REG-Pan African Resources PLC: Provisional audited results for the year ended 30.06.14 <Origin Href="QuoteRef">PAFR.L</Origin> <Origin Href="QuoteRef">PANJ.J</Origin> - Part 2
24/11/2014 14:09
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cost of production (including off mine costs) increased by 25.4% to
ZAR831.5 million (2013: ZAR663.2 million).
The main year-on-year cost contributors were the following:
The BTRP operations resulted in additional processing costs amounting to
ZAR97.1 million for the financial year.
Salary and wages increased by 15.5% to ZAR369.9 million (2013: ZAR320.3
million). The increase was driven by additional employees for the management of
the BTRP, resulting in additional costs of ZAR9.5 million (or increase of
3.0%), coupled with a two year wage agreement in line with the Chamber of
Mines. Barberton Mines also introduced a medical aid scheme for category
workers 4 to 8 of which the company contributes 60% towards each member's
premium, this added costs of ZAR6.7 million in the current year.
Mining costs increased by only 4.1% to ZAR102.6 million (2013: ZAR98.6 million)
due to the vamping contractors gold production having decreased from the prior
year by 7.4%. The mining costs excluding the vamping contractors costs
increased by 8.9% year-on-year.
Processing costs (excluding the BTRP reagents) increased by 8.4% to ZAR61.8
million (2013: ZAR57.0 million).
Engineering and technical services costs increased by 12.5% to ZAR64.0 million
(2013: ZAR56.9 million). The majority of this increase was for additional
secondary support installations required at Fairview mine, and increased
maintenance on the TWM following the fatality as report above.
Electricity costs excluding the BTRP increased by 6.4% to ZAR76.7 million
(2013: ZAR72.1 million), which were lower than the average 8% increase in Eskom
tariffs. The decrease in electricity usage reflects the three week closure of
Sheba Mine following flooding during March 2014. The electricity cost of the
BTRP amounted to ZAR9.2 million resulting in the total Barberton Mines
electricity costs increasing by 19.1% to ZAR85.9 million (2013: ZAR72.1
million).
Security costs were well controlled and only increased by 4.7% to ZAR26.8
million (2013: ZAR25.6 million).
Administration and other costs increased by 10.3% to ZAR33.2 million (2013:
ZAR30.1 million). The higher than CPI increase was mainly due to additional
insurance costs in relation to the BTRP.
Barberton Mines had gold inventory movements decreasing the cost of production
by ZAR14.4 million due to the BIOX® locking up gold concentrates equivalent to
59.4 kilograms (1,910 ounces) of gold at year end. During the last quarter of
the financial year, the Biox® experienced a temporary set-back in recoveries,
due to oil contamination resulting from a breakdown at the Fairview primary
crusher. This necessitated the management team in having to separate certain
gold concentrates from the BIOX® at year end to stabilise the bacteria
organisms. The gold concentrates will be reprocessed during the new financial
year. The overall recoveries as result of the incident decreased for the full
year to 90% (2013: 91%).
The total combined USD all-in cash cost per ounce decreased by 24.3% to USD934/
oz (2013: USD1,234/oz). Barberton Mines' ZAR combined all-in cash cost per
kilogram decreased by 13.8% to ZAR302,058/kg (2013: ZAR350,302/kg). This
decrease in all-in cash costs was mainly as a result of the once-off
non-sustainable capital expenditure decreasing by ZAR188.9 million due to the
BTRP construction in the prior year.
Mining operations
Barberton Mines' (excluding BTRP) gold sold decreased to 88,738oz (2013:
96,296oz). Mining operations tonnes milled decreased by 5.9% to 292,121t (2013:
310,484t). The decrease in tonnes milled was mostly as a result of the Sheba
Mine flooding during March 2014, as a result of a cloud-burst, forcing the mine
to close for three weeks. This effectively reduced production tonnages by 9,000
tonnes (or 2.9% of the prior year's production tonnages), at an average Sheba
Mine's headgrade of 8.5g/t, resulting in an estimated reduction of 2,165 ounces
of gold sold.
The decrease in gold sold from Barberton Mines underground and surface mining
operations was therefore as a result of:
Decrease in tonnes milled due to the Sheba Mine flooding.
Gold ounces in Biox® lock up, due to oil contamination from the breakdown at
the Fairview primary crusher.
