9
September 2013.
- JAJ Loots was appointed as Financial director effective 1 October 2013. JAJ
Loots was previously Pan African Resources Financial director and also a
non-executive director of the Group. JAJ Loots is a permanent employee of
Shanduka but will vacate this position to join the Group.
Resignations:
- J Nelson resigned on 28 February 2013.
- B Sitole resigned as the Financial director, effective 30 September 2013, to
focus on personal commitments.
Shares Issued
During the period under review the Company announced the issue and allotment of
374,571,902 new ordinary shares in respect of share options exercised and
rights offer issue:
On 25 October 2012 3,000,000 shares was issued to A Esterhuizen at 7 pence per
share, in relation to share options exercised.
On 17 January 2013 370,071,902 shares was issued at 14 pence per share, to
raise funds to finance the acquisition of Evander Mines from Harmony.
On 31 May 2013 1,500,000 shares issued to KC Spencer (chairman) at 6 pence per
share, in relation to share options exercised.
Dividend
The board of directors has proposed a dividend of approximately ZAR240 million
(GBP15.2 million1) for the 2013 year, equating to ZAR0.1314 per share (0.83p
per share1), resulting in a dividend cover of 2.3 times. Because of the
anticipated cash flow associated with the acquisition of Evander Mines, the
board of directors did not propose a dividend for the year ended 30 June 2012.
Note 1: The GBP proposed dividend was calculated based on 13 September 2013
closing exchange rate of ZAR15.76:1. The UK shareholders are to note that a
revised exchange rate will be communicated prior to final approval at the AGM.
Therefore the proposed dividend is approximately 0.83p.
Going concern
The board confirms that the business is a going concern and that it has
reviewed the business' working capital requirements in conjunction with its
future funding capabilities for at least the next 12 months, and has found them
to be adequate. The Group has secured a five year revolving credit facility
with Nedbank Limited and ABSA Limited. The Group at 30 June 2013 had unutilised
RCF facilities of R434.8 million and cash on hand of ZAR71.6 million to assist
in funding working capital requirement. Management are not aware of any
material uncertainties which may cast significant doubt on the Group's ability
to continue as a going concern. Should the need arise the Group can cease most
exploration and capital activities, and by doing so conserve cash.
Events after the reporting period
The company announced on 2 September 2013 that a new issue of ordinary shares
of 1p each had been made following the exercise of share options granted in
2007 under the Company's share option plan. The share issue was for 3,000,000
shares at a price of ZAR0.83 per share to an ex-employee.
Company announced on 9 September the following appointments and resignations:
R Holding was appointed as the Chief executive officer with effect from 9
September 2013.
B Sitole resigned as the financial director, effectively from 30 September 2013
to focus on personal commitments.
- JAJ Loots was appointed as Financial director effective 1 October 2013. JAJ
Loots was previously Pan African Resources Financial director and also a
non-executive director of the Group. JAJ Loots is a permanent employee of
Shanduka but will vacate this position to join the Group.
The Group regrets to report two fatalities at its Barberton Mines operation
during July 2013.
Accounting policies
The provisional announcement has been prepared using accounting policies that
comply with the International Financial Reporting Standards ('IFRS') adopted by
the European Union and South Africa, which are consistent with those applied in
the financial statements for the year ended 30 June 2013 and prior year end 30
June 2012.
Directors' dealings
During the year under review R Holding had participated in the following
transactions in the Company's shares:
- On 11 January 2013 subscribed for 127,500 shares at ZAR1.90 per share in
the Groups rights offer issue.
- On 3 March 2013 purchased 125,000 shares at a price of ZAR2.16 per share.
- On 22 April 2013 purchased 100,000 shares at a price between ZAR1.90 and
ZAR1.95 per share.
At 30 June 2013 R Holding held a total of 852,500 shares (2012: 500,000)
representing 0.05% of the issued share capital.
During the year under review JP Nelson had participated in the following
transactions in the Company's shares:
- On 11 January 2013 subscribed for 13,157 shares at ZAR1.90 per share in
the Groups rights offer issue.
- On 24 February 2013 sold 135,600 shares at a price of ZAR2.65 per share.
JP Nelson had 1,000,000 shares remaining upon his resignation on 28 February
2013 (2012:1,122,442) representing 0.05% of the issued share capital.
During the year under review JAJ Loots had participated in the following
transactions in the Company's shares:
- On 11 January 2013 subscribed for 16,575 shares at ZAR1.90 per share in
the Groups rights offer issue.
