Pan African Resources PLC
(Incorporated and registered in England and Wales, registration number 3937466)
Share code on AIM : PAF
Share code on JSE : PAN
ISIN
: GB0004300496
(“Pan African Resources” or the “company” or the “group”)
Provisional audited results for the
year ended 30 June 2018
Pan African Resources CEO Cobus Loots commented:
“Pan African Resources acted decisively during the year under
review to reconfigure its operations for sustainable profitability.
Our cost base is now significantly lower, and
efficiencies and stability improved due to the
restructuring we effected during the year. We are
confident the group is now positioned as a lower-cost, long-life
gold miner, consistent with stakeholder expectations and our key
strategic objectives. All our producing assets are today generating
positive cash flows through the production of low-cost gold
ounces.
A key highlight of the year was the excellent progress made
towards the completion of the Elikhulu tailings retreatment plant.
The project poured its first gold on 16
August 2018, ahead of schedule and within the projected
budget. It is expected to be a flagship operation within our
low-cost, long-life asset base.
In terms of our existing operations, the regrind mill at the
Barberton tailings retreatment plant was completed, which
alleviated past processing challenges. Barberton Mines’
sub-vertical shaft project at Fairview, together with our current
programme of accelerated underground development, will
facilitate improved access to the high-grade Fairview
11-block Main Reef Complex orebody in the future.
I am pleased to report an excellent improvement in group-wide
on-mine safety and congratulate Barberton Mines on achieving its
one-million fatality-free shifts milestone during June 2018.
Barberton Mines has also made good progress in its stakeholder
engagement efforts in order to minimise operational stoppages, and
these initiatives will continue across the group.
Our existing portfolio presents attractive opportunities to
further the group’s profitable production growth. The Royal Sheba
Project at Barberton Mines offers the potential to access low-cost
near surface ounces and significantly boost Barberton Mines’
production in the short to medium term.
The Egoli Project at Evander Mines also remains an attractive
opportunity as a standalone project, following the difficult but
necessary decision to cease large-scale underground
mining activities at 8 Shaft.
Given all the difficulties we experienced in the past year, our
board elected not to recommend a final dividend for the 2018
financial year. Even though this decision was expected by
most shareholders, it remains disappointing, given our group’s
excellent track record of sector-leading dividends. Our board
is confident that at prevailing ZAR gold prices, and as a result of
the remedial measures implemented, Pan African Resources will be
able to resume its attractive dividends in the near future.
Pan African Resources has started the 2019 financial year well,
and we are on track to achieving our production guidance of
approximately 170,000oz for the 2019 financial year. We will
continue to focus on improving and expanding our portfolio, on a
sustainable and value-accretive basis, to the benefit of all
stakeholders.”
Key features reported in South African
Rand (“ZAR” or “R”) and Pound Sterling (“GBP”)
Strategic repositioning of the
group
- During the year ended 30 June
2018 (“current reporting period”), the group restructured
operations to ensure the long-term sustainability and profitability
of its business.
- Large-scale underground mining at Evander Mines’
underground operations, which includes 8 Shaft, 7 Shaft and the
run-of-mine circuit in the Kinross
metallurgical plant, was discontinued on 31 May 2018. As a
result, 1,635 employees were retrenched at a cost of R161
million. Evander Mines’ underground operations was a
high-cost gold producer, producing at an all-in cost of R963,882/kg
or USD2,331/oz (2017: R959,976/kg or
USD2,197/oz).
- With the final commissioning of Elikhulu concluded
during September 2018, the group has
established a material, safe, low-cost and long-life tailings
reprocessing business, comprising the following operations:
o Barberton tailings retreatment plant (“BTRP”):
Processing capacity of 100,000tpm @ ~1.4g/t
o Elikhulu
: Processing capacity of 1,000,000tpm @ ~0.3g/t
o Evander tailings retreatment plant
(“ETRP”) : Processing capacity of
200,000tpm @ ~0.3g/t
- Barberton Mines’ underground operations are forecast to
produce approximately 80,000oz during the 2019 financial year, an
improvement of 9.4% from 73,125oz in the 2018 financial year. At
Barberton Mines, the underground development rates will be
increased by approximately 60% and together with the new
sub-vertical shaft, which is under construction this will
facilitate improved access to additional high-grade
Fairview 11-block mining platforms. These initiatives will assist
in maintaining and increasing future gold production from this
long-life asset.
- Recent exploration drilling at Barberton Mines’ Royal
Sheba Project has increased resources by 150% from 0.36Moz (2.60Mt
at 4.32g/t) to 0.9Moz (8.56Mt at 3.27g/t). The group expects to
finalise a definitive feasibility study for Royal Sheba by
February 2019. The project has the
potential to significantly increase gold production from Barberton
Mines in the next years.
- The group is now repositioned as a low-cost producer and
is well placed for an improved performance in the next financial
year. The repositioning has reduced the unit cost of production and
increased group profitability, with the majority of its production
ounces coming from low-cost and safe tailings retreatment
operations.
Operational key features
- The group’s gold production for the current reporting
period reduced to 160,444oz (2017: 173,285oz), primarily because of
the cessation of mining at Evander Mines’ underground operations on
31 May 2018.
- The Elikhulu Project, which achieved its inaugural gold
pour on 16 August 2018, was fully
commissioned during September 2018,
ahead of schedule. The project is still forecast to be completed
within its original budget.
- Improved overall safety performances from Barberton
Mines and Evander Mines.
- Barberton Mines’ Royal Sheba Project presents an
opportunity to expand Barberton Mines’ production profile the short
to medium term. The drilling campaign conducted during the
year increased the Royal Sheba gold resource by 150%, 0.36Moz to
0.9Moz.
- The feasibility study for Evander Mines’ Egoli Project
(previously referred to as the 2010 Pay Channel Project) has been
updated to cater for the cessation of mining at Evander Mines’
underground operations and the construction of a new run-of-mine
metallurgical plant circuit. The project remains attractive and has
a revised pre-taxation internal rate of return of 34%, and a
pre-taxation net present value of R1.04 billion.
- Reduced production from Barberton Mines of 90,629oz
(2017: 98,508oz) due to:
o lower head grades and processing
difficulties at the BTRP, after encountering coarser fraction
tailings, which produced 9,241oz less compared to the prior
reporting period. The BTRP completed the installation of a regrind
mill in May 2018, which has
effectively dealt with these processing difficulties.
o underground production for the current
reporting period improved by 1,362oz, following the mining of
higher grades from Fairview’s high-grade 272 and 358 platforms;
and
o Barberton Mines experienced
approximately 58 lost production days due to industrial action and
community unrest.
- The group’s detailed operational and financial
summaries, per entity, are disclosed on the Pan African Resources
website at
http://www.panafricanresources.com/investors/financial-reports/.
Financial key features
- The profit after taxation from the group’s continuing
operations was R202.0 million (2017: R700.6 million). In GBP terms,
the profit after taxation from the group’s continuing operations
was GBP11.5 million (2017:
GBP40.6 million).
- The group incurred a once-off impairment charge of R1.78
billion (GBP106.3 million) associated
with the cessation of Evander Mines’ underground operations and the
resultant retrenchment costs of R161 million (GBP9.3 million).
- As a result of the impairment charge and retrenchment
costs the group’s continued and discontinued operations (“combined
operations”) profit after taxation of R309.9 million (GBP17.9 million) in the prior reporting period
reduced to a loss after taxation of R1.56 billion (GBP93.3 million) in the current reporting
period.
- Continuing operations’ earnings per share (“EPS”)
decreased to 11.16 cents per share
(2017: 44.78 cents per share), while
in GBP terms, continuing operations EPS decreased to a 0.63 pence per share (2017: 2.60 pence per share).
- The combined operations’ EPS decreased to a loss of
(86.03) cents per share (2017:
19.81 cents earnings per share),
while in GBP terms, the combined operations’ EPS decreased to a
loss of (5.15) pence per share (2017:
1.14 pence earnings per share).
- Continuing operations’ headline earnings per share
(“HEPS”) decreased to 18.71 cents per
share (2017: 38.72 cents per share).
In GBP terms, continuing operations’ HEPS decreased to 1.08 pence per share (2017: 2.24 pence per share). Refer to note 3.
- The combined operations’ HEPS decreased to 12.66 cents per share (2017: 20.17 cents per share). In GBP terms, HEPS
decreased to 0.73 pence per share
(2017: 1.17 pence per share). Refer
to note 3.
- Revenue from continuing operations decreased to R1,873.9
million (2017: R2,158.2 million) and, in GBP terms, group revenue
decreased to GBP108.5 million (2017:
GBP125.1 million) as a result of a
decrease in the average ZAR gold price received and gold ounces
sold.
- The group’s earnings before interest taxation,
depreciation and amortisation (“adjusted EBITDA”) decreased to
R416.0 million (2017: R816.0 million), while in GBP terms it
decreased to GBP24.2 million (2017:
GBP47.3 million). Refer to note
3.
- The average ZAR gold price received decreased to
R538,100/kg (2017: R542,773/kg) and, in USD terms, it increased to
USD1,301/oz (2017: USD1,242/oz).
- The all-in sustaining cost per kilogramme of Barberton
Mines’ underground mining operation was well controlled and only
increased in ZAR terms to R507,130/kg (2017: R501,330/kg), and in
USD terms the all-in sustaining cost per ounce increased to
USD1,227/oz (2017: USD1,147/oz).
