Wrap Text
Unaudited Interim Financial Results
Pan African Resources PLC
("Pan African" 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
www.panafricanresources.com
Unaudited interim financial results for the six months ended 31 December 2018
Chief executive officer's statement
Pan African CEO Cobus Loots commented:
"Pan African Resources is pleased to report a robust operational, financial and safety performance for
the six months ended 31 December 2018. The group is now positioned as a low cost and long-life gold producer,
in line with our stated strategy and our shareholders' expectations.
Our combined underground and tailings operations are some of the lowest-cost gold producers in South Africa and
also internationally competitive, from an all-in sustaining cost perspective. In the current reporting period,
the group's all-in sustaining cost per ounce in USD terms improved materially to USD975/oz (2017: USD1,268/oz),
emphasising the quality of our operations, the impact of low-cost ounces from Elikhulu and also the other
business improvements implemented.
We recorded a significantly improved group safety performance during the current reporting period, with
Barberton's Fairview Mine reaching its one-million fatality free shift milestone during July 2018.
The construction of our flagship Elikhulu tailings retreatment facility at Evander has been successfully
completed, despite the challenges associated with delivering a project of this magnitude and complexity, on
time and within budget. The plant is on track to achieve throughput of approximately 1.2-million tonnes per
month in February 2019.
Barberton Mines benefited from increased underground mining flexibility at its high-grade Fairview 272 and
358 mining platforms. The Barberton tailings retreatment facility also significantly improved production,
following the successful commissioning of this facility's regrind mill during May 2018.
Group profit after tax increased by 136.8% to R137.8 million (GBP: 127.3% increase to GBP7.5 million), and
group earnings per share from combined operations increased by 121.4% to 7.15 cents per share (GBP: 116.7%
increase to 0.39 pence per share).
Pan African has an attractive pipeline of near- to medium-term growth projects. The completion of the
drilling programme at Barberton Mines' Royal Sheba prospect indicated a near-surface mineral resource of
0.37Moz. We are excited by the potential to access low-cost, near-surface ounces at Royal Sheba and will
communicate results of the feasibility study to stakeholders in the near future. Barberton Mines has also
started an extended exploration drilling programme at the New Consort Mine's mining right, targeting the
Main Maiden Reef orebody as a potential satellite deposit for the Royal Sheba project. These projects,
together with improvements to our underground ore handling and processing plant infrastructure, have the
potential to significantly boost Barberton Mines' production in the coming years.
Management's key focus areas for the remainder of the 2019 financial year include a continued focus on
improving our safety performance, delivering quality ounces consistent with our production guidance,
optimising the performance of Elikhulu, advancing value accretive growth opportunities and strengthening
the group's statement of financial position by reducing debt to allow for improved funding flexibility.
We remain on track to achieve our production guidance of approximately 170,000oz for the full 2019
financial year."
Key features
Reported in South African rand ("ZAR" or "R") and pound sterling ("GBP")
Operational key features
- Gold production from the group's continuing mining operations (note 1) increased by 54.2% to 81,014oz
(2017: 52,548oz), with robust operational performance from Barberton Mines' underground operations and the
group's portfolio of tailings retreatment plants.
- Gold production from the Barberton complex increased significantly by 24.5% to 50,556oz (2017: 40,611oz).
The Elikhulu tailings retreatment plant ("Elikhulu") contributed 15,292oz (2017: nil) of incremental
low-cost ounces to group production. Elikhulu reached its nameplate capacity of 1-million tonnes throughput
in October 2018 and its optimisation is continuing.
- The incorporation of the existing Evander tailings retreatment plant ("ETRP") throughput capacity of
0.2-million tonnes per month into Elikhulu was completed in December 2018, which increased Elikhulu's
processing capacity to 1.2-million tonnes per month.
- Significantly improved group safety performance during the current reporting period with the lost-time
injury frequency rate improving to 1.77 (2017: 4.05) per million man hours and the reportable injury
frequency rate improving to 0.53 (2017:0.62) per million man hours, following the cessation of large
scale underground mining at Evander Mines and the commissioning of Elikhulu.
- The drilling programme at Barberton Mines' Royal Sheba prospect was completed, indicating a
near-surface mineral resource of 0.37Moz with a 900m strike and 150m down-dip extension. The total
mineral resource is now 0.76Moz (8.97Mt at 2.62g/t) comprising the near-surface resource of
0.37Moz (5.85Mt at 1.96g/t) and the underground mineral resource of 0.39Moz (3.12Mt at 3.87g/t). The
feasibility study on the Royal Sheba project, which will now include a review of possible near-term
improvements to underground ore handling logistics/infrastructure and existing processing plant
throughput capacity, will be completed in the coming months.
- The group has commenced an extended exploration drilling programme at Barberton Mines' mining right at
New Consort Mine, targeting the Main Maiden Reef ("MMR") orebody as a potential satellite deposit for the
Royal Sheba project.
- Evander Mines' Egoli project remains a viable underground mining project and the group is currently
reviewing and assessing options to advance this project.
- The group's detailed operational and financial summaries, per entity, are disclosed on the Pan African
website at http://www.panafricanresources.com/investors/financial-reports/.
Financial key features
- Group profit after taxation in ZAR terms increased by 136.8% to R137.8 million (2017: R58.2 million),
while in GBP terms, group profit after taxation increased by 127.3% to GBP7.5 million (2017: GBP3.3 million).
- Group earnings before interest, taxation, depreciation and losses from discontinued operations
("EBITDA") in ZAR terms increased by 92.3% to R342.5 million (2017: R178.1 million), while in GBP terms
it increased by 83.3% to GBP18.7 million (2017: GBP10.2 million).
- Earnings per share ("EPS") in ZAR terms increased by 121.4% to 7.15 cents per share (2017: 3.23 cents
per share), while in GBP terms, EPS increased by 116.7% to 0.39 pence per share (2017: 0.18 pence per share).
- The effective ZAR gold price received increased by 1.1% to R557,446/kg (2017: R551,506/kg) although, in
USD terms, it decreased by 4.6% to USD1,222/oz (2017: USD1,281/oz).
- Group revenue from continuing operations in ZAR terms increased by 52.8% to R1,383.0 million (2017:
R904.9 million) and, in GBP terms, revenue increased by 46.8% to GBP75.3 million (2017: GBP51.3 million) due
to an increase in gold ounces produced by Barberton Mines' underground mining operations, the Barberton
tailings retreatment plant ("BTRP") and also the contribution from the newly commissioned Elikhulu.
- Cash cost per kilogramme decreased by 14.4% in ZAR terms to R405,216/kg (2017: R473,187/kg) and,
in USD terms, the cash cost per ounce decreased by 19.2% to USD888/oz (2017: USD1,099/oz).
- All-in sustaining cost per kilogramme decreased significantly by 18.5% in ZAR terms to R444,946/kg
(2017: R545,908/kg) and, in USD terms, the all-in sustaining cost per ounce decreased by 23.1% to USD975/oz
(2017: USD1,268/oz).
- The group's continuing operations' all-in sustaining cost per kilogramme decreased by 5.8% in ZAR terms
to R444,946/kg (2017: R472,359/kg) and, in USD terms, the all-in sustaining cost per ounce of continuing
operations decreased by 11.1% to USD975/oz (2017: USD1,097/oz).
- Financing Elikhulu's construction resulted in the group's net debt increasing to R1,880.3 million
(2017: R653.0 million) and in GBP terms, the net debt increased to GBP102.7 million (2017:GBP39.2 million).
Six months Six months Six months Six months
ended ended ended ended
31 31 31 31
December December Salient December December
Movement 2018 2017 Unit features Unit 2017 2018 Movement
54.2% 2,520 1,634 (Kilogrammes) Continuing operations (Oz) 52,548 81,014 54.2%
gold produced (note 1)
(5.0%) 2,520 2,653 (Kilogrammes) Combined operations (Oz) 85,282 81,014 (5.0%)
gold produced (note 1)
(6.5%) 2,481 2,653 (Kilogrammes) Combined operations (Oz) 85,282 79,765 (6.5%)
gold sold
52.8% 1,383.0 904.9 (R million) Revenue (GBP million) 51.3 75.3 46.8%
1.1% 557,446 551,506 (R/kg) Average gold (USD/oz) 1,281 1,222 (4.6%)
price received
(14.4%) 405,216 473,187 (R/kg) Cash costs (note 4) (USD/oz) 1,099 888 (19.2%)
(18.5%) 444,946 545,908 (R/kg) All-in sustaining (USD/oz) 1,268 975 (23.1%)
costs (note 2)
17.9% 654,470 554,890 (R/kg) All-in costs (note 2) (USD/oz) 1,289 1,435 11.3%
92.3% 342.5 178.1 (R million) Adjusted EBITDA (GBP million) 10.2 18.7 83.3%
(note 3)
136.8% 137.8 58.2 (R million) Attributable (GBP million) 3.3 7.5 127.3%
earnings
(combined operations)
20.9% 137.8 114.0 (R million) Attributable (GBP million) 6.5 7.5 15.4%
earnings
(continuing operations)
118.7% 137.8 63.0 (R million) Headline earnings (GBP million) 3.6 7.5 108.3%
(note 4)
121.4% 7.15 3.23 (cents) Earnings per share (pence) 0.18 0.39 116.7%
103.7% 7.15 3.51 (cents) Headline earnings (pence) 0.20 0.39 95.0%
per share ("HEPS")
(note 4)
187.9% 1,880.3 653.0 (R million) Net debt (note 4) (GBP million) 39.2 102.7 162.0%
(57.5%) 66.0 155.2 (R million) Total sustaining (GBP million) 8.8 3.6 (59.2%)
capital expenditure
(15.8%) 586.7 697.0 (R million) Total capital (GBP million) 39.5 32.0 (19.0%)
expenditure
(41.1%) 114.4 194.3 (cents) Net asset value (pence) 11.7 6.5 (44.6%)
per share (note 4)
7.2% 1,928.3 1,798.3 (million) Weighted average (million) 1,798.3 1,928.3 7.2%
number of shares
in issue
6.0% 14.19 13.39 (ZAR:USD) Average exchange rate (ZAR:GBP) 17.65 18.36 4.0%
16.2% 14.36 12.36 (ZAR:USD) Closing exchange rate (ZAR:GBP) 16.67 18.32 9.9%
Note 1: The continuing mining operations include: Barberton Mines' operations and Evander Mines' operations
(Elikhulu, ETRP and the mining and vamping of the remnant high-grade stopes as part of the phased closure of
the underground mining operation). The continuing mining operations excludes the discontinued Evander Mines'
large-scale underground mining operation, which produced 32,734oz in the corresponding six-month period ended
31 December 2017 ("corresponding reporting period"). The group's corresponding reporting period's gold
production, including discontinued operations, was 85,282oz.
Note 2: The all-in sustaining cost per kilogramme and all-in cost per kilogramme excludes derivative fair
value mark-to-market gains/losses relating to the current gold mining operations. Refer to the alternative
performance measure ("APM") summary report for the period ended 31 December 2018. Refer to note 16.
Note 3: Adjusted EBITDA is represented by earnings before interest, taxation, depreciation, and losses from
discontinued operations. Refer to the APM summary report for the period ended 31 December 2018. Refer to
note 16.
Note 4: Refer to the APM summary report for the period ended 31 December 2018. Refer to note 16.
Group safety
The group has significantly improved its safety performance in the current reporting period. The group's
safety risk has reduced following the cessation of large-scale underground mining at Evander Mines and the
commissioning of Elikhulu. Pan African remains committed to and focused on ensuring the safety of all our
employees, while continuing to work towards a zero-harm environment.
- Fairview Mine reached its one-million fatality free shift milestone on 15 July 2018.
- The group had no fatalities during the current and corresponding reporting periods.
- The group's lost-time injury frequency rate improved significantly to 1.77 (2017: 4.05) per million man hours.
- The reportable injury frequency rate improved to 0.53 (2017: 0.62) per million man hours.