- On 1 March 2013 purchased 100,000 shares at GBP0.16 per share
At 30 June 2013 JAJ Loots held a total of 181,575 shares (2012: 65,000)
representing 0.01% of the issued share capital.
During the year under review KC Spencer had participated in the following
transactions in the Company's shares:
- On 31 May 2013 1,500,000 shares were issued to the Strode Trust, a family
trust of KC Spencer at ZAR0.83, in relation to share options
exercised.
At 30 June 2013 KC Spencer, through the Strode Trust held a total of 1,500,000
shares (2012:nil) representing 0.08% of the issued share capital.
During the year under review RG Still had participated in the following
transactions in the Company's shares (both in his personal capacity and related
entities):
RG Still in his personal capacity:
On 11 January 2013 subscribed for 510,000 shares at ZAR1.90 per share in the
Groups rights offer issue.
At 30 June 2013 RG Still in his personal capacity, held 2,510,000 shares (2012:
2,000,000) representing 0.14% of the issued share capital.
RG Still related entities dealings:
RG Still is a director of Pangea Exploration (Proprietary) Limited ('Pangea')
and a trustee of a family trust ('The Alexandra Trust') which owns 50% of
Pangea. RG Still is therefore deemed to have an indirect, non-beneficial
interest in Pangea's holding in the Company and Pangea holds 0.12% of the
current issued share capital of the Company. RG Still is also a deemed to have
an indirect, non-beneficial interest in The Alexandra Trust's holding in the
Company.
During the year under review the Alexandra trust and Pangea had the following
dealings in shares:
Pangea
- On 11 January 2013 Pangea subscribed for 457,418 shares at R1.90 per share in
the Groups rights offer issue.
At 30 June 2013 Pangea held a total of 2,251,214 shares (2012: 1,793,796)
representing 0.12% of the issued share capital.
Alexandra Trust
- On 11 January 2013 subscribed for 3,169,880 shares at ZAR1.90 per share in the
Groups rights offer issue.
- On 11 January 2013 purchased additional 72,836 shares at ZAR1.90 per share in
the Groups right offer issue, in an application for surplus rights offer
shares.
- On 30 April 2013 sold 1,700,000 shares at a price of ZAR2.22 per share.
- On 8 May 2013 sold 1,000,000 shares at a price of ZAR2.24 per share.
- On 9 May 2013 sold 1,100,000 shares at a price of ZAR2.34 per share.
- On 10 May 2013 sold 200,000 shares at a price of ZAR2.35 per share.
At 30 June 2013 the Alexandra Trust held a total of 11,673,616 shares (2012:
12,430,900) representing 0.64% of the issued share capital.
Shanduka Gold (Pty) Ltd - Director dealings
JAJ Loots and P Mahanyele during the financial year were permanent employees of
the Shanduka Group (Pty) Ltd ('Shanduka Group'), the ultimate holding company
of Shanduka Gold (Pty) Ltd ('Shanduka'). P Mahanyele is a shareholder of the
Shanduka Group, and further holds options to acquire shares in the Shanduka
Group. JAJ Loots also holds options to acquire shares in the Shanduka Group.
Neither JAJ Loots nor P Mahanyele owns or has options to acquire more than 2%
of the Shanduka Group.
Shanduka sold the following nil paid letters prior to the Groups rights issue:
- Between 13 December 2012 and 2 January 2013, sold 23,183,516 nil paid letters
at a price range of between 36 cents and 50 cents.
Shanduka subscribed for 70,189,473 shares at ZAR1.90 in the Groups Rights offer
issue.
At 30 June 2013 Shanduka held 436,358,058 shares representing 23.94% of the
issued share capital.
Segment Reporting
A segment is a distinguishable component of the Group that is engaged in
providing products or services in a particular business sector or segment,
which is subject to risk and rewards that are different to those of other
segments. The Group's business activities were conducted through five business
segments:
- Barberton Mines, located in Barberton South Africa,
- Evander Gold Mining (Pty) Ltd and Evander Gold Mines Ltd ('Collectively known
as Evander Mines'),located in Evander South Africa,
- Phoenix Platinum, located near Rustenburg South Africa,
- Corporate and growth projects and,
- Pan African Resources Funding Company (Pty) Ltd ('Funding Company').
The Chief executive officer reviews the operations in accordance with the
disclosures presented above.
