Last checked at 1 Sep 2009 08:00
Regulatory Announcement Company Pan African Resources plc TIDM PAF Headline Year End Results Released 1 September 2009 Pan African Resources PLC (`Pan African' or the `Company' or the `Group')
(Incorporated and registered in England and Wales under Companies Act 1985 with
registered number 3937466 on 25 February 2000) Share code on AIM: PAF Share code on JSE: PAN ISIN: GB0004300496 Consolidated unaudited provisional results for the year ended 30 June 2009
Pan African Resources PLC (AIM: PAF, Altx: PAN), the African focused gold mining company, is pleased to report its results for the year ended 30 June 2009.
SALIENT FEATURESCorporate: * EBITDA increased 30% to 17.8 million (2008: 13.7 million); * Unhedged and debt-free; * Strengthened management team; * Dividend of 0.02555p per share declared at the Interim results.
Mining Operations:
* Underground gold production increased by 15% to 94,909oz (2008: 82,436oz); * Headgrade improved by 16% to 10.32g/t (2008: 8.9g/t); * Reserve base increased by 22% to 600koz (2008: 490koz); * Total cash cost decreased to US$469/oz (2008: US$476/oz).
Growth Projects:
* Acquisition of 100% stake in Phoenix Platinum Mining (Pty) Ltd (`Phoenix Platinum'), a tailings retreatment project in South Africa; * Exploration projects in the Central African Republic (`CAR') and Ghana terminated, as drilling results did not meet Company's criteria to continue with exploration, resulting in the impairment and cessation of exploration costs in these countries.
Jan Nelson, Chief Executive Officer, commented: "The ability of the Company to continue to demonstrate year-on-year growth in productivity, together with encouraging cost control measures, will ensure we continue to deliver shareholder value. Early-stage exploration expenditure has been terminated, Phoenix Platinum is on schedule to further grow the revenue stream and additional productivity improvement initiatives at Barberton are set to increase the profitability of the Company. We are favourably positioned to take advantage of further value-enhancing growth opportunities."
Presentation and conference call details:
Pan African Resources will host a presentation today, 1 September 2009, at 10.00am South African time (9:00am UK time) at the Grace Hotel in Rosebank.
The conference call dial- in numbers are:
UK: 0808 234 6771
SA: 0800 200 648
PLAYBACK will be available from 11:30am on 1 September 2009 on + 27 11 305 2030with code 29992# 12 Months 12 Months ended ended 30 June 2009 30 June 2008 Revenue (GBP) 53,000,352 39,254,557 EBITDA (GBP) 17,864,321 13,710,819 Attributable Profit (GBP) 4,403,535 5,460,067 EPS (pence) 0.40 0.52 HEPS (pence) 0.85 0.52 Weighted average number of shares in 1,104,367,219 1,043,789,285issue
Nature of Business
Pan African is a gold mining company that produces approximately 100,000oz per year. Its focus is on developing low cost, high margin production or near production projects. The Company has no debt, is unhedged and is able to fund all of its current on-mine capital from current cashflows.
Overall Performance
Financial performance
Gross Revenue from gold sales amounted to 53 million (2008: 39 million), with the total cost of production being 28.5 million (2008: 25.1 million). Tax amounted to 8.2 million (2008: 4.4 million), other expenses were 1.4 million (2008: 0.3 million), and an exploration expenditure impairment charge was 5 million (2008: nil).
EBITDA for the year under review was 17.8 million (2008: 13.7 million). Cash operating profit at Barberton Mines (Pty) Ltd (`Barberton Mines') increased to 20.5 million (2008: 11.7 million), despite an increase in the cost of production to 28.5 million (2008: 25.1 million). Higher costs were linked to increases in the prices of consumables, electricity and wages.
The increase in mining profit is a direct result of the average spot gold price increasing to US$867/oz (2008: US$823/oz) and an average US$:ZAR exchange rate of ZAR9.00 (2008: ZAR7,30). The effective ZAR gold price achieved was ZAR251,829/kg (2008: ZAR187,000/kg).
Income tax increased to 8.2 million (2008: 4.4 million) as a result of an increase in the profit margin as well as the unredeemed capital balance being fully utilised in 2008.
Basic headline earnings per share improved by 63% from 0.52 pence reported in 2008 to 0.85 pence for the current year.
