Wrap Text
Unaudited interim financial results for Pan African for the six months ended 31 December 2022 – short-form
Pan African Resources PLC Pan African Resources Funding Company
(Incorporated and registered in England and Wales Limited
under the Companies Act 1985 with registered Incorporated in the Republic of South Africa
number 3937466 on 25 February 2000) with limited liability
Share code on AIM: PAF Registration number: 2012/021237/06
Share code on JSE: PAN Alpha code: PARI
ISIN: GB0004300496 (PAR Funding Company)
ADR ticker code: PAFRY
(“Pan African” or the “Company” or the “Group”)
(Key features are reported in United States dollar (US$) or South African rand (ZAR) where relevant)
UNAUDITED INTERIM FINANCIAL RESULTS FOR PAN AFRICAN FOR THE SIX MONTHS ENDED
31 DECEMBER 2022 – SHORT-FORM ANNOUNCEMENT
KEY FEATURES
• Gold production of 92,307oz (2021: 108,085oz), with increased production forecast for the
second half of the 2023 financial year as Barberton Mines’ continuous operating cycle and
other optimisation initiatives are implemented
• Full-year production guidance maintained between 195,000oz and 205,000oz
• Refocused health and safety initiatives to address the regression in underground mining
safety rates
• All-in sustaining costs (AISC) for the six months ended 31 December 2022 (current reporting
period) of US$1,291/oz (2021: US$1,173/oz)
• Group operations (excluding Consort and Sheba Mines), which account for more than 85% of
gold output, produced at an AISC of US$1,139/oz (2021: US$1,052/oz)
• Profit after tax of US$28.9 million (2021: US$46.1 million) and headline earnings of US$29.1
million (2021: US$46.1 million)
• Earnings per share and headline earnings per share decreased to US 1.52 cents per share
(2021: US 2.39 cents per share)
• Inaugural sustainability-linked bond issued for US$47.3 million during December 2022 to
fund growth projects
• Cash returned to shareholders with a net dividend of US$20.0 million (2021: US$21.6
million)
• Mintails project construction is planned to commence by June 2023 subject to finalisation of
the funding package and permitting
• Site clearance completed for Barberton Mines’ 8.5MWac solar photovoltaic (PV) renewable
energy plant, with construction scheduled to commence by June 2023
This announcement contains inside information.
Cobus Loots, Pan African’s chief executive officer, commented:
Overview
“Reduced gold production over the past six months can primarily be attributed to the performance of
Barberton Mines’ underground operations. We believe that the tangible measures being implemented
at these operations, as detailed in this announcement, will result in a significant improvement in
production during the second half of the financial year and in the years ahead. The balance of our
portfolio delivered in line with expectations, despite disruptions to our electricity supply and
inclement weather conditions adversely impacting operations.
At our Evander Mines operation alone, electricity issues adversely impacted production by
approximately 5%, reinforcing our strategic objective to expand our renewable energy portfolio in the
years ahead. Given the increased production performance expected in the second half of the 2023
financial year, we will maintain production guidance of 195,000oz to 205,000oz for the full year
subject to consistency in Eskom’s electricity supply.
Pan African is committed in its resolve to continued value creation for its stakeholders by positioning
the Group as a sustainable, safe, high-margin and long-life gold producer with an attractive pipeline
of growth projects.
Health and safety
Regrettably, the Group has seen a regression in its safety performance during the current reporting
period at its underground operations, following the excellent safety records achieved in prior years.
The Group has implemented a number of programmes to address the identified safety performance
shortcomings at these underground operations.
Operational overview
Group production for the current reporting period decreased by 14.6% to 92,307oz (2021: 108,085oz)
following the record gold production achieved in the previous reporting period.
The decrease in production, mainly attributable to Barberton Mines’ underground operations, will be
addressed by reconfiguring Fairview and Sheba Mines’ shift cycles to continuous (24-hour) operations
and converting Consort Mine to a contract mining model. These restructuring plans, together with
other initiatives to increase mining flexibility, will ensure the sustainability of these operations in the
future.
The Barberton Tailings Retreatment Plant produced 10,012oz (2021: 9,126oz) for the current
reporting period at an AISC of US$725/oz (2021: US$814/oz). Gold production from Elikhulu, also one
of the lowest-cost gold mining operations in Southern Africa, remained steady at 25,830oz (2021:
25,900oz) at an AISC of US$947/oz (2021: US$937/oz), despite electricity supply disruptions and
inclement weather conditions during the November and December rainy season. Gold production
from Elikhulu is expected to increase marginally in the second half of the 2023 financial year, as
material from the Leslie/Bracken tailings storage facility (TSF) is re-treated, following the installation
of the 6km pipeline and successful commissioning of its pump station in September 2022.
Evander Mines’ underground production decreased by 29.8% to 19,173oz (2021: 27,312oz), despite
an increase in processed tonnes by 6.0% to 73,946t (2021: 69,790t) due to the normalisation of mining
face grades in line with planned grades and limited mining rates in accordance with geotechnical
parameters for the shaft pillar’s safe extraction.
Financial performance
The Group’s AISC increased by 10.1% to US$1,291/oz (2021: US$1,173/oz). Importantly, operations
which account for over 85% of the Group’s total production achieved an AISC of US$1,139/oz, resulting
in an AISC margin of 34.0% on the average gold price of US$1,725/oz earned by the Group during the
current reporting period from these operations. Post the current reporting period, spot gold prices
have continued to increase. If this increase is maintained, it should further benefit operational margins
in the second half of the financial year.