Pan African Resources Outlook - The Future
Pan African Resources successfully operates on its strong foundation of its low
cost and high margin business model. With the addition of a flat, empowered
management team and low overhead structure, the group believes that it has
positioned itself as a long term, sustainable business.
Barberton Mines, as is evident from the success of the BTRP, has a demonstrated
a proven ability to source additional ounces at low input costs. The social
impact of the BTRP in the Barberton area, which has high unemployment, has been
very positive with the creation of an additional 83 permanent employment
opportunities.
The Group will continue to ensure historic productions levels are maintained at
Barberton Mines from the underground operations. The management team will
further ensure the BTRP is brought into full production, taking Barberton Mines
to 115,000oz of gold production.
Over the past year the mining industry has placed greater emphasis on cost
delivery, free cash flows and enhanced shareholders returns. Without diverting
from this demand we will continue to concentrate on the efficient use of
capital.
Evander Mines has commenced a lower-grade mining cycle, until the 2015
financial year, when we will revert to a high-grade mining cycle. In an effort
to ameliorate this reduction in revenue from the mine, we have identified and
are evaluating numerous potential organic projects at Evander Mines. Through
the process of targeting incremental ounces, cost of production at Evander
Mines will be reduced with greater economies of scale and infrastructure
synergies.
Already underway is a sweeping and vamping project at Evander No.7 Shaft,
producing gold from previously mined out areas. A second project to process
additional surface sources requires the conversion of one of the current
autogenous mills to a ball mill to process fines at a rate of 20,000 tonnes per
month over 21 months, thereby extending the current LOM of surface sources.
A further initiative being considered is the re-opening of the No. 3 Decline
mining section at Evander Mines No.7 Shaft. This could enable the quick
recovery of additional gold. An additional benefit of this project is that it
allows access to the 2010 Payshoot exploration project, which has the potential
of becoming a significant new mining area.
Surface tailings within the Evander Mines complex have a total resource of 203
million tonnes at an average grade of 0.29 g/t. A total reserve of 39 million
tonnes of tailings at 0.32 g/t is available at Kinross. The Kinross
metallurgical plant, with a nameplate capacity of 260,000 tonnes per month, has
some 180,000 tonnes per month of excess capacity. Having identified this as a
"quick value" project, we have initiated the necessary project work to bring
the proposed Evander Tailings Retreatment Project ('ETRP') into production.
This project entails the upgrading of the existing Evander Mines plant with a
capital investment spend estimated to be significantly less than that of the
BTRP, and with expected delivery to be within 18 months.
Phoenix Platinum will remain a focus area over next year in order to identify
alternative feedstock for the plant to process, improve recoveries, reduce cost
efficiencies and improve production levels.
Other major projects at Evander Mines
Additional major opportunities are the Poplar, Evander South and Rolspruit
projects. We have tasked SRK to perform a bankable feasibility GAP analysis on
previous pre-feasibility studies on the Poplar and Evander South projects and
will, during the 2014 financial year, consider options of progressing these
projects in a manner that will benefit the Group and its shareholders.
Welcome and thanks
A warm welcome to all new employees, shareholders and stakeholders to the Pan
African Resources and in particular, to all of the new employees at Evander
Mines. Our thanks go out to Graham Briggs and his Harmony team for the
professional and friendly manner in which the Evander Mines deal was undertaken
and the continued support provided to Evander Mines through the current shared
services arrangement.
Pan African Resources is privileged to have the right people at all levels in
our organisation, but none are more important than those men and women who go
to work daily and competently perform their duties, often under physically
challenging circumstances.
Underpinning our success and assisting in ensuring a bright future for Pan
African Resources are the on-mine support crews, management and the behind the
scenes corporate employees who deliver their best for the Group. Our lean and
flat structure makes the business model possible and ensures we continue to
deliver on our set goals.
At the end of February 2013 our previous CEO, Jan Nelson, left Pan African
Resources and we thank him for his years of service and wish him well in his
future ventures.
During the current year our shareholders entrusted us with more than ZAR707.3
million in an oversubscribed rights issue. We wish to thank this very
distinguished shareholder base for their continued faith and loyal support.
We have also been strongly supported by a well-established board that offers a
broad range of experience in mining and commerce. Their on-going advice and
guidance is invaluable in ensuring we remain on course. During the year
Shanduka, our BEE shareholder, rendered exceptional business expertise and
contributed to our success.