- The all-in sustaining cost per kilogramme of the group’s
continuing tailings operations increased in ZAR terms to
R297,661/kg (2017: R208,590/kg) and in USD terms, the all-in
sustaining cost per ounce increased to USD720/oz (2017: USD477/oz).
- Due to the group’s lower gold production, the group’s
all-in sustaining cost per kilogramme increased in ZAR terms to
R561,468/kg (2017: R514,435/kg) and in USD terms, the all-in
sustaining cost per ounce increased to USD1,358/oz (2017: USD1,177/oz). Refer to note 3.
- The group paid a final dividend of R185 million or
GBP10.0 million (2016: R300 million
or GBP17.1 million) on 21 December 2017, relating to the 2017 financial
year. This dividend equated to R0.08279 per share or 0.44561 pence per share (2016: R0.1544 per share
or 0.87668 pence per share).
- The sale of Phoenix Platinum Mining Proprietary Limited
(“Phoenix”) to Sylvania Platinum Limited for R89 million or
GBP4.8 million was concluded on
7 November 2017.
- Net debt increased to R1,623.6 million or GBP89.8 million (2017: R67.6 million or
GBP4 million) as the group’s
facilities were drawn to fund the Elikhulu Project’s capital
expenditure and Evander Mines’ retrenchment costs. Refer to note
3.
For the year ended
30 June 2018 |
For the year ended
30 June 2017 |
Metric |
Salient features |
Metric |
For
the year ended 30 June 2017 |
For
the year ended 30 June 2018 |
4,990 |
5,390 |
(Kilogrammes) |
Combined
operations gold sold |
(Oz) |
173,285 |
160,444 |
1,873.9 |
2,158.2 |
(R millions) |
Revenue
– Continuing operations |
(GBP millions) |
125.1 |
108.5 |
538,100 |
542,773 |
(R/kg) |
Average
gold price received |
(USD/oz) |
1,242 |
1,301 |
480,439 |
430,863 |
(R/kg) |
Cash
costs (Note 3) |
(USD/oz) |
986 |
1,162 |
561,468 |
514,435 |
(R/kg) |
All-in
sustaining costs (Note 1) |
(USD/oz) |
1,177 |
1,358 |
614,713 |
540,693 |
(R/kg) |
All-in
costs (Note 3) |
(USD/oz) |
1,237 |
1,487 |
416.0 |
816.0 |
(R millions) |
Adjusted
EBITDA (Note 2) |
(GBP millions) |
47.3 |
24.2 |
(1,556.9) |
309.9 |
(R millions) |
Attributable earnings (Combined operations) |
(GBP millions) |
17.9 |
(93.3) |
202.0 |
700.6 |
(R millions) |
Attributable earnings (Continuing operations) |
(GBP millions) |
40.6 |
11.5 |
229.1 |
315.6 |
(R millions) |
Headline
earnings (Combined operations) (Note 3) |
(GBP millions) |
18.3 |
13.3 |
(86.03) |
19.81 |
(cents) |
EPS
(Combined operations) |
(pence) |
1.14 |
(5.15) |
12.66 |
20.17 |
(cents) |
HEPS
(Combined operations) (Note 3) |
(pence) |
1.17 |
0.73 |
1,623.6 |
67.6 |
(R millions) |
Net debt
(Note 3) |
(GBP millions) |
4.0 |
89.8 |
289.4 |
330.0 |
(R millions) |
Total
sustaining capital expenditure |
(GBP millions) |
19.1 |
16.8 |
1,650.2 |
613.1 |
(R millions) |
Total
capital expenditure |
(GBP millions) |
35.5 |
95.6 |
104.6 |
201.3 |
(cents) |
Net
asset value per share |
(pence) |
12.0 |
5.8 |
1,809.7 |
1,564.3 |
(millions) |
Weighted
average number of shares in issue |
(millions) |
1,564.3 |
1,809.7 |
12.86 |
13.59 |
(R/USD) |
Average
exchange rate |
(R/GBP) |
17.25 |
17.27 |
13.71 |
13.04 |
(R/USD) |
Closing
exchange rate |
(R/GBP) |
16.96 |
18.09 |
Note 1: The all-in sustaining cost per kilogram and
all-in cost per kilogram excludes the Elikhulu capital expenditure
as well as derivative fair value mark-to-market gains / expenses
and relates directly to the current gold mining operations. Refer
to the alternative performance measure (“APM”) summary report for
the period ended 30 June 2018.
Note 2: Adjusted EBITDA is represented by earnings before
interest, taxation, depreciation and amortisation, profit/(loss) on
asset held for sale, profit/(loss) on disposal of investments and
(loss)/profit from discontinued operations. Refer to the APM
summary report for the year ended 30 June
2018.
Note 3: Refer to the APM summary report for the period
ended 30 June 2018.
CEO STATEMENT
During the year under review, the group faced unprecedented
challenges, which included falling ZAR gold prices, volatile
exchange rates, operational challenges at both our Barberton and
Evander operations and a capricious political, labour and community
relations climate in South Africa.
We are however pleased to report that these issues have been
decisively dealt with and the business repositioned to deliver
sustainable value creation into the future.
Following the implementation of several initiatives, Pan African
Resources’ assets have been repositioned to be cash flow generative
through the production of low-cost gold ounces. This includes
our most recent organic growth project, Elikhulu, was fully
commissioned during September 2018,
ahead of time and within its project budget. Though our gold
production for the 2018 financial year was lower than in previous
years, the restructuring has significantly decreased our cost base
and improved efficiencies and stability across all our
operations.
The cessation of Evander Mines’ underground operations and
remedial actions at our other operations was the focus of the board
and management’s attention during the year. With this exercise now
largely completed, the leadership can focus on growing the group’s
profitable ounce production profile in the future.
When a management team is confronted with circumstances that
demand imminent action, it is imperative to be circumspect in
analysing the situation and then taking decisive and expeditious
remedial action. A summary of the principal challenges dealt
with and opportunities realised by the group in the past financial
year include:
Segment |
Challenge/Opportunity |
Management action |
Status |
Evander Mines’
underground operations |
Curtailment of the cash burn at Evander Mines’ underground
operations, particularly given the depressed ZAR gold price
environment.
Opportunity to mine the 8 Shaft pillar and perform reclamation
work. |
The
curtailment of large-scale underground mining operations at Evander
Mines, and resultant retrenchment of 1,635 of our employees, was
difficult and regrettable, however our group had no viable
alternative.
The management team is currently reviewing and assessing options to
access and mine Evander Mines’ 8 Shaft pillar. |
The
retrenchment process was successfully concluded on 31 May
2018. The requirements of S189 of South African Labour
Relations Act, 66 of 1995, were complied with.
The outcome of the assessment to mine the Evander Mines’ 8 Shaft
pillar will be communicated in the near future. |
Elikhulu |
Construction of the
Elikhulu plant - ensuring the plant is completed on schedule and
within budget. |
Construction commenced
in August 2017, with detailed planning and co-ordination to
minimise potential delays and cost overruns. |
Elikhulu’s inaugural
gold pour was on 16 August 2018, within one year of inception of
the construction. The plant was fully commissioned during September
2018. Construction work on the enlarged Kinross tailings facility
continues. |
BTRP |
Unexpected coarse fraction material
encountered, resulting in reduced plant throughput and gold
recoveries from the BTRP. |
Installation of a regrind mill to
assist with material handling and improved recoveries from the
Harper dump coarse fraction material. Process of design and
construction was fast tracked and completed in less than six
months. |
The regrind mill was successfully
commissioned in May 2018, and the BTRP is again performing in line
with expectations. |
Fairview
underground operations |
Limited mining flexibility within
the Fairview Main Reef Complex (“MRC”) orebody. |
Development of two
high-grade mining platforms in the MRC orebody to improve mining
flexibility. This development was completed during January
2018.
Barberton Mines has increased its ongoing development rates in the
2019 financial year with the objective of establishing a third high
grade platform in the Fairview 11-block by the end of June
2019. |
The 358 and 272 high-grade mining
platforms are currently in production with a commensurate increase
in Barberton Mines’ head grade in the second half of the 2018
financial year. These platforms will be available for the
next two to three years, allowing sufficient time for development
into new mining areas. |
Fairview mining operation is
restricted by the hoisting capacity of its No 3 Decline, which is
also used by employees to access workings below 42 Level and the
high-grade 11-block of the MRC. |
The Fairview sub-vertical shaft
project will improve ore handling efficiencies and significantly
reduce the time taken by employees to access high-grade mining
platforms. The sub-vertical shaft project is estimated to improve
production by approximately 7,000oz-10,000oz per annum. |
The R105 million project is
scheduled for completion over the next two to three years. |
Further organic
growth |
Barberton Mines’
Royal Sheba Project presents an opportunity to expand Barberton
Mines’ production profile and access low-cost near-surface minable
ounces over the short to medium term. We did not previously
identify the near-surface opportunity at Royal Sheba and are
exploring similar targets within our mining right area. |
Engaged in a surface
drilling campaign and appointed DRA Global to complete a
feasibility to mine the Royal Sheba orebody as an open-cast mining
operation and then in future an underground mining operation. |
- The drilling
campaign has been completed with excellent results confirming the
extension of the orebody to surface. We have updated the market on
the prospectivity of Royal Sheba and are now considering
alternatives to expedite ‘first gold’ and a large steady-state
operation. |
Labour relations |
Barberton Mines’ wage
agreements expired at the end of the current reporting period. |
Engaged with
representative unions in order to agree a multi-year agreement to
the benefit of all stakeholders. |
- Concluded a
three-year wage agreement with Barberton Mines’ representative
unions. |
Clearly, the challenges we faced during the period, which were
well communicated to the market, have significantly reduced our
profitability for the 2018 financial year.
