Wrap Text
Provisional audited results for the year ended 30 June 2016 and final dividend announcement
Pan African Resources PLC
(‘Pan African Resources’ or the ‘company’ or the ‘group’)
(Incorporated and registered on 25 February 2000 in England and Wales
under the Companies Act 1985, registration number 3937466)
Share code on AIM : PAF
Share code on JSE : PAN
ISIN : GB0004300496
Provisional audited results for the year ended 30 June 2016 and final dividend announcement
Cobus Loots, CEO of Pan African Resources commented: “The Pan African Resources group delivered an
outstanding set of results for the 2016 financial year. These results include a year of record gold
production and profits and the largest dividend payment to date.
Our gold mining operations delivered exceptional results, producing in excess of 200,000oz of gold
for the financial year. The performance from Evander Mines, in particular, demonstrated the
potential of the operation, with production increasing by 30.8% year-on-year. Results were also
assisted by the Rand gold price and a full year’s production from the Evander tailings retreatment
plant.
Our robust financial position, well-established cash-generative operations, decentralised hands-on
management structure and cost-conscious culture differentiate us from our peers. These attributes
give Pan African Resources a competitive advantage for further growth through our project pipeline
and also position the group to capitalise on potential acquisition opportunities.”
Key features reported in South African Rand (‘ZAR or R’) and Pound Sterling (‘GBP’)
Financial key features
– The group’s profit after taxation in ZAR terms increased by 160.2% to R547.0 million (2015:
R210.2 million), while in GBP terms, the group’s profit after taxation increased by
117.9% to GBP25.5 million (2015: GBP11.7 million).
– Earnings per share (‘EPS’) increased by 163.1% to 30.20 cents per share (2015: 11.48 cents per
share), while in GBP terms, EPS increased by 120.3% to 1.41 pence per share (2015:0.64 pence
per share).
– Group revenue increased by 43.1% to R3,632.8 million (2015: R2,539.4 million) as a result of the
materially improved operational performance, the higher prevailing effective ZAR
gold price and the incorporation of the Uitkomst Colliery (‘Uitkomst’) revenue.
– The Pan African Resources’ board of directors (‘board’) has proposed an increased final dividend
of R300 million or approximately GBP16.0 million (2015: R210 million or GBP9.7 million), equating
to R0.15438 per share or approximately 0.82338 pence per share (2015: R0.11466 per share or 0.53108
pence per share). This dividend is subject to approval at the annual general meeting (‘AGM’), which
will take place on 25 November 2016. (note 1)
– The group completed the Shanduka Gold Pty Ltd (‘Shanduka Gold’) transaction which resulted in the
company acquiring an effective 23.8% (post dilution 22.5%) of its issued shares on
7 June 2016 for a total consideration of R546.9 million. Shanduka Gold is, from an accounting
perspective, deemed to be controlled by Pan African Resources and Shanduka Gold’s full shareholding
of 436.4 million shares in Pan African Resources will eliminate upon consolidation. Shanduka Gold
has been subsequently renamed to PAR Gold Pty Ltd (‘PAR Gold’).
Operational key features
– Group delivered record gold production, with gold sales increasing by 16.5% to 204,928oz
(2015: 175,857oz).
– Effective ZAR gold price received increased by 21.6% to R542,850/kg (2015: R446,274/kg), however
in USD terms it decreased to USD1,164/oz (2015:USD1,212/oz).
– All-in sustaining cost per kilogramme increased marginally in ZAR terms to R405,847/kg
(2015: R402,221/kg), however in USD terms all-in sustaining cost per ounce decreased to
USD870/oz (2015:USD1,093/oz).
– The group concluded the acquisition of Uitkomst for a cash purchase consideration of R148 million
effective 31 March 2016. Uitkomst contributed R11.4 million to the group’s profit after taxation in
the current year.
– The group’s gold resources increased to 34.9Moz (2015: 31.9Moz).
– The group regrets to report one fatality during the year under review (2015: one fatality).
Year Year Year Year
ended ended ended ended
30 June 30 June Summary of 30 June 30 June
Movement 2016 2015 Metric key features Metric 2016 2015 Movement
16.5% 6,374 5,470 (Kilogrammes) Gold sold (Oz) 204,928 175,857 16.5%
43.1% 3,632.8 2,539.4 (R millions) Revenue (GBP millions) 169.4 141.1 20.1%
21.6% 542,850 446,274 (R/kg) Average gold (USD/oz) 1,164 1,212 (4.0%)
price received
(3.2%) 338,242 349,410 (R/kg) Cash costs (USD/oz) 725 949 (23.6%)
0.9% 405,847 402,221 (R/kg) All-in (USD/oz) 870 1,093 (20.4%)
sustaining costs
(3.5%) 410,206 425,084 (R/kg) All-in costs (USD/oz) 879 1,155 (23.9%)
89.3% 969.5 512.1 (R millions) Adjusted EBITDA (GBP millions) 45.2 28.4 59.2%
(note 2)
160.2% 547.0 210.2 (R millions) Profit after (GBP millions) 25.5 11.7 117.9%
taxation
156.1% 547.1 213.6 (R millions) Headline (GBP millions) 25.5 11.9 114.3%
earnings
163.1% 30.20 11.48 (cents) EPS (pence) 1.41 0.64 120.3%
158.8% 30.20 11.67 (cents) Headline (pence) 1.41 0.65 116.9%
earnings per
share (‘HEPS’)
5.8% 339.6 321.1 (R millions) Net debt (GBP millions) 17.2 16.6 3.4%
9.7% 265.7 242.3 (R millions) Total (GBP millions) 12.4 13.5 (8.1%)
sustaining
capital
expenditure
(14.1%) 302.4 352.0 (R millions) Total capital (GBP millions) 14.0 19.6 (28.6%)
expenditure
27.6% 190.8 149.5 (cents) Net asset (pence) 10.0 8.0 25.0%
value per share
(1.0%) 1,811.40 1,830.40 (millions) Weighted (millions) 1,811.4 1,830.40 (1.0%)
average number
of shares
in issue
26.7% 14.51 11.45 (R/USD) Average (R/GBP) 21.45 18.00 19.2%
exchange
rate
20.3% 14.78 12.29 (R/USD) Closing (R/GBP) 19.78 19.30 2.5%
exchange rate
Note 1: The GBP proposed final dividend was calculated based on 1,943,206,554 total shares in issue
and an illustrative exchange rate of R18.75:1. Shareholders on the London register are to note that
a revised exchange rate will be communicated prior to approval at the AGM.
Note 2: Adjusted EBITDA is represented by earnings before interest, taxation, depreciation and
amortisation, impairments and loss on disposal of associate.
CEO STATEMENT
The past year has been an exceptionally successful period for Pan African Resources and for most of
our stakeholders. The group has delivered a year of record gold production and profits and
successfully concluded the Shanduka Gold transaction. This transaction enables the group to
preserve and protect its black economic empowerment (‘BEE’) status on an earnings accretive basis.
Despite maintaining our focus on gold assets, the finalisation of the Uitkomst acquisition provides
an opportunistic expansion into the coal sector and a natural hedge against rising energy prices.
The group also benefitted from the rising USD gold price and rand depreciation, which factors
resulted in a bull market in gold at the beginning of 2016. At the end of the financial year, the
spot gold price closed at USD1,325/oz – an increase of approximately 25% from the prior year end.
The combined impact of the group’s excellent operating performance and favourable economic
conditions resulted in an outstanding financial performance. Our share price reflected this
positive momentum, with a year-end price of R3.75 and 0.19 pence per share.
We continue to acknowledge our shareholders’ desire for an attractive cash return on their
investment. To this end, the Pan African Resources board is pleased to recommend the largest ever
dividend payment of R300 million (GBP16.0 million) for approval at the upcoming AGM. We have also
revisited our dividend policy, as detailed below, to provide the market with more certainty on
future payments and to ensure that our dividend is sustainable.
Notwithstanding the impact of these favourable tailwinds, we continue to be mindful that the local
and global mining industry remains a challenging operating environment. Certain analysts believe
the higher gold price should not only be attributed to factors such as the market view that
interest rates will remain at record lows and the recent decision by the United Kingdom (‘UK’) to
exit the European Union (‘EU’), but also predict a continued period of geopolitical uncertainty
that could result in increased global instability and volatility. Locally, South Africa faces a
possible sovereign credit rating downgrade to sub-investment grade as well as heightened political
tension, which could lead to further depreciation in the ZAR. It is therefore vital that we remain
vigilant and continue to look for opportunities to differentiate ourselves and continue to further
profitably grow our business and provide shareholder returns in the form of dividends and capital
appreciation in our share.
Safety
Regrettably, we experienced a regression in our group safety accident rates at Evander Mines. In
particular the lost-time injury frequency rate (‘LTIFR’) and reportable-injury frequency rate
(‘RIFR’) increased. The safety of our people is our main concern, and we are actively pursuing
measures to reduce injury frequency rates by, inter-alia, stepping up management oversight,
technological enhancements, training and control of safety across all operations.
