REG-Pan African Resources Plc: Final Results
19/09/2018 07:05
Pan African Resources PLC
(Incorporated and registered in England and Wales, registration number
3937466)
Share code on AIM : PAF
Share code on JSE : PAN
ISIN : GB0004300496
(“Pan African Resources” or the “company” or the “group”)
Provisional audited results for the year ended 30 June 2018
Pan African Resources CEO Cobus Loots commented:
“Pan African Resources acted decisively during the year under review to
reconfigure its operations for sustainable profitability. Our cost base
is now significantly lower, and efficiencies and stability improved due to
the restructuring we effected during the year. We are confident the group
is now positioned as a lower-cost, long-life gold miner, consistent with
stakeholder expectations and our key strategic objectives. All our producing
assets are today generating positive cash flows through the production of
low-cost gold ounces.
A key highlight of the year was the excellent progress made towards the
completion of the Elikhulu tailings retreatment plant. The project poured its
first gold on 16 August 2018, ahead of schedule and within the projected
budget. It is expected to be a flagship operation within our low-cost,
long-life asset base.
In terms of our existing operations, the regrind mill at the Barberton
tailings retreatment plant was completed, which alleviated past processing
challenges. Barberton Mines’ sub-vertical shaft project at Fairview,
together with our current programme of accelerated underground
development, will facilitate improved access to the high-grade Fairview
11-block Main Reef Complex orebody in the future.
I am pleased to report an excellent improvement in group-wide on-mine safety
and congratulate Barberton Mines on achieving its one-million fatality-free
shifts milestone during June 2018. Barberton Mines has also made good
progress in its stakeholder engagement efforts in order to minimise
operational stoppages, and these initiatives will continue across the group.
Our existing portfolio presents attractive opportunities to further the
group’s profitable production growth. The Royal Sheba Project at Barberton
Mines offers the potential to access low-cost near surface ounces and
significantly boost Barberton Mines’ production in the short to medium term.
The Egoli Project at Evander Mines also remains an attractive opportunity as a
standalone project, following the difficult but necessary decision to
cease large-scale underground mining activities at 8 Shaft.
Given all the difficulties we experienced in the past year, our board elected
not to recommend a final dividend for the 2018 financial year. Even though
this decision was expected by most shareholders, it remains disappointing,
given our group’s excellent track record of sector-leading dividends. Our
board is confident that at prevailing ZAR gold prices, and as a result of the
remedial measures implemented, Pan African Resources will be able to resume
its attractive dividends in the near future.
Pan African Resources has started the 2019 financial year well, and we are on
track to achieving our production guidance of approximately 170,000oz for the
2019 financial year. We will continue to focus on improving and expanding our
portfolio, on a sustainable and value-accretive basis, to the benefit of all
stakeholders.”
Key features reported in South African Rand (“ZAR” or “R”) and Pound
Sterling (“GBP”)
Strategic repositioning of the group
- During the year ended 30 June 2018 (“current reporting period”), the
group restructured operations to ensure the long-term sustainability and
profitability of its business.
- Large-scale underground mining at Evander Mines’ underground operations,
which includes 8 Shaft, 7 Shaft and the run-of-mine circuit in the Kinross
metallurgical plant, was discontinued on 31 May 2018. As a result, 1,635
employees were retrenched at a cost of R161 million. Evander Mines’
underground operations was a high-cost gold producer, producing at an all-in
cost of R963,882/kg or USD2,331/oz (2017: R959,976/kg or USD2,197/oz).
- With the final commissioning of Elikhulu concluded during September 2018,
the group has established a material, safe, low-cost and long-life tailings
reprocessing business, comprising the following operations:
o Barberton tailings retreatment plant (“BTRP”): Processing capacity of
100,000tpm @ ~1.4g/t
o Elikhulu :
Processing capacity of 1,000,000tpm @ ~0.3g/t
o Evander tailings retreatment plant (“ETRP”) : Processing
capacity of 200,000tpm @ ~0.3g/t
- Barberton Mines’ underground operations are forecast to produce
approximately 80,000oz during the 2019 financial year, an improvement of 9.4%
from 73,125oz in the 2018 financial year. At Barberton Mines, the underground
development rates will be increased by approximately 60% and together with the
new sub-vertical shaft, which is under construction this will
facilitate improved access to additional high-grade Fairview 11-block mining
platforms. These initiatives will assist in maintaining and increasing future
gold production from this long-life asset.
- Recent exploration drilling at Barberton Mines’ Royal Sheba Project has
increased resources by 150% from 0.36Moz (2.60Mt at 4.32g/t) to 0.9Moz (8.56Mt
at 3.27g/t). The group expects to finalise a definitive feasibility study for
Royal Sheba by February 2019. The project has the potential to significantly
increase gold production from Barberton Mines in the next years.
- The group is now repositioned as a low-cost producer and is well placed
for an improved performance in the next financial year. The repositioning has
reduced the unit cost of production and increased group profitability, with
the majority of its production ounces coming from low-cost and safe tailings
retreatment operations.
Operational key features
- The group’s gold production for the current reporting period reduced to
160,444oz (2017: 173,285oz), primarily because of the cessation of mining at
Evander Mines’ underground operations on 31 May 2018.
- The Elikhulu Project, which achieved its inaugural gold pour on 16 August
2018, was fully commissioned during September 2018, ahead of schedule. The
project is still forecast to be completed within its original budget.
- Improved overall safety performances from Barberton Mines and Evander
Mines.
- Barberton Mines’ Royal Sheba Project presents an opportunity to expand
Barberton Mines’ production profile the short to medium term. The drilling
campaign conducted during the year increased the Royal Sheba gold resource by
150%, 0.36Moz to 0.9Moz.
- The feasibility study for Evander Mines’ Egoli Project (previously
referred to as the 2010 Pay Channel Project) has been updated to cater for the
cessation of mining at Evander Mines’ underground operations and the
construction of a new run-of-mine metallurgical plant circuit. The project
remains attractive and has a revised pre-taxation internal rate of return of
34%, and a pre-taxation net present value of R1.04 billion.
- Reduced production from Barberton Mines of 90,629oz (2017: 98,508oz) due
to:
o lower head grades and processing difficulties at the BTRP, after
encountering coarser fraction tailings, which produced 9,241oz less compared
to the prior reporting period. The BTRP completed the installation of a
regrind mill in May 2018, which has effectively dealt with these processing
difficulties.
o underground production for the current reporting period improved by
1,362oz, following the mining of higher grades from Fairview’s high-grade
272 and 358 platforms; and
o Barberton Mines experienced approximately 58 lost production days
due to industrial action and community unrest.
- The group’s detailed operational and financial summaries, per entity,
are disclosed on the Pan African Resources website at
http://www.panafricanresources.com/investors/financial-reports/.
Financial key features
- The profit after taxation from the group’s continuing operations was
R202.0 million (2017: R700.6 million). In GBP terms, the profit after taxation
from the group’s continuing operations was GBP11.5 million (2017: GBP40.6
million).
- The group incurred a once-off impairment charge of R1.78 billion (GBP106.3
million) associated with the cessation of Evander Mines’ underground
operations and the resultant retrenchment costs of R161 million (GBP9.3
million).
- As a result of the impairment charge and retrenchment costs the group’s
continued and discontinued operations (“combined operations”) profit after
taxation of R309.9 million (GBP17.9 million) in the prior reporting period
reduced to a loss after taxation of R1.56 billion (GBP93.3 million) in the
current reporting period.
- Continuing operations’ earnings per share (“EPS”) decreased to 11.16
cents per share (2017: 44.78 cents per share), while in GBP terms, continuing
operations EPS decreased to a 0.63 pence per share (2017: 2.60 pence per
share).
- The combined operations’ EPS decreased to a loss of (86.03) cents per
share (2017: 19.81 cents earnings per share), while in GBP terms, the combined
operations’ EPS decreased to a loss of (5.15) pence per share (2017: 1.14
pence earnings per share).
- Continuing operations’ headline earnings per share (“HEPS”)
decreased to 18.71 cents per share (2017: 38.72 cents per share). In GBP
terms, continuing operations’ HEPS decreased to 1.08 pence per share (2017:
2.24 pence per share). Refer to note 3.
- The combined operations’ HEPS decreased to 12.66 cents per share (2017:
20.17 cents per share). In GBP terms, HEPS decreased to 0.73 pence per share
(2017: 1.17 pence per share). Refer to note 3.
- Revenue from continuing operations decreased to R1,873.9 million (2017:
R2,158.2 million) and, in GBP terms, group revenue decreased to GBP108.5
million (2017: GBP125.1 million) as a result of a decrease in the average ZAR
gold price received and gold ounces sold.
- The group’s earnings before interest taxation, depreciation and
amortisation (“adjusted EBITDA”) decreased to R416.0 million (2017: R816.0
million), while in GBP terms it decreased to GBP24.2 million (2017: GBP47.3
million). Refer to note 3.
- The average ZAR gold price received decreased to R538,100/kg (2017:
R542,773/kg) and, in USD terms, it increased to USD1,301/oz (2017:
USD1,242/oz).
- The all-in sustaining cost per kilogramme of Barberton Mines’
underground mining operation was well controlled and only increased in ZAR
terms to R507,130/kg (2017: R501,330/kg), and in USD terms the all-in
sustaining cost per ounce increased to USD1,227/oz (2017: USD1,147/oz).
- The all-in sustaining cost per kilogramme of the group’s continuing
tailings operations increased in ZAR terms to R297,661/kg (2017: R208,590/kg)
and in USD terms, the all-in sustaining cost per ounce increased to USD720/oz
(2017: USD477/oz).
- Due to the group’s lower gold production, the group’s all-in
sustaining cost per kilogramme increased in ZAR terms to R561,468/kg (2017:
R514,435/kg) and in USD terms, the all-in sustaining cost per ounce increased
to USD1,358/oz (2017: USD1,177/oz). Refer to note 3.
- The group paid a final dividend of R185 million or GBP10.0 million (2016:
R300 million or GBP17.1 million) on 21 December 2017, relating to the 2017
financial year. This dividend equated to R0.08279 per share or 0.44561 pence
per share (2016: R0.1544 per share or 0.87668 pence per share).
- The sale of Phoenix Platinum Mining Proprietary Limited (“Phoenix”) to
Sylvania Platinum Limited for R89 million or GBP4.8 million was concluded on 7
November 2017.