Elikhulu
- As previously communicated, Elikhulu was successfully commissioned ahead of schedule and within budget
and achieved a throughput of 1-million tonnes per month during October 2018.
- The incorporation of the existing ETRP throughput capacity of 0.2-million tonnes per month into Elikhulu was
completed in December 2018, which increased Elikhulu's processing capacity to 1.2-million tonnes per month.
- Elikhulu processed 3,534,278 tonnes in the four months from September 2018 to December 2018 at a recovered
grade of 0.135g/t and with 15,292oz (475.6kg) of gold sold. This does not include August 2018 pre-production
gold capitalised of 736oz (22.9kg) and gold inventory held in the circuit.
- Optimisation of the enlarged Elikhulu is continuing, with throughput of 1.2-million tonnes expected from
February 2019.
Barberton Mines and Barberton tailings retreatment plant
- Barberton Mines produced 50,556oz (2017: 40,611oz) during the current reporting period, comprising:
* Underground mining operations, which contributed 38,550oz (2017: 32,159oz); and
* BTRP, which contributed 12,006oz (2017: 8,452oz).
- Barberton Mines produced 100,573oz during the 2018 calendar year and remains on track to achieve the market
guidance of approximately 100,000oz for the full 2019 financial year.
- Barberton Mines' period-on-period increase in production resulted from:
* Increased tonnages and improved recoveries at the BTRP, following the successful commissioning of the regrind
mill during May 2018; and
* Increased underground mining flexibility at the Fairview Mine high-grade 272 and 358 platforms.
- Barberton Mines successfully concluded a three-year wage agreement during September 2018 with no industrial
action.
Evander Mines
- Evander Mines' continuing operations: surface operations, together with the mining and vamping of the remnant
high-grade stopes, produced 15,166oz (2017: 11,937oz) and contributed positively to the group's adjusted EBITDA
during the current reporting period.
- The feasibility study into the merits of mining the 8 Shaft pillar and high-grade areas in proximity to the
pillar is expected to be completed by the end of February 2019, after which a decision will be made on whether
to commence mining in these areas.
Mineral resources and mineral reserves
The group's mineral resources and mineral reserves, in compliance with the South African Code for the Reporting
of Exploration Results, Mineral Resources and Mineral Reserves (the SAMREC Code, 2016 edition), are summarised
as follows:
- Gold mineral resources of 331.2Mt at 3.13g/t for 33.3Moz (2017: 337.9Mt at 3.17g/t for 34.4Moz)
Tonnes Grade Gold Gold
Gold mineral resources Mt g/t t Moz
Barberton hard rock 15.3 7.49 115.0 3.7
BTRP 23.3 1.08 25.1 0.8
Evander underground 82.7 10.08 834.0 26.8
Elikhulu and ETRP 209.7 0.29 61.3 2.0
Total 331.2 3.13 1 035.5 33.3
- Gold mineral reserves of 239.1Mt at 1.46g/t for 11.2Moz (2017: 231.8Mt at 1.50g/t for 11.2Moz)
Tonnes Grade Gold Gold
Gold mineral resources Mt g/t t Moz
Barberton hard rock 8.5 5.66 48.2 1.5
BTRP 12.5 1.36 16.9 0.5
Evander underground 27.5 8.31 228.4 7.3
Elikhulu and ETRP 190.6 0.29 54.8 1.8
Total 239.1 1.46 348.4 11.2
In determining our mineral resources and mineral reserves, a gold price of R600,000/kg and R525,000/kg was
used for resources and reserves, respectively. All mineral resources and mineral reserves are reported as
in-situ tonnes at an estimated head grade. Mining losses, plant recovery factors and costs were used in the
calculation of each respective operations cut-off grade. The mineral resources and mineral reserves are
reported in accordance with the guidelines of the SAMREC Code, 2016 edition.
Mineral reserves and mineral resources related to discontinued operations have been excluded from the
reported Evander Mines' underground mineral reserves and resources.
There have been no material changes to the group's mineral resource and mineral reserve statement since
the year ended 30 June 2018, other than the additional mineral resources and mineral reserves added
following the Royal Sheba drilling campaign which was previously announced on 30 November 2018.
Refer to the annual Mineral Resource and Mineral Reserve Report, dated 30 June 2018, as published on our
website www.panafricanresources.com for more detail on the reported mineral resources and mineral reserves.
Near- to medium-term growth projects
Barberton Mines' Royal Sheba project
As previously communicated, the drilling programme on Barberton Mines' Royal Sheba prospect has been
completed, indicating a near-surface mineral resource of 0.37Moz (5.85Mt at 1.96g/t) with 900m strike and
150m down-dip extension.
Barberton Mines' New Consort MMR project
The group has commenced an extended exploration drilling programme at Barberton Mines' mining right at
New Consort Mine, targeting the MMR orebody as a potential satellite deposit for the Royal Sheba project.
The first phase has been defined as eight holes testing the orebody on a single 100m by 100m slice. Six drill
holes have been completed to date, with the final two drill holes of phase 1 progressing according to plan.
The assay results from four of the six holes drilled indicates discrete zones of mineralisation occurring as
lenses within a 40m zone in the footwall of the Consort bar up to the first serpentinite contact.
Further to this zone, the drill holes also intersected another amphibolite-serpentinite contact around
70m-80m further in the footwall. Assay results indicate pay shoots of mineralisation exist near this contact.
Barberton Mines' sub-vertical shaft project at Fairview
Shareholders were previously advised that the Fairview mining operation is restricted by the hoisting capacity
of its No 3 Decline, which is used to access workings below 42 Level and the high-grade 11-block of the MRC.
Development of top and bottom access is nearly complete with shaft development commencing in due course. Once
the shaft is completed over the next two years, it is expected to improve production by an additional
7,000oz - 10,000oz of gold per annum.
Evander Mines' Egoli project (previously called the 2010 Pay Channel project)
Evander Mines' Egoli project remains an attractive growth project, and the group is currently reviewing and
assessing options to advance this project.
Outlook
Key focus areas for the 2019 financial year include:
- continuing to improve our safety performance, and environmental, social and governance compliance across
all operations;
- delivering on our gold production guidance of approximately 170,000oz;
- ensuring Elikhulu delivers to expectations and fully incorporating ETRP's throughput into Elikhulu's
processing capacity;
- strengthening of the group's financial position by reducing debt to allow for improved funding flexibility
and increased capacity; and
- focussing on advancing value accretive growth opportunities such as:
* Royal Sheba project;
* Evander Mines' 8 Shaft pillar project;
* Evander Mines' Egoli project; and
* Barberton Mines' sub-vertical shaft.
The group continues to evaluate acquisition opportunities, particularly in other African jurisdictions, in
accordance with its rigorous capital allocation criteria.
Financial performance
Exchange rates and their impact on results
All group 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, being incorporated
in England and Wales and being dual-listed in the United Kingdom ("UK") and South Africa. The group's
presentation currency is expected to change to USD from GBP for the 30 June 2019 financial results.
During the current reporting period, the average ZAR:GBP exchange rate was R18.36:1 (2017: R17.65:1) and the
closing ZAR:GBP exchange rate was R18.32:1 (2017: R16.67:1). The period-on-period change in the average and
closing exchange rates of 4.0% and 9.9%, respectively, must be taken into account for the purposes of
translating and comparing period-on-period results.
The group records its revenue from precious metals sales in ZAR. The depreciation in the value of the ZAR:USD
exchange rate during the current reporting period positively impacted the USD revenue received when translated
into ZAR. In the current reporting period, the average ZAR:USD exchange rate depreciated by 6.0% to R14.19:1
(2017: R13.39:1), while the USD gold price received decreased by 4.6% to USD1,222/oz (2017: USD1,281/oz).
The commentary below analyses the current and corresponding reporting periods' 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
Discontinued operations
As a result of the sale of Phoenix Platinum Mining Proprietary Limited ("Phoenix Platinum") on 6 November 2017,
and the cessation of the large-scale underground mining operations at Evander Mines on 31 May 2018, the
corresponding reporting period's figures have been restated in accordance with International Financial
Reporting Standards ("IFRS") 5 Non-current assets held for sale and discontinued operations. The loss from
discontinued operations in the corresponding reporting period has been separately disclosed as a line item in
the condensed consolidated statement of profit or loss and other comprehensive income.
Revenue
The group's total revenue from continuing operations, period-on-period, increased in ZAR terms by 52.8% to
R1,383.0 million (2017: R904.9 million), and in GBP terms increased by 46.8% to GBP75.3 million (2017:
GBP51.3 million).
Group revenue was mainly impacted by:
- Gold sold from continuing mining operations increased by 51.8% to 79,765oz (2017: 52,548oz); and
- The average ZAR gold price received increasing by 1.1% to R557,446/kg (2017: R551,506/kg).
Cost of production
Pan African's cost of production for continuing operations increased by 47.1% to R994.9 million (2017:
R676.3 million), primarily impacted by: Barberton Mines' cost of production increasing by 10.1% to
R621.3 million (2017: R564.1 million), largely due to:
- Salary and wages increasing by 7.9% to R288.8 million (2017: R267.7 million), with the increase attributed to:
* The signing of a three-year wage agreement, with annual increases over the period of approximately 6.5% and
5.5% for National Union of Mines Workers and United Association of South Africa members, respectively.
* Improved production performances also resulted in mining operations production incentives increasing
period-on-period.
* Electricity costs increasing by 14.1% to R72.2 million (2017: R63.3 million). Barberton Mines' electricity
costs, excluding the BTRP, increased by 5.6%, in line with the National Energy Regulator of South Africa's
average national increase of 5.3% from 1 April 2018. The BTRP's electricity costs increased to R13.6 million
(2017: R7.8 million) due to additional electricity consumed following the installation of the operation's
new regrind mill.
- Mining and processing costs increased by 19.3% to R174.8 million (2017: R146.5 million). The above-inflation
increase was driven primarily by the increased tonnes mined period-on-period:
* The mining operations' tonnes milled increased by 12.3% to 140,329t (2017: 124,969t); and
* BTRP tonnes processed increased by 23.6% to 567,109t (2017: 458,779t).
- Engineering and technical costs decreased by 6.7% to R43.4 million (2017: R46.5 million), following a
reduction in secondary support costs period-on-period and other cost saving initiatives.
- Security costs increased materially by 88.1% to R33.1 million (2017: R17.6 million), with an increased
focus on addressing illegal mining activities and once-off costs incurred during instances of community unrest.
- Evander Mines' cost of production increased to R373.6 million (2017: R112.2 million), mainly due to:
* Elikhulu's processing costs of R113.4 million during the four months from 1 September 2018 to
31 December 2018. Elikhulu's cash cost per kilogramme during the period was R239,639/kg or USD517/oz.
* ETRP and surface-source operations costs decreased to R46.1 million (2017: R103.0 million) mainly due to a
reduction in surface feedstock tonnages to 67,832t (2017: 184,161t).
* Remnant mining and vamping of remaining high-grade stopes was R214.1 million (2017: nil).
Realisation costs
Group realisation costs decreased to R10.4 million (2017: R25.1 million), largely due to the depletion of
available gold recovery projects previously undertaken in the Evander Mines' Kinross metallurgical plant.
Depreciation costs
Depreciation from continuing operations increased to R97.1 million (2017: R45.1 million). The group incurred
an additional R41.3 million in depreciation, following the commissioning of Elikhulu on 1 September 2018. The
depreciation charge is calculated based on the available units of production (tonnes milled and processed)
over the life of the mining operation.
Other expenditure and finance income/costs
Other expenditure increased to R28.5 million (2017: R22.1 million). In the current reporting period, the
group recorded lower mark-to-market fair-value gains of R8.9 million (2017: R19.4 million) on financial
derivatives entered into as part of a gold price hedging programme.
Finance costs increased to R80.9 million (2017: R14.3 million), due to an increase in net debt as a result
of the construction spend on Elikhulu.
