Pan African Regulatory News (PAF)

Pan African Resources PLC('Pan African Resources' or the 'Company' or the 'Group')(Incorporated and registered in England and Wales under the Companies Act 1985with a registered number 3937466 on 25 February 2000)Share code on AIM: PAFShare code on JSE: PANISIN: GB0004300496 Provisional audited results for the year ended 30 June 2013 Highlights and key features "Increased earnings and headline earnings with a proposed dividend toshareholders, 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: ZAR1,240.3million). - 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: ZAR359.7million). - 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 ZAR255.5million), and an undrawn revolving credit facility ('RCF') balance of ZAR434.8million. - The Group repaid ZAR184.8 million (of ZAR350.0 million initial drawdown) ofits 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 capitalamounted to ZAR381.6 million (2012: ZAR213.9 million). - Except for the two fatalities at Barberton Mines (Pty) Ltd ('BarbertonMines'), the Group had improved safety statistics at both undergroundoperations. - 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: GBP101.1million). - EBITDA1 increased by 18.0% to GBP53.1 million (2012: GBP45.0 million). - Headline earnings2 increased by 20.1% to GBP35.2 million (2012: GBP29.3million). - 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 ofGBP11.0 million at year end. - Group capital expenditure incurred on sustaining and expansion capitalamounted to GBP27.6 million (2012: GBP17.4 million). - Final GBP dividend will be confirmed prior to the AGM, based on prevailingZAR:GBP exchange rate. Evander Gold Mines Ltd ('Evander Mines') acquisition - Concluded acquisition of Evander Mines on 28 February 2013 for effectivelyZAR1,313.1 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 toapproximately 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: ZAR76.4million). - 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 underreview. - Lost time injury frequency rate ('LTIFR') decreased to 2.6 (2012: 3.3) andreportable injury frequency rate ('RIFR') increased to 1.5 (2012: 0.7). Gold mining operations - Evander Mines (effective 4 months of consolidatedresults 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 goldprice 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 RIFRdecreased to 1.7 (2012: 3.1). Platinum tailings operations - Phoenix Platinum Mining (Pty) Ltd ('PhoenixPlatinum') - 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 onschedule and within budget in July 2013. - Capital expenditure incurred on the BTRP in the current financial year ofZAR229.6 million (2012: ZAR43.3 million)7. - Capital expenditure to date of ZAR272.9 million, funded internally from cashgenerated by Barberton Mines. Notes: EBITDA is represented by earnings before interest, taxation, depreciation,amortisation, bargain purchase gain, impairments and loss on disposal of assetheld for sale. Headline earnings exclude a bargain purchase gain of ZAR 322.4 million (GBP24.1million), impairments of ZAR242.3 million (GBP16.1 million) and loss ondisposal of asset held for sale of ZAR8.2 million (GBP0.6 million). Movement in the reserve and resource inventory includes Manica in the prioryear. Sustainable capital expenditure includes normal sustainable capital expenditurebut 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, whilethe plant was being ramped up to steady state production. BTRP capital expenditure relates directly to plant and tailings storagefacility construction, and excludes the purchase of additional Harper tailingsand 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 13September2013 closing exchange rate of ZAR15.76:1. The UK shareholders are tonote that a revised exchange rate will be communicated prior to dividendapproval at the AGM. Therefore the proposed dividend is approximately 0.83p. Ron Holding, CEO of Pan African Resources commented, "Pan African Resourcesexceeded most of its targets for the financial year ended 30 June 2013,delivering growth with pleasing operational and financial performances. EvanderMine's acquisition and the commissioning of the new BTRP have positioned PanAfrican Resources to produce approximately 200,000 profitable ounces of gold ayear. There is also further growth potential through the exploitation of othernear term organic projects. The board of Pan African Resources has decided torecommend a dividend approximating ZAR0.1314 per share or ZAR240 million toshareholders, 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 alloperations being cash generative. It has a strong statement of financialposition which enables it to fund all on-mine capital expenditure requirementsfrom internally generated funds. The Company's strategy of targeting long life, high grade projects withattractive margins and low cash cost profiles, which are either near or at theproduction stage, enables it to consistently maintain and improve its resourcebase and its profit margins, with the primary objective of ensuring continuedgrowth in shareholder value. Successful acquisition of Evander Mines On 30 May 2012, Pan African Resources advised shareholders