- Net debt increased to R1,623.6 million or GBP89.8 million (2017: R67.6
million or GBP4 million) as the group’s facilities were drawn to fund the
Elikhulu Project’s capital expenditure and Evander Mines’ retrenchment
costs. Refer to note 3.
For the year ended 30 June 2018 For the year ended 30 June 2017 Metric Salient features Metric For the year ended 30 June 2017 For the year ended 30 June 2018
4,990 5,390 (Kilogrammes) Combined operations gold sold (Oz) 173,285 160,444
1,873.9 2,158.2 (R millions) Revenue – Continuing operations (GBP millions) 125.1 108.5
538,100 542,773 (R/kg) Average gold price received (USD/oz) 1,242 1,301
480,439 430,863 (R/kg) Cash costs (Note 3) (USD/oz) 986 1,162
561,468 514,435 (R/kg) All-in sustaining costs (Note 1) (USD/oz) 1,177 1,358
614,713 540,693 (R/kg) All-in costs (Note 3) (USD/oz) 1,237 1,487
416.0 816.0 (R millions) Adjusted EBITDA (Note 2) (GBP millions) 47.3 24.2
(1,556.9) 309.9 (R millions) Attributable earnings (Combined operations) (GBP millions) 17.9 (93.3)
202.0 700.6 (R millions) Attributable earnings (Continuing operations) (GBP millions) 40.6 11.5
229.1 315.6 (R millions) Headline earnings (Combined operations) (Note 3) (GBP millions) 18.3 13.3
(86.03) 19.81 (cents) EPS (Combined operations) (pence) 1.14 (5.15)
12.66 20.17 (cents) HEPS (Combined operations) (Note 3) (pence) 1.17 0.73
1,623.6 67.6 (R millions) Net debt (Note 3) (GBP millions) 4.0 89.8
289.4 330.0 (R millions) Total sustaining capital expenditure (GBP millions) 19.1 16.8
1,650.2 613.1 (R millions) Total capital expenditure (GBP millions) 35.5 95.6
104.6 201.3 (cents) Net asset value per share (pence) 12.0 5.8
1,809.7 1,564.3 (millions) Weighted average number of shares in issue (millions) 1,564.3 1,809.7
12.86 13.59 (R/USD) Average exchange rate (R/GBP) 17.25 17.27
13.71 13.04 (R/USD) Closing exchange rate (R/GBP) 16.96 18.09
Note 1: The all-in sustaining cost per kilogram and all-in cost per kilogram
excludes the Elikhulu capital expenditure as well as derivative fair value
mark-to-market gains / expenses and relates directly to the current gold
mining operations. Refer to the alternative performance measure (“APM”)
summary report for the period ended 30 June 2018.
Note 2: Adjusted EBITDA is represented by earnings before interest, taxation,
depreciation and amortisation, profit/(loss) on asset held for sale,
profit/(loss) on disposal of investments and (loss)/profit from discontinued
operations. Refer to the APM summary report for the year ended 30 June 2018.
Note 3: Refer to the APM summary report for the period ended 30 June 2018.
CEO STATEMENT
During the year under review, the group faced unprecedented challenges, which
included falling ZAR gold prices, volatile exchange rates, operational
challenges at both our Barberton and Evander operations and a capricious
political, labour and community relations climate in South Africa. We are
however pleased to report that these issues have been decisively dealt with
and the business repositioned to deliver sustainable value creation into the
future.
Following the implementation of several initiatives, Pan African Resources’
assets have been repositioned to be cash flow generative through the
production of low-cost gold ounces. This includes our most recent organic
growth project, Elikhulu, was fully commissioned during September 2018, ahead
of time and within its project budget. Though our gold production for the
2018 financial year was lower than in previous years, the restructuring has
significantly decreased our cost base and improved efficiencies and stability
across all our operations.
The cessation of Evander Mines’ underground operations and remedial actions
at our other operations was the focus of the board and management’s
attention during the year. With this exercise now largely completed, the
leadership can focus on growing the group’s profitable ounce production
profile in the future.
When a management team is confronted with circumstances that demand imminent
action, it is imperative to be circumspect in analysing the situation and then
taking decisive and expeditious remedial action. A summary of the principal
challenges dealt with and opportunities realised by the group in the past
financial year include:
Segment Challenge/Opportunity Management action Status
Evander Mines’ underground operations Curtailment of the cash burn at Evander Mines’ underground operations, particularly given the depressed ZAR gold price The curtailment of large-scale underground mining operations at Evander Mines, and resultant retrenchment of 1,635 of our employees, was difficult and regrettable, however our group had no viable alternative. The management team is currently reviewing and assessing options to access and mine Evander Mines’ 8 The retrenchment process was successfully concluded on 31 May 2018. The requirements of S189 of South African Labour Relations Act, 66 of 1995, were complied with. The outcome of the assessment to mine the Evander Mines’ 8 Shaft pillar will be communicated in the near future.
environment. Opportunity to mine the 8 Shaft pillar and perform reclamation work. Shaft pillar.
Elikhulu Construction of the Elikhulu plant - ensuring the plant is completed on schedule and within budget. Construction commenced in August 2017, with detailed planning and co-ordination to minimise potential delays and cost overruns. Elikhulu’s inaugural gold pour was on 16 August 2018, within one year of inception of the construction. The plant was fully commissioned during September 2018. Construction work on the enlarged Kinross tailings facility continues.
BTRP Unexpected coarse fraction material encountered, resulting in reduced plant throughput and gold recoveries from the BTRP. Installation of a regrind mill to assist with material handling and improved recoveries from the Harper dump coarse fraction material. Process of design and construction was fast tracked and completed in less than six months. The regrind mill was successfully commissioned in May 2018, and the BTRP is again performing in line with expectations.
Fairview underground operations Limited mining flexibility within the Fairview Main Reef Complex (“MRC”) orebody. Development of two high-grade mining platforms in the MRC orebody to improve mining flexibility. This development was completed during January 2018. Barberton Mines has increased its ongoing development rates in the 2019 financial year with the objective of establishing a third high grade platform in the Fairview The 358 and 272 high-grade mining platforms are currently in production with a commensurate increase in Barberton Mines’ head grade in the second half of the 2018 financial year. These platforms will be available for the next two to three years, allowing sufficient time for development into new mining areas.
11-block by the end of June 2019.
Fairview mining operation is restricted by the hoisting capacity of its No 3 Decline, which is also used by employees to access The Fairview sub-vertical shaft project will improve ore handling efficiencies and significantly reduce the time taken by employees to access high-grade mining platforms. The sub-vertical shaft project is estimated to improve production by approximately 7,000oz-10,000oz per annum. The R105 million project is scheduled for completion over the next two to three years.
workings below 42 Level and the high-grade 11-block of the MRC.
Further organic growth Barberton Mines’ Royal Sheba Project presents an opportunity to expand Barberton Mines’ production profile and access low-cost Engaged in a surface drilling campaign and appointed DRA Global to complete a feasibility to mine the Royal Sheba orebody as an open-cast mining operation and then in future an underground mining operation. - The drilling campaign has been completed with excellent results confirming the extension of the orebody to surface. We have updated the market on the prospectivity of Royal Sheba and are now considering alternatives to expedite ‘first gold’ and a large steady-state operation.
near-surface minable ounces over the short to medium term. We did not previously identify the near-surface opportunity at Royal
Sheba and are exploring similar targets within our mining right area.
Labour relations Barberton Mines’ wage agreements expired at the end of the current reporting period. Engaged with representative unions in order to agree a multi-year agreement to the benefit of all stakeholders. - Concluded a three-year wage agreement with Barberton Mines’ representative unions.
Clearly, the challenges we faced during the period, which were well
communicated to the market, have significantly reduced our profitability for
the 2018 financial year.
During the current reporting period, our team decisively dealt with the issues
threatening the future sustainability of the group. The group is now well
positioned to deliver into a much-improved performance during the 2019
financial year.
Group safety
In terms of safety performances, significant progress was made over the past
year, with on-mine safety improvement campaigns contributing to these results.
Further, Barberton Mines achieved its one-million fatality-free shift
milestone during June 2018. To ensure continued safety improvements, the group
will continue to engage independent safety experts to review each of the
mining operations’ safety systems and controls. The group experienced no
fatalities in the 2018 financial year (2017: three employees fatally injured).
The group’s lost-time injury frequency rate remained stable at 3.73 (2017:
3.51), while the reportable injury frequency rate improved materially to 1.08
(2017: 1.53).
Evander Mines and ETRP
The decision to cease underground operations at 8 Shaft was difficult, given
South Africa’s prevailing socio-economic environment, and the impact on the
retrenched miners and their families. Retrenched employees were offered
re-skilling opportunities, which is continuing, and we have retrained and
re-employed a number of these employees into the Elikhulu Project.
Environmental rehabilitation of the mine will provide further employment
opportunities.
Evander Mines’ underground operations produced 48,565oz (2017: 45,304oz) of
gold during the reporting period.
Gold production at ETRP reduced to 21,250oz (2017: 29,473oz). In the prior
reporting period the ETRP treated incrementally more surface feedstock due to
the additional milling capacity that became available because of the 7 Shaft
infrastructure repairs, and the reduced production from the underground mining
operation. The ETRP’s all-in sustaining cost was R306,120/kg (2017:
R242,260/kg) or USD740/oz (2017: USD554/oz).
Barberton Mines and BTRP
Barberton Mines’ gold production reduced by 7,879oz to 90,629oz (2017:
98,508oz), predominantly due to the following:
- BTRP gold production reduced to 17,504oz (2017: 26,745oz) due to the
re-mining operation moving to the lower-grade Harper dump following depletion
of the Bramber dump, and the head grade reducing from 2.3g/t to 1.4g/t. The
Harper dump material has a larger coarse fraction, which resulted in
processing problems and a reduction in plant recoveries to approximately 30%
on the feedstock. Barberton Mines’ underground mining production increased
to 73,125oz (2017: 71,763oz). The underground tonnes milled decreased to
237,831t (2017: 246,915t), while the head grade improved to 10.3g/t (2017:
9.8g/t).
- Gold production was adversely impacted by operational disruptions from
pressure groups, community unrest and unprotected strike action at the mine,
which resulted in 58 lost production days. Barberton Mines has significantly
increased its community engagement efforts during the current reporting
period, and operational disruptions have decreased as a result of these
efforts.
