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Audited Results for the year ended 30 June 2012
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
Audited Results for the year ended 30 June 2012
Highlights and Key Matters
Group
- Gross revenue for gold sales increased by 27.65% to GBP101.1 million (2011: GBP79.2 million).
- Earnings Before Interest, Taxation, Depreciation and Amortisation ('EBITDA') increased by 57.89% to GBP45.0 million
(2011: GBP28.5 million).
- Attributable profit increased by 69.77% to GBP29.2 million (2011: GBP17.2 million).
- Earnings per share ('EPS') increased by 68.33% to 2.02p (2011: 1.20p).
- Headline earnings per share ('HEPS') increased by 69.17% to 2.03p (2011: 1.20p).
- Profit margin* increased by 57.19% to US$ 918/oz (2011: US$ 584/oz).
- Gold resource inventory increased by 4.41% to 5.92Moz (2011: 5.67Moz).
- Gold reserve inventory increased by 16.0% to 1.16Moz (2011: 1.0Moz).
- The Group's cash balance increased by 96.04% to GBP19.8 million (2011: GBP10.1 million).
- Group capital expenditure incurred was GBP17.4 million (2011: GBP21.0 million).
Offer accepted for the acquisition of Evander Gold Mines Ltd ('Evander Gold Mines')
- On 30 May 2012 the Group entered into an agreement with Harmony Gold Mining Company Limited ('Harmony') to acquire the
entire issued share capital and claims against Evander Gold Mines for a total purchase consideration of GBP116.2 million,
subject to certain terms and conditions.
- Evander Gold Mines reported a net profit of GBP21.9 million for the 6 months ended 31 December 2011.
- Evander Gold Mines has an expected life of mine (excluding the reserves from the Rolspruit area that is contiguous
to the current mining area) of more than ten years.
- Expected production profile of approximately 100,000 oz of gold per annum.
- Evander Gold Mines total underground resource represents 28.74Moz (110Mt @ 8.16g/t) and a reserve of 7.66Moz
(28Mt @ 8.45g/t).
Mining Operations - Barberton Mines (Pty) Ltd ('Barberton Mines')
- Gold sold increased by 2.44% to 94,449oz (2011: 92,197oz).
- Capital investment of GBP10.7 million (2011: GBP6.8 million).
- Sustained a head grade in excess of 10g/t.
- Lost Time Injury Frequency Rate ('LTIFR') increased to 3.26 (2011: 2.2) and Serious Injury Frequency Rate ('SIFR')
to 0.74 (2011: 0.66).
Retreatment Operations - Phoenix Platinum Mining (Pty) Ltd ('Phoenix Platinum')
- Sale of concentrate agreement concluded during November 2011.
- Hot commissioning completed in April 2012.
- Production of 3,384oz PGE 6E#.
- Ramp up phase completed by July 2012.
Near-term Production - Barberton Tailings Retreatment Project ('BTRP')
- Capital expenditure of approximately GBP23.2 million approved for project.
- Construction commenced in April 2012.
- Capital expenditure to date of GBP4.5 million.
- Commissioning scheduled for July 2013.
* Profit margin is calculated by deducting the total cash cost in US$/oz sold from the average US$/oz spot price received.
Movement in the reserve and resource inventory includes Manica but excludes the potential impact of the Evander transaction.
# Platinum, Palladium, Rhodium, Gold, Ruthenium and Iridium.
2012 2011
Financial Summary
Gold sales (GBP) 101,068,596 79,208,399
EBITDA (GBP) 45,017,891 28,540,323
Attributable profit - Owners of the parent (GBP) 29,241,634 17,168,665
EPS (pence) 2.02 1.20
HEPS (pence) 2.03 1.20
Weighted average number of shares in issue 1,445,202,485 1,432,666,738
Jan Nelson, CEO of Pan African commented, "We have produced an excellent set of financial results and achieved two
significant corporate milestones. Barberton mines produced a consistent 94,449oz gold at a consistently high head grade
of 10g/t and we started construction on our tailings retreatment plant at Barberton. At Phoenix Platinum, we have seen
significant improvement.
We agreed terms to acquire Evander Gold Mines from Harmony, which is a game changing acquisition for us and sets us
on a path to mid-tier production status. In addition, post year end we found the right opportunity for Manica in Terranova
Minerals NL on the ASX.
The impact on the year is a significantly improved profit margin up by 57.19% to US$918/oz and a 27.65% increase in revenue
at just over GBP101.1 million (ZAR 1.2 billion). This was due to an excellent gold price but also as a result of stringent cost
management at the mine. The first quarter sees the business in excellent health and we are very excited at the prospects
2013 will bring".
Reporting Currency Impact on Material Obligations
Shareholders should take cognisance that the Group's liabilities with regard to its current debt facility arrangements and
future obligation in terms of settling the R1.5 billion purchase consideration of Evander Gold Mines, are denominated in South
African Rand ('ZAR'). Although the financial information is reported in Pounds ('GBP') the Group's functional currency is ZAR,
as a result the Group's liabilities above are not subject to exchange rate movements.
Nature of Business
Pan African is a precious metals, African focused mining company.
During the reporting period, the Company remained unhedged, debt free, and was able to fund all its capital expenditure
requirements from internally generated cashflows. It is the Group's intention to increase the current revolving credit facility
to GBP11.62 million (secured in South African Rands ('ZAR') of 150 million) to GBP23.2 million (ZAR 300 million) to potentially
fund part of the Evander Gold Mines purchase consideration.
The Company's strategy of targeting long life (a life of approximately ten years or more) projects with high grade margins and
low cash cost profiles, which are either near or at production stage, enables it to consistently improve not only its resource
base but also its profit margins thereby enabling the Group to ensure continued growth in shareholder value.
Offer to acquire Evander Gold Mines
On 30 May 2012 Pan African advised shareholders that it entered into an agreement ('Acquisition Agreement') with
Harmony which was amended on 15 August 2012 to acquire the entire issued share capital and claims against Evander for a
total purchase consideration of GBP116.2 million, subject to certain terms and conditions described below.
Background to Evander Gold Mines and rationale for the transaction
Evander Gold Mines, currently a wholly owned subsidiary of Harmony, mines and produces gold and related products and is
located in Mpumalanga, South Africa. Evander Gold Mines total underground resources represent 28.74Moz (110Mt @ 8.16g/t) and a
reserve of 7.66Moz (28Mt @ 8.45g/t) and its operations comprise, inter alia:
- Evander Gold Mines 8 Shaft which has an expected life of mine of more than ten years and is producing approximately
100,000 oz of gold per annum;
- Various development projects comprising Evander South, Rolspruit and Poplar;
- Evander Gold Mines Surface resources of 1.89Moz (203Mt @ 0.29g/t) comprising existing tailings dumps;
- Kinross Metallurgical processing facility and associated infrastructure and buildings;
- The Evander Gold Mines operations generated production profit, as published by Harmony, for the full year ended 30
June 2012 of GBP52 million, before tax and other charges, up from GBP16.7 million for the previous year. This was mainly
the result of Harmony investing approximately GBP21 million to upgrade and improve the underground rock handling
and ventilation infrastructure at Evander Gold Mines 8 shaft.
Evander Gold Mines meets Pan African's investment criteria of a long life, high grade, high margin, quality asset. Upon
completion of the transaction the Group will increase its underground reserve from 1.02Moz (3.9Mt @ 8.0g/t) to 8.8Moz
(39.5Mt @ 6.94g/t) and its underground resource from 2.45Moz (8.3Mt @ 9.22g/t) to 34.7Moz (177Mt @ 6.08g/t). The
acquisition is expected to be earnings accretive, and potentially allows the Group to double its current gold production
profile. Upon completion of the transaction the single mine risk of the Group will be removed.
