REG-Pan African Resources Plc: Unaudited Interim financial results for the six months ended 31 december 2023

Pan African ResourcesAnnouncement

14/02/2024 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)    

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

UNaudited INTERIM FINANCIAL results for THE SIX Months ended 31 december 2023

 

 

KEY FEATURES

Production
* Gold production of 98,458oz (2022: 92,307oz), an increase of 6.7% relative
to the six months ended 31 December 2022 (previous reporting period)
* The Group is well positioned to deliver into its 2024 financial year
production guidance of between 180,000oz to 190,000oz of gold. Increased
guidance may be considered in due course.
Safety
* Improvement in overall safety rates with a total recordable injury frequency
rate of 6.13 per million man hours for the year (2022: 8.54 per million man
hours)
* Group surface operations reported no recordable injuries for the six months
ended 31 December 2023 (reporting period) (2022: 5.14 per million man hours)
* Barberton Mines achieved 4 million fatality-free shifts during November
2023.
Costs and cost outlook
* Production costs were well managed, despite inflationary pressures,
resulting in a reduction in all-in sustaining costs (AISC) per ounce for the
reporting period to US$1,287/oz (2022: US$1,291/oz)
* The Group’s operations, which account for more than 85% of the Group’s
gold production, produced at an AISC per ounce of US$1,149/oz (2022:
US$1,139/oz)
* The Group’s tailings retreatment operations (Elikhulu Tailings Retreatment
Plant (Elikhulu) and Barberton Tailings Retreatment Plant (BTRP)) produced at
an AISC of US$894/oz (2022: US$887/oz)
* 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
* The AISC per ounce guidance range for the 2024 financial year reduced to
between US$1,325/oz and US$1,350/oz (assuming an exchange rate of
US$/ZAR:18.50).
Financial
* Net cash from operating activities increased by 134.5% to US$27.2 million
(2022: US$11.6 million)
* Profit for the period increased by 46.7% to US$42.4 million (2022: US$28.9
million)
* Headline earnings increased by 46.4% to US$42.6 million (2022: US$29.1
million)
* Earnings per share and headline earnings per share increased by 46.1% to US
2.22 cents per share (2022: US 1.52 cents per share)
* Payment of a net dividend of US$18.3 million (2022: US$20.0 million) in
December 2023, equating to a dividend yield of 5.9% (2022: 4.6%), at the last
traded price on 30 June 2023
* Robust financial position at the end of the reporting period, with net debt
of US$64.3 million (2022: US$53.7 million). The increase in net debt is
primarily attributable to the capital expenditure of US$21.6 million incurred
on the Mogale Tailings Retreatment project (MTR project)
* Liquidity remains healthy, with access to immediately available cash of
US$31.3 million (2022: US$33.9 million) and undrawn facilities of US$86.4
million (2022: US$52.1 million) at the reporting period-end.
Growth projects
* MTR project	* Steady-state production expected by December 2024
* Capital expenditure in line with budget
* Incremental annual production of approximately 50,000oz, at an expected AISC
per ounce of approximately US$900/oz, over the 20-year life-of-mine (LoM)
(including the Soweto Cluster tailings storage facilities)
	
* Evander Mines’ 8 Shaft 24, 25 and 26 Level underground expansion project
is on track	* Construction of phase 2 of the refrigeration plant on 24 Level
is currently at an advanced stage, with completion anticipated during the 2024
financial year, as 25 Level mining operations commence
* Equipping of the existing 17 Level underground ventilation shaft, with a
hoisting capacity of up to 40,000 tonnes per month, is also expected to be
completed during the 2024 financial year, improving efficiencies and
eliminating the majority of the existing cumbersome conveyor system
	
* Dewatering of Evander Mines’ 7 Shaft Egoli project is ongoing and once
dewatered to below 20 Level, reserve delineation drilling will commence during
the first quarter of the 2025 financial year to further define the ore
payshoot and its grade variability
* At Barberton Mines, the consolidated Royal Sheba and Western Cross projects
(Sheba Fault project) are earmarked to provide sustainable ore feed for the
BTRP once existing reserves are depleted. The BTRP’s current Mineral
Reserves are adequate to maintain production for another two years albeit with
a declining profile. A regional drilling campaign has also been initiated to
identify other suitable material for processing.
Environmental, social and governance initiatives
* Construction of Fairview Mine’s 8.75MW solar plant is progressing with
plant commissioning expected during June 2024
* Barberton Mines and Evander Mines handed over community Social and Labour
Plan infrastructure development projects, including new classrooms and science
and computer laboratories, that will benefit some 2,800 community learners
annually
* Commenced environmental rehabilitation at the MTR project sites, which is
already positively impacting the environment and local living conditions.
Sudan exploration
* On-the-ground exploration activities included geological mapping and
sampling and target generation for planned drilling activities, with drilling
expected to commence during the last quarter of the 2024 financial year.
This announcement contains inside information.

