REG-Pan African Resources Plc: Provisional Summarised Audited Results

Pan African ResourcesAnnouncement

16/09/2020 07:05

Pan African Resources PLC

(Incorporated and registered in England and Wales under the Companies Act 1985
with registered 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)

(Key features are reported in US dollar (US$) and South African rand (ZAR))

Provisional summarised audited results for the year ended 30 June 2020 –
SHORT FORM ANNOUNCEMENT

KEY FEATURES
* The Group responded swiftly in implementing stringent policies and protocols
to mitigate the impact of the COVID-19 pandemic on its employees and
operations
* Gold production increased by 4.1% to 179,457oz after final refinery
adjustments (2019: 172,442oz), exceeding the revised full-year production
guidance of 176,000 oz
* Industry-leading safety performance, both in terms of lost-time injury and
reportable injury frequency rates
* Revenue increased by 25.9% to US$273.7 million (2019: US$217.4 million)
* Profit after taxation increased by 16.6% to US$44.3 million (2019: US$38.0
million)
* Headline earnings increased by 93.0% to US$44.2 million (2019: US$22.9
million)
* Headline earnings per share increased by 92.4% to US 2.29 cents per share
(2019: US 1.19 cents per share)
* Earnings per share increased by 16.8% to US 2.30 cents per share (2019: US
1.97 cents per share)
* Net cash generated by operating activities increased by 42.7% to US$53.8
million (2019: US$37.7 million)
* Net senior debt* decreased by 51.9% to US$62.0 million (2019: US$129.0
million)
* Improved net debt to net adjusted EBITDA ratio of 0.7 (2019: 2.2)
* Low-cost operations (including Elikhulu, BTRP and Barberton Mines’
Fairview Mine) achieved an AISC of US$826/oz for the Reporting Period
* The development of Evander Mines’ Egoli project has commenced. The
project’s payback is estimated at less than five years from inception of
construction, with funding provided on a non-dilutive basis by means of a
dedicated debt facility
* Production guidance increased to 190,000oz for the year ending 30 June 2021
* The board has proposed a record final dividend of ZAR 312.9 million or
approximately US$18.7 million, at prevailing exchange rates, subject to
approval by shareholders at the annual general meeting (AGM)
(*Net senior debt includes senior interest-bearing debt and the outstanding
gold loan balance, net of available cash)

CHIEF EXECUTIVE OFFICER’S STATEMENT

"Over the past year, our Group's operations demonstrated their resilience,
with gold production in excess of the revised guidance for the year ended 30
June 2020 (Reporting Period). This operational performance was achieved
despite the impact of the COVID-19 pandemic and the resultant restrictions
imposed to curb the spread of the virus – a testament to the robustness and
operational flexibility of our diversified portfolio of assets.    

Gold production from Elikhulu and the Barberton Tailings Retreatment Plant
(BTRP), our low-cost surface retreatment operations, have contributed
significantly to the profitability of the Group and demonstrated the benefit
of multiple producing operations. 

We are pleased to confirm that we remain firmly on track to deliver into our
guided gold production of 190,000oz for the year ending 30 June 2021, a
substantial increase compared to the revised production guidance of 176,000oz
for the Reporting Period.

We successfully levered the Group's operational execution capability to bring
Evander Mines' 8 Shaft (8 Shaft) pillar project and the Prince Consort (PC)
Shaft's Level 42 development at Barberton Mines’ New Consort Mine into
steady-state production, and these operations are now an integral part of our
strategy to further reduce costs and increase margins at our underground
mines.

Our Group's safety performance during the Reporting Period is commendable and
we will remain unrelenting in the pursuit of our ultimate goal of zero harm in
the years ahead. We are deeply saddened by the fatality that occurred after
the Reporting Period, as outlined in the subsequent events section further in
the announcement.

Pan African’s earnings for the Reporting Period were adversely affected by
COVID-19. This impact was however largely offset by the robust gold price and
by our ability to expeditiously ramp up gold production, in line with
government directives, post the initial hard lockdown period. Despite the
impact of COVID-19, we are pleased to report increased earnings for the Group
this year.

We reduced net debt during the Reporting Period by 41.2% to US$76.4 million
(2019: US$129.9 million), which resulted in a significantly improved net debt
to net adjusted EBITDA ratio(APM) of 0.7 (2019: 2.2).

Group all-in sustaining costs (AISC) of US$1,147/oz includes realised hedge
losses of US$12.0 million. Excluding these realised losses, the Group’s AISC
decreased to US$1,078/oz (2019: US$988/oz), which is more reflective of the
actual operational costs and in line with the Group’s targeted AISC of
US$1,000/oz. The AISC for the Group’s low-cost operations, comprising
Elikhulu, BTRP and Barberton Mines’ Fairview Mine, was US$826/oz for the
Reporting Period. We believe the Group is well on track to produce at an AISC
of below US$1,000/oz for the 2021 financial year. 

Our robust operational and financial performance over the past year, together
with a positive outlook for the year ahead, has enabled the board to recommend
a record dividend of ZAR312.9 million, or US 0.83582 cents per share, for
approval by shareholders at the upcoming AGM.