Safety remains a focus at all our operations and we endeavour to ensure the group’s culture,
behaviour and values align to our safety objectives. However, we regret to report that one of our
employees, Mr JA Muxhanga, was fatally injured at Evander Mines on 26 June 2016 following a
tramming accident. Pan African Resources’ management and board express their sincere condolences to
the family, friends and colleagues of Mr Muxhanga.
Production highlights and challenges
We are pleased to report the excellent operational performance across our gold mining operations.
Total gold production was 204,928oz, with Barberton Mines contributing 113,281oz and Evander Mines
contributing a total of 91,647oz. Underground head grades at Barberton Mines improved to 11.0g/t
(2015: 10.9g/t), while head grades at Evander Mines improved to 5.7g/t (2015: 4.6g/t). We also
delivered important operational improvements at Evander Mines, with gold sales and revenue
increasing significantly. In addition, the Evander tailings retreatment plant (‘ETRP’) assisted our
production growth by achieving full nameplate capacity, producing 18,151oz of gold from tailings
and surface feedstock material.
Uitkomst produced 87,538 tonnes of coal from its underground operations, and acquired 48,564 tonnes
of coal for further processing and blending, resulting in total coal sold of 136,102 tonnes.
Phoenix Platinum’s performance was hampered by the business rescue proceedings announced by
International Ferro Metals Limited in August 2015 regarding its South African subsidiary,
International Ferro Metal (SA) Proprietary Limited (‘IFMSA’), as well as the drought and associated
water shortages affecting re-mining and processing. In terms of a 2010 agreement between Pan
African Resources and IFMSA, Phoenix Platinum, which is situated on IFMSA property, obtained a
portion of its feedstock from IFMSA’s processing activities, as well as electricity, water and
other services. In terms of the 2015 business rescue proceedings, Samancor Chrome Limited was
selected as the successful bidder to acquire IFMSA’s assets and subsequently nominated its
subsidiary, TC Smelters Proprietary Limited (‘TC Smelters’), as the acquirer of the IFMSA business
and assets. In July 2016, Pan African Resources reached an agreement with TC Smelters, assigning
the tailings treatment agreement to TC Smelters. Although the agreement does not guarantee
current arising feedstock to Phoenix Platinum– this will be dependent on the manner in which
TC Smelters uses the IFMSA assets – it places Phoenix Platinum in a better position where it
should be able to continue operations under similar conditions to those prior to the business
rescue proceedings. Further, it ensures that Phoenix´s Platinum operations and interests are
safeguarded. Phoenix Platinum also has alternative sources of feedstock, which are currently
being processed.
Wage negotiations successfully concluded
The group successfully concluded its gold wage negotiations during October 2015, with Barberton
Mines securing a two year agreement ending in June 2017 and Evander Mines securing a three year
agreement ending in June 2018.
Mineral reserves and resources
We recognise that, together with our people and infrastructure, our mineral reserves and resources
are a key asset to the group. In the year under review, the group’s total gold resources increased
by 9.4% to 34.9Moz (2015: 31.9Moz).
The group’s mineral resources and reserves are summarised as follows:
– Gold reserves decreased to 10.0Moz (2015: 10.4Moz), we plan to increase these reserves in the
next financial year
– Gold resources increased to 34.9Moz (2015: 31.9Moz)
– PGE reserves decreased 0.2Moz (2015: 0.5Moz)
– PGE resources remained at 0.6Moz (2015: 0.6Moz)
– Coal resources were 23.3Mt
We use what we deem to be a conservative ZAR gold price estimate when modelling reserves and
resources, and in the current year reserves were modelled at R450,000/kg and gold resources at
R550,000/kg.
Corporate activity
Shanduka Gold (now PAR Gold) is Pan African Resources’ primary BEE shareholder, with its sole
assets being a 22.5% interest in Pan African Resources’ issued share capital (post conclusion of
the Shanduka Gold transaction) and a notional vendor loan of R558 million to its BEE shareholder,
the Mabindu Business Development Trust (‘Mabindu Trust’) as at 30 June 2016. Following a merger
between Shanduka Group Proprietary Limited and the Pembani Group Proprietary Limited in
December 2015, Pan African Resources engaged with Shanduka Gold shareholders and concluded an
agreement to assist in preserving the group’s BEE ownership in a meaningful and mutually beneficial
manner by means of an acquisition of a material interest in Shanduka Gold. Prior to the transaction
with Pan African Resources, Shanduka Gold’s shareholders were Standard Bank of South Africa Limited
(‘Standard Bank’) (16.9%), Jadeite Limited (33.6%) and the Mabindu Trust (49.5%). Pan African
Resources acquired Standard Bank’s 16.9% and Jadeite Limited’s 33.6% interest in Shanduka Gold
for R182.5 million and R364.4 million, respectively. Approximately 0.6% of the Shanduka Gold
shares acquired from Jadeite Limited have been retained by Jadeite Limited for sale, at a future
date, to an independent third party nominated by Pan African Resources. Pursuant to the transactions,
Pan African Resources acquired a 49.9% direct interest in Shanduka Gold but consolidates the full
interest in Shanduka Gold for accounting purposes.
Pan African Resources assumed effective control of Uitkomst on 31 March 2016 for a cash purchase
consideration of R148 million, which was funded from existing debt facilities and internally
generated cash flows. The Uitkomst coal mine is situated in Utrecht, KwaZulu-Natal, South Africa
and employs 115 plant and administration employees and 326 contractors. It produces approximately
30,000-35,000 tonnes of saleable coal per month from its underground mining operation and has
approximately 23.3Mt of coal resources, with an estimated life-of-mine of 22 years at current
production rates.
Following receipt of a positive high-level economic and technical assessment of the Elikhulu
tailings retreatment project (‘Elikhulu’) at Evander Mines, the company has mandated DRA Projects
(Pty) Limited to complete a definitive feasibility study on the project. The results of the study
will be available in November 2016, at which time shareholders will be appraised. Elikhulu will
potentially treat slimes at a processing capacity of up to 12 million tonnes per annum, at a head
grade of 0.29g/t from the Winkelhaak, Leslie and Kinross tailings storage facilities. The total
mineral resource for Elikhulu is 178.7 million tonnes at 0.29g/t (1.7M in-situ ounces) with a
life-of-operation of approximately 14 years and 1.7Moz of contained gold. The project is estimated
to yield approximately 50,000oz of gold per annum in the initial 8 years of production while
treating the Kinross and Leslie tailings storage facilities and then approximately 38,000oz per
annum for the remaining 6 years from processing the Winkelhaak tailings storage facility.
The Evander 2010 pay channel is a potentially attractive ore body that runs parallel to the Kinross
pay channel and is accessible via Evander Mines 7 Shaft. Harmony Gold historically developed
towards the orebody before halting all mining operations on 7 Shaft and allowing flooding of the
infrastructure to 18 level. The Evander Mines’ 2010 pay channel resources are classified in an
inferred category and surface drilling is currently underway to improve confidence in the resource.
The initial results of the drilling programme will also be available during November 2016. The 2010
pay channel may offer Evander Mines the possibility of establishing a new mine area without having
to incur the cost of sinking a new shaft from surface.
During the next year we will also investigate further medium- to long-term underground production
increases from sources such as 9 Shaft and projects such as Evander South at Evander Mines.
Outlook
The group is well positioned to increase profitable production through organic and acquisitive
growth, while continuing to create shareholder value.
In the next year, the key focus areas for the group, from an operational perspective, include:
– Safety and compliance across operations.
– Barberton Mines: Renewed focus on creating additional flexibility and efficiencies to improve
tonnages mined and gold produced from underground operations. The management team is currently
considering options to improve the future tonnage output at Fairview Mines’ deeper levels and
assessing future exploration targets.
– Evander Mines: The operation will continue to invest in development capital expenditure to ensure
improved flexibility is achieved to maintain current levels of production.
– Phoenix Platinum aims to optimise resources from Elandskraal and Kroondal to maintain and improve
production and cash flows.
– Uitkomst will focus on ensuring that stable production is maintained and review the possibility
of expanding run-of-mine production to 900,000t per annum.
From an internal growth perspective, the following opportunities will be prioritised:
– Finalising the feasibility study on the Elikhulu project and, if the feasibility is successful,
progressing towards full-scale production within two years.
– Drilling the Evander 2010 pay channel for grade continuity and assessing options to exploit this
orebody.
– Assessing further growth projects at Evander Mines.
The group will also continue to evaluate acquisitive gold opportunities. Any project considered
will however be subject to the group’s stringent capital allocation criteria, which requires any
investment to be in a position to contribute profitable production ounces within a short- to
medium-term timeframe and deliver the requisite returns to our shareholders.
Financial performance
Exchange rates and their impact on results
All of the group’s subsidiaries are incorporated in South Africa and their functional currency is
ZAR. The group’s business is conducted in ZAR and the accounting records are maintained in this
same currency, with the exception of precious metal product sales, which are conducted in USD prior
to conversion into ZAR. The ongoing review of the operational results by executive management and
the board is also performed in ZAR.
The group’s presentation currency is GBP due to its ultimate holding company, Pan African
Resources, being incorporated in England and Wales and being dual-listed in the UK and South
Africa.
