REG-Pan African Resources Plc: Operational Update for 9 Months ended March 2019

Pan African ResourcesAnnouncement

17/05/2019 07:05

Pan African Resources PLC

("Pan African" or “the Company" or “the Group”)

(Incorporated and registered in England and Wales under Companies Act 1985
with registered number 3937466 on 25 February 2000)

Share code on AIM: PAF

Share code on JSE: PAN

ISIN: GB0004300496

OPERATIONAL UPDATE FOR THE NINE MONTHS ENDED 31 MARCH 2019

Pan African is pleased to provide an operational update for the nine months
ended 31 March 2019 (“Current Reporting Period”) as well as detail on
progress with internal growth projects and initial production guidance for the
2020 financial year.

Pan African CEO Cobus Loots commented:

“The Group’s performance over the past nine months reflects our efforts to
maintain Pan African’s position as a safe, low-cost and long-life gold
producer. Safe, highly profitable and sustainable ounces at Elikhulu have
replaced those of Evander’s loss-making underground operations. We continue
to optimise Elikhulu, which delivered a throughput of 1.3-million tonnes in
March 2019, 100,000 tonnes above the name plate capacity. The focus is now on
maximising sustainable margins from this world-class operation.

We have commenced the development and equipping of Evander Mines’ 8 Shaft
Pillar (“Evander Pillar operation”), with first gold expected in August
2019. The Evander 8 Shaft Pillar is expected to contribute an additional
20,000oz to 30,000oz per annum for three years, at an all-in sustaining costs
(“AISC”) of approximately US$900 per ounce, therefore making a meaningful
contribution to the Group’s near-term production and profitability. The
operation will be mined by a specialised and experienced independent
contractor given the nature of pillar mining. 

We have completed extensive feasibility work on Barberton Mines’ Royal Sheba
project (“Royal Sheba Project”). Due to the Group’s disciplined capital
allocation criteria and the capital cost estimates to develop this mine, the
Company will not pursue the Royal Sheba Project on a stand-alone basis. The
existing Barberton Mines’ processing plant infrastructure can be upgraded to
process ore from this orebody. The benefits of this approach is the ability to
expedite the environmental licencing process, shorten the timeline to
production, enhance returns from mining this orebody and negate the
requirement for external capital funding. We look forward to updating the
market on this project in the months ahead.

We are confident the Group remains on track to meet its gold production
guidance of 170,000oz for the full financial year to end 30 June 2019. With
Elikhulu producing at a steady state for a full year and the incremental
contribution from Evander’s Pillar operation, we expect to produce
approximately 185,000oz of gold for the 2020 financial year, which is a
sizeable increase in our gold production profile.”

Key highlights for the current reporting period

Operational results:
* Gold production from the Group’s continuing mining operations (note 1)
increased by 51.4% to 123,771oz (2018: 81,729oz), with robust performances
from Barberton Mines’ underground operations and the Group’s tailings
retreatment plants. * Gold production from the Barberton complex increased by
11.7% to 72,944oz (2018: 65,297oz) * Underground and surface mining increased
by 3.4% to 54,857oz (2018: 53,034oz); and
* Barberton tailings retreatment plant (“BTRP”) increased by 47.5% to
18,087oz (2018: 12,263oz) due to an improved tonnage throughput and recoveries
following the successful commissioning of the BTRP regrind mill in May 2018.

* The Elikhulu tailings retreatment plant (“Elikhulu”) processed 6,915,113
tonnes from September 2018 to March 2019 at a recovered grade of 0.135g/t with
29,881oz (929.4kg) of gold sold. This excludes the pre-production gold of
736oz (22.9kg) capitalised as pre-production income and gold inventory
locked-up in the Elikhulu circuit;     
* As previously communicated, the incorporation of the historical Evander
tailings retreatment plant’s (“ETRP”) throughput of 200,000 tonnes per
month into Elikhulu was completed in December 2018, which increased
Elikhulu’s processing capacity to 1.2-million tonnes per month;
* Elikhulu’s all-in sustaining cost of production continues to be lower than
previously anticipated, at less than US$600/oz; and
* Evander Mines’ remnant mining and surface sources contributed a further
20,946oz (2018: 16,432oz).
Note 1: The continuing mining operations include: Barberton Mines, Evander
Mines, Elikhulu and Evander’s tailings retreatment plant (“ETRP”) as
well as the mining and vamping of the remnant high-grade stopes as part of the
phased closure of the underground mining operation. The continuing mining
operations exclude the discontinued Evander Mines’ large-scale underground
mining operation, which produced 42,118oz in the corresponding nine months
ended 31 March 2018 (“corresponding reporting period”). The Group’s
corresponding reporting period gold production, including discontinued
operations, was 123,845oz.