that it had enteredinto an agreement with Harmony to acquire the entire issued share capital andclaims against Evander Mines for a purchase consideration of ZAR1,500.0million. The acquisition was concluded by a wholly-owned subsidiary of theCompany, Emerald Panther Investments 91 (Pty) Ltd ('Emerald Panther'). In termsof the sale and purchase agreement, the purchase price increased effectivelyfrom 1 October 2012, until the date that all conditions precedent had been met,resulting in the purchase price increasing by ZAR23.1 million to ZAR1,523.1million. The Group assumed effective control over Evander Mines on 28 February 2013 andsettled the balance owing to Harmony of ZAR1,523.1 million in the followingmanner: - 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 RCFfacility 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 ofZAR210.0 million. The ZAR210.0 million above represents cash generated by Evander Mines between 1April 2012 and 28 February 2013 and was paid as a dividend to Harmony prior toPan African Resources assuming effective control of Evander Mines. Foraccounting purposes, this amount was deducted in determining the final purchaseprice 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 EvanderMines at acquisition appears in the following purchase price allocation (PPA)table, prepared in accordance with IFRS3 Business combinations. This analysisresulted 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 GBPand 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 theirfunctional currency is ZAR. The Group's books of prime entry are maintained inZAR and, with the exception of product sales, which are conducted in US dollars('USD') prior to conversion into ZAR, business is conducted in ZAR. Theon-going review of the results of operations conducted by executive managementand 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 anddual-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 ratesof 12.8% and 16.3% respectively must be taken into account for the purposes oftranslating 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 thefinancial year had a compensating effect on the weaker USD metals pricerevenue. 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 aspectsof the Group's ZAR results appear in the body of this commentary and have beenused as the basis against which its financial performance is measured. Thegross GBP equivalent figures can be calculated by applying the exchange ratesas listed above. Commodity prices During the course of the 2013 financial year, higher gold prices were achievedfor sales over the first three financial quarters, when compared to prior yearprices. Gold prices retreated considerably during the last quarter of thefinancial year, impacting the average USD gold price received for the year. TheGroup realised an average gold price of USD1,553/oz for the year, a decrease of8.3% from the USD1,694/oz achieved in the prior year. The average ZAR gold price received by the Group increased by 4.4% toZAR440,824/kg (2012: ZAR422,215/kg), shielded by the weakening in the ZARagainst 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 6Ebasket price of USD1,030/oz (2012: USD968/oz), after taking into account theterms of its off-take agreement with Western Platinum Limited. The average ZAR PGE 6E basket price received by the Group increased by 21.3% toZAR9,093/oz (2012: ZAR7,499/oz). Inflation and cost escalation During the financial year, the consumer price index ('CPI'), (a primaryindicator of South Africa's inflation) was reported at 5.5% (2012: 5.5%). Themain 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 handat 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, PhoenixPlatinum contributed ZAR58.9 million and Barberton Mines contributed ZAR110million, resulting in a ZAR607.8 million increase in revenue. Barberton Minesrecorded an increase in revenue due to an increase in gold ounces sold andhigher ZAR gold prices achieved. The Group realised an average gold price ofZAR440,824/kg (2012: ZAR422,215/kg) and an average price for PGM 6E ofZAR292,355/kg. The Group's year-on-year total cost of production reflects an increased byZAR419.1 million to ZAR985.1 million (2012: ZAR566.0 million), of which EvanderMines contributed ZAR275.5 million, and Phoenix Platinum ZAR48.9 million of theincrease. Barberton Mines' costs increased by 16.7%, which contributed ZAR94.7million to the Group's cost of production increase. The Group has adopted reporting cash costs in line with the recommendation ofthe World Gold Council, and the table below reflects the consolidated Group'soverall 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 wagescosts increases at Barberton Mines of 16.1%, an increase in the cost ofelectricity of 15.0%, mining costs increasing by 32.3%, primarily due to highervamping contractor costs as a result of additional kilograms produced by thiscontractor. The mining costs also included additional secondary support costsincurred at Fairview to establish additional mineable panels. The Group's all-in sustaining cash cost of production per kilogram (includingdirect cost of production, royalties, associated corporate costs and overheadsand sustainable