Despite the current reporting period’s decline in production, relative to the record production of the
previous reporting period, the Group generated profit after tax of US$28.9 million (2021: US$46.1 million),
which is identical to the US$28.9 million profit generated during the second half of the 2022
financial year.
The Group has embarked on a number of restructuring initiatives to reduce its production cost in real
terms, which combined with the electricity cost savings from large-scale solar PV renewable energy
projects and anticipated increased production during the remainder of the 2023 financial year, is
expected to contribute to reducing unit production cost in the future. Savings at Evander Mines’ solar
PV renewable energy plant currently average approximately US$145,000 a month following its full
commissioning in May 2022. We have now convincingly demonstrated the business case for
renewable energy in the South African mining industry and will maintain our strategic objective to
expand this footprint significantly in the coming years.
Growth projects overview
We are encouraged by the progress made in relation to the Group’s growth projects. The development
of the 24, 25 and 26 Level project at Evander Mines is on track, with equipping of the existing
ventilation shaft from 17 to 24 Levels underway. Hoisting of ore via this vertical shaft will significantly
streamline ore handling and reduce dependency on the current conveyor belt system.
Following the positive definitive feasibility study results for the remining of Mogale Gold Proprietary
Limited’s (Mogale Gold’s) TSFs, the Group is in the process of completing optimisation and value
engineering activities in preparation for the construction of the tailings retreatment plant (the Mintails
project), which is expected to commence by June 2023, subject to permitting and finalisation of
funding (expected in April 2023) for the project’s construction. Concept engineering works for the
Soweto Cluster’s TSFs are also underway. This operation is expected to increase current Group gold
production by up to 25%, or 50,000oz per year, post commissioning.
Processing of the 10,000t bulk sample from the Royal Sheba project at the Sheba and Consort
metallurgical plants was completed, with recovered grades of 1.22g/t in excess of the planned grade
of 0.5g/t, and with recoveries in line with expectations. Preliminary mine design work has been
completed with further optimisation work currently in progress. The Royal Sheba orebody has a
Mineral Resource of 17.2Mt, with initial mining anticipated to achieve head grades of up to 3.13g/t.
Environmental, social and governance
Pan African continues to pioneer and pursue its sustainability commitment through adherence to its
‘beyond compliance’ ESG approach. The Group’s collaboration and partnerships with numerous
specialists in local community development, climate change and energy management, biodiversity
conservation, agriculture, water stewardship and tailings management have positioned the Company
and its stakeholders as impactful ESG role players in the gold mining industry. Pan African’s ESG
approach has recently been recognised through awards in the ESG field.
Outlook for the 2023 financial year
The Group expects its production for the full 2023 financial year to be in line with the production
achieved in the 2022 financial year. We are positioned for further growth as we progress the
development of our organic projects and seek to commence with the full-scale construction of the
Mintails project.”
DIRECTORS’ RESPONSIBILITY
The information in this announcement has been extracted from the unaudited interim financial results
for the six months ended 31 December 2022. The short-form announcement has not been reviewed
by the Company’s auditors. The unaudited interim financial results have been prepared under the
supervision of the financial director, Deon Louw. This short-form announcement is the responsibility
of the directors of Pan African and is only a summary of the information contained in the full
announcement which was released on SENS on 15 February 2023.
Any investment decisions should be based on the full announcement and the Group’s detailed
operational and financial summaries.
AVAILABILITY OF FULL ANNOUNCEMENT
The full announcement is accessible via the JSE link at
https://senspdf.jse.co.za/documents/2023/jse/isse/pan/INT2022.pdf
and via the Company’s website at https://www.panafricanresources.com/wp-content/uploads/Pan-
African-Resources-interim-results-SENS-announcement-2023.pdf
Copies of the full announcement may also be requested by emailing ExecPA@paf.co.za and
electronically via the sponsor (sponsor@questco.co.za) at no charge during business hours.
The Company has a dual primary listing on the JSE in South Africa and the AIM market of the London
Stock Exchange, a secondary listing on the A2X Markets as well as a sponsored Level 1 ADR programme
in the USA through the Bank of New York Mellon.
For further information on Pan African, please visit the Company's website at
www.panafricanresources.com
Rosebank
15 February 2023
Corporate information
Corporate office Registered office
The Firs Office Building 2nd Floor
2nd Floor, Office 204 107 Cheapside
Cnr. Cradock and Biermann Avenues London
Rosebank, Johannesburg EC2V 6DN
South Africa United Kingdom
Office: + 27 (0)11 243 2900 Office: + 44 (0)20 7796 8644
info@paf.co.za info@paf.co.za
Chief executive officer Financial director
Cobus Loots Deon Louw
Office: + 27 (0)11 243 2900 Office: + 27 (0)11 243 2900
Head: investor relations Website: www.panafricanresources.com
Hethen Hira
Tel: + 27 (0)11 243 2900
E-mail: hhira@paf.co.za
Company secretary Nominated adviser and joint broker
Jane Kirton Ross Allister/David McKeown
St James's Corporate Services Limited Peel Hunt LLP
Office: + 44 (0)20 7796 8644 Office: +44 (0)20 7418 8900
JSE Sponsor and JSE debt sponsor Joint broker
Ciska Kloppers Thomas Rider/Nick Macann
Questco Corporate Advisory Proprietary Limited BMO Capital Markets Limited
Office: + 27 (0)11 011 9200 Office: +44 (0)20 7236 1010
Joint broker
Matthew Armitt/Jennifer Lee
Joh. Berenberg, Gossler & Co KG
Office: +44 (0)20 3207 7800
5
Date: 15-02-2023 09:00:00
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