In the year under review the average ZAR/GBP exchange rate was R21.45:1 (2015: R18.00:1) and the
closing ZAR/GBP exchange rate was R19.78:1 (2015: R19.30:1). The year-on-year change in the
average and closing exchange rates of 19.2% and 2.5%, respectively, must be taken into account
for the purposes of translating and comparing year-on-year results.
The group records its revenue from precious metals sales in ZAR, and the deterioration in the value
of the ZAR/USD exchange rate during the year had a compensating effect on the weaker USD metals
revenue received. The average ZAR/USD exchange rate was 26.7% weaker at R14.51:1 (2015: R11.45:1).
The commentary below analyses the current and prior period’s results. Key aspects of the group’s
ZAR results appear in the body of this commentary and have been used as the basis against which its
financial performance is measured. The gross GBP equivalent figures can be calculated by applying
the exchange rates as detailed above.
Analysing the group’s financial performance
Revenue
The group’s revenue, year-on-year, increased by 43.1% to R3,632.8 million (2015: R2,539.4 million).
The increase was predominantly due to:
1) Gold ounces sold increased by 16.5% to 204,928oz (2015: 175,857oz).
2) The average ZAR gold price received by the group increased by 21.6% to R542,850/kg (2015:
R446,274/kg), as a result of the weakening of the ZAR/USD exchange rate.
3) Consolidation of Uitkomst revenue of R98 million, effective from 1 April 2016.
The increase in the average ZAR gold price was due to the following movements:
1) The group realised an average gold price of USD1,164/oz, a decrease of 4.0% from the USD1,212/oz
achieved in the prior reporting period.
2) The average ZAR/USD exchange rate was 26.7% weaker at R14.51:1 (2015: R11.45:1).
Cost of production and realisation costs
The group’s total cost of production increased by 16.8% to R2,321.4 million (2015: R1,987.4
million). The group’s cost of production incorporated a full year’s production costs for the ETRP
of R154.8 million (2015: R54.1 million), and Uitkomst coal production costs of R91.8 million
(2015: nil).
Pan African Resources’ gold cost of production per the statement of comprehensive income increased
by 12.3% to R2,155.5 million (2015: R1,919.6 million) as a result of the following:
– The group’s gold operations salaries and wages increased by 12.5% to R967.7 million (2015:
R860.1 million), predominately due to:
* The increase in salaries and wages following the gold wage agreements of Barberton Mines and
Evander Mines.
* Higher production incentives following increased productivity at the gold operations. Barberton
Mines’ production incentives increased by R13.7 million equating to 1.6% of the total year-on-year
increase. Evander Mines’ production incentives increased by R4.3 million, contributing an
additional 0.5% to the labour costs year-on-year increase.
* The ETRP salary and wage bill increased by R4.7 million, resulting in an additional 0.6% increase
year-on-year following a full a production year.
– The group’s electricity costs increased by 16.8% to R317.3 million (2015: R271.6 million). The
National Energy Regulator of South Africa’s approved increases applied to electricity consumption
was 12.7% for the year under review. The additional increase was predominantly as a result of the
electricity costs associated with the ETRP being in production for the full year, amounting to
R9.9 million (2015: R2.1 million).
– The ETRP and associated surface feedstock material cost of production was R154.8 million (2015:
R54.1 million) following a full year’s production (in the prior year the ETRP cost production
related to a four month period only).
The gold cost of production excluding ETRP and surface feedstock was well controlled and increased
by 7.2% to R2,000.7 million (2015: R1,865.5 million). The group’s gold cost of production per
kilogramme declined by 3.2% to R338,242/kg (2015: R349,410/kg). The decline is attributed to:
– Gold sold increasing by 16.5% to 204,928/oz (2015: 175,857/oz), resulting in a lower unit cost of
production.
– Improved head grades mined compared to the previous year, which also impacted the gold sold.
The group’s gold all-in sustaining cost of production per kilogram (including direct cost of
production, royalties, associated corporate costs and overheads and sustaining capital expenditure)
increased by 0.9% to R405,847/kg (2015: R402,221/kg). The group’s all-in sustaining costs were
primarily impacted by an increase in gold production and the improved head grades, compared to the
prior year.
The all-in gold cost per kilogram (sustaining cost of production and once-off expansion capital)
declined by 3.5% to R410,206/kg (2015: R425,084/kg), due to the increase in gold production and the
completion of the ETRP in the prior year, which contributed R95.1 million in capital costs to the
2015 cost base.
The PGE cost of production increased by 9.3% to R74.1 million (2015: R67.8 million), predominately
due to:
– Salaries and wages increasing by 3.1% to R20.2 million (2015: R19.6 million). The Phoenix
Platinum employee incentives decreased in the current year following lower production levels.
– Refining and processing costs increased by 10.8% to R48.3 million (2015: R43.6 million),
following additional transporting costs to move tailings material from the Elandskraal/Kroondal
tailings sites as well as higher chrome refining costs due to a higher chrome prevalence in the
tailings processed.
– Electricity costs increased by 13.5% to R4.2 million (2015: R3.7 million).
The groups’ realisation costs increased by 65.3% to R20.5 million (2015: R12.4 million) due to
additional refining costs associated with the extraction and recovery of gold contained at Evander
Mines’ processing plants floors.
Depreciation increased by 20.5% to R224.3 million (2015: R186.1 million), following increased
charges associated with the commissioning of the ETRP and Evander Mines’ 8 Shaft 25 level
development.
Other expenditure and income
Barberton Mines entered into a short-term strategic hedge (‘the Cost Collar’) in July 2015, when
the prevailing spot gold price was R440,000/kg, to protect its cash flows and the group’s annual
dividend against severe adverse movements in the ZAR gold price. During the current reporting
period, the group recorded a pre-tax net unrealised mark-to-market fair value loss of
R117.6 million on the Cost Collar, offset by a realised Cost Collar derivative income of
R3.8 million, resulting in a net pre-tax fair value Cost Collar loss for the year of R113.8 million
(2015: pre-tax realised Cost Collar derivative income of R44.8 million). The economic consequence
of the mark-to-market fair value adjustment is to lock in revenue on 25,000oz of gold production from
Barberton Mines at R625,000/kg (the closing ZAR gold price at 30 June 2016) for the twelve month
period commencing 1 October 2016. The group currently only has this gold collar derivative in
place.
Pan African Resources’ share price increased significantly by 108% to R3.75 from R1.80 during the
current reporting period, which resulted in an increase in the group’s cash settled share option
costs. The pre-tax effect of cash settled share option costs for the current reporting period
amounted to R100.6 million (2015: pre-tax R6.1 million gain).
The fair value adjustment of the group’s rehabilitation liability resulted in the liability
reducing by R38.2 million (2015: increased by R19.7 million). The rehabilitation investment
increased by R9.2 million (2015: R33.9 million).
Finance costs decreased to R31.1 million (2015: R44.2 million), following improved cash flows
generated to reduce net debt during the year.
Profit after tax and headline earnings
Profit after taxation increased by 160.2% to R547.0 million (2015: R210.2 million) and the
corresponding headline earnings increased by 156.1% to R547.1 million (2015: R213.6 million),
primarily impacted by the following:
1) Revenue increased by R1,093.4 million supported by higher gold production and an increase in the
effective ZAR gold price received.
2) Cost of production increased by R334.0 million.
3) Depreciation increased by R38.2 million following increased charges associated with the
commissioning of the ETRP and Evander Mines’ 8 Shaft 25 level development.
4) Other income and expenditure increased by R265.8 million, due to the pre-tax net Cost Collar
mark-to-market fair value adjustment of R113.8 million (2015: realised cost collar derivative
income of R44.8 million), and higher cash settled share option costs linked to the increase in the
share price amounting to R100.6 million (2015: R6.1 million gain).
5) Royalty costs increased by R30.4 million linked to the increased gold revenues.
6) Taxation increased by R102.2 million due to the improved operational performance.
EPS and HEPS
The group’s EPS in ZAR increased by 163.1% to 30.20 cents (2015: 11.48 cents). The group’s HEPS in
ZAR increased by 158.8% to 30.20 cents (2015: 11.67 cents). The difference between the EPS and HEPS
resulted from adjusting the profit after taxation for the loss on the disposal of fixed assets and
the associated impairment on the sale of Auroch Minerals Limited in the prior reporting period.
Refer to the statement of comprehensive income for the reconciliation between EPS and HEPS.
The EPS and HEPS is calculated by applying the group’s weighted average number of shares to the
attributable and headline earnings, which decreased by 1% to 1,811.4 million shares
(2015:1,830.0 million shares). The decrease in shares was attributed to eliminating the PAR Gold
shares held in Pan African Resources with effect from 7 June 2016.
Headline earnings per share is calculated as follows:
30 June 30 June 30 June 30 June
2016 2015 2016 2015
GBP GBP ZAR ZAR
Basic earnings 25,501,817 11,669,967 547,014,018 210,198,254
Adjustments: (note 1)
Loss on disposal of associate - 139,970 - 2,429,880
Loss on disposal of property
plant, mineral right
and equipment 2,767 149 59,360 2,679
Impairments - 58,424 - 1,014,239
Headline earnings 25,504,584 11,868,510 547,073,378 213,645,052
Headline earnings per share 1.41 0.65 30.20 11.67
Diluted headline earnings
per share 1.41 0.65 30.19 11.67
Note 1: The adjustments accounted for, did not have any taxation impact to the group.