Mineral reserves and resources
The group’s mineral resources and reserves, compliant with the South African
Code for Reporting of Mineral Resources and Mineral Reserves, 2016, are
summarised as follows:
- Gold reserves of 11.2Moz (239.9Mt at 1.46g/t) (2017: 11.2Moz)
- Gold resources of 33.3Moz (331.2Mt at 3.13g/t) (2017: 34.4Moz)
In determining the group’s reserves and resources, gold reserves were
modelled at R525,000/kg and gold resources at R600,000/kg. The competent
person for Pan African Resources, Hendrik Pretorius, the group’s Project
Geologist, has reviewed and approved the information contained in this
announcement as it pertains to the mineral resources and reserves. Mr
Pretorius holds a BSc (Hons) in the field of geology and a Graduate Diploma in
Mining Engineering focussing on mineral resource management. He has more than
15 years’ relevant experience, is registered with the South African Council
for Natural Scientific Professionals (400051/11) and is a member in good
standing with the Geological Society of South Africa.
Near- to medium-term growth projects
Elikhulu Project
Elikhulu, which is expected to produce some of the lowest-cost ounces in the
South African gold mining industry, is critical to Evander Mines’ return to
profitability and delivering into the group’s strategic repositioning.
Tailings, which were deposited over the past 70 years of mining activity, will
be re-mined in line with industry best practices and consolidated into a
single facility, which will mitigate environmental risks and make substantial
surface areas available for other land uses, including housing and / or
agriculture.
From December 2018, Elikhulu’s processing capacity will increase to
1.2-million tonnes per annum by incorporating the existing ETRP throughput, in
order to benefit from the new plant’s improved efficiencies and economies of
scale.
Elikhulu was constructed ahead of schedule, and was fully commissioned during
September 2018. By 30 June 2018, capital expenditure of R1,256.1 million
(2017: R175.5 million) had been incurred on the project. Construction on the
enlarged Kinross tailings facility is continuing.
Barberton Mines’ Royal Sheba Project
Barberton Mines’ Royal Sheba Project is an opportunity to expand the
operation’s production profile and access low-cost near-surface minable
ounces over the short to medium term. Shareholders are referred to the
announcement on 6 September 2018, detailing the exploration results from the
Royal Sheba orebody.
Evander Mines’ Egoli Project – Reassessed mining feasibility study
The Egoli Project is adjacent to the 7 Shaft infrastructure and extends from
the boundary of Taung Gold International Limited’s 6 Shaft mining right.
Shareholders were informed on 1 February 2018 of the updated resource
statement of the Egoli Project and subsequently on 28 March 2018 that the
group would reassess the mining feasibility study, conducted by DRA Global,
into the viability of the Egoli Project as a standalone project following the
cessation of mining at Evander Mines’ underground operations. The project
remains attractive, with more than one-million ounces of contained gold in
measured and indicated categories.
The results of an optimisation study based on the DRA Global feasibility study
are:
§ The mining operation is planned to ensure waste and reef are hoisted
separately.
§ The life-of-mine is expected to be 11 years.
§ Average recoverable gold of approximately 23,500 ounces per annum during
the initial four-year development phase, and an average of approximately
79,000 ounces per annum for the remaining seven years thereafter is forecast.
§ A new metallurgical plant would be constructed, and the existing Evander
Mines’ 7 Shaft infrastructure would be used for hoisting.
§ Peak funding requirement is forecast at approximately R870 million.
§ An internal rate of return (real, pre-taxation) of 34%, with a payback
period of two years following the initial four-year development period is
forecast. This projection is based on an assumed gold price of R547,000/kg.
§ Project, pre-taxation, net present value is R1.04 billion at a 12.4% real
discount rate.
§ An incremental all-in sustaining cost per kilogramme of approximately
R300,000/kg, or USD650/oz, on average, over the life-of-mine.
§ An average gold recovery rate of 95% and a mine call factor of 85%.
§ The total resources remain at 9.4Mt @ 9.75g/t equating to 2.95Moz.
Barberton Mines’ sub-vertical shaft project at Fairview
Shareholders were previously advised that the Fairview mining operation is
restricted by the hoisting capacity of its No 3 Decline, which is used to
access workings below 42 Level and the high-grade 11-block of the MRC. During
the period under review, Fairview commenced the development required in
preparation for the construction of the new sub-vertical shaft. The project
cost is forecast at approximately R105 million over two to three years.
Following the commissioning of this shaft, it is expected that productivity
improvements will yield an additional 7,000oz - 10,000oz of gold per annum due
to the increased hoisting capacity.
Wage agreements
As announced on 7 September 2018, Barberton Mines successfully concluded a
three-year wage agreement with the National Union of Mineworkers (“NUM”)
and the United Association of South Africa (“UASA”) (“the agreement”).
NUM and UASA represent the majority of employees at Barberton Mines. The
Agreement provides for an average annual wage increase of approximately 6.5%
and 5.5% for NUM and UASA members, respectively, over the three years. The
negotiations were successfully concluded with no industrial action or work
stoppages. The agreement should assist in providing certainty and
sustainability to all stakeholders in the coming years.
Outlook
Key focus areas for the 2019 financial year include:
- continuing to improve our safety performance, and environmental,
social and governance compliance across operations;
- delivering into the gold production guidance of approximately
170,000oz;
- ensuring Elikhulu delivers to expectation and incorporating
ETRP’s throughput into Elikhulu’s processing capacity;
- increase the statement of financial position flexibility and
capacity;
- focus on growth opportunities such as:
o The Royal Sheba Project
o Evander Mines’ 8 Shaft pillar project
o Evander Mines’ Egoli Project
o Barberton Mines’ sub-vertical shaft
- Re-initiate dividend payments
The group continues to evaluate acquisitive opportunities, particularly within
other African jurisdictions, in accordance with its rigorous capital
allocation criteria.
I would like to thank my fellow board members for their guidance, support and
insight during the past financial year. Further, a sincere thanks to the
executive management team and all employees, who continued to show commitment
and dedication during this challenging period.
Finally, to our stakeholders, thank you for your ongoing support of Pan
African Resources. While times may be marked by turbulence and volatility, we
believe the group, with its current strategic direction, is well positioned to
maximise value for our shareholders and our other stakeholders in the year
ahead and well into the future.
FINANCIAL PERFORMANCE
Exchange rates and their impact on results
All of the group’s subsidiaries are incorporated in South Africa and their
functional currency is ZAR. The group’s business is conducted in ZAR and the
accounting records are maintained in this same currency, with the exception of
precious metal product sales, which are transacted in USD prior to conversion
into ZAR. The ongoing review of the operational results by executive
management and the board is also performed in ZAR.
The group’s presentation currency is GBP due to its ultimate holding
company, Pan African Resources, being incorporated in England and Wales and
being dual-listed in the United Kingdom (“UK”) and South Africa.
During the current reporting period the average ZAR:GBP exchange rate was
R17.27:1 (2017: R17.25:1) and the closing ZAR:GBP exchange rate was R18.09:1
(2017: R16.96:1). The year-on-year change in the average and closing exchange
rates of 0.1% and 6.7%, respectively, must be taken into account for the
purposes of translating and comparing year-on-year results, and in the event
of material transactions, the exchange rate on the date of the material
transaction is used to translate earnings from ZAR to GBP.
The group records its revenue from precious metals sales in ZAR and the
strength in the value of the ZAR:USD exchange rate during the current
reporting period had a negative impact on the USD revenue received when
translated into ZAR. The average ZAR:USD exchange rate was 5.4% stronger at
R12.86:1 (2017: R13.59:1).
The commentary below analyses the current and prior reporting period’s
results. Key aspects of the group’s ZAR results appear in the body of this
commentary and have been used as the basis against which its financial
performance is measured. The gross GBP equivalent figures can be calculated by
applying the exchange rates as detailed above.
Analysing the group’s financial performance for continuing operations
1) Revenue
Gold sales from continuing operations declined year-on-year by 13.2% to
R1,873.9 million (2017: R2,158.2 million) mainly impacted by:
1) The average ZAR gold price received decreasing by 0.9% to R538,100/kg
(2017: R542,773/kg).
2) Gold ounces sold from continuing operations decreasing by 12.6% to
111,879oz (2017: 127,981oz).
Revenue from Evander Mines’ underground operations of R811.4 million (2017:
R767.2 million) has been disclosed in discontinued operations following the
cessation of mining at this operation.
2) Cost of production
Cost of production (including realisation costs) for continuing operations
increased by 4.4% to R1,376.7 million (2017: R1,318.9 million).
The main cost contributors that impacted the year-on-year increase during the
current reporting period are summarised as follows:
- Salaries and wages (represents 38.9% of the gold cost of
production) increased by 7.6% to R535.1 million (2017: R497.1 million).
Salaries and wage rates increased in line with the gold labour agreements
signed at the respective operations.
- Electricity costs (represents 9.6% of the gold cost of
production) increased by 8.3% to R132.5 million (2017: R122.3 million). The
increase is higher than the National Energy Regulator of South Africa’s
approved average national increase of 5.2% from 1 April 2018, because of
higher electricity consumption associated with the surface re-mining operation
and Barberton Mines’ new refrigeration plant installed at Fairview during
July 2017.
- Mining and processing costs (represents 33.7% of gold cost of
production) decreased by 6.7% to R463.3 million (2017: R496.3 million). The
decrease was due to less surface sources being processed at Evander Mines in
the current reporting period.
- Engineering and technical costs (represents 6.7% of gold cost of
production) increased by 13.0% to R92.7 million (2017: R82.0 million).
Cash cost per kilogramme from continuing operations increased by 19.6% to
R387,194/kg (2017: R323,692/kg). The increase was predominantly due to the
group’s gold sold decreasing by 12.6% to 111,879oz (2017: 127,981oz) and the
cost of production increasing by 4.4%.
3) Realisations costs
The group’s realisation costs increased to R34.6 million (2017: R17.5
million). The realisation costs relate predominantly to refining charges, paid
to Gauteng Refinery for gold extracted and recovered from the Kinross plant
civil infrastructure.
4) Depreciation costs
Depreciation from continuing operations decreased by 10.3% to R85.1 million
(2017: R94.9 million). The depreciation charge is based on the available units
of production over the life of the operations and the depreciation charge
reduced commensurate with the decrease in production.
5) Other expenditure and income
Other expenses increased to R74.0 million (2017: R4.1 million). The increase
in other expenses is due to the group realising a pre-tax gain of R94.7
million in the prior reporting period on the mark-to-market fair value
adjustment of a derivative instrument entered into to mitigate gold price
risk.