Transaction Terms and Conditions
Conditions Precedent ('Conditions'):
- The Transaction is subject to, inter alia, the fulfilment, or where possible, waiver of the following conditions:
- The Transaction being unconditionally approved by the South African competition authorities by no later than 31
August 2012 (condition fulfilled on 26 July 2012);
- Evander Gold Mines entering into a new electricity supply agreement with Eskom by no later than 31 October 2012,
on terms and conditions acceptable to Pan African (condition not yet fulfilled);
- Pan African obtaining irrevocable undertakings from Shareholders controlling no less than 50% of Pan African's issued
share capital, to vote in favour of the Transaction by no later than 31 October 2012 (condition fulfilled on 3 September
2012);
- Pan African obtaining all the requisite approvals for the Transaction from the stock exchanges upon which it is listed
by no later than 30 November 2012 (condition not yet fulfilled);
- Pan African obtaining approval from Shareholders for the Transaction and all resolutions ancillary to the implementation
of the Transaction, by no later than 30 November 2012 (condition not yet fulfilled); and
- The parties to the Transaction ('Parties') obtaining the necessary consent for the Transaction from the Department of
Mineral Resources ('DMR') in terms of section 11 of the Mineral and Petroleum Resources Development Act 28 of
2002 by no later than 30 June 2013 (condition not yet fulfilled). In terms of the Acquisition Agreement, the Purchaser
is entitled to waive the Condition pertaining to Irrevocable Undertakings and each of Harmony and the Purchaser is
entitled to extend the relevant date for fulfilment of the Conditions pertaining to Shareholder Approval for a period
of 30 days. The closing date for the Transaction shall be the later of 30 November 2012 or the tenth business day after
which all the conditions precedent to the Transaction are fulfilled or waived, as the case may be. The intention of the
Parties is that the Closing Date shall be 30 November 2012.
Except for the condition to enter into a new electricity supply agreement with Eskom (expected to occur before 31
October 2012) and obtaining the necessary consent from the DMR in terms of section 11, all other conditions not yet
fulfilled can only be fulfilled upon shareholders' approval of the transaction.
Purchase Consideration
In terms of the Acquisition Agreement, Pan African shall acquire the entire issued share capital of and claims against Evander
Gold Mines for a total consideration of GBP116.2 million (ZAR1.5 billion) to be settled in the following manner:
- Pan African shall pay to Harmony an amount of no less than GBP77.5 million (ZAR1 billion) ('Deposit') upon the
fulfilment or waiver of all the Conditions, other than the necessary Consent for the transaction from the Department
of Mineral Resources in terms of Section 11 of the Mineral and Petroleum Resources Development Act 28 of 2002;
and
- Pan African shall pay to Harmony the remainder of the Purchase Consideration, being no more than GBP38.7 million
(ZAR500 million), in cash, upon fulfillment of the Consent for the transaction from the Department of Mineral
Resources in terms of Section 11 of the Mineral and Petroleum Resources Development Act 28 of 2002. In the
event that the above condition is not fulfilled and the Transaction is not implemented, Harmony shall be required to
repay the Deposit to Pan African, with interest, calculated at 5% per annum, thereon. The Deposit shall be secured by
various security cessions and mortgage bonds over the assets of Evander and the gold proceeds earned by Evander
Gold Mines. All cash and profits generated by Evander Gold Mines from 1 April 2012 onwards are for the benefit of
Pan African.
Break Fee
- The Parties have agreed to a break fee arrangement in terms of which Pan African shall pay to Harmony a break fee
of GBP3.87 million (ZAR50 million);
- The Full Break Fee was payable in two separate tranches and shall be deducted from the Purchase Consideration in
the event that the Transaction is successfully implemented;
- The first tranche of the Full Break Fee is an amount of GBP1.55 million (ZAR20 million) and was paid within 5 business
days of the Signature Date (paid on 31 May 2012);
- The second tranche of the Full Break Fee is an amount of GBP2.32 million (ZAR30 million) which was paid within 5
business days from the date upon which the Condition pertaining to Irrevocable Undertakings were fulfilled or
waived, as the case may be (paid on 16 August 2012);
- The parties have agreed that the full break fee will be deductible from the GBP77.5 million (ZAR1 billion) deposit;
- If the Condition pertaining to Irrevocable Undertakings were not fulfilled or waived, the First Tranche Break Fee shall
be non-refundable;
- The Full Break Fee shall be non-refundable in the event that the Transaction is not concluded as a result of the
Condition pertaining to Shareholder Approval not being fulfilled;
- In all other instances, the Full Break Fee shall be refundable to Pan African.
Funding the Transaction
When considering the funding of the Transaction, Pan African has formulated an approach consistent with its philosophy of
ensuring that its business provides profitable, sustainable stakeholder growth.
With this in mind, Pan African intends funding the Transaction through a combination of:
- Third party debt financing ('Debt Financing');
- Its current cash reserves and cash generated through the operations of and potential strategic disposals of non-core
assets by Pan African and Evander Gold Mines until the Closing Date ('Cash Reserves'); and
- To the extent necessary, through the issue of new ordinary shares in the share capital of Pan African for cash.
Debt Financing
Pan African is in the process of securing additional Debt Financing from third party lenders upon terms and conditions
acceptable to Pan African to a total amount not exceeding GBP46.5 million (ZAR600 million) for the Group.
Cash Resources
As at 25 September 2012 Pan African has available cash resources in the amount of approximately GBP20.2 million (ZAR261
million), a portion of which may be utilised for purposes of partially settling the Purchase Consideration. Furthermore, cash
generated from Pan African's Barberton Mines and Phoenix Platinum operations up until the Closing Date may be utilised
for purposes of partially settling the Purchase Consideration.
In addition, the Purchase Consideration shall be reduced by any distributions made by Evander Gold Mines from interim
period profits. As a result Pan African is confident that a considerable contribution towards the partial settlement of the
purchase consideration may arise from a combination of cash resources and distributions.
Equity Capital Raising
Pan African intends to finance a portion of the Purchase Consideration through the issue of new Pan African ordinary shares
('Rights Offer Shares') by way of a rights offer ('Rights Offer'), as referred to in the announcement published on 30 May 2012
('Announcement').
Pan African authorised a bookbuild exercise ('Bookbuild') which was conducted with, inter alia, the lead institutional
shareholders of the Company and Pan African's Black Economic Empowerment shareholder, Shanduka Resources,
('Bookbuild Participants') with a view to obtaining sufficient capital subscription commitment to secure the funding of a
portion of the Purchase Consideration and, in particular, the potential R1 billion deposit ('Deposit') which, at Harmony's
election, may become due and payable on 30 November 2012.
On 17 August 2012 Pan African announced that the Bookbuild Participants had collectively and irrevocably committed to:
- subscribe for Rights Offer Shares up to an aggregate amount of GBP54.2 million (ZAR700 million), upon the Rights Offer
and the Transaction being approved by Shareholders ('Subscription Commitments'); and
- vote in favour of all the requisite resolutions ('Transaction Resolutions') pertaining to the Transaction, the Rights Offer
and matters ancillary thereto ('Voting Undertakings').
The Subscription Commitments were given by the Bookbuild Participants at an issue price of R1.90 per Rights Offer Share
('Subscription Price'). The aggregate Voting Undertakings secured by Pan African represent approximately 57% of the
current total issued ordinary shares of the Company ('Shares').
In terms of the Subscription Commitments, the Bookbuild Participants have committed to, inter alia:
- follow their rights in terms of the Rights Offer; and/or
- apply for so many excess Rights Offer Shares in terms of the Rights Offer, so as to ensure a total minimum capital
commitment to the Rights Offer of GBP54.2 million (ZAR700 million) ('Secured Capital').