capital expenditure) increased by 14.1% to ZAR281,551/kg (2012:ZAR 246,801/kg), largely impacted by higher on-mine maintenance and developmentcapital expenditure. The Group's all-in cost per kilogram (sustaining cost of production plusonce-off expansion capital) increased by 29.4% to ZAR343,949/kg (2012: ZAR265,713/kg), due to high capital expenditure incurred on the construction ofthe BTRP and Evander shaft deepening project. The Group incurred overall lowerroyalty costs as a result of the higher capital expenditure on the BTRP, whichis factored into the all-in cash costs for the royalty calculation. When costsare 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: ZAR552.5million), mainly as a result of the inclusion of Evander Mines' EBITDA ofZAR152.3 million. Pan African Resources achieved an increase of 55.7% in profit after tax toZAR558.9 million (2012: ZAR358.9 million), due to inter alia, the followingreasons: - An improved performance at Barberton Mines, - Four months profit contribution from Evander Mines, - Bargain purchase gain of ZAR322.4 million arising on the Evander Minesacquisition. The bargain purchase gain was largely offset by once-off costs, comprising ofPhoenix Platinum's impairment of ZAR100 million, an Auroch impairment ofZAR142.3 million, a loss on disposal of asset held for sale of ZAR8.2 millionand once-off acquisition costs relating to Evander Mines of ZAR18.3 million. The impairments arose as a result of, inter alia, lower precious metal priceforecasts and exploration and mining challenges in the current depressed miningenvironment. 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 ZAR229.5million incurred in the year was fully tax deductible, resulting in theeffective current tax rate decreasing to 22.2% (2012: 30.7%). Phoenix Platinumhas unredeemed capital expenditure of ZAR133.2 million at year end, which willbe utilised in the future. The Group's EPS in ZAR amounted to 34.51 cents (2012: 24.83 cents) resulting inan increase of 39.0%. The rights issue during January 2013 resulted in theweighted average number of shares in issue increasing by 12.1% during the yearto 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), anincrease of 20.8%. The current year's HEPS differ from EPS due to the bargainpurchase gain, impairment charges and loss on sale of investment, which areadjusted for when calculating the HEPS. This net adjustment amounted to ZAR71.9million. 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 propertyplant and equipment. 2. Current assets at 30 June 2013 exclude non-current assets held for sale ofZAR3.2 million (GBP0.2 million) and at 30 June 2012, ZAR169.6 million (GBP13.1million). Non-current assets increased by 225.8% to ZAR3,726.2 million. The majority ofthis significant increase is attributable to the Evander Mines acquisition andrelated fair value adjustments to the property plant and equipment acquired(ZAR2,157.0 million), as well as capital expenditure at Barberton Mines ofZAR316.8 million, of which ZAR229.6 million related to the BTRP and isclassified as a major project and therefore non-sustainable capital. Includedin non-current assets at 30 June 2013 is Evander Mines' rehabilitation trustfund balance of ZAR218.7 million. The rehabilitation trust funds amount isinvested in interest-bearing short-term investments or medium-term equitylinked notes issued by commercial banks. Current assets increased by 9.2% to ZAR401.5 million, as a result of increasesin inventory and accounts receivable. Inventory increased due to the inclusionof Evander Mines' inventory balances, which included Evander Mines' gold stocknot yet sold. In addition, BTRP's reagent consumables were held for the firsttime 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 ZAR707.3million rights issue undertaken to fund the Evander Mines acquisition and theincrease in the current years retained income, as a result of profit of aftertax of ZAR558.9 million. Non-current liabilities increased by 546.2% to ZAR1,200.9 million, due to theinclusion of Evander Mines' rehabilitation provision of ZAR182.3 million andEvander Mines' deferred tax liability of ZAR607.9 million. In addition, PanAfrican Resources raised ZAR350 million in RCF debt to fund the Evander Minestransaction. At 30 June 2013, an amount of ZAR165.2 million of this RCF debtremains outstanding and is included in non-current and current liabilities. Itis pleasing to note that ZAR184.8 million was repaid within four months of theinitial ZAR350 million drawdown. Current liabilities increased by 152.8% to ZAR361.2 million. The majority ofthe increase relates to the inclusion of Evander Mines' trade and otherpayables, amounting to ZAR192.1 million. The balance of the increase mainlyrelates to Barberton Mines' increase in trade and other payables of ZAR58.3million as a result of the BTRP construction contracts. The increase in theaccounts payable resulted in the creditor days increasing to 60 days (2012: 30days). Capital expenditure during the year amounted to ZAR381.5 million as detailedper 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 andconstruction of the BTRP. Despite these outflows, the Group was still able togenerate sufficient