REG-Pan African Resources Plc: Provisional summarised audited results for the year ended 30 June 2023

Pan African ResourcesAnnouncement

13/09/2023 07:15

Pan African Resources PLC (Incorporated and registered in England and Wales under the Companies Act 1985 with registration number 3937466 on 25 February 2000) Share code on AIM: PAF Share code on JSE: PAN ISIN: GB0004300496 ADR ticker code: PAFRY (Pan African or the Company or the Group)  Pan African Resources Funding Company Limited Incorporated in the Republic of South Africa with limited liability Registration number: 2012/021237/06 Alpha code: PARI (Funding Company)  

(Key features are reported in United States dollar (US$) or South African rand
(ZAR), to the extent relevant.)

 

Provisional summarised audited results for the year ended 30 June 2023 –
SHORT FORM ANNOUNCEMENT

KEY FEATURES

 

Production
* Gold production of 175,209oz (2022: 205,688oz), in line with revised
guidance 
* Increased production outlook for the 2024 financial year – guidance of
178,000oz to 190,000oz
Safety
* As previously announced, a fatal accident occurred at Evander Mines in March
2023, following 1 million fatality-free shifts at the operation prior to the
accident
* Improvement in overall safety rates compared to the previous financial year,
with a total recordable injury frequency rate of 7.96 per million man hours
for the year (2022: 8.95 per million man hours)
* Focused initiatives implemented to further enhance safety performance
Costs and cost outlook
* All-in sustaining costs (AISCAPM) for the current financial year of
US$1,327/oz, a sub-US$ inflation increase of 3.3% (US$1,284/oz for the
financial year ended 30 June
* AISC in line with revised guidance for 2023 of between US$1,325/oz to
US$1,350/oz
* AISC of US$1,152/oz (2022: US$1,145/oz) for our lower-cost operations,
comprising all operations, excluding Sheba Mine and Consort Mine, which
account for more than 81% 
(2022: 87%) of annual production * Remedial measures implemented to reduce
real AISC at high-cost operations (Sheba and Consort Mines)

* Renewable energy generation and water recycling, together with other
initiatives to increase the Group’s future gold production, are expected to
contribute to a decline in future real AISC
 
* 2024 AISC guidance of US$1,350/oz (assuming an exchange rate of
US$/ZAR:18.50)
Financial
* Net cash generated from operating activities of US$100.1 million (2022:
US$110.0 million)
* Profit for the year of US$60.7 million (2022: US$75.0 million)
* Headline earningsAPM of US$60.4 million (2022: US$75.6 million) 
* Earnings per share of US 3.19 cents per share (2022: US 3.90 cents per
share) and headline earnings per shareAPM of US 3.15 cents per share (2022: US
3.93 cents per share)
* Robust financial position at year-end, with net debtAPM of US$22.0 million
(2022: US$13.0 million)
* Liquidity remains healthy, with access to immediately available cash and
undrawn facilities of US$84.7 million (2022: US$69.4 million) at financial
year-end. Post the current financial year, the Company also closed the
dedicated Mogale Tailings Retreatment project (MTR project) senior debt
facility of US$70.3 million
Proposed dividend
* Sector-leading final dividend of ZA 18.00000 cents per share (or US 0.95592
cents per share at an exchange rate of US$/ZAR:18.83) proposed for approval at
the upcoming annual general meeting (AGM)
Growth projects
* The MTR project construction commenced in July 2023 with steady-state
production expected by December 2024
* Evander Mines’ 8 Shaft 24, 25 and 26 Level underground expansion project
is on track* Refrigeration plant at 24 Level commissioned in phases to
facilitate mining at depth 
* Development to access the 25 and 26 Level mining areas has commenced
* Equipping of an existing underground ventilation shaft for rock hoisting
capacity of up to 40,000tpm is planned to be completed during the third
quarter of the 2024 financial year, improving efficiencies and eliminating the
cumbersome and labour-intensive conveyor system
Environmental, social and governance (ESG) initiatives
* Established a renewable energy roadmap to decarbonisation – construction
of Fairview Mine’s solar facility commenced at Barberton Mines
* Commissioned Evander Mines’ water recycling plant to reduce potable water
requirements and lower costs
Sudan exploration
* Exploration activities resumed post the reporting period, following a
detailed risk assessment of the in-country operating environment in the
exploration area
 

CHIEF EXECUTIVE OFFICER’S STATEMENT

Cobus Loots, Pan African’s chief executive officer, commented:

 

“Pan African delivered a resilient financial performance for the current
financial year, with a much-improved rand gold price compensating for lower
production from our underground operations.

We are confident that the measures we are implementing, specifically at
Barberton Mines’ underground operations, will result in higher production in
the future, with production guidance increased for the 2024 financial year. If
the current rand gold price tailwinds persist, we can look forward to another
robust financial performance from Pan African in the year ahead.