During the current reporting period, our team decisively dealt
with the issues threatening the future sustainability of the group.
The group is now well positioned to deliver into a much-improved
performance during the 2019 financial year.
Group safety
In terms of safety performances, significant progress was made
over the past year, with on-mine safety improvement campaigns
contributing to these results. Further, Barberton Mines achieved
its one-million fatality-free shift milestone during June 2018. To ensure continued safety
improvements, the group will continue to engage independent safety
experts to review each of the mining operations’ safety systems and
controls. The group experienced no fatalities in the 2018 financial
year (2017: three employees fatally injured). The group’s lost-time
injury frequency rate remained stable at 3.73 (2017: 3.51), while
the reportable injury frequency rate improved materially to 1.08
(2017: 1.53).
Evander Mines and ETRP
The decision to cease underground operations at 8 Shaft was
difficult, given South Africa’s prevailing socio-economic
environment, and the impact on the retrenched miners and their
families. Retrenched employees were offered re-skilling
opportunities, which is continuing, and we have retrained and
re-employed a number of these employees into the Elikhulu Project.
Environmental rehabilitation of the mine will provide further
employment opportunities.
Evander Mines’ underground operations produced 48,565oz (2017:
45,304oz) of gold during the reporting period.
Gold production at ETRP reduced to 21,250oz (2017: 29,473oz). In
the prior reporting period the ETRP treated incrementally more
surface feedstock due to the additional milling capacity that
became available because of the 7 Shaft infrastructure repairs, and
the reduced production from the underground mining operation. The
ETRP’s all-in sustaining cost was R306,120/kg (2017: R242,260/kg)
or USD740/oz (2017: USD554/oz).
Barberton Mines and BTRP
Barberton Mines’ gold production reduced by 7,879oz to 90,629oz
(2017: 98,508oz), predominantly due to the following:
- BTRP gold production reduced to 17,504oz (2017:
26,745oz) due to the re-mining operation moving to the lower-grade
Harper dump following depletion of the Bramber dump, and the head
grade reducing from 2.3g/t to 1.4g/t. The Harper dump material has
a larger coarse fraction, which resulted in processing problems and
a reduction in plant recoveries to approximately 30% on the
feedstock. Barberton Mines’ underground mining production increased
to 73,125oz (2017: 71,763oz). The underground tonnes milled
decreased to 237,831t (2017: 246,915t), while the head grade
improved to 10.3g/t (2017: 9.8g/t).
- Gold production was adversely impacted by operational
disruptions from pressure groups, community unrest and unprotected
strike action at the mine, which resulted in 58 lost production
days. Barberton Mines has significantly increased its community
engagement efforts during the current reporting period, and
operational disruptions have decreased as a result of these
efforts.
Mineral reserves and resources
The group’s mineral resources and reserves, compliant with the
South African Code for Reporting of Mineral Resources and Mineral
Reserves, 2016, are summarised as follows:
- Gold reserves of 11.2Moz (239.9Mt at 1.46g/t) (2017:
11.2Moz)
- Gold resources of 33.3Moz (331.2Mt at 3.13g/t) (2017:
34.4Moz)
In determining the group’s reserves and resources, gold reserves
were modelled at R525,000/kg and gold resources at R600,000/kg. The
competent person for Pan African Resources, Hendrik Pretorius, the group’s Project
Geologist, has reviewed and approved the information contained in
this announcement as it pertains to the mineral resources and
reserves. Mr Pretorius holds a BSc (Hons) in the field of geology
and a Graduate Diploma in Mining Engineering focussing on mineral
resource management. He has more than 15 years’ relevant
experience, is registered with the South African Council for
Natural Scientific Professionals (400051/11) and is a member in
good standing with the Geological Society of South Africa.
Near- to medium-term growth
projects
Elikhulu Project
Elikhulu, which is expected to produce some of the lowest-cost
ounces in the South African gold mining industry, is critical to
Evander Mines’ return to profitability and delivering into the
group’s strategic repositioning. Tailings, which were deposited
over the past 70 years of mining activity, will be re-mined in line
with industry best practices and consolidated into a single
facility, which will mitigate environmental risks and make
substantial surface areas available for other land uses, including
housing and / or agriculture.
From December 2018, Elikhulu’s
processing capacity will increase to 1.2-million tonnes per annum
by incorporating the existing ETRP throughput, in order to benefit
from the new plant’s improved efficiencies and economies of
scale.
Elikhulu was constructed ahead of schedule, and was fully
commissioned during September 2018. By 30 June 2018, capital expenditure of R1,256.1
million (2017: R175.5 million) had been incurred on the project.
Construction on the enlarged Kinross tailings facility is continuing.
Barberton Mines’ Royal Sheba
Project
Barberton Mines’ Royal Sheba Project is an opportunity to expand
the operation’s production profile and access low-cost near-surface
minable ounces over the short to medium term. Shareholders are
referred to the announcement on 6 September
2018, detailing the exploration results from the Royal Sheba
orebody.
Evander Mines’ Egoli Project – Reassessed mining
feasibility study
The Egoli Project is adjacent to the 7 Shaft infrastructure and
extends from the boundary of Taung Gold International Limited’s 6
Shaft mining right.
Shareholders were informed on 1 February
2018 of the updated resource statement of the Egoli Project
and subsequently on 28 March 2018
that the group would reassess the mining feasibility study,
conducted by DRA Global, into the viability of the Egoli Project as
a standalone project following the cessation of mining at Evander
Mines’ underground operations. The project remains attractive, with
more than one-million ounces of contained gold in measured and
indicated categories.
The results of an optimisation study based on the DRA Global
feasibility study are:
§ The mining operation is planned to ensure waste and reef
are hoisted separately.
§ The life-of-mine is expected to be 11 years.
§ Average recoverable gold of approximately 23,500 ounces
per annum during the initial four-year development phase, and an
average of approximately 79,000 ounces per annum for the remaining
seven years thereafter is forecast.
§ A new metallurgical plant would be constructed, and the
existing Evander Mines’ 7 Shaft infrastructure would be used for
hoisting.
§ Peak funding requirement is forecast at approximately
R870 million.
§ An internal rate of return (real, pre-taxation) of 34%,
with a payback period of two years following the initial four-year
development period is forecast. This projection is based on an
assumed gold price of R547,000/kg.
§ Project, pre-taxation, net present value is R1.04
billion at a 12.4% real discount rate.
§ An incremental all-in sustaining cost per kilogramme of
approximately R300,000/kg, or USD650/oz, on average, over the life-of-mine.
§ An average gold recovery rate of 95% and a mine call
factor of 85%.
§ The total resources remain at 9.4Mt @ 9.75g/t equating
to 2.95Moz.
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. During the period under review,
Fairview commenced the development required in preparation for the
construction of the new sub-vertical shaft. The project cost is
forecast at approximately R105 million over two to three years.
Following the commissioning of this shaft, it is expected that
productivity improvements will yield an additional 7,000oz -
10,000oz of gold per annum due to the increased hoisting
capacity.
Wage agreements
As announced on 7 September 2018,
Barberton Mines successfully concluded a three-year wage agreement
with the National Union of Mineworkers (“NUM”) and the United
Association of South Africa
(“UASA”) (“the agreement”). NUM and UASA represent the majority of
employees at Barberton Mines. The Agreement provides for an average
annual wage increase of approximately 6.5% and 5.5% for NUM and
UASA members, respectively, over the three years. The
negotiations were successfully concluded with no industrial action
or work stoppages. The agreement should assist in providing
certainty and sustainability to all stakeholders in the coming
years.
Outlook
Key focus areas for the 2019 financial year include:
- continuing to improve our
safety performance, and environmental, social and governance
compliance across operations;
- delivering into the gold
production guidance of approximately 170,000oz;
- ensuring Elikhulu delivers
to expectation and incorporating ETRP’s throughput into Elikhulu’s
processing capacity;
- increase the statement of
financial position flexibility and capacity;
- focus on growth
opportunities such as:
o The Royal Sheba Project
o Evander Mines’ 8 Shaft pillar project
o Evander Mines’ Egoli Project
o Barberton Mines’ sub-vertical shaft
- Re-initiate dividend
payments
The group continues to evaluate acquisitive opportunities,
particularly within other African jurisdictions, in accordance with
its rigorous capital allocation criteria.
I would like to thank my fellow board members for their
guidance, support and insight during the past financial year.
Further, a sincere thanks to the executive management team and all
employees, who continued to show commitment and dedication during
this challenging period.
Finally, to our stakeholders, thank you for your ongoing
support of Pan African Resources. While times may be marked by
turbulence and volatility, we believe the group, with its current
strategic direction, is well positioned to maximise value for our
shareholders and our other stakeholders in the year ahead and well
into the future.
FINANCIAL PERFORMANCE
Exchange rates and their impact on
results
All of the group’s subsidiaries are incorporated in South Africa and their functional currency is
ZAR. The group’s business is conducted in ZAR and the accounting
records are maintained in this same currency, with the exception of
precious metal product sales, which are transacted in USD prior to
conversion into ZAR. The ongoing review of the operational results
by executive management and the board is also performed in ZAR.