We look forward to continuing our onward journey together!
Ronald Holding
Chief Executive Officer
Cobus Loots
Director
16 September 2013
FINANCIAL STATEMENTS - PROVISIONAL FINANCIAL INFORMATION
Summarised Consolidated Statement of Financial Position at 30 June 2013
Group
30 June 2013 30 June 2012
(Audited) (Audited)
GBP GBP
ASSETS
Non-current assets
Property, plant and equipment and mineral rights 209,489,677 62,411,655
Other intangible assets 340,484 -
Deferred taxation 312,798 -
Goodwill 21,000,714 21,000,714
Investments in associate 1,199,071 -
Rehabilitation trust fund 16,973,713 2,662,934
249,316,457 86,075,303
Current assets
Inventories 6,595,740 1,868,735
Current tax asset 1,479,339 -
Trade and other receivables 13,904,416 6,828,047
Cash and cash equivalents 4,768,916 19,782,179
26,748,411 28,478,961
Non-current assets held for sale 213,191 13,135,215
TOTAL ASSETS 276,278,059 127,689,479
EQUITY AND LIABILITIES
Capital and reserves
Share capital 18,228,342 14,482,623
Share premium 94,515,562 51,149,299
Translation reserve (22,166,345) (1,937,509)
Share option reserve 1,031,955 904,902
Retained income 102,005,124 59,432,741
Realisation of equity reserve (10,701,093) (10,701,093)
Merger reserve (10,705,308) (10,705,308)
Equity attributable to owners of the parent 172,208,237 102,625,655
Non-controlling interest - -
Total equity 172,208,237 102,625,655
Non-current liabilities
Long term provisions 14,821,152 3,043,954
Long term liabilities 11,132,960 868,881
Deferred taxation 54,049,440 10,088,530
80,003,552 14,001,365
Current liabilities
Trade and other payables 23,202,052 7,709,729
Current portion of long term liabilities 864,218 -
Current tax liability - 3,352,730
24,066,270 11,062,459
TOTAL EQUITY AND LIABILITIES 276,278,059 127,689,479
Summarised Consolidated Statement of Comprehensive Income for the Year Ended 30
June 2013
30 June 2013 30 June 2012
(Audited) (Audited)
GBP GBP
Revenue
Gold sales 129,277,438 101,068,596
Platinum sales 4,257,512 -
Realisation costs (226,738) (163,217)
On - mine revenue 133,308,212 100,905,379
Gold cost of production (67,646,119) (46,122,811)
Platinum cost of production (3,535,046) -
Mining depreciation (5,998,267) (3,259,010)
Mining Profit 56,128,780 51,523,558
Other (expenses)/income (5,652,226) (5,916,227)
Bargain purchase gain 24,114,255 -
Loss in associate (152,312) -
Loss on disposal of asset held for sale (586,138) -
Impairments (16,143,604) (48,238)
Royalty costs (3,198,622) (3,848,450)
Net income before finance income and finance costs 54,510,133 41,710,643
Finance income 1,454,659 652,267
Finance costs (1,257,696) (136,765)
Profit before taxation 54,707,096 42,226,145
Taxation (12,133,063) (12,984,511)
Profit after taxation 42,574,033 29,241,634
Other comprehensive income:
Foreign currency translation differences (20,228,836) (10,248,051)
Total comprehensive income for the year 22,345,197 18,993,583
Profit attributable to:
Owners of the parent 42,574,033 29,241,634
42,574,033 29,241,634
Total comprehensive income attributable to:
Owners of the parent 22,345,197 18,993,583
22,345,197 18,993,583
Earnings per share 2.63 2.02
Diluted earnings per share 2.62 2.01
Weighted average number of shares in issue 1,619,756,902 1,445,202,485
Diluted number of shares in issue 1,625,933,891 1,453,287,941
Headline earnings per share is calculated :
Basic earnings 42,574,033 29,241,634
Adjustments: Bargain purchase gain (24,114,255) -
Adjustments: Loss on disposal of property - 17,922
Adjustments: Loss on disposal of asset held for sale 586,138 -
Adjustments: Impairment 16,143,604 48,238