The underground head grade reduced marginally to 11.5g/t (2013: 11.8g/t), and
gold recoveries decreased to 90% (2013: 91%) as a result of the BIOX® incident
mentioned above.
The total underground and surface USD cash costs per ounce decreased by 0.3% to
USD778/oz (2013: USD780/oz). In ZAR per kilogram terms, total cash costs
increased by 17.0% to ZAR258,972/kg (2013: ZAR221,424/kg).
Tailing operations - BTRP
The BTRP construction was completed in the prior financial year and production
commenced on 1 July 2013.
BTRP gold sold was 22,885oz for the year. The plant processed 815,736t of
tailings at a headgrade of 1.6g/t and achieved a higher than expected recovery
of 56% (originally planned recovery: 50%).
The BTRP USD cash costs per ounce were USD493/oz. In ZAR per kilogram terms,
total cash costs were ZAR163,977/kg.
Capital expenditure
Total capital expenditure at Barberton Mines decreased by 52.3% to ZAR151.0
million (2013: ZAR316.8 million). Maintenance capital expenditure of ZAR33.3
million (2013: ZAR45.1 million) and development capital expenditure of ZAR50.5
million (2013: ZAR42.1 million) was incurred. Expansion capital incurred on the
BTRP construction totalled ZAR40.7 million (2013: ZAR229.6 million), and
capital on the development of four new raise boreholes at Fairview Mine to
improve environmental conditions was ZAR26.5 million (2013: ZAR2.6 million).
Review of Evander Mines
Safety
It is with deep regret that we report one fatal accident at Evander Mines
during the financial year. The incident related to a fall of ground accident.
Preventing fall of ground accidents remains a focus area within the group, in
order to ensure a safe working environment. Evander Mines is in the process of
improving its safety statistics by implementing phase four of its safety
programme ('Vuka Sizwe').
Evander Mines' TRIFR improved to 6.0 (2013: 7.7) per 1,000,000 man hours
worked, and the LTIFR increased to 4.1 (2013: 2.9) per 1,000,000 man hours
worked. The RIFR has shown a regression to 2.6 (2013: 1.7) per 1,000,000 man
hours worked.
Operating performance
Evander Mines gold sold decreased to 76,556oz (2013: 95,089oz1). Mining
operations tonnes milled increased by 10.7% to 656,028t (2013: 592,484t1). The
increase in tonnes milled was mostly due to an increase in surface stockpiles
processed of 58,789t, whilst underground tonnes milled increased by 4,755t.
As a result of the low grade mining cycle, the underground head grade decreased
to 5.2g/t (2013: 7.4g/t1). The Kinross processing plant performed well, and
achieved improved plant recoveries of 96% (2013: 95%1).
As previously announced, this low grade mining cycle at Evander Mines is
expected to continue until February 2015, and will therefore also impact group
results and earnings for the first eight months of the 2015 financial year.
Measures implemented, or in progress, to mitigate the impact of the current low
grade cycle at Evander Mine's include the following:
The construction of the ETRP to yield an estimated 10,000oz of gold per annum,
with a life of mine of 17 years. The ETRP project is progressing well and
expected to be in production by January 2015.
Surface sources throughput in the Evander plant has been increased from 18,000
tonnes per month to approximately 30,000 tonnes per month. To maintain these
tonnages for the full 2015 financial year, additional sources are being
investigated.
Vamping (the mining of historical "leftovers" remaining after previous mining
operations) at Evander No 7 Shaft has been expanded to include the 15 Level
return airway mud accumulation project. This has been contributing additional
ounces from July 2014.
Management is concentrating efforts to increase availability of conveyor belts
in the Evander No 8 Shaft declines. A refurbishment program has been
implemented to effect the necessary mechanical improvements and upgrades.
Management has rescheduled the mine planning and improved mining flexibility by
increasing development rates on 25 and 25A Levels at Evander No 8 Shaft to
access more stoping areas.
The total cost of production including off mine costs increased by 9.5% to
ZAR914.7 million (2013: ZAR835.4 million1). The Evander Mines management team
successfully focused on containing their costs whilst in the lower grade mining
cycle, resulting in their cost per ton decreasing by 1.1% to ZAR1,394/t (2013:
ZAR1,410/t).
The main year-on-year cost contributors were the following:
Salary and wages increased by 7.1% to ZAR448.9 million (2013: ZAR419.0
million). The salary and wages increased as result of the Chamber of Mines wage
settlement.