Had the Shanduka Gold transaction been effective on 1 July 2015, the number of shares that would
have been taken into account for calculating EPS and HEPS would have been reduced as follows:
Pan African Resources’Shares Shares % Change
Opening balance shares - 1 July 2015 1,831,494,763 -
Issue of shares – vendor
consideration placement 111,711,791 6.1%
Elimination of shares held by
Shanduka Gold (436,358,058) (23.8%)
Closing balance shares 1,506,848,496 -
Reduction in number of shares 324,646,267 17.7%
Taxation
The group’s total taxation charge increased by 137.4% to R176.6 million (2015: R74.4 million)
due to higher gold revenues and improved profit margins.
The taxation charge comprised of:
– An increase in the current taxation charge of 113.7% to R206.6 million (2015: R96.7 million).
– A marginal increase in the deferred taxation income to R30.0 million (2015: R22.3 million).
Historical dividends
The group paid a final dividend of R210 million or GBP9.7 million (2014: R258 million or
GBP14.9 million) on 24 December 2015 relating to the 2015 financial year, equating to
R0.11466 per share or 0.53 pence per share (2014: R0.14100 per share or 0.82 pence per share).
Dividend policy
Pan African Resources aspires to pay a regular dividend to shareholders. In balancing this cash
return to shareholders with the group’s strategy of generic and acquisitive growth, it believes
that a target pay-out ratio of 40% of net cash generated from operating activities, after allowing
for the cash flow impact of sustaining capital, contractual debt repayments and also the cash flow
impact of once-off items, is appropriate. This measure aligns dividend distributions with the cash
generation potential of the business. In proposing a dividend, the board will also take into
account the company’s financial condition, future prospects, satisfactory solvency and liquidity
assessments and other factors deemed by the board to be relevant at the time.
Proposed dividend for approval at the AGM
The board has proposed a final dividend of R300 million or approximately GBP16.0 million, equating
to R0.15438 per share or approximately 0.82338 pence per share. This dividend is subject to
approval at the AGM, which will take place on Friday, 25 November 2016.
Assuming the final dividend is approved by the shareholders, the following salient dates would
apply:
Currency conversion date 05 December, Monday
Last date to trade on the exchanges 06 December, Tuesday
Ex-Dividend date on the JSE 07 December, Wednesday
Ex-Dividend date on the LSE 08 December, Thursday
Record date 09 December, Friday
Payment date 22 December, Thursday
The GBP proposed final dividend was calculated based on 1,943,206,554 total shares in issue and an
illustrative exchange rate of R18.75:1. Shareholders on the London register should note that a
revised exchange rate will be communicated prior to approval at the AGM.
No transfers between the Johannesburg and London registers between the commencement of trading on
Monday, 5 December 2016 and close of business on Friday, 9 December 2016 will be permitted.
No shares may be dematerialised or rematerialised between Wednesday, 7 December 2016 and Friday,
9 December 2016, both days inclusive.
The South African dividends tax rate is fifteen percent per ordinary share for shareholders who are
liable to pay the dividends tax, resulting in a net dividend of R0.13123 per share for these
shareholders. Foreign investors may qualify for a lower dividend tax rate, subject to completing a
dividend tax declaration and submitting it to Computershare Limited or Capita Plc who manage the SA
and UK register, respectively. The company’s South African income tax reference number is
9154588173 and it has 1,943,206,554 shares currently in issue.
Debt facilities
The group’s net debt increased marginally to R339.6 million (2015: R321.1 million) following the
dividend payment of R210 million, the Uitkomst acquisition of R148 million and the cash funded
portion of the Shanduka Gold transaction of R182.5 million.
Summary of the long-term debt liabilities:
Revolving credit facility Evander Mines gold loan Total
30 June 30 June 30 June 30 June 30 June 30 June
2016 2015 2016 2015 2016 2015
ZAR ZAR ZAR ZAR ZAR ZAR
(millions) (millions) (millions) (millions) (millions) (millions)
Non-current portion 279.3 224.1 26.6 82.0 305.9 306.1
Current portion 31.1 21.6 55.2 58.0 86.3 79.6
Total 310.4 245.7 81.8 140.0 392.2 385.7
Cash flow summary
Net cash flow generated by operations (after dividends) and before investing and financing
activities increased to R581.4 million (2015: R95.7 million). The cash outflows from investing
activities increased to R969.0 million (2015: 366.0 million), predominately due to:
– Capital expenditure incurred decreasing to R302.4 million (2015: R352.0 million).
– The conclusion of the Shanduka Gold transaction for R546.9 million (2015: nil).
– The net cash consideration of R120 million for the acquisition of Uitkomst, being the purchase
consideration of R148 million less cash acquired of R28 million on 31 March 2016.
Net cash flows from financing activities increased to R375.9 million (2015: R233.4 million),
predominately due to:
– Cash raised for the Shanduka Gold transaction amounting to R339.8 million.
Operational performance
The groups operational and production summaries are disclosed on the Pan African Resources website
at http://www.panafricanresources.com/investors/financial-reports/
Review of Barberton Mines
Safety
– The operation reported no fatalities (2015: one fatality).
– Total recordable injury frequency rate per 1,000,000 man hours worked (‘TRIFR’) improved to 15.00
(2015: 15.87).
– LTIFR improved to 1.86 (2015: 1.87).
– RIFR remained at 0.62 (2015: 0.62).
Operational performance
– Average underground head grade achieved of 11.0g/t (2015: 10.9g/t).
– Gold sold increased by 7.1% to 113,281oz (2015: 105,776oz).
– Revenue increased by 30.8% to R1,921.8 million (2015: R1,469.0 million), as a result of the
improved gold sales and the higher effective ZAR gold price.
– Cash cost per kilogramme increased marginally to R279,226/kg (2015: R278,859/kg), and in USD term
the cash cost per ounce decreased to USD599/oz (2015: USD758/oz), due to improved gold ounce
production.
– All-in sustaining cost per kilogramme increased by 4.8% to R348,231/kg (2015: R332,151/kg), and
in USD terms the all-in sustaining cost per ounce decreased to USD746/oz (2015:USD902/oz).
– All-in cost per kilogramme increased by 5.1% to R354,417/kg (2015: R337,317/kg), and in USD terms
the all-cost per ounce decreased to USD760/oz (2015: USD916/oz).
– Adjusted EBITDA increased to R729.8 million (2015: R505.5 million).
– Capital expenditure increased to R139.7 million (2015: R112.6 million) summarised in the
following categories:
– Sustaining development capital expenditure was R63.4 million (2015: R53.7 million).
– Sustaining maintenance capital expenditure was R54.5 million (2015: R44.2 million).
– Once-off expansion capital was R21.8 million (2015 R14.7 million), which relates to the Royal
Sheba development costs and the completion of the BTRP power line extension and installation. In
the prior year R14.7 million was spent on the development of the Fairview ventilation raise
borehole project to improve operating conditions.
– Effective from 1 July 2016 the life-of-mine of respective operations at Barberton Mines are:
* Fairview mine 22 years (2015: 20 years)
* Sheba mine 18 years (2015: 20 years)
* New Consort mine 5 years (2015: 7 years)
* BTRP 14 years (2015: 15 years)
Review of Evander Mines
Safety
– The operation reported one fatality detailed above in the CEO statement (2015: nil).
– TRIFR increased to 14.18 (2015: 6.87).
– LTIFR increased to 4.96 (2015: 2.66).
– RIFR increased to 3.31 (2015: 1.54).
Operational performance
– Underground head grade improved to 5.7g/t (2015: 4.6g/t), principally due to establishing mining
on 8 Shaft’s new 25 level.
– Gold sold increased substantially by 30.8% to 91,647oz (2015: 70,081oz), primarily due to
improved production associated with an increase in tonnages mined and head grades.
– Revenue increased by 58.3% to R1,538.3 million (2015: R972.0 million) as a result of improved
gold production and an increase in the effective ZAR gold price.
– The ETRP produced 18,151oz (2015: 16,336oz), following an increase in gold produced from tailings
to 6,724oz (2015: 2,494oz) and surface feedstock contributing 11,427oz (2015: 13,842oz).
– Cash costs per kilogramme decreased by 9.8% to R411,168/kg (2015: R455,896/kg), and in USD terms
the cash cost per ounce decreased to USD881/oz (2015:USD 1,238/oz), due to additional gold
production from the ETRP and higher grades mined at 8 Shaft.
– All-in sustaining cost per kilogramme decreased by 6.1% to R477,044/kg (2015: R507,980/kg), and
in USD terms the all-in sustaining cost per ounce decreased to USD1,023/oz (2015:USD1,380/oz),
in line with the decrease in cash costs.
– All-in cost per kilogramme decreased by 14.1% to R479,145/kg (2015: R557,553/kg), and in USD
terms the all-in cost per ounce decreased to USD1,027/oz (2015:USD1,515/oz), in addition to the
factors detailed above, the prior year included once-off ETRP expansionary capital of R95.1 million
during the prior reporting period.
– Adjusted EBITDA increased to R357.7 million (2015: R47.4 million).
