REG-Pan African Resources Plc: Trading Statement and Production Update

Pan African ResourcesAnnouncement

14/09/2018 09:20

Pan African Resources PLC
("Pan African" or “the company" or “the group”)
(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

TRADING STATEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018, PRODUCTION UPDATE
FOR 2019 FINANCIAL YEAR AND ELIKHULU COMMISSIONING

Pan African CEO Cobus Loots commented:

“The group results for the 2018 financial year are reflective of both the
incredibly challenging operational environment and the specific issues that
confronted the group over the past year.  These issues, as well as the
definitive remedial actions we implemented, were well disseminated to the
market. The operational update and the commissioning of the Elikhulu plant
demonstrates that we are well on track to deliver into our 2019 targets and
look forward to the year ahead”. 

TRADING STATEMENT

In terms of paragraph 3.4(b) of the Listings Requirements of the JSE Limited,
a listed company is required to publish a trading statement as soon as it is
satisfied that a reasonable degree of certainty exists that the financial
results for the period to be reported upon next, will differ by at least 20%
from those of the previous corresponding period.

Pan African is incorporated in England and Wales and, accordingly, its
presentation currency is Pounds Sterling (“GBP”) with a functional
currency in South African Rands (“ZAR” or “R”).

The ZAR:GBP exchange rate affects the reporting of results in GBP. For the
reporting period ended 30 June 2018 (“current reporting period”), the
average prevailing ZAR:GBP exchange rate is used, and, in the event of
material transactions, the exchange rate on the date of the material
transaction is used to translate earnings from ZAR to GBP. 

For the reporting period ended 30 June 2017 (“prior reporting period”),
the average ZAR:GBP exchange rate was ZAR17.25:1. For the current reporting
period, the ZAR marginally depreciated against the GBP to an average exchange
rate of ZAR17.27:1. This 0.1% year-on-year depreciation in the average
exchange rate should be taken into account for the purposes of a comparison
with the prior reporting period.

The group records its revenue from precious metals sales in ZAR. The strength
in the value of the ZAR/USD exchange rate during the current reporting period
had an adverse impact on the USD revenue received when translated into ZAR. In
the current reporting period, the average ZAR/USD exchange rate appreciated by
5.4% to R12.86:1 (2017: R13.59:1).

Due to the cessation of mining at Evander Gold Mining Proprietary Limited
(“Evander Mines”) underground operations which includes 8 Shaft, 7 Shaft
and the run-of-mine circuit in the Kinross metallurgical plant,  the
financial results from the Evander Mines’ underground operations were
classified as discontinued operations (“discontinued operations”) during
the current reporting period. The prior reporting period’s figures have been
re-presented to differentiate between the discontinued operations and the
results from the remainder of the operational portfolio comprising the
continuing operations (“continuing operations”). The combined results
comprise the results of the continuing operations and discontinued operations
(“combined operations”). As result of the cessation of Evander Mines’
underground operations, the group recognised a once-off impairment charge of
R1.78 billion (GBP106.3 million) and incurred retrenchments costs of R161
million (GBP9.3 million).  

In the current reporting period, the group’s weighted average number of
shares in issue increased by 15.7% to 1,809,726,739 shares (2017:
1,564,346,115 shares). The increase in the weighted average number of shares
in issue is predominantly due to the full-year impact of the issuance of new
shares to fund the equity component of the Elikhulu tailings retreatment
project’s (“Elikhulu”) construction late in the prior reporting period.
The disposal of 130-million Pan African shares held by PAR Gold Proprietary
Limited, which had a commensurate increase in the weighted average number of
shares in issue, as these shares had previously been treated as treasury
shares. The proceeds from the disposal were partly utilised to fund the
incorporation of existing Evander tailing retreatment plant (“ETRP”)
throughput into Elikhulu’s processing capacity, which will result in an
increased capacity of 1.2-million tonnes per month from December 2018.

Pan African advises shareholders that its headline earnings per share
(“HEPS”) and earnings per share (“EPS”) in ZAR terms from its
continuing operations for the current reporting period are expected to be
between:
*
HEPS: 57% to 47% lower than the 38.72 cents for the prior reporting period.
Therefore the expected HEPS range is between 16.77 cents to 20.65 cents.
* EPS: 80% to 70% lower than the 44.78 cents for the prior reporting period.
Therefore the expected EPS range is between 8.92 cents to 13.40 cents.
The group’s combined operations, EPS and HEPS in ZAR terms for the current
reporting period are expected to be between:
*
HEPS: 42% to 32% lower than the 20.17 cents for the prior reporting period.
Therefore the expected HEPS range is between 11.65 cents to 13.67 cents.
* EPS is expected to decrease from 19.81 cents for the prior reporting period,
to between (87.02) cents to (85.04) cents.
The HEPS and EPS in GBP terms from its continuing operations for the current
reporting period are expected to be between:
*
HEPS: 56% to 46% lower than the 2.24 pence for the prior reporting period.
Therefore the expected HEPS range is between 0.97 pence to 1.20 pence.
* EPS: 81% to 71% lower than the 2.60 pence for the prior reporting period.
Therefore the expected EPS range is between 0.50 pence to 0.76 pence.
The group’s combined operations HEPS and EPS in GBP terms for the current
reporting period are expected to be between:
*
HEPS: 43% to 33% lower than the 1.17 pence for the prior reporting period.
Therefore the expected HEPS range is between 0.67 pence to 0.79 pence.
* EPS is expected to decrease from 1.14 pence for the prior reporting period,
to between (5.21) pence to (5.10) pence.
PRODUCTION UPDATE FOR THE 2019 FINANCIAL YEAR