Taxation
The group's taxation charge increased to R33.0 million (2017: R12.1 million), due to an increase in the
group's profitability and comprised of:
- an increase in the current taxation charge to R25.2 million (2017: R1.8 million); and
- a decrease in deferred taxation to R7.8 million (2017: R10.3 million).
EPS and HEPS
The group's combined EPS in ZAR increased by 121.4% to 7.15 cents (2017: 3.23 cents), while in GBP terms,
EPS increased by 116.7% to 0.39 pence per share (2017: 0.18 pence per share).
The group's combined HEPS in ZAR increased by 103.7% to 7.15 cents (2017: 3.51 cents), while in GBP terms,
HEPS increased by 95.0% to 0.39 pence per share (2017: 0.20 pence per share).
The group's continuing EPS and HEPS in ZAR increased by 12.8% to 7.15 cents (2017: 6.34 cents), while
in GBP terms, continuing EPS and HEPS increased by 8.3% to 0.39 pence per share (2017: 0.36 pence
per share).
For further details refer to the reconciliation between basic earnings and headlines earnings in the APM
summary report. Refer to note 16.
Net debt and cash flows
The group's net debt increased to R1,880.3 million (2017: R653.0 million), comprised of:
- Total debt facilities utilised at 31 December 2018 of R1,815.4 million (2017: R771.7 million);
- Gold prepayments of R115.0 million (2017: nil); and
- Cash and cash equivalents of R50.1 million (2017: R118.7 million).
Refer to a detailed summary of the group's net debt in the APM summary report. Refer to note 16.
Cash generated by operations after dividends increased to R316.6 million (2017: R22.2 million after dividends),
due to an improved production performance from Barberton Mines and the maiden production contribution from
Elikhulu, which resulted in additional operational cash flows being generated. In the corresponding reporting
period, the group paid a net dividend of R148.9 million.
The cash outflows from investing activities decreased to R574.1 million (2017: R634.2 million), predominantly
due to:
- Capital expenditure incurred on Elikhulu decreasing to R494.9 million (2017: R511.7 million);
- Capital expenditure incurred on operations reducing to R91.8 million (2017: R185.3 million), following
the cessation of Evander Mines' underground mining operation; and
- Cash received from the sale of Phoenix Platinum of R89.0 million in the corresponding reporting period.
Net cash inflows from financing activities decreased to R295.0 million (2017: R570.5 million), largely due
to a lower utilisation of the debt facilities to fund the construction of Elikhulu.
Senior debt restructure
The group's existing revolving credit facility which terminates in June 2020, is being restructured with an
extended repayment profile to 2022. Under the restructured revolving credit facility, the available
commitment will reduce over time as follows:
- Up to 15 June 2020: R1 billion
- 15 June 2020: R750 million
- 15 December 2020: R725 million
- 15 June 2021: R700 million
- 15 September 2021: R650 million
- 15 December 2021: R600 million
- 15 March 2022: R550 million
- 15 June 2022: R500 million
Pan African has received credit approval from its lead bank, First Rand Bank Limited, for the implementation
of the restructured revolving credit facility, which should be effective from 30 June 2019. The facility
of R1 billion, used to fund a portion of the construction costs of the Elikhulu project continues to
amortise consistent with its original redemption profile.
Directorship changes and dealing
No directorship changes took place during the period under review.
The following director dealings in securities took place:
Mr JAJ Loots entered into the following contract for difference derivatives ("CFDs"):
- On 20 September 2018, entered into a CFD for 64,280 shares at average of 8.25 pence per share.
- On 21 September 2018, entered into a CFD for 50,000 shares at average of 8.50 pence per share.
Mr JAJ Loots held 668,675 shares and 514,280 CFDs at period end, representing approximately 0.05% of the
total issued shares.
Mr KC Spencer transferred 3,000,000 shares at R1.75 per share in an off-market transaction from the Strode
Trust into his personal capacity on 17 October 2018. Following this transaction, Mr KC Spencer held
3,000,000 shares at period end, representing approximately 0.13% of the total issued shares.
JSE limited listing
The company has a dual primary listing on the main board of the JSE Limited ("JSE") and the Alternative
Investment Market ("AIM") of the London Stock Exchange.
The group interim results have been prepared and presented in accordance with, and containing the information
required by IAS 34 Interim financial reporting, as well as the SAICA Financial Reporting Guides as issued by
the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards
Council.
AIM Listing
The financial information for the period ended 31 December 2018 does not constitute statutory accounts as
defined in sections 435 (1) and (2)of the Companies Act 2006.
The group's announcement has been prepared in accordance with IFRS and International Financial Reporting
Interpretation Committee interpretations adopted for use by the European Union, with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS.
Forward-looking information
Any forward-looking information contained in this report is the sole responsibility of the directors and
has not been reviewed or reported on by the group's external auditor.
Cobus Loots Deon Louw
Chief Executive Officer Financial Director
20 February 2019
Condensed consolidated interim financial statements for the six months ended 31 December 2018
Condensed consolidated statement of financial position as at 31 December 2018
Unaudited Unaudited Audited Unaudited Unaudited Unaudited
31 December 31 December 30 June 31 December 31 December 30 June
2018 2017 2018 2018 2017 2018
GBP GBP GBP R R R
million million million million million million
Assets
Non-current assets
Property, plant and equipment
and mineral rights 217.1 263.7 192.8 3,977.2 4,396.0 3,488.3
Goodwill 21.0 21.0 21.0 303.5 303.5 303.5
Other intangible assets - 0.1 - 0.6 1.8 0.6
Deferred taxation 5.1 0.5 6.2 93.0 7.7 112.3
Long-term inventory 0.6 0.7 0.6 10.3 11.6 10.3
Long-term receivables 1.3 2.6 1.3 23.4 42.8 24.0
Investments 6.8 5.5 3.1 124.3 91.5 56.7
Rehabilitation funds 20.2 21.4 20.1 369.8 357.5 364.3
272.1 315.5 245.1 4,902.1 5,212.4 4,360.0
Current assets
Inventories 4.1 4.0 2.7 74.7 66.0 48.9
Current taxation asset 0.5 0.8 0.7 9.3 13.5 12.5
Trade and other receivables 11.9 14.7 14.8 218.1 244.7 268.6
Current portion of
long-term receivables 1.0 - 0.9 19.1 - 17.2
Financial instruments assets - 0.3 0.2 - 5.8 4.0
Cash and cash equivalents 2.7 7.1 0.7 50.1 118.7 12.6
20.2 26.9 20.0 371.3 448.7 363.8
Total assets 292.3 342.4 265.1 5,273.4 5,661.1 4,723.8
Equity and liabilities
Capital and reserves
Share capital 22.3 22.3 22.3 318.8 318.8 318.8
Share premium 144.6 145.4 144.6 2,247.4 2,261.4 2,247.4
Translation reserve (44.1) (34.2) (42.8) - - -
Share option reserve 1.7 1.2 1.6 24.6 17.2 24.6
Retained earnings 37.5 126.6 30.0 299.2 1,776.4 161.4
Realisation of equity reserve (10.7) (10.7) (10.7) (140.6) (140.6) (140.6)
Treasury capital reserve (15.6) (25.4) (15.6) (385.2) (548.6) (385.2)
Merger reserve (10.7) (10.7) (10.7) (154.7) (154.7) (154.7)
Other reserves (0.1) (2.2) (3.0) (2.5) (36.1) (55.0)
Equity attributable to
owners of the parent 124.9 212.3 115.7 2,207.0 3,493.8 2,016.7
Total equity 124.9 212.3 115.7 2,207.0 3,493.8 2,016.7
Non-current liabilities
Long-term provisions 13.5 11.9 15.1 248.2 198.1 273.4
Long-term liabilities 90.5 43.7 86.5 1,657.6 729.1 1,565.0
Deferred taxation 14.4 40.3 14.3 263.0 671.1 259.5
118.4 95.9 115.9 2,168.8 1,598.3 2,097.9
Current liabilities
Trade and other payables 31.5 27.7 27.7 577.3 460.2 505.2
Financial instruments liability 0.1 - - 1.7 - -
Current portion of
long-term liabilities 16.7 5.6 5.2 305.3 93.3 93.5
Current taxation liability 0.7 0.9 0.6 13.3 15.5 10.5
49.0 34.2 33.5 897.6 569.0 609.2
Total equity and liabilities 292.3 342.4 265.1 5,273.4 5,661.1 4,723.8
Condensed consolidated statement of profit or loss and other comprehensive income
for the period ended 31 December 2018
Unaudited Unaudited
and restated and restated
Unaudited (note 1) Unaudited (note 1)
six months six months six months six months
ended ended ended ended
31 December 31 December 31 December 31 December
2018 2017 2018 2017
Continuing operations GBP million GBP million R million R million
Revenue 75.3 51.3 1,383.0 904.9
Gold sales 75.3 51.3 1,383.0 904.9
Realisation costs (0.6) (1.4) (10.4) (25.1)
Net revenue 74.7 49.9 1,372.6 879.8
Gold cost of production (54.2) (38.3) (994.9) (676.3)
Mining depreciation (5.3) (2.6) (97.1) (45.1)
Mining profit 15.2 9.0 280.6 158.4
Other expenses (1.4) (1.2) (28.5) (22.1)
Royalty costs (0.4) (0.2) (6.7) (3.3)
Net income before finance income and finance costs 13.4 7.6 245.4 133.0
Finance income 0.3 0.4 6.3 7.4
Finance costs (4.4) (0.8) (80.9) (14.3)
Profit before taxation 9.3 7.2 170.8 126.1
Taxation (1.8) (0.7) (33.0) (12.1)
Profit after taxation - continuing operations 7.5 6.5 137.8 114.0
Loss from discontinued operations - (3.2) - (55.8)
Profit after taxation 7.5 3.3 137.8 58.2
Other comprehensive income:
Fair value movement investment measured
at fair value through other comprehensive income 3.7 (2.2) 67.6 (36.1)
Taxation on investment measured at fair value
through other comprehensive income (0.8) - (15.1) -
Foreign currency translation differences (1.2) 2.7 - -
Total comprehensive income for the year 9.2 3.8 190.3 22.1
Profit attributable to:
Owners of the parent 7.5 3.3 137.8 58.2
Total comprehensive income attributable to:
Owners of the parent 9.2 3.8 190.3 22.1
pence pence cents cents
Earnings per share 0.39 0.18 7.15 3.23
Diluted earnings per share 0.39 0.18 7.15 3.23
Earnings per share - continuing operations 0.39 0.36 7.15 6.34
Diluted earnings per share
- continuing operations 0.39 0.36 7.15 6.33
Weighted average number of shares in issue 1,928.3 1,798.3 1,928.3 1,798.3
Diluted number of shares in issue 1,928.3 1,798.9 1,928.3 1,798.9
Condensed consolidated statement of changes in equity
for the period ended 31 December 2018
Unaudited Unaudited
and restated and restated
Unaudited (note 1) Unaudited (note 1)
six months six months six months six months
ended ended ended ended
31 December 31 December 31 December 31 December
2018 2017 2018 2017
GBP million GBP million R million R million
Shareholder's equity at the beginning
of the period 115.7 216.6 2,016.7 3,620.5
Other comprehensive income 1.7 0.4 52.5 (36.1)
Profit for the period 7.5 3.3 137.8 58.2
Dividends paid - (10.0) - (185.0)
Reciprocal dividend
- PAR Gold Proprietary Limited ("PAR Gold") - 2.0 - 36.2
Total equity 124.9 212.3 2,207.0 3,493.8
Condensed consolidated statement of cash flows for the period ended 31 December 2018
Unaudited Unaudited
and restated and restated
Unaudited (note 1) Unaudited (note 1)
six months six months six months six months
ended ended ended ended
31 December 31 December 31 December 31 December
2018 2017 2018 2017
GBP million GBP million R million R million
Net cash generated by operations
after taxation, royalty and
finance cost and before dividends 17.0 8.5 316.6 171.1
Dividends paid - (10.2) - (185.0)
Reciprocal dividend - PAR Gold - 2.1 - 36.1
Cash inflow from operating activities 17.0 0.4 316.6 22.2
Cash outflow from investing activities (31.3) (36.2) (574.1) (634.2)
Cash inflow from financing activities 16.4 32.7 295.0 570.5
Net increase/(decrease) in cash equivalents 2.1 (3.1) 37.5 (41.5)
Cash at the beginning of period 0.7 9.4 12.6 160.2
Effect of foreign currency rate changes (0.1) 0.8 - -
Cash and cash equivalents at end of period 2.7 7.1 50.1 118.7
Note 1: Relates to the correction of a prior period error, addressing the reclassification of the payment
of cash settled share options from financing activities to operating activities. Refer to note 15.