– Capital expenditure decreased to R153.8 million (2015: R238.2 million) summarised in the
following categories:
– Sustaining development capital expenditure was R118.4 million (2015: R104.4 million).
– Sustaining maintenance capital expenditure was R29.4 million (2015: R38.7 million).
– Once-off expansion capital expenditure was R6.0 million (2015 R95.1 million), relating to
development costs associated with 8 Shafts’ 26 level in the current financial year and the
completion of the ETRP, which contributed R95.1 million in capital costs to the 2015 cost base.
– On 1 July 2015, Evander Mines implemented an employee share ownership programme, which is similar
to the scheme implemented at Barberton Mines in June 2015. A newly established employee trust
acquired 5% of the issued share capital of Evander Mines.
– Effective from 1 July 2016, the life-of-mine of 8 Shaft and the ETRP remained at 16 years
(2015: 16 years).
Review of Phoenix Platinum
Safety
No safety incidents were reported during the financial year.
Operational performance
– Phoenix Platinum’s profitability was negatively impacted during the reporting period due to a
curtailment in current arisings from IFMSA Lesedi mine, following the initiation of business rescue
proceedings by IFMSA. Tonnages processed were also adversely impacted by the drought and associated
water shortages affecting re-mining and processing.
– Phoenix Platinum’s loss after taxation was R9.6 million (2015: R12.3 million profit after
taxation).
– PGE production decreased by 18.6% to 8,339oz (2015: 10,245oz).
– Revenue decreased by 24.1% to R74.7 million (2015: R98.4 million) due to lower tonnages processed
as result of the operational challenges highlighted above and the lower effective
PGE net revenue price received of R8,952/oz (2015: R9,603/oz).
– The average PGE net revenue price received decreased by 6.8% to R8,952/oz (2015: R9,603/oz), and
in USD terms the average PGE net revenue per ounce decreased to USD617/oz (2015: USD839/oz).
– Cost per tonne increased by 15.1% to R298/t (2015: R259/t), mainly due to tonnages processed
decreasing by 5.0% to 248,981t (2015: 262,119t).
– Cost per ounce of production increased by 34.3% to R8,890/oz (2015: R6,621/oz), and in USD terms
the cost per ounce increased to USD613/oz (2015: USD578/oz).
– Adjusted EBITDA decreased to a loss of R4.8 million (2015: R27.7 million).
– Capital expenditure incurred was R6.8 million (2015: R0.6 million).
– Effective from 1 July 2016 the life-of-operation decreased to 9 years (2015: 28 years) as a
result of taking into account surface material available to process, excluding current arisings.
Review of Uitkomst
Pan African Resources completed the acquisition of Uitkomst from Oakleaf Investments Holding 109
Proprietary Limited (‘Oakleaf’) and Shanduka Resources Proprietary Limited for a final net cash
consideration of R148 million on 31 March 2016. Uitkomst is located close to the town of Utrecht in
KwaZulu-Natal, South Africa, and is a high grade thermal export quality coal deposit with
metallurgical applications.
The acquisition was funded from an existing revolving credit facility and internally generated cash
flows. Uitkomst is, for accounting and production reporting purposes, consolidated effectively from
1 April 2016.
Summary of the purchase price allocation:
Fair value Fair value
at acquisition at acquisition
ZAR GBP
Non-current assets 191.9 9.1
Current assets 67.0 3.2
Non-current liabilities (67.5) (3.2)
Current liabilities (43.4) (2.1)
Net assets at fair value 148.0 7.0
Net cash consideration paid 148.0 7.0
Safety
– The operation reported no fatalities.
– TRIFR per 200,000 man hours for the three month period was 5.59.
– LTIFR per 200,000 man hours for the three month period was 2.79.
– RIFR per 200,000 man hours for the three month period was 0.93.
Operational performance
– Profit after taxation for the period 1 April 2016 to 30 June 2016 was R11.4 million.
– Underground coal plant feed was 128,022t and also acquired third party coal for processing
of 38,354t.
– Coal sold was 136,102t.
– Revenue amounted to R98 million.
– Cost of production of R91.8 million.
– The average revenue per ton received was R720/t or USD48/t.
– Cost per tonne was R674/t or USD45/t.
– All-in sustaining costs and all-costs per tonnes were R657/t or USD44/t. The all-in sustaining
costs and all-in costs were marginally lower than the direct cost per tonne as result of other
income earned by the logistics department of Uitkomst.
– Adjusted EBITDA was R10.8 million.
– Capital expenditure incurred was R0.9 million.
– Effective from 1 July 2016 the life-of-operation was 22 years for a run-of-mine coal production
profile of 600,000t per annum.
Commitments reported in Rand and GBP
The group had identified no contingent liabilities in the current or prior financial period.
The group had outstanding open orders contracted for at year end of R12.7 million (2015:
R22.8 million) or GBP0.6 million (2015: GBP1.2 million).
Authorised commitments for the new financial year, not yet contracted for, totalled
345.9 million (2015: R271.1 million) or GBP17.5 million (2015: GBP14 million).
At 30 June 2016, the group had guarantees in place of R24.6 million (2015: R24.6 million) or
GBP1.2 million (2015: GBP1.3 million) in favour of Eskom, R20.3 million (2014: R14.0 million) or
GBP1.0 million (2015: GBP0.8 million) in favour of the Department of Mineral Resources, and
R6.6 million (2015: Nil) or GBP0.3 (2015: nil) in favour of Transnet SOC Limited.
Operating lease commitments, which fall due within the next year, amounted to R3.5 million
(2015: R4.0 million) or GBP0.2 million (2015: GBP0.2 million).
Fair value instruments
Financial instruments that are measured at fair value grouped into levels 1 to 3 based on the
extent to which fair value is observable.
The levels are classified as follows:
Level 1 – fair value is based on quoted prices in active markets for identical financial assets or
liabilities;
Level 2 – fair value is determined using inputs other than quoted prices included within level 1
that are observable for the asset or liability; and
Level 3 – fair value is determined on inputs not based on observable market data.
Level 1 financial instruments:
The group’s rehabilitation trust funds are valued at R321.5 million (2015: R312.3 million) or
GBP16.3 million (2015: GBP16.2 million), which comprise of investments in guaranteed equity-linked
notes, government bonds and equities, according to quoted prices in an active market.
During the prior financial year, the company purchased 1,750,850 shares for R18.9 million (GBP1
million) in a listed available-for-sale investment. The investment is valued according to quoted
prices in an active market currently valued at R25.1 million (GBP1.3 million).
Level 2 financial instruments:
During the financial period, the company entered into a Cost Collar derivative with a financial
institution. At the end of the period under review the financial instrument was not closed out and
settled, therefore resulting in a financial exposure to be fair value on a mark-to-market basis.
The financial instrument was valued according to quoted prices in an active market resulting in a
Cost Collar mark-to-market liability of R117.6 million (2015: Nil).
The group’s cash settled share option liability which is valued on a mark-to-market basis according
to the Pan African Resources quoted share price amounted to R104.0 million (2015: R23.7 million).
Level 3 financial instruments:
The group’s ESOP liability is accounted on a cash settled share option basis and valued on a
mark-to-market on the net present value of the discounted future cash flows applicable to the
beneficiaries to the schemes. The ESOP liability was R5.6 million (2015: R0.2 million).
Basis of preparation of the financial statements and accounting policies
Investors should consider non-Generally Accepted Accounting Principles (‘non-GAAP’) financial
measures shown in this provisional 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.
The provisional announcement has been prepared using accounting policies that comply with the IFRS
adopted by the European Union and South Africa, which are consistent with those applied in the
financial statements for the prior years ended 30 June 2015 and 30 June 2014.
The provisional audited results announcement is only a summary of the information in the Integrated
Report and does not contain full or complete details. Any investment decision by investors and/or
shareholders should be based on consideration of the final Integrated Report to be published on
SENS and the company’s website as a whole.
Jse Limited Listing
The company has a dual primary listing on JSE Limited (‘JSE’) in South Africa and the AIM market
(‘AIM’) of the London Stock Exchange (‘LSE’).
This provisional announcement has been prepared in accordance with the framework concepts and the
measurement and recognition requirements of IFRS and SAICA Financial Reporting Guides as issued by
the Accounting Practice Committee and the Financial Pronouncements as issued by the Financial
Reporting Standards Council, and the minimum information as required by International Accounting
Standards 34: Interim Financial Reporting.
The group’s South African external auditors, Deloitte & Touche, have issued their opinions on the
group’s consolidated financial statements and the provisional summarised consolidated financial
statements for the year ended 30 June 2016. The audits were for both the summarised and full set of
financial statements conducted in accordance with International Standards on Auditing. Deloitte &
Touche have expressed unmodified opinions on the group’s consolidated financial statements and the
provisional summarised consolidated financial statements. The copies of their audit reports are
available for inspection at the company’s registered office. Any reference to future financial
performance included in this provisional report has not been reviewed or reported on by the
group’s South African external auditors.
The auditor’s report does not necessarily report on all of the information contained in this
announcement/financial results. Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditor’s engagement they should obtain a copy of that report,
together with the accompanying financial information, from the company’s registered office.