 

 

CHIEF EXECUTIVE OFFICER’S STATEMENT

 

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

 

“Pan African delivered an excellent safety, production and financial
performance for the reporting period, which positions the Group well to
deliver on our production and cost guidance for the full financial year. We
are deeply saddened by the fatality that occurred at Elikhulu after the
reporting period, as outlined in the subsequent events section further in the
announcement.

Despite inflationary pressures, the Group managed to curtail AISC, with unit
costs benefiting from increased gold production, the Group’s cost-conscious
culture and the weaker US$/ZAR exchange rate.

The higher US$ gold price, improved production and cost and capital discipline
contributed to the much-improved cash generation of US$27.2 million, an
increase of more than 130% when compared to the previous reporting period.
This cash flow generation has resulted in the Group’s robust financial
position, even after taking into account the MTR project’s capital
expenditure and the net dividend of US$18.3 million paid to shareholders in
December 2023.

The Group’s surface remining operations performed exceptionally well, with
their sub US$900/oz AISC contributing significantly to Group production, cash
flows and profits. The BTRP benefited from operational enhancements and the
optimisation of the carbon-in-leach process, which reduced AISC by over 10% to
US$650/oz, making it one of the world’s lowest-cost gold producers. Our
long-life MTR project, once commissioned later this calendar year, will also
add meaningfully to the Group’s surface production portfolio and its
valuation. With the MTR project’s incremental production of approximately
50,000oz per year, almost 50% of the Group’s annual gold production will be
sourced from low-cost, long life surface remining operations.

In addition to being a compelling investment proposition, large-scale tailings
retreatment operations provide much-needed economic stimulus and employment in
defunct mining regions with challenging socio-economic conditions. Our
‘beyond compliance’ community development strategy, in collaboration with
other critical role players, has a tangible and meaningful positive impact in
the areas where we operate.

The introduction of continuous operations at Barberton Mines’ Fairview and
Sheba Mines has made a positive impact on production and further improvements
will become evident once optimisation of the underground infrastructure is
fully implemented. While Consort Mine has experienced geotechnical challenges,
we believe that the contractor operating model is appropriate for the scale of
this operation going forward. We are excited by the initial exploration
results from drilling programmes being undertaken, using the latest geological
software to unlock the seemingly unlimited potential of Barberton’s
orebodies, which have been continuously mined for almost 140 years.

The development of Evander Mines’ 24, 25 and 26 Level project is progressing
well, with ramped-up mining operations at 24 Level already contributing to the
replacement of ounces as mining from the 8 Shaft’s pillar nears completion.
The significant capital expenditure already spent on this project to improve
and optimise the infrastructure will enable consistent and sustainable
production of an average of 65,000oz annually from this operation in the long
term, and allow it to maintain its status as one of the lowest-cost
underground gold mines in Southern Africa.

Following the recommencement of our gold exploration activities in Sudan,
steady progress has been made by our in-country team, with the mapping and
sampling activities of shallow orebodies for the prioritisation of initial
drill targets.

In the short term, our priority is to deliver into the production guidance for
the 2024 financial year and commission the MTR project on schedule and within
budget, which will elevate Pan African into the next tier of global gold
producers.

We are well positioned to deliver on our operational and strategic objectives
for the 2024 financial year, and if the current gold price tailwinds persist,
shareholders can look forward to a continuation of the reporting period’s
excellent financial performance for the full financial year.”

 

DIRECTORS’ RESPONSIBILITY

The information in this announcement has been extracted from the unaudited
interim financial results for the six months ended 31 December 2023. The
short-form announcement has not been reviewed by the Company’s auditors. The
unaudited interim financial 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 which was released on SENS on
14 February 2024.

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

 

AVAILABILITY OF THE FULL ANNOUNCEMENT

The full announcement is accessible via the JSE link at
https://senspdf.jse.co.za/documents/2024/jse/isse/pan/INT2023.pdf

and via the Company’s website at 
https://www.panafricanresources.com/wp-content/uploads/Pan-African-Resources-interim-results-SENS-announcement-2024.pdf

Copies of the full announcement may also be requested by emailing
ExecPA@paf.co.za and electronically via the sponsor (sponsor@questco.co.za) at
no charge during business hours.

The Company has a dual primary listing on the JSE Limited in South Africa and
the Alternative Investment Market of the London Stock Exchange, a secondary
listing on the A2X Market as well as a sponsored Level 1 American Depository
Receipt programme in the United States of America through the Bank of New York
Mellon.

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

 

Rosebank

14 February 2024


 

 

 Corporate information                                                                                                                                                                                                                                                                         
 Corporate Office The Firs 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 107 Cheapside 2nd Floor London EC2V 6DN United Kingdom Office: + 44 (0) 20 7796 8644             
 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/Bhavesh Patel 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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