6) Finance income and costs
Finance income increased to R25.7 million (2017: R4.4 million), following an
increase in interest earned on the group’s rehabilitation funds. Finance
costs increased to R54.3 million (2017: R48.4 million), due to an increase in
group debt during the current reporting period.
7) Taxation
The taxation charge of the group’s continuing operations decreased to a
credit of R36.3 million (2017: R72.5 million) due to:
· An increase in the deferred tax credit of R63.6 million (2017:
R7.9 million) because of the reduction in the long-term taxation rate to 19.2%
from 23.1% for the Evander Mines’ surface operations.
· Decrease in the current taxation charge to R27.3 million (2017:
R80.4 million).
Discontinued operations
In the current reporting period the group’s discontinued operations
comprised of:
- Phoenix; and
- Evander Mines’ underground operations
In the prior reporting period the group’s discontinued operations comprised
of:
- Phoenix; and
- Uitkomst Colliery Proprietary Limited (“Uitkomst”).
Phoenix, under discontinued operations, recorded a loss of R6.9 million in the
current reporting period, for the period 1 July 2017 – 6 November 2017. This
loss comprised of R2 million in operational losses and a R4.9 million loss on
asset held for sale.
Due to the cessation of mining at Evander Mines’ underground operations, the
financial results from this operation has been classified as a discontinued
operation in the current reporting period.
Losses from discontinued operations have increased to R1.76 billion (2017:
R390.7 million), which includes an impairment charge of R1.78 billion and
retrenchment costs of R161 million, for the Evander Mines’ underground
operations.
EPS and HEPS
The combined operations EPS in ZAR decreased to a loss of (86.03) cents per
share (2017: 19.81 cents per share). The combined operations HEPS in ZAR
decreased to 12.66 cents per share (2017: 20.17 cents per share).
The EPS and HEPS are calculated by applying the group’s weighted average
number of shares in issue to the attributable and headline earnings. The
weighted average number of shares in issue increased by 15.7% to
1,809.7-million shares (2017: 1,564.3-million shares). The increase in shares
was attributed to the additional 291.5-million shares issued in the equity
raise concluded on 12 April 2017 for the equity tranche of the Elikhulu
Project, and the disposal of 130-million shares held by PAR Gold Proprietary
Limited (“PAR Gold”) on 30 May 2018.
Refer to the reconciliation of the earnings and headline earnings in the APM
summary report for the period ended 30 June 2018.
Net debt
Total debt facilities utilised at 30 June 2018 increased to R1,636.6 million
(2017: R227.8 million) and cash holdings declined to R12.6 million (2017:
R160.2 million), resulting in an increase in net debt to R1,623.6 billion
(2017: R67.6 million). The increase in net debt was predominantly due to the
R1.26 billion capital expenditure incurred on the Elikhulu Project,
operational losses from Evander Mines’ underground operations and
retrenchment costs of R161 million. Refer to the APM summary report for the
period ended 30 June 2018.
Summary of the long-term debt liabilities:
Revolving credit facility Evander Mines gold loan Elikhulu term facility Total
30 June 2018 30 June 2017 30 June 2018 30 June 2017 30 June 2018 30 June 2017 30 June 2018 30 June 2017
ZAR (millions) ZAR (millions) ZAR (millions) ZAR (millions) ZAR (millions) ZAR (millions) ZAR (millions) ZAR (millions)
Non-current portion 778.0 180.5 - - 770.0 - 1,548.0 180.5
Current portion 88.2 20.7 - 26.6 - - 88.2 47.3
Total 866.2 201.2 - 26.6 770.0 - 1,636.2 227.8
The group’s compliance to the revolving credit facility debt covenants are
summarised below:
Covenant Measurement 30 June 2018 30 June 2017
Net-debt-to-equity ratio Must be less than 1:1 0.78 0.02
Net-debt-to-adjusted EBITDA ratio (note 1) Must be less than 2.5:1 3.73 0.08
Interest cover ratio (note 2) Must be greater than 4 times 4.61 19.32
Debt service cover ratio Must be greater than 1.3 times 3.84 9.11
Note 1: The net debt to EBTIDA covenant is only measurable on 31 December 2019
to cater for the construction of Elikhulu and commensurate increase in cash
flows for measurement purposes.
Note 2: The interest cover ratio covenant was reduced to 2.3 times until
December 2018, where after it will increase to 4 times.
Capital expenditure
Group capital expenditure for the current reporting period has been summarised
per operation in the table below:
Barberton Mines Evander Mines Elikhulu Corporate Total
ZAR million ZAR million ZAR million ZAR million ZAR million
Development capital 68.1 48.4 - - 116.5
Maintenance capital 42.9 127.8 - 2.2 172.9
Sustaining capital total 111.0 176.2 - 2.2 289.4
Expansion capital 99.4 5.3 1,256.1 - 1,360.8
Total capital expenditure 210.4 181.5 1,256.1 2.2 1,650.2
Cash flow summary
Cash generated by operations (after dividends) decreased by R250.5 million to
a deficit of R202.1 million (2017: R48.4 million), due to the lower gold
production, Evander Mines’ operational losses and retrenchment costs of R161
million. The 2017 financial year dividend payment (net of PAR Gold reciprocal
dividends) of R148.9 million (2016: R232.6 million) was paid on 21 December
2017.
The cash outflows from investing activities increased to R1,545.4 million
(2017: R491.0 million), largely due to:
* capital expenditure incurred of R1,601.4 million (2017:
R612.7 million);
* contributions to the rehabilitation trust of R26.2 million
(2017: nil);and
* proceeds from the sale of Phoenix of R89.0 million (2017:
R142.1 million proceeds from the disposal of investments/subsidiaries and
property plant and equipment).
Net cash inflows from financing activities increased to R1,599.9 million
(2017: R551.1 million), largely due to the utilisation of the group’s debt
facilities to fund operational and project capital expenditure, offset by
proceeds on the disposal of PAR Gold treasury shares of R149.8 million (2017:
nil).
COMMITMENTS REPORTED IN ZAR AND GBP
The group identified no material contingent liabilities in the current or
prior reporting period.
The group had contracted outstanding open orders at period end of R434.3
million (2017: R1.22 billion), or GBP24.0 million (2017: GBP72.0 million).
Outstanding orders in the current reporting period related primarily to the
Elikhulu Project.
Authorised commitments for the new financial year, not yet contracted for,
totalled R254.5 million (2017: R328.7 million) or GBP14.1 million (2017:
GBP19.4 million).
At 30 June 2018, the group had guarantees in place of R24.6 million (2017:
R24.6 million) or GBP1.4 million
(2017: GBP1.4 million) in favour of Eskom Holdings SOC Limited, and R14.0
million (2017: R14.0 million) or
GBP0.8 million (2017: GBP0.8 million) in favour of the DMR.
Operating lease commitments, which fall due within the next financial year,
amounted to R16.3 million
(2017: R2.7 million) or GBP0.9 million (2017: GBP0.16 million).
FAIR VALUE INSTRUMENTS
Financial instruments measured at fair value are grouped into levels 1 to 3
based on the extent to which fair value is observable.
The levels are classified as follows:
Level 1: Fair value is based on quoted prices in active markets for
identical financial assets or liabilities.
Level 2: Fair value is determined using inputs, other than quoted prices
included within level 1, which are observable for the asset or liability.
Level 3: Fair value is determined on inputs not based on observable market
data.
Level 1 financial instruments:
Pan African Resources holds 13,064,381 shares in MC Mining Limited (previously
known as Coal of Africa Limited). The investment was fair valued at R56.7
million or GBP3.1 million (2017: R127.6 million or GBP7.5 million), at the
reporting date. The fair value of the listed investment is treated as Level 1
of the fair value hierarchy, as the share price is quoted on a stock exchange.
The group’s rehabilitation funds are valued at R364.3 million (2017: R320.6
million) or GBP20.1 million (2017: GBP18.9 million), which comprise of
predominantly equity-linked notes and interest-bearing call accounts.
Level 2 financial instruments:
During the current and prior reporting period, the group had exposure to
financial derivatives comprising a cost-collar hedge. The mark-to-market value
of this cost-collar asset at 30 June 2018 was R4.0 million or GBP0.2 million
(2017: nil)
The group’s cash settled share option liability, which is valued on a
mark-to-market basis according to the company’s quoted share price, amounted
to R9.6 million or GBP0.5 million (2017: R46.4 million or GBP2.7 million).
Level 3 financial instruments:
The group’s employee share ownership plan (“ESOP”) liability is
accounted for on a cash settled share option basis and valued on a
mark-to-market basis on the net present value of the discounted future cash
flows applicable to the beneficiaries of the schemes. The ESOP liability was
R10.3 million or GBP0.6 million (2017: R1.9 million or GBP0.11 million).
DIVIDENDS
Dividend paid and recommended
During the current reporting period the group paid a dividend of R185 million
or GBP10.0 million (2016: R300 million or GBP17.1 million), on 21 December
2017, relating to the 2017 financial year. This dividend equated to R0.08279
per share or 0.44561 pence per share (2016: R0.15438 per share or 0.87668
pence per share). As result of the cessation of mining at Evander Mines’
underground operations and the associated retrenchment costs, the board has
not recommended a dividend for the current reporting period. With Pan African
Resource’s business being repositioned to secure sustainable low-cost,
higher-margin production, the group’s prospect of reintroducing dividends
will improve in the next year.
The group received reciprocal PAR Gold dividends of R36.1 million (2016: R67.4
million), resulting in a net dividend paid of R148.9 million (2016: R232.6
million) to external shareholders.
Dividend policy
Pan African Resources aspires to pay a regular dividend to its shareholders.
In balancing this cash return to shareholders with the group’s strategy of
generic and acquisitive growth, Pan African Resources believes a target
pay-out ratio of 40% of net cash generated from operating activities - after
allowing for the cash flow impact of sustaining capital, contractual debt
repayments and the cash flow impact of once-off items - is appropriate. This
measure aligns dividend distributions with the cash generation potential of
the business. In proposing a dividend, the board will also take into account
the company’s financial position, future prospects, satisfactory solvency
and liquidity assessments and other factors deemed relevant at the time. The
board also allows itself flexibility to deviate from the above policy, when
deemed appropriate.