cashflows from operations to fund on-mine capitalexpenditure and ZAR184.8 million in RCF repayments during the year. The Group remains cash generative with a net debt position of only ZAR93.6million at year-end. The cash generated by the operations is a reflection ofthe quality gold assets and the available profit margins as a result of costcontrol and improved production results. Review of Gold Operations The following figures represent the two gold operations, Barberton Mines andEvander Mines. Evander Mines was consolidated from 1 March 2013, thereforecontributing 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 asafety perspective. Although safety is the top priority at Pan AfricanResources, we are saddened to report the tragic loss of two employees atBarberton Mines. - On 17 November 2012, Gert Fourie passed away when the truck he was driving leftthe road, overturned and rolled down a hill at Barberton's Sheba Mine. - On 7 March 2013, Velly Malumane was fatally electrocuted while weldingunderground. Subsequent to these accidents, employees were counselled and engaged as topossible causes and remedial actions to prevent similar accidents happening inthe future. To encourage them to work safe, each employee, supervisor andmanager also signed a commitment pledge. In the 2013 financial year, Barberton Mines' total recordable injury frequencyrate (TRIFR) improved from 25.1 to 19.2 per 1,000,000 man hours worked, and thelost time injury frequency rate (LTIFR) improved from 3.3 to 2.6 per 1,000,000man hours worked. Due to two fatalities at the operation, the reportable injuryfrequency rate (RIFR) has shown a regression from 0.7 to 1.5 per 1,000,000 manhours worked. Operating performance Barberton Mines sold 96,296oz of gold during the year, an increase of 1.9% fromthe previous year (2012: 94,449oz). Mining operations accounted for 310ktmilled, an increase of 1% from the prior year (2012: 308kt). The increase intonnes milled was mostly due to an increase in surface stockpiles processed of35kt(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% toZAR221,424/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 ofonce-off non-sustainable capital invested in building the BTRP. Production summary Financial year: 2013 2012 2011 2010 2009 Tonnes milled: (t) 274,398 282,041 296,200 313,167 313,952underground 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) 273,653 246,801 217,524 189,308 155,910cost 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 ZAR316.8million (2012: ZAR131.8 million). Maintenance capital expenditure of ZAR45.1million (2012: ZAR38.7 million) and development capital expenditure of ZAR42.1million (2012: ZAR37.7 million) was incurred. The BTRP capital expenditure atthe end of the financial year totalled 2013 ZAR229.6 million (2012: ZAR55.4million). 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 hoursworked, and its RIFR has improved from 3.1 to 1.7 per 1,000,000 man hoursworked. Operating performance Evander Mines sold 34,197oz during the 4 months it was consolidated into theGroup. Mining operations accounted for 128kt of the tonnes milled and surfaceoperations 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 wasat 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 ZARper 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 1March 2013 to 30 June 2013. Capital expenditure Total capital expenditure at Evander Mines was ZAR62.4 million for the 4 monthperiod. Maintenance capital expenditure of ZAR19.9 million and developmentcapital 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 sinceturning the first sod in April 2010. The Phoenix team strives to eliminate all potential hazards thus ensuring asafe 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 6Ebasket price received increased by 21.3% ZAR9,093/oz (2012: ZAR7,499/oz). Costper 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 tonnesfrom the Buffelsfontein dumps. The Chrome Tailing Retreatment Plant ('CTRP') was designed to treat sulphidematerial from International Ferro Metals Ltd ('IFM') Lesedi Mine. IFM initiallysupplied Phoenix Platinum with sulphide-rich material from its Lesediunderground operations, however the ferrochrome producer cut back drasticallyon operations at Lesedi in the prior year and started mining oxidised materialfrom their open cast section. This resulted in oxidised tailings being blendedinto the Phoenix Platinum feedstock. The metallurgy of oxidised tailingsnegatively affects recovery and concentrate grade in the CTRP. This in turnresults to poor PGM concentrate production. Phoenix Platinum is currently doing the following to address the issue ofoxidised feedstock: - Increase feed tonnages into the plant - Investigating methods of chemically converting oxide material to improverecoveries - Expedite deliverables for the new tailings storage facility project to increasebypass 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 1July 2012, therefore all associated revenues and costs were capitalised in theprior 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 compositedrill hole samples drilled during the previous financial year, the potential ofretreating the Bramber tailings dam