REG-Pan African Resources PLC: Trading Statement <Origin Href="QuoteRef">PAFR.L</Origin>

Pan African ResourcesAnnouncement

27/01/2017 10:35

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 AND OPERATIONAL UPDATE FOR THE SIX MONTHS REPORTING PERIOD
ENDED 31 DECEMBER 2016

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 percent from those of the previous corresponding period.

Pan African is incorporated in England and Wales under the Companies Act 1985
and accordingly, its presentation currency is Pounds Sterling (“GBP”).

The average ZAR:GBP exchange rate affect the reporting of Group results in
GBP. For the six month’s reporting period ended 31 December 2016 (“current
reporting period”), the average prevailing ZAR:GBP exchange rate is used to
translate earnings per share (“EPS”) and headline earnings per share
(“HEPS”) from ZAR to GBP. 

For the reporting period ended 31 December 2015 (“prior reporting
period”), the average ZAR:GBP exchange rate was ZAR20.83:1. For the current
reporting period, the ZAR appreciated against the GBP, with an average
exchange rate of ZAR17.88:1. This 14.2 percent period-on-period appreciation
in the average exchange rate should be taken into account for the purposes of
comparing results with the prior reporting period.

Pan African advises shareholders that its EPS and HEPS for the current
reporting period are expected to be between:
1.
EPS in ZAR terms: 23 percent to 43 percent higher than the 12.43 cents EPS for
the prior reporting period (therefore estimated EPS of 15.34 cents to 17.82
cents).
2.
HEPS in ZAR terms: 21 percent to 41 percent higher than the 12.43 cents HEPS
for the prior reporting period (therefore estimated HEPS of 15.08 cents to
17.56 cents).

Using the average ZAR:GBP 17.88:1 exchange rate that prevailed during the
current reporting period, the Group’s EPS and HEPS in GBP terms for the
current reporting period are expected to be between:
3.
EPS in GBP terms: 45 percent to 65 percent higher than the 0.60 pence EPS for
the prior reporting period (therefore estimated EPS of 0.87 pence to 0.99
pence).
4.
HEPS in GBP terms: 42 percent to 62 percent higher than the 0.60 pence HEPS
for the prior reporting period (therefore estimated HEPS of 0.85 pence to 0.97
pence).

The following items had a significant impact on the profit after taxation
during the current reporting period:

PAR Gold Proprietary Limited, previously known as Shanduka Gold Proprietary
Limited, transaction (“PAR Gold transaction”)

The materially earnings accretive PAR Gold transaction was finalised on 7 June
2016, which has resulted in the weighted average number of shares in issue
reducing significantly by 17.7 percent period-on-period. Disclosed below is
the Pan African share reconciliation, illustrating the effect of the PAR Gold
transaction on the weighted average number of shares in issue, which is used
to calculate the EPS and HEPS.

 Pan African Shares Reconciliation                       Shares     
 Shares in issue at 31 December 2015                  1,831,494,763 
 Issue of shares – 7 June 2016                          111,711,791 
 Shares in issue at 31 December 2016                  1,943,206,554 
 Elimination of shares held by PAR Gold               (436,358,058) 
 Shares used to calculate the EPS and HEPS            1,506,848,496 
 Net reduction in number of weighted average shares           17.7% 

Uitkomst Colliery

The Uitkomst Colliery, acquired on the 31 March 2016, has performed well
during the current reporting period, contributing approximately 8.5 percent of
the Group’s EPS and HEPS. If the current favourable coal price environment
continues, the payback period for this acquisition is expected to be less than
the four years previously forecast.

Gold price hedge – fair value adjustment

Barberton Mines entered into a short term strategic hedge (“the Cost
Collar”) in July 2015, when the prevailing spot gold price was
ZAR440,000/kg, to protect its cash flows and the Group’s annual dividend
against severe adverse movements in the ZAR gold price. During the current
reporting period, the Group recorded a pre-tax mark-to-market fair value gain
of ZAR90 million on the Cost Collar (2015: pre-tax mark-to-market fair value
loss of ZAR40.6 million). The mark-to-market fair value gain was due to a
reduction in the gold price of ZAR625,000/kg at 30 June 2016 to ZAR505,000/kg
at 31 December 2016.

Increase in the average ZAR gold price received

The average ZAR gold price received by the Group period-on-period increased by
16.5 percent to R565,298/kg (2015: R485,215/kg), as a result of the weakening
of the ZAR/USD exchange rate by 2.9 percent to R13.99:1 (2015: R13.60:1) and
an increase in the USD gold price received by 13.2 percent to USD1,257/0z
(2015: USD1,110/0z).

OPERATIONAL UPDATE

The Group previously informed shareholders on 5 December 2016 of its revised
gold production guidance for the 2017 financial year of 195,000oz. The gold
production in the second half of the financial year is forecasted to exceed
the first half performance.  

 Six months ended  31 December                                                  Mining and tailings operations                                                   
                                Barberton Mines  (Gold ounces)  Evander Mines  (Gold ounces)  Uitkomst Colliery  (Coal tonnes)  Phoenix Platinum (PGE ounces)    
                                                                
 2015                                       56,447                         45,350                             -                             4,493                
 2016                                       49,212                         42,401                          327,202                          4,575                
 Percentage                                 (12.8%)                        (6.5%)                           100%                             1.8%                

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

27 January 2017

 Contact information                                                                                                                                                                                                                                                                                                                                      
 Corporate Office The Firs Office Building 1st Floor, Office 101 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) 207 796 8644 Facsimile: + 44 (0) 207 796 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) 207 796 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                                                                                                                                 Matthew Armitt / Ross Allister Peel Hunt LLP Joint Broker Office: +44 (0) 207 418 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) 207 236 1010                                        
 Website: www.panafricanresources.com                                                                                                                                                                                                                                                                                                                     



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