Mining costs increased by 28.1% to ZAR89.4 million (2013: ZAR69.8 million) due
to additional vamping occurring in 7 Shaft, and additional maintenance on
blasting barricades.
Processing costs increased by 22.3% to ZAR33.5 million (2013: ZAR27.4 million),
due to the additional surface tonnages being processed through the plant.
Engineering and technical services costs increased by 26.6% to ZAR86.6 million
(2013: ZAR68.4 million). The majority of this increase related to additional
costs to improve maintenance of the 11 conveyor belts on 8 Shaft, which has a
total length of 14 kilometres, as well maintaining and improving the trackless
fleet.
Electricity and water costs were well controlled and decreased by 3.2% to
ZAR164.2 million (2013: ZAR169.7 million) due to benefits realised from the
load clipping optimisation program that manages and improves the consumption of
power.
The security costs remained well controlled and decreased by 22.6% to ZAR12.7
million (2013: ZAR16.4 million), highlighting the cost benefits of a
centralised security monitoring team for both Barberton Mines and Evander
Mines.
Administration and other costs decreased by 24.5% to ZAR57.7 million (2013:
ZAR76.4 million) as result of not sharing in Harmony's corporate and other
costs in the current year.
Off mines costs decreased by 23.5% to ZAR1.3 million (2013: ZAR1.7 million) in
line with the lower gold production supplied to the refinery.
Evander Mines had gold inventory movements increasing the cost of production by
ZAR20.5 million (2013: ZAR13.4 million decrease in production costs).
The total underground and surface USD cash costs per ounce decreased by 16.0%
to USD1,154/oz (2013: USD995/oz1). However, in ZAR per kilogram terms, total
cash costs increased by 36.0% to ZAR384,150/kg (2013: ZAR282,451/kg1).
Capital expenditure
Total capital expenditure at Evander Mines was ZAR210.5 million (2013: ZAR201.1
million1). Maintenance capital expenditure was ZAR27.9 million (2013: ZAR65.0
million1) and development capital expenditure was ZAR103.4 million (2013:
ZAR54.2 million1). Expansion capital related to the ETRP plant construction was
ZAR79.2 million. In the prior year Evander Mines spent expansion capital on the
shaft deepening project of ZAR81.9 million1.
Note:
The prior year Evander Mines values were obtained from historical financial
records to allow for consistent reporting with the group's current gold
operations costs. Therefore the values may vary from Harmony's previously
announced values.
Review of platinum tailings operations
Review of Phoenix Platinum
Safety
Phoenix maintained its excellent safety record, with no injuries recorded.
Operating performance
An improved performance at Phoenix Platinum in the year under review resulted
in PGE ounces sold increasing by 11.2% to 7,204oz PGE (2013: 6,480oz PGE).
Several challenges were encountered during November 2013 as a result of furnace
ash and talc material which was historically deposited by IFM on the
Buffelsfontein dumps affecting plant recoveries. Furnace ash and talc dilutes
the final concentrate grade and must be chemically modified to prevent a
negative effect on the plant recoveries. The problem was identified by a
process of elimination and by metallurgical test work carried out, and an
estimated 500 PGE ounces were lost during the year under review as a result of
this contamination. Despite this, Phoenix Platinum was still able to improve
its recoveries to 29% (2013: 21%) and improve PGE ounce production.
The CTRP was designed to treat sulphide material from the Lesedi Mine, which
initially supplied Phoenix Platinum with sulphide-rich material. However
subsequent to commissioning the plant, IFM stopped its underground operations
at Lesedi and focussed on oxidised material from their open cast operation.
This resulted in oxidised tailings being blended into the Phoenix Platinum
feedstock during the year under review. The metallurgy of oxidised tailings
negatively affects the recovery and concentrate grade in the CTRP. This in turn
results in poor PGM concentrate production. In July 2014, IFM resumed mining at
Lesedi Mine and the expected tonnages from this sulphide material should
improve Phoenix Platinum production and plant recoveries.
In the year under review, the effective average PGE basket price received
increased by 9.8% ZAR9,987/oz (2013: ZAR9,093/oz). Cost per ounce of production
increased by 2.3% to ZAR7,723/oz (2013: ZAR7,551/oz). This marginal increase in
costs was offset by improved production. The plant feed decreased during the
period by 8.4% to 251,182t (2013: 274,190t) as result of the talc and furnace
ash complications highlight above.