was assessed in a feasibility study for theproposed construction of a tailings retreatment plant at Fairview Mine. Theviability of a retreatment plant was confirmed in an independent review byVenmyn Rand (Pty) Ltd. Detailed engineering, process and flow design to treatapproximately 1.2 Mt per annum was carried out by Basil Read Matomo. When infull production the BTRP will increase the annual production profile atBarberton Mines by approximately 20,000 oz to 115,000 oz a year. With aforecast cost structure of USD725/oz, this project falls well in line with theCompany's strategy of developing low cost, high margin projects. The LOM of theBTRP has been augmented by auger drilling on an additional 6 Mt of tailings atthe Consort tailings dam, extending the life of the project from six to 12years. Final commissioning was completed in June 2013 and production build-upcommenced. The commissioning of the BTRP project created 83 new jobs in theBarberton 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 andtailings storage facility construction and excludes the purchase of additionalHarper tailings and the associated land purchased in the prior year for ZAR12.1million. 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 ZARBTRP Construction (millions) (millions) (millions) (millions) (millions) Construction andInfrastructure 42.8 185.4 228.2 10.8 239.0 Quantitysurveying - 1.9 1.9 0.7 2.6 Environmental 0.5 0.5 1.0 - 1.0 Tailings storagefacility - 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, itsgold exploration project in Mozambique, in exchange for a 42% equity share inAustralian-listed Auroch. No non-financial performance indicators are includedin this report for either Manica or Auroch. More information concerning Aurochis available at www.aurochminerals.com. Commitments The Groups commitments have been presented in both ZAR and GBP for use ofreview for both UK and SA shareholders. The Group had no contingent liabilities in the current financial year or prioryear. Commitments reported in ZAR The Group had outstanding open orders contracted for at year end of ZAR72.7million (2012: ZAR158.9 million). The Group had guarantees of ZAR23.4 million (2012: ZAR3.8 million) in favour ofEskom, and ZAR14.0 million (2012: ZAR2.9 million) in favour of the Departmentof Mineral Resources at year end. Operating lease commitments, which fall due within the next year, amounted toZAR1.6 million (2012: ZAR1.6 million). Commitments reported in GBP The Group had outstanding open orders contracted for at year end of GBP4.8million (2012: GBP12.3 million). The Group had guarantees of GBP1.6 million (2012: GBP0.3 million) in favour ofEskom, and GBP0.9 million (2012: GBP0.2 million) in favour of the Department ofMineral Resources at year end. Operating lease commitments, which fall due within the next year, amounted toGBP0.1 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 inaddition to, and not as a substitute for or as superior to, measures offinancial performance reported in accordance with International FinancialReporting Standards ('IFRS'). The IFRS results reflect all items that affectreported performance and therefore it is important to consider the IFRSmeasures alongside the non-GAAP measures. JSE Limited listing The Company has a dual primary listing on the JSE Limited ('JSE') and the AIMmarket ('AIM') of the London Stock Exchange. The provisional announcement has been prepared in accordance with SAICAfinancial reporting guidelines as issued by the accounting practice committeeand financial reporting pronouncement as issued by the financial reportingcouncil, and the information as required by International Accounting Standards('IAS') 34: Interim Financial Reporting. The Group's South African external auditors, Deloitte & Touche, have issuedtheir opinion on the Group's Annual Financial Statements for the year ended 30June 2013. The audit was conducted in accordance with International Standardson Auditing. They have expressed an unmodified opinion on the Annual FinancialStatements from which the Group's provisional announcement was derived. A copyof their audit report is available for inspection at the Company's registeredoffice. Any reference to future financial performance included in these Groupfinancial statements have not been reviewed or reported on by the Group's SouthAfrican external auditors. The auditor's report does not necessarily report on all of the informationcontained in this announcement/ financial results. Shareholders are thereforeadvised that in order to obtain a full understanding of the nature of theauditor's engagement they should obtain a copy of that report together with theaccompanying financial information from the issuer's registered office. AIM listing The financial information for the year ended 30 June 2013 does not constitutestatutory accounts as defined in sections 435 (1) and (2) of the United Kingdom('UK') Companies Act 2006 but has been derived from those accounts. Statutoryaccounts for the year ended 30 June 2012 have been delivered to the Registrarof Companies and those for 2013 will be delivered following the Company'sannual general meeting. Deloitte & Touche UK, the external auditors havereported