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS AND ACCOUNTING POLICIES
The provisional audited results announcement has been prepared using
accounting policies that comply with the International Financial Reporting
Standards (“IFRS”) adopted by the European Union and South Africa, which
are consistent with those applied in the financial statements for the prior
year ended 30 June 2017.
The provisional audited results announcement is only a summary of the
information in the Integrated Annual Report and does not contain full or
complete details. Any investment decision by investors and/or shareholders
should be based on consideration of the final Integrated Annual Report, as a
whole, to be published on the company’s website in due course.
ALTERNATIVE PERFORMANCE MEASURE (“APM”)
The provisional audited results announcement contains both statutory measures
and alternative performance measures which, in management’s view, reflect
the underlying performance of the business and provide a more meaningful
comparison of how the group’s business is managed and measured on a
day-to-day basis.
Alternative performance measures are non-GAAP (Generally Accepted Accounting
Practice) measures and provide supplementary information to assist with the
understanding of the group’s financial results and with the evaluation of
operating performance for all the periods presented. Alternative performance
measures, however, are not a measure of financial performance under IFRS as
adopted by the European Union and South Africa and should not be considered as
a substitute for measures determined in accordance with IFRS. As the group’s
alternative performance measures are not defined terms under IFRS they may
therefore not be comparable with similarly titled measures reported by other
companies.
Refer to the APM summary report for the period ended 30 June 2018.
JSE LIMITED (“JSE”) LISTING
The company has a dual primary listing on the JSE in South Africa and the AIM
market (“AIM”) of the London Stock Exchange.
This provisional audited results announcement has been prepared in accordance
with the framework concepts and the measurement and recognition requirements
of IFRS and the SAICA Financial Reporting Guides as issued by the Accounting
Practice Committee, and the Financial Pronouncements as issued by the
Financial Reporting Standards Council and contains the minimum information as
required by International Accounting Standard 34. The accounting policies are
in terms of IFRS and are consistent with those applied in the 2017
consolidated financial statements.
The group's South African external auditors, Deloitte & Touche, have issued
their opinion on the consolidated financial statements and the provisional
summarised consolidated financial statements for the year ended 30 June 2018.
The audits for both the summarised and full set of financial statements
conducted in accordance with International Standards on Auditing. Deloitte &
Touche have expressed unmodified opinions on the consolidated financial
statements and the provisional summarised consolidated financial statements.
Copies of the audit reports are available for inspection at the company's
registered office. Any reference to future financial performance included in
this provisional audited results announcement has not been reviewed or
reported on by the group's South African external auditors.
The auditor’s report does not report on the APMs (excluding headline
earnings and HEPS) contained in this announcement. Shareholders are therefore
advised that in order to obtain a full understanding of the nature of the
auditor’s engagement they should obtain a copy of that report, together with
the accompanying financial information, from the company’s registered
office.
These provisional summarised consolidated financial statements are extracted
from the audited consolidated financial statements. The directors take full
responsibility for the preparation of the provisional summarised audited
results and confirm the financial information and related commentary has been
correctly extracted from the underlying group consolidated financial
statements.
AIM LISTING
The financial information for the year ended 30 June 2018 does not constitute
statutory accounts as defined in sections 435(1) and 435(2) of the UK
Companies Act 2006 (“Companies Act 2006”) but has been derived from those
accounts. Statutory accounts for the year ended 30 June 2017 have been
delivered to the Registrar of Companies and those for 2018 will be delivered
following the company's annual general meeting. Deloitte LLP, the external
auditor registered in the UK, has reported on these accounts for the year
ended 30 June 2018.
Deloitte LLP’s audit report for 30 June 2018 was unqualified, did not
include a reference to any matters to which auditors draw attention by way of
emphasis of matter, and did not contain a statement under section 498(2) or
498(3) of the Companies Act 2006. These statutory accounts have been prepared
in accordance with IFRS and IFRS Interpretations Committee interpretations
adopted for use by the European Union, with those parts of the Companies Act
2006 applicable to companies reporting under IFRS.
DIRECTORSHIP CHANGES AND DEALINGS
Current reporting period
No directorship changes took place during the period under review.
However, the following director dealings in securities took place:
Mr JAJ Loots participated in the following company shares transactions:
- On 22 February 2018, Mr JAJ Loots entered into a contract for difference
derivative (“CFDs”) for 200,000 shares at a price of GBP0.08 per share.
- On 27 September 2017, Mr JAJ Loots purchased 108,000 shares at an average
price of R2.35 per share.
- On 29 September 2017, Mr JAJ Loots entered into a CFD for 200,000 shares
at average of GBP12.747p per share.
Mr JAJ Loots had 668,675 shares and 400,000 CFD’s at period end,
representing 0.05% of the total issued shares.
Mr GP Louw participated in the following company shares transactions:
- On 28 September 2017, Mr GP Louw purchased 45,000 shares at an average
price of R2.35 per share.
- On 23 February 2018, Mr GP Louw purchased 75,000 shares at R1.30 per
share.
Mr GP Louw had 257,450 shares at period end, representing 0.01% of the total
issued shares.
Mr T Mosololi, on 6 October 2017, purchased 20,000 shares at R2.30. Mr T
Mosololi had 50,000 shares outstanding at period end, representing 0.01% of
total issued shares.
Mr K Spencer had 3,000,000 shares at period end, representing 0.13% of the
total issued shares.
No dealings in the securities by the directors of the company took place
between the period end and the date of the publication of this announcement.
SHARES ISSUED
No additional issuance of shares during the current reporting period.
GOING CONCERN
The group closely monitors and manages its liquidity risk by means of a
centralised treasury function. Cash forecasts are regularly produced, and
sensitivities run for different scenarios including, but not limited to,
changes in commodity prices and different production profiles from the
group’s producing assets. The group had R485 million of available debt
facilities and R12.6 million of cash and cash equivalents at 30 June 2018.
Based on the current status of the group’s finances, having considered going
concern forecasts and reasonably possible downside scenarios, including a ZAR
gold price of R525,000/kg (USD1,270/oz at a prevailing ZAR:USD average
exchange rate R12.86:1), and reduced production volumes, the group’s
forecasts demonstrate it will have sufficient liquidity headroom to meet its
obligations in the ordinary course of business, and will comply with financial
covenants for the 12 months from the date of approval of the financial
statements.
The board has a reasonable expectation that the company has adequate resources
to continue in operational existence for the foreseeable future. Accordingly,
the group continues to adopt the going concern basis of accounting in
preparation of the 30 June 2018 financial statements.
EVENTS AFTER THE REPORTING PERIOD
The group had no material events after the reporting period.
SEGMENT REPORTING
A segment is a distinguishable component of the group engaged in providing
products or services in a particular business sector or segment, which is
subject to risks and rewards different from those of other segments. The
group's business activities were conducted through the following business
segments:
Continuing operations:
- Barberton Mines (including BTRP), located in Barberton, South Africa;
- Evander Mines (ETRP and Elikhulu, excluding the 8 Shaft underground mining
operation), located in Evander, South Africa;
- Corporate, located in Johannesburg, South Africa; and
- Pan African Resources Funding Company Proprietary Limited (“Funding
Company”), located in Johannesburg, South Africa.
Discontinued operations:
- Phoenix, located near Rustenburg, South Africa;
- Uitkomst Colliery, located in Newcastle, South Africa; and
- Evander Mines’ underground operations (including 8 Shaft, 7 Shaft and
the run-of-mine circuit in the Kinross Metallurgical plant), located in
Evander, South Africa.
The executive committee reviews the operations in accordance with the
disclosures presented above.
Cobus Loots Deon Louw
Chief Executive Officer Financial Director
19 September 2018
Pan African Resources PLC
Summarised consolidated statement of profit or loss and other comprehensive income for the period ended 30 June 2018
30 June 2018 30 June 2017 30 June 2018 30 June 2017
(Audited) (Audited) (Note 1) (Unaudited) (Unaudited) (Note 1)
Continuing operations GBP million GBP million ZAR million ZAR million
Revenue 108.5 125.1 1,873.9 2,158.2
Gold sales 108.5 125.1 1,873.9 2,158.2
Realisation costs (2.0) (1.0) (34.6) (17.5)
On - mine revenue 106.5 124.1 1,839.3 2,140.7
Gold cost of production (77.7) (75.4) (1,342.1) (1,301.4)
Mining depreciation (4.9) (5.5) (85.1) (94.9)
Mining profit 23.9 43.2 412.1 744.4
Other (expenses) (4.2) (0.3) (74.0) (4.1)
Profit on disposal of investment - 0.2 - 4.6
Profit on disposal of subsidiary - 5.4 - 91.3
Continuing operations - Impairment costs (8.2) - (136.6) -
Royalty costs (0.4) (1.1) (7.2) (19.2)
Net income before finance income and finance costs 11.1 47.4 194.3 817.0
Finance income 1.5 0.3 25.7 4.4
Finance costs (3.2) (2.8) (54.3) (48.4)
Profit before taxation 9.4 44.9 165.7 773.0
Taxation 2.1 (4.3) 36.3 (72.4)
Profit after taxation - continuing operations 11.5 40.6 202.0 700.6
Discontinued operations
Loss from discontinued operations (104.8) (22.7) (1,758.9) (390.7)
(Loss)/Profit after taxation (93.3) 17.9 (1,556.9) 309.9
Other comprehensive (loss)/income:
Items that have been or may subsequently be reclassified to the statement of profit or loss (net of tax):
Fair value movement on available for sale investment (3.9) (0.1) (70.9) (1.7)
Taxation on fair value movement on available for sale investment 0.9 - 15.9 -
Items that will not be reclassified to the statement of profit or loss (net of tax):
Profit on disposal of available for sale investment - (0.2) - (4.6)
Foreign currency translation differences (5.9) 21.7 - -
Total comprehensive (loss)/income for the year (102.2) 39.3 (1,611.9) 303.6
(Loss)/Profit attributable to:
Owners of the parent (93.3) 17.9 (1,556.9) 309.9
Total comprehensive (loss)/income attributable to:
Owners of the parent (102.2) 39.3 (1,611.9) 303.6
Earnings per share - combined operations (5.15) 1.14 (86.03) 19.81
Diluted earnings per share - combined operations (5.15) 1.14 (86.03) 19.80
Earnings per share - continuing operations 0.63 2.60 11.16 44.78
Diluted earnings per share - continuing operations 0.63 2.60 11.16 44.76
Note 1: The prior reporting period’s figures have been represented in
accordance with IFRS 5 non-current assets held for sale and discontinued
operations.
