PAN AFRICAN RESOURCES PLC - Trading statement and operational update for the six months reporting period ended 31 December 2016

Trading statement and operational update for the six months reporting period ended 31 December 2016

Pan African Resources PLC
("Pan African" or “the Company" or “the Group”)
(Incorporated and registered in England and Wales under Companies Act 1985
with registered number 3937466 on 25 February 2000)
Share code on AIM: PAF
Share code on JSE: PAN
ISIN: GB0004300496

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

TRADING STATEMENT

In terms of paragraph 3.4(b) of the Listings Requirements of the JSE Limited, a
listed company is required to publish a trading statement as soon as it is
satisfied that a reasonable degree of certainty exists that the financial results
for the period to be reported upon next, will differ by at least
20 percent from those of the previous corresponding period.

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

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

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

Pan African advises shareholders that its EPS and HEPS for the current reporting
period are expected to be between:

   1) EPS in ZAR terms: 23 percent to 43 percent higher than the 12.43 cents
      EPS for the prior reporting period (therefore estimated EPS of 15.34 cents
      to 17.82 cents).

   2) HEPS in ZAR terms: 21 percent to 41 percent higher than the 12.43 cents
      HEPS for the prior reporting period (therefore estimated HEPS of 15.08
      cents to 17.56 cents).

Using the average ZAR:GBP 17.88:1 exchange rate that prevailed during the current
reporting period, the Group’s EPS and HEPS in GBP terms for the current reporting
period are expected to be between:

   1) EPS in GBP terms: 45 percent to 65 percent higher than the 0.60 pence EPS
      for the prior reporting period (therefore estimated EPS of 0.87 pence to
      0.99 pence).

   2) HEPS in GBP terms: 42 percent to 62 percent higher than the 0.60 pence
      HEPS for the prior reporting period (therefore estimated HEPS of 0.85
      pence to 0.97 pence).

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

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

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

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

Uitkomst Colliery

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

Gold price hedge – fair value adjustment

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

Increase in the average ZAR gold price received

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

OPERATIONAL UPDATE

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

                                Mining and tailings operations

Six months                                            Uitkomst        Phoenix
                
ended           Barberton Mines    Evander Mines      Colliery        Platinum
            
31 December      (Gold ounces)     (Gold ounces)    (Coal tonnes)   (PGE ounces)

2015                   56,447          45,350              -           4,493
2016                   49,212          42,401          327,202         4,575
Percentage            (12.8%)          (6.5%)            100%           1.8%


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


27 January 2017


Contact information
Corporate Office                           Registered Office
The Firs Office Building                   Suite 31
1st Floor, Office 101                      Second Floor
Cnr. Cradock and Biermann Avenues          107 Cheapside
Rosebank, Johannesburg                     London
South Africa                               EC2V 6DN
Office:   + 27 (0) 11 243 2900             United Kingdom
Facsimile: + 27 (0) 11 880 1240            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                             Jeffrey Couch/Neil Haycock/Thomas
Aprio Strategic Communications             Rider
Public & Investor Relations SA             BMO Capital Markets Limited
Office: +27 (0)11 880 0037                 Joint Broker
                                           Office: +44 (0) 207 236 1010

Website: www.panafricanresources.com

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