REG-Pan African Resources PLC: Interim Results for the six months ended 31 Dec 2014 <Origin Href="QuoteRef">PAFR.L</Origin> <Origin Href="QuoteRef">PANJ.J</Origin> - Part 2
26/02/2015 07:00
- Part 2: For the preceding part double click ID:nPRrP11E5a
2014 (ZAR million) 59.1 - 459.7 487.8 947.5
2013 (ZAR million) 53.0 - 412.4 427.8 840.2
All-in sustainable cost of production 2014 (ZAR million) 61.7 - 544.0 565.1 1,109.1
2013 (ZAR million) 53.0 - 477.9 483.7 961.6
All-in cost of production 2014 (ZAR million) 61.7 - 556.3 576.8 1,133.1
2013 (ZAR million) 88.9 - 523.3 517.6 1,040.9
EBITDA 2014 (ZAR million) 80.2 - 235.5 6.2 241.7
2013 (ZAR million) 85.1 - 316.7 123.1 439.8
Note:1: Adjusted EBITDA is represented by earnings before interest, taxation,
depreciation and amortisation, bargain purchase gain, impairments and loss on
disposal of associate.
Review of Barberton Mines
Safety
Safety is a key priority at Barberton Mines and we are pleased to report that
no fatalities occurred during the period under review.
Barberton Mines' total recordable injury frequency rate ('TRIFR') decreased to
12.93 (2013: 15.59) per 1,000,000 man hours worked, and the lost time injury
frequency rate ('LTIFR') improved to 1.50 (2013: 1.56) per 1,000,000 man hours
worked. The reportable injury frequency rate ('RIFR') improved to zero (2013:
0.94) per 1,000,000 man-hours worked.
Operating performance
Barberton Mines' (including BTRP) gold sold decreased by 7.1% to 52,942oz
(2013: 57,008oz).
The total combined USD cash costs per ounce increased by 10.0% to USD791/oz
(2013: USD719/oz). In ZAR per kilogram terms, total cash costs increased by
20.0% to ZAR279,150/kg (2013: ZAR232,611/kg).
The total cost of production (including off-mine costs) increased by 11.5% to
ZAR459.7 million (2013: ZAR412.4 million).
The main year-on-year cost contributors were the following:
Salary and wages increased by 6.5% to ZAR194.8 million (2013: ZAR182.9
million). The increase was driven by basic salary increases, effective 1 July
2014, consistent with the two-year wage agreement.
Mining costs increased by 12.4% to ZAR57.9 million (2013: ZAR51.5 million), due
to additional costs associated with mining consumables and vamping costs.
Processing costs increased by 5.6% to ZAR79.2 million (2013: ZAR75.0 million),
principally due to an increase of 41.1% in tonnes milled by the BTRP to
484,315t (2013: 343,137t).
Engineering and technical services costs increased by 7.5% to ZAR31.4 million
(2013: ZAR29.2 million) mainly due to expenditure incurred on the secondary
support at Fairview Mine's high grade 11
block.
Electricity costs increased by 10.7% to ZAR47.7 million (2013: ZAR43.1
million), due to Eskom tariff increases.
Security costs were well controlled and only increased by 2.3% to ZAR13.6
million (2013: ZAR13.3 million).
Administration and other costs increased by 7.8% to ZAR16.6 million (2013:
ZAR15.4 million). The higher than consumer price index ('CPI') increase was
mainly due to an increase in training costs, which increased by 35.3% to ZAR2.3
million (2013: ZAR1.7 million).
The total combined USD all-in cash cost per ounce increased by 5.0% to USD957/
oz (2013: USD912/oz). Barberton Mines' ZAR combined all-in cash cost per
kilogram increased by 14.5% to ZAR337,814/kg (2013: ZAR295,134/kg). This
increase in all-in cash costs was as a result of the 7.1% decrease in gold
sold, an increase in cash costs of 20.0% and sustaining capital increasing by
46.7% to ZAR20.1 million (2013: ZAR13.7 million).
Mining operations
Barberton Mines' gold sold (excluding BTRP) decreased by 9.2% to 41,232oz
(2013: 45,405oz). The mining operations tonnes milled decreased by 15.3% to
126,713t (2013: 149,589t).
On 21 November 2014 Pan African announced to shareholders that a Section 54
notice of order was issued by the South African Department of Mineral Resources
("DMR") to Barberton Mines. This notice was issued after the DMR's Mine Health
and Safety Inspectorate identified deviations from operating procedures and
administrative processes pertaining to Barberton Mines' lamp room, self-rescuers
and gas monitors. The stoppage resulted in 5 production days being lost at
Barberton Mines.
The Group, together with the operations' Safety and Health Committees, have since
corrected the deviations and action plans were presented to the DMR, which resulted
in approval being granted to re-commence production.
The decrease in gold sold from Barberton Mines underground and surface mining
operations therefore primarily resulted from:
Oil contamination at the BIOX® plant; and
The Section 54 safety stoppage.
