REG-Pan African Resources Plc: Unaudited Interim Financial Results for the six months ended 31 December 2024

Pan African ResourcesAnnouncement

12/02/2025 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 2024

 

KEY FEATURES
Production * Group gold production for the six months ended 31 December 2024
(current reporting period) of 84,705oz, a slight reduction of 3.3% relative to
the previous six months (H2FY2024: 87,581oz)	* As announced in the December
2024 operational update, Evander Mines’ underground production was impacted
by the delay in commissioning of the subvertical shaft for ore hoisting, which
was partially offset by early production from the Mogale Tailings Retreatment
(MTR) operation
	
* The Group is well positioned for much-improved production in H2FY2025, with
a further significant increase in production expected for FY2026. Full-year
guidance for FY2025 of approximately 215,000oz (FY2024: 186,039oz) is
maintained, an increase of 16% from the prior year	* The subvertical hoisting
shaft at Evander Mines was fully commissioned during January 2025
* MTR production is now fully ramped up, ahead of schedule and with final
project capital below budget 
* Full-year gold production (48,000oz to 60,000oz) from Tennant Consolidated
Mining Group (TCMG) in Australia is planned for FY2026.
	
Safety* Regrettably, the Group experienced one fatality during the reporting
period (FY2024: one), following an underground mud rush incident at Evander
Mines’ 7 Shaft on 30 December 2024
* Improvement in lost-time injury frequency rate (LTIFR) to 1.55 per million
man hours (FY2024: 1.82) and reportable injury frequency rate (RIFR) to 0.55
per million man hours (FY2024: 0.78)
* Total reportable injury frequency rate (TRIFR) regressed to 8.25 per million
man hours (FY2024: 6.52), which is being addressed
* The MTR operation achieved a 1.8 million fatality-free shift milestone
during the construction phase, with:	* over 1,600 employees and contractors
on-site
* zero reportable injuries and only one lost-time injury.
	
 Costs and cost outlook* All-in sustaining costs (AISC) for the reporting
period of US$1,675/oz (H1FY2024:  US$1,295/oz) impacted by: 	* a decrease in
production from Evander Mines’ underground operations for reasons previously
highlighted  
* multiple Eskom transformer failures at Barberton Mines, as flagged in the
operational update published on 12 December 2024, negatively impacting
production from the operation. A number of mitigation measures have been
implemented to avoid a recurrence of this issue 
* appreciation of the average exchange rate by 4.0% to US$/ZAR:17.95
(H1FY2024: US$/ZAR:18.69)
* once-off long-term employee incentive expenses to the value of US$4.3
million (US$53.3/oz) included in the cost of production  
	
* AISC of US$1,466/oz (FY2024: US$1,170/oz) for our lower-cost operations
(Elikhulu Tailings Retreatment Plant, Barberton Tailings Retreatment Plant,
MTR operation, Evander Mines underground and Fairview Mine), which account for
approximately 86% (FY2024: 84%) of annual production
* AISC guidance for H2FY2025 is anticipated to be between US$1,450/oz to
US$1,500/oz, with the expected cost reduction versus H1FY2025 as a result of
improved performance from the underground operations and MTR being in
production for the full period.
 Financial* Revenue remained robust at US$189.3 million (H1FY2024: restated
US$191.1 million) with only a slight decrease of 1% compared to the previous
year as a result of a 13% decrease in gold production and the impact of the
synthetic gold forward sale transaction of approximately US$17.4 million on
profits for the reporting period, offset by a 21% increase in the US$ gold
price received
* Profit for the reporting period increased by 10% to US$44.6 million
(H1FY2024: restated US$40.7 million), and includes a gain on acquisition
relating to the TCMG transaction of US$25.2 million
* Earnings per share (EPS) increased by 10.3% to US 2.35 cents per share
(H1FY2024: restated US 2.13 cents per share) and headline earnings per share
(HEPS) decreased by 43.7% to US 1.20 cents per share (H1FY2024: restated US
2.13 cents per share). Included in EPS in the current reporting period is a
gain on acquisition relating to the TCMG transaction. This gain is excluded
from HEPS
* Net cash used in operating activities of US$11.7 million (H1FY2024: US$27.2
million), negatively impacted by the opportunity cost of US$17.4 million that
resulted from the abovementioned synthetic gold forward sale transaction
utilised to part fund MTR’s construction as well as increased finance costs
* Net debt increased to US$228.5 million (H1FY2024: US$64.3 million),
primarily as a result of the construction of the MTR operation and the
consolidation of debt acquired as part of the TCMG acquisition 
* Available cash and undrawn facilities at period-end of US$32.3 million
(H1FY2024: US$117.7 million)
* Net dividend of US$23.7 million paid to shareholders in December 2024
(FY2024 dividend).
 Near-term growth projects*     Mogale Tailings Retreatment operation	*
Studies are underway to increase annual production from 50,000oz to
approximately 60,000oz in the next year, through:
* the installation of additional reactors to further improve recoveries
* the addition of two carbon-in-leach (CIL) tanks to increase throughput from
800ktpm to 1Mtpm
* a prefeasibility study on the inclusion of a hard rock crushing circuit
enabling the processing of nearby remnant hard rock resources 
* a full feasibility study on the Soweto Cluster tailings storage facilities
(TSFs) is underway and expected to be completed by September 2025, with the
study focusing on:
* the possibility of constructing a new processing facility in closer
proximity to the Soweto Cluster TSFs, which would be a stand-alone operation,
also producing approximately 50,000oz per year
* the option to include additional proximal TSF resources that will further
add to the life- of-mine (LoM) of the project.
	