Notes to the condensed consolidated interim financial statements for the period ended 31 December 2018
1. Basis of preparation of the financial statements and accounting policies
The accounting policies applied in compiling the condensed consolidated interim financial statements are in
accordance with IFRS adopted by the European Union and South Africa, which are consistent with those applied
in preparing the group's annual financial statements for the year ended 30 June 2018.
The financial information set out in this announcement does not constitute the company's statutory accounts
for the period ended 31 December 2018.
The interim results have been prepared and presented in accordance with, and containing the information
required by IAS 34, as well as the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by Financial Reporting Standards Council.
The interim results have not been reviewed or reported on by the group's external auditor.
Adoption of new accounting standards
IFRS 15 Revenue from contracts with customers
The group has adopted IFRS 15 as of 1 July 2018. The implementation of IFRS 15 has not had any impact on
revenue recognition (timing or quantum) for the sale of gold by the group.
The standard describes a five step approach for the recognition of revenue:
- Identify the contract(s) with a customer.
- Identify the performance obligations in the contract.
- Determine the transaction price.
- Allocate the transaction price to the performance obligations in the contract(s).
- Recognise revenue when (or as) the entity satisfies a performance obligation.
The group's only revenue is from the sale of gold, which is a commodity product and is priced relative to
quoted benchmarks. Sales contracts contain a single obligation to deliver gold at which time title and risk
pass to the purchaser. The quantum and price of gold ounces traded is agreed upfront between parties.
Sales contracts have a single performance obligation. The price is based on observable market inputs which
are clearly defined within the contract.
IFRS 9 Financial instruments
The group has adopted IFRS 9 as of 1 July 2018. The requirements of IFRS 9 represents a change from IAS 39
Financial instruments: recognition and measurement. The impact of the change in accounting policy is
disclosed below.
IFRS 9 contains three principal classification categories for financial instruments: measured at amortised
cost, fair value through other comprehensive income ("FVOCI") and fair value through profit and loss ("FVTPL").
The standard eliminates the previous IAS 39 categories of held to maturity, loans and receivables and
available for sale. Refer to the table below for a summary of the classification changes upon the transition
to IFRS 9.
IFRS 9 replaces the "incurred loss model" in IAS 39 with an "expected loss" model. The new impairment model
applies to financial assets measured at amortised cost and financial assets measured at FVOCI. Under IFRS 9
credit losses are recognised earlier than IAS 39. An assessment was performed to determine the expected
credit loss of financial assets. The group has recognised expected credit losses of R1 million
(GBP0.1 million) (2017: nil) in the current reporting period.
IFRS 9 indicates a revised approach to hedge accounting, however this has not impacted the group as the group
does not apply hedge accounting.
The following table shows the original measurement categories under IAS 39 and the new measurement categories
under IFRS 9 for each class of the group's financial assets and liabilities at 31 December 2018.
New classification Original classification
under IFRS 9 under IAS 39
Financial assets
Cash and cash equivalents Measured at amortised cost Loans and receivables
Long-term receivables Measured at amortised cost Loans and receivables
Current portion of long-term receivables Measured at amortised cost Loans and receivables
Trade receivables Measured at amortised cost Loans and receivables
Investment Measured at FVTOCI Available-for-sale
Rehabilitation funds Measured at FVTPL Measured at FVTPL
Financial instruments asset Measured at FVTPL Measured at FVTPL
Financial liabilities
Trade and other payables Measured at amortised cost Measured at amortised cost
Revolving credit facility Measured at amortised cost Measured at amortised cost
Term loan facility Measured at amortised cost Measured at amortised cost
Employee share ownership plan
("ESOP") liability Measured at FVTPL Measured at FVTPL
Financial instruments liability Measured at FVTPL Measured at FVTPL
Cash settled share options liability Measured at FVTPL Measured at FVTPL
Accounting standards issued but not yet effective
IFRS 16 Leases
The new standard will replace IAS 17 Leases and eliminates the classification of leases as either
operating leases or finance leases by the lessee. IFRS 16 is effective for the group for the year ended
30 June 2020. Classification of leases by the lessor under IFRS 16 continues as either an operating or
finance lease, as was the treatment under IAS 17. Lease arrangements will give rise to the recognition by
the lessee of an asset, representing the right to use the leased item, and a related liability for future
lease payments. Lease costs will be recognised in the statement of profit and loss in the form of depreciation
of the right-of-use asset over the lease term, and finance charges which represents the unwinding of the
discount on the lease liability.
Management has reviewed service contracts within the group and are currently evaluating the accounting impacts
of applying the new standard.
It is expected that the adoption of IFRS 16 will result in an increase in lease liabilities representing
the present value of future payments under arrangements currently classified as operating leases, along with
a corresponding increase in property, plant and equipment for the right-of-use asset, together with an
increase in depreciation and finance costs.
2. Critical accounting judgements and key sources of estimation uncertainty
In the application of the group's accounting policies, the directors are required to make certain judgements,
estimates and assumptions that are not readily apparent from other sources that may materially affect the
carrying amounts of assets and liabilities, the reported revenue and expense during the reported period and
the related disclosures. The estimates and judgements are based on historical experience, current and expected
future economic conditions and other factors. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period, or
in the period of the revision and future periods if the revision affects both current and future periods.
Critical accounting judgements in applying the group's accounting policies
The following are the critical judgement areas, apart from those involving estimations, that the directors
have made in the process of applying the group's accounting policies and that have the most significant
effect on the amounts recognised in the condensed consolidated interim financial statements.
Discontinued operation
Due to the cessation of mining at Evander Mines' large-scale underground operations, which includes 8 Shaft,
7 Shaft and the run-of-mine circuit in the Kinross metallurgical plant on 31 May 2018, the financial results
for the six months ended 31 December 2017 from the Evander Mines' large-scale underground operations were
classified as a discontinued operation. Judgement was required to determine the allocation of the financial
results between Evander Mines' continuing and discontinuing operations.
Management has performed an assessment to ensure that the Evander Mines' large-scale underground operations
meets the requirements to be classified as a discontinued operation and the financial results have been
appropriately allocated for the six months ended 31 December 2017.
Elikhulu capitalisation date
Given the nature of Elikhulu, a key area of judgement was the date of commissioning which required
determination of when Elikhulu was in the location and condition for it to be operating in the manner
intended by management.
Pan African Resources has applied a guiding principle that once the plant achieves commercial production,
it is operating in the manner as intended by management. At the beginning of the month in which the project
achieved commercial production, the various assets, by major component, are recorded in the fixed asset
register and are subject to depreciation over their respective useful lives.
Commercial production is assumed when management can demonstrate that the plant is able to materially achieve
the technical design parameters established by the feasibility study and it is probable that future economic
benefits will be generated by the plant.
Commercial production was achieved during the month of September 2018 and thus the commissioning date of
Elikhulu was 1 September 2018. Refer to note 8 for amounts capitalised to Elikhulu in the current period.
In total R1.93 billion (GBP105.1 million) has been capitalised to the project since construction commenced.
Other significant sources of estimation uncertainty
The following are areas of significant estimation:
Rehabilitation and decommissioning provision:
At each reporting date the group estimates the rehabilitation and decommissioning provision. A change in
estimate will impact the carrying amount of the liability and corresponding decommissioning asset. There
is judgement in the input assumptions used in determining the estimated rehabilitation and decommissioning
provision. Inputs used which require judgement include:
- closure costs which are determined in accordance with regulatory requirements,
- inflation rate, which has been adjusted for a long-term view, and
- risk-free rate, which is compounded annually and linked to the life-of-mine.
Assessing the recoverable amount associated with long-lived assets
Mining operations require significant technical and financial resources to operate. Their value may be
sensitive to a range of characteristics unique to each asset and key sources of estimation uncertainty which
include ore reserve estimates and cash flow projections.
3. Segmental reporting
A segment is a distinguishable component of the group engaged in providing products or services in a
particular business sector or segment, which is subject to risks and rewards different from those of
other segments. The group's business activities were conducted through the following business segments:
Continuing operations
- Barberton Mines (including BTRP), located in Barberton, South Africa;
- Evander Mines (Elikhulu, ETRP and the mining and vamping of the remnant high-grade stopes as part of
the phased closure of the underground mining operation), located in Evander, South Africa;
- Corporate, located in Johannesburg, South Africa; and
- Pan African Resources Funding Company Proprietary Limited ("Funding Company"), located in Johannesburg,
South Africa.
Discontinued operations
- Phoenix Platinum, located near Rustenburg, South Africa; and
- Evander Mines' underground operations (including 8 Shaft, 7 Shaft and the run-of-mine circuit in the
Kinross Metallurgical plant), located in Evander, South Africa.
The executive committee, which is considered the chief operating decision maker, reviews the operations
in accordance with the disclosures presented above.