Summarised consolidated Statement of Financial Position as at 30 June 2018
30 June 2018 30 June 2017 30 June 2018 30 June 2017
(Audited) (Audited) (Unaudited) (Unaudited)
GBP million GBP million ZAR million ZAR million
ASSETS
Non-current assets
Property, plant and equipment and mineral rights 192.8 224.7 3,488.3 3,810.7
Other intangible assets(Note 1) - 0.1 0.6 1.2
Deferred taxation 6.2 0.8 112.3 12.9
Long-term inventory 0.6 0.7 10.3 11.6
Long-term receivables 1.3 2.5 24.0 43.0
Goodwill 21.0 21.0 303.5 303.5
Investments 3.1 7.5 56.7 127.6
Rehabilitation funds 20.1 18.9 364.3 320.6
245.1 276.2 4,360.0 4,631.1
Current assets
Inventories 2.7 5.1 48.9 85.7
Current taxation asset 0.7 1.1 12.5 18.1
Trade and other receivables 14.8 13.7 268.6 233.1
Current portion of long-term receivables 0.9 - 17.2 -
Financial instruments assets(Note 1) 0.2 - 4.0 -
Cash and cash equivalents 0.7 9.4 12.6 160.2
20.0 29.3 363.8 497.1
Non-current assets held for sale - 5.6 - 95.2
TOTAL ASSETS 265.1 311.1 4,723.8 5,223.4
EQUITY AND LIABILITIES
Capital and reserves
Share capital 22.3 22.3 318.8 318.8
Share premium 144.6 145.4 2,247.4 2,261.4
Translation reserve (42.8) (36.8) - -
Share option reserve 1.7 1.2 24.6 17.2
Retained earnings 30.0 131.3 161.4 1,867.1
Realisation of equity reserve (10.7) (10.7) (140.6) (140.6)
Treasury capital reserve (15.6) (25.4) (385.2) (548.6)
Merger reserve (10.7) (10.7) (154.7) (154.7)
Other reserves (3.0) - (55.0) -
Equity attributable to owners of the parent 115.8 216.6 2,016.7 3,620.6
Total equity 115.8 216.6 2,016.7 3,620.6
Non-current liabilities
Long-term provisions 15.1 11.7 273.4 197.7
Long-term liabilities 86.5 12.3 1,565.0 208.4
Deferred taxation 14.3 38.9 259.5 660.5
115.9 62.9 2,097.9 1,066.6
Current liabilities
Trade and other payables 27.6 27.1 505.2 458.9
Current portion of long term liabilities 5.2 4.1 93.5 70.3
Current taxation liability (Note 1) 0.6 - 10.5 0.8
33.4 31.2 609.2 530.0
Liabilities directly associated with non-current assets held for sale - 0.4 - 6.2
TOTAL EQUITY AND LIABILITIES 265.1 311.1 4,723.8 5,223.4
Note 1: Figures are presented in millions, and values less than GBP0.5 million
or R0.5 million, have been rounded to zero.
Summarised consolidated statement of cash flows for the year ended 30 June 2018
30 June 2018 30 June 2017 30 June 2018 30 June 2017
(Audited) (Audited) (Unaudited) (Unaudited)
GBP million (Note 1) GBP million (Note 1) ZAR million (Note 1) ZAR million (Note 1)
NET CASH (USED IN)/GENERATED FROM OPERATIONS AFTER TAXATION, ROYALTIES AND FINANCE CHARGES (3.3) 16.5 (53.2) 281.0
Dividends paid net of PAR Gold reciprocal dividend (8.2) (13.3) (148.9) (232.6)
NET CASH (USED IN)/GENERATED FROM OPERATING ACTIVITIES (11.5) 3.2 (202.1) 48.4
INVESTING ACTIVITIES
Additions to property, plant and equipment and mineral rights (92.7) (35.5) (1,601.4) (612.7)
Additions to other intangible assets - (0.1) (0.3) (0.4)
Rehabilitation funds contributions (1.5) - (26.2) -
Proceeds on disposals of Property plant and equipment and mineral rights - 0.4 - 7.0
Increase in long term loans receivables (0.4) (1.2) (6.5) (20.0)
Proceeds from disposal of subsidiary, net of cash - 6.6 - 111.7
Proceeds on disposals of investment 4.8 1.4 89.0 23.4
NET CASH USED IN INVESTING ACTIVITIES (89.8) (28.4) (1,545.4) (491.0)
FINANCING ACTIVITIES - - - -
Proceeds from borrowings 90.0 47.8 1,535.0 817.0
Borrowings repaid (5.8) (54.0) (100.0) (915.0)
Proceeds/(settlement) of financial instruments 0.9 (1.4) 15.5 (22.9)
Proceeds from disposal of treasury shares 8.9 - 149.4 -
Shares issued - 40.8 - 696.0
Share issue costs - (1.4) - (24.0)
NET CASH FROM FINANCING ACTIVITIES 94.0 31.8 1,599.9 551.1
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (7.3) 6.6 (147.6) 108.5
Cash and cash equivalents at the beginning of the year 9.4 2.7 160.2 52.6
Cash and cash equivalents from discontinued operations - (0.1) - (0.9)
Effect of foreign exchange rate changes (1.4) 0.2 - -
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 0.7 9.4 12.6 160.2
Note 1: Figures are presented in millions, and values below GBP0.5 million or
R0.5 million, have been rounded to zero.
Note 2: The cash settled share option costs have been represented in cash
generated from operating activities from financing activities in the current
and prior reporting period.
Summarised audited consolidated segment report for the year ended 30 June 2018
30 June 2018 30 June 2017
Continuing operations Discontinued operations Continuing operations Discontinued operations
Barberton Mines Evander Mines (Continuing operations) Corporate office and growth projects Funding Company Evander Mines (Discontinued Phoenix Platinum (Note 4) Reclassification Group Barberton Mines Evander Mines (Continuing operations) Corporate office and growth projects Funding Company Uitkomst Colliery (Note 5) Phoenix Platinum (Note 4) Evander Mines (Discontinued operations) Reclassification Group
(Note 3) operations) (Note 3) (Note 3) (Note 3)
GBP million GBP million GBP million GBP million GBP million GBP million GBP million GBP million GBP million GBP million GBP million GBP million GBP million GBP million GBP million GBP million GBP million
Revenue
Gold sales (Note 1) 87.2 21.3 - - 47.0 - (47.0) 108.5 97.3 27.8 - - - - 44.5 (44.5) 125.1
Platinum Sales - - - - - 1.4 (1.4) - - - - - - 4.8 - (4.8) -
Coal sales - - - - - - - - - - - - 25.1 - - (25.1) -
Realisation costs (0.4) (1.6) - - (0.7) - 0.7 (2.0) (0.6) (0.4) - - - - (0.8) 0.8 (1.0)
On - mine revenue 86.8 19.7 - - 46.3 1.4 (47.7) 106.5 96.7 27.4 - - 25.1 4.8 43.7 (73.6) 124.1
Gold cost of production (65.9) (11.8) - - (59.5) - 59.5 (77.7) (61.2) (14.2) - - - - (58.6) 58.6 (75.4)
Platinum cost of production - - - - - (1.6) 1.6 - - - - - - (5.0) - 5.0 -
Coal cost of production - - - - - - - - - - - - (21.7) - - 21.7 -
Depreciation and amortisation (4.2) (0.7) - - (6.1) - 6.1 (4.9) (4.7) (0.8) - - (0.7) (0.9) (5.0) 6.6 (5.5)
Mining Profit 16.7 7.2 - - (19.3) (0.2) 19.5 23.9 30.8 12.4 - - 2.7 (1.1) (19.9) 18.3 43.2
Other (expenses)/income (Note 2) (0.7) 0.9 (4.0) (0.4) (11.5) - 11.5 (4.2) 4.6 0.5 (5.5) 0.1 0.2 (0.1) (1.8) 1.7 (0.3)
Loss from associate - - - - - - - - - - - - - - - - -
Profit on disposal of investment - - - - - - - - - - 0.2 - - - - - 0.2
Profit on disposal of subsidiary - - - - - - - - - 5.4 - - - - - 5.4
Continuing operations - impairment costs - (8.2) - - (98.1) - 98.1 (8.2) - - - - - (6.0) - 6.0 -
(Note 6)
Adjustment on sale of asset held for sale - - - - - (0.3) 0.3 - - - - - - - - - -
Royalty costs (0.4) - - - (0.2) - 0.2 (0.4) (1.0) (0.1) - - (0.1) - (0.2) 0.3 (1.1)
Net income / (loss) before finance income 15.6 (0.1) (4.0) (0.4) (129.1) (0.5) 129.6 11.1 34.4 12.8 0.1 0.1 2.8 (7.2) (21.9) 26.3 47.4
and finance costs
Finance income 0.2 0.8 0.4 0.1 0.5 - (0.5) 1.5 - - 0.1 0.2 0.1 - - (0.1) 0.3
Finance costs - 0.1 - (3.3) (0.2) - 0.2 (3.2) - - - (2.8) - - - - (2.8)
Profit /(loss) before taxation 15.8 0.8 (3.6) (3.6) (128.8) (0.5) 129.3 9.4 34.4 12.8 0.2 (2.5) 2.9 (7.2) (21.9) 26.2 44.9
Taxation (2.3) 5.6 (1.2) - 24.4 0.1 (24.5) 2.1 (5.7) 2.0 (0.5) (0.1) (0.8) 0.3 4.0 (3.5) (4.3)
Profit /(loss) after taxation before 13.5 6.4 (4.8) (3.6) (104.4) (0.4) 104.8 11.5 28.7 14.8 (0.3) (2.6) 2.1 (6.9) (17.9) 22.7 40.6
inter-company charges
Loss after taxation from discontinued - - - - - (104.8) (104.8) - - - - - - - (22.7) (22.7)
operations
Profit /(loss) after taxation before 13.5 6.4 (4.8) (3.6) (104.4) (0.4) - (93.3) 28.7 14.8 (0.3) (2.6) 2.1 (6.9) (17.9) - 17.9
inter-company charges
Inter-company transactions
Management fees (2.0) (0.1) 1.8 (0.1) (0.2) 0.6 - - (2.8) (0.8) 5.7 (0.1) (0.4) (0.3) (1.3) - -
inter-company interest charges (0.3) - (0.4) 3.6 (2.9) - - - (0.8) - (0.6) 2.8 - 0.1 (1.5) - -
Profit /(loss) after taxation after inter 11.2 6.3 (3.4) (0.1) (107.5) 0.2 - (93.3) 25.1 14.0 4.8 0.1 1.7 (7.1) (20.7) - 17.9
-company charges
Segmental assets (Total assets excluding 79.3 156.9 7.5 0.7 - - - 244.4 73.8 190.0 19.6 1.1 - 5.6 - - 290.1
goodwill)
Segmental liabilities 26.9 30.7 1.6 90.5 - - - 149.7 25.2 52.5 4.6 11.9 - 0.4 - - 94.6
Goodwill 21.0 - - - - - - 21.0 21.0 - - - - - - - 21.0
Net assets (excluding goodwill) (Note 7) 52.4 126.2 5.9 (89.8) - - - 94.7 48.6 137.5 15.0 (10.8) - 5.2 - - 195.5
Capital Expenditure (Note 8) 12.2 73.0 0.1 - - - - 85.3 11.2 10.2 0.1 - 0.9 0.3 12.9 - 35.6
Adjusted EBITDA (Note 9) 19.8 8.8 (4.0) (0.4) (15.6) (0.2) 15.8 24.2 39.1 13.6 (5.5) 0.1 3.5 (0.3) (16.9) 13.7 47.3
Figures are presented in millions, and values less than GBP0.5 million or R0.5 million, have been rounded to zero. Note 1: All gold sales were made in the Republic of South Africa and the majority of revenue was generated from South African financial institutions.