The group’s presentation currency is GBP due to its ultimate
holding company, Pan African Resources, being incorporated in
England and Wales and being dual-listed in the
United Kingdom (“UK”) and
South Africa.
During the current reporting period the average ZAR:GBP exchange
rate was R17.27:1 (2017: R17.25:1) and the closing ZAR:GBP exchange
rate was R18.09:1 (2017: R16.96:1). The year-on-year change in the
average and closing exchange rates of 0.1% and 6.7%, respectively,
must be taken into account for the purposes of translating and
comparing year-on-year results, and in the event of material
transactions, the exchange rate on the date of the material
transaction is used to translate earnings from ZAR to
GBP.
The group records its revenue from precious metals sales in ZAR
and the strength in the value of the ZAR:USD exchange rate during
the current reporting period had a negative impact on the USD
revenue received when translated into ZAR. The average ZAR:USD
exchange rate was 5.4% stronger at R12.86:1 (2017: R13.59:1).
The commentary below analyses the current and prior reporting
period’s results. Key aspects of the group’s ZAR results appear in
the body of this commentary and have been used as the basis against
which its financial performance is measured. The gross GBP
equivalent figures can be calculated by applying the exchange rates
as detailed above.
Analysing the group’s financial
performance for continuing operations
1) Revenue
Gold sales from continuing operations declined year-on-year by
13.2% to R1,873.9 million (2017: R2,158.2 million) mainly impacted
by:
1) The average ZAR gold price received decreasing by 0.9% to
R538,100/kg (2017: R542,773/kg).
2) Gold ounces sold from continuing operations decreasing by
12.6% to 111,879oz (2017: 127,981oz).
Revenue from Evander Mines’ underground operations of R811.4
million (2017: R767.2 million) has been disclosed in discontinued
operations following the cessation of mining at this operation.
2) Cost of production
Cost of production (including realisation costs) for continuing
operations increased by 4.4% to R1,376.7 million (2017: R1,318.9
million).
The main cost contributors that impacted the year-on-year
increase during the current reporting period are summarised as
follows:
- Salaries and wages
(represents 38.9% of the gold cost of production) increased by 7.6%
to R535.1 million (2017: R497.1 million). Salaries and wage rates
increased in line with the gold labour agreements signed at the
respective operations.
- Electricity costs
(represents 9.6% of the gold cost of production) increased by 8.3%
to R132.5 million (2017: R122.3 million). The increase is higher
than the National Energy Regulator of South Africa’s approved
average national increase of 5.2% from 1
April 2018, because of higher electricity consumption
associated with the surface re-mining operation and Barberton
Mines’ new refrigeration plant installed at Fairview during
July 2017.
- Mining and processing
costs (represents 33.7% of gold cost of production) decreased by
6.7% to R463.3 million (2017: R496.3 million). The decrease was due
to less surface sources being processed at Evander Mines in the
current reporting period.
- Engineering and technical
costs (represents 6.7% of gold cost of production) increased by
13.0% to R92.7 million (2017: R82.0 million).
Cash cost per kilogramme from continuing operations increased by
19.6% to R387,194/kg (2017: R323,692/kg). The increase was
predominantly due to the group’s gold sold decreasing by 12.6% to
111,879oz (2017: 127,981oz) and the cost of production increasing
by 4.4%.
3) Realisations costs
The group’s realisation costs increased to R34.6 million (2017:
R17.5 million). The realisation costs relate predominantly to
refining charges, paid to Gauteng Refinery for gold extracted and
recovered from the Kinross plant
civil infrastructure.
4) Depreciation costs
Depreciation from continuing operations decreased by 10.3% to
R85.1 million (2017: R94.9 million). The depreciation charge is
based on the available units of production over the life of the
operations and the depreciation charge reduced commensurate with
the decrease in production.
5) Other expenditure and income
Other expenses increased to R74.0 million (2017: R4.1 million).
The increase in other expenses is due to the group realising a
pre-tax gain of R94.7 million in the prior reporting period on the
mark-to-market fair value adjustment of a derivative instrument
entered into to mitigate gold price risk.
6) Finance income and costs
Finance income increased to R25.7 million (2017: R4.4 million),
following an increase in interest earned on the group’s
rehabilitation funds. Finance costs increased to R54.3
million (2017: R48.4 million), due to an increase in group debt
during the current reporting period.
7) Taxation
The taxation charge of the group’s continuing operations
decreased to a credit of R36.3 million (2017: R72.5 million) due
to:
· An increase in the deferred tax
credit of R63.6 million (2017: R7.9 million) because of the
reduction in the long-term taxation rate to 19.2% from 23.1% for
the Evander Mines’ surface operations.
· Decrease in the current taxation
charge to R27.3 million (2017: R80.4 million).
Discontinued operations
In the current reporting period the group’s discontinued
operations comprised of:
- Phoenix; and
- Evander Mines’ underground
operations
In the prior reporting period the group’s discontinued
operations comprised of:
- Phoenix; and
- Uitkomst Colliery
Proprietary Limited (“Uitkomst”).
Phoenix, under discontinued
operations, recorded a loss of R6.9 million in the current
reporting period, for the period 1 July
2017 – 6 November 2017. This
loss comprised of R2 million in operational losses and a R4.9
million loss on asset held for sale.
Due to the cessation of mining at Evander Mines’ underground
operations, the financial results from this operation has been
classified as a discontinued operation in the current reporting
period.
Losses from discontinued operations have increased to R1.76
billion (2017: R390.7 million), which includes an impairment charge
of R1.78 billion and retrenchment costs of R161 million, for the
Evander Mines’ underground operations.
EPS and HEPS
The combined operations EPS in ZAR decreased to a loss of
(86.03) cents per share (2017:
19.81 cents per share). The combined
operations HEPS in ZAR decreased to 12.66
cents per share (2017: 20.17
cents per share).
The EPS and HEPS are calculated by applying the group’s weighted
average number of shares in issue to the attributable and headline
earnings. The weighted average number of shares in issue increased
by 15.7% to
1,809.7-million shares (2017: 1,564.3-million shares). The increase
in shares was attributed to the additional 291.5-million shares
issued in the equity raise concluded on 12
April 2017 for the equity tranche of the Elikhulu Project,
and the disposal of 130-million shares held by PAR Gold Proprietary
Limited (“PAR Gold”) on 30 May
2018.
Refer to the reconciliation of the earnings and headline
earnings in the APM summary report for the period ended
30 June 2018.
Net debt
Total debt facilities utilised at 30 June
2018 increased to R1,636.6 million (2017: R227.8 million)
and cash holdings declined to R12.6 million (2017: R160.2 million),
resulting in an increase in net debt to R1,623.6 billion (2017:
R67.6 million). The increase in net debt was predominantly due to
the R1.26 billion capital expenditure incurred on the Elikhulu
Project, operational losses from Evander Mines’ underground
operations and retrenchment costs of R161 million. Refer to the APM
summary report for the period ended 30 June
2018.
Summary of the long-term debt liabilities:
|
Revolving credit facility |
Evander Mines gold loan |
Elikhulu term facility |
Total |
30
June 2018 |
30
June 2017 |
30
June 2018 |
30
June 2017 |
30
June 2018 |
30
June 2017 |
30
June 2018 |
30
June 2017 |
|
ZAR
(millions) |
ZAR
(millions) |
ZAR
(millions) |
ZAR
(millions) |
ZAR
(millions) |
ZAR
(millions) |
ZAR
(millions) |
ZAR
(millions) |
Non-current
portion |
778.0 |
180.5 |
- |
- |
770.0 |
- |
1,548.0 |
180.5 |
Current portion |
88.2 |
20.7 |
- |
26.6 |
- |
- |
88.2 |
47.3 |
Total |
866.2 |
201.2 |
- |
26.6 |
770.0 |
- |
1,636.2 |
227.8 |
The group’s compliance to the revolving credit facility debt
covenants are summarised below:
Covenant |
Measurement |
30
June 2018 |
30
June 2017 |
Net-debt-to-equity
ratio |
Must be less than
1:1 |
0.78 |
0.02 |
Net-debt-to-adjusted
EBITDA ratio (note 1) |
Must be less than
2.5:1 |
3.73 |
0.08 |
Interest cover ratio
(note 2) |
Must be greater than 4
times |
4.61 |
19.32 |
Debt service cover
ratio |
Must be greater than
1.3 times |
3.84 |
9.11 |
Note 1: The net debt to EBTIDA covenant is only measurable on
31 December 2019 to cater for the
construction of Elikhulu and commensurate increase in cash flows
for measurement purposes.
Note 2: The interest cover ratio covenant was reduced to 2.3
times until December 2018, where
after it will increase to 4 times.
Capital expenditure
Group capital expenditure for the current reporting period has
been summarised per operation in the table below:
|
Barberton Mines |
Evander Mines |
Elikhulu |
Corporate |
Total |
|
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
Development
capital |
68.1 |
48.4 |
- |
- |
116.5 |
Maintenance
capital |
42.9 |
127.8 |
- |
2.2 |
172.9 |
Sustaining capital
total |
111.0 |
176.2 |
- |
2.2 |
289.4 |
Expansion capital |
99.4 |
5.3 |
1,256.1 |
- |
1,360.8 |
Total capital
expenditure |
210.4 |
181.5 |
1,256.1 |
2.2 |
1,650.2 |
Cash flow summary
Cash generated by operations (after dividends) decreased by
R250.5 million to a deficit of R202.1 million (2017: R48.4
million), due to the lower gold production, Evander Mines’
operational losses and retrenchment costs of R161 million. The 2017
financial year dividend payment (net of PAR Gold reciprocal
dividends) of R148.9 million (2016: R232.6 million) was paid on
21 December 2017.
The cash outflows from investing activities increased to
R1,545.4 million (2017: R491.0 million), largely due to:
- capital
expenditure incurred of R1,601.4 million (2017: R612.7
million);
- contributions
to the rehabilitation trust of R26.2 million (2017:
nil);and
- proceeds from
the sale of Phoenix of R89.0
million (2017: R142.1 million proceeds from the disposal of
investments/subsidiaries and property plant and equipment).