Barberton Mines mining operations were affected by the following power outages,
which resulted from load clipping and Eskom load shedding programmes during the
period under review:
Sheba Mine experienced 4 instances of load shedding averaging between 2-3
hours, whilst there were 12 other instances of power outages averaging between
2-3 hours at a time.
Fairview Mine experienced no instances of load shedding but experienced 8
instances of power interruptions averaging between 1-3 hours at a time.
Consort Mine experienced two instances of load shedding averaging between 2-3
hours, whilst there were 16 other instances of power interruptions averaging
between 2-3 hours at a time.
The underground head grade increased marginally to 11.6g/t (2013: 11.5g/t), and
gold recoveries decreased to 89% (2013: 91%) as a result of the BIOX® plant oil
contamination mentioned above.
The total underground and surface USD cash costs per ounce increased by 12.5%
to USD885/oz (2013: USD787/oz). In ZAR per kilogram terms, total cash costs
increased by 22.8% to ZAR312,502/kg (2013: ZAR254,506/kg).
Tailing operations - BTRP
BTRP gold sold increased to 11,710oz (2013: 11,603oz) for the period. Tonnage
processed by the plant increased by 41.1% to 484,315t (2013: 343,137t) and the
head grade decreased to 1.5g/t (2013: 1.7g/t). Overall recoveries decreased by
15.0% to 51% (2013: 60%).
The BTRP USD cash costs per ounce increased by 1.1% to USD459/oz (2013: USD454/
oz). In ZAR per kilogram terms, total cash costs increased by 10.4% to
ZAR162,203/kg (ZAR146,928/kg). This cost increase is mainly due to lower
recoveries obtained.
Capital expenditure
Total capital expenditure at Barberton Mines decreased by 33.8% to ZAR55.9
million (2013: ZAR84.5 million). Maintenance capital expenditure of ZAR20.1
million (2013: ZAR13.7 million) and development capital expenditure of ZAR25.5
million (2013: ZAR25.4 million) was incurred. The BTRP was completed during the
first quarter of the 2014 financial year and therefore no expansion capital was
incurred on the BTRP during the period (2013: ZAR35.9 million). Capital
expenditure for the development of four new raise boreholes at Fairview Mine,
to improve underground environmental conditions, amounted to ZAR10.3 million
(2013: ZAR9.5 million).
Review of Evander Mines
Safety
Evander Mines reported that no fatalities occurred during the period under
review, and the 'Vuka Sizwe' safety initiative continues to improve safety
performance.
Evander Mines' TRIFR increased to 7.55 (2013: 5.12) per 1,000,000 man hours
worked, and the LTIFR improved to 2.86 (2013: 3.62) per 1,000,000 man hours
worked. The RIFR improved to 1.82 (2013: 2.71) per 1,000,000 man-hours worked.
Operating performance
Evander Mines' gold sold decreased by 21.8% to 33,733oz (2013: 43,164oz).
Tonnes milled increased by 27.3% to 396,457t (2013: 311,497t). The increase in
tonnes milled was due to an increase in surface stockpiles processed of 78.5%
to 198,578t (2013: 111,225t), whilst underground tonnes milled decreased by
1.2% to 197,879t (2013: 200,272t).
As a result of the low grade mining cycle and increased low grade surface
tonnages processed, the underground head grade decreased to 4.3g/t (2013: 6.2g/
t) and surface head grade increased to 1.4g/t (2013: 1.3g/t). Overall average
recovery decreased by 4.1% to 93% (2013: 97%), due to the additional surface
stockpile processed.
Evander Mines mining operations were affected by 19 instances of power
interruptions varying in length from 2 to 9 hours. Load clipping is carried
out on mine to assist Eskom in managing the regional grid demand.
The total cost of production including off-mine costs, increased by 14.0% to
ZAR487.8 million (2013: ZAR427.8 million). In ZAR per kilogram terms, total
cash costs increased by 45.9% to ZAR464,955/kg (2013: ZAR318,616/kg), mainly as
a result of the low grade mining cycle which resulted in lower gold sales.
The main year-on-year cost contributors were the following:
Salary and wages increased by 7.3% to ZAR237.5 million (2013: ZAR221.4 million)
consistent with the annual increase provided for in the collective wage
agreement.
Mining costs increased by 6.3% to ZAR45.7 million (2013: ZAR43.0 million), in
line with CPI rates.
Processing costs increased by 104.3% to ZAR52.7 million (2013: ZAR25.8
million), due to the increase of 78.5% to 198,578t (2013: 111,225t) of surface
sources being processed through the plant and the inclusion of the toll
treatment ore, ash and dredge projects.
Engineering and technical services costs increased by 10.7% to ZAR22.7 million
(2013: ZAR20.5 million) due inflation linked increases and higher maintenance
costs.
Electricity costs increased by 8.8% to ZAR97.4 million (2013: ZAR89.5 million),
in line with the average increase in Eskom's tariffs.
