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Pan African Resources PLC (PAF)

  Print      Mail a friend       Annual reports

Thursday 21 February, 2008

Pan African Resources PLC

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.


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
EPS               (pence)           0.13          -0.08
*HEPS             (pence)           0.13          -0.08

*HEPS - Headline Earnings Per Share

**GBP - Great British Pound


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                                                              
                                         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
                         %                      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

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.


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


21 February 2008

Consolidated Income Statement                                                  
                                          Six months ended    Nine months ended
                                          31 December 2007     31 December 2006
                                               (Unaudited)            (Audited)
                                                         £                    £
   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)
   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)
   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)

Condensed Consolidated Balance Sheet                                           
                                            31 December 2007       30 June 2007
                                                 (Unaudited)          (Audited)
                                                           £                  £
    BALANCE SHEET                                                              
    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                  -
    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                  -
    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
                                              31 December 2007 31 December 2006
                                                   (Unaudited)        (Audited)
                                                             £                £
        Cash Generated/(absorbed) by                 4,604,148        (274,639)
        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
        Cash outflow from investing                (3,982,702)        (877,066)
        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
                                              31 December 2007 31 December 2006
                                                   (Unaudited)      (Unaudited)
                                                             £                £
             Shareholders' equity at start of        5,906,749        6,330,902
             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.


For further information on Pan African Resources plc, please visit the website


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

a d v e r t i s e m e n t