Net cash inflows from financing activities increased to R1,599.9
million (2017: R551.1 million), largely due to the utilisation of
the group’s debt facilities to fund operational and project capital
expenditure, offset by proceeds on the disposal of PAR Gold
treasury shares of R149.8 million (2017: nil).
COMMITMENTS REPORTED IN ZAR AND
GBP
The group identified no material contingent liabilities in the
current or prior reporting period.
The group had contracted outstanding open orders at period end
of R434.3 million (2017: R1.22 billion), or GBP24.0 million (2017: GBP72.0 million). Outstanding orders in the
current reporting period related primarily to the Elikhulu
Project.
Authorised commitments for the new financial year, not yet
contracted for, totalled R254.5 million (2017: R328.7 million) or
GBP14.1 million (2017: GBP19.4 million).
At 30 June 2018, the group had
guarantees in place of R24.6 million (2017: R24.6 million) or
GBP1.4 million
(2017: GBP1.4 million) in favour of
Eskom Holdings SOC Limited, and R14.0 million (2017: R14.0 million)
or
GBP0.8 million (2017: GBP0.8 million) in favour of the DMR.
Operating lease commitments, which fall due within the next
financial year, amounted to R16.3 million
(2017: R2.7 million) or GBP0.9
million (2017: GBP0.16
million).
FAIR VALUE INSTRUMENTS
Financial instruments measured at fair value 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, which are observable for the
asset or liability.
Level 3: Fair value is determined on inputs not based on
observable market data.
Level 1 financial instruments:
Pan African Resources holds 13,064,381 shares in MC Mining
Limited (previously known as Coal of Africa Limited). The
investment was fair valued at R56.7 million or GBP3.1 million (2017: R127.6 million or
GBP7.5 million), at the reporting
date. The fair value of the listed investment is treated as Level 1
of the fair value hierarchy, as the share price is quoted on a
stock exchange.
The group’s rehabilitation funds are valued at R364.3 million
(2017: R320.6 million) or GBP20.1
million (2017: GBP18.9
million), which comprise of predominantly equity-linked
notes and interest-bearing call accounts.
Level 2 financial instruments:
During the current and prior reporting period, the group had
exposure to financial derivatives comprising a cost-collar hedge.
The mark-to-market value of this cost-collar asset at 30 June 2018 was R4.0 million or GBP0.2 million (2017: nil)
The group’s cash settled share option liability, which is valued
on a mark-to-market basis according to the company’s quoted share
price, amounted to R9.6 million or GBP0.5
million (2017: R46.4 million or GBP2.7 million).
Level 3 financial instruments:
The group’s employee share ownership plan (“ESOP”) liability is
accounted for on a cash settled share option basis and valued on a
mark-to-market basis on the net present value of the discounted
future cash flows applicable to the beneficiaries of the schemes.
The ESOP liability was R10.3 million or GBP0.6 million (2017: R1.9 million or
GBP0.11 million).
DIVIDENDS
Dividend paid and recommended
During the current reporting period the group paid a dividend of
R185 million or GBP10.0 million
(2016: R300 million or GBP17.1
million), on 21 December 2017,
relating to the 2017 financial year. This dividend equated to
R0.08279 per share or 0.44561 pence
per share (2016: R0.15438 per share or 0.87668 pence per share). As result of the
cessation of mining at Evander Mines’ underground operations and
the associated retrenchment costs, the board has not recommended a
dividend for the current reporting period. With Pan African
Resource’s business being repositioned to secure sustainable
low-cost, higher-margin production, the group’s prospect of
reintroducing dividends will improve in the next year.
The group received reciprocal PAR Gold dividends of R36.1
million (2016: R67.4 million), resulting in a net dividend paid of
R148.9 million (2016: R232.6 million) to external shareholders.
Dividend policy
Pan African Resources aspires to pay a regular dividend to its
shareholders. In balancing this cash return to shareholders with
the group’s strategy of generic and acquisitive growth, Pan African
Resources believes a target pay-out ratio of 40% of net cash
generated from operating activities - after allowing for the cash
flow impact of sustaining capital, contractual debt repayments and
the cash flow impact of once-off items - is appropriate. This
measure aligns dividend distributions with the cash generation
potential of the business. In proposing a dividend, the board will
also take into account the company’s financial position, future
prospects, satisfactory solvency and liquidity assessments and
other factors deemed relevant at the time. The board also allows
itself flexibility to deviate from the above policy, when deemed
appropriate.
BASIS OF PREPARATION OF THE FINANCIAL
STATEMENTS AND ACCOUNTING POLICIES
The provisional audited results announcement has been prepared
using accounting policies that comply with the International
Financial Reporting Standards (“IFRS”) adopted by the European
Union and South Africa, which are
consistent with those applied in the financial statements for the
prior year ended 30 June 2017.
The provisional audited results announcement is only a summary
of the information in the Integrated Annual Report and does not
contain full or complete details. Any investment decision by
investors and/or shareholders should be based on consideration of
the final Integrated Annual Report, as a whole, to be published on
the company’s website in due course.
ALTERNATIVE PERFORMANCE MEASURE
(“APM”)
The provisional audited results announcement contains both
statutory measures and alternative performance measures which, in
management’s view, reflect the underlying performance of the
business and provide a more meaningful comparison of how the
group’s business is managed and measured on a day-to-day basis.
Alternative performance measures are non-GAAP (Generally
Accepted Accounting Practice) measures and provide supplementary
information to assist with the understanding of the group’s
financial results and with the evaluation of operating performance
for all the periods presented. Alternative performance measures,
however, are not a measure of financial performance under IFRS as
adopted by the European Union and South
Africa and should not be considered as a substitute for
measures determined in accordance with IFRS. As the group’s
alternative performance measures are not defined terms under IFRS
they may therefore not be comparable with similarly titled measures
reported by other companies.
Refer to the APM summary report for the period ended
30 June 2018.
JSE LIMITED (“JSE”) LISTING
The company has a dual primary listing on the JSE in
South Africa and the AIM market
(“AIM”) of the London Stock Exchange.
This provisional audited results announcement has been prepared
in accordance with the framework concepts and the measurement and
recognition requirements of IFRS and the SAICA Financial Reporting
Guides as issued by the Accounting Practice Committee, and the
Financial Pronouncements as issued by the Financial Reporting
Standards Council and contains the minimum information as required
by International Accounting Standard 34. The accounting policies
are in terms of IFRS and are consistent with those applied in the
2017 consolidated financial statements.
The group's South African external auditors, Deloitte &
Touche, have issued their opinion on the consolidated financial
statements and the provisional summarised consolidated financial
statements for the year ended 30 June
2018. The audits for both the summarised and full set of
financial statements conducted in accordance with International
Standards on Auditing. Deloitte & Touche have expressed
unmodified opinions on the consolidated financial statements and
the provisional summarised consolidated financial statements.
Copies of the audit reports are available for inspection at the
company's registered office. Any reference to future
financial performance included in this provisional audited results
announcement has not been reviewed or reported on by the group's
South African external auditors.
The auditor’s report does not report on the APMs (excluding
headline earnings and HEPS) contained in this announcement.
Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditor’s engagement they should
obtain a copy of that report, together with the accompanying
financial information, from the company’s registered office.
These provisional summarised consolidated financial statements
are extracted from the audited consolidated financial statements.
The directors take full responsibility for the preparation of the
provisional summarised audited results and confirm the financial
information and related commentary has been correctly extracted
from the underlying group consolidated financial statements.
AIM LISTING
The financial information for the year ended 30 June 2018 does not constitute statutory
accounts as defined in sections 435(1) and 435(2) of the UK
Companies Act 2006 (“Companies Act 2006”) but has been derived from
those accounts. Statutory accounts for the year ended 30 June 2017 have been delivered to the Registrar
of Companies and those for 2018 will be delivered following the
company's annual general meeting. Deloitte LLP, the external
auditor registered in the UK, has reported on these accounts for
the year ended 30 June 2018.
Deloitte LLP’s audit report for 30 June
2018 was unqualified, did not include a reference to any
matters to which auditors draw attention by way of emphasis of
matter, and did not contain a statement under section 498(2) or
498(3) of the Companies Act 2006. These statutory accounts have
been prepared in accordance with IFRS and IFRS Interpretations
Committee interpretations adopted for use by the European Union,
with those parts of the Companies Act 2006 applicable to companies
reporting under IFRS.
DIRECTORSHIP CHANGES AND DEALINGS
Current reporting period
No directorship changes took place during the period under
review.
However, the following director dealings in securities took
place:
Mr JAJ Loots participated in the following company shares
transactions:
- On 22 February 2018, Mr
JAJ Loots entered into a contract for difference derivative
(“CFDs”) for 200,000 shares at a price of GBP0.08 per share.
- On 27 September 2017, Mr
JAJ Loots purchased 108,000 shares at an average price of R2.35 per
share.