The combination of the Subscription Commitments, the Voting Undertakings and the Secured Capital allows Pan African and/
or Special Purpose Vehicle ('SPV') to:
- discharge its/their obligations to Harmony in respect of a portion of the Purchase Consideration (or the Deposit, as
the case may be); and
- extend the Rights Offer to both the JSE and AIM markets and thereby allow the majority of its Shareholders trading or
residing within jurisdictions that are not restricted from participating in the Rights Offer (further details of which will
be set out in the Rights Offer circular to Shareholders) to participate in the Rights Offer.
On 3 September 2012 Pan African signed the Bookbuild commitment agreements.
The Subscription Price constitutes a discount of approximately:
- 3.7% relative to the closing price of the Shares as traded on the exchange operated by the JSE Limited ('JSE') on 30
May 2012, being the date when the Evander transaction was announced;
- 3.7% relative to the volume weighted average Share price as traded on the JSE for the 30 trading days ended on 30
May 2012; and
- 4.2% relative to the volume weighted average Share price as traded on the JSE over the period from the Announcement
date up to and including 15 August 2012, being the period during which the Bookbuild was conducted.
Pan African will compensate the Bookbuild Participants for providing the Subscription Commitments by paying them a
liquidity fee equal to 2% of the Secured Capital.
The Bookbuild outcome is summarised in the table below.
Voting undertakings Subscription Commitments
Bookbuild Participants
(Shares) (Rands)
Investec Asset Management 141,785,423 231,000,000
Coronation Asset Management 160,000,000 220,000,000
Shanduka Gold 366,168,585 125,000,000
Allan Gray 97,074,447 75,000,000
Public Investment Corporation 39,894,492 19,282,500
Directors and others* 18,942,752 29,717,500
Total voting undertakings/
subscription comments** 823,865,699 700,000,000
*Including JP Nelson, RG Still and JAJ Loots, being directors of Pan African ('Directors') and who hold or represent certain direct
and/or other indirect/non-beneficial Shares. No other Directors hold Shares as at the date of this announcement.
**Total Voting Undertakings will represent 56.9% of the current shares in issue.
Pro Forma Financial Effects and Salient Dates
The pro forma financial effects of the Transaction on the reported financial information of Pan African, as well as the salient
dates and times relating to the implementation of the Transaction will be announced by Pan African as soon as they have
been determined.
Categorisation and Circular
The Transaction is classified as a category 1 transaction for Pan African in accordance with Section 9 of the JSE Limited
Listings Requirements. A circular containing further information pertaining to the Transaction will be posted, together with
a notice of a general meeting, to Shareholders in due course.
Financial Performance
Key drivers of the Group's results:
Exchange Rates
Pan African is incorporated in England and Wales, and its reporting currency is pounds sterling ('GBP'). Barberton Mines and
Phoenix Platinum are South African incorporated companies, and their functional and reporting currency is ZAR. Manica is
a Mozambican incorporated company and its functional and reporting currency is Meticals ("MZN").
When Barberton Mines, Phoenix Platinum and the Company financial statements are translated into GBP for the purposes
of Group consolidation and reporting, the annual average and year-end closing ZAR:GBP exchange rates affect the Group
consolidated financial results. In the current financial year, the average ZAR:GBP exchange rate was 12.27:1 (2011: 11.11:1), and
the closing ZAR:GBP exchange rate was 12.91:1 (2011: 10.94:1). The year-on-year change in the average and closing exchange
rates of 10.44% and 18.01% respectively must be taken into account for the purposes of comparing year-on-year results.
The annual average and year-end closing ZAR:US$ exchange rates were, 7.75:1 (2011: 6.99:1), and the closing ZAR:US$
exchange rate was 8.27:1 (2011: 6.83:1). The year-on-year change in the average and closing exchange rates of 10.87% and
21.08% respectively must be taken into account for the purposes of comparison.
Furthermore, when Manica financial statements are translated into GBP for the purposes of Group consolidation and reporting,
the year-end closing MZN:GBP exchange rate affects the Group consolidated financial results. In the current financial year the
average MZN:GBP exchange rate was 42.76:1(2011: 52.64:1) and the closing MZN:GBP exchange rate was 43.25:1(2011: 45.33:1).
The year-on-year change in the average and closing exchange rates of 18.77% and 4.59% respectively must be taken into
account for the purposes of comparing year-on-year results.
Commodity Prices
During the year, the Group realised an average gold price of US$ 1,694/oz (ZAR422,215/kg), an increase of 24.01% (37.64%)
from US$ 1,366/oz (ZAR306,757/kg). During the reporting period, the gold price varied between a low of US$ 1,483.00/
oz and a high of US$ 1,985/oz. In ZAR terms the gold price varied between a low of ZAR 321,608/kg and a high of ZAR
467,512/kg.
Platinum Group Metals ('PGM') prices were lower during the year under review averaging US$ 992/oz primarily because of
the slowdown in the global economy, however short-term supply pressure should support prices at current levels for the
next year which will be our first year of reporting PGM revenue from Phoenix Platinum.
Inflation and cost escalation
The Group experienced cost of production inflation in ZAR terms of 12.39% during the year under review. The impact of
inflation on the Group's unit costs was mitigated to some extent by the Group's cost and efficiency improvement initiatives.
Statement of Comprehensive Income
Gross revenue from gold sales increased by 27.65% to GBP101.1 million (2011: GBP79.2 million). The increase in revenue was
mainly attributed to a 24.01% increase in the average US$ gold spot price received to US$1,694/oz (2011: US$1,366/oz).
The increase in gross revenue was however negatively impacted by the appreciation of the GBP against the ZAR during the
reporting period, the GBP appreciating by 10.44% from ZAR:GBP 11.11 to 12.27. The average US$:ZAR exchange rate was
10.87% weaker at ZAR7.75 compared to the previous year (2011: ZAR6.99), which positively impacted revenue received in
ZAR. The effective ZAR gold price was 37.64% higher at ZAR422,215/kg (2011: ZAR306,757/kg).
Group mining profit grew by 67.21% to GBP51.5 million (2011: GBP30.8 million).The profit margin in ZAR terms also substantially
increased by 74.38% to ZAR228,855/kg (2011: ZAR131,237/kg) due to the favourable gold price received during the year
under review.The total cash cost per kilogram increased by 10.16% to ZAR193,360/kg (2011: ZAR175,520/kg). In US$ terms
the total cash cost per ounce decreased by 0.64% to US$776/oz (2011: US$781/oz).
Cost of production only increased by 1.77% to GBP46.1 million (2011: GBP45.3 million). In Rand terms, cost of production in-
creased by 12.39% to ZAR566.0 million (2011: ZAR503.6 million).This increase is mainly attributable to a 27.13% increase in
electricity costs to ZAR62.8 million (2011: ZAR49.4 million), engineering and technical services costs increasing by 21.65%
to ZAR50.00 million (2011: ZAR41.1 million) and salary, wages and other staff expenses increasing by 18.72% to ZAR275.9
million (2011: ZAR232.4 million).These increases were offset by the reduction in security costs, which were down by 12.76%
to ZAR29.4 million (2011: ZAR33.7 million) and processing costs reducing by 5.11% to ZAR50.1 million (2011: ZAR52.8
million).
Other expenses increased 110.71% to GBP5.9 million (2011: GBP2.8 million) largely due to once off costs associated with the
Evander Gold Mines acquisition amounting to GBP0.9 million, costs related to the sale of Manica amounting to GBP0.5 million,
community project costs of GBP1.2 million and cash settled share option expense of GBP0.8 million. The Royalty charge for the
year increased by 58.33% to GBP3.8 million (2011: GBP2.4 million) due to increased revenue.
EBITDA for the year under review was GBP45.0 million (2011: GBP28.5 million), an increase of 57.89%. EPS increased by 68.33% to
2.02p (2011: 1.20p) and HEPS were up 69.17% to 2.03p (2011: 1.20p), supported by increased revenue from gold sales. The
HEPS was slightly higher in comparison to the EPS due to an impairment charge of assets of GBP0.05 million. The impairments
relates to Barberton Mines Segalla plant which is held for sale, the net book value was impaired to the Agreement Sale price.
