REG-Pan African Resources Plc: Summarised audited results for the y/e 30 June 2022

Pan African ResourcesAnnouncement

14/09/2022 07:15

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 United States (US) dollar (US$) and South
African rand (ZAR))

Provisional summarised audited results for the year ended 30 June 2022 –
SHORT FORM ANNOUNCEMENT

HIGHLIGHTS
* Excellent safety record maintained
* Record gold production, with production increasing by 1.9% to 205,688oz
(2021: 201,777oz)
* All-in sustaining costs (AISC(APM)) for the financial year ended 30 June
2022 (current financial year) of US$1,284/oz (US$1,261/oz), a marginal
increase of 1.8% when compared to the financial year ended 30 June 2021
(previous financial year)
* When higher cost operations are excluded, the AISC(APM) for 87% of the
Group’s gold production was US$1,145/oz
* Net cash from operating activities increased by 45.1% to US$110.0 million
(2021: US$75.8 million)
* Profit after tax of US$75.0 million (2021: US$74.7 million) and headline
earnings of US$75.6 million (2021: US$74.7 million)
* Earnings per share (EPS) increased to US 3.90 cents per share (2021: US 3.87
cents per share) and headline earnings per share (HEPS(APM)) increased to US
3.93 cents per share (2021: US 3.87 cents per share)
* Net debt reduced by 66.7% to US$13.0 million (2021: US$39.0 million)
* Final dividend of ZA 18.00000 cents per share or US 1.04046 cents per share
at the prevailing exchange rate, proposed for approval at the upcoming Annual
General Meeting (AGM)
* Evander Mines’ underground life-of-mine (LoM) extended to 14 years, with
increased expected gold production and development capital internally funded
* Transaction to acquire Mintails tailings retreatment assets expected to be
concluded by 30 September 2022
* First phase of share buy-back programme of US$3.2 million (2021: US$ 0
million) completed
* 9.9MW solar photovoltaic (PV) renewable energy plant at Evander fully
commissioned
* First commercial harvest at Barberton’s Blueberry project in progress
CHIEF EXECUTIVE OFFICER’S STATEMENT

Overview

“Over the past year the Group has again made meaningful progress with our
operational performance and growth projects. Our teams achieved record gold
production of 205,688oz from what is now a better diversified portfolio of
assets. The organic growth projects at the Evander Mines’ underground
operations are on schedule to commence delivering within their anticipated
production timeframes.

Importantly, the outstanding production performance was achieved without
compromising our industry leading safety record, where we have moved closer to
our goal of a zero-harm working environment.

A key focus for the year ahead will be the smaller underground operations at
Barberton Mines, to ensure that these high-grade assets perform to their full
potential.

We have further strengthened our statement of financial position relative to
the previous financial year, notwithstanding the payment of a record dividend
and incurring significant growth and sustaining capital expenditure. In
proposing the final dividend for the current financial year, the board
considered all capital allocation priorities, carefully balancing
opportunities for increased production and diversification with returning cash
to shareholders.

Financial Performance

The Group’s AISC increased marginally by 1.8% to US$1,284/oz (2021:
US$1,261/oz). Group operations (excluding Consort and Sheba Mines), which
account for 87% of the Group’s total production, achieved an AISC of
US$1,145/oz, resulting in an AISC margin of 37.2% on the average gold price of
US$1,824/oz earned by the Group from these operations.

The Group has embarked on a number of initiatives to reduce its cost of
production in real terms, with future cost savings expected from solar PV
renewable energy projects. Savings at the commissioned Evander solar PV
facility currently averages approximately US$250 thousand a month during the
winter months, following full commissioning in May 2022. Construction has
commenced at Barberton Mines’ 8MW solar PV plant, with completion expected
during the fourth quarter of the 2023 calendar year. The Group plans to
generate 30MW of solar PV renewable energy by 2024, with meaningful cost
savings and a large reduction in carbon emissions.

The relatively high rand gold price, together with an excellent operational
performance, has enabled the Group to significantly reduce Group net debt by
66.7% to US$13.0 million (2021: US$39.0 million).

Health and safety and COVID-19

The health and safety of our employees remains our number one priority and we
have again achieved an overall improvement in recordable injuries across the
Group. All our operations achieved excellent safety rates during the current
financial year. Improvements in safety protocols and operating procedures are
ongoing, with the Group implementing innovative practices to continue to
encourage safe behaviour.

Our COVID-19 precautions and safety measures remain in place and our
vaccination drives and awareness programmes have resulted in over 80% of our
employees being fully vaccinated, a far higher percentage than the country’s
overall vaccination rates.

Operational overview

The Group’s record gold production of 205,688oz (2021: 201,777oz) exceeded
our revised production guidance of 200,000oz.

Barberton Mines retained its improved ?exibility at the Fairview operation
during the past year through accelerated underground development programmes at
the high-grade MRC and Rossiter orebodies.

The BTRP produced 19,560oz (2021: 18,239oz) for the 2022 ?nancial year at an
AISC of US$891/oz (2021: US$946/oz). The BTRP’s remaining LoM from current
tailings sources is estimated at two years. Additional feed sources are being
investigated, including the possible conversion of the BTRP to a hard rock
operation with supplemented ore from Barberton Mines’ Royal Sheba orebody,
where extraction of a 10,000t bulk sample is currently in progress.