Safety and Training
The safety results have improved year-on-year, apart from the lost time injuries. Shifts lost and the number of reportable accidents have decreased. The Company is pleased to report no fatalities for the year. The Consort section achieved a million fatality free shifts over a seven year period and the Fairview section is approaching two million fatality free shifts. The safety of the Group's employees is of paramount importance and the Company runs approved training programmes at its mining operations.
Review of Barberton Mining Operations
Operating performance
A total of 97,353oz (2008: 99,078oz) of gold was sold from the Barberton mining operation (which comprises the Fairview, Sheba, and New Consort sections), a decrease of 1.7% from the previous year. Total underground gold production however increased by 15% to 94,909oz (2008: 82,436oz). This was despite a 0.4% decrease in tons milled to 313,952t (2008: 315,305t), which was offset by an increase in headgrade of 15.9% to 10.32g/t (2008: 8.9g/t).
Production from the Calcine tailings dam retreatment project yielded 3,955oz of gold. No further production is expected from this project. Total mine cash costs decreased marginally by 1.47% to US$469/oz (2008: US$476/oz).
2009 2008 2007 2006 2005 Tons Milled (t) 313,952 315,305 330,367 313,779 316,094 Headgrade (g/t) 10.32 8.9 9.2 10.7 11.1 Overall Recovery (%) 91 91 92 92 92 Production: (oz) 94,909 82,436 90,022 99,281 103,847Underground Production: Calcine (oz) 3,955 13,513 - - -Dump Gold Sold (oz) 97,353 99,078 89,572 99,924 102,914 Average Price: Spot (US$/oz) 867 823 640 528 433 Average Price: Hedge (US$/oz) - 451 415 438 511 Total Cash Cost US$/ (US$/oz) 469 476 465 429 427oz sold Capital Expenditure (GBP) 4,052,440 2,901,792 1,637,359 1,091,965 1,021,041 Exchange rate - (ZAR/ 14.39 14,68 13,95 n/a n/aaverage GBP) Exchange rate - (ZAR/ 12.66 15,56 14,18 n/a n/aclosing GBP) Reserve Replacement ProjectsSheba - Southwell adit
The re-equipping of the Western Cross and Birthday areas was completed successfully and plans are in place to commence mining in this area.
Sheba - 35 ZK Decline
The 35 ZK decline was sunk 71.7 metres and station development has commenced. A further 180m of development is required to access the main ZK orebody.
Sheba - Edwin Bray to Thomas & Joe's Luck orebodies
Exploration drilling at the Thomas orebody has been completed. The development of the 7 level haulage and the return airway continued during the year and a total of 740 metres of development was completed. The Eureka orebody was exposed and further drilling is planned in the coming year to define additional orezones. A further 600 metres of development remains to the Thomas and Joe's Luck orebodies
Consort - 45 level exploration drive
On 45 level, 227 metres of exploration development was completed and exploration drilling confirmed the up dip extension of the Bullion orebody currently being mined on 50 level. Further drilling is planned in the coming year to continue definition of the Bullion orebody.
Consort - 50 level declines
At Consort, mining flexibility remains problematic and capital development to replace ore reserves continue. At the 50W1 area, 224 metres were sunk in the two declines which are on target to open up the east and west ore bodies below 50 level. Sinking in the coming year will continue to expose the next levels.
Fairview - 60/62 level development
Development on 60 and 62 level to replace ore reserves progressed well and a total of 817 metres was completed. A further 535m development is required to complete the development required to access the MRC orebody.
58 ZK and MRC Horizon exploration development
A total of 128 metres was completed on 58 level and 72 metres on the 60 level to access the ZK and MRC ore bodies respectively. A further 800 metres of development is required to access the down-dip extension of the ZK orebody on 60 level. The 58 level development is approximately 100 metres from the ZK orebody.
Fairview - 3 Shaft deepening
Work to open up the No.3 sub-incline shaft bottom, to enable the deepening of the shaft, is progressing satisfactorily. Cleaning to below 64 level elevation was completed during the year. The widening of the bottom portion, between 62 and 64 levels of the No.3 sub-incline shaft, is planned whereafter shaft sinking to 68 level will commence. A further 180 metres of shaft sinking is required to reach 69 level, whereafter access to the le Roux and hope orebodies will require 200 metres of development.