Group income tax increased by 41.30% to GBP13.0 million (2011: GBP9.2 million), in line with the increase in profits before
tax. During the year under review South Africa's gold mining income tax formula was reduced upon the introduction of
withholding tax on dividends that replaced the secondary tax on companies, resulting in the ZAR effective tax rate of
Barberton Mines decreasing to 29.1% (2011: 34.5%).
Accounting for the Phoenix project
The construction of the Phoenix CTRP ('Chrome Tailings Retreatment Plant') was completed in early November 2011, with
hot commissioning commencing thereafter and the first concentrate being produced at the beginning of December 2011.
During the testing phase, all the expenditures incurred were capitalised and the plant was declared to be brought into use
for accounting purposes in July 2012.
Statement of Financial Position
Statement of financial position improved significantly during the year. The increase was however partly offset by the effects
of the stronger closing GBP currency against the Rand which resulted in a negative translation reserve of GBP1.9 million in 2012
compared with a positive translation reserve of GBP8.3 million in 2011.
Current assets, excluding assets held for sale, increased by 80.38% to GBP28.5 million (2011: GBP15.8 million). This was primarily
as a result of a higher cash balance and an increase in debtors due to the higher value of gold shipped on the last day of the
financial year compared to the previous year. Net asset value ('NAV') per share increased by 13.06% to 7.10p (2011: 6.28p)
and tangible NAV per share increased by 22.83% to 4.73p (2011: 3.85p).
Non-current assets decreased by 11.51% to GBP86.1 million (2011: GBP97.3 million), mainly due to assets which have been classified as held-for-sale.
These assets relate to Manica assets and the Barberton Mines Segalla plant. Pan African entered into an agreement with Terranova Minerals NL to
sell the Group's interest in the Manica project, detailed further under'Events after the reporting period' section below. This transaction is expected
to be finalised within the next financial year.
Current liabilities increased by 23.33% to GBP11.1 million (2011: GBP9.0 million) due to outstanding income and royalty tax. The
Group remains debt free with an untapped revolving credit facility of GBP11.62 million.
Statement of Cash Flow
The Group's cash and cash equivalents increased by 96.04% to GBP19.8 million (2011: GBP10.1 million). This increase was mainly
due to increased cash generated from operations of GBP30.6 million (2011: GBP16.6 million), up by 84.34% from 2011 after making
significant payments including dividends of GBP7.4 million (2011: GBP5.4 million), income tax of GBP8.4 million (2011: GBP8.3 million)
and royalty charge of GBP3.3 million (2011: GBP2.4 million). Cash used in investing activities in the amount of GBP17.4 million mainly
related to capital expenditures for Barberton's maintenance and development capital expenditures, Phoenix and Barberton
Tailings Project.
Review of Barberton Mines
Safety & Training
It is with regret that we have to report that on 29 May 2012 at approximately 19h20 an underground general shaft worker,
Mr. Christopher Makhosonke Hlela, was fatally injured when a measuring flask of a rock loading station at the Fairview No
3 Shaft bottom dislodged and struck him.
The failure of the measuring flask could not be foreseen or detected by weekly inspections and no single action was
identified as the reason for the death of Mr. Christopher Makhosonke Hlela. No person contravened the requirements of
the Act or Regulations, however, the following actions were recommended and have been implemented at the mine:
- The mine must revise the design, construction, operation and maintenance of box fronts, chutes and measuring flasks;
- The code of practice for the safe operation of draw points, tipping points, rock passes and box fronts must be revised.
The code of practice must include the timely replacement of parts of the equipment that may fail. (Reliability centred
maintenance);
- Procedures and training must be amended to provide for the changes in the risk assessment and code of practice. All
relevant persons must be re-trained;
- A system of inspections and planned task observations must be implemented to ensure compliance to training, rules
and legislation.
The Group remains committed to the safety and health of all its employees and continues to review its procedures on a
regular basis as part of its focus on a behaviour based safety approach.
The LTIFR increased to 3.26 (2011: 2.2) and the SIFR increased to 0.74 (2011: 0.66).
The Total Recordable Injury Frequency Rate ('RIFR') also increased to 25.1 (2011: 22.6). Although Barberton Mines showed
a slight decline on its year-on-year safety performance results are below the 2014 targets as set by the DMR.
In addition to the robust safety, health, environment and community ('SHEC') implemented during the previous year, the
strategic focus remains on:
- The improvement of health and safety performance through the setting and achievement of goals, taking into account
stakeholder expectations and industry leading practices;
- The implementation and measurement of SHEC systems and their successes to provide a working environment that
is conducive to the Company's SHEC charter;
- The management of the day to day operational risks in the workplace and the insurance that employees have to have
the relevant skills to perform work related tasks in a safe manner, has taken priority.
Operating Performance
Barberton Mines sold 94,449oz of gold during the year, an increase of 2.44% from the previous year (2011: 92,197oz). Mining
operations accounted for 308,095 tons milled, an increase of 4.02% from the prior year (2011: 296,200 tons). The increase
in tons milled was mostly due to surface stockpiles totalling 26,054 tons (at a headgrade of 1.8g/t), yielding 1,068oz of gold.
Head grade and overall recoveries remained relatively constant at 10.45g/t (2011: 10.55g/t) and 91.22% (2011: 90.80%)
respectively.
Total cash costs per ounce decreased by 0.64% to US$776/oz (2011: US$781/oz). However in Rand per kilogram terms,
total cash costs increased by 10.16% to ZAR193,360/kg (2011: ZAR175,520/kg).
Total capital expenditure at Barberton Mine increased by 57.35% to GBP10.7 million (2011: GBP6.8 million). Maintenance capital
expenditure of GBP3.1 million (2011: GBP3.6 million) and development capital expenditure of GBP3.1 million (2011: GBP3.2 million)
were incurred. The BTRP capital expenditure at the end of the financial year totalled GBP4.5 million.
Production Summary
Financial Year: 2012 2011 2010 2009 2008
Tonnes Milled (t) 308,095 296,200 313,167 313,952 315,305
Headgrade (g/t) 10.45 10.55 10.61 10.32 8.90
Overall Recovery (%) 91 91 91 91 91
Production: Underground (oz) 93,381 92,043 97,483 94,909 82,436
Production: Surface material (oz) 1,068 - - 3,955 13,513
Gold Sold (oz) 94,449 92,197 98,091 97,353 99,078
Average Price: Spot (R/kg) 422,215 306,757 267,876 251,740 193,159
Average Price: Hedge (R/kg) - - - - 105,850
Average Price: Spot (US$/oz) 1,694 1,366 1,098 867 823
Average Price: Hedge (US$/oz) - - - - 451
Total Cash Cost US$/oz sold (US$/oz) 776 781 650 469 476
Total Cash Cost R/Kg sold (R/Kg) 193,360 175,520 158,711 136,178 111,272
Total Cost per Ton (R/t) 1,844 1,707 1,537 1,313 1,088
Total Mining Cost per Ton (R/t) 1,830 1,648 1,486 1,256 1,045
Capital Expenditure (GBP) 10,741,230 6,773,729 5,918,271 4,052,665 2,901,792
Exchange rate - average (ZAR/GBP) 12.27 11.11 11.93 14.39 14.68
Exchange rate - closing (ZAR/GBP) 12.91 10.94 11.53 12.66 15.56
Exchange rate - average (ZAR/US$) 7.75 6.99 7.59 9.03 7.30
Exchange rate - closing (ZAR/US$) 8.27 6.83 7.65 7.72 7.80
Capital Expenditure
Organic Growth Projects
During the year under review, a total of GBP10.7 million was spent on capital expenditure, of which GBP3.1 million was for capital
development projects.