The Group will continue to invest in our compelling organic growth projects,
most notably the recently announced long-life Egoli project, which capitalises
on the substantial existing shaft and plant infrastructure, and is also fully
licenced and 'shovel-ready'. We are pleased to announce that following the
successful completion of the feasibility study, the Group has obtained credit
approval from Rand Merchant Bank for the full debt funding of the project’s
capital expenditure. Additional detail on the Egoli project’s development
and funding is provided further in the announcement.

We have prioritised our environmental, social and governance initiatives, as
evidenced by the level of rehabilitation spend for the Reporting Period, and
board approval for the implementation of a number of significant and
sustainable development projects. These include the 10MW renewable energy
solar photovoltaic plant at Elikhulu and a large-scale agriculture project at
Barberton Mines.  The merits of a similar solar photovoltaic plant are also
being considered for Barberton Mines, as well as new agriculture projects on
rehabilitated land at Evander Mines.

We are acutely conscious of the ongoing impact of the COVID-19 pandemic and
will continue to implement stringent preventative and precautionary measures
to limit incidences of infection among our employees and in our host
communities, and minimise the potential adverse impact of the pandemic on the
Group 's operations.

In the year ahead, aligned to our strategy of delivering safe, sustainable and
high-margin gold production, we will continue to direct our focus on creating
shareholder value by optimising our operations, further de-gearing our balance
sheet and increasing dividend distributions. Furthermore, we will also
continue investing in our host communities to improve the living conditions of
these critical stakeholders.

My sincere thanks and gratitude to all of the management and employees of Pan
African for their contribution to the Group through this difficult time and
for ensuring the sustainability of our operations, now and into the future."

PROPOSED DIVIDEND FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

The board has proposed a final dividend of ZAR312.9 million for the 2020
financial year (approximately US$18.7 million), equal to ZA 14.00000 cents per
share or approximately US 0.83582 cents per share (0.65451 pence per share).
The dividend is subject to approval by shareholders at the AGM, which is
convened for Thursday, 26 November 2020.

In light of the robust results for the Reporting Period and the favourable
financial prospects for the operations in the 2021 financial year, the board
has applied its discretion and has proposed a dividend in excess of the
Company’s dividend policy’s guidelines, which provide for a 40% payout
ratio of net cash generated from operating activities.

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

 Currency conversion date                                       Thursday, 26 November 2020 
 Annual General Meeting                                         Thursday, 26 November 2020 
 Currency conversion announcement released by 11:00 (SA time)     Friday, 27 November 2020 
 Last date to trade on the JSE                                    Tuesday, 1 December 2020 
 Last date to trade on the LSE                                  Wednesday, 2 December 2020 
 Ex -dividend date on the JSE                                   Wednesday, 2 December 2020 
 Ex- dividend date on the LSE                                    Thursday, 3 December 2020 
 Record date on the JSE and LSE                                    Friday, 4 December 2020 
 Payment date                                                    Tuesday, 15 December 2020 

The pound sterling (GBP) and US$ proposed final dividend was calculated based
on a total of 2,234,687,537 shares in issue and an illustrative exchange rate
of US$/ZAR:16.75 and GBP/ZAR:21.39, respectively. Shareholders on the London
register should note that a revised exchange rate will be communicated before
approval at the AGM.

No transfers between the Johannesburg and London registers, between the
commencement of trading on Wednesday, 2 December 2020 and close of business on
Friday, 4 December 2020 will be permitted.

No shares may be dematerialised or rematerialised between Wednesday, 2
December 2020 and Friday, 4 December 2020, both days inclusive.

The South African dividends taxation rate is 20% per ordinary share for
shareholders who are liable to pay dividends taxation, resulting in a net
dividend of ZA 11.20000 cents per share. 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"), have issued
their opinion on the consolidated annual financial statements for the year
ended 30 June 2020.

There have been two key audit matters identified by PwC which relate to the
Impairment assessments of goodwill, intangible assets and property, plant and
equipment and mineral rights – Group, and the Impact of COVID-19 – Group
and Parent Company. Further details on these key audit matters can be found in
the full auditor’s report which is available on the Company’s website
https://www.panafricanresources.com/wp-content/uploads/Pan-African-Resources-integrated-annual-report-2020.pdf.

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 2020, 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.

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

AVAILABILITY OF FULL ANNOUNCEMENT

The full announcement is accessible via the JSE link at
https://senspdf.jse.co.za/documents/2020/jse/isse/pan/FYE2020.pdf

and via the Company’s website at
https://www.panafricanresources.com/wp-content/uploads/Pan-African-Resources-year-end-results-SENS-announcement-2020.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 AIM
market of the London Stock Exchange (AIM) as well as a sponsored level 1 ADR
programme in the USA through the Bank of New York Mellon

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

www.panafricanresources.com

 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 info@paf.co.za  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/Jane Kirton St James's Corporate Services Limited Company Secretary Office: + 44 (0)20 7796 8644                                                                      Ross Allister/David McKeown Peel Hunt LLP Nominated Adviser and Joint Broker Office: +44 (0)20 7418 8900           
 Ciska Kloppers Questco Corporate Advisory Proprietary Limited JSE Sponsor Office: + 27 (0)11 011 9200                                                                             Thomas Rider/Neil Elliot BMO Capital Markets Limited Joint Broker Office: +44 (0)20 7236 1010                      
 Hethen Hira Pan African Resources PLC Head: Investor Relations Tel: + 27 (0)11 243 2900 E-mail: hhira@paf.co.za                                                                   Website: www.panafricanresources.com                                                                               



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