Electricity
Barberton Mines embarked on power saving initiatives to reduce total demand by 10%. The largest consumer of energy is compressed air generation and the mine is in the process of replacing older compressors with modern efficient units.
Review of Near-Term Production Projects
Phoenix Platinum - South Africa
Effective May 2009, the Company acquired 100% of Phoenix Platinum Mining, for 5.2 million. Phoenix Platinum was acquired from Metorex Limited (`Metorex') and is now a wholly owned subsidiary.
The recent acquisition of Phoenix Platinum does not change the gold focus of the Company. Preliminary sampling and recovery results have exceeded expectations and management's proactive actions could see plant construction as early as February 2010, with production likely in December 2010. However, this production outlook is sensitive to management's ability to secure plant location.
Review of Growth Projects
Manica Gold Project - Mozambique
Since Pan African acquired the Manica gold project the resource has been increased over a three year period, from 0.50Moz to 2.571Moz. An in-house pre-feasibility study was completed in the year under review. The results of the study, as announced on 4 June 2009, indicated that a change of strategy was necessary in order to optimise project value. Work planned for the coming year will focus on regional consolidation of oxide resources with the objective to define significant non-refractory ore that can be mined from surface, requiring less capital and fast tracking potential production.
Review of Exploration Projects
Ghana and the Central African Republic (`CAR')
The results from the first phase of drilling on the projects in Ghana and the CAR have not met the Company's criteria to continue with further exploration activity. As a result exploration activity has been terminated, leading to an impairment charge of 5 million.
Capital Expenditure and Commitments
Capital expenditure at Barberton Mines totalled 4 million, of which 2.1 million was spent on development and drilling to replace current depleted gold reserves and to grow the mineable resource base. The balance of 1.9 million was spent on equipment and the maintenance of current infrastructure on the mine.
Exploration expenditure at the Company's projects in Mozambique, Central African Republic and Ghana totalled 1.8 million for the financial year.
Contracted capital commitments at the end of the financial year amounted to 62,231. Operating lease commitments, which fall due within the next year, amount to 176,651 whilst interest bearing commitments of 20,669 fall due during the following year.
Directorship Changes
The board announced the resignation of Mr Simon Malone, effective 20 January 2009 and the resignation of Mr Charles Needham, effective 26 June 2009.
Accounting Policies and basis of preparation
The financial information set out in this announcement does not constitute the Company's statutory accounts for the year ended 30 June 2009.
The financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (`IFRS'), this announcement does not itself contain sufficient disclosure information to comply fully with IFRS. The Company expects to publish full financial statements which comply with IFRS in October 2009. This preliminary announcement was approved by the board on 28 August 2009.
Share Capital changes
1. 722 724 shares were issued to Goldiam SARL at 5.5p per share in relation to the Novation Agreement dated 21 July 2008.
2. 12 000 000 shares were issued to SEMS Exploration Services Limited and Birim Goldfields (Ghana) Limited at 6p in exchange for the licence rights of the Akrokerri exploration property, dated 6 March 2009.
Directors Dealings
The Company was informed on 26 and 27 November 2008 that Mr Jan Nelson, the Company's Chief Executive Officer, registered the acquisition of 30,000 and 17,308 ordinary shares of 1 pence each in the Company on that day at a price of 50 South African cents per share.
Dividend
A dividend of 0.2555 pence per share was declared at the Interim Results. The dividend was declared in the currency of the United Kingdom and paid on Wednesday, 8 April 2009. No further dividend is being declared. Future dividends will be determined by the Board, after considering the Group's cashflow requirements and growth options.
Post Balance Sheet Events
On 19 June 2009, the Company announced that it had concluded an agreement with Shanduka Gold (Pty) Ltd (`Shanduka') whereby Pan African would acquire Shanduka's 26% shareholding in Barberton Mines in exchange for the issue of new 295,751,549 ordinary shares to Shanduka.
This share exchange transaction with Shanduka became effective on 21 August 2009 and allows Shanduka to appoint two representatives to the Board of Pan African in a non-executive capacity.
On 26 June 2009, Metorex announced that it had engaged in a book building exercise to dispose of its 53,4% shareholding in Pan African. In addition to its 21% shareholding in Pan African issued via the share exchange transaction detailed above, Shanduka announced that it would acquire an additional 5% of the enlarged share capital of Pan African through the book build. As a result, Shanduka increased its shareholding in Pan African to 26%. The balance of the shares sold by Metorex was taken up by institutional investors.