Six months ended 31 December 2018
Continuing operations
Evander
Barberton Mines Funding
Condensed unaudited segment report for Mines (note 3) Corporate Company Group
the period ended 31 December 2018 GBP million GBP million GBP million GBP million GBP million
Revenue
Gold sales (note 1) 46.5 28.8 - - 75.3
Platinum sales - - - - -
Realisation costs (0.2) (0.4) - - (0.6)
Net revenue 46.3 28.4 - - 74.7
Gold cost of production (33.8) (20.4) - - (54.2)
Platinum cost of production - - - - -
Mining depreciation (2.8) (2.5) - - (5.3)
Mining profit 9.7 5.5 - - 15.2
Other (expenses)/income (note 2) (0.3) 1.3 (2.4) - (1.4)
Adjustment on sale of asset held for sale - - - - -
Royalty costs (0.2) (0.2) - - (0.4)
Net income/(loss) before finance
income and finance costs 9.2 6.6 (2.4) - 13.4
Finance income - 0.1 0.1 0.1 0.3
Finance costs - 0.2 - (4.6) (4.4)
Profit/(loss) before taxation 9.2 6.9 (2.3) (4.5) 9.3
Taxation (1.5) - (0.3) - (1.8)
Profit/(loss) after taxation before
inter-company charges 7.7 6.9 (2.6) (4.5) 7.5
Loss after taxation from discontinued
operations - - - - -
Profit/(loss) after taxation before
inter-company charges 7.7 6.9 (2.6) (4.5) 7.5
Inter-company transactions
Management fees (0.9) (0.7) 1.7 (0.1) -
Inter-company interest charges 0.1 (4.6) (0.2) 4.7 -
Profit/(loss) after taxation after
inter-company charges 6.9 1.6 (1.1) 0.1 7.5
Segmental assets (total assets
excluding goodwill) 78.4 179.9 10.4 2.6 271.3
Segmental liabilities 30.3 36.3 1.7 99.1 167.4
Goodwill 21.0 - - - 21.0
Net assets (excluding goodwill) (note 5) 48.1 143.6 8.7 (96.5) 103.9
Capital expenditure (note 6) 5.0 27.0 - - 32.0
Adjusted EBITDA (note 7) 12.0 9.1 (2.4) - 18.7
Six months ended 31 December 2017
Discontinuing
operations
Continuing operations Evander
Evander Mines
Mines (Dis- Re-
(Continuing Phoenix continued classi-
Condensed unaudited Barberton operations) Funding Platinum operations fication
segment report for Mines (note 3) Corporate Company (note 4) (note 3) (note 8) Group
the period ended GBP GBP GBP GBP GBP GBP GBP GBP
31 December 2018 million million million million million million million million
Revenue
Gold sales (note 1) 39.7 11.6 - - - 31.6 (31.6) 51.3
Platinum sales - - - - 1.4 - (1.4) -
Realisation costs (0.2) (1.2) - - - (0.1) 0.1 (1.4)
Net revenue 39.5 10.4 - - 1.4 31.5 (32.9) 49.9
Gold cost of production (32.0) (6.3) - - - (31.3) 31.3 (38.3)
Platinum cost of
production - - - - (1.6) - 1.6 -
Mining depreciation (2.2) (0.4) - - - (3.4) 3.4 (2.6)
Mining profit 5.3 3.7 - - (0.2) (3.2) 3.4 9.0
Other (expenses)/income
(note 2) (0.4) 0.7 (1.5) - - 0.6 (0.6) (1.2)
Adjustment on sale of
asset held for sale - - - - (0.3) - 0.3 -
Royalty costs (0.2) - - - - (0.2) 0.2 (0.2)
Net income/(loss)
before finance income
and finance costs 4.7 4.4 (1.5) - (0.5) (2.8) 3.3 7.6
Finance income 0.1 0.1 0.2 - - 0.3 (0.3) 0.4
Finance costs - - - (0.8) - - - (0.8)
Profit/(loss)
before taxation 4.8 4.5 (1.3) (0.8) (0.5) (2.5) 3.0 7.2
Taxation (0.5) 0.2 (0.4) - 0.1 (0.3) 0.2 (0.7)
Profit/(loss) after
taxation before
inter-company charges 4.3 4.7 (1.7) (0.8) (0.4) (2.8) 3.2 6.5
Loss after taxation from
discontinued operations - - - - - - (3.2) (3.2)
Profit/(loss) after
taxation before
inter-company charges 4.3 4.7 (1.7) (0.8) (0.4) (2.8) - 3.3
Inter-company transactions
Management fees (0.8) (0.1) 1.1 (0.1) - (0.1) - -
Inter-company interest
charges (0.2) - (0.2) 0.7 - (0.3) - -
Profit/(loss) after
taxation
after inter-company
charges 3.3 4.6 (0.8) (0.2) (0.4) (3.2) - 3.3
Segmental assets
(total assets
excluding goodwill) 75.5 230.4 10.3 5.2 - - - 321.4
Segmental liabilities 27.8 52.9 2.8 46.6 - - - 130.1
Goodwill 21.0 - - - - - - 21.0
Net assets
(excluding goodwill)
(note 5) 47.7 177.5 7.5 (41.4) - - - 191.3
Capital expenditure
(note 6) 4.1 35.1 - - 0.3 - - 39.5
Adjusted EBITDA
(note 7) 6.9 4.8 (1.5) - (0.2) 0.6 (0.4) 10.2
Note 1: All gold sales were made in South Africa and the majority of revenue (more than 90%) was generated
from South African financial institutions.
Note 2: Other (expenses)/income exclude inter-company management fees and dividends.
Note 3: During the prior financial reporting period, Evander Mines underground mining operations ceased mining
on 31 May 2018. The Evander Mines' Elikhulu, ETRP and the mining and vamping of the remnant high-grade stopes
at Evander, as part of the phased closure of the underground mining operation, remain as continuing operations.
Note 4: Phoenix Platinum was classified as held for sale and as a discontinued operation at 30 June 2017. The
disposal was concluded on 6 November 2017.
Note 5: All assets are held within South Africa, and the segmental assets and liabilities presented, exclude
inter-company balances.
Note 6: Capital expenditure comprises of additions to property plant and equipment and mineral rights
and intangible assets.
Note 7: Adjusted EBITDA is represented by earnings before interest, taxation, depreciation and losses from
discontinued operations. Note 8: Relates to the reclassification of operations as discontinued.
Six months ended 31 December 2018
Continuing operations
Evander
Barberton Mines Funding
Condensed unaudited segment report for Mines (note 3) Corporate Company Group
the period ended 31 December 2018 R million R million R million R million R million
Revenue
Gold sales (note 1) 853.8 529.2 - - 1,383.0
Platinum sales - - - - -
Realisation costs (3.4) (7.0) - - (10.4)
Net revenue 850.4 522.2 - - 1,372.6
Gold cost of production (621.3) (373.6) - - (994.9)
Platinum cost of production - - - - -
Mining depreciation (50.9) (46.2) - - (97.1)
Mining profit 178.2 102.4 - - 280.6
Other (expenses)/income (note 2) (5.1) 23.9 (47.3) - (28.5)
Adjustment on sale of asset held for sale - - - - -
Royalty costs (4.1) (2.6) - - (6.7)
Net income/(loss) before finance
income and finance costs 169.0 123.7 (47.3) - 245.4
Finance income 0.3 1.9 2.3 1.8 6.3
Finance costs - (0.5) - (80.4) (80.9)
Profit/(loss) before taxation 169.3 125.1 (45.0) (78.6) 170.8
Taxation (28.1) (0.7) (3.5) (0.7) (33.0)
Profit/(loss) after taxation
before inter-company charges 141.2 124.4 (48.5) (79.3) 137.8
Loss after taxation from
discontinued operations - - - - -
Profit/(loss) after taxation
before inter-company charges 141.2 124.4 (48.5) (79.3) 137.8
Inter-company transactions
Management fees (17.3) (12.0) 30.3 (1.0) -
Inter-company interest charges 1.6 (83.9) (3.7) 86.0 -
Profit/(loss) after taxation
after inter-company charges 125.5 28.5 (21.9) 5.7 137.8
Segmental assets (total assets
excluding goodwill) 1,435.5 3,295.8 190.3 48.3 4,969.9
Segmental liabilities 554.3 665.9 30.9 1,815.3 3,066.4
Goodwill 303.5 - - - 303.5
Net assets (excluding goodwill) (note 5) 881.2 2,629.9 159.4 (1,767.0) 1,903.5
Capital expenditure (note 6) 90.9 495.0 0.8 - 586.7
Adjusted EBITDA (note 7) 219.9 169.9 (47.3) - 342.5
Six months ended 31 December 2017
Discontinuing
operations
Continuing operations Evander
Evander Mines
Mines (Dis- Re-
(Continuing Phoenix continued classi-
Condensed unaudited Barberton operations) Funding Platinum operations fication
segment report for Mines (note 3) Corporate Company (note 4) (note 3) (note 8) Group
the period ended R R R R R R R R
31 December 2018 million million million million million million million million
Revenue
Gold sales (note 1) 700.3 204.6 - - - 558.1 (558.1) 904.9
Platinum sales - - - - 24.7 - (24.7) -
Realisation costs (2.9) (22.2) - - - (2.0) 2.0 (25.1)
Net revenue 697.4 182.4 - - 24.7 556.1 (580.8) 879.8
Gold cost of
production (564.1) (112.2) - - - (551.7) 551.7 (676.3)
Platinum cost
of production - - - - (28.2) - 28.2 -
Mining depreciation (38.3) (6.8) - - - (59.7) 59.7 (45.1)
Mining profit 95.0 63.4 - - (3.5) (55.3) 58.8 158.4
Other (expenses)/income
(note 2) (7.7) 11.2 (25.6) - 0.7 8.6 (9.3) (22.1)
Adjustment on sale
of asset held for sale - - - - (4.9) - 4.9 -
Royalty costs (2.9) (0.4) - - - (2.8) 2.8 (3.3)
Net income/(loss) before
finance income and
finance costs 84.4 74.2 (25.6) - (7.7) (49.5) 57.2 133.0
Finance income 1.2 1.6 3.2 1.4 0.2 6.0 (6.2) 7.4
Finance costs - - (0.2) (14.1) - - - (14.3)
Profit/(loss)
before taxation 85.6 75.8 (22.6) (12.7) (7.5) (43.5) 51.0 126.1
Taxation (9.5) 3.4 (5.7) (0.3) 0.7 (5.5) 4.8 (12.1)
Profit/(loss)
after taxation before
inter-company charges 76.1 79.2 (28.3) (13.0) (6.8) (49.0) 55.8 114.0
Loss after taxation from
discontinued operations - - - - - - (55.8) (55.8)
Profit/(loss)
after taxation before
inter-company charges 76.1 79.2 (28.3) (13.0) (6.8) (49.0) - 58.2
Inter-company
transactions
Management fees (14.6) (0.9) 18.9 (1.0) - (2.4) - -
Inter-company
interest charges (4.4) - (3.0) 12.4 - (5.0) - -
Profit/(loss)
after taxation after
inter-company charges 57.1 78.3 (12.4) (1.6) (6.8) (56.4) - 58.2
Segmental assets
(total assets
excluding goodwill) 1,258.8 3,840.4 171.7 86.7 - - - 5,357.6
Segmental liabilities 463.9 882.3 43.8 777.3 - - - 2,167.3
Goodwill 303.5 - - - - - - 303.5
Net assets (excluding
goodwill) (note 5) 794.9 2,958.1 127.9 (690.6) - - - 3,190.3
Capital expenditure
(note 6) 71.4 619.0 0.6 - 6.0 - - 697.0
Adjusted EBITDA
(note 7) 122.7 81.0 (25.6) - (2.8) 10.2 (7.4) 178.1
Note 1: All gold sales were made in South Africa and the majority of revenue (more than 90%) was generated
from South African financial institutions.
Note 2: Other (expenses)/income exclude inter-company management fees and dividends.
Note 3: During the prior financial reporting period, Evander Mines underground mining operations ceased
mining on 31 May 2018. The Evander Mines' Elikhulu, ETRP and the mining and vamping of the remnant high-grade
stopes at Evander, as part of the phased closure of the underground mining operation, remain as continuing
operations.
Note 4: Phoenix Platinum was classified as held for sale and as a discontinued operation at 30 June 2017.
The disposal was concluded on 6 November 2017.
Note 5: All assets are held within South Africa, and the segmental assets and liabilities presented, exclude
inter-company balances.
Note 6: Capital expenditure comprises of additions to property plant and equipment and mineral rights
and intangible assets.
Note 7: Adjusted EBITDA is represented by earnings before interest, taxation, depreciation and losses from
discontinued operations.
Note 8: Relates to the reclassification of operations as discontinued.
4. Net finance (expenses)/income
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
31 December 31 December 31 December 31 December
2018 2017 2018 2017
GBP million GBP million R million R million
Interest received - bank 0.1 0.3 1.6 4.8
Interest received - other 0.1 - 2.8 -
Interest received - rehabilitation funds 0.1 0.1 1.9 2.6
0.3 0.4 6.3 7.4
Interest expense - bank (4.4) (0.8) (80.4) (14.3)
Interest expense - other - - (0.5) -
(4.4) (0.8) (80.9) (14.3)
Net finance (expenses)/income (note 1) (4.1) (0.4) (74.6) (6.9)
Note 1: The net finance (expenses)/income from financial assets and liabilities that are not measured at fair
value through profit or loss except for interest received from rehabilitation funds.
5. Taxation
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
31 December 31 December 31 December 31 December
2018 2017 2018 2017
GBP million GBP million R million R million
Income taxation expense
South African normal taxation
- current year 1.4 0.1 25.2 1.8
Deferred taxation
- current year 0.4 0.6 7.8 10.3
Total taxation expense 1.8 0.7 33.0 12.1
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
31 December 31 December 31 December 31 December
Unredeemed capital and assessed 2018 2017 2018 2017
loss expenditure (note 1) GBP million GBP million R million R million
Evander Mines - unredeemed capital 135.2 70.6 2,476.1 1,176.8
Evander Mines - assessed loss 27.7 10.5 507.2 174.5
162.9 81.1 2,983.3 1,351.3
Note 1: Deferred taxation assets have been recognised in respect of all assessed losses and unredeemed
capital expenditure.