These provisional summarised consolidated financial statements are extracted from the audited group
consolidated financial statements. The directors take full responsibility for the preparation of
the provisional summarised audited results and confirm that the financial information and related
commentary has been correctly extracted from the underlying group consolidated financial
statements.
AIM Listing
The financial information for the year ended 30 June 2016 does not constitute statutory accounts as
defined in sections 435(1) and 435(2) of the UK Companies Act 2006 (‘Companies Act 2006’) but has
been derived from those accounts. Statutory accounts for the year ended 30 June 2015 have been
delivered to the Registrar of Companies and those for 2016 will be delivered following the
company’s AGM. Deloitte LLP, the external auditor registered in the UK, have reported on these
accounts for the year ended 30 June 2016. 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 498(3) of the Companies Act 2006. These statutory accounts have
been prepared in accordance with IFRS and IFRS Interpretations Committee interpretations adopted
for use by the EU, with those parts of the UK Companies Act 2006 applicable to companies reporting
under IFRS.
Directorship changes and dealings
No changes took place during the year and there were no director dealings in securities during the
period under review.
Shares issued
On 3 June 2016 Pan African Resources issued 111,711,791 shares for R339.8 million to fund the
Shanduka Gold transaction.
Going concern
The board confirms that the business is a going concern and that it has reviewed the group’s
working capital requirements in conjunction with its future funding capabilities for at least the
next 12 months and has found them to be adequate. The group has a R800 million revolving credit
facility from a consortium of South African banks (and a two year accordion option, subject to the
bank’s credit committee approval, for an additional R300 million facility), as well as access to
general banking facilities of R100 million. At 30 June 2016 the group had borrowing capacity on the
revolving credit facility and general banking facilities of R490 million (GBP24.8 million) and
R50 million (GBP2.5 million), respectively, toassist in funding working capital requirements.
On 1 July 2016 the group finalised the general banking facility of R85 million (GBP4.3 million)
for Uitkomst. Management is not aware of any material uncertainties which may cast significant
doubt on the group’s ability to continue as a going concern. Should the need arise the group can
cease discretionary exploration and certain capital expenditure activities to conserve cash on
the short to medium term.
Events after the reporting period
No material events occurred after the reporting period.
Cobus Loots Deon Louw
Chief Executive Officer Financial Director
21 September 2016
Corporate Office
The Firs Office Building
1st Floor, Office 101
Cnr. Cradock and Biermann Avenues
Rosebank, Johannesburg
South Africa
Office: + 27 (0) 11 243 2900
Facsimile: + 27 (0) 11 880 1240
Registered Office
Suite 31
Second Floor
107 Cheapside
London
EC2V 6DN
United Kingdom
Office: + 44 (0) 207 796 8644
Facsimile: + 44 (0) 207 796 8645
Cobus Loots Deon Louw
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
Phil Dexter John Prior/Paul Gillam
St James’s Corporate Services Limited Numis Securities Limited
Company Secretary Nominated Adviser and Joint Broker
Office: + 44 (0) 207 796 8644 Office: +44 (0) 20 7260 1000
Sholto Simpson Matthew Armitt/Ross Allister
One Capital Peel Hunt LLP
JSE Sponsor Joint Broker
Office: + 27 (0) 11 550 5009 Office: +44 (0) 207 418 8900
Julian Gwillim Daniel Thöle
Aprio Strategic Communications Bell Pottinger PR
Public & Investor Relations SA Public & Investor Relations UK
Office: +27 (0)11 880 0037 Office: + 44 (0) 203 772 2500
Jeffrey Couch/Neil Haycock/Thomas Rider
BMO Capital Markets Limited
Joint Broker
Office: +44 (0) 207 236 1010
www.panafricanresources.com
Financial statements: Summarised financial information
Summarised consolidated statement of financial position as at 30 June 2016
30 June 2016 30 June 2015 30 June 2016 30 June 2015
(Audited) (Audited) (Unaudited) (Unaudited)
GBP GBP ZAR ZAR
Assets
Non-current assets
Property, plant and
equipment and mineral
rights 190,725,199 181,532,780 3,772,544,439 3,503,582,652
Other intangible assets 123,235 202,488 2,437,592 3,908,021
Deferred taxation 1,117,092 327,748 22,096,084 6,325,533
Long term inventory 186,861 - 3,696,114 -
Goodwill 21,000,714 21,000,714 303,491,812 303,491,812
Investments 1,269,228 904,818 25,105,331 17,462,996
Rehabilitation trust fund 16,253,708 16,181,925 321,498,339 312,311,153
230,676,037 220,150,473 4,450,869,711 4,147,082,167
Current assets
Inventories 4,398,813 3,502,569 87,008,537 67,599,584
Current tax asset 848,946 827,298 16,792,156 15,966,858
Trade and other
receivables 14,042,357 9,559,010 277,757,811 184,488,890
Cash and cash equivalents 2,658,947 3,328,850 52,593,979 64,246,802
21,949,063 17,217,727 434,152,483 332,302,134
Non-current assets
held for sale 66,873 - 1,322,750 -
Total assets 252,691,973 237,368,200 4,886,344,944 4,479,384,301
Equity and liabilities
Capital and reserves
Share capital 19,432,065 18,314,947 269,660,040 244,752,779
Share premium 108,936,082 94,846,046 1,638,563,371 1,323,632,626
Translation reserve (58,583,849) (56,402,515) - -
Share option reserve 1,035,888 1,035,888 13,957,178 13,957,178
Retained earnings 126,620,651 110,850,201 1,789,877,978 1,452,863,957
Realisation of equity
reserve (10,701,093) (10,701,093) (140,624,130) (140,624,130)
Treasury capital reserve (25,376,743) - (548,619,802) -
Merger reserve (10,705,308) (10,705,308) (154,707,759) (154,707,759)
Other reserves 317,509 (70,679) 6,280,332 (1,364,097)
Equity attributable to
owners of the parent 150,975,202 147,167,487 2,874,387,208 2,738,510,554
Total equity 150,975,202 147,167,487 2,874,387,208 2,738,510,554
Non-current liabilities
Long term provisions 10,432,986 12,249,367 206,364,460 236,412,781
Long term liabilities 18,456,309 16,312,982 362,640,753 314,840,546
Deferred taxation 40,616,337 39,288,059 803,391,140 758,259,537
69,505,632 67,850,408 1,372,396,353 1,309,512,864
Current liabilities
Trade and other payables 18,743,235 16,799,043 370,741,187 324,221,523
Financial instrument
liabilities 5,945,399 - 117,600,000 -
Current portion of
long term liabilities 6,980,711 5,047,478 140,503,506 97,416,327
Current tax liability 541,794 503,784 10,716,690 9,723,033
32,211,139 22,350,305 639,561,383 431,360,883
Total equity and
liabilities 252,691,973 237,368,200 4,886,344,944 4,479,384,301
Summarised consolidated statement of profit or loss and other comprehensive income for the year
ended 30 June 2016
30 June 2016 30 June 2015 30 June 2016 30 June 2015
(Audited) (Audited) (Unaudited) (Unaudited)
GBP GBP ZAR ZAR
Revenue 169,360,532 141,076,883 3,632,783,424 2,539,383,882
Gold sales 161,312,220 135,611,436 3,460,147,123 2,441,005,844
Platinum sales 3,480,338 5,465,447 74,653,256 98,378,038
Coal sales 4,567,974 - 97,983,045 -
Realisation costs (956,709) (690,538) (20,521,416) (12,429,687)
On - mine revenue 168,403,823 140,386,345 3,612,262,008 2,526,954,195
Gold cost of production (100,487,340) (106,644,655) (2,155,453,481) (1,919,603,779)
Platinum cost of
production (3,456,007) (3,768,530) (74,131,334) (67,833,541)
Coal cost of production (4,279,735) - (91,800,287) -
Mining depreciation (10,456,129) (10,337,211) (224,283,967) (186,069,804)
Mining profit 49,724,612 19,635,949 1,066,592,939 353,447,071
Other (expenses)/income (12,182,895) 249,776 (261,323,095) 4,495,974
Loss in associate - (127,950) - (2,291,239)
Loss on disposal of
associate - (139,970) - (2,429,880)
Impairments - (58,424) - (1,014,239)
Royalty costs (2,799,947) (1,647,297) (60,058,865) (29,651,339)
Net income before finance
income and finance costs 34,741,770 17,912,084 745,210,979 322,556,348
Finance income 442,616 348,959 9,494,114 6,281,253
Finance costs (1,448,738) (2,458,287) (31,075,424) (44,249,162)
Profit before taxation 33,735,648 15,802,756 723,629,669 284,588,439
Taxation (8,233,831) (4,132,789) (176,615,651) (74,390,185)
Profit after taxation 25,501,817 11,669,967 547,014,018 210,198,254
Other comprehensive income:
Fair value movement on
available for sale
investment 388,188 (70,679) 7,644,429 (1,364,097)
Other movements - 5,529 - 99,569
Foreign currency translation
differences (2,181,333) (8,857,195) - -
Total comprehensive income
for the year 23,708,672 2,747,622 554,658,447 208,933,726
Profit attributable to:
Owners of the parent 25,501,817 11,669,967 547,014,018 210,198,254
Total comprehensive
income attributable to:
Owners of the parent 23,708,672 2,747,622 554,658,447 208,933,726
Earnings per share 1.41 0.64 30.20 11.48
Diluted earnings
per share 1.41 0.64 30.19 11.48
Weighted average number
of shares in issue 1,811,427,377 1,830,422,160 1,811,427,377 1,830,422,160
Diluted number of
shares in issue 1,811,916,935 1,830,967,266 1,811,916,935 1,830,967,266
Note 1: The adjustments accounted for, did not have any taxation impact to the group.