Our surface remining operations, the Elikhulu Tailings Retreatment Plant
(Elikhulu) and the Barberton Tailings Retreatment Plant, performed in line
with expectations during the past financial year, contributing significantly
to the Group’s production, cash flows and profits. The consistent
performance of these low-cost and, in the case of Elikhulu, long-life assets,
demonstrates their importance in our portfolio and reinforces our decision to
develop the MTR project.

Pan African has an outstanding track record in the development and operation
of tailings retreatment operations. Full-scale construction of the MTR plant
commenced on schedule in July this year, with commissioning anticipated within
the next 18 months. The MTR project’s incremental production of
approximately 50,000oz per year will contribute to almost 50% of the Group’s
annual gold output being sourced from low-cost, safe, surface remining
operations. In addition to being a compelling investment, large-scale tailings
retreatment operations of this nature rehabilitate and restore the
environment, while also providing much-needed employment and economic
opportunities.

The development of Evander Mines’ 24 Level project is progressing well, with
crews being redeployed to the 24 Level area as the 8 Shaft’s pillar mining
nears completion. Improved mining flexibility, together with other initiatives
being implemented to ensure that infrastructure availability is optimised,
will ensure sustainable production from this long-life underground operation.

We are grateful that after year-end we managed to resume our gold exploration
activities in Sudan. The decision to recommence operations was only made after
a comprehensive risk assessment of the in-country operating environment in the
exploration area, and we will continue to closely monitor the political
situation.

Globally, gold producers have experienced severe cost inflation in recent
years.  Despite inflationary pressures on input costs with, specifically,
reagents used in processing and electricity costs being subject to large
increases, the financial results for the year benefited from Pan African’s
culture of cost control.  AISC increased by only 3.3% in US$ to US$1,327/oz,
with the depreciation of the rand relative to the US$ providing an offset to
the higher rand unit costs.

We ended the financial year in a strong financial position with net debt of
only US$22.0 million, despite a substantial capital investment programme and
the payment of an attractive dividend to shareholders in the past year. The
fact that we are able to maintain this dividend in rand terms, while
undertaking the MTR project’s construction, our largest capital project
ever, is a testament to the quality of our portfolio.

Excellent progress was also made with our ESG initiatives, with an increased
focus on renewable energy projects. In May 2023, construction of the Group’s
second solar plant commenced at Barberton Mines. This plant, with a capacity
of 8.75MW, will supply most of the daytime power requirements for the Fairview
Mine. The Group has also signed a third-party power purchase agreement for the
off-site provision of 40MW of wheeled power over a period of up to 15 years.
Along with Evander Mines’ operating solar plant, these projects are expected
to reduce our carbon emissions by up to 30% (by 2030), as well as deliver
associated cost benefits, as the price of grid power continues to increase at
above-inflation rates. Evander Mines’ water recycling plant is also expected
to generate attractive cost savings as underground water can now be used as
process water, reducing our reliance on municipal resources.

Reflecting on the past year, we wish to again express our condolences to the
family, friends and co-workers of our colleague, Mr Sahlukaniso, who was
fatally injured in a fall of ground accident at our Evander Mines’
underground mine in March 2023. Pan African remains steadfast in its resolve
to achieve a zero-harm working environment in the coming years.

In terms of the outlook for the year ahead, we will continue to balance safe,
sustainable gold production, the successful delivery of our transformational
growth projects, cash returns to shareholders and all our other initiatives to
the benefit of our stakeholders. We are well positioned to exceed the
production achieved in the current financial year, with estimated production
of between 178,000oz and 190,000oz forecast for the 2024 financial year.”

 

PROPOSED DIVIDEND FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023

 

The board has proposed a final dividend of ZAR400.1 million for the 2023
financial year (approximately US$21.2 million), equal to ZA 18.00000 cents per
share or approximately US 0.95592 cents per share (0.75219 pence per share). A
dividend of ZA 18.00000 cents per share or approximately US 1.05820 cents per
share (or 0.86915 pence per share) was paid for the 2022 financial year. The
dividend is subject to approval by shareholders at the AGM, which is to be
convened on Thursday, 23 November 2023.

 

Assuming shareholders approve the final dividend, the following salient dates
would apply:

 

 Annual general meeting                                        Thursday, 23 November 2023   
 Currency conversion date                                      Thursday, 23 November 2023   
 Currency conversion announcement released by 11:00 (SA time)  Friday, 24 November 2023     
 Last date to trade on the JSE                                 Tuesday, 28 November 2023    
 Last date to trade on the LSE                                 Wednesday, 29 November 2023  
 Ex-dividend date on the JSE                                   Wednesday, 29 November 2023  
 Ex-dividend date on the LSE                                   Thursday, 30 November 2023   
 Record date on the JSE and LSE                                Friday, 1 December 2023      
 Payment date                                                  Tuesday, 12 December 2023    

 

The British pound (GBP) and US$ proposed final dividend was calculated based
on a total of 2,222,862,046 shares in issue and an illustrative exchange rate
of US$/ZAR:18.83 and GBP/ZAR:23.93, respectively.