6. Financial instruments
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
31 December 31 December 31 December 31 December
2018 2017 2018 2017
GBP million GBP million R million R million
Financial assets and liabilities by category
Financial assets (note 1)
Measured at amortised cost
Cash and cash equivalents 2.7 7.1 50.1 118.7
Long-term receivables 1.3 2.6 23.4 42.8
Current portion of long-term receivables 1.0 - 19.1 -
Trade receivables (note 2) 5.9 7.1 108.2 117.8
Measured at fair value through other
comprehensive income
Investment 6.8 5.5 124.3 91.5
Designation at fair value through profit and loss
Rehabilitation funds 20.2 21.4 369.8 357.5
Financial instruments asset - 0.3 - 5.8
Financial liabilities
Measured at amortised cost
Trade and other payables (note 3) 31.5 27.6 577.0 460.1
Revolving credit facility 44.5 40.6 815.4 676.6
Term loan facility 54.6 5.7 1,000.0 95.1
Measured at fair value through profit or loss
ESOP liability 0.5 0.1 9.9 1.9
Financial instruments liability 0.1 - 1.7 -
Cash settled share options liability 1.1 2.8 20.3 46.3
Note 1: At the end of the current reporting period the group did not have trade receivables that are past
overdue and not impaired.
Note 2: Trade receivables exclude prepayments, taxation and VAT.
Note 3: Trade and other payables exclude taxation and VAT.
Fair value hierarchy
Financial instruments are measured at fair value and are 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, either directly (i.e. prices) or indirectly (i.e. derived from prices).
Level 3 - fair value is determined on inputs not based on observable market data.
Unaudited six months ended 31 December 2018
Level 1 Level 2 Level 3 Level 4
GBP R GBP R GBP R GBP R
million million million million million million million million
Investment (note 1) 6.8 124.3 - - - - 6.8 124.3
Rehabilitation funds
(note 2) 20.2 369.8 - - - - 20.2 369.8
Cash settled share
option liability
(note 3) - - 1.1 20.3 - - 1.1 20.3
Financial instruments
liability (note 5) - - 0.1 1.7 - - 0.1 1.7
ESOP liability (note 4) - - - - 0.5 9.9 0.5 9.9
Unaudited six months ended 31 December 2017
Level 1 Level 2 Level 3 Level 4
GBP R GBP R GBP R GBP R
million million million million million million million million
Investment (note 1) 5.5 91.5 - - - - 5.5 91.5
Rehabilitation funds
(note 2) 21.4 357.5 - - - - 21.4 357.5
Cash settled share
option liability
(note 3) - - 2.8 46.3 - - 2.8 46.3
Financial instruments
liability (note 5) - - 0.3 5.8 - - 0.3 5.8
ESOP liability (note 4) - - - - 0.1 1.9 0.1 1.9
Note 1: The fair value of the listed investment is treated as Level 1 per the fair value hierarchy, as its
market share price is quoted on a stock exchange.
Note 2: Rehabilitation funds are treated as Level 1 per the fair value hierarchy as the contributions are
invested in an interest-bearing short-term deposits and equity share portfolios held in insurance investment
products managed by fund managers.
Note 3: The cash settled share option liability is valued on a mark-to-market basis according to the company's
quoted share price and other inputs which are company specific.
Note 4: The group's ESOP liability is accounted for on a cash settled basis. The valuation of the liability
relates to the group's gold operations, and was performed by independent consulting actuaries. The liability
was valued as a European call option.
Note 5: The group is exposed to financial derivatives which comprise of cost collar hedges.
7. Borrowings and financial covenants
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
31 December 31 December 31 December 31 December
2018 2017 2018 2017
Interest-bearing borrowings GBP million GBP million R million R million
Revolving credit facility - current portion 4.5 4.0 82.5 66.1
Revolving credit facility - long-term portion 40.0 36.6 732.9 610.5
Term loan facility - current portion 5.5 - 100.0 -
Term loan facility - long-term portion 49.1 5.7 900.0 95.1
Total interest-bearing borrowings 99.1 46.3 1,815.4 771.7
Available facilities
Revolving credit facility 10.1 19.5 185.0 325.0
Term loan facility - 54.3 - 905.0
General banking facility 6.6 4.1 121.5 69.0
16.7 77.9 306.5 1,299.0
Note 1: Net debt is disclosed as part of the APM summary report. Refer to note 16.
Financial covenants
The group's compliance to the revolving credit and term loan facility debt covenants are summarised below:
Unaudited Unaudited
six months six months
ended ended
31 December 31 December
2018 2017
Covenant Measurement GBP million GBP million
Net-debt-to-equity ratio Must be less than 1:1 0.85 0.19
Net-debt-to-adjusted EBITDA ratio (note 1) Must be less than 2.5:1 3.24 2.25
Interest cover ratio Must be greater than 2.5 time at 3.64 4.62
31 December 2018 and 4 times thereafter
Debt service cover ratio Must be greater than 1.3 times 2.85 1.85
Note 1: The net debt to adjusted EBITDA covenant is only measurable in December 2019, as agreed with the
consortium of South African banks given the delay between capital expenditure and revenue generation. This
allows for the measurement period to appropriately measure the cash flows of Elikhulu following the
conclusion of construction, with the net debt.
8. Capital expenditure
Unaudited
Development capital Maintenance capital Expansion capital Total
GBP R GBP R GBP R GBP R
million million million million million million million million
Barberton 31 December 1.9 34.7 1.7 31.2 1.4 25.0 5.0 90.9
Mines 2018
31 December 2.0 35.2 1.0 17.5 1.1 18.7 4.1 71.4
2017
Evander 31 December - 0.1 - - - - - 0.1
Mines 2018
31 December 1.7 30.4 4.1 72.1 0.3 4.8 6.1 107.3
2017
Elikhulu 31 December - - - - 27.0 494.8 27.0 494.8
2018
31 December - - - - 29.0 511.7 29.0 511.7
2017
Phoenix 31 December - - - - - - - -
Platinum 2018
31 December - - 0.3 6.0 - - 0.3 6.0
2017
Corporate 31 December - 0.9 - - - - - 0.9
2018
31 December - 0.6 - - - - - 0.6
2017
Total 31 December 1.9 35.7 1.7 31.2 28.4 519.8 32.0 586.7
2018
31 December 3.7 66.2 5.4 95.6 30.4 535.2 39.5 697.0
2017
9. Share capital
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 December 31 December 30 June
2018 2017 2018
Issued
Number of ordinary shares issued (note 1) 2,234,687,537 2,234,687,537 2,234,687,537
Treasury shares in issue (note 2) (306,358,058) (436,358,058) (306,358,058)
1,928,329,479 1,798,329,479 1,928,329,479
Ordinary shares issued of GBP0.01 each 22,346,875 22,346,875 22,346,875
Note 1: No additional ordinary shares were issued during the current reporting period.
Note 2: On 30 May 2018, PAR Gold disposed of 130 million Pan African Resources' shares at GBP0.07 per share,
resulting in a decrease in the treasury shares held by PAR Gold in Pan African Resources.
10. Disposals and acquisitions
There were no disposals or acquisitions noted during the current reporting period.
Corresponding period
Phoenix Platinum located in the North West province of South Africa was sold to Sylvania Platinum Limited
on 6 November 2017 for R89.0 million. Refer to the result announcements for the financial year ended
30 June 2017 and six months ended December 2017 for additional information on this transaction.
11. Commitments and contingent liabilities
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
31 December 31 December 31 December 31 December
2018 2017 2018 2017
GBP million GBP million R million R million
Outstanding open orders 10.2 64.3 187.2 1,071.2
Authorised commitments not yet contracted for 4.7 10.2 86.5 170.4
Operating lease commitments
- due within the next 12 months 0.7 0.1 13.4 1.8
Guarantees - Eskom Holdings SOC Limited 1.3 1.5 24.6 24.6
Guarantees - DMR 0.8 0.8 14.0 14.0
Outstanding orders in the corresponding reporting period related primarily to the construction of Elikhulu.
No material contingent liabilities were identified in the current or corresponding reporting period.
12. Related party transactions
The related party transactions have been summarised in the following notes:
- Inter-company interest and management fees - refer to note 3. Inter-company loans have no specific repayment
terms, are repayable on demand and bear interest in relation to the treasury function provided by Funding
Company; and
- Inter-company reciprocal dividend - refer to condensed consolidated statement of changes in equity.
No further major related party transactions occurred, either with third parties or with group entities,
during the current and corresponding reporting period.
13. 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 twelve months from the
date of approval of the condensed consolidated interim financial statements and has found them to be adequate.
The group has a R1 billion revolving credit facility from a consortium of South African banks as well as access
to general banking facilities of R121 million. At 31 December 2018, the group had available borrowing capacity
on the revolving credit facility of R185 million (GBP10.1 million) to assist in funding working capital
requirements. The group is exposed to a number of macro-economic risks, including the gold price and the
prevailing ZAR:USD exchange rate. Management is not aware of any other 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 and curtail loss making operations.
14. Events after the reporting period
The group had no material events after the reporting period.
15. Correction of prior period errors
Classification of the settlement of cash settled share option costs
For the year ended 30 June 2017 and six months ended 31 December 2017, the payment of cash settled share
options of GBP3.3 million (R58.0 million) and GBP0.4 million (R6.9 million) respectively, were classified
as a financing activity in the consolidated statement of cash flows. However, since the payment of cash
settled share options related to employees, these payments should have been classified as an employee cost
and included in net cash flows from operating activities.
As a consequence, net cash flows from financing activities were overstated and net cash flows from operating
activities were understated. The error was identified through the JSE's proactive monitoring process. The
error has been corrected by restating each of the affected financial statement line items for the prior
reporting periods as follows:
Audited Unaudited Unaudited Unaudited
year six months year six months
ended ended ended ended
30 June 31 December 30 June 31 December
2017* 2017 2017* 2017
Impact on the statement of cash flows GBP million GBP million R million R million
Net cash flows from operating activities (3.3) (0.4) (58.0) (6.9)
Net cash flows financing activities 3.3 0.4 58.0 6.9
Increase/(decrease) in cash and
cash equivalents - - - -
* This correction applies to the year ended 30 June 2018 annual financial statements and, was not a
re-presentation, as stated, but an error.
The correction of the classification of the payment of cash settled share options in the consolidated statement
of cash flows for the year ended 30 June 2017 and six months ended 31 December 2017 had no effect on the:
- consolidated statement of profit or loss and other comprehensive income;
- consolidated statement of financial position and cash holdings; or
- the group's basic and diluted earnings per share.
Classification of the cash outflow from the purchase of the shares in PAR Gold
For the year ended 30 June 2016 the group concluded a transaction for the acquisition of PAR Gold's shares by
Pan African Resources. The transaction was entered into to secure the group's BEE status and was deemed to be
strategic in nature. The transaction entailed the acquisition of 49.9% of PAR Gold's shareholding which was
settled with an issue of Pan African Resources' shares. The transaction was classified as a treasury share
buyback transaction from a group perspective as PAR Gold held 23.8% of Pan African Resources' shares. The cash
outflow of GBP25.3 million (R546.9 million) related to this transaction was previously classified as an
investing activity in the consolidated statement of cash flows. However, since the transaction amounted to
a treasury share transaction from a group perspective the cash outflow should have been classified as a
financing activity in the consolidated statement of cash flows in accordance with the criteria of IAS 7.
As a consequence, net cash flows from investing activities were overstated and net cash flows from financing
activities were understated in the consolidated statement of cash flows for the year ended 30 June 2016.
The error was identified through the JSE's proactive monitoring process. The error would be corrected by
restating each of the affected financial statement line items in the consolidated statement of cash flows
for the prior period as follows:
Audited Unaudited
ended ended
30 June 30 June
2016 2016
Impact on the statement of cash flows GBP million R million
Net cash flow from investing activities 25.3 546.9
Net cash flow from financing activities (25.3) (546.9)
Increase/(decrease) in cash and cash equivalents - -
The correction of the classification of the cash outflows resulting from the transaction to purchase the
shares in PAR Gold in the consolidated statement of cash flows for the year ended 30 June 2016 had no effect
on the:
- consolidated statement of profit or loss and other comprehensive income;
- consolidated statement of financial position and cash holdings; or
- the group's basic and diluted earnings per share.