Headline earnings 35,189,520 29,307,794
Headline earnings per share 2.17 2.03
Diluted headline earnings per share 2.16 2.02
Summarised Consolidated Changes in Equity for the Year Ended 30 June 2013
Share Share
Share Premium Translation option Retained
GROUP Capital account reserve reserve earnings
GBP GBP GBP GBP GBP
Balance at 30
June 2011 14,440,406 50,932,830 8,310,542 861,450 37,607,283
Issue of shares 42,217 216,469 - - -
Total - - (10,248,051) 29,241,634
Comprehensive
income
Dividends paid - - - - (7,416,176)
Share based
payment - Charge
for the year - - - 43,452 -
Balance at 30
June 2012 14,482,623 51,149,299 (1,937,509) 904,902 59,432,741
-
Issue of shares 3,745,719 46,868,536 - -
Share issue
costs - (3,502,273) - - -
Other reserves - - - - (1,650)
Total
Comprehensive
income - - (20,228,836) - 42,574,033
Share based
payment - Charge
for the year - - - 127,053 -
Balance at 30
June 2013 18,228,342 94,515,562 (22,166,345) 1,031,955 102,005,124
Realisation of Merger Non-controlling
GROUP equity reserve reserve interest Total
GBP GBP GBP GBP
Balance at 30 (10,701,093) (10,705,308) - 90,746,110
June 2011
Issue of - - - 258,686
shares
Total - - - 18,993,583
Comprehensive
income
Dividends
paid - - - (7,416,176)
Share based
payment -
Charge for - - - 43,452
the year
Balance at 30
June 2012 (10,701,093) (10,705,308) - 102,625,655
Issue of
shares - - - 50,614,255
Share issue
costs - - - (3,502,273)
Other
reserves - - (1,650)
Total
Comprehensive
income - - - 22,345,197
Share based
payment -
Charge for - - - 127,053
the year
Balance at 30
June 2013 (10,701,093) (10,705,308) - 172,208,237
Summarised Consolidated Cashflow Statement for the Year Ended 30 June 2013
Group
30 June 2013 30 June 2012
GBP GBP
NET CASH GENERATED FROM OPERATING ACTIVITIES 48,265,537 30,575,270
INVESTING ACTIVITIES
Deposit - (1,548,779)
Additions to property, plant and equipment and mineral rights (27,566,533) (17,424,906)
Net cash outflows from the acquisition of Evander Mines (96,006,400) -
Additions to intangibles - (505,273)
Proceeds on disposals of assets 10,555 -
Funding of the rehabilitation trust fund 359,172 115,970
NET CASH USED IN INVESTING ACTIVITIES (123,203,206) (19,362,988)
FINANCING ACTIVITIES
Proceeds from borrowings 34,763,874 -
Borrowings repaid (22,545,100) -
Shares issued 50,614,255 258,686
Share issue costs (3,502,273) -
NET CASH FROM FINANCING ACTIVITIES 59,330,756 258,686
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (15,606,913) 11,470,968
Cash and cash equivalents at the beginning of the year 19,782,179 10,123,822
Effect of foreign exchange rate changes 593,650 (1,812,611)
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 4,768,916 19,782,179
Summarised Consolidated Segmental Analysis for year ended 30 June 2013
30 June 2013
Barberton Evander Phoenix Corporate
Mines Mines Platinum and Growth
Projects
GBP GBP GBP GBP
Revenue
Gold sales*** 97,564,881 31,712,557 - -
Platinum Sales - - 4,257,512 -
Realisation costs (179,270) (47,468) - -
On - mine revenue 97,385,611 31,665,089 4,257,512 -
Cost of production (47,739,505) (19,906,614) (3,535,046) -
Depreciation (3,000,640) (2,056,566) (941,061) -
Mining Profit 46,645,466 9,701,909 (218,595) -
Other expenses ** (2,188,879) (8,783) (221,604) (3,231,154)
Bargain purchase - 24,114,255 - -
loss from associate - - - (152,312)
Loss on disposal of asset held for sale - - - (586,138)
Impairment costs - - (2,495,480) (13,648,124)
Royalty costs (2,450,476) (748,146) - -
Net income / (loss) before finance income and finance costs 42,006,111 33,059,235 (2,935,679) (17,617,728)