- On 29 September 2017, Mr
JAJ Loots entered into a CFD for 200,000 shares at average of
GBP12.747p per share.
Mr JAJ Loots had 668,675 shares and 400,000 CFD’s at period end,
representing 0.05% of the total issued shares.
Mr GP Louw participated in the following company shares
transactions:
- On 28 September 2017, Mr
GP Louw purchased 45,000 shares at an average price of R2.35 per
share.
- On 23 February 2018, Mr GP
Louw purchased 75,000 shares at R1.30 per share.
Mr GP Louw had 257,450 shares at period end, representing 0.01%
of the total issued shares.
Mr T Mosololi, on 6 October 2017,
purchased 20,000 shares at R2.30. Mr T Mosololi had 50,000 shares
outstanding at period end, representing 0.01% of total issued
shares.
Mr K Spencer had 3,000,000 shares at period end, representing
0.13% of the total issued shares.
No dealings in the securities by the directors of the company
took place between the period end and the date of the publication
of this announcement.
SHARES ISSUED
No additional issuance of shares during the current reporting
period.
GOING CONCERN
The group closely monitors and manages its liquidity risk by
means of a centralised treasury function. Cash forecasts are
regularly produced, and sensitivities run for different scenarios
including, but not limited to, changes in commodity prices and
different production profiles from the group’s producing assets.
The group had R485 million of available debt facilities and R12.6
million of cash and cash equivalents at 30
June 2018. Based on the current status of the group’s
finances, having considered going concern forecasts and reasonably
possible downside scenarios, including a ZAR gold price
of R525,000/kg (USD1,270/oz at a
prevailing ZAR:USD average exchange rate R12.86:1), and reduced
production volumes, the group’s forecasts demonstrate it will have
sufficient liquidity headroom to meet its obligations in the
ordinary course of business, and will comply with financial
covenants for the 12 months from the date of approval of the
financial statements.
The board has a reasonable expectation that the company has
adequate resources to continue in operational existence for the
foreseeable future. Accordingly, the group continues to adopt the
going concern basis of accounting in preparation of the
30 June 2018 financial
statements.
EVENTS AFTER THE REPORTING PERIOD
The group had no material events after the reporting period.
SEGMENT 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 (ETRP and Elikhulu, excluding the 8 Shaft
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, located near
Rustenburg, South Africa;
- Uitkomst Colliery, located in Newcastle, 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 reviews the operations in accordance
with the disclosures presented above.
Cobus Loots
Deon Louw
Chief Executive Officer
Financial
Director
19 September 2018
Pan African
Resources PLC |
|
|
|
|
Summarised consolidated statement of profit or loss and other
comprehensive income for the period ended 30 June 2018 |
|
30 June 2018 |
30
June 2017 |
30 June 2018 |
30
June 2017 |
|
(Audited) |
(Audited)
(Note 1) |
(Unaudited) |
(Unaudited)
(Note 1) |
Continuing
operations |
GBP
million |
GBP
million |
ZAR
million |
ZAR
million |
Revenue |
108.5 |
125.1 |
1,873.9 |
2,158.2 |
Gold sales |
108.5 |
125.1 |
1,873.9 |
2,158.2 |
Realisation costs |
(2.0) |
(1.0) |
(34.6) |
(17.5) |
On - mine
revenue |
106.5 |
124.1 |
1,839.3 |
2,140.7 |
Gold cost of
production |
(77.7) |
(75.4) |
(1,342.1) |
(1,301.4) |
Mining
depreciation |
(4.9) |
(5.5) |
(85.1) |
(94.9) |
Mining
profit |
23.9 |
43.2 |
412.1 |
744.4 |
Other (expenses) |
(4.2) |
(0.3) |
(74.0) |
(4.1) |
Profit on
disposal of investment |
- |
0.2 |
- |
4.6 |
Profit on disposal of
subsidiary |
- |
5.4 |
- |
91.3 |
Continuing operations -
Impairment costs |
(8.2) |
- |
(136.6) |
- |
Royalty costs |
(0.4) |
(1.1) |
(7.2) |
(19.2) |
Net income before
finance income and finance costs |
11.1 |
47.4 |
194.3 |
817.0 |
Finance income |
1.5 |
0.3 |
25.7 |
4.4 |
Finance costs |
(3.2) |
(2.8) |
(54.3) |
(48.4) |
Profit before
taxation |
9.4 |
44.9 |
165.7 |
773.0 |
Taxation |
2.1 |
(4.3) |
36.3 |
(72.4) |
Profit after
taxation - continuing operations |
11.5 |
40.6 |
202.0 |
700.6 |
Discontinued
operations |
|
|
|
|
Loss from discontinued
operations |
(104.8) |
(22.7) |
(1,758.9) |
(390.7) |
(Loss)/Profit after
taxation |
(93.3) |
17.9 |
(1,556.9) |
309.9 |
|
|
|
|
|
Other comprehensive
(loss)/income: |
|
|
|
|
Items that have
been or may subsequently be reclassified to the statement of profit
or loss (net of tax): |
|
|
|
|
Fair value movement on
available for sale investment |
(3.9) |
(0.1) |
(70.9) |
(1.7) |
Taxation on fair value
movement on available for sale investment |
0.9 |
- |
15.9 |
- |
Items that will not
be reclassified to the statement of profit or loss (net of
tax): |
|
|
|
|
Profit on disposal of
available for sale investment |
- |
(0.2) |
- |
(4.6) |
Foreign currency
translation differences |
(5.9) |
21.7 |
- |
- |
Total comprehensive
(loss)/income for the year |
(102.2) |
39.3 |
(1,611.9) |
303.6 |
(Loss)/Profit
attributable to: |
|
|
|
|
Owners of the
parent |
(93.3) |
17.9 |
(1,556.9) |
309.9 |
|
|
|
|
|
Total comprehensive
(loss)/income attributable to: |
|
|
|
|
Owners of the
parent |
(102.2) |
39.3 |
(1,611.9) |
303.6 |
|
|
|
|
|
Earnings per share -
combined operations |
(5.15) |
1.14 |
(86.03) |
19.81 |
Diluted earnings per
share - combined operations |
(5.15) |
1.14 |
(86.03) |
19.80 |
Earnings per share -
continuing operations |
0.63 |
2.60 |
11.16 |
44.78 |
Diluted earnings per
share - continuing operations |
0.63 |
2.60 |
11.16 |
44.76 |
Note 1: The prior reporting period’s figures have been
represented in accordance with IFRS 5 non-current assets held for
sale and discontinued operations.
Summarised
consolidated Statement of Financial Position as at 30 June
2018 |
|
30 June
2018 |
30 June
2017 |
30 June
2018 |
30 June
2017 |
|
(Audited) |
(Audited) |
(Unaudited) |
(Unaudited) |
|
GBP
million |
GBP
million |
ZAR
million |
ZAR
million |
ASSETS |
|
|
|
|
Non-current assets |
|
|
|
|
Property, plant and equipment and
mineral rights |
192.8 |
224.7 |
3,488.3 |
3,810.7 |
Other intangible assets(Note 1) |
- |
0.1 |
0.6 |
1.2 |
Deferred taxation |
6.2 |
0.8 |
112.3 |
12.9 |
Long-term inventory |
0.6 |
0.7 |
10.3 |
11.6 |
Long-term receivables |
1.3 |
2.5 |
24.0 |
43.0 |
Goodwill |
21.0 |
21.0 |
303.5 |
303.5 |
Investments |
3.1 |
7.5 |
56.7 |
127.6 |
Rehabilitation funds |
20.1 |
18.9 |
364.3 |
320.6 |
|
245.1 |
276.2 |
4,360.0 |
4,631.1 |
Current assets |
|
|
|
|
Inventories |
2.7 |
5.1 |
48.9 |
85.7 |
Current taxation asset |
0.7 |
1.1 |
12.5 |
18.1 |
Trade and other receivables |
14.8 |
13.7 |
268.6 |
233.1 |
Current portion of long-term
receivables |
0.9 |
- |
17.2 |
- |
Financial instruments assets(Note
1) |
0.2 |
- |
4.0 |
- |
Cash and cash equivalents |
0.7 |
9.4 |
12.6 |
160.2 |
|
20.0 |
29.3 |
363.8 |
497.1 |
Non-current assets held
for sale |
- |
5.6 |
- |
95.2 |
TOTAL ASSETS |
265.1 |
311.1 |
4,723.8 |
5,223.4 |
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
Capital and reserves |
|
|
|
|
Share capital |
22.3 |
22.3 |
318.8 |
318.8 |
Share premium |
144.6 |
145.4 |
2,247.4 |
2,261.4 |
Translation reserve |
(42.8) |
(36.8) |
- |
- |
Share option reserve |
1.7 |
1.2 |
24.6 |
17.2 |
Retained earnings |
30.0 |
131.3 |
161.4 |
1,867.1 |
Realisation of equity reserve |
(10.7) |
(10.7) |
(140.6) |
(140.6) |
Treasury capital reserve |
(15.6) |
(25.4) |
(385.2) |
(548.6) |
Merger reserve |
(10.7) |
(10.7) |
(154.7) |
(154.7) |
Other reserves |
(3.0) |
- |
(55.0) |
- |
Equity attributable to owners of the
parent |
115.8 |
216.6 |
2,016.7 |
3,620.6 |
Total equity |
115.8 |
216.6 |
2,016.7 |
3,620.6 |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Long-term provisions |
15.1 |
11.7 |
273.4 |
197.7 |
Long-term liabilities |
86.5 |
12.3 |
1,565.0 |
208.4 |
Deferred taxation |
14.3 |
38.9 |
259.5 |
660.5 |
|
115.9 |
62.9 |
2,097.9 |
1,066.6 |
Current liabilities |
|
|
|
|
Trade and other payables |
27.6 |
27.1 |
505.2 |
458.9 |
Current portion of long term
liabilities |
5.2 |
4.1 |
93.5 |
70.3 |
Current taxation liability (Note
1) |
0.6 |
- |
10.5 |
0.8 |
|
33.4 |
31.2 |
609.2 |
530.0 |
Liabilities directly associated with
non-current assets held for sale |
- |
0.4 |
- |
6.2 |
TOTAL EQUITY AND
LIABILITIES |
265.1 |
311.1 |
4,723.8 |
5,223.4 |
Note 1: Figures are presented in millions, and values less than
GBP0.5 million or R0.5 million, have
been rounded to zero.