on these accounts for the year ended 30 June 2013. Their report wasunqualified, did not include a reference to any matters to which auditors drawattention by way of emphasis of matter and did not contain a statement undersection 498 (2) or (3) of the Companies Act 2006. These statutory accounts havebeen prepared in accordance with IFRS and IFRS Interpretations Committee('IFRIC') interpretations adopted for use by the European Union, with thoseparts 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 September2013: Appointments: - R Holding was appointed as the Chief executive officer with effect from 9September 2013. - JAJ Loots was appointed as Financial director effective 1 October 2013. JAJLoots was previously Pan African Resources Financial director and also anon-executive director of the Group. JAJ Loots is a permanent employee ofShanduka 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, tofocus on personal commitments. Shares Issued During the period under review the Company announced the issue and allotment of374,571,902 new ordinary shares in respect of share options exercised andrights offer issue: On 25 October 2012 3,000,000 shares was issued to A Esterhuizen at 7 pence pershare, in relation to share options exercised. On 17 January 2013 370,071,902 shares was issued at 14 pence per share, toraise 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 pershare, 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 (0.83pper share1), resulting in a dividend cover of 2.3 times. Because of theanticipated cash flow associated with the acquisition of Evander Mines, theboard 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 2013closing exchange rate of ZAR15.76:1. The UK shareholders are to note that arevised 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 hasreviewed the business' working capital requirements in conjunction with itsfuture funding capabilities for at least the next 12 months, and has found themto be adequate. The Group has secured a five year revolving credit facilitywith Nedbank Limited and ABSA Limited. The Group at 30 June 2013 had unutilisedRCF facilities of R434.8 million and cash on hand of ZAR71.6 million to assistin funding working capital requirement. Management are not aware of anymaterial uncertainties which may cast significant doubt on the Group's abilityto continue as a going concern. Should the need arise the Group can cease mostexploration 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 sharesof 1p each had been made following the exercise of share options granted in2007 under the Company's share option plan. The share issue was for 3,000,000shares 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 9September 2013. B Sitole resigned as the financial director, effectively from 30 September 2013to focus on personal commitments. - JAJ Loots was appointed as Financial director effective 1 October 2013. JAJLoots was previously Pan African Resources Financial director and also anon-executive director of the Group. JAJ Loots is a permanent employee ofShanduka but will vacate this position to join the Group. The Group regrets to report two fatalities at its Barberton Mines operationduring July 2013. Accounting policies The provisional announcement has been prepared using accounting policies thatcomply with the International Financial Reporting Standards ('IFRS') adopted bythe European Union and South Africa, which are consistent with those applied inthe financial statements for the year ended 30 June 2013 and prior year end 30June 2012. Directors' dealings During the year under review R Holding had participated in the followingtransactions in the Company's shares: - On 11 January 2013 subscribed for 127,500 shares at ZAR1.90 per share inthe 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 andZAR1.95 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 followingtransactions in the Company's shares: - On 11 January 2013 subscribed for 13,157 shares at ZAR1.90 per share inthe 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 February2013 (2012:1,122,442) representing 0.05% of the issued share capital. During the year under review JAJ Loots had participated in the followingtransactions in the Company's shares: - On 11 January 2013 subscribed for 16,575 shares at ZAR1.90 per share inthe 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 followingtransactions in the Company's shares: - On 31 May 2013 1,500,000 shares were issued to the Strode Trust, a familytrust of KC Spencer at ZAR0.83, in relation to share optionsexercised. At 30 June 2013 KC Spencer, through the Strode Trust held a total of 1,500,000shares (2012:nil) representing 0.08% of the issued share capital. During the year under review RG Still had participated in the followingtransactions in the Company's shares (both in his personal capacity and relatedentities): RG Still in his personal capacity: On 11 January 2013 subscribed for 510,000 shares at ZAR1.90 per share in theGroups 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% ofPangea. RG Still is therefore deemed to have an indirect, non-beneficialinterest in Pangea's holding in the Company and Pangea holds 0.12% of thecurrent issued