Safety:
* The Group’s focus on safety and related ongoing improvements continues to
bear fruit, with material improvements in all categories of safety statistics
during the current reporting period: * The Group had no fatalities in this
quarter (2018: no fatalities);
* The Group’s lost-time injury frequency rate improved substantially to 1.75
(2018: 3.79); and
* The reportable injury frequency rate improved substantially to 0.58 (2018:
1.17).
Evander 8 Shaft Pillar:
* The feasibility study into the merits of mining the Evander 8 Shaft Pillar
and high-grade areas in proximity to the pillar has been completed and the Pan
African board of directors has approved the development of the project.
* Development and equipping of this area has already commenced, with first
gold expected during August 2019.
* The Evander 8 Shaft Pillar will replace the current remnant underground
mining and vamping production and is expected to contribute, on average,
30,000oz per annum over the next three financial years, with approximately
20,000oz of production forecast for FY2020.  
* The Evander 8 Shaft Pillar mining feasibility highlights are: * An average
all-in sustaining cost of approximately R415,000/kg or US$900/oz over the life
of the project (assuming US$/ZAR1:14.30);
* The existing Kinross processing plant and Evander’s 7 Shaft infrastructure
will be used to treat and hoist the mined ore from the Evander 8 Shaft Pillar;
* Capital expenditure of approximately R70 million is to be incurred over the
life of the project, of which R40 million is to be incurred upfront. All
capital for the Evander 8 Shaft Pillar’s development will be funded from
existing Group facilities; and
* A forecast payback period on the initial capital investment of less than one
year, from commencement of mining, and a net present value of R369 million
(US$25.8 million) at a 10% real discount rate and an assumed gold price of
R600,000/kg or US$1,305/oz.
Royal Sheba Project:
* The Group has completed the Royal Sheba project feasibility study and
concluded that the merits of mining the near-surface resource, using an
opencast mining method, did not meet the Group’s disciplined capital
allocation criteria. This was as a result of higher than anticipated capital
expenditure, largely due to the challenging topography of the Sheba valley.
* The emphasis is now to assess the merits of using an underground sub-level
open stoping mining method by developing haulages from surface into the
orebody. The existing Barberton Mines’ processing plant infrastructure can
be upgraded to process ore from this orebody, which will substantially reduce
the originally contemplated capital expenditure, and shorten the environmental
licensing approval process.
* Shareholders will be updated on progress with Royal Sheba development plans
in the coming months.
Restructure of Revolving Credit Facility (“RCF”):
* The Group has received final credit approvals from its consortium of bankers
and is finalising the legal agreements with the intent of having the
restructured facility effective by 30 June 2019. The proposed restructured RCF
will amortise according to the following repayment profile:
 Amortisation profile  RCF available balance  (R million)  Repayments  (R million)  
 Up to 15 June 2020                                  1,000                      250 
 15 June 2020                                          750                       25 
 15 December 2020                                      725                       25 
 15 June 2021                                          700                       50 
 15 September 2021                                     650                       50 
 15 December 2021                                      600                       50 
 15 March 2022                                         550                       50 
 15 June 2022                                          500                      500 
* The repayment profile of the Elikhulu project’s term debt facility,
comprising 10 semi-annual, equal principal instalments of R100 million,
commencing in December 2019, is unaffected by the restructuring of the RCF.
The financial and other information contained in this announcement has neither
been reviewed nor audited by the Company’s external auditors.

For further information on Pan African, please visit the Company’s website
at www.panafricanresources.com.

Rosebank

17 May 2019

 Contact information                                                                                                                                                                                                                                                                   
 Corporate Office The Firs Office Building 2nd Floor, Office 204 Cnr. Cradock and Biermann Avenues Rosebank, Johannesburg South Africa Office: + 27 (0)11 243 2900  Registered Office Suite 31 Second Floor 107 Cheapside London EC2V 6DN United Kingdom Office: + 44 (0)20 7796 8644  
 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)20 7796 8644                                                                   John Prior Numis Securities Limited Nominated Adviser and Joint Broker Office: +44 (0)20 7260 1000                 
 Ciska Kloppers Questco Corporate Advisory Proprietary Limited JSE Sponsor Office: + 27 (0)11 011 9200                                                              Ross Allister/David McKeown Peel Hunt LLP Joint Broker Office: +44 (0)20 7418 8900                                 
 Julian Gwillim Aprio Strategic Communications Public & Investor Relations SA Office: +27 (0)11 880 0037                                                            Jeffrey Couch/Thomas Rider/Neil Elliot BMO Capital Markets Limited Joint Broker Office: +44 (0)20 7236 1010        
 Bobby Morse/Chris Judd Buchanan Public & Investor Relations UK Office: +44 (0)20 7466 5000 paf@buchanan.uk.com                                                     Website: www.panafricanresources.com                                                                               



Copyright (c) 2019 PR Newswire Association,LLC. All Rights Reserved