Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
UK Listing Rules
Listing Rule 9 (Continuing Obligations): Requires listed companies to maintain high standards of disclosure and transparency. It mandates timely publication of financial reports and disclosures of significant events.
Listing Rule 10 (Significant Transactions): Governs disclosures related to significant transactions and ensures that shareholders are informed about major changes affecting the company.
The Financial Conduct Authority (FCA) Handbook
Disclosure Guidance and Transparency Rules (DTR): Set out the requirements for disclosure of inside information, financial reporting, and significant shareholdings.
DTR 4 (Periodic Financial Reporting): Requires timely and accurate publication of annual and interim financial reports.
DTR 7 (Corporate Governance): Outlines requirements for corporate governance statements, including compliance with the UK Corporate Governance Code.
The Companies Act 2006
Directors' Duties (Sections 171-177): Imposes legal obligations on directors to act in the best interests of the company, avoid conflicts of interest, and exercise care, skill, and diligence.
Shareholder Rights (Part 13): Provides shareholders with rights to information, to convene meetings, and to take legal action if their interests are prejudiced.
UK Corporate Governance Code
Principles and Provisions: Sets out standards of good practice in relation to board leadership, effectiveness, remuneration, accountability, and relations with shareholders.
International Financial Reporting Standards (IFRS)
IFRS Compliance: Listed companies must prepare financial statements in accordance with IFRS, ensuring transparency and comparability of financial information.
Over six months suspension and the Company is hitting every indicator :
Investor Confidence
Severely erode investor trust and confidence in the company's management and operations.
Market Perception
Negative perceptions about the company’s stability and future prospects.
Financing Challenges
Inability to raise funds, lenders will also view the suspension as a significant risk.
Operational Constraints
Cash flow issues and project delays.
Regularity and Legal Risks
Compliance issues and legal consequences. Shareholders and creditors might take legal action if they believe the company has mismanaged funds or failed to meet its obligations.
The audit process may not have been initiated within a timely fashion as required in following regulations.
RNS 9th May 2024
As part of the Group Audit an independent review of the Kilimapesa 3 year mine plan was required to be undertaken.
Seeing that it's currently being reviewed and we have enough data for the actual Gold production, I thought I'd run the numbers through the computer on the estimated production from the mine plan and compare the two.
Whether the independent review will do this, I've no idea but it would highlight discrepancies and areas to look further into.
While the operational data indicates that the mining and processing volumes are consistent with the plan, the actual smelted ounces are significantly lower than the calculated recovery based on grades and recovery rates.
Estimated production 49,155 oz
Operational production 34,847 oz
So there's a discrepancy of 14,298 oz
While smelting losses are a significant factor, the overall discrepancy between calculated recovery and actual smelted gold can stem from a combination of factors throughout the entire production process.
Losses during processing or smelting.
Inefficiencies in recovery methods.
Delays between recovery and reporting of smelted gold.
The result of the independent review will be interesting.
So I estimate approx just under $300k of sales profit available but if the current AISC is higher it will eat into this and so will the information below :
RNS 14th November 2023
The Company shall make monthly payments and each monthly payment shall be calculated as the higher of US $50,000 and 50% of free cash flow of the Company.
RNS 13th May 2024
The production ramp up from the Kilimapesa Mine has been impacted by various factors and with operations running intermittently the Company's working capital position is constrained.
The Company may have predicted a sales profit of between and upto $600k - $800k at this time.
Using in Troy Oz today's gold price of $2413 and the last known AISC of $1645 and average deductions from the Company's processes of gold recovery to gold sales. (lot of variables but still average all throughout)
The latest update would give GCAT a sales profit of $290,304
Interestingly the gold recovered from the heap leach operation was a fraction under 60oz but the average should actually be 110oz, so other factors came into play, ie weather etc
The HNW individuals would have only seen the future plans (including the heap leach ounces) when they raised capital via pre issued the prospectus shares.
Now the figures are out for March 2024, they must be wondering how are they going to achieve more than eleven times improvement on current ounces recovered.
I know I would be asking.
We can blame whoever but there's no escaping the Company is in a pickle.
The Minoplex mine plan is currently being independently verified and from the information provided in the latest update, the gold recovery from the heap leach operation needs to increase over 1,100% to meet the monthly average.
That's a massive task by anyone's standards. The results maybe skewed by several factors but we shall see what the outcome is going forward.
This fella must be feeling the pressure
RONALD SHIKUKU WANJALA
Kilimapesa CFO
Qualified Chartered accountant with over 20 years of experience in mine finance and accounting. Covering management accounts, tax planning, regulatory requirements and both internal and external auditing in the mining industry.
The Moss the audit will have full integrity.
'The Company is dependent on receipt of further funding to continue operations and is working with its stakeholders in this regard;'
RM doesn't give out bad news if he can get away from it, (with that in mind) the comment above, RM himself is saying it's NOT a going concern without the help from stakeholders.
The comment is directed at them specifically in my opinion.
Yes positive if it's been repaid.
The debt could have been paid for via the cash from the pre sold prospectus shares.
It is $250k loan with a debenture attached which would be tricky on a default.
It's unconfirmed information though via third party professional.
There's a lot of information we really don't know at this time regarding the Company's current and true financial situation.
I may not think RM is upto the job but I'm still a shareholder.
He definitely won't be my hero but that's irrelevant, he needs the heap leach to perform better, there's a lot of risk at the moment and perhaps the indepenently verified mine plan is probably more crucial than the audit at this time.
LW - How can you take someone's word on financing when everything else he's said hasn't happened, it's been a slow grueling journey to this point and there's procedures that has to be followed, like the audit, the prospectus and financing it's never been such a case where you can say it's being finalised without procedures being followed during the process.
It's a race against time now and a lot of it is now out of RM's hands.
RNS 13th May 2024
The delay in completing the Company's audit for the period ending June 2023 (as announced 9 May 2024) has affected the Company's ability to complete the financing for the Kilimapesa expansion project.
This is because of the lending company being unable to complete their due diligence before making a decision.
'The Company is dependent on receipt of further funding to continue operations and is working with its stakeholders in this regard'
The Company is in real danger of running out of money before getting financing over the line.
RM has just about used up all of the prospectus shares to give to stakeholders.
Asset sale is one option but could also take time.
I suspect another shareholder vote at a General Meeting to allow RM to pre issue more prospectus shares. They will have to issue a notice period before vote.
By my calculations they should need a fundraising in July but there's also a race against time to get the audit published.
RNS 14th November 2023
The Company shall make monthly payments and each monthly payment shall be calculated as the higher of US $50,000 and 50% of free cash flow of the Company.
FCF comes from gold sales, the company needs to pay it's debts down ASAP
With the current gold price of $2390 per oz, it's really bad form and wrong for the company to not give any gold sales figures in the last two updates.
They are nothing to do with the the audits we're waiting for and shareholders deserve to know the situation unless there are no gold sales figures to release?
You'll probably find on the mining side RM is much better but this type of company needs to be run by a money man, someone with a strong financial background who will make the right cost based decisions with realistic aspirations that the company could achieve.
RM really painted the company into a corner with Tanzania asset and now the best thing would be to monetize it ASAP.