 

No transfers between the Johannesburg and London registers, between the
commencement of trading on Wednesday, 29 November 2023 and close of business
on Friday, 1 December 2023 will be permitted.

 

No shares may be dematerialised or rematerialised between Wednesday, 29
November 2023 and Friday, 1 December 2023, both days inclusive.

 

The South African dividend taxation rate is 20% per ordinary share for
shareholders who are liable to pay dividend taxation, resulting in a net
dividend of ZA 14.40000 cents per share for these shareholders. Foreign
investors may qualify for a lower dividend taxation rate, subject to
completing a dividend taxation declaration and submitting it to Computershare
Investor Services Proprietary Limited or Link Asset Services, who manage the
South African and UK registers, respectively. The Company's South African
income taxation reference number is 9154588173. The proposed dividend will be
paid out of the Company's retained earnings, without drawing on any other
capital reserves.

 

AUDIT OPINION

 

The Group's external auditor, PricewaterhouseCoopers LLP (PwC), has issued
their opinion on the consolidated annual financial statements for the year
ended 30 June 2023.

The audit of the consolidated annual financial statements was conducted in
accordance with the International Standards on Auditing. PwC has expressed an
unmodified opinion on the consolidated annual financial statements. A copy of
the audited annual financial statements and the audit report is available for
inspection at the issuer's registered office. Any reference to future
financial performance included in this provisional summarised audited results
announcement has not been reviewed or reported on by the Group's external
auditor.

 

DIRECTORS’ RESPONSIBILITY

 

The information in this announcement has been extracted from the provisional
summarised audited results for the year ended 30 June 2023, but this
short-form announcement itself has not been reviewed by the Company’s
auditors. The provisional summarised audited results have been prepared under
the supervision of the financial director, Deon Louw. This short-form
announcement is the responsibility of the directors of Pan African and is only
a summary of the information contained in the full announcement and does not
contain full or complete details.

 

Any investment decisions should be based on the full announcement and the
Group’s detailed operational and financial summaries.

 

AVAILABILITY OF THE ANNUAL FINANCIAL STATEMENTS AND PROVISIONAL SUMMARISED
AUDITED RESULTS

 

The annual financial statements (together with PwC’s audit opinion thereon)
have been released on SENS and are available for viewing via the JSE Limited
(JSE) link at
https://senspdf.jse.co.za/documents/2023/jse/isse/pan/FYE2023.pdf

and via the Company’s website at
https://www.panafricanresources.com/wp-content/uploads/Pan-African-Resources-integrated-annual-report-2023.pdf.

The provisional summarised audited results for the year ended 30 June 2023 can
be viewed via the Company’s website at
https://www.panafricanresources.com/wp-content/uploads/Pan-African-Resources-year-end-results-SENS-announcement-2023.pdf

 

Copies of the full announcement may also be requested by emailing
ExecPA@paf.co.za  

 

The Company has a dual primary listing on the JSE in South Africa and the
Alternative Investments Market (AIM) of the London Stock Exchange (LSE) as
well as a sponsored Level 1 ADR programme in the USA through the Bank of New
York Mellon and a secondary listing on the A2X Market.

 

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

www.panafricanresources.com

 

Rosebank

 

13 September 2023

 

 Corporate information                                                                                                                                                                                                                                                                                                                                                  
 Corporate office The Firs Building 2nd Floor, Office 204 Corner Cradock and Biermann Avenues Rosebank, Johannesburg South Africa Office: + 27 (0) 11 243 2900 info@paf.co.za                                                                    Registered office 2nd Floor 107 Cheapside London EC2V 6DN United Kingdom Office: + 44 (0) 20 7796 8644 info@paf.co.za  
 Chief executive officer Cobus Loots Office: + 27 (0) 11 243 2900                                                                                                                                                                                Financial director and debt officer Deon Louw Office: + 27 (0) 11 243 2900                                             
 Head investor relations Hethen Hira                                                                                                                                                                                                             Website: www.panafricanresources.com                                                                                   
  Tel: + 27 (0) 11 243 2900                                                                                                                                                                                                                                                                                                                                             
  Email: hhira@paf.co.za                                                                                                                                                                                                                                                                                                                                                
 Company secretary Jane Kirton St James's Corporate Services Limited Office: + 44 (0) 20 7796 8644                                                                                                                                               Nominated adviser and joint broker Ross Allister/David McKeown Peel Hunt LLP Office: +44 (0) 20 7418 8900              
 JSE sponsor Ciska Kloppers Questco Corporate Advisory Proprietary Limited Office: + 27 (0) 11 011 9200 (https://www.google.co.za/search?q=questco&rlz=1C1EJFC_enZA816ZA818&oq=questco&aqs=chrome..69i57j0l5.1159j0j4&sourceid=chrome&ie=UTF-8)  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 Office: +44 (0) 20 3207 7800                  

 



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