Elikhulu is one of the lowest-cost gold mining operations in Southern Africa,
producing 52,220oz (2021: 51,459oz) at an AISC of US$1,003/oz (2021:
US$846/oz), with a remaining operational life of 11 years. The plant processes
approximately 1.2Mt of historical tailings per month from the three tailings
storage facilities (TSFs) at Kinross, Leslie/Bracken and Winkelhaak.
Reprocessing results in the residues being re-deposited to a single TSF site,
reducing our environmental footprint.

At the end of the 2022 financial year, the Evander Mines’ 8 Shaft pillar had
a remaining life of approximately one year. Mining of the 8 Shaft pillar has
been a great success, with simpli?ed logistics, modern underground mining
support and favourable working conditions.

Growth projects overview

The Group constantly evaluates opportunities to bring its large reserve base
to account with the work at Evander Mines’ 8 Shaft being testament to these
efforts. This operation has been given a new lease of life, transformed from a
high-cost and marginal mine in a cash generative and long-life asset with the
inclusion of 24, 25 and 26 Levels, which extends its LoM to 14 years.

Our work on the Mintails Mogale’s assets has demonstrated a compelling
project and we look forward to concluding the acquisition and progressing the
development of this mine in the year ahead.

Environmental, social and governance (ESG)

Our ‘beyond compliance’ approach to ESG continues, with our projects
making a meaningful and positive difference for many of our stakeholders.

We achieved significant milestones during the year, including the
commissioning of the 9.9MW solar PV renewable energy project at Elikhulu, the
first of its scale in the South African mining industry. We have since
completed a feasibility study for expanding this facility by a further 12MW,
with the additional capacity allocated to our long-life underground projects.
At Barberton Mines, site establishment has commenced on an 8MW solar PV
renewable energy plant.

Commercial harvesting of blueberries is underway at the Barberton Blueberries
project and employment of seasonal labour is ramping up, as planned. Workers
from the surrounding communities now receive a steady income and the project
is providing a much needed economic opportunity to communities surrounding our
Barberton operations.

We are investigating other local economic development projects at Barberton,
including initiatives that will preserve the biodiversity of the area while
creating employment for local communities. Apart from our contribution to
rhino conservation, we aim to further strengthen our collaborative approach to
assist with the sustainability of the Barberton Mountainland area. In the
current financial year approximately US$1.7 million of our Barberton Mines’
security spend also assisted in safeguarding parts of the nature reserve.

Outlook for the 2023 financial year

The Group expects its production for the 2023 financial year to be in line
with production achieved in the 2022 financial year. We are positioned for
further growth as we move closer to commissioning our organic projects and
seek to imminently conclude the Mintails transaction.”

PROPOSED DIVIDEND FOR THE FINANCIAL YEAR ENDED 30 JUNE 2022

The board has proposed a final dividend of ZAR400.1 million for the 2022
financial year (approximately US$23.1 million), equal to ZA 18.00000 cents per
share or approximately US 1.04046 cents per share (0.90452 pence per share). A
dividend of ZA 18.00000 cents per share or approximately US 1.13924 cents per
share (or 0.84654 pence per share) was paid for the 2021 financial year. The
dividend is subject to approval by shareholders at the AGM, which is to be
convened for Thursday, 24 November 2022.

In light of the robust current financial year results, the board has applied
its discretion and has proposed a dividend in line with the Company’s
dividend policy’s guidelines.

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

 Annual General Meeting                                        Thursday, 24 November 2022   
 Currency conversion date                                      Thursday, 24 November 2022   
 Currency conversion announcement released by 11:00 (SA time)  Friday, 25 November 2022     
 Last date to trade on the JSE                                 Tuesday, 29 November 2022    
 Last date to trade on the LSE                                 Wednesday, 30 November 2022  
 Ex-dividend date on the JSE                                   Wednesday, 30 November 2022  
 Ex-dividend date on the LSE                                   Thursday, 1 December 2022    
 Record date on the JSE and LSE                                Friday, 2 December 2022      
 Payment date                                                  Tuesday, 13 December 2022    

The pound sterling (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:17.30 and GBP/ZAR: 19.90, respectively.

No transfers between the Johannesburg and London registers, between the
commencement of trading on Wednesday, 30 November 2022 and close of business
on Friday, 2 December 2022 will be permitted.

No shares may be dematerialised or rematerialised between Wednesday, 30
November 2022 and Friday, 2 December 2022, 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 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"), have issued
their opinion on the consolidated annual financial statements for the year
ended 30 June 2022.

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 Carrying value of investments
in subsidiaries and receivables from Group companies - 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-2022.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 2022, 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 FULL ANNOUNCEMENT

The full announcement has been released on SENS and is available for viewing
via the JSE link at
https://senspdf.jse.co.za/documents/2022/jse/isse/pan/FYE2022.pdf

and via the Company’s website at
https://www.panafricanresources.com/wp-content/uploads/Pan-African-Resources-year-end-results-SENS-announcement-2022.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 and a secondary
listing on the A2X markets.

For further information on Pan African, 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 2 (nd)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  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/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                                                                            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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