Summarised consolidated statement of cash flows for the year
ended 30 June 2018 |
|
|
|
|
|
|
|
|
|
30
June 2018 |
30
June 2017 |
30
June 2018 |
30
June 2017 |
|
(Audited) |
(Audited) |
(Unaudited) |
(Unaudited) |
|
GBP
million
(Note 1) |
GBP
million
(Note 1) |
ZAR
million
(Note 1) |
ZAR
million
(Note 1) |
NET CASH (USED
IN)/GENERATED FROM OPERATIONS AFTER TAXATION, ROYALTIES AND FINANCE
CHARGES |
(3.3) |
16.5 |
(53.2) |
281.0 |
Dividends paid net of
PAR Gold reciprocal dividend |
(8.2) |
(13.3) |
(148.9) |
(232.6) |
NET CASH (USED
IN)/GENERATED FROM OPERATING ACTIVITIES |
(11.5) |
3.2 |
(202.1) |
48.4 |
|
|
|
|
|
INVESTING
ACTIVITIES |
|
|
|
|
Additions to property,
plant and equipment and mineral rights |
(92.7) |
(35.5) |
(1,601.4) |
(612.7) |
Additions to other
intangible assets |
- |
(0.1) |
(0.3) |
(0.4) |
Rehabilitation funds
contributions |
(1.5) |
- |
(26.2) |
- |
Proceeds on disposals
of Property plant and equipment and mineral rights |
- |
0.4 |
- |
7.0 |
Increase in long term
loans receivables |
(0.4) |
(1.2) |
(6.5) |
(20.0) |
Proceeds from disposal
of subsidiary, net of cash |
- |
6.6 |
- |
111.7 |
Proceeds on disposals
of investment |
4.8 |
1.4 |
89.0 |
23.4 |
NET CASH USED IN
INVESTING ACTIVITIES |
(89.8) |
(28.4) |
(1,545.4) |
(491.0) |
|
|
|
|
|
FINANCING
ACTIVITIES |
- |
- |
- |
- |
Proceeds from
borrowings |
90.0 |
47.8 |
1,535.0 |
817.0 |
Borrowings repaid |
(5.8) |
(54.0) |
(100.0) |
(915.0) |
Proceeds/(settlement)
of financial instruments |
0.9 |
(1.4) |
15.5 |
(22.9) |
Proceeds from disposal
of treasury shares |
8.9 |
- |
149.4 |
- |
Shares issued |
- |
40.8 |
- |
696.0 |
Share issue costs |
- |
(1.4) |
- |
(24.0) |
NET CASH FROM
FINANCING ACTIVITIES |
94.0 |
31.8 |
1,599.9 |
551.1 |
|
|
|
|
|
NET
(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS |
(7.3) |
6.6 |
(147.6) |
108.5 |
Cash and cash
equivalents at the beginning of the year |
9.4 |
2.7 |
160.2 |
52.6 |
Cash and cash
equivalents from discontinued operations |
- |
(0.1) |
- |
(0.9) |
Effect of foreign
exchange rate changes |
(1.4) |
0.2 |
- |
- |
CASH AND CASH
EQUIVALENTS AT THE END OF THE YEAR |
0.7 |
9.4 |
12.6 |
160.2 |
Note 1: Figures are presented in millions, and values below
GBP0.5 million or R0.5 million, have
been rounded to zero.
Note 2: The cash settled share option costs have been
represented in cash generated from operating activities from
financing activities in the current and prior reporting period.
Summarised audited consolidated segment report for the
year ended 30 June 2018
|
|
30 June 2018 |
30 June 2017 |
|
Continuing operations |
Discontinued operations |
|
Continuing operations |
Discontinued operations |
|
|
|
Barberton Mines |
Evander Mines (Continuing operations) (Note 3) |
Corporate office and growth projects |
Funding Company |
Evander Mines (Discontinued operations) (Note 3) |
Phoenix Platinum (Note 4) |
Reclassification |
Group |
Barberton Mines |
Evander Mines (Continuing operations) (Note 3) |
Corporate office and growth projects |
Funding Company |
Uitkomst Colliery (Note 5) |
Phoenix Platinum (Note 4) |
Evander Mines (Discontinued operations) (Note 3) |
Reclassification |
Group |
|
GBP million |
GBP million |
GBP million |
GBP million |
GBP million |
GBP million |
GBP million |
GBP million |
GBP million |
GBP million |
GBP million |
GBP million |
GBP million |
GBP million |
GBP million |
GBP million |
GBP million |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold sales (Note
1) |
87.2 |
21.3 |
- |
- |
47.0 |
- |
(47.0) |
108.5 |
97.3 |
27.8 |
- |
- |
- |
- |
44.5 |
(44.5) |
125.1 |
Platinum Sales |
- |
- |
- |
- |
- |
1.4 |
(1.4) |
- |
- |
- |
- |
- |
- |
4.8 |
- |
(4.8) |
- |
Coal sales |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
25.1 |
- |
- |
(25.1) |
- |
Realisation costs |
(0.4) |
(1.6) |
- |
- |
(0.7) |
- |
0.7 |
(2.0) |
(0.6) |
(0.4) |
- |
- |
- |
- |
(0.8) |
0.8 |
(1.0) |
On - mine
revenue |
86.8 |
19.7 |
- |
- |
46.3 |
1.4 |
(47.7) |
106.5 |
96.7 |
27.4 |
- |
- |
25.1 |
4.8 |
43.7 |
(73.6) |
124.1 |
Gold cost of
production |
(65.9) |
(11.8) |
- |
- |
(59.5) |
- |
59.5 |
(77.7) |
(61.2) |
(14.2) |
- |
- |
- |
- |
(58.6) |
58.6 |
(75.4) |
Platinum cost of
production |
- |
- |
- |
- |
- |
(1.6) |
1.6 |
- |
- |
- |
- |
- |
- |
(5.0) |
- |
5.0 |
- |
Coal cost of
production |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(21.7) |
- |
- |
21.7 |
- |
Depreciation and
amortisation |
(4.2) |
(0.7) |
- |
- |
(6.1) |
- |
6.1 |
(4.9) |
(4.7) |
(0.8) |
- |
- |
(0.7) |
(0.9) |
(5.0) |
6.6 |
(5.5) |
Mining
Profit |
16.7 |
7.2 |
- |
- |
(19.3) |
(0.2) |
19.5 |
23.9 |
30.8 |
12.4 |
- |
- |
2.7 |
(1.1) |
(19.9) |
18.3 |
43.2 |
Other (expenses)/income
(Note 2) |
(0.7) |
0.9 |
(4.0) |
(0.4) |
(11.5) |
- |
11.5 |
(4.2) |
4.6 |
0.5 |
(5.5) |
0.1 |
0.2 |
(0.1) |
(1.8) |
1.7 |
(0.3) |
Loss from
associate |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Profit on disposal of
investment |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
0.2 |
- |
- |
- |
- |
- |
0.2 |
Profit on disposal of
subsidiary |
- |
- |
- |
- |
- |
|
- |
- |
- |
- |
5.4 |
- |
- |
- |
- |
- |
5.4 |
Continuing operations -
impairment costs (Note 6) |
- |
(8.2) |
- |
- |
(98.1) |
- |
98.1 |
(8.2) |
- |
- |
- |
- |
- |
(6.0) |
- |
6.0 |
- |
Adjustment on sale of
asset held for sale |
- |
- |
- |
- |
- |
(0.3) |
0.3 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Royalty costs |
(0.4) |
- |
- |
- |
(0.2) |
- |
0.2 |
(0.4) |
(1.0) |
(0.1) |
- |
- |
(0.1) |
- |
(0.2) |
0.3 |
(1.1) |
Net income / (loss)
before finance income and finance costs |
15.6 |
(0.1) |
(4.0) |
(0.4) |
(129.1) |
(0.5) |
129.6 |
11.1 |
34.4 |
12.8 |
0.1 |
0.1 |
2.8 |
(7.2) |
(21.9) |
26.3 |
47.4 |
Finance income |
0.2 |
0.8 |
0.4 |
0.1 |
0.5 |
- |
(0.5) |
1.5 |
- |
- |
0.1 |
0.2 |
0.1 |
- |
- |
(0.1) |
0.3 |
Finance costs |
- |
0.1 |
- |
(3.3) |
(0.2) |
- |
0.2 |
(3.2) |
- |
- |
- |
(2.8) |
- |
- |
- |
- |
(2.8) |
Profit /(loss)
before taxation |
15.8 |
0.8 |
(3.6) |
(3.6) |
(128.8) |
(0.5) |
129.3 |
9.4 |
34.4 |
12.8 |
0.2 |
(2.5) |
2.9 |
(7.2) |
(21.9) |
26.2 |
44.9 |
Taxation |
(2.3) |
5.6 |
(1.2) |
- |
24.4 |
0.1 |
(24.5) |
2.1 |
(5.7) |
2.0 |
(0.5) |
(0.1) |
(0.8) |
0.3 |
4.0 |
(3.5) |
(4.3) |
Profit /(loss) after
taxation before inter-company charges |
13.5 |
6.4 |
(4.8) |
(3.6) |
(104.4) |
(0.4) |
104.8 |
11.5 |
28.7 |
14.8 |
(0.3) |
(2.6) |
2.1 |
(6.9) |
(17.9) |
22.7 |
40.6 |
Loss after taxation