The total cost of production increased by 13.7% to ZAR55.6 million (2013:
ZAR48.9 million).
The main year-on-year cost contributors were the following:
Salary and wages of 9.9% to ZAR17.7 million (2013: ZAR16.1 million), comprising
a standard increase of 7.5% granted to the employees in line with the gold
operations and an incentive bonus scheme for achieving targets and realising a
profit.
Processing costs increased by 16.0% to ZAR33.3 million (2013: ZAR28.7 million)
as result of increased reagent costs and consumption to address the talc and
furnace ash in the tailings processed, whilst additional processing costs were
incurred due to higher chrome content fees charged during the refining process.
Administration costs increased by 50.0% to ZAR0.6 million (2013: ZAR0.4
million), due to an increase in consulting fees.
Security cost remained well controlled at ZAR0.5 million (2013: ZAR0.5
million).
Electricity costs increased by 12.5% to ZAR3.6 million (2013: ZAR3.2 million).
Phoenix Platinum sources electricity from IFM and the effective cost per kWh
increased as result of IFM no longer benefitting from a historical Eskom
rebate.
Phoenix Platinum was able to achieve its maiden headline profit of ZAR3.7
million (2013: ZAR6.4 million headline loss) for the financial year, despite
challenges highlighted above and the five month platinum industrial action that
occurred during the financial year.
Year Units Tailings
ended operations
30
June Phoenix
Platinum
Tonnes processed - tailings 2014 (t) 251,182
2013 (t) 274,190
Headgrade - tailings 2014 (g/t) 3.7
2013 (g/t) 3.7
Overall recovery 2014 (%) 29%
2013 (%) 21%
PGE Sold 2014 (oz) 7,204
2013 (oz) 6,480
Average ZAR PGE price received 2014 (oz) 9,987
2013 (oz) 9,093
Average USD gold price received 2014 (USD/oz) 965
2013 (USD/oz) 1,030
ZAR cash cost 2014 (ZAR/oz) 7,723
2013 (ZAR/oz) 7,551
ZAR all-in sustaining cash costs 2014 (ZAR/oz) 7,977
2013 (ZAR/oz) 8,632
ZAR all-in cost 2014 (ZAR/oz) 7,977
2013 (ZAR/oz) 8,632
USD cash cost 2014 (USD/oz) 746
2013 (USD/oz) 855
USD all-in sustaining cash cost 2014 (USD/oz) 771
2013 (USD/oz) 978
USD all-in cost 2014 (USD/oz) 771
2013 (USD/oz) 978
ZAR cash cost per ton 2014 (ZAR/t) 222
2013 (ZAR/t) 178
Capital expenditure 2014 (ZAR million) 0.4
2013 (ZAR million) 2.2
Average exchange rate 2014 (ZAR/USD) 10.35
2013 (ZAR/USD) 8.83
Revenue 2014 (ZAR million) 71.9
2013 (ZAR million) 58.9
Cost of Production 2014 (ZAR million) 55.6
2013 (ZAR million) 48.9
All-in sustainable cost of production 2014 (ZAR million) 57.5
2013 (ZAR million) 55.9
All-in cost of production 2014 (ZAR million) 57.5
2013 (ZAR million) 55.9
Adjusted EBITDA1 2014 (ZAR million) 16.0
2013 (ZAR million) 6.9
Note:
Adjusted EBITDA is represented by earnings before interest, taxation,
depreciation and amortisation, bargain purchase gain, impairments and loss on
disposal of assets held for sale.
Capital expenditure
Total capital expenditure at Phoenix Platinum decreased to ZAR0.4 million
(2013: ZAR2.2 million).
Expansion /Growth projects
Evander Tailings Retreatment Plant
The group has begun to upgrade and rehabilitate the Carbon-in-Leach ('CIL')
tanks of the Evander Mines Kinross plant. The construction of the ETRP will
yield an estimated 10,000oz of gold per annum with a life of mine of 17 years.
The project will leverage off the current plant infrastructure and labour,
which will result in a marginal incremental cost per ton to process the
additional tailings. The ETRP project is progressing well and expected to be in
production by January 2015.
The capital expenditure is projected to be approximately ZAR200 million, with a
construction period of less than 12 months to first gold production. The group
had spent ZAR79.2 million of the project value during the 2014 financial year.