Note 2: Other (expenses)/income exclude inter-company management fees and dividends.
Note 3: During the current reporting period, Evander Mines underground operations ceased mining on 31 May 2018. The ETRP buy-in operations remain as continuing operations.
Note 4: Phoenix was classified as held for sale and as a discontinued operation at 30 June 2017. The Phoenix disposal was concluded on 6 November 2017.
Note 5: The disposal of Pan African Resources Coal Holdings Proprietary Limited and Uitkomst was completed on 30 June 2017 and this business was classified as a discontinued operation.
Note 6: Impairment costs associated with the continuing operations represent the carrying value of the Kinross and ETRP metallurgical plant infrastructure.
Note 7: All assets are held within South Africa. The segmental assets and liabilities above, exclude inter-company balances.
Note 8: Capital expenditure comprises of additions to property, plant and equipment and mineral rights and intangible assets.
Note 9: Adjusted EBITDA is represented by earnings before interest, taxation, depreciation and amortisation, impairments, discontinued operations and profit/(loss) on disposal of investments.
Summarised unaudited consolidated segment report for the year ended 30 June 2018
30 June 2018 30 June 2017
Continuing operations Discontinued operations Continuing operations Discontinued operations
Barberton Mines Evander Mines (Continuing operations) (Note 3) Corporate office and growth projects Funding Company Evander Mines (Discontinued operations) (Note 3) Phoenix Platinum (Note 4) Reclassification Group Barberton Mines Evander Mines (Continuing operations) (Note 3) Corporate office and growth projects Funding Company Uitkomst Colliery (Note 5) Phoenix Platinum (Note 4) Evander Mines (Discontinued operations) (Note 3) Reclassification Group
ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million
Revenue
Gold sales (Note 1) 1,506.5 367.4 - - 811.4 - (811.4) 1,873.9 1,679.2 479.0 - - - - 767.2 (767.2) 2,158.2
Platinum Sales - - - - - 24.7 (24.7) - - - - - - 82.2 - (82.2) -
Coal sales - - - - - - - - - - - 432.8 - - (432.8) -
Realisation costs (7.7) (26.9) - - (12.5) - 12.5 (34.6) (10.5) (7.0) - - - - (14.0) 14.0 (17.5)
On - mine revenue 1,498.8 340.5 - - 798.9 24.7 (823.6) 1,839.3 1,668.7 472.0 - - 432.8 82.2 753.2 (1,268.2) 2,140.7
Gold cost of production (1,138.0) (204.1) - - (1,027.8) - 1,027.8 (1,342.1) (1,056.2) (245.2) - - - - (1,010.2) 1,010.2 (1,301.4)
Platinum cost of production - - - - - (28.2) 28.2 - - - - - - (86.4) - 86.4 -
Coal cost of production - - - - - - - - - - - - (375.0) - - 375.0 -
Depreciation and amortisation (72.8) (12.3) - - (106.1) - 106.1 (85.1) (81.9) (13.0) - - (12.2) (15.0) (86.2) 113.4 (94.9)
Mining Profit 288.0 124.1 - - (335.0) (3.5) 338.5 412.1 530.6 213.8 - - 45.6 (19.2) (343.2) 316.8 744.4
Other (expenses)/income (Note 2) (12.7) 14.9 (69.0) (7.2) (198.0) 0.7 197.3 (74.0) 81.3 8.6 (95.6) 1.6 2.7 (2.0) (30.4) 29.7 (4.1)
Profit on disposal of investment - - - - - - - - - - 4.6 - - - - - 4.6
Profit on disposal of subsidiary - - - - - - - - - - 91.3 - - - - - 91.3
Continuing operations - impairment costs (Note 6) - (136.6) - - (1,644.5) - 1,644.5 (136.6) - - - - - (100.9) - 100.9 -
Adjustment on sale of asset held for sale - - - - - (4.9) 4.9 - - - - - - - - - -
Royalty costs (6.5) (0.7) - - (4.1) - 4.1 (7.2) (17.5) (1.7) - - (1.2) - (3.8) 5.0 (19.2)
Net income / (loss) before finance income and finance 268.8 1.7 (69.0) (7.2) (2,181.6) (7.7) 2,189.3 194.3 594.4 220.7 0.3 1.6 47.1 (122.1) (377.4) 452.4 817.0
costs
Finance income 3.3 13.3 6.2 2.9 8.6 0.1 (8.7) 25.7 0.1 0.3 0.9 3.1 1.8 - 0.6 (2.4) 4.4
Finance costs - - (0.1) (54.2) - - - (54.3) (0.4) - (0.2) (47.8) - - (0.2) 0.2 (48.4)
Profit /(loss) before taxation 272.1 15.0 (62.9) (58.5) (2,173.0) (7.6) 2,180.6 165.7 594.1 221.0 1.0 (43.1) 48.9 (122.1) (377.0) 450.2 773.0
Taxation (40.2) 95.9 (18.9) (0.5) 421.0 0.7 (421.7) 36.3 (97.5) 35.4 (9.2) (1.1) (13.6) 4.8 68.3 (59.5) (72.4)
Profit /(loss) after taxation before inter-company 231.9 110.9 (81.9) (59.0) (1,752.0) (6.9) 1,758.9 202.0 496.6 256.4 (8.2) (44.2) 35.3 (117.3) (308.7) 390.7 700.6
charges and discontinued operations
Loss after taxation from discontinued operations - - - - - (1,758.9) (1,758.9) - - - - - - - (390.7) (390.7)
Profit /(loss) after taxation before inter-company 231.9 110.9 (81.8) (59.0) (1,752.0) (6.9) - (1,556.9) 496.6 256.4 (8.2) (44.2) 35.3 (117.3) (308.7) - 309.9
charges
Inter-company transactions
Management fees (34.0) (1.5) 41.0 (2.0) (3.5) - - - (48.4) (14.1) 97.9 (1.6) (7.6) (4.5) (21.7) - -
inter-company interest charges (5.1) - (6.3) 62.3 (50.9) - - - (13.1) - (11.3) 47.9 0.5 2.1 (26.1) - -
Profit /(loss) after taxation after inter-company charges 192.8 109.4 (47.1) 1.3 (1,806.4) (6.9) - (1,556.9) 435.1 242.3 78.4 2.1 28.2 (119.7) (356.5) - 309.9
Segmental assets (Total assets excluding goodwill) 1,434.0 2,838.4 135.9 12.8 - - - 4,420.1 1,251.0 3,222.6 332.6 18.5 - 95.2 - - 4,919.9
Segmental liabilities 486.8 555.3 28.4 1,636.5 - - - 2,707.0 426.7 890.1 77.8 202.0 - 6.2 - - 1,602.8
Goodwill 303.5 - - - - - - 303.5 303.5 - - - - - - - 303.5
Net assets (Excluding goodwill) (Note 7) 947.2 2,283.1 106.5 (1,623.7) - - - 1,713.1 824.3 2,332.5 254.8 (183.5) - 89.0 - - 3,317.1
Capital expenditure (Note 8) 210.4 1,261.4 2.2 - 176.1 - - 1,650.1 193.5 222.2 1.4 - 15.1 5.4 175.5 - 613.1
Adjusted EBITDA (Note 9) 341.6 150.6 (69.0) (7.2) (270.0) (2.8) 272.8 416.0 676.3 233.7 (95.6) 1.6 59.3 (6.2) (291.2) 238.1 816.0
Figures are presented in millions, and values less than GBP0.5 million or R0.5 million, have been rounded to zero.
Note 1: All gold sales were made in the Republic of South Africa and the majority of revenue was generated from South African financial institutions.
Note 2: Other (expenses)/income exclude inter-company management fees and dividends.
Note 3: During the current reporting period, Evander Mines underground operations ceased mining on 31 May 2018. The ETRP buy-in operations remain as continuing operations.
Note 4: Phoenix was classified as held for sale and as a discontinued operation at 30 June 2017. The Phoenix disposal was concluded on 6 November 2017.
Note 5: The disposal of Pan African Resources Coal Holdings Proprietary Limited and Uitkomst was completed on 30 June 2017 and this business was classified as a discontinued operation.
Note 6: Impairment costs associated with the continuing operations represent the carrying value of the Kinross and ETRP metallurgical plant infrastructure.
Note 7: All assets are held within South Africa. The segmental assets and liabilities above, exclude inter-company balances.
Note 8: Capital expenditure comprises of additions to property, plant and equipment and mineral rights and intangible assets.
Note 9: Adjusted EBITDA is represented by earnings before interest, taxation, depreciation and amortisation, impairments, discontinued operations and profit/(loss) on disposal of investments.