The drilling progress of the projects for the period are summarised below:
2012 2011 Resource
Project
(metres) (metres) target
(oz)
Sheba 36ZK 359 294 6,000
Sheba Edwin Bray to Thomas and Joe's Luck area 303 491 17,000
54 Level Rossiter orebody 123 0 11,000
Fairview 3 Shaft Deepening 109 149 278,000
Consort 40 level station establishment 267 34 10,000
Consort 50 Level Decline West 197 123 26,000
Sheba 36 ZK
Good progress was made with this project and a mineable block has been delineated (36ZK 1030 Hanging Wall 2820tons @
13.82g/t) and stoping will commence in the next financial year. Further exploration drilling will be conducted during the
next financial year to delineate the various Cross Fractures (1010, 990, 970 and 950 X/Fractures).
Sheba Edwin Bray, Thomas and Joe's Luck area
Incline development towards the high grade surface borehole intersections was carried out during the period under review.
Additional infill exploration drilling is in progress for the next financial year.
Fairview 54 Level Rossiter Orebody
This project has been completed and as a result the indicated resource block was converted to a measured
resource (50g/t over a 3,8m). On reef mining is in progress.
Fairview 3 Shaft Deepening
Good progress was made with this project, where the development of a return airway was designed to provide sufficient
ventilation at workable temperature. A further change was made to commence with a decline towards the 68 level downdip
of the 11 high grade block.
Consort 40 Level Development
Development to the east through the pegmatite was successful. Development on the shale will continue in the next financial
year. Further exploration drilling from strategic points will target the position of the footwall lens/serpentinite to determine
the extent of mineralisation.
Consort 50 Level Decline West
A station was successfully established on 52 level and the shaft decline will be developed to 53 level in the new financial year.
On-Mine Development
The on-mine development for the period under review is summarised below:
New Consort Fairview Sheba
On-Mine Development
for 2012 metres g/t metres g/t metres g/t
Reef Development 548 4.04 581 8.45 1,057 3.38
Stope Development 357 5.47 229 6.10 73 7.46
Waste Development 1,348 - 1,563 - 2,527 -
Total Development 2,253 - 2,363 - 3,657 -
Capital 590 - 510 - 1,059 -
Maintenance Capital (excluding BTRP)
The maintenance capital at Barberton Mines amounted to GBP3.1 million. Expenditure on processing plant maintenance capital
was GBP0.19 million for the year, as a result of purchasing of a new concentrator truck in relation to the Sheba plant and
installation of new pumps at Sheba and Consort Plants. The BIOX® Plant incurred GBP0.27 million in upgrading compressors
and blowers. The total metallurgical maintenance and replacement expenditure for the year under review amounted to
GBP0.7 million.
The capital expenditure on the maintenance of engineering equipment and infrastructure totalled GBP1.4 million for the year.
Upgrading the mining equipment fleet was a key focus area during the year, with expenditure of GBP0.2 million to re-build load
haul dumpers. The purchase of front end loader and tipper truck cost GBP0.2 million. Expenditure on the refurbishment of
shafts and headgears amounted to GBP0.2 million.
The balance of the maintenance capital was largely spent on the final implementation of a new financial system for GBP0.24
million and replacement of light vehicles for GBP0.7 million.
Projects
Review of Phoenix Platinum
The Phoenix project has a total South African Code for Reporting of Exploration Results, Mineral Resources and Mineral
Reserves ('SAMREC') compliant resource of 493,000 ounces PGM 4E's (4,853,000 tons at 3.16g/t PGM 4E's in situ).
The project is expected to produce 211,000 ounces PGM 6E's at a plant recovery of 45% over the 17-year life of the
operation with a planned annual retreatment capacity of 240,000 tons. The total capital cost required to construct and
commission the plant was GBP8.5 million (ZAR104 million). The cost for the plant was funded from existing cash resources
within the Group. A sale of concentrate agreement was concluded with Western Platinum Limited ('WPL'), a subsidiary of
Lonmin PLC, during November 2011.
The construction of the CTRP was completed in November 2011 with the first low grade concentrate delivered to WPL
at the end of January 2012.
During the hot commissioning phase the metallurgists continued with CTRP stabilisation to achieve steady state concentrate
production. The International Ferro Metals Limited ('IFM') feed source to the CTRP prior to January 2012 originated from
the IFM Lesedi underground operations and this sulphide rich tailings material was the basis of the original CTRP project
flotation test work. Due to financial considerations IFM drastically cut back on the Lesedi underground tons and moved
mining operations to the low cost opencast oxidised ore section at Skychrome.
This opencast material being highly oxidised, contains poor quality chrome and low PGE grades. Feeding this current arisings
material into the CTRP is not ideal as the highly oxidised tailings do not float properly. The metallurgy of oxidised tailings
negatively affects recovery and grade, leading to poor PGE concentrate production. The oxide to sulphide ratio contained
in the run of mine ore from the IFM opencast pits will reduce proportionately with the increase in depth of the mining
cut. Various options are being investigated to address the effect of the highly oxidised feed source, recoveries and final
concentrate grade.
Production Summary
Dec Jan Feb Mar Apr May Jun
2011 2012 2012 2012 2012 2012 2012
Plant Feed (t) 11,625 14,239 19,327 18,382 15,616 21,994 23,281
Head Grade (g/t) 4,21 3,32 4,22 4,20 4,63 3,92 4,64
Overall Plant Recovery (%) 28 9 20 17 20 27 24
Percent Cr(2)O(3) (%) 2,46 2,57 2,39 2,4 1,94 2,87 2,81
Ounces Produced 6E PGE (oz) 439 122 587 405 439 777 705
($/oz) 961 940 1,048 1,028 990 929 918
Basket Price Received
(ZAR/oz) 7,853 7,523 8,015 7,785 7,733 7,537 7,681
($/oz) 727 2,575 577 882 781 586 664
Total Cash Cost
(ZAR/oz) 5,938 20,599 4,414 6,678 6,102 4,756 5,560
($/oz) 27 22 18 19 22 21 20
Cash Cost Per Ton
(ZAR/oz) 224 176 134 147 172 168 168
Capital Expenditure ($/oz) 195,545 854,882 2,126,370 553,910 271,745 0 958,446
Exchange Rate- Average (ZAR/oz) 8,17 8,00 7,65 7,57 7,81 8,11 8,37
BTRP project
As a consequence of successful metallurgical test work carried out on composite drill hole samples drilled during the
previous financial year, the potential of retreating the Bramber tailings dam was assessed in a feasibility study. The project
viability was confirmed in an independent review by Venmyn Rand (Pty) Limited and during November 2011 the Company's
board of directors ('Board') approved capital of GBP23.2 million (ZAR300 million) for the BTRP project at Barberton Mines.
Detailed engineering process and flow design, to treat approximately 1.2Mt per annum, was carried out by Basil Read
Matomo. When in production the BTRP will increase the annual gold production profile at Barberton Mines by 20,000 to
25,000 oz. With a cost structure of US$700/oz this project is well in line with the Company's strategy of developing low
cost-high margin projects.
The construction of the BTRP on a site adjoining the Bramber Tailings Storage Facility ('TSF') is well underway and on target
to commence cold commissioning in April 2013. Additional land adjacent to the current tailings dam extension has been
acquired for a TSF and the Environmental Impact Assessment ('EIA') is due to be completed by December 2012. The TSF
will be ready for use when the commissioning phase of the BTRP begins by end April 2013.
The life of the BTRP project has been augmented by auger drilling on an additional 6Mt of tailings at the Harper dumps (at
Fairview) and the Consort Tailings dam, extending the Life of Project from three to ten years.
Final commissioning is scheduled to be completed in June 2013 and production build up is planned from July 2013.