Auroch
Auroch is an exploration company focused on developing and exploring the Manica
Gold Project ('Manica') in Mozambique. Manica was previously owned by Pan
African Resources. After its sale of Manica to Auroch during January 2013, as
part of the transaction consideration, Pan African Resources was issued 42% of
the total issued share capital of Auroch. During the reporting period, the
group consolidated ZAR2.9 million (2013: ZAR2.1 million) of Auroch's
exploration and corporate costs incurred, this is disclosed in the Statement of
comprehensive income under 'Loss in Associate'.
The group announced on 26 November 2013 that Pan African entered into an
amending agreement with Auroch:
1. Per this amendment to the agreement dated 23 May 2014, Auroch shall pay Pan
African an amount of AUD2 million in cash, of which AUD0.55 million is payable
prior to 30 June 2014, in relation to option payments and the balance AUD1.45
million is a final payment due by 30 September 2015.
2. If Auroch settles the full cash consideration in accordance with the
amending agreement, Pan African shall allow Auroch to reacquire or cancel the
consideration shares at no additional cost or consideration.
In the event that Auroch fails to settle the cash consideration pursuant to the
amended agreement, the amendment will expire and the provisions of the Original
Agreement will be restored. Any payment made under the amending agreement is
non-refundable.
Commitments
The group's commitments have been presented in both ZAR and GBP for ease of
review for both UK and SA shareholders. The group had no contingent liabilities
in the current financial year or prior year.
Commitments reported in ZAR
The group had outstanding open orders contracted for at year end of ZAR89.8
million (2013: ZAR72.7 million).
Authorised commitments for the new financial year not yet contracted for
totalled ZAR343.3 million (2013: ZAR144.5 million).
The group had guarantees of ZAR24.6 million (2013: ZAR24.6 million) in favour
of Eskom, and ZAR14.0 million (2013: ZAR14.0 million) in favour of the
Department of Mineral Resources at year end.
Operating lease commitments, which fall due within the next year, amounted to
ZAR2.6 million (2013: ZAR1.6 million).
Commitments reported in GBP
The group had outstanding open orders contracted for at year end of GBP5.0
million (2013: GBP4.8 million).
Authorised commitments for the new financial year not yet contracted for
totalled GBP19.1 million (2013: GBP9.6 million).
The group had guarantees of GBP1.4 million (2013: GBP1.6 million) in favour of
Eskom, and GBP0.8 million (2012: GBP0.9 million) in favour of the Department of
Mineral Resources at year end.
Operating lease commitments, which fall due within the next year, amounted to
GBP0.2 million (2013: GBP0.2 million).
Basis of preparation of financial statements
Investors should consider non-Generally Accepted Accounting Principles
('non-GAAP') financial measures shown in this provisional announcement in
addition to, and not as a substitute for or as superior to, measures of
financial performance reported in accordance with International Financial
Reporting Standards ('IFRS'). The IFRS results reflect all items that affect
reported performance and therefore it is important to consider the IFRS
measures alongside the non-GAAP measures.
The provisional audited results announcement is only a summary of the
information in the Integrated 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 Report to be published on SENS
and the company's website as a whole.
JSE Limited listing
The company has a dual primary listing on JSE Limited ('JSE') in South Africa
and the AIM market ('AIM') of the London Stock Exchange.
This provisional announcement has been prepared in accordance with the
framework concepts and the measurement and recognition requirements of IFRS and
SAICA financial reporting guidelines as issued by the accounting practice
committee and financial reporting pronouncement as issued by the financial
reporting standards council, and the information as required by International
Accounting Standards ('IAS') 34: Interim Financial Reporting.
The group's South African external auditors, Deloitte & Touché, have issued
their opinions on the group's financial statements and the summary consolidated
financial statements for the year ended 30 June 2014. The audit was conducted
in accordance with International Standards on Auditing. Deloitte and Touché
have expressed the unmodified opinions on the group's financial statements and
the summary consolidated financial statements. The copies of their audit
reports are available for inspection at the company's registered office. Any
reference to future financial performance included in this provisional report
have not been reviewed or reported on by the group's South African external
auditors.
The auditor's report does not necessarily report on all of the information
contained in this announcement/financial results. 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 issuer's registered office.
These summarised consolidated financial statements are extracted from the
audited group financial statements. The directors take full responsibility for
the preparation of the provisional audited results and confirm that the
financial information has been correctly extracted from the underlying
financial statements.