Summarised audited consolidated statement of changes in equity for the year ended 30 June 2018
Share capital Share premium Translation reserve Share option reserve Retained earnings Realisation of equity reserve Treasury capital reserve Merger reserve Other reserves Total
GBP million GBP million GBP million GBP million GBP million GBP million GBP million GBP million GBP million GBP million
Balance at 30 June 2016 19.4 108.9 (58.6) 1.0 126.8 (10.7) (25.4) (10.7) 0.3 151.0
Issue of shares 2.9 37.9 - - - - - - - 40.8
Share issue costs - (1.4) - - - - - - - (1.4)
Profit for the year - - - - 17.9 - - - - 17.9
Total comprehensive income - - 21.7 - - - - - (0.3) 21.4
Dividends paid - - - - (17.1) - - - - (17.1)
Reciprocal dividends - PAR Gold - - - - 3.8 - - - - 3.8
Share based payment - charge for the year - - - 0.2 - - - - - 0.2
Balance at 30 June 2017 (Note 1) 22.3 145.4 (36.9) 1.2 131.4 (10.7) (25.4) (10.7) - 216.6
Disposal of treasury shares - (0.8) - - - - 9.8 - - 9.0
Loss for the year - - - - (93.3) - - - - (93.3)
Total comprehensive loss - - (5.9) - - - - - (3.0) (8.9)
Dividends paid - - - - (10.0) - - - - (10.0)
Reciprocal dividends - PAR Gold - - - - 1.9 - - - - 1.9
Share based payment - charge for the year - - - 0.5 - - - - - 0.5
Balance at 30 June 2018 22.3 144.6 (42.8) 1.7 30.0 (10.7) (15.6) (10.7) (3.0) 115.8
Note 1: Due to rounding in the statement of changes in equity, the figures may differ to the summarised consolidated statement of financial position.
Summarised unaudited consolidated statement of changes in equity in for the year ended 30 June 2018
Share Capital Share Premium Translation reserve Share option reserve Retained earnings Realisation of equity reserve Treasury capital reserve Merger reserve Other reserves Total
ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million ZAR million
Balance at 30 June 2016 269.7 1,638.5 - 14.0 1,789.9 (140.6) (548.6) (154.7) 6.3 2,874.5
Issue of shares 49.1 646.9 - - - - - - - 696.0
Share issue costs - (24.0) - - - - - - - (24.0)
Profit for the year - - - - 309.9 - - - - 309.9
Total comprehensive income - - - - - - - - (6.3) (6.3)
Dividends paid - - - - (300.0) - - - - (300.0)
Reciprocal dividends - PAR Gold - - - - 67.4 - - - - 67.4
Share based payment - charge for the year - - - 3.2 - - - - - 3.2
Balance at 30 June 2017 (Note 1) 318.8 2,261.4 - 17.2 1,867.2 (140.6) (548.6) (154.7) - 3,620.7
Disposal of treasury shares - (14.0) - - - - 163.4 - - 149.4
Loss for the year - - - - (1,556.9) - - - - (1,556.9)
Total comprehensive loss - - - - - - - - (55.0) (55.0)
Dividends paid - - - - (185.0) - - - - (185.0)
Reciprocal dividends - PAR Gold - - - - 36.1 - - - - 36.1
Share based payment - charge for the year - - - 7.4 - - - - - 7.4
Balance at 30 June 2018 318.8 2,247.4 - 24.6 161.4 (140.6) (385.2) (154.7) (55.0) 2,016.7
Note 1: Due to rounding in the statement of changes in equity, the figures
may differ to the summarised consolidated statement of financial position.
Unaudited alternative performance measures summary for the period ended 30
June 2018
30 June 2018 30 June 2017 PRODUCTION CASH COST, ALL-IN SUSTAINING COSTS AND ALL-IN COSTS 30 June 2017 30 June 2018
USD million USD million ZAR million ZAR million
186.5 170.9 Cash costs 2,322.3 2,397.5
184.3 170.1 Gold cost of production 2,311.6 2,369.9
3.7 2.3 Realisation costs 31.5 47.1
(1.5) (1.5) Care and maintenance costs (20.8) (19.5)
218.1 204.2 All-in sustaining costs 2,772.7 2,802.1
186.5 170.9 Cash costs 2,322.3 2,397.5
0.9 1.7 Royalties 23.0 11.3
1.1 1.7 Community costs related to gold operations 22.7 13.6
(0.1) (0.2) By-product credits (3.3) (1.9)
7.3 6.9 Corporate general and administrative costs 93.1 94.4
9.1 10.7 Development capital (sustaining) 145.4 116.5
13.3 12.5 Maintenance capital expenditure (sustaining) 169.5 170.7
238.7 214.6 All-in costs 2,914.3 3,067.8
218.1 204.2 All-in sustaining costs 2,772.7 2,802.1
8.1 7.4 Capital expenditure (non-sustaining) 100.8 104.7
12.5 3.0 Voluntary severance pay/retrenchment costs (non-sustaining) 40.8 161.0
30 June 2018 30 June 2017 30 June 2017 30 June 2018
GBP million GBP million SUMMARY OF ADJUSTED EBITDA ZAR million ZAR million
24.2 47.3 Adjusted EBITDA 816.0 416.0
(93.3) 17.9 Loss/profit after taxation 309.9 (1,556.9)
(2.1) 4.3 Taxation 72.4 (36.3)
3.2 2.8 Finance costs 48.4 54.3
(1.5) (0.3) Finance income (4.4) (25.7)
8.2 - Impairments - 136.6
- (5.4) Profit on disposal of subsidiary (91.3) -
- (0.2) Profit on disposal of investment (4.6) -
4.9 5.5 Mining depreciation and amortisation 94.9 85.1
104.8 22.7 Profit after tax on discontinued operations 390.7 1,758.9
30 June 2018 30 June 2017 AUDITED HEADLINE EARNINGS AND HEADLINE EARNINGS PER SHARE FROM COMBINED OPERATIONS 30 June 2017 30 June 2018
GBP million GBP million ZAR million ZAR million
(93.3) 17.9 Basic earnings 309.9 (1,556.9)
- (0.2) Profit on disposal of investment (4.6) -
- Taxation on profit on disposal of investment 1.0
- (5.4) Profit on disposal of subsidiary (91.3) -
0.3 - Adjustment on sale of asset held for sale - 4.9
- - Profit on disposal of property plant and equipment (0.4) -
- - Taxation on profit on disposal of property plant and equipment 0.1 -
106.3 6.0 Impairment 100.9 1,781.1
13.3 18.3 Headline earnings 315.6 229.1
0.73 1.17 Headline earnings per share 20.17 12.66
0.73 1.17 Diluted headline earnings per share 20.17 12.66
30 June 2018 30 June 2017 AUDITED HEADLINE EARNINGS AND HEADLINE EARNINGS PER SHARE FROM CONTINUING OPERATIONS 30 June 2017 30 June 2018
GBP million GBP million ZAR million ZAR million
11.5 40.6 Basic earnings 700.6 202.0
- (0.2) Profit on disposal of Investment (4.6) -
- Taxation on profit on disposal of Investment 1.0
- (5.4) Profit on disposal of subsidiary (91.3) -
- - Profit on disposal of property plant and equipment - -
- - Tax on profit on disposal of property plant and equipment - -
8.2 - Impairment - 136.6
19.6 35.0 Headline earnings 605.7 338.6
1.08 2.24 Headline earnings per share 38.72 18.71
1.08 2.24 Diluted headline earnings per share 38.70 18.71
30 June 2018 30 June 2017 NET DEBT FOR THE GROUP 30 June 2017 30 June 2018
GBP million GBP million ZAR million ZAR million
89.8 4.1 Net debt 67.6 1,623.6
47.9 11.9 Revolving credit facility 201.2 866.2
42.6 - Elikhulu term loan facility - 770.0
- 1.6 Gold loan 26.6 -
(0.7) (9.4) Cash and cash equivalents (160.2) (12.6)
30 June 2018 30 June 2017 Metric CASH COST PER OUNCE AND KILOGRAMME Metric 30 June 2017 30 June 2018
1,162 986 USD/oz Cash cost ZAR/kg 430,863 480,439
186.5 170.9 USD million Cash costs ZAR million 2,322.3 2,397.5
160,444 173,285 Oz Gold sold kg 5,390 4,990
30 June 2018 30 June 2017 Metric ALL-IN SUSTAINING COST PER OUNCE AND KILOGRAMME Metric 30 June 2017 30 June 2018
1,358 1,177 USD/oz All-in sustaining cost ZAR/kg 514,435 561,468
218.1 204.2 USD million All-in sustaining costs ZAR million 2,772.7 2,802.1
160,444 173,285 oz Gold sold kg 5,390 4,990
30 June 2018 30 June 2017 Metric ALL-IN COST PER OUNCE AND KILOGRAMME Metric 30 June 2017 30 June 2018
1,487 1,237 USD/oz All-in cost ZAR/kg 540,693 614,713
238.7 214.6 USD million All-in costs ZAR million 2,914.3 3,067.8
160,444 173,285 Oz Gold sold kg 5,390 4,990
Contact information
Corporate Office The Firs Office Building 2nd Floor, Office 201 Cnr. Cradock and Biermann Avenues Rosebank, Johannesburg South Africa Office: + 27 (0) 11 243 2900 Facsimile: + 27 (0) 11 880 1240 Registered Office Suite 31 Second Floor 107 Cheapside London EC2V 6DN United Kingdom Office: + 44 (0) 207 796 8644 Facsimile: + 44 (0) 207 796 8645
Cobus Loots Pan African Resources PLC Chief Executive Officer Office: + 27 (0) 11 243 2900 Deon Louw Pan African Resources PLC Financial Director Office: + 27 (0) 11 243 2900
Phil Dexter St James's Corporate Services Limited Company Secretary Office: + 44 (0) 207 796 8644 John Prior / Paul Gillam Numis Securities Limited Nominated Adviser and Joint Broker Office: +44 (0) 20 7260 1000
Sholto Simpson One Capital JSE Sponsor Office: + 27 (0) 11 550 5009 Ross Allister/James Bavister/David McKeown Peel Hunt LLP Joint Broker Office: +44 (0) 207 418 8900
Julian Gwillim Aprio Strategic Communications Public & Investor Relations SA Office: +27 (0)11 880 0037 Jeffrey Couch /Thomas Rider BMO Capital Markets Limited Joint Broker Office: +44 (0) 207 236 1010
Bobby Morse Buchanan Public & Investor Relations UK Office: +44 (0)20 7466 5000 Email: PAF@buchanan.uk.com
Website: www.panafricanresources.com
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