REG-Pan African Resources Plc: Operational Update for the Year ended 30 June 2019

Pan African ResourcesAnnouncement

12/07/2019 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 YEAR ENDED 30 JUNE 2019

Pan African is pleased to provide an operational update for the year ended 30
June 2019 (“current reporting period”).

Pan African CEO Cobus Loots commented:

“Pan African has emerged at year-end as a safe, low-cost and long-life gold
producer, following the successful execution of our strategy. We exceeded the
full year production guidance of 170,000 ounces, resulting in the Group’s
gold production increasing by 7.5% to 172,442oz - or 54.1% on continuing
operations relative to the corresponding reporting period.

This has been delivered through the cessation of the high cost underground
mining at Evander Mines, the successful commissioning of the Elikhulu tailings
retreatment plant, and Barberton Mines achieving a significant increase in
production. Critically, Barberton Mines achieved a historical milestone of 2
million fatality free shifts during June 2019 and we commend the team for this
safety achievement.

We continue to assess the optionality of our portfolio and are looking to
build upon this year’s momentum to drive further growth. Evander’s 8 Shaft
Pillar mining is expected to contribute an additional 20,000oz to 30,000oz per
annum for the next three years. The Group is currently reviewing the merits of
expediting the Egoli project and is assessing funding options. Progress is
also being made with the underground mining project feasibility study at Royal
Sheba and we look forward to communicating the results to shareholders in the
near future.

We are also very mindful of the positive socio-economic impact that the mining
industry has on communities and are proud of the way we manage our stakeholder
relations. That said, we continue to experience certain challenges amongst
specific stakeholder groups, which have impacted Barberton Mines, and are
working in conjunction with law enforcement and other stakeholders to remedy
the situation.

As previously announced, the 2020 financial year production guidance will be
approximately 185,000oz, representing an important increase in our
year-on-year gold production profile.”

OPERATIONAL RESULTS

Key highlights for the current reporting period relative to the corresponding
12 months ended 30 June 2018 (“corresponding reporting period”):
* Gold production from the Group’s continuing mining operations increased by
54.1% to 172,442oz (2018: 111,879oz) (Note 1).
* Gold production from the Group’s continuing and discontinued operations
increased by 7.5% to 172,442oz (2018: 160,444oz).
* Barberton Mines: * Production from the Barberton complex increased by 9.6%
to 99,363oz (2018: 90,629oz);
* Underground and surface mining increased by 3.1% to 75,356oz (2018:
73,125oz); and
* Barberton tailings retreatment plant (“BTRP”) production increased by
37.2% to 24,007oz (2018: 17,504oz) due to an improved tonnage throughput and
recoveries following the successful commissioning of the BTRP regrind mill in
May 2018.

* Elikhulu tailings retreatment plant (“Elikhulu”): * Processed
10.85-million tonnes from September 2018 to June 2019;
* Achieved a recovered grade of 0.133g/t; and
* Gold produced of 46,201oz (1,437kg), which excludes pre-production gold of
736oz (22.9kg) capitalised as pre-production income and gold inventory
locked-up in the Elikhulu circuit. The production figures include the 200,000
tonnes per month throughput from the Evander tailings retreatment plant
(“ETRP”), which was incorporated into Elikhulu with effect from January
2019, which increased Elikhulu’s processing capacity to 1.2-million tonnes
per month.

* Evander Mines: * Remnant mining and surface sources contributed a further
26,878oz (2018: 21,250oz).
Note 1: The continuing mining operations include: Barberton Mines, Evander
Mines’ Elikhulu and ETRP as well as the mining and vamping of the remnant
high-grade stopes as part of the phased closure of the Evander Mines’
underground mining operation. The continuing mining operations exclude the
discontinued Evander Mines’ large-scale underground mining operation, which
produced 48,656oz in the corresponding reporting period.

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 the current or prior financial year;
* The Group’s lost-time injury frequency rate per million man hours improved
substantially to 2.12 (2018: 3.73);
* The reportable injury frequency rate per million man hours improved
substantially to 0.51 (2018: 1.08); and
* Barberton Mines achieved 2-million fatality free shifts during June 2019.
RESTRUCTURE OF REVOLVING CREDIT FACILITY (“RCF”) DEBT FACILITY AND
INTRODUCTION OF A GOLD LOAN

The restructured RCF facility referred to in the operational update announced
on 17 May 2019, became effective on 3 June 2019. The Group’s senior debt
will amortise in terms of 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 quarterly, equal principal instalments of R50 million, commencing
in September 2019, is unaffected by the restructuring of the RCF.

In light of the strong prevailing rand gold price and the opportunity it
presents to lock in an attractive cash margin and reduce interest costs, the
Group entered into a gold loan for 20,000oz with Rand Merchant Bank
(“RMB”) a division of First Rand Bank Limited, in July 2019. In exchange
for an upfront cash receipt of R394 million, the Group will deliver 12 monthly
instalments of 1666.67oz to RMB, commencing on 31 July 2019, in settlement of
the gold loan.

The gold loan effectively locks in a gold price of approximately R633,000/kg
or US$1,414/oz on 622kg of gold, representing approximately 11% of the
Group’s guided gold production for the 2020 financial year. The proceeds of
this gold loan will be used to reduce the balance of the RCF debt, resulting
in a material interest saving for the Group over the next 12 months.

PROTEST ACTION AFFECTING BARBERTON MINES

Barberton Mines has recently experienced a number of lost production days due
to its roadways being blocked and the destruction of mine property by
protestors demanding employment and commercial concessions from the mine.

These protests are unrelated to normal industrial action and are initiated and
supported by politicians and criminals who believe that extortion by means of
violence is a legitimate social objective. The mine has been supported by the
South African Police’s Public Order Policing Division to control these
protests, protect Pan African’s employees and preserve its assets. 

Whilst Pan African is cognisant of the levels of unemployment in South Africa
and the resultant social impact flowing therefrom, these actions will only
exacerbate the country’s economic problems and further disincentivises
investment in the mining sector.

Pan African will take the appropriate action to protect its employees and
assets in the interest of all its stakeholders, supported by the South African
law enforcement authorities. Interdicts have been served and further criminal
and civil actions will follow against certain individuals and organisations.
The Company will keep its stakeholders informed of developments.

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

12 July 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) 207 796 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) 207 796 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) 207 418 8900                                 
 Julian Gwillim Aprio Strategic Communications Public & Investor Relations SA Office: +27 (0)11 880 0037                                                             Jeffrey Couch/Neil Elliot/Thomas Rider BMO Capital Markets Limited Joint Broker Office: +44 (0) 207 236 1010        
 Bobby Morse/Chris Judd Buchanan Public & Investor Relations UK Office: +44 (0)20 7466 5000 paf@buchanan.uk.com                                                      Website: www.panafricanresources.com                                                                                



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