AIM listing
The financial information for the year ended 30 June 2014 does not constitute
statutory accounts as defined in sections 435 (1) and (2) of the United Kingdom
('UK') Companies Act 2006 but has been derived from those accounts. Statutory
accounts for the year ended 30 June 2013 have been delivered to the Registrar
of Companies and those for 2014 will be delivered following the company's
annual general meeting. Deloitte LLP, the external auditor registered in the
UK, have reported on these accounts for the year ended 30 June 2014. Their
report 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 (3) of the Companies Act 2006. These
statutory accounts have been prepared in accordance with IFRS and IFRS
Interpretations Committee ('IFRIC') interpretations adopted for use by the
European Union, with those parts of the UK Companies Act 2006 applicable to
companies reporting under IFRS.
Directorship Changes
The following changes took place during the year under review:
Appointments:
- RA Holding was appointed as a director and chief executive officer with
effect from 1 September 2013.
- JAJ Loots was appointed as financial director effective 1 October 2013. JAJ
Loots was previously a non-executive director of the group.
- TF Mosololi was appointed as an independent non-executive director effective
9 December 2013.
Resignations:
- B Sitole resigned as the financial director, effective 30 September 2013.
Shares Issued
During the financial year under review 7,160,500 shares were issued in relation
to share options exercised:
9 September 2013 : 3,000,000 shares issued at 5 pence per share.
16 October 2013 : 2,063,000 shares were issued as follows:
1,213,000 shares issued at 5 pence per share.
850,000 shares issued at 4 pence per share.
10 February 2014 : 282,500 shares were issued at 4 pence per share.
20 February 2014 : 965,000 shares were issued at 4 pence per share.
5 June 2014 : 850,000 shares were issued at 4 pence per share.
Dividend
Historically, the board has recommended an annual dividend to shareholders, for
approval at the AGM. The board recognises that where possible, shareholders
require a cash return on their investment. Pan African Resources has now
revised and further clarified its dividend policy, going forward the company
will pay a progressive annual ZAR dividend. Any dividend recommendation and
payment, however, will still be dependent on prevailing gold prices and other
external factors, as well as the performance of and outlook for the group.
The group paid a dividend of ZAR240.3 million (GBP14.7 million) for the 2013
year, equating to ZAR0.1314 per share (0.8030p per share).
The board has proposed a dividend of ZAR258.0 million (approximately GBP14.5
million1) for the 2014 financial year, equating to ZAR0.1410 per share
(approximately 0.7898p per share1), resulting in a dividend cover of 1.8 times.
Note 1: The GBP proposed dividend was calculated based on an exchange rate of
ZAR17.85:1. The UK shareholders are to note that a revised exchange rate will
be communicated prior to final approval at the AGM. Therefore the proposed
dividend is approximately 0.7898p per share.
Going concern
The board confirms that the business is a going concern and that it has
reviewed the business' working capital requirements in conjunction with its
future funding capabilities for at least the next 12 months, and has found them
to be adequate. The group has a revolving credit facility with Nedbank Limited,
ABSA Limited and Rand Merchant Bank. The group at 30 June 2014 had unutilised
RCF facilities of ZAR600 million and cash on hand of ZAR101.2 million to assist
in funding working capital requirements. Management are not aware of any
material uncertainties which may cast significant doubt on the group's ability
to continue as a going concern. Should the need arise the group can cease most
exploration and capital activities, and by doing so conserve cash.
Events after the reporting period
Mr RG Still resigned as a non-executive director with effect from 1 July 2014.
Mr R Smith was appointed as an independent non-executive director, with effect
from 08 September 2014.
On 29 August 2014, Barberton Mines implemented a broad-based employee ownership
scheme (ESOP). A newly established employee trust will own 5% of the issued
share capital of Barberton Mines. The transaction was fully vendor financed on
a notional basis by Barberton Mines, the preference share funding attracts
market related returns and dilution effect to Pan African Resources is limited.
Accounting policies
The provisional announcement has been prepared using accounting policies that
comply with the IFRS adopted by the European Union and South Africa, which are
consistent with those applied in the financial statements for the year ended 30
June 2014 and prior year end 30 June 2013.
Directors' dealings
Mr JAJ Loots had participated in the following transactions in the company's
shares:
- 17 September 2013, purchased 50,000 shares at ZAR2.23 per share.