* Barberton Tailings Retreatment Plant (BTRP)	* Construction of the pump
station to reprocess the Bramber dormant TSF at the BTRP is expected to
commence in Q4FY2025, with commissioning expected in Q3FY2026
* This will extend the LoM of the BTRP from two years to seven years from
current surface sources
 
*     TCMG project in Australia
* transaction to acquire TCMG for US$54.2 million was completed in December
2024, as follows: 	* An initial cash investment of US$3.4 million for an 8%
shareholding in TCMG, with the all-scrip acquisition for the remaining 92% of
the business through the new issue of less than 6% of the Company’s shares
valued at US$50.8m. 
* Production from TCMG is expected to initially add more than 20% to annual
Group production from current reserves, with significant upside exploration
potential in its asset portfolio
	
* Construction of the Nobles Gold carbon in leach (CIL) processing plant has
been accelerated and is progressing ahead of schedule and within budget.
Commissioning of the plant and first gold is now expected in Q4FY2025.  
 Expected FY2026 production forecastThe Group anticipates significant growth
in production as outlined in the table below:
 Operation                     Production range      
 Elikhulu                      48,000     53,000     
 MTR                           48,000     53,000     
 BTRP                          10,000     12,000     
 TCMG                          48,000     60,000     
 Barberton Mines underground*  68,000     75,000     
 Evander Mines underground     48,000     55,000     
 Total                         270,000    308,000    
*Assumes rightsizing of Barberton Mines’ underground operations as detailed
in the operations section of the full announcement. 
Group cash flow generation and dividends

The final settlement in terms of the synthetic gold forward sale transaction
will be at the end of February 2025, after which the Group will fully benefit
from the prevailing spot gold price of approximately US$2,860/oz
(ZAR1,690,000/kg) which is 21% higher (24% in rand terms) compared with the
average price of US$2,359/oz (ZAR1,361,202/kg) received in the current
reporting period.

 

At prevailing gold prices and with increased high-margin production as
outlined in this announcement, the Group is expected to be materially
de-geared in the next 12 to 18 months. This will allow a review of the
Group’s dividend policy after financial year-end, which could include
instating interim dividend payments going forward.
Environmental, social and governance initiatives* The Group’s renewable
energy initiatives provide a roadmap to decarbonise an estimated 100MW of
power through its renewable energy projects by 2030	* The Evander Mines phase
1 and Fairview renewable energy plants are performing exceptionally well,
generating an estimated 21GWh of solar power. This contributes approximately
10% of the Group's total energy, realising a significant saving of US$2.1
million for the reporting period, while avoiding nearly 19ktCO2e of Scope 2
emissions
* A feasibility study has been completed for a 20MW solar renewable energy
plant, with applications for environmental authorisations and permitting
currently in progress 
	
* The Group has embarked on several energy efficiency optimisation projects at
our operations, realising approximately US$0.3 million in savings from these
initiatives for the reporting period, with an additional saving of 3 ktCO2e in
emissions
* Following a positive feasibility study, the Evander Mines’ water treatment
plant will be expanded to supply an estimated 4.5ML/day to 5.5ML/day from the
current 3ML/day. Construction work to expand the plant will commence during
2025
* Rehabilitation at MTR’s Mogale and Soweto sites is in progress, with
several wetlands being restored since operations commenced. The Group is on
target to rehabilitate 85ha for FY2025, in accordance with the targets set out
for the Group’s Sustainability Bond
* The Group’s closure liabilities are materially funded with a shortfall of
only US$5.2 million related to the MTR closure liability
 

 

This announcement contains inside information.

 

CHIEF EXECUTIVE OFFICER’S STATEMENT

 

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

 

“Pan African has established an excellent safety record over the years, and
we remain committed to our goal of zero harm. We wish to again express our
condolences to the family, friends and co-workers of our colleague who
succumbed to his injuries following a mud rush incident at a loading box at
Evander Mines’ 7 Shaft on 30 December 2024.