Summarised audited GBP consolidated statement of changes in equity
for the year ended 30 June 2016
Share
Share Share Translation option Retained
capital premium reserve reserve earnings
Group GBP GBP GBP GBP GBP
Balance at
30 June 2014 18,299,947 94,792,516 (47,545,320) 1,154,891 114,106,005
Issue of shares 15,000 53,530 - - -
Total comprehensive
income - - (8,857,195) - 11,669,967
Dividends paid - - - - (14,925,771)
Share based payment
- charge for the year - - - (119,003) -
Balance at
30 June 2015 18,314,947 94,846,046 (56,402,515) 1,035,888 110,850,201
Issue of shares 1,117,118 15,011,206 - - -
Share issue costs - (921,170) - - -
Total comprehensive
income - - (2,181,333) - 25,501,817
Dividends paid - - - - (9,731,368)
Share buyback - - - - -
Balance at
30 June 2016 19,432,065 108,936,082 (58,583,848) 1,035,888 126,620,650
Realisation Treasury
of equity capital Merger Other
reserve reserve reserve reserve Total
Group GBP GBP GBP GBP GBP
Balance at
30 June 2014 (10,701,093) - (10,705,308) (5,529) 159,396,109
Issue of shares - - - - 68,530
Total comprehensive
income - - - (65,150) 2,747,622
Dividends paid - - - (14,925,771)
Share based payment
- charge for the year - - - - (119,003)
Balance at
30 June 2015 (10,701,093) - (10,705,308) (70,679) 147,167,487
Issue of shares - - - - 16,128,324
Share issue costs - - - - (921,170)
Total comprehensive
income - - - 388,188 23,708,672
Dividends paid - - - - (9,731,368)
Share buyback - (25,376,743) - - (25,376,743)
Balance at
30 June 2016 (10,701,093) (25,376,743) (10,705,308) 317,509 150,975,202
Summarised unaudited ZAR consolidated statement of changes in equity
for the year ended 30 June 2016
Share Realisation
Share Share option Retained of equity
capital premium reserve earnings reserve
Group ZAR ZAR ZAR ZAR ZAR
Balance at
30 June 2014 244,480,271 1,322,660,134 15,965,957 1,500,694,965 (140,624,130)
Issue of shares 272,508 972,492 - - -
Total comprehensive
income - - - 210,198,257 -
Dividends paid - - - (258,029,262) -
Share based payment
– charge for the year - - (2,008,779) - -
Balance at
30 June 2015 244,752,779 1,323,632,626 13,957,178 1,452,863,960 (140,624,130)
Issue of shares 24,907,261 334,689,839 - - -
Share issue costs - (19,759,094) - - -
Total comprehensive
income - - - 547,014,018 -
Dividends paid - - - (210,000,000) -
Share buyback - - - - -
Balance at
30 June 2016 269,660,040 1,638,563,371 13,957,178 1,789,877,978 (140,624,130)
Treasury
capital Merger Other
reserve reserve reserve Total
Group ZAR ZAR ZAR ZAR
Balance at 30 June 2014 - (154,707,759) (99,569) 2,788,369,869
Issue of shares - - - 1,245,000
Total comprehensive income - - (1,264,528) 208,933,729
Dividends paid - - - (258,029,262)
Share based payment – charge
for the year - - - (2,008,779)
Balance at 30 June 2015 - (154,707,759) (1,364,097) 2,738,510,557
Issue of shares - - 359,597,100
Share issue costs - - - (19,759,094)
Total comprehensive income - - 7,644,429 554,658,447
Dividends paid - - (210,000,000)
Share buyback (548,619,802) - - (548,619,802)
Balance at 30 June 2016 (548,619,802) 154,707,759) 6,280,332 2,874,387,208
Summarised consolidated statement of cash flows for the year ended 30 June 2016
30 June 2016 30 June 2015 30 June 2016 30 June 2015
(Audited) (Audited) (Unaudited) (Unaudited)
GBP GBP ZAR ZAR
Net cash generated from
operating activities 28,464,205 5,364,480 581,423,450 95,659,360
Investing activities
Additions to property,
plant and equipment and
mineral rights (14,079,918) (19,528,616) (302,014,225) (351,515,099)
Additions to other
intangible assets (17,248) (25,740) (369,970) (463,320)
Investments acquired - (1,037,677) - (18,825,000)
Proceeds on disposals of
property plant and equipment 14,620 - 313,600 -
Acquisition of Uitkomst (5,700,402) - (120,013,429) -
Shanduka Gold transaction (25,299,095) - (546,941,145) -
Proceeds on disposals
of associate - 277,732 - 4,834,253
Net cash used in investing
activities (45,082,043) (20,314,301) (969,025,169) (365,969,166)
Financing activities
Proceeds from borrowings 38,061,147 27,898,927 840,000,000 500,000,000
Borrowings repaid (38,131,957) (14,728,154) (803,889,110) (262,552,468)
Settlement of equity
share option costs - (303,067) - (5,321,928)
Shares issued 16,128,324 68,530 359,597,100 1,245,000
Share issue costs (921,170) - (19,759,094) -
Net cash from financing
activities 15,136,344 12,936,236 375,948,896 233,370,604
Net (decrease)/increase
in cash and cash
equivalents (1,481,494) (2,013,585) (11,652,823) (36,939,202)
Cash and cash equivalents
at the beginning of
the year 3,328,850 5,618,323 64,246,802 101,186,004
Effect of foreign
exchange rate changes 811,591 (275,888) - -
Cash and cash equivalents
at the end of the year 2,658,947 3,328,850 52,593,979 64,246,802
Summarised audited consolidated GBP segment report for the year ended 30 June 2016
Year ended 30 June 2016
Corporate
office and Funding
Barberton Evander Phoenix Growth Company Consoli-
Mines Mines Platinum Uitkomst Projects (Note 3) dated
GBP GBP GBP GBP GBP GBP GBP
Revenue
Gold sales1 89,596,24 71,715,975 - - - - 161,312,220
Platinum sales - - - 3,480,338 - - 3,480,338
Coal sales - - - 4,567,974 - - 4,567,974
Realisation costs (398,937) (557,772) - - - - (956,709)
On-mine
revenue 89,197,308 71,158,2 3,480,338 4,567,974 - - 168,403,823
Cost of
production (45,461,824) (55,025,516) (3,456,007) (4,279,735) - - (108,223,082)
Depreciation (3,562,121) (6,433,405) (311,870) (148,733) - - (10,456,129)
Mining profit 40,173,363 9,699,282 (287,539) 139,506 - - 49,724,612
Other
expenses2 (7,253,912) 873,481 (249,773) 233,905 (5,867,371) 80,775 (12,182,895)
Loss from
associate - - - - - - -
Loss on disposal
of associate/
asset held
for sale - - - - - - -
Impairment costs - - - - - - -
Royalty costs (2,450,505) (332,918) - (16,524) - - (2,799,947)
Net income/(loss)
before finance
income and
finance costs 30,468,946 10,239,845 (537,312) 356,887 (5,867,371) 80,775 34,741,770
Finance income 13,380 27,840 448 8,823 79,755 312,370 442,616
Finance costs (6,048) (7,383) (489) - (7) (1,434,811) (1,448,738)
Profit/(loss)
before taxation 30,476,278 10,260,302 (537,353) 365,710 (5,787,623 (1,041,666) 33,735,648
Taxation (8,492,721) (757,683) 118,266 226,037 701,414 (29,144) (8,233,831)
Profit/(loss)
after taxation
before inter-
company charges 21,983,557 9,502,61 (419,087) 591,747 (5,086,209) (1,070,810) 25,501,817
Inter-company
transactions
Management
fees (1,439,394) (1,137,529) (107,226) (65,734) 2,749,883 - -
Inter-company
interest
charges (331,029) (750,800) 79,849 7,489 (135,868) 1,130,359 -
Profit after
taxation after
inter-company
charges 20,213,134 7,614,290 (446,464) 533,502 (2,472,194) 59,549 25,501,817
Segmental assets
(Total assets
excluding
goodwill) 56,651,503 146,201,423 9,991,120 15,034,211 3,180,048 632,954 231,691,259
Segmental 27,035,796 48,372,120 883,249 4,545,415 5,154,888 15,725,303 101,716,771
Goodwill 21,000,714 - - - - - 21,000,714
Net assets
(excluding
goodwill) 29,615,707 97,829,303 9,107,871 10,488,796 (1,974,840) (15,092,349) 129,974,488
Adjusted
EBITDA 34,031,067 16,673,250 (225,442) 505,620 (5,867,371) 80,775 45,197,899