Review of Manica Gold
During the period under review the Group entered into negotiations with certain strategic partners to divest of the project.
A separate management team was put in place to (a) assist the Group with its divestment strategy and (b) ensure compliance
with its current obligations on the project. The Group's divestment strategy allows for the project to be disposed for a
consideration of cash and shares over a period of 3 years. During this period the Group will remain a non-controlling
shareholder and will not assume management nor financial responsibility for advancing the project. Further details of the
status of this strategy are provided in the 'Events after the reporting period' section below.
Capital Expenditure
Capital expenditure at Barberton Mines totalled GBP10.7 million, of which development capital was GBP3.1 million, maintenance
capital was GBP3.1 million and BTRP Capital was GBP4.5 million.
Capital expenditure on Phoenix Platinum totalled GBP6.7 million.
There was GBP12.3 million in outstanding orders contracted for capital commitments at the end of the period at Barberton
Mines and GBPnil outstanding at Phoenix Platinum.
Operating lease commitments, which fall due within the next year, amounted to GBP0.12 million (2011: GBP0.19 million).
Basis of Preparation of Financial Statements
Investors should consider non-Generally Accepted Accounting Principles ('GAAP') financial measures shown in this
preliminary announcement in addition to, and not as a substitute for or as superior to, measures of financial performance
reported in accordance with International Financial Reporting Standards ('IFRS'). The IFRS results reflect all items that affect
reported performance and therefore it is important to consider the IFRS measures alongside the non-GAAP measures.
JSE Limited listing
The Company has a dual primary listing on JSE Limited ('JSE') and the AIM Market ('AIM') of the London Stock Exchange.
The preliminary announcement has been prepared in accordance with the framework concepts and the measurement
and recognition requirements of IFRS, the AC 500 standards as issued by the Accounting Practices Board ('APB') and the
information as required by International Accounting Standards ('IAS') 34: Interim Financial Reporting.
The Group's South African external auditors, Deloitte & Touche, have issued their opinion on the Group's Annual Financial
Statements for the year ended 30 June 2012. The audit was conducted in accordance with International Standards on
Auditing.They have expressed an unmodified opinion on the Annual Financial Statements from which the Group's preliminary
announcement was derived. A copy of their audit report is available for inspection at the Company's registered office. Any
reference to future financial performance included in these Group Financial Statements has not been reviewed or reported
on by the Group's South African external auditors.
AIM Listing
The financial information for the year ended 30 June 2012 does not constitute statutory accounts as defined in sections
435 (1) and (2) of the United Kingdom ('UK') Companies Act 2006 but has been derived from those accounts. Statutory
accounts for the year ended 30 June 2011 have been delivered to the Registrar of Companies and those for 2012 will be
delivered following the Company's annual general meeting. The UK external auditors (Deloitte LLP) have reported on these
accounts for the year ended 30 June 2012. Their report was unqualified, did not include a reference to any matters to
which auditors draw attention by way of emphasis of matter and did not contain a statement under section 498 (2) or (3)
of the Companies Act 2006. These statutory accounts have been prepared in accordance with IFRS and IFRS Interpretations
Committee ('IFRIC') interpretations adopted for use by the European Union, with those parts of the Companies Act 2006
applicable to companies reporting under IFRS.
Directorship Change
The following changes took place in the financial year ended 30 June 2012:
Non-Executive Directors
- Mr Cyril Ramaphosa resigned as chairman of the board. (14 December 2011)
- Mr Keith Spencer replaced Mr Cyril Ramaphosa as chairman of the board. (14 December 2011)
- Ms Phuti Mahanyele replaced Mr Keith Spencer as Deputy Chairman of the board. (14 December 2011)
- Ms Hester Hickey was appointed to the board as chairperson of the audit committee. (12 April 2012)
Executive Directors
- Mr Cobus Loots resigned as Financial Director and remained as a non-executive director. (14 December 2011)
- Ms Busi Sitole was appointed as Financial Director. (14 December 2011)
Shares Issued
During the year under review, the Company announced the issue and allotment of 4,221,650 new ordinary shares in respect
of share options exercised:
- On 28 October 2011 200,000 shares issued to F. Chadwick at 7 pence per share.
- On 24 November 2011 723,650 shares issued to D Negri at 6 pence per share.
- On 3 April 2012 500,000 shares issued to N. Spruijt at 7 pence per share.
- On 27 April 2012 450,000 shares issued to C. Strydom at 7 pence per share.
- On 27 April 2012 850,000 shares issued to C. Strydom at 5 pence per share.
- On 27 April 2012 288,000 shares issued to P. Human at 7 pence per share.
- On 27 April 2012 850,000 shares issued to P. Human at 5 pence per share.
- On 27 April 2012 360,000 shares issued to R. Le Roux at 7 pence per share.
Dividend
The Pan African board previously stated that the company's policy is to pay an annual dividend, subject to the capital
requirements of the company. This policy has not changed. However, taking into account the funding required to implement
the Evander Gold Mines transaction and the concomitant proposed rights offer, and following discussions with major
shareholders, the board of directors has decided to forego the declaration of a dividend in respect of the 2012 financial year.
A final dividend for the year ended 30 June 2011 of GBP7.4 million was paid.
The board remains committed to continue with the company's dividend policy and intends to resume the dividend payment
in the 2013 financial year, normal legal and commercial considerations permitting. Pan African is positive that the Evander
Gold Mines transaction, once implemented, will further support the Group's cash flows and drive to enhance shareholder
returns through dividends.
Going Concern
The Group is currently generating significant levels of cash from its operations, is debt free and has a revolving credit facility
of GBP11.62 million with a major bank which it has not yet utilised. However, the terms of its agreement to acquire Evander
Gold Mines from Harmony will require it to make a significant cash payment (approximately GBP116 million) once all the
outstanding conditions precedent have been met. The directors currently envisage that the required funding will be met by
a combination of existing cash, additional equity (for which irrevocable shareholder undertakings of GBP54 million have been
obtained), cash held by Evander Gold Mines and debt funding. The level of debt funding required is expected to exceed the
capacity of the current revolving credit facility but we have secured credit committee approval from a major bank for the
required increase in the size of the facility secured and the Company is satisfied that the remaining steps to obtain
final approval are procedural in nature.
The Group's ability to fund the transaction and meet the working capital needs of the enlarged Group thereafter is also
sensitive to a number of other factors including, but not limited to, changes in gold price, production rates and cost levels.
We have therefore produced cash flow forecasts and run sensitivities in respect of the above factors as well as considering
the potential impact on our funding position of a national strike in the South African mining sector between now and the
completion of the transaction. In the event there are unexpected adverse changes to the Group's cash flows, the directors
are confident that the Group could manage its financial affairs in a number of ways, including a reduction in discretionary
capital expenditure, obtaining additional debt funding and, in the event of a short term downturn, a focus on higher grade
ores and working capital management.
Having taken into consideration the above factors, the diretors believe that the Group's forecasts and projections show
that the Company and Group will be able to complete the Evander Gold Mines acquisition, meet all its other contractual
commitments and have adequate resources to continue in operational existence for the foreseeable future, being 12 months
from the date of this report. Accordingly, the directors continue to adopt the going concern basis in preparing the results
for the year ended 30 June 2012.
Events After the reporting period
Acquisition of Evander Gold Mines from Harmony
On 17 August 2012 Pan African issued an update on the Evander acquisition status. Pan African announced that 57% of the
shareholders had committed to vote in favour of the transaction and that it had secured GBP54.2 million (ZAR700 million)
through rights offer commitments. Pan African has made a further payment of GBP2.5 million (ZAR30 million) to Harmony in
respect of the second tranche of the break fee in terms of the Agreement. Therefore, the full Break Fee, being an amount of
GBP4.1 million (ZAR50 million), has been paid by Pan African to Harmony. Pan African and Harmony have furthermore agreed
that the Break Fee shall be set off against the GBP77.5 million (ZAR1 billion) Deposit. The balance of the Deposit (if it becomes
payable, at Harmony's election) shall therefore constitute a total amount of GBP73.6 million (ZAR950 million).