 

Overall, the Group has improved its safety performance in the period under
review, and we continue to implement ongoing safety awareness and training
programmes. We are especially proud of the safety achievements at the recently
commissioned MTR operation, where we achieved 1.8 million fatality-free hours
and zero reportable injuries during the construction phase, with over 1,600
employees and contractors on site.

 

In the past few years, we have made excellent progress in positioning Pan
African as a safe, sustainable and growing high-margin producer. We have
diversified our production base from predominantly older underground mines to
a more balanced portfolio of surface and underground assets. During the
reporting period, we successfully commissioned our MTR operation, ahead of
schedule and with a saving of some US$8 million on the upfront project
capital. MTR is another flagship tailings retreatment asset for our Group,
which will produce approximately 50,000oz of gold per annum for a period of 20
years or more, if we include all of our West Rand tailings reserves and
resources. MTR also presents scope for further production growth, with the
ability to grow gold output to approximately 60,000oz in the year ahead, via
plant expansion initiatives.

 

In terms of additional diversification and near-term production growth, we are
delighted to have concluded the TCMG transaction in December 2024. The
construction of the TCMG processing plant at its Nobles project is now nearing
completion, ahead of schedule and within its approximate US$32.2 million
capital budget. This processing plant will be the largest to ever operate in
the Tennant Creek mineral field, aligned with our approach of achieving
economies of scale by operating bulk processing facilities. We have also now
accelerated the timing of anticipated gold production from this asset, with
estimated production of 48,000oz to 60,000oz in the next financial year, at a
very competitive AISC. In addition to near-term, low cost gold production from
surface operations, the Tennant Creek mineral field presents exciting
exploration potential, some 1,700km2 of highly prospective ground in
Australia’s highest grade goldfield, both from wholly-owned and joint
venture properties.

 

Including production from TCMG, production from low cost surface sources in
the Group will account for over 50% of the Group’s annual production in
FY2026, estimated at between 270,000oz and 308,000oz per annum. These surface
assets will assist in ensuring Pan African maintains a competitive AISC
profile, comparing favourably to the rest of the global industry.

 

Underground mining in South Africa still represents a significant portion of
Pan African’s production base, with the Group having invested meaningful
capital into our long-life assets in recent years. The Group flagged the
challenges experienced at the Evander Mines and Barberton Mines’ underground
operations in the December 2024 operational update. Following several delays,
the subvertical hoisting shaft at our Evander Mines’ underground operations
was finally commissioned during January 2025. Mining at the high-grade D line
and F line raises on 24 Level has continued, resulting in accumulated ore in
the ore passes underground, and limited ore reaching the metallurgical plant
through the conveyor belt system. This has resulted in elevated unit costs at
Evander Mines during the reporting period, which will reduce commensurately in
the next months with increased gold production.

 

At Barberton Mines’ operations, production has normalised following the
Eskom transformer issues previously reported. Contingencies are now in place
to prevent these issues from recurring. We are pleased that our efforts at
Consort have seen this smaller operation turn a corner and produce positive
cash flows in the past months, with further improvements anticipated in the
period ahead. To ensure the long-term sustainability of Sheba Mine at
Barberton Mines, we will implement a number of improvement and cost-cutting
measures before the end of the financial year.

 

We believe Pan African is in an excellent position to capitalise from record
gold prices, with high margins, a stable and growing production profile, and
the Group being materially unhedged from March 2025. At prevailing gold
prices, we anticipate the Group to de-gear completely in the next 12 to 18
months, allowing us to re-invest, to grow and continue to provide
sector-leading returns to shareholders. The Group will revisit its dividend
policy with regards to dividends post year-end, should current gold prices be
sustained.”

 

DIRECTORS’ RESPONSIBILITY

The information in this announcement has been extracted from the unaudited
interim financial results for the six months ended 31 December 2024. 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, Marileen Kok. 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
12 February 2025.

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
https://senspdf.jse.co.za/documents/2025/jse/isse/pan/INT2024.pdf

and via the Company’s website at 
https://www.panafricanresources.com/wp-content/uploads/Pan-African-Resources-interim-results-SENS-announcement-2025.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 AIM 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

12 February 2025

 

 

 

 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 3869 0706             
 Chief executive officer  Cobus Loots  Office: + 27 (0) 11 243 2900                                                                                                         Financial director and debt officer Marileen Kok 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 3869 0706                                                                          Nominated adviser and joint broker Ross Allister/Georgia Langoulant Peel Hunt LLP Office: +44 (0) 20 7418 8900     
 JSE sponsor Ciska Kloppers Questco Corporate Advisory Proprietary Limited Office: + 27 (0) 63 482 3802                                                                     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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