The following changes to the Board of Pan African have been proposed and will be confirmed at the upcoming Board meeting:
* Mr. Cyril Ramaphosa, Executive Chairman of Shanduka Group (Proprietary) Limited, will be appointed as Non-Executive Chairman. * Mr. Keith Spencer will remain on the Board as independent, Non-Executive Deputy Chairman. * Mr. Rowan Smith from Shanduka Group will be appointed as a Non-Executive Director. * Mr. Maritz Smith, previously a representative of Metorex, has resigned with immediate effect as Financial Director; Mr. Cobus Loots will replace him as Financial Director. * Mr. John Hopwood, Mr. Rob Still and Mr. Jan Nelson remain members of the Board.
On 1 July 2009, the Company announced that Barberton Mines had cancelled the Metorex management agreement for a consideration of 314,000. The Company also announced that the outstanding consideration of 954,759 to acquire 100% of Phoenix Platinum would be paid to Metorex by no later than 30 September 2009.
During August 2009, Barberton Mines reached 2-year agreements with both the National Union of Mineworkers (`NUM') and the Underground Association of South Africa (`UASA') on wage increases. The percentage increases which include all the changed benefits came to 13% for NUM and 11% for UASA employees. The second year increase will be the average Consumer Price Index (`CPI') plus 1 % with a guaranteed minimum of 7.5%. The Company and Unions will also return to the negotiation table if the gold price falls below ZAR190,000/kg.
Future Prospects
The Company is now a fully independent business and operator with a newly structured and empowered board. Full ownership of the flagship Barberton Mines and the near-term production Phoenix Platinum project will not only be future earnings enhancing, but will also sustain self-funding, profitable growth and the pursuit of opportunistic acquisitions.
.By order of the BoardK C Spencer J P Nelson
Chairman Chief Executive Officer
1 September 2009Financial StatementsConsolidated Income Statement Year ended Year ended 30 June 09 30 June 08 (Unaudited) (Audited) GBP GBP Revenue Gold sales 53 000 352 39 254 557 Realisation costs (140 546) (106 277) On - mine revenue 52 859 806 39 148 280 Cost of production (28 504 686) (25 163 675) Depreciation (2 360 431) (1 965 872) Mining Profit 21 994 689 12 018 733 Other (expenses) / income (1 465 336) (273 786) Operating income before finance costs 20 529 353 11 744 947 Finance income 816 754 217 288 Finance costs (9 933) (17 006) Impairment costs (5 025 463) Profit before taxation 16 310 711 11 945 229 Taxation (8 219 425) (4 366 543) Profit after taxation 8 091 286 7 578 686 Attributable to: Equity holders of the parent 4 403 535 5 460 067 Minority interests 3 687 751 2 118 619 8 091 286 7 578 686 Earnings per share (pence) 0.40 0.52 Diluted earnings per share (pence) 0.39 0.51
Weighted average number of shares in 1 104 367 219 1 043 789 285 issue
Diluted number of shares in issue 1 117 367 219 1 073 789 285 Headline earnings per share is calculated : Headline earnings 9 428 998 5 460 067 Headline earnings per share (pence) 0.85 0.52 Diluted headline earnings per share 0.84 0.51(pence) Consolidated Balance Sheet 30 June 2009 30 June 2008 (Unaudited) (Audited) GBP GBP ASSETS Non-current assets Property, plant and equipment and Mineral 31 801 235 20 069 814Rights Rehabilitation trust fund 2 357 266 1 739 522 Intangible assets 12 038 616 12 837 045 Goodwill 21 000 714 21 000 714 67 197 831 55 647 095 Current assets Inventories 358 363 377 974 Trade and other receivables 2 201 213 2 972 776 Cash and cash equivalents 2 389 301 5 419 489 4 948 877 8 770 239 TOTAL ASSETS 72 146 708 64 417 334 EQUITY AND LIABILITIES Capital and reserves Share capital 11 125 891 10 998 664 