Finance income 77,463 283,229 - 1,093,967
Finance costs (107,810) (296,888) - -
Profit /(loss) before taxation 41,975,764 33,045,576 (2,935,679) (16,523,761)
Taxation (11,408,506) (962,917) (24,863) 286,257
Profit /(loss) after taxation 30,567,258 32,082,659 (2,960,542) (16,237,504)
Segmental Assets (Total assets excluding goodwill) 63,530,231 172,971,365 13,897,511 4,867,060
Segmental Liabilities 25,018,515 65,569,101 320,175 2,151,222
Goodwill 21,000,714 - - -
Net Assets (excluding goodwill) 38,511,716 107,402,264 13,577,336 2,715,838
Capital Expenditure 22,886,611 4,506,501 160,879 12,542
30 June 2013
Funding Group
Company****
GBP GBP
Revenue
Gold sales*** - 129,277,438
Platinum Sales - 4,257,512
Realisation costs - (226,738)
On - mine revenue - 133,308,212
Cost of production - (71,181,165)
Depreciation - (5,998,267)
Mining Profit - 56,128,780
Other expenses ** (1,806) (5,652,226)
Bargain purchase - 24,114,255
loss from associate - (152,312)
Loss on disposal of asset held for sale - (586,138)
Impairment costs - (16,143,604)
Royalty costs - (3,198,622)
Net income / (loss) before finance income and finance costs (1,806) 54,510,133
Finance income - 1,454,659
Finance costs (852,998) (1,257,696)
Profit /(loss) before taxation (854,804) 54,707,096
Taxation (23,034) (12,133,063)
Profit /(loss) after taxation (877,838) 42,574,033
Segmental Assets (Total assets excluding goodwill) 11,178 255,277,345
Segmental Liabilities 11,010,809 104,069,822
Goodwill - 21,000,714
Net Assets (excluding goodwill) (10,999,631) 151,207,523
Capital Expenditure - 27,566,533
30 June
2012
Barberton Phoenix Corporate Group
Mines Platinum* and Growth
Projects
GBP GBP GBP GBP
Revenue
Gold sales*** 101,068,596 - - 101,068,596
Platinum Sales - - - -
Realisation costs (163,217) - - (163,217)
On - mine revenue 100,905,379 - - 100,905,379
Cost of production (46,122,811) - - (46,122,811)
Depreciation (3,259,010) - - (3,259,010)
Mining Profit 51,523,558 - - 51,523,558
Other expenses ** (1,484,792) (59,957) (4,371,478) (5,916,227)
Bargain purchase - - - -
loss from associate - - - -
Loss on disposal of asset held for sale - - - -
Impairment costs (48,238) - - (48,238)
Royalty costs (3,848,450) - - (3,848,450)
Net income / (loss) before finance income and finance costs 46,142,078 (59,957) (4,371,478) 41,710,643
Finance income 96,202 4,911 551,154 652,267
Finance costs (136,765) - - (136,765)
Profit /(loss) before taxation 46,101,515 (55,046) (3,820,324) 42,226,145
Taxation (13,058,128) 73,617 - (12,984,511)
Profit /(loss) after taxation 33,043,387 18,571 (3,820,324) 29,241,634
Segmental Assets (Total assets excluding goodwill) 48,864,455 19,617,673 38,206,637 106,688,765
Segmental Liabilities 23,552,791 275,378 1,235,655 25,063,824
Goodwill 21,000,714 - - 21,000,714
Net Assets (excluding goodwill) 25,311,664 19,342,295 36,970,982 81,624,941
Capital Expenditure 10,739,237 6,672,468 13,201 17,424,906
*Costs directly attributable to Phoenix Platinum, along with attributable
overheads, were capitalised to capital under construction in the prior years.
On 1 July 2012 Phoenix Platinum was fully commissioned for accounting purposes,
therefore all costs and revenue incurred and received respectively, were
allocated to the statement of comprehensive income.
** Other expenses exclude inter-company management fees and dividends
*** All gold sales were made in the Republic of South Africa and the majority
of revenue was generated from a single customer, Rand Refinery (Pty) Ltd.
****The Funding Company was established during the current financial year with
effect from 1 March 2013.