At 30 June 2014 Mr JAJ Loots held a total of 231,575 shares (2013: 181,575)
representing 0.01% of the issued share capital.
Mr RG Still is a trustee of a family trust ('The Alexandra Trust'). Mr RG Still
is therefore deemed to have an indirect, non-beneficial interest in The
Alexandra Trust's holding in the company.
The Alexandra trust had the following dealings in shares:
- 01 October 2013, sold 360,916 shares at ZAR2.70 per share.
- 02 to 06 May 2014, sold 4,312,700 shares at an average price of ZAR2.70 per
share.
At 30 June 2014 the Alexandra Trust held a total of 7,000,000 shares (2013:
11,673,616) representing 0.38% of the issued share capital.
Segment Reporting
A segment is a distinguishable component of the group that is engaged in
providing products or services in a particular business sector or segment,
which is subject to risk and rewards that are different to those of other
segments. The group's business activities were conducted through five business
segments:
- Barberton Mines (Including BTRP), located in Barberton South Africa,
- Evander Gold Mining (Pty) Ltd and Evander Gold Mines Ltd ('Collectively known
as Evander Mines'), located in Evander South Africa,
- Phoenix Platinum, located near Rustenburg South Africa,
- Corporate and growth projects and,
- Pan African Resources Funding Company (Pty) Ltd ('Funding company').
The Executive committee ('Exco') reviews the operations in accordance with the
disclosures presented above.
Pan African Resources Outlook
The board approved construction and commissioning of the ETRP is significant,
as it has an estimated resource of 0.4 million ounces and adds immediate
production ounces to Evander Mines. Should the ETRP project meet targets, we
will evaluate a project to commission a further, much larger plant - the
Elikhulu Project - situated at Evander to treat tailings from the Winkelhaak,
Leslie, Bracken and Kinross Dam storage facilities, with an estimated resource
of 1.5 million ounces.
Our long-term project pipeline at Evander Mines also includes the Evander
South, Poplar and Rolspruit projects. Evander South has estimated resources of
5.2 million, Poplar 5.4 million ounces, and Rolspruit 8.9 million ounces.
The refurbishment of Fairview Number 2 and 3 Decline Shafts at Barberton Mines
will continue for another 18 months, after which operations will revert to six
shifts per week.
Once the above plans are actioned we will be on track to achieve our targeted
250,000 ounces of annual production from our current portfolio of assets and
infrastructure.
Pan African Resources is also very well positioned to take advantage of further
growth opportunities.
We extend our thanks to our management team, our mine managers and all their
staff for their hard work and persistence that have allowed Pan African
Resources to continue growing from strength to strength. We also thank our
fellow directors for their support and guidance.
Ronald Holding
Chief Executive Officer
Cobus Loots
Financial Director
16 September 2014
Summary Consolidated Financial Statements
Summarised Consolidated Statement of Financial Position at 30 June 2014
30 June 2014 30 June 2013
(Audited) (Audited)
GBP GBP
ASSETS
Non-current assets
Property, plant and equipment and mineral rights 185,375,968 209,489,677
Other intangible assets 214,330 340,484
Deferred taxation 366,567 312,798
Goodwill 21,000,714 21,000,714
Investments in associate 1,009,545 1,199,071
Rehabilitation trust fund 15,458,291 16,973,713
223,425,415 249,316,457
Current assets
Inventories 5,341,128 6,595,740
Current tax asset 854,568 1,479,339
Trade and other receivables 11,696,380 13,904,416
Cash and cash equivalents 5,618,323 4,768,916
23,510,399 26,748,411
Non-current assets held for sale - 213,191
TOTAL ASSETS 246,935,814 276,278,059
EQUITY AND LIABILITIES
Capital and reserves
Share capital 18,299,947 18,228,342
Share premium 94,792,516 94,515,562
Translation reserve (47,545,320) (22,166,345)
Share option reserve 1,154,891 1,031,955
Retained income 114,106,005 102,005,124
Realisation of equity reserve (10,701,093) (10,701,093)
Merger reserve (10,705,308) (10,705,308)
Other reserves (5,529) -
Total equity 159,396,109 172,208,237