Following the operational updates released during July 2018, Pan African is
pleased to provide a production update and guidance for quarter one of the
2019 financial year (“quarter one”), and further information on the
group’s prospects for the remainder of the new financial year.

Barberton Mines Proprietary Limited (“Barberton Mines”)
*
Barberton Mines is benefitting from increased underground mining flexibility
due to, inter alia, both the high-grade 272 and 358 platforms being available
at Barberton Mines’ Fairview operation. The Barberton tailings retreatment
plant (“BTRP”) is also benefiting from the installation of the regrind
mill at the end of the 2018 financial year.
*
Barberton Mines is forecast to produce approximately 26,000oz for quarter one,
with underground mining operations contributing more than 20,500oz, and the
BTRP more than 5,000oz. Barberton Mines is therefore on track to deliver its
annual production guidance of approximately 100,000oz for the 2019 financial
year.
*
Fairview commendably achieved one-million fatality free shifts during July
2018.
*
The conclusion of a three-year wage agreement with the National Union of
Mineworkers and the United Association of South Africa, which was announced on
7 September 2018, is expected to assist with operational stability and
productivity at Barberton Mines.
* As per the announcement of 6 September 2018, phase one and two of the Royal
Sheba drilling campaign, comprising 20 drill holes, has been completed with
excellent results confirming the extension of the Sheba orebody to surface. An
updated mineral reserve’s report on Royal Sheba is expected by November
2018, and a definitive feasibility study by February 2019.
Evander Mines
*
The ETRP and surface-source operations are expected to produce approximately
4,000oz the first quarter. The ETRP and surface-source production remains on
track, despite production being impacted by lower-quality surface sources
being treated during the quarter.
* The group is reviewing the merits of mining Evander Mines’ 8 Shaft pillar.
Further information on this initiative will be communicated in the near
future.
ELIKHULU COMMISSIONING
*
The Elikhulu Project is progressing according to schedule with all phases of
the five-phase technical commissioning processes now successfully completed.
This commissioning includes the successful completion of the “C5” or final
contractual certificate dealing with production requirements, in that the
plant’s tonnage throughput was achieved and the dissolved gold content in
the final leach tank has been met for a continuous period of 72 hours. In line
with previous guidance, Elikhulu is expected to produce at steady-state from
October 2018.
* The incorporation of the existing ETRP’s throughput into Elikhulu’s
processing capacity, which will result in an increased capacity totalling
1.2-million tonnes per month, is in progress as previously communicated.
The financial information contained in this announcement has neither been
reviewed nor audited by the company’s auditors. The group’s audited
year-end results for the year ended 30 June 2018 will be released on 19
September 2018.

For further information on Pan African, please visit the company’s website
at www.panafricanresources.com

14 September 2018

 

 Contact information                                                                                                                                                                                                                                                                                                                                      
 Corporate Office The Firs Office Building 2nd Floor, Office 201 Cnr. Cradock and Biermann Avenues Rosebank, Johannesburg South Africa Office: + 27 (0) 11 243 2900 Facsimile: + 27 (0) 11 880 1240  Registered Office Suite 31 Second Floor 107 Cheapside London EC2V 6DN United Kingdom Office: + 44 (0) 20 7796 8644 Facsimile: + 44 (0) 20 7796 8645  
 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 St James's Corporate Services Limited Company Secretary Office: + 44 (0) 20 7796 8644                                                                                                   John Prior / Paul Gillam Numis Securities Limited Nominated Adviser and Joint Broker Office: +44 (0) 20 7260 1000                                    
 Sholto Simpson One Capital JSE Sponsor Office: + 27 (0) 11 550 5009                                                                                                                                 Ross Allister/James Bavister/David McKeown Peel Hunt LLP Joint Broker Office: +44 (0) 20 7418 8900                                                   
 Julian Gwillim Aprio Strategic Communications Public & Investor Relations SA Office: +27 (0)11 880 0037                                                                                             Jeffrey Couch/Neil Haycock/Thomas Rider BMO Capital Markets Limited Joint Broker Office: +44 (0) 20 7236 1010                                        
 Bobby Morse Buchanan Public & Investor Relations UK Office: +44 (0)20 7466 5000 Email: PAF@buchanan.uk.com                                                                                                                                                                                                                                               
 Website: www.panafricanresources.com                                                                                                                                                                                                                                                                                                                     



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