16. Alternative performance measures summary for the period ended 31 December 2018
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
31 December 31 December 31 December 31 December
2018 2017 2017 2018
USD million USD million Reconciliation of World Gold Council costs R million R million
70.8 93.7 Cash costs 1,255.1 1,005.3
70.1 91.7 Gold cost of production 1,228.0 994.9
0.7 2.0 Realisation costs 27.1 10.4
77.7 108.2 All-in sustaining costs 1,448.0 1,103.8
70.8 93.7 Cash costs 1,255.1 1,005.3
0.5 0.5 Royalties 6.1 6.7
0.8 0.7 Community costs related to gold operations 9.0 11.7
(0.3) - By-product credits (0.3) (3.9)
1.3 1.7 Corporate general and administrative costs 23.0 18.0
2.4 4.9 Development capital (sustaining) 65.6 34.7
2.2 6.7 Maintenance capital expenditure (sustaining) 89.5 31.3
114.3 110.0 All-in costs 1,471.8 1,623.6
77.7 108.2 All-in sustaining costs 1,448.0 1,103.8
36.6 1.8 Capital expenditure (non-sustaining) 23.5 519.8
- - Voluntary severance pay (non-sustaining) 0.3 -
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
31 December 31 December 31 December 31 December
2018 2017 2017 2018
GBP million GBP million Reconciliation of adjusted EBITDA R million R million
18.7 10.2 Adjusted EBITDA 178.1 342.5
7.5 3.3 Profit after taxation 58.2 137.8
1.8 0.7 Taxation 12.1 33.0
4.4 0.8 Finance costs 14.3 80.9
(0.3) (0.4) Finance income (7.4) (6.3)
5.3 2.6 Mining depreciation 45.1 97.1
- 3.2 Loss after taxation on discontinued operations 55.8 -
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
31 December 31 December Cash cost 31 December 31 December
2018 2017 Unit per oz/kg Unit 2017 2018
888 1,099 USD/oz Cash cost R/kg 473,187 405,216
70.8 93.7 USD million Cash costs R million 1,255.1 1,005.3
79,765 85,282 oz Gold sold kg 2,653 2,481
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
31 December 31 December In-all sustaining 31 December 31 December
2018 2017 Unit cost per oz/kg Unit 2017 2018
975 1,268 USD/oz All-in sustaining cost R/kg 545,908 444,946
77.7 108.2 USD million All-in sustaining costs R million 1,448.0 1,103.8
79,765 85,282 oz Gold sold kg 2,653 2,481
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
31 December 31 December In-all cost 31 December 31 December
2018 2017 Unit cost per oz/kg Unit 2017 2018
1,435 1,289 USD/oz All-in cost R/kg 554,890 654,470
114.3 110.0 USD million All-in costs R million 1,471.8 1,623.6
79,765 85,282 Oz Gold sold kg 2,653 2,481
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
31 December 31 December 31 December 31 December
2018 2017 Headline earnings and headline earnings 2017 2018
GBP million GBP million per share from combined operations R million R million
7.5 3.3 Basic earnings 58.2 137.8
- 0.3 Fair value movement on asset held for sale 4.8 -
7.5 3.6 Headline earnings 63.0 137.8
pence pence cents cents
0.39 0.20 Headline earnings per share 3.51 7.15
0.39 0.20 Diluted headline earnings per share 3.50 7.15
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
31 December 31 December 31 December 31 December
2018 2017 Headline earnings and headline earnings 2017 2018
GBP million GBP million per share from continuing operations R million R million
7.5 6.5 Basic earnings 114.0 137.8
7.5 6.5 Headline earnings 114.0 137.8
pence pence cents cents
0.39 0.36 Headline earnings per share 6.34 7.15
0.39 0.36 Diluted headline earnings per share 6.33 7.15
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
31 December 31 December 31 December 31 December
2018 2017 2017 2018
GBP million GBP million Summary of net debt R million R million
102.7 39.2 Net debt 653.0 1,880.3
44.5 40.6 Revolving credit facility 676.6 815.4
54.6 5.7 Elikhulu term loan facility 95.1 1,000.0
6.3 - Gold prepayments - 115.0
(2.7) (7.1) Cash and cash equivalents (118.7) (50.1)
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
31 December 31 December Net cash generated by operations 31 December 31 December
2018 2017 after taxation, royalty and finance 2017 2018
GBP million GBP million costs and before dividends R million R million
17.0 8.5 Net cash generated by operations after 171.1 316.6
taxation, royalty and finance costs and
before dividends
23.4 9.5 Cash generated by operations 187.5 434.0
(1.1) 0.4 Taxation refund/(paid) 7.6 (20.5)
(0.3) (0.4) Royalties paid (6.5) (5.4)
- (0.4) Payment of cash settled share options (6.9) (0.5)
(0.5) - Rehabilitation expenses - (8.6)
0.8 - Net receipts from financial instruments - 14.6
(5.3) (0.6) Net finance costs (10.6) (97.0)
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
31 December 31 December Net asset value 31 December 31 December
2018 2017 Unit per share Unit 2017 2018
6.5 11.7 pence Group net asset Cents 194.3 114.4
value per share
2,234.7 2,234.7 share million Total shares issued shares million 2,234.7 2,234.7
at year-end
(306.4) (436.4) share million Treasury shares shares million (436.4) (306.4)
1,928.3 1,798.3 share million shares million 1,798.3 1,928.3
124.9 212.3 GBP million Net asset value R million 3,493.8 2,207.0
Operational production report for the period ended 31 December 2018
Continuing operations
Period Evander
ended Barberton Mines
31 December Units Mines BTRP (note 5) Elikhulu
Tonnes milled - underground 2018 (t) 127,858 - 37,349 -
2017 (t) 124,969 - - -
Tonnes milled - surface 2018 (t) 12,471 - - -
2017 (t) - - - -
Tonnes milled - total underground
and surface 2018 (t) 140,329 - 37,349 -
2017 (t) 124,969 - - -
Tonnes processed - tailings (note 4) 2018 (t) - 567,109 918,809 3,534,278
2017 (t) - 458,779 907,969 -
Tonnes processed - surface feedstock 2018 (t) - - 67,832 -
2017 (t) - - 184,161 -
Tonnes processed - total tailings
and surface feedstock 2018 (t) - 567,109 986,641 3,534,278
2017 (t) - 458,779 1,092,130 -
Tonnes milled and processed - total 2018 (t) 140,329 567,109 1,023,990 3,534,278
2017 (t) 124,969 458,779 1,092,130 -
Headgrade - underground 2018 (g/t) 9.6 - - -
2017 (g/t) 8.7 - - -
Headgrade - surface 2018 (g/t) 2.3 - - -
2017 (g/t) - - - -
Headgrade - total underground
and surface 2018 (g/t) 8.9 - - -
2017 (g/t) 8.7 - - -
Headgrade - tailings 2018 (g/t) - 1.5 0.3 0.3
2017 (g/t) - 1.4 0.3 -
Headgrade - surface feedstock 2018 (g/t) - - 2.0 -
2017 (g/t) - - 2.0 -
Headgrade - total tailings and
surface feedstock 2018 (g/t) - 1.5 0.4 0.3
2017 (g/t) - 1.4 0.6 -
Headgrade - total 2018 (g/t) 8.9 1.5 0.4 0.3
2017 (g/t) 8.7 1.4 0.6 -
Overall recovered grade 2018 (g/t) 8.54 0.66 0.46 0.13
2017 (g/t) 8.00 0.57 0.34 -
Overall recovery - underground 2018 (%) 94 - 94 -
2017 (%) 93 - - -
Overall recovery - tailings 2018 (%) - 42 46 44
2017 (%) - 41 56 -
Gold produced - underground 2018 (oz) 37,735 - 8,821 -
2017 (oz) 32,159 - - -
Gold production - surface operations 2018 (oz) 815 - - -
2017 (oz) - - - -
Gold produced - tailings (note 3) 2018 (oz) - 12,006 3,634 15,292
2017 (oz) - 8,452 3,248 -
Discontinued
Continuing operations operations
Period Barbeton Evander
ended Mines Mines Group Evander
31 December Units Total Total Total Mines
Tonnes milled - underground 2018 (t) 127,858 37,349 165,207 -
2017 (t) 124,969 - 124,969 174,233
Tonnes milled - surface 2018 (t) 12,471 - 12,471 -
2017 (t) - - - -
Tonnes milled - total
underground and surface 2018 (t) 140,329 37,349 177,678 -
2017 (t) 124,969 - 124,969 174,233
Tonnes processed - tailings (note 4) 2018 (t) 567,109 4,453,087 5,020,196 -
2017 (t) 458,779 907,969 1,366,748 -
Tonnes processed - surface feedstock 2018 (t) - 67,832 67,832 -
2017 (t) - 184,161 184,161 -
Tonnes processed - total
tailings and surface feedstock 2018 (t) 567,109 4,520,919 5,088,028 -
2017 (t) 458,779 1,092,130 1,550,909 -
Tonnes milled and processed -total 2018 (t) 707,438 4,558,268 5,265,706 -
2017 (t) 583,748 1,092,130 1,675,878 174,233
Headgrade - underground 2018 (g/t) 9.6 - 9.6 -
2017 (g/t) 8.7 6.1 7.2 6.1
Headgrade - surface 2018 (g/t) 2.3 - 2.3 -
2017 (g/t) - - - -
Headgrade - total underground
and surface 2018 (g/t) 8.9 - 8.9 -
2017 (g/t) 8.7 6.1 7.2 6.1
Headgrade - tailings 2018 (g/t) 1.5 0.3 0.7 -
2017 (g/t) 1.4 0.3 0.7 -
Headgrade - surface feedstock 2018 (g/t) - 2.0 2.0 -
2017 (g/t) - 2.0 2.0 -
Headgrade - total tailings
and surface feedstock 2018 (g/t) 1.5 0.3 0.5 -
2017 (g/t) 1.4 0.6 0.8 -
Headgrade - total 2018 (g/t) 3.0 0.4 0.5 -
2017 (g/t) 2.9 1.4 1.9 6.1
Overall recovered grade 2018 (g/t) 2.22 0.21 0.48 -
2017 (g/t) 2.16 0.34 0.98 5.84
Overall recovery - underground 2018 (%) 94 94 94 -
2017 (%) 93 - 93 96
Overall recovery - tailings 2018 (%) 42 46 44 -
2017 (%) 41 56 49 -
Gold produced - underground 2018 (oz) 37,735 8,821 46,556 -
2017 (oz) 32,159 - 32,159 32,734
Gold production - surface operations 2018 (oz) 815 - 815 -
2017 (oz) - - - -
Gold produced - tailings (note 3) 2018 (oz) 12,006 18,926 30,932 -
2017 (oz) 8,452 3,248 11,700 -
Total continuing operations
Period Barbeton Evander
ended Mines Mines Group
31 December Units Total Total Total
Tonnes milled - underground 2018 (t) 127,858 37,349 165,207
2017 (t) 124,969 174,233 299,202
Tonnes milled - surface 2018 (t) 12,471 - 12,471
2017 (t) - - -
Tonnes milled - total underground and surface 2018 (t) 140,329 37,349 177,678
2017 (t) 124,969 174,233 299,202
Tonnes processed - tailings (note 4) 2018 (t) 567,109 4,453,087 5,020,196
2017 (t) 458,779 907,969 1,366,748
Tonnes processed - surface feedstock 2018 (t) - 67,832 67,832
2017 (t) - 184,161 184,161
Tonnes processed - total tailings and surface feedstock 2018 (t) 567,109 4,520,919 5,088,028