Capital
expenditure 6,513,408 7,179,831 316,726 40,251 46,950 - 14,097,166
Year ended 30 June 2015
Corporate
office and Funding
Barberton Evander Phoenix Growth Company Consoli-
Mines Mines Platinum Projects (Note 3) dated
GBP GBP GBP GBP GBP GBP
Revenue
Gold sales1 81,609,692 54,001,744 - - - 135,611,436
Platinum sales - - 5,465,447 - - 5,465,447
Coal sales - - - - - -
Realisation costs (534,421) (156,117) - - - (690,538)
On-mine revenue 81,075,271 53,845,627 5,465,447 - - 140,386,345
Cost of production (50,434,360) (56,210,295) (3,768,530) - - (110,413,185)
Depreciation (4,008,467) (5,963,752) (364,992) - - (10,337,211)
Mining profit 26,632,444 (8,328,420) 1,331,925 - - 19,635,949
Other expenses2 (966,703) 5,057,581 (163,390) (3,676,779) (933) 249,776
Loss from associate - - - (127,950) - (127,950)
Loss on disposal
of associate/asset
held for sale - - - (139,970) - (139,970)
Impairment costs - - - (58,424) - (58,424)
Royalty costs (1,595,802) (51,495) - - - (1,647,297)
Net income/(loss)
before finance
income and finance
costs 24,069,939 (3,322,334) 1,168,535 (4,003,123) (933) 17,912,084
Finance income 109,514 167,047 11,186 53,290 7,922 348,959
Finance costs (246,094) (918,923) (1,136) (13,164 (1,278,970) (2,458,287)
Profit/(loss)
before taxation 23,933,359 (4,074,210) 1,178,585 (3,962,997) (1,271,981) 15,802,756
Taxation (5,956,861) 2,270,046 (336,438) (89,033) (20,503) (4,132,789)
Profit/(loss)
after taxation
before inter-
company charges 17,976,498 (1,804,164) 842,147 (4,052,030) (1,292,484) 11,669,967
Inter-company
transactions
Management fees (1,666,667) (1,248,661) (152,777) 3,068,105 - -
Inter-company
interest charges (57,776) (1,230,251) (4,605) (16,450) 1,309,082 -
Profit after
taxation after
inter-company
charges 16,252,055 (4,283,076) 684,765 (1,000,375) 16,598 11,669,967
Segmental assets
(Total assets
excluding goodwill) 55,423,588 146,705,365 10,850,893 2,454,933 932,707 216,367,486
Segmental
liabilities 21,528,152 52,987,201 933,751 1,973,835 12,777,774 90,200,713
Goodwill 21,000,714 - - - - 21,000,714
Net assets
(excluding goodwill) 33,895,436 93,718,164 9,917,142 481,098 (11,845,067) 126,166,773
Adjusted EBITDA 28,078,406 2,641,418 1,533,527 (3,804,729) (933) 28,447,689
Capital expenditure 6,258,248 13,231,962 31,355 32,791 - 19,554,356
Note 1: All gold sales were made in the Republic of South Africa and the majority of revenue was
generated from selling gold to South African institutions through the group’s Funding
Company.
Note 2: Other expenses exclude inter-management fees and dividend received
Note 3: Pan African Resources Funding Company (Pty) Ltd (‘Funding Company’) manages the group’s
treasury function.
Summarised unaudited consolidated ZAR segment report for the year ended 30 June 2016
Year ended 30 June 2016
Corporate
office and Funding
Barberton Evander Phoenix Growth Company
Mines Mines Platinum Uitkomst Projects (Note 3) Group
ZAR ZAR ZAR ZAR ZAR ZAR ZAR
million million million million million million million
Revenue
Gold sales1 1,921.8 1,538.3 - - - - 3,460.1
Platinum Sales - - 74.7 - - - 74.7
Coal sales - - - 98.0 - - 98.0
Realisation costs (8.6) (11.9) - - - - (20.5)
On-mine revenue 1,913.2 1,526.4 74.7 98.0 - - 3,612.3
Gold cost of
production (975.2) (1,180.3) - - - - (2,155.5)
Platinum cost
of production - - (74.1) - - - (74.1)
Coal cost
of production - - - (91.8) - - (91.8)
Depreciation (76.4) (138.0) (6.7) (3.2) - - (224.3)
Mining profit 861.6 208.1 (6.1) 3.0 - - 1,066.6
Other expenses2 (155.6) 18.7 (5.4) 5.0 (125.7) 1.7 (261.3)
Bargain purchase - - - - - - -
Loss from associate - - - - - - -
Loss on disposal
of associate - - - - - - -
Impairment costs - - - - - - -
Royalty costs (52.6) (7.1) - (0.4) - - (60.1)
Net income/(loss)
before finance
income and
finance costs 653.4 219.7 (11.5) 7.6 (125.7) 1.7 745.2
Finance income 0.3 0.6 - 0.2 1.7 6.7 9.5
Finance costs (0.1) (0.2) - - - (30.8) (31.1)
Profit/(loss)
before taxation 653.6 220.1 (11.5) 7.8 (124.0) (22.4) 723.6
Taxation (182.2) (16.3) 2.5 4.8 15.2 (0.6) (176.6)
Profit/(loss)
after taxation 471.4 203.8 (9.0) 12.6 (108.8) (23.0) 547.0
Inter-company
transactions
Management fees (30.9) (24.4) (2.3) (1.4) 59.0 - -
Inter-company
interest charges (7.1) (16.1) 1.7 0.2 (2.9) 24.2 -
Profit/(loss) after
taxation after
inter-company
charges 433.4 163.3 (9.6) 11.4 (52.7) 1.2 547.0
Segmental assets
(Total assets
excluding
goodwill) 1,120.6 2,891.9 198.6 297.4 61.6 12.5 4,582.6
Segmental
liabilities 534.8 956.8 17.5 92.9 98.9 311.0 2,011.9
Goodwill 303.5 - - - - - 303.5
Net assets
(excluding
goodwill) 585.8 1,935.1 181.1 204.5 (37.3) (298.5) 2,570.7
Adjusted EBITDA 729.8 357.7 (4.8) 10.8 (125.7) 1.7 969.5
Capital expenditure 139.7 154.0 6.8 0.9 1.0 - 302.4
Year ended 30 June 2015
Corporate
office and Funding
Barberton Evander Phoenix Growth Company
Mines Mines Platinum Projects (Note 3) Group
ZAR ZAR ZAR ZAR ZAR ZAR
million million million million million million
Revenue
Gold sales1 1,469.0 972.0 - - - 2,441.0
Platinum Sales - - 98.4 - - 98.4
Coal sales - - - - - -
Realisation costs (9.6) (2.8) - - - (12.4)
On-mine revenue 1,459.4 969.2 98.4 - - 2,527.0
Gold cost of
production (907.8) (1,011.8) - - - (1,919.6)
Platinum cost
of production - - (67.8) - - (67.8)
Coal cost of production - - - - - -
Depreciation (72.2) (107.3) (6.6) - - (186.1)
Mining Profit 479.4 (149.9) 24.0 - - 353.5
Other expenses2 (17.4) 91.0 (2.9) (66.2) - 4.5
Bargain purchase - - - - - -
Loss from associate - - - (2.3) - (2.3)
Loss on disposal
of associate - - - (2.4) - (2.4)
Impairment costs - - - (1.0) - (1.0)
Royalty costs (28.7) (1.0) - - - (29.7)
Net income/(loss)
before finance
income and finance
costs 433.3 (59.9) 21.1 (71.9) - 322.6
Finance income 2.0 3.0 0.2 1.0 0.1 6.3
Finance costs (4.4) (16.5) - (0.3) (23.1) (44.3)
Profit/(loss)
before taxation 430.9 (73.4) 21.3 (71.2) (23.0) 284.6
Taxation (107.2) 40.9 (6.1) (1.7) (0.3) (74.4)
Profit/(loss)
after taxation 323.7 (32.5) 15.2 (72.9) (23.3) 210.2
Inter-company
transactions
Management fees (30.0) (22.5) (2.7) 55.2 - -
Inter-company
interest charges (1.0) (22.1) (0.2) (0.3) 23.6 -
Profit/(loss) after
taxation after
inter-company
charges 292.7 (77.1) 12.3 (18.0) 0.3 210.2
Segmental assets
(Total assets
excluding goodwill) 1,069.7 2,831.4 209.4 47.4 18.0 4,175.9
Segmental
liabilities 415.5 1,022.7 18.0 38.1 246.6 1,740.9
Goodwill 303.5 - - - - 303.5
Net assets
(excluding goodwill) 654.2 1,808.7 191.4 9.3 (228.6) 2,435.0
Adjusted EBITDA 505.5 47.4 27.7 (68.5) - 512.1
Capital expenditure 112.6 238.2 0.6 0.6 - 352.0
Note 1: All gold sales were made in the Republic of South Africa and the majority of revenue was
generated from selling gold to South African institutions through the group’s Funding
Company.
Note 2: Other expenses exclude inter-management fees and dividend received
Note 3: Pan African Resources Funding Company (Pty) Ltd (‘Funding Company’) manages the group’s
treasury function.
Date: 21/09/2016 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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