As discussed earlier in this document the Secured Capital, in addition to Pan African's existing cash funds available and, to the
extent necessary, draw-downs by Pan African from existing debt funding facilities, will be sufficient to allow Pan African to
make payment of the Deposit. Pan African intends to fund the balance of the Purchase Consideration through a combination
of, inter alia, third party debt financing and funds generated from Pan African's existing operations. Further details are
outlined in the SENS announcement dated 17 August 2012.
The Group is in the process of finalising the debt component of GBP46.5 million (ZAR600 million) required for part of the
financing of the Evander transaction.
Disposal of Manica Gold Project
On 29 August 2012 Pan African announced that it entered into an agreement to dispose of 100% of its Manica Gold Project
('Manica') to Auroch Minerals Mozambique (Pty) Ltd, a wholly owned subsidiary of Terranova Minerals NL, for a total
potential purchase consideration of AUD 6 million (GBP 4 million / ZAR 52.4 million) payable in cash and 96,666,668 shares
in Terranova, subject to certain terms and conditions more fully described in the SENS announcement dated 29 August 2012.
Accounting Policies
The preliminary announcement has been prepared using accounting policies that comply with the International Financial
Reporting Standards ('IFRS') adopted by the European Union and South Africa, which are consistent with those applied in
the financial statements for the year ended 30 June 2012 and prior year end 30 June 2011.
Directors' Dealings
The Company was notified on Tuesday 18 October 2011 that Pangea Exploration (Pty) Ltd ('Pangea'), a private company of
which Mr Rob Still is a director, had declared a dividend in specie (the "Dividend") to its shareholders on 1 October 2011.
The Alexandra Trust, of which Mr Still is a trustee, is a major shareholder of Pangea and accordingly received 12,430,900
ordinary shares of 1 pence each in the Company at a price of ZAR1.46 per share, with a total value of ZAR18,149,114 as a
consequence of the dividend in specie.
The Company was notified between Friday 28 October and Tuesday 1 November 2011, that Pangea had sold the shares at
the following prices:
277,863 shares at R1.7056 per share
322,137 shares at R1.7131 per share
45,708 shares at R1.72 per share
54,292 shares at R1.70 per share
300,000 shares at R1.70 per share
The Company was notified on Friday 30 March 2012 that Pangea had disposed of 1,530,612 ordinary shares of 1 pence each
in the Company at ZAR1.96 per share for a total value of ZAR3,000,000.
The above mentioned shares were sold by Pangea in order to finance new business. Following these off market transactions,
Pangea holds 1,793,796 shares, representing 0.12% of the issued share capital of the Company.
Mr Still's total direct, beneficial interest in Pan African remains unchanged at 2,000,000 shares, representing 0.14% of the
issued share capital of the Company as well as his total indirect, non-beneficial interest of 14,224,696 shares representing
0.98% of the issued share capital of the Company.
Segment Reporting
A segment is a distinguishable component of the Group that is engaged in providing products or services in a particular
business sector (operating segment), which is subject to risk and rewards that are different to those of other segments. The
segments which the Group reviews the business activities of are: Mining Operations (Barberton Mines), Near-Term Mining
Operations (Phoenix Platinum) and Development Projects (Manica).
Renewal of cautionary announcement
Shareholders are referred to the announcements published by the Company on 17 August 2012 and 29 August 2012 wherein
Shareholders were advised to continue exercising caution when dealing in the Company's shares until such time as the pro
forma financial effects relating to the acquisition of Evander Gold Mines and the disposal of Manica have been published,
respectively.
Accordingly, Pan African shareholders are advised to continue exercising caution when dealing in the Company's shares until
such time as the pro forma financial effects relating to the acquisition of Evander Gold Mines and the disposal of Manica
have been published.
Pan African Outlook - The Future
The offer to acquire Evander Gold Mines from Harmony marks a significant milestone in the future growth of the company.
On successful completion the transaction will allow the Group to double gold production output. Mineral reserves will
increase from just over 1Moz to close 9Moz ensuring a sustainable future. A pipeline of brownfield projects will become
available around current mining areas that can be developed to unlock future value. Such development will be funded from
internal cash flows without impeding on future dividend payments.
No major project development will be undertaken without shareholder approval and the Group will continue through
strategic partnerships to exploit further growth opportunities within the precious metals sector in South Africa. The Group
believes that significant opportunities will become available in the gold and platinum sectors in South Africa as the major
mining houses start divesting of their South African assets to gain a more international footprint.
The Group will continue to differentiate itself from its peer group and pursue its strategy of investment into ore bodies with
high grades, high margins and a long life. Our people, through their actions, will produce the results and we will continue to
invest in their well-being and skills upliftment.
I would like to offer my sincere thanks to my fellow Directors and to all the Staff at the Corporate Office and the Operations
for their tireless efforts during a very successful year. We would also like to thank all the shareholders for their continued
support and we look forward to continuing our journey as an emerging mid-tier precious metals producer.
Jan Nelson
Chief Executive Officer
Busi Sitole
Financial Director
Condensed Consolidated Statement of Comprehensive Income
for the year ended 30 June 2012
Group
30 June 2012 30 June 2011
(Audited) (Audited)
GBP GBP
Revenue
Gold sales 101,068,596 79,208,399
Realisation costs (163,217) (157,763)
On-mine revenue 100,905,379 79,050,636
Cost of production (46,122,811) (45,345,417)
Depreciation (3,259,010) (2,885,243)
Mining Profit 51,523,558 30,819,976
Other expenses (5,916,227) (2,796,657)
Impairment (48,238) -
Royalty costs (3,848,450) (2,368,239)
Net income before finance income and finance costs 41,710,643 25,655,080
Finance income 652,267 802,022
Finance costs (136,765) (40,128)
Profit before taxation 42,226,145 26,416,974
Taxation (12,984,511) (9,248,309)
Profit after taxation 29,241,634 17,168,665
Other comprehensive income:
Foreign currency translation differences (10,248,051) 3,814,677
Total comprehensive income for the year 18,993,583 20,983,342
Profit attributable to:
Owners of the parent 29,241,634 17,168,665
Non-controlling interest - -
29,241,634 17,168,665
Total comprehensive income attributable to:
Owners of the parent 18,993,583 20,983,342
Non-controlling interest - -
18,993,583 20,983,342
Condensed Consolidated Statement of Comprehensive Income
for the year ended 30 June 2012 (continued)
Group
30 June 2012 30 June 2011
(Audited) (Audited)
GBP GBP
Earnings per share 2.02 1.20