Non-current liabilities
Long term provisions 12,033,167 14,821,152
Long term liabilities 8,141,317 11,132,960
Deferred taxation 43,353,577 54,049,440
63,528,061 80,003,552
Current liabilities
Trade and other payables 17,219,749 23,202,052
Current portion of long term liabilities 4,754,803 864,218
Current tax liability 2,037,092 -
24,011,644 24,066,270
TOTAL EQUITY AND LIABILITIES 246,935,814 276,278,059
Summarised Consolidated Statement of Comprehensive Income for the Year Ended 30
June 2014
30 June 2014 30 June 2013
(Audited) (Audited)
GBP GBP
Revenue
Gold sales 150,288,898 129,277,438
Platinum sales 4,262,160 4,257,512
Realisation costs (349,454) (226,738)
On - mine revenue 154,201,604 133,308,212
Gold cost of production (103,099,110) (67,646,119)
Platinum cost of production (3,294,975) (3,535,046)
Mining depreciation (10,023,361) (5,998,267)
Mining profit 37,784,158 56,128,780
Other (expenses) (1,449,853) (5,652,226)
Bargain purchase consideration - 24,114,255
Loss in associate (173,177) (152,312)
Loss on disposal of asset held for sale (11,848) (586,138)
Impairments costs - (16,143,604)
Royalty costs (2,019,066) (3,198,622)
Net income before finance income and finance costs 34,130,214 54,510,133
Finance income 687,185 1,454,659
Finance costs (878,064) (1,257,696)
Profit before taxation 33,939,335 54,707,096
Taxation (7,154,742) (12,133,063)
Profit after taxation 26,784,593 42,574,033
Other comprehensive income:
Other movements (5,529) -
Foreign currency translation differences (25,378,975) (20,228,836)
Total comprehensive income for the year 1,400,089 22,345,197
Profit attributable to:
Owners of the parent 26,784,593 42,574,033
26,784,593 42,574,033
Total comprehensive income attributable to:
Owners of the parent 1,400,089 22,345,197
1,400,089 22,345,197
Earnings per share 1.47 2.63
Diluted earnings per share 1.46 2.62
Weighted average number of shares in issue 1,827,207,555 1,619,756,902
Diluted number of shares in issue 1,831,339,174 1,625,933,891
Headline earnings per share is calculated :
Basic earnings 26,784,593 42,574,033
Bargain purchase gain - (24,114,255)
Profit on disposal of property plant and
equipment and mineral resource (20,497) -
Loss on disposal of asset held for sale 11,848 586,138
Impairment costs - 16,143,604
Headline earnings 26,775,944 35,189,520
Headline earnings per share 1.47 2.17
Diluted headline earnings per share 1.46 2.16
Summarised Consolidated Statement of Cashflows
FOR THE YEAR ENDED 30 JUNE 2014
30 June 2014 30 June 2013
Audited Audited
GBP GBP
NET CASH GENERATED FROM OPERATING ACTIVITIES 22,170,837 48,265,537
INVESTING ACTIVITIES
Additions to property, plant and equipment and mineral rights (21,461,839) (27,566,533)
Net cash outflows from the acquisition of Evander - (96,006,400)
Additions to intangibles (38,617) -
Proceeds on disposals of assets 145,366 10,555
Funding of the rehabilitation trust fund - 359,172
NET CASH USED IN INVESTING ACTIVITIES (21,355,090) (123,203,206)
FINANCING ACTIVITIES
Proceeds from borrowings 22,955,725 34,763,874
Borrowings repaid (22,431,453) (22,545,100)
Shares issued 348,559 50,614,255
Share issue costs - (3,502,273)
NET CASH FROM FINANCING ACTIVITIES 872,831 59,330,756
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,688,578 (15,606,913)
Cash and cash equivalents at the beginning of the period 4,768,916 19,782,179
Effect of foreign exchange rate changes (839,171) 593,650
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 5,618,323 4,768,916
Summarised Audited Consolidated Statement of Changes in Equity for the period
30 June 2014
Summarised Audited Consolidated Statement of Changes in Equity for the period
30 June 2014
GBP GBP GBP GBP
Realisation of Merger Other
equity reserve reserve reserves Total
Balance at 30 June 2012 (10,701,093) (10,705,308) - 102,625,655
Issue of shares - - - 50,614,255
Share issue costs - - - (3,502,273)
Other reserves - - (1,650)
Total comprehensive - - - 22,345,197
income
Share based payment - - - - 127,053
charge for the year
Balance at 30 June 2013 (10,701,093) (10,705,308) - 172,208,237
Issue of shares - - 348,559
Total comprehensive -
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