The security costs remained well controlled and decreased by 1.7% to ZAR5.6
million (2013: ZAR5.7 million), highlighting the cost benefits of a centralised
security monitoring team for both Barberton and Evander Mines.
Administration and other costs increased by 23.0% to ZAR24.6 million (2013:
ZAR20.0 million) due to higher information technology costs incurred as a
result of migrating to a new accounting system. Administration costs also
increased as a result of operational and accounting services.
The total combined USD all-in cash cost per ounce increased by 47.5% to
USD1,796/oz (2013: USD1,218/oz). Evander Mines' ZAR combined all-in cash cost
per kilogram increased by 61.0% to ZAR633,960/kg (2013: ZAR393,854/kg). This
increase in all-in cash costs was mainly as a result of the 21.8% decrease in
gold sold and the increase in cash costs of 45.9% as well as once-off expansion
capital on the ETRP of ZAR88.3 million. Also included in this increase was
ZAR11.7 million for once-off voluntary separation packages.
Capital expenditure
Total capital expenditure at Evander Mines was ZAR157.6 million (2013: ZAR74.8
million). Maintenance capital expenditure was ZAR25.0 million (2013: ZAR16.3
million) and development capital expenditure was ZAR44.3 million (2013: ZAR58.5
million). Expansion capital related to the ETRP plant construction was ZAR88.3
million (2013: Nil).
Review of platinum tailings operations
Review of Phoenix Platinum
Safety
Phoenix maintained its excellent safety record, with no injuries recorded.
Operating performance
A significantly improved performance at Phoenix Platinum in the period under
review resulted in PGE ounces sold increasing by 57.7% to 4,711oz (2013:
2,987oz).
During the current period under review, International Ferro Metals SA (Pty) Ltd
('IFM') resumed mining at its underground Lesedi Mine, providing sulphide
material for treatment in the CTRP. Plant recoveries increased by 41.7% to 34%
(2013: 24%), as a result of the improved reagent suite and the processing of
higher sulphide content tailings contained in dam number 4, as well as currents
arisings from Lesedi Mine.
In the year under review, the effective average PGE basket price received
increased by 4.6% to ZAR9,815/oz (2013: ZAR9,380/oz). Cost per ounce of
production decreased by 19.6% to ZAR6,817/oz (2013: ZAR8,484/oz). Plant feed
increased during the period by 15.0% to 135,963t (2013: 118,258t).
The total cost of production increased by 26.9% to ZAR32.1 million (2013:
ZAR25.3 million).
The main year-on-year cost contributors were the following:
Salary and wages increased by 11.9% to ZAR7.5 million (2013: ZAR6.7 million),
which was attributable to an 8.5% increase granted to employees and a new
incentive scheme linked to productivity.
Site production costs increased by 21.2% to ZAR6.3 million (2013: ZAR5.2
million) as result of increased plant feed tons, which attracted higher
re-mining costs.
Tailings costs increased by 10.3% to ZAR3.2 million (2013: ZAR2.9 million), due
to annual increases granted to tailings contractors and additional cyclones
that were purchased during the period.
Consumables increased by 21.2% to ZAR4.0 million (2013: ZAR3.3 million, which
is attributable to inflationary increases and costs associated with additional
reagents required for the higher tonnes treated in comparison to the
comparative period. .
Administration costs decreased by 53.8% to ZAR0.6 million (2013: ZAR1.3
million), as a result of a reduction in consultation fees.
Realisation and refining costs increased by 173.1% to ZAR7.1 million (2013:
ZAR2.6 million) during the period under review due to increased concentrate
tonnages delivered to Lonmin. This was as a result of increasing the mass pull
from the plant which then also results in higher chrome contents and additional
chrome charges.
Electricity and other utility costs remained constant at ZAR1.9 million (2013:
ZAR1.9 million), mainly as a result of optimisation of the plant's mill, which
resulted in lower electricity consumption offsetting the electricity rate
increases.
Phoenix Platinum achieved a headline profit of ZAR6.1 million (2013: ZAR2.6
million - headline loss) for the period under review.
PGE Production summary
For the six For the six
months ended months ended
Metric 31 December 2014 31 December 2013
Plant feed (t) 135,963 118,258
Head grade (g/t) 3.16 3.80
Plant recovery (%) 34 24
Chromium (iii) oxide (Cr203) (%) 3.41 2.47
Production and sales of PGE 6E (oz) 4,711 2,987
Basket price received (ZAR/oz) 9,815 9,380
Basket price received (USD/oz) 894 932
Exchange Rate (USD/ZAR) 10.98 10.06
Total cash costs per ounce (ZAR/oz) 6,817 8,484
Total cash costs per tonne (ZAR/t) 236 214
Total Cost of Production (ZAR million) 32.1 25.3
Total Capital Expenditure (ZAR million) 0.1 0.2
Capital expenditure
Total capital expenditure at Phoenix Platinum decreased to ZAR0.1 million
(2013: ZAR0.2 million).
Expansion/Growth projects
Evander Tailings Retreatment Plant
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