2017 (t) 458,779 1,092,130 1,550,909
Tonnes milled and processed - total 2018 (t) 707,438 4,558,268 5,265,706
2017 (t) 583,748 1,266,363 1,850,111
Headgrade - underground 2018 (g/t) 9.6 7.8 9.2
2017 (g/t) 8.7 6.1 7.2
Headgrade - surface 2018 (g/t) 2.3 - 2.3
2017 (g/t) - - -
Headgrade - total underground and surface 2018 (g/t) 8.9 7.8 8.7
2017 (g/t) 8.7 6.1 7.2
Headgrade - tailings 2018 (g/t) 1.5 0.3 0.7
2017 (g/t) 1.4 0.3 0.7
Headgrade - surface feedstock 2018 (g/t) - 2.0 2.0
2017 (g/t) - 2.0 2.0
Headgrade - total tailings and surface feedstock 2018 (g/t) 1.5 0.3 0.5
2017 (g/t) 1.4 0.6 0.8
Headgrade - total 2018 (g/t) 3.0 0.4 0.5
2017 (g/t) 2.9 1.4 1.9
Overall recovered grade 2018 (g/t) 2.22 0.21 0.48
2017 (g/t) 2.16 1.10 1.43
Overall recovery - underground 2018 (%) 94 94 94
2017 (%) 93 96 94
Overall recovery - tailings 2018 (%) 42 46 44
2017 (%) 41 56 49
Gold produced - underground 2018 (oz) 37,735 8,821 46,556
2017 (oz) 32,159 32,734 64,893
Gold production - surface operations 2018 (oz) 815 - 815
2017 (oz) - - -
Gold produced - tailings (note 3) 2018 (oz) 12,006 18,926 30,932
2017 (oz) 8,452 3,248 11,700
Continuing operations
Period Evander
ended Barberton Mines
31 December Units Mines BTRP (note 5) Elikhulu
Gold produced - surface feedstock 2018 (oz) - - 2,711 -
2017 (oz) - - 8,689 -
Gold produced - total (note 3) 2018 (oz) 38,550 12,006 15,166 15,292
2017 (oz) 32,159 8,452 11,937 -
Gold sold - total 2018 (oz) 37,829 11,478 15,166 15,292
2017 (oz) 32,159 8,452 11,937 -
Average ZAR gold price received 2018 (R/kg) 556,770 556,576 553,938 563,250
2017 (R/kg) 554,361 554,589 439,560 -
Average USD gold price received 2018 (USD/oz) 1,220 1,220 1,214 1,216
2017 (USD/oz) 1,288 1,288 1,021 -
ZAR cash cost 2018 (R/kg) 454,164 252,880 565,367 239,639
2017 (R/kg) 492,826 281,863 337,055 -
ZAR all-in sustaining costs 2018 (R/kg) 532,021 254,837 559,898 258,229
2017 (R/kg) 570,611 282,376 342,189 -
ZAR all-in cost 2018 (R/kg) 551,908 259,431 559,898 1,298,489
2017 (R/kg) 577,259 328,295 342,951 -
USD cash cost 2018 (USD/oz) 1,009 510 1,239 517
2017 (USD/oz) 1,145 655 783 -
USD all-in sustaining cost 2018 (USD/oz) 1,180 514 1,227 557
2017 (USD/oz) 1,325 656 795 -
USD all-in cost 2018 (USD/oz) 1,223 525 1,227 2,803
2017 (USD/oz) 1,341 763 797 -
R cash cost per tonne 2018 (R/t) 3,860 147 260 32
2017 (R/t) 3,945 162 115 -
Capital expenditure 2018 (R million) 88.7 2.1 0.2 494.8
2017 (R million) 59.3 12.1 1.3 511.7
Revenue 2018 (R million) 655.1 198.7 261.3 267.9
2017 (R million) 554.5 145.8 163.2 -
Cost of production 2018 (R million) 534.4 90.3 266.7 114.0
2017 (R million) 493.0 74.1 125.1 -
All-in sustainable cost of production 2018 (R million) 626.0 91.0 264.1 122.8
2017 (R million) 570.8 74.2 127.0 -
All-in cost of production 2018 (R million) 649.4 92.6 264.1 617.6
2017 (R million) 577.4 86.3 127.3 -
Adjusted EBITDA 2018 (R million) 137.2 82.7 24.8 145.1
2017 (R million) 72.3 50.4 81.0 -
Average exchange rate 2018 (ZAR:USD) 14.19 14.19 14.19 14.41
2017 (ZAR:USD) 13.39 13.39 13.39 -
Discontinued
Continuing operations operations
Period Barbeton Evander
ended Mines Mines Group Evander
31 December Units Total Total Total Mines
Gold produced - surface feedstock 2018 (oz) - 2,711 2,711 -
2017 (oz) - 8,689 8,689 -
Gold produced - total (note 3) 2018 (oz) 50,556 30,458 81,014 -
2017 (oz) 40,611 11,937 52,548 32,734
Gold sold - total 2018 (oz) 49,307 30,458 79,765 -
2017 (oz) 40,611 11,937 52,548 32,734
Average ZAR gold price received 2018 (R/kg) 556,725 558,614 557,446 -
2017 (R/kg) 554,413 439,560 553,653 588,723
Average USD gold price received 2018 (USD/oz) 1,220 1,224 1,222 -
2017 (USD/oz) 1,288 1,021 1,286 1,368
ZAR cash cost 2018 (R/kg) 407,308 401,829 405,216 -
2017 (R/kg) 448,923 337,055 423,507 552,933
ZAR all-in sustaining costs 2018 (R/kg) 467,496 408,439 444,946 -
2017 (R/kg) 510,625 342,189 472,359 663,970
ZAR all-in cost 2018 (R/kg) 483,823 930,721 654,470 -
2017 (R/kg) 525,447 342,951 483,987 668,704
USD cash cost 2018 (USD/oz) 893 881 888 -
2017 (USD/oz) 1,043 783 984 1,284
USD all-in sustaining cost 2018 (USD/oz) 1,025 895 975 -
2017 (USD/oz) 1,186 795 1,097 1,542
USD all-in cost 2018 (USD/oz) 1,061 2,040 1,435 -
2017 (USD/oz) 1,221 797 1,124 1,553
R cash cost per tonne 2018 (R/t) 883 84 191 -
2017 (R/t) 971 115 413 3,231
Capital expenditure 2018 (R million) 90.8 495.0 585.8 -
2017 (R million) 71.4 1.3 72.7 106.0
Revenue 2018 (R million) 853.8 529.2 1,383.0 -
2017 (R million) 700.3 204.6 904.9 599.4
Cost of production 2018 (R million) 624.7 380.7 1,005.4 -
2017 (R million) 567.1 125.1 692.2 563.0
All-in sustainable cost of production 2018 (R million) 717.0 386.9 1,103.9 -
2017 (R million) 645.0 127.0 772.0 676.0
All-in cost of production 2018 (R million) 742.0 881.7 1,623.7 -
2017 (R million) 663.7 127.3 791.0 680.8
Adjusted EBITDA 2018 (R million) 219.9 169.9 389.8 -
2017 (R million) 122.7 81.0 203.7 10.2
Average exchange rate 2018 (ZAR:USD) 14.19 14.19 14.19 14.19
2017 (ZAR:USD) 13.39 13.4 13.39 13.39
Total continuing operations
Period Barbeton Evander
ended Mines Mines Group
31 December Units Total Total Total
Gold produced - surface feedstock 2018 (oz) - 2,711 2,711
2017 (oz) - 8,689 8,689
Gold produced - total (note 3) 2018 (oz) 50,556 30,458 81,014
2017 (oz) 40,611 44,671 85,282
Gold sold - total 2018 (oz) 49,307 30,458 79,765
2017 (oz) 40,611 44,671 85,282
Average ZAR gold price received 2018 (R/kg) 556,725 558,614 557,446
2017 (R/kg) 554,413 548,863 551,506
Average USD gold price received 2018 (USD/oz) 1,220 1,224 1,222
2017 (USD/oz) 1,288 1,275 1,281
ZAR cash cost 2018 (R/kg) 407,308 401,829 405,216
2017 (R/kg) 448,923 495,246 473,187
ZAR all-in sustaining costs 2018 (R/kg) 467,496 408,439 444,946
2017 (R/kg) 510,625 577,984 545,908
ZAR all-in cost 2018 (R/kg) 483,823 930,721 654,470
2017 (R/kg) 525,447 581,656 554,890
USD cash cost 2018 (USD/oz) 893 881 888
2017 (USD/oz) 1,043 1,150 1,099
USD all-in sustaining cost 2018 (USD/oz) 1,025 895 975
2017 (USD/oz) 1,186 1,343 1,268
USD all-in cost 2018 (USD/oz) 1,061 2,040 1,435
2017 (USD/oz) 1,221 1,351 1,289
R cash cost per tonne 2018 (R/t) 883 84 191
2017 (R/t) 971 543 678
Capital expenditure 2018 (R million) 90.8 495.0 585.8
2017 (R million) 71.4 619.0 690.4
Revenue 2018 (R million) 853.8 529.2 1,383.0
2017 (R million) 700.3 762.6 1,462.9
Cost of production 2018 (R million) 624.7 380.7 1,005.4
2017 (R million) 567.1 688.1 1,255.2
All-in sustainable cost of production 2018 (R million) 717.0 386.9 1,103.9
2017 (R million) 645.0 803.1 1,448.1
All-in cost of production 2018 (R million) 742.0 881.7 1,623.7
2017 (R million) 663.7 808.1 1,471.8
Adjusted EBITDA 2018 (R million) 219.9 169.9 389.8
2017 (R million) 122.7 91.2 213.9
Average exchange rate 2018 (ZAR:USD) 14.19 14.19 14.19
2017 (ZAR:USD) 13.39 13.39 13.39
Note 1: Split between ETRP and surface feedstock cost per ton is R42.61/t and R174.91/t respectively,
averaging at R108/t.
Note 2: Adjusted EBITDA is represented by earnings before interest, taxation, depreciation and loss from
discontinued operations.
Note 3: Gold produced excludes 22.89kg's and gold in process produced by Elikhulu during August 2018. These
kilogrammes were capitalised in accordance with IFRS.
Note 4: The tonnes processed by Elikhulu excludes 509,759t which was capitalised in accordance with IFRS.
Note 5: Operations include ETRP and Evander underground operations.
May differ to APM summary report due to rounding. Refer to note 16.
Company information
Pan African Resources PLC
(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
Corporate office
The Firs Office Building
2nd Floor, Office 204
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) 20 7796 8644
Facsimile: +44 (0) 20 7796 8645
Directors
Cobus Loots
Pan African Resources Chief Executive Officer
Office +27 (0) 11 243 2900
Deon Louw
Pan African Resources
Financial Director
Office +27 (0) 11 243 2900
Company secretary
Phil Dexter
St James?s Corporate Services Limited
Office +44 (0) 20 7796 8644
JSE sponsor
Marian Gaylard
Questco Corporate Advisory Proprietary Limited
Office: +27 (0) 11 011 9200
Nominated adviser and joint broker
John Prior/Paul Gillam Numis
Securities Limited
Office: +44 (0) 20 7260 1000
Joint brokers
Ross Allister/David Mckeown
Peel Hunt LLP
Office: +44 (0) 20 7418 8900
Jeffrey Couch/Thomas Rider
BMO Capital Markets Limited
Office: +44 (0) 20 7236 1010
Public and investor relations SA
Julian Gwillim
Aprio Strategic Communications
Office: +27 (0) 11 880 0037
Public and investor relations UK
Bobby Morse/Chris Judd
Buchanan
Office: +44 (0) 20 7466 5000
paf@buchanan.uk.com
Meeting and conference call details are as follows:
Date: 20 February 2019
Time: 11:00 (SAST time), 09:00 (UK time)
Venue: Batha Room, 54 on Bath, 54 Bath Avenue, Rosebank, Johannesburg.
For those attending in person
Parking is available at Rosebank Mall. Refreshments will be served after
the presentation.
For those dialing in
A live teleconference facility is available for dial-in participants on the
following numbers. Please ask to be joined to the Pan African Resources PLC
call and provide your name and company upon entering the call.
UK listeners: 0 333 300 1418
SA listeners: 010 201 6800
South Africa toll free: 0800 200 648
Date: 20/02/2019 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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