share capital of the Company. RG Still is also a deemed to havean indirect, non-beneficial interest in The Alexandra Trust's holding in theCompany. During the year under review the Alexandra trust and Pangea had the followingdealings in shares: Pangea - On 11 January 2013 Pangea subscribed for 457,418 shares at R1.90 per share inthe 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 theGroups rights offer issue. - On 11 January 2013 purchased additional 72,836 shares at ZAR1.90 per share inthe Groups right offer issue, in an application for surplus rights offershares. - 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 ofthe Shanduka Group (Pty) Ltd ('Shanduka Group'), the ultimate holding companyof Shanduka Gold (Pty) Ltd ('Shanduka'). P Mahanyele is a shareholder of theShanduka Group, and further holds options to acquire shares in the ShandukaGroup. 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 lettersat a price range of between 36 cents and 50 cents. Shanduka subscribed for 70,189,473 shares at ZAR1.90 in the Groups Rights offerissue. At 30 June 2013 Shanduka held 436,358,058 shares representing 23.94% of theissued share capital. Segment Reporting A segment is a distinguishable component of the Group that is engaged inproviding products or services in a particular business sector or segment,which is subject to risk and rewards that are different to those of othersegments. The Group's business activities were conducted through five businesssegments: - Barberton Mines, located in Barberton South Africa, - Evander Gold Mining (Pty) Ltd and Evander Gold Mines Ltd ('Collectively knownas 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 thedisclosures presented above. Pan African Resources Outlook - The Future Pan African Resources successfully operates on its strong foundation of its lowcost and high margin business model. With the addition of a flat, empoweredmanagement team and low overhead structure, the group believes that it haspositioned itself as a long term, sustainable business. Barberton Mines, as is evident from the success of the BTRP, has a demonstrateda proven ability to source additional ounces at low input costs. The socialimpact of the BTRP in the Barberton area, which has high unemployment, has beenvery positive with the creation of an additional 83 permanent employmentopportunities. The Group will continue to ensure historic productions levels are maintained atBarberton Mines from the underground operations. The management team willfurther ensure the BTRP is brought into full production, taking Barberton Minesto 115,000oz of gold production. Over the past year the mining industry has placed greater emphasis on costdelivery, free cash flows and enhanced shareholders returns. Without divertingfrom this demand we will continue to concentrate on the efficient use ofcapital. Evander Mines has commenced a lower-grade mining cycle, until the 2015financial year, when we will revert to a high-grade mining cycle. In an effortto ameliorate this reduction in revenue from the mine, we have identified andare evaluating numerous potential organic projects at Evander Mines. Throughthe process of targeting incremental ounces, cost of production at EvanderMines will be reduced with greater economies of scale and infrastructuresynergies. Already underway is a sweeping and vamping project at Evander No.7 Shaft,producing gold from previously mined out areas. A second project to processadditional surface sources requires the conversion of one of the currentautogenous mills to a ball mill to process fines at a rate of 20,000 tonnes permonth over 21 months, thereby extending the current LOM of surface sources. A further initiative being considered is the re-opening of the No. 3 Declinemining section at Evander Mines No.7 Shaft. This could enable the quickrecovery of additional gold. An additional benefit of this project is that itallows access to the 2010 Payshoot exploration project, which has the potentialof becoming a significant new mining area. Surface tailings within the Evander Mines complex have a total resource of 203million tonnes at an average grade of 0.29 g/t. A total reserve of 39 milliontonnes of tailings at 0.32 g/t is available at Kinross. The Kinrossmetallurgical plant, with a nameplate capacity of 260,000 tonnes per month, hassome 180,000 tonnes per month of excess capacity. Having identified this as a"quick value" project, we have initiated the necessary project work to bringthe proposed Evander Tailings Retreatment Project ('ETRP') into production.This project entails the upgrading of the existing Evander Mines plant with acapital investment spend estimated to be significantly less than that of theBTRP, and with expected delivery to be within 18 months. Phoenix Platinum will remain a focus area over next year in order to identifyalternative feedstock for the plant to process, improve recoveries, reduce costefficiencies and improve production levels. Other major projects at Evander Mines Additional major opportunities are the Poplar, Evander South and Rolspruitprojects. We have tasked SRK to perform a bankable feasibility GAP analysis onprevious pre-feasibility studies on the Poplar