REG-Pan African Resources Plc: Operational Update for year-ended 30 June 2022

Pan African ResourcesAnnouncement

14/07/2022 10:15

Pan African Resources PLC

(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

ADR code: PAFRY

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

OPERATIONAL UPDATE FOR THE YEAR ENDED 30 JUNE 2022 – RECORD ANNUAL GOLD
PRODUCTION AND SIGNIFICANT REDUCTION IN NET SENIOR DEBT

Pan African is pleased to provide its shareholders with the gold production
figures and a preliminary operational update for the financial year ended 30
June 2022 (“Reporting Period”). The detailed report of the Group’s
operational and financial performance for the Reporting Period, and annual
reporting suite, will be released on 14 September 2022.  

KEY HIGHLIGHTS
* Record annual gold production * Production of 205,459oz of gold, an increase
of ~2% on FY2021 gold production of 201,777oz
* Production was ~3% higher than the upwardly revised guidance of 200,000oz
and ~5% higher than initial guidance of 195,000oz, released at inception of
the Reporting Period

* Industry leading safety statistics – further improvements have been
achieved * Recordable injury frequency rate (“RIFR") improved to 0.35 per
million man hours (FY2021: 0.63)
* Lost time injury requency rate (“LTIFR") improved to 1.04 per million man
hours (FY2021: 1.41)
* COVID-19 vaccination rate of +80% achieved across the Group

* Significant decrease in the Group’s net senior debt * Reduction of 71.5%
to US$9.6 million (FY2021: US$33.7 million)

* Organic growth projects on track * Barberton Mines * Royal Sheba orebody
intersected on schedule during June 2022, extraction of 10,000 ton bulk sample
in progress

* Evander underground * Refrigeration plant at Evander 8 Shaft 24 Level
nearing completion for commissioning during August 2022
* Development blasting on Evander 8 Shaft 24 Level completed in preparation
for mining  

* Elikhulu surface tailings retreatment * New Leslie/Bracken re-mining pump
station and related infrastructure in place for mining to commence during
August 2022


* ESG highlights * Commissioned 10MW solar PV renewable energy plant at
Evander – the first of this scale in the South African mining industry
* Barberton 8MW solar PV renewable energy plant site establishment has
commenced
* First commercial harvest at Barberton’s blueberry project
* Commenced construction of a water retreatment plant at Evander Mines *
Capacity to recycle 3 megalitres per day and produce potable water,
substituting potable water from the local municipality


* Production guidance for FY2023 * Gold production is expected to be at a
level similar that achieved in the Reporting Period
Pan African CEO Cobus Loots commented:

“We are very pleased with the Group’s operational performance over the
last year, and the record gold production achieved by our teams during this
period.

The Group has made meaningful progress with our production growth projects at
Evander underground and at Barberton’s Royal Sheba; both projects are on
schedule to start delivering within their anticipated production timeframes.

We have further strengthened our balance sheet over the last year, despite the
payment of a record dividend and incurring significant growth and sustaining
capital expenditure.

A key focus area in the year ahead will be the smaller underground operations
at Barberton, to ensure that these assets perform to their full potential.

Significant milestones have also been achieved with progress on our ESG
projects, including the commissioning of our first solar PV renewable energy
project at Elikhulu, the first of its scale in the South African mining
industry. We are also excited about the imminent commencement of construction
of Barberton’s solar PV plant. The Group plans to generate 30MW of solar PV
renewable energy by 2024, with commensurate cost savings of approximately
R100million or US$6,1million per year, and a large reduction in carbon
emissions. At Barberton, commercial harvesting of blueberries has commenced
and employment of seasonal labour is ramping up, as planned.

We look forward to presenting our 2022 year-end financial results in
September, and to provide further details and information on the impact of our
initiatives and operations and the value created for our stakeholders.”

GROUP ANNUAL PRODUCTION

Final Group gold production for the Reporting Period increased by ~2.0% to
205,459oz (2021: 201,777oz), exceeding the upwardly revised production
guidance of 200,000oz referred to in the interim financial results, announced
on 16 February 2022. The gold production split per operation is as follows:

                                              Year ended 30 June 2022*  Year ended 30 June 2021  
 Production ounce profile:                                                                       
 Fairview Mine Sheba and Consort Mines             47,985  27,587            45,686  39,140      
 Barberton Tailings Retreatment Plant (BTRP)           19,560                    18,239          
 Elikhulu Evander Mines                       52,139  58,187                 51,459  47,252      
 Total ounces produced:                                205,459                  201,777          

* Preliminary values subject to final refinery adjustments

Barberton Mines’ Fairview underground operations and the BTRP surface
operations performed very well during the Reporting Period. At Fairview Mine,
this was again attributable to the increased flexibility established at this
mines high-grade Main Reef Complex (“MRC”) and Rossiter orebodies.

Performances from Barberton’s smaller Sheba and Consort underground
operations were below expections, and the Group is implementing improvement
programmes to ensure that these assets deliver to their full potential.