APPENDIX A - ZAR Provisional Summarised Unaudited Consolidated Statement of
Financial Position and Comprehensive Income
Summarised Consolidated Unaudited ZAR Statement of Financial Position at 30 June 2013
Group
30 June 2013 31 June 2012
(Unaudited) (Unaudited)
ZAR ZAR
ASSETS
Non-current assets
Property, plant and equipment and mineral rights 3,144,440,055 805,946,666
Other intangible assets 5,110,665 -
Deferred taxation 4,695,100 -
Goodwill 303,491,812 303,491,812
Investments in associate 13,727,146 -
Rehabilitation trust fund 254,775,427 34,387,532
3,726,240,205 1,143,826,010
Current assets
Inventories 99,002,052 24,131,722
Current tax asset 22,204,873 -
Trade and other receivables 208,705,296 88,173,302
Cash and cash equivalents 71,581,436 255,455,190
401,493,657 367,760,214
Non-current assets held for sale 3,200,000 169,620,285
TOTAL ASSETS 4,130,933,862 1,681,206,509
EQUITY AND LIABILITIES
Capital and reserves
Share capital 243,305,216 190,646,748
Share premium 1,318,146,974 707,810,082
Translation reserve - 12,386,873
Share option reserve 13,890,798 12,105,628
Retained income 1,288,834,738 729,929,882
Realisation of equity reserve (140,624,130) (140,624,130)
Merger reserve (154,707,759) (154,707,759)
Equity attributable to owners of the parent 2,568,845,837 1,357,547,324
Non-controlling interest -
Total equity 2,568,845,837 1,357,547,324
Non-current liabilities
Long term provisions 222,465,492 39,307,796
Long term liabilities 167,105,730 11,220,208
Deferred taxation 811,282,089 130,277,223
1,200,853,311 180,805,227
Current liabilities
Trade and other payables 348,262,806 99,558,814
Current portion of long term liabilities 12,971,908 -
Current tax liability - 43,295,144
361,234,714 142,853,958
TOTAL EQUITY AND LIABILITIES 4,130,933,862 1,681,206,509
Summarised Consolidated Unaudited ZAR Statement of Comprehensive Income for the
Year Ended 30 June 2013
30 June 2013 30 June 2012
(Unaudited) (Unaudited)
ZAR ZAR
Revenue
Gold sales 1,789,199,741 1,240,341,866
Platinum sales 58,923,965 -
Realisation costs (3,138,054) (2,003,044)
On - mine revenue 1,844,985,652 1,238,338,822
Gold cost of production (936,222,287) (566,031,940)
Platinum cost of production (48,925,034) -
Mining depreciation (83,016,020) (39,995,475)
Mining Profit 776,822,311 632,311,407
Other (expenses)/income (78,226,814) (72,605,580)
Bargain purchase gain 322,443,757 -
Loss in associate (2,107,999) -
Loss on disposal of asset held for sale (8,221,588) -
Impairments (242,315,494) (591,990)
Royalty costs (44,268,923) (47,229,247)
Net income before finance income and finance costs 724,125,250 511,884,590
Finance income 20,132,477 8,004,802
Finance costs (17,406,512) (1,678,418)
Profit before taxation 726,851,215 518,210,974
Taxation (167,921,595) (159,349,523)
Profit after taxation 558,929,620 358,861,451
Other comprehensive income:
Foreign currency translation differences (12,386,873) 24,067,908
Total comprehensive income for the year 546,542,747 382,929,359
Profit attributable to:
Owners of the parent 558,929,620 358,861,451
558,929,620 358,861,451
Total comprehensive income attributable to:
Owners of the parent 546,542,747 382,929,359
546,542,747 382,929,359
Earnings per share 34.51 24.83
Diluted earnings per share 34.38 24.69
Weighted average number of shares in issue 1,619,756,902 1,445,202,485
Diluted number of shares in issue 1,625,933,891 1,453,287,941
Headline earnings per share is calculated :
Basic earnings 558,929,620 358,861,451
Adjustments: Bargain purchase gain (322,443,757) -
Adjustments: Loss on disposal of property - 219,944
Adjustments: Loss on disposal of asset held for sale 8,221,588 -
Adjustments: Impairment 242,315,494 591,990
Headline earnings 487,022,945 359,673,385
Headline earnings per share 30.07 24.89
Diluted headline earnings per share 29.95 24.75
Contact Details
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South Africa
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Suite 31
Second Floor
107 Cheapside
London
EC2V 6DN
United Kingdom
Office: + 44 (0) 207 796 8644
Facsmile: + 44 (0) 207 796 8645
Ron Holding Cobus Loots
Pan African Resources PLC Pan African Resources PLC
Chief Executive Officer Director
Office: + 27 (0) 11 243 2900 Office: + 27 (0) 11 243 2900
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Gable Communications St James's Corporate Services Limited
Public Relations - UK Company Secretary
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Canaccord Genuity Limited finnCap Ltd
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Vestor Media & Investor Relations
Public & Investor Relations
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