and Evander South projects andwill, during the 2014 financial year, consider options of progressing theseprojects 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 PanAfrican Resources and in particular, to all of the new employees at EvanderMines. Our thanks go out to Graham Briggs and his Harmony team for theprofessional and friendly manner in which the Evander Mines deal was undertakenand the continued support provided to Evander Mines through the current sharedservices arrangement. Pan African Resources is privileged to have the right people at all levels inour organisation, but none are more important than those men and women who goto work daily and competently perform their duties, often under physicallychallenging circumstances. Underpinning our success and assisting in ensuring a bright future for PanAfrican Resources are the on-mine support crews, management and the behind thescenes corporate employees who deliver their best for the Group. Our lean andflat structure makes the business model possible and ensures we continue todeliver on our set goals. At the end of February 2013 our previous CEO, Jan Nelson, left Pan AfricanResources and we thank him for his years of service and wish him well in hisfuture ventures. During the current year our shareholders entrusted us with more than ZAR707.3million in an oversubscribed rights issue. We wish to thank this verydistinguished shareholder base for their continued faith and loyal support. We have also been strongly supported by a well-established board that offers abroad range of experience in mining and commerce. Their on-going advice andguidance is invaluable in ensuring we remain on course. During the yearShanduka, our BEE shareholder, rendered exceptional business expertise andcontributed to our success. We look forward to continuing our onward journey together! Ronald HoldingChief Executive Officer Cobus LootsDirector 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 GBPASSETS 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 30June 2013 30 June 2013 30 June 2012 (Audited) (Audited) GBP GBPRevenue 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 RetainedGROUP Capital account reserve reserve earnings GBP GBP GBP GBP GBP Balance at 30June 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) 29,241,634Comprehensiveincome Dividends paid - - - - (7,416,176) Share basedpayment - Chargefor the year - - - 43,452 - Balance at 30June 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 issuecosts - (3,502,273) - - - Other reserves - - - - (1,650) TotalComprehensiveincome - - (20,228,836) - 42,574,033 Share basedpayment - Chargefor the year - - - 127,053 - Balance at 30June 2013 18,228,342 94,515,562 (22,166,345) 1,031,955 102,005,124 Realisation of Merger Non-controllingGROUP equity reserve reserve interest Total GBP GBP GBP GBP Balance at 30 (10,701,093) (10,705,308) - 90,746,110June 2011 Issue of - - - 258,686shares Total - - - 18,993,583Comprehensiveincome Dividendspaid - - - (7,416,176) Share basedpayment -Charge for - - - 43,452the year Balance at 30June 2012 (10,701,093) (10,705,308) - 102,625,655 Issue ofshares - - - 50,614,255 Share issuecosts - - - (3,502,273) Otherreserves - - (1,650) TotalComprehensiveincome - - - 22,345,197 Share basedpayment -Charge for - - - 127,053the year Balance at 30June 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 attributableoverheads, 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, wereallocated 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 majorityof revenue was generated from a single customer, Rand Refinery (Pty) Ltd. ***\* The Funding Company was established during the current financial year witheffect from 1 March 2013. APPENDIX A - ZAR Provisional Summarised Unaudited Consolidated Statement ofFinancial 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 ZARASSETS 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 theYear Ended 30 June 2013 30 June 2013 30 June 2012 (Unaudited) (Unaudited) ZAR ZARRevenue 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 Corporate OfficeThe Firs Office Building1st Floor, Office 101cnr. Cradock and Biermann AvenuesRosebank, JohannesburgSouth AfricaOffice: + 27 (0) 11 243 2900Facsmile: + 27 (0) 11 880 1240 Registered OfficeSuite 31Second Floor107 CheapsideLondonEC2V 6DNUnited Kingdom Office: + 44 (0) 207 796 8644Facsmile: + 44 (0) 207 796 8645 Ron Holding Cobus LootsPan African Resources PLC Pan African Resources PLCChief Executive Officer DirectorOffice: + 27 (0) 11 243 2900 Office: + 27 (0) 11 243 2900 Justine James Phil DexterGable Communications St James's Corporate Services LimitedPublic Relations - UK Company SecretaryOffice: +44 (0)207 193 7463 Office: + 44 (0) 207 499 3916 Andrew Chubb Elizabeth JohnsonCanaccord Genuity Limited finnCap LtdNominated Adviser and Joint Broker Joint BrokerOffice: +44 (0)207 523 8350 Office: + 44 (0) 207 220 0500 Nigel Gordon Sholto SimpsonFasken Martineau LLP One CapitalSolicitors in the UK JSE SponsorOffice: +44 (0)207 917 8500 Office: + 27 (0) 11 550 5009 Louise BrugmanVestor Media & Investor RelationsPublic & Investor RelationsOffice: +27 (0) 11 787 3015

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