Diluted earnings per share 2.01 1.19
Weighted average number of shares in issue 1,445,202,485 1,432,666,738
Diluted number of shares in issue 1,453,287,941 1,438,824,573
Headline earnings per share is calculated
Basic earnings 29,241,634 17,168,665
Adjustments
Impairments 48,238 -
Loss of sale of asset 17,922 -
Headline earnings 29,307,794 17,168,665
Headline earnings per share 2.03 1.20
Diluted headline earnings per share 2.02 1.19
Condensed Consolidated Statement of Financial Position
at 30 June 2012
Group
30 June 2012 30 June 2011
(Audited) (Audited)
GBP GBP
ASSETS
Non-current assets
Property, plant and equipment and mineral rights 62,411,655 59,052,015
Other intangible assets - 14,214,426
Goodwill 21,000,714 21,000,714
Rehabilitation trust fund 2,662,934 3,013,385
86,075,303 97,280,540
Current assets
Inventories 1,868,735 1,457,202
Trade and other receivables 6,828,047 4,254,401
Cash and cash equivalents 19,782,179 10,123,822
28,478,961 15,835,425
Assets held for sale 13,135,215 -
TOTAL ASSETS 127,689,479 113,115,965
EQUITY AND LIABILITIES
Capital and reserves
Share capital 14,482,623 14,440,406
Share premium 51,149,299 50,932,830
Translation reserve (1,937,509) 8,310,542
Share option reserve 904,902 861,450
Retained income 59,432,741 37,607,283
Realisation of equity reserve (10,701,093) (10,701,093)
Merger reserve (10,705,308) (10,705,308)
Equity attributable to owners of the parent 102,625,655 90,746,110
Total equity 102,625,655 90,746,110
Non - Current liabilities
Long term provisions 3,043,954 3,386,591
Long-term liabilities 868,881 181,285
Deferred taxation 10,088,530 9,841,695
14,001,365 13,409,571
Current liabilities
Trade and other payables 7,709,729 8,193,750
Current tax liability 3,352,730 766,534
11,062,459 8,960,284
TOTAL EQUITY AND LIABILITIES 127,689,479 113,115,965
Condensed Consolidated Statement Of Cash Flows
For the year ended 30 June 2012
Group
30 June 2012 30 June 2011
(Audited) (Audited)
GBP GBP
NET CASH GENERATED FROM OPERATING ACTIVITIES 30,575,270 16,610,289
INVESTING ACTIVITIES
Additions to property, plant and equipment, mineral rights (17,424,906) (21,033,991)
Evander break-fee deposit (1,548,779) -
Additions to intangibles (505,273) (800,619)
Funding of rehabilitation trust fund 115,970 122,145
NET CASH USED IN INVESTING ACTIVITIES (19,362,988) (21,712,465)
FINANCING ACTIVITIES
Shares issued 258,686 1,545,000
NET CASH FROM FINANCING ACTIVITIES 258,686 1,545,000
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 11,470,968 (3,557,176)
Cash and cash equivalents at the beginning of the year 10,123,822 12,756,262
Effect of foreign exchange rate changes (1,812,611) 924,736
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 19,782,179 10,123,822
Condensed Consolidated Statement of Changes in Equity
for the year ended 30 June 2012
Share Share Translation Share Retained Realisation Merger Total
Capital Premium reserve option earnings of equity reserve
GROUP account reserve reserve
GBP GBP GBP GBP GBP GBP GBP GBP
Balance at 30
14,095,406 49,732,830 4,495,865 754,394 25,814,783 (10,701,093) (10,705,308) 73,486,877
June 2010
345,000 1,200,000 - - - - - 1,545,000
Issue of shares
Total
comprehensive - - 3,814,677 - 17,168,665 - - 20,983,342
income
- - - - (5,376,165) - - (5,376,165)
Dividends paid
Share Based
payment -
- - - 107,056 - - - 107,056
Charge for the
year
Balance at 30
14,440,406 50,932,830 8,310,542 861,450 37,607,283 (10,701,093) (10,705,308) 90,746,110
June 2011
42,217 216,469 - - - - - 258,686
Issue of shares
Total
comprehensive - - (10,248,051) - 29,241,634 - - 18,993,583
income
- - - - (7,416,176) - - (7,416,176)
Dividends paid
Share Based
payment -
- - - 43,452 - - - 43,452
Charge for the
year
Balance at 30
14,482,623 51,149,299 (1,937,509) 904,902 59,432,741 (10,701,093) (10,705,308) 102,625,655
June 2012
Consolidated Segmented Report
for the year ended 30 June 2012
30 June 2012 30 June 2011
Barberton Phoenix Corporate Group Barberton Phoenix Corporate Group
Mines Platinum* and Growth Mines Platinum* and Growth
Projects Projects
GBP GBP GBP GBP GBP GBP GBP GBP
Revenue
Gold sales 101,068,596 - - 101,068,596 79,208,399 - - 79,208,399
Realisation costs (163,217) - - (163,217) (157,763) - - (157,763)
On - mine revenue 100,905,379 - - 100,905,379 79,050,636 - - 79,050,636
Cost of production (46,122,811) - - (46,122,811) (45,345,417) - - (45,345,417)
Depreciation (3,259,010) - - (3,259,010) (2,885,243) - - (2,885,243)
Mining Profit 51,523,558 - - 51,523,558 30,819,976 - - 30,819,976
Other expenses ** (1,484,792) (59,957) (4,371,478) (5,916,227) (288,930) (12,943) (2,494,784) (2,796,657)
Impairment costs (48,238) - - (48,238) - - - -
Royalty costs (3,848,450) - - (3,848,450) (2,368,239) - - (2,368,239)
Net income / (loss)
before finance income 46,142,078 (59,957) (4,371,478) 41,710,643 28,162,807 (12,943) (2,494,784) 25,655,080
and finance costs
Finance income 96,202 4,911 551,154 652,267 29,065 - 772,957 802,022
Finance costs (136,765) - - (136,765) (40,128) - - (40,128)
Profit /(loss) before
taxation 46,101,515 (55,046) (3,820,324) 42.226.145 28,151,744 (12,943) (1,721,827) 26,416,974
Taxation (13,058,128) 73,617 - (12,984,511) (9,251,933) 3,624 - (9,248,309)
Profit /(loss) after
taxation 33,043,387 18,571 (3,820,324) 29,241,634 18,899,811 (9,319) (1,721,827) 17,168,665
Other comprehensive
income:
Foreign currency
translation differences (3,840,331) 550,605 (6,958,325) (10,248,051) 1,737,540 269,848 1,807,289 3,814,677
Total comprehensive
income / (loss) for 29,203,056 569,176 (10,778,649) 18,993,583 20,637,351 260,529 85,462 20,983,342
the year
*Costs directly attributable to Phoenix Platinum, along with attributable overheads, are capitalised to capital under construction
** Other expenses are excluding inter-company management fees and dividends
Segmental Assets 48,864,455 19,617,673 38,206,637 106,688,765 43,333,140 16,990,521 31,791,590 92,115,251
Segmental Liabilities 23,552,791 275,378 1,235,655 25,063,824 20,212,973 1,556,006 600,876 22,369,855
Goodwill - - - 21,000,714 - - - 21,000,714
Net Assets (excluding
goodwill) 25,311,664 19,342,295 36,970,982 81,624,941 23,120,167 15,434,515 31,190,714 69,745,396
Capital Expenditure 10,739,237 6,672,468 13,202 17,424,907 6,773,729 14,079,722 180,540 21,033,991
Contact Details
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
Facsmile: + 27 (0) 11 880 1240
Registered Office
6 St James's Place
London
SW1A 1NP
United Kingdom
Office: + 44 (0) 207 499 3916
Facsmile: + 44 (0) 207 491 1989
Jan Nelson Busi Sitole
Pan African Resources PLC Pan African Resources PLC
Chief Executive Officer Financial Director
Office: + 27 (0) 11 243 2900 Office: + 27 (0) 11 243 2900
Justine James Phil Dexter
Gable Communications St James's Corporate Services Limited
Public Relations - UK Company Secretary
Office: +44 (0)207 193 7463 Office: + 44 (0) 207 499 3916
John Prior Elizabeth Johnson
Canaccord Genuity Limited finnCap Ltd
Nominated Adviser and Joint Broker Joint Broker
Office: +44 (0)207 523 8350 Office: + 44 (0) 207 220 0500
Nigel Gordon Sholto Simpson
Fasken Martineau LLP One Capital
Solicitors in the UK JSE Sponsor
Office: +44 (0)207 917 8500 Office: + 27 (0) 11 550 5009
Louise Brugman
Vestor Media & Investor Relations
Public & Investor Relations
Office: +27 (0) 11 787 3015
www.panafricanresources.com
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