Share Premium 37 899 997 37 267 475 Translation Reserve 2 531 639 (1 118 262) Share Option Reserve 549 690 285 312 Retained income 11 537 551 9 946 021 Merger Reserve (10 705 308) (10 705 308) Equity attributable to equity holders of 52 939 460 46 673 902parent Minority interest 3 420 942 3 694 869 Total equity 56 360 402 50 368 771 Non - Current liabilities Long term liabilities - Interest bearing - 16 822 Long term Provisions 2 933 105 2 219 954 Deferred Taxation 6 752 432 5 201 245 9 685 537 7 438 021 Current liabilities Trade and other payables 3 719 787 2 754 795 Short term liabilities - Interest bearing 20 669 89 269 Short term Provisions 1 151 895 711 085 Payable to another Group Company 954 759 - Current Tax Liabilities 253 659 3 055 393 6 100 769 6 610 542 TOTAL EQUITY AND LIABILITIES 72 146 708 64 417 334
Group Consolidated Cash Flow Statement
Group GBP 2009 2008
NET CASH FROM/(USED IN) OPERATING ACTIVITIES 7 582 060 11 239 529
INVESTING ACTIVITIES Dividends received Additions to property, plant and equipment, (4 318 424) (3 031 659)mineral rights Additions to intangibles (1 580 349) (2 652 270) Loans to subsidiaries Funding of rehabilitation trust fund 193 347 4 126
Cash (outflow) / inflow on acquisition of (4 205 144) 226 164 subsidiary
NET CASH USED IN INVESTING ACTIVITIES (9 910 571) (5 453 639) FINANCING ACTIVITIES Borrowings Raised 1 145 710 Borrowings repaid (190 952) (179 591) Shares Issued 784 624 NET CASH (USED IN)/FROM FINANCING ACTIVITIES 954 759 605 033
NET INCREASE / (DECREASE) IN CASH AND CASH (1 373 752) 6 390 923 EQUIVALENTS
Cash and cash equivalents at the beginning of 5 419 489 422 416 the period
Effect of foreign exchange rate changes (1 656 436) (1 393 850)
CASH AND CASH EQUIVALENTS AT THE END OF THE 2 389 301 5 419 489 PERIOD
Group Statement of Changes in Equity
Share Share Preference Hedging and Retained Share Merger Minority Total Capital Premium share translation earnings option reserve Interest account capital reserve reserve and premium Balance at 30 4 180 4 076 5 578 175 (1 041 234) 4 128 360 (6 1 576 12 794June 2007 032 769 485 954 189 702) 250 604 Issue of 6 818 33 190 - - - - - - 40 009shares 632 706 338 Redemption of - - (5 578 - - - - - (5shares 175) 578 175) Current year - - - (77 028) - - - - (77 028)movement Profit / - - - - 5 460 - - 2 118 7 578(loss) for 067 619 686the year Share Based - - - - - 156 952 - - 156 952payment - Charge for the year Current year - - - - - - (4 - (4merger 515 606) 515 606) Balance at 30 10 998 37 267 - (1 118 262) 9 946 285 312 (10 3 694 50 368June 2008 664 475 021 705 308) 869 771 Issue of 127 227 632 522 - - - - - - 759 749shares Redemption of - - - - - - - - -shares Current year - - - 3 649 901 - - - - 3 649movement 901 Profit / - - - - 4 403 - - 3 687 8 091(loss) for 535 751 286the year Dividend - - - - (2 - - (3 (6Issue 812 005) 961 678) 773 683) Share Based - - - - - 264 378 - - 264 378payment - Charge for the year Current year - - - - - - - - -merger
Balance at 30 11 125 37 899 - 2 531 639 11 537 549 690 (10 3 420 56 360 June 2009 891 997
551 705 308) 942 402 ENDS
For further information on Pan African Resources plc, please visit the website at www.panafricanresources.com
Enquiries: Pan African Resources Jan Nelson, CEO +27 (0) 11 243 2900 Nicole Spruijt, Public Relations +27 (0) 11 243 2900 RBC Capital Markets Martin Eales +44 (0) 20 7029 7881 Barnard Jacobs Mellet Corporate Finance (Proprietary) Limited Natalie Di-Sante +27 (0) 11 750 0207 Sholto Simpson +27 (0) 11 750 0213 St James's Corporate Services Limited Phil Dexter +44 (0) 20 7499 3916 FD Beachhead Media & Investor Relations Jennifer Cohen +27 (0) 11 214 2401 Louise Brugman +27 (0) 11 214 2415 +27 (0) 83 504 1186
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