The Elikhulu tailings retreatment operation processed tonnages with volumes
and head grade both in excess of the mining plan, which improved gold
production levels when compared to the previous financial year.
Notwithstanding, production levels were negatively impacted by adverse weather
conditions and lower than anticipated recoveries. Production is expected to
improve as re-mining of the Leslie/Bracken tailings facility commences during
FY2023. Elikhulu remains one of the lowest-cost gold mining operations in
Southern Africa, with a remaining operational life of 11 years.

Evander’s 8 Shaft pillar significantly outperformed its planned gold output
for the Reporting Period, with a remaining life of just over a year. Evander
Mines’ 24 Level project is currently in the construction phase, while the
refrigeration plant is expected to be commissioned during August 2022. Mining
of the 24 Level ore will extend the production profile of the underground
mining at 8 Shaft, post extraction of the 8 Shaft pillar, for an additional
two and a half years, and maintain Evander Mines’ annual underground gold
production.

As previously communicated, the Group is proceeding with plans to mine the
down-dip extent of the Evander orebody at 25 and 26 Levels using the 24 Level
infrastructure, with an on-reef decline layout. The mining of 25 and 26 Levels
demonstrates a compelling business case and further extend Evander Mines’ 8
Shaft’s production, post cessation of mining at the 8 Shaft pillar and 24
Level, for an additional eight years, with average expected annual production
of approximately 65,000oz. Dewatering on 25 Level commenced in the Reporting
Period, and blasting of the development ends will commence in the 2023
financial year, with mining of the first stope planned for the 2025 financial
year.

These projects will increase the 8 Shaft life-of-mine to 13 years, with
potential to increase further, should the Inferred Mineral Resources be
converted to Mineral Reserves. Evander Mines’ mining right is valid until
2038.

SAFETY ACHIEVEMENTS

The Group has achieved an overall reduction in recordable injuries, following
a number of safety initiatives and interventions: 
* The Group reported an improvement in the RIFR to 0.35 per million man hours
for the Reporting Period (2021: 0.63 per million man hours);
* The Group’s LTIFR also improved to 1.04 per million man hours for
Reporting Period (2021: 1.41 per million man hours);
* Evander Mines achieved a 100% improvement in reportable injuries in the
Reporting Period, despite the increased number of crews deployed underground,
including the 24, 25 and 26 Level development crews
Barberton Mines achieved 2 million fatality free shifts on 10 May 2022 and the
combined Evander/Elikhulu operations achieved 2.5 million fatality free shifts
on 19 January 2022.

REDUCTION IN SENIOR DEBT

The Group materially reduced its net senior debt over the Reporting Period,
with a year-on-year decline of 71.5% to US$9.6 million (ZAR155.5 million at an
exchange rate of US$/ZAR:16.28) from US$33.7 million (ZAR481.3 million at an
exchange rate of US$/ZAR:14.28) at 30 June 2021. In US$ terms, this represents
a reduction in net senior debt of 59.8% relative to the debt levels at 31
December 2021 of US$23.9 million (ZAR382.4 million at an exchange rate of
US$/ZAR:16:00). 

OPERATIONAL AND GROWTH PROJECTS UPDATE

A detailed update on the Group’s operations and production growth projects
will be included in the Company’s annual final results and presentation,
scheduled to be released on 14 September 2022.

PRODUCTION GUIDANCE FOR FY2023

The Group expects to maintain its 2023 financial year gold production at a
level similar to that achieved in the Reporting Period.

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the
European Union (Withdrawal) Act 2018. Upon the publication of this
announcement via Regulatory Information Service ('RIS'), this inside
information is now considered to be in the public domain.

Rosebank

14 July 2022

For further information on Pan African Resources, please visit the Company's
website at

www.panafricanresources.com

 Corporate 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 info@paf.co.za  Registered Office Suite 31 Second Floor 107 Cheapside London EC2V 6DN United Kingdom Office: + 44 (0)20 7796 8644   
 Chief Executive Officer  Cobus Loots Office: + 27 (0)11 243 2900                                                                                                                  Financial Director Deon Louw Office: + 27 (0)11 243 2900                                                            
 Head: Investor Relations Hethen Hira Tel: + 27 (0)11 243 2900 E-mail: hhira@paf.co.za                                                                                             Website: www.panafricanresources.com                                                                                
 Company Secretary Phil Dexter/Jane Kirton  St James's Corporate Services Limited Office: + 44 (0)20 7796 8644                                                                     Nominated Adviser and Joint Broker Ross Allister/Alexander Allen  Peel Hunt LLP Office: +44 (0)20 7418 8900         
 JSE Sponsor Ciska Kloppers  Questco Corporate Advisory Proprietary Limited Office: + 27 (0)11 011 9200                                                                            Joint Broker Thomas Rider/Nick Macann  BMO Capital Markets Limited Office: +44 (0)20 7236 1010                      
                                                                                                                                                                                   Joint Broker Matthew Armitt/Jennifer Lee  Joh. Berenberg, Gossler & Co KG (Berenberg)  Office: +44 (0)20 3207 7800  



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