from discontinued operations |
- |
- |
- |
- |
|
- |
(104.8) |
(104.8) |
- |
- |
- |
- |
- |
- |
- |
(22.7) |
(22.7) |
Profit /(loss) after
taxation before inter-company charges |
13.5 |
6.4 |
(4.8) |
(3.6) |
(104.4) |
(0.4) |
- |
(93.3) |
28.7 |
14.8 |
(0.3) |
(2.6) |
2.1 |
(6.9) |
(17.9) |
- |
17.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inter-company
transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management fees |
(2.0) |
(0.1) |
1.8 |
(0.1) |
(0.2) |
0.6 |
- |
- |
(2.8) |
(0.8) |
5.7 |
(0.1) |
(0.4) |
(0.3) |
(1.3) |
- |
- |
inter-company interest
charges |
(0.3) |
- |
(0.4) |
3.6 |
(2.9) |
- |
- |
- |
(0.8) |
- |
(0.6) |
2.8 |
- |
0.1 |
(1.5) |
- |
- |
Profit /(loss) after
taxation after inter-company charges |
11.2 |
6.3 |
(3.4) |
(0.1) |
(107.5) |
0.2 |
- |
(93.3) |
25.1 |
14.0 |
4.8 |
0.1 |
1.7 |
(7.1) |
(20.7) |
- |
17.9 |
Segmental assets
(Total assets excluding goodwill) |
79.3 |
156.9 |
7.5 |
0.7 |
- |
- |
- |
244.4 |
73.8 |
190.0 |
19.6 |
1.1 |
- |
5.6 |
- |
- |
290.1 |
Segmental
liabilities |
26.9 |
30.7 |
1.6 |
90.5 |
- |
- |
- |
149.7 |
25.2 |
52.5 |
4.6 |
11.9 |
- |
0.4 |
- |
- |
94.6 |
Goodwill |
21.0 |
- |
- |
- |
- |
- |
- |
21.0 |
21.0 |
- |
- |
- |
- |
- |
- |
- |
21.0 |
Net assets
(excluding goodwill) (Note 7) |
52.4 |
126.2 |
5.9 |
(89.8) |
- |
- |
- |
94.7 |
48.6 |
137.5 |
15.0 |
(10.8) |
- |
5.2 |
- |
- |
195.5 |
Capital Expenditure
(Note 8) |
12.2 |
73.0 |
0.1 |
- |
- |
- |
- |
85.3 |
11.2 |
10.2 |
0.1 |
- |
0.9 |
0.3 |
12.9 |
- |
35.6 |
Adjusted EBITDA
(Note 9) |
19.8 |
8.8 |
(4.0) |
(0.4) |
(15.6) |
(0.2) |
15.8 |
24.2 |
39.1 |
13.6 |
(5.5) |
0.1 |
3.5 |
(0.3) |
(16.9) |
13.7 |
47.3 |
Figures are presented in millions, and values less than GBP0.5
million or R0.5 million, have been rounded to zero.
Note 1: All gold sales were made in the Republic of South Africa
and the majority of revenue was generated from South African
financial institutions. |
|
|
|
|
|
|
|
Note 2:
Other (expenses)/income exclude inter-company management fees and
dividends. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 3:
During the current reporting period, Evander Mines underground
operations ceased mining on 31 May 2018. The ETRP buy-in operations
remain as continuing operations. |
|
|
|
|
|
|
Note 4:
Phoenix was classified as held for sale and as a discontinued
operation at 30 June 2017. The Phoenix disposal was concluded on 6
November 2017. |
|
|
|
|
|
|
|
Note 5:
The disposal of Pan African Resources Coal Holdings Proprietary
Limited and Uitkomst was completed on 30 June 2017 and this
business was classified as a discontinued operation. |
|
|
|
|
|
Note 6:
Impairment costs associated with the continuing operations
represent the carrying value of the Kinross and ETRP metallurgical
plant infrastructure. |
|
|
|
|
|
|
|
|
Note 7: All
assets are held within South Africa. The segmental assets and
liabilities above, exclude inter-company balances. |
|
|
|
|
|
|
|
|
|
|
Note 8:
Capital expenditure comprises of additions to property, plant and
equipment and mineral rights and intangible assets. |
|
|
|
|
|
|
|
|
|
|
Note 9:
Adjusted EBITDA is represented by earnings before interest,
taxation, depreciation and amortisation, impairments, discontinued
operations and profit/(loss) on disposal of investments. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summarised unaudited consolidated segment report for
the year ended 30 June 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 June 2018 |
30 June 2017 |
|
Continuing operations |
Discontinued operations |
|
Continuing operations |
Discontinued operations |
|
|
Barberton Mines |
Evander Mines (Continuing operations) (Note 3) |
Corporate office and growth projects |
Funding Company |
Evander Mines (Discontinued operations) (Note 3) |
Phoenix Platinum (Note 4) |
Reclassification |
Group |
Barberton Mines |
Evander Mines (Continuing operations) (Note 3) |
Corporate office and growth projects |
Funding Company |
Uitkomst Colliery (Note 5) |
Phoenix Platinum (Note 4) |
Evander Mines (Discontinued operations) (Note 3) |
Reclassification |
Group |
|
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR million |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold sales (Note
1) |
1,506.5 |
367.4 |
- |
- |
811.4 |
- |
(811.4) |
1,873.9 |
1,679.2 |
479.0 |
- |
- |
- |
- |
767.2 |
(767.2) |
2,158.2 |
Platinum Sales |
- |
- |
- |
- |
- |
24.7 |
(24.7) |
- |
- |
- |
- |
- |
- |
82.2 |
- |
(82.2) |
- |
Coal sales |
- |
- |
- |
- |
|
- |
- |
- |
- |
- |
- |
- |
432.8 |
- |
- |
(432.8) |
- |
Realisation costs |
(7.7) |
(26.9) |
- |
- |
(12.5) |
- |
12.5 |
(34.6) |
(10.5) |
(7.0) |
- |
- |
- |
- |
(14.0) |
14.0 |
(17.5) |
On - mine
revenue |
1,498.8 |
340.5 |
- |
- |
798.9 |
24.7 |
(823.6) |
1,839.3 |
1,668.7 |
472.0 |
- |
- |
432.8 |
82.2 |
753.2 |
(1,268.2) |
2,140.7 |
Gold cost of
production |
(1,138.0) |
(204.1) |
- |
- |
(1,027.8) |
- |
1,027.8 |
(1,342.1) |
(1,056.2) |
(245.2) |
- |
- |
- |
- |
(1,010.2) |
1,010.2 |
(1,301.4) |
Platinum cost of
production |
- |
- |
- |
- |
- |
(28.2) |
28.2 |
- |
- |
- |
- |
- |
- |
(86.4) |
- |
86.4 |
- |
Coal cost of
production |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(375.0) |
- |
- |
375.0 |
- |
Depreciation and
amortisation |
(72.8) |
(12.3) |
- |
- |
(106.1) |
- |
106.1 |
(85.1) |
(81.9) |
(13.0) |
- |
- |
(12.2) |
(15.0) |
(86.2) |
113.4 |
(94.9) |
Mining
Profit |
288.0 |
124.1 |
- |
- |
(335.0) |
(3.5) |
338.5 |
412.1 |
530.6 |
213.8 |
- |
- |
45.6 |
(19.2) |
(343.2) |
316.8 |
744.4 |
Other (expenses)/income
(Note 2) |
(12.7) |
14.9 |
(69.0) |
(7.2) |
(198.0) |
0.7 |
197.3 |
(74.0) |
81.3 |
8.6 |
(95.6) |
1.6 |
2.7 |
(2.0) |
(30.4) |
29.7 |
(4.1) |
Profit on disposal of
investment |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
4.6 |
- |
- |
- |
- |
- |
4.6 |
Profit on disposal of
subsidiary |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
91.3 |
- |
- |
- |
- |
- |
91.3 |
Continuing operations -
impairment costs (Note 6) |
- |
(136.6) |
- |
- |
(1,644.5) |
- |
1,644.5 |
(136.6) |
- |
- |
- |
- |
- |
(100.9) |
- |
100.9 |
- |
Adjustment on sale of
asset held for sale |
- |
- |
- |
- |
- |
(4.9) |
4.9 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Royalty costs |
(6.5) |
(0.7) |
- |
- |
(4.1) |
- |
4.1 |
(7.2) |
(17.5) |
(1.7) |
- |
- |
(1.2) |
- |
(3.8) |
5.0 |
(19.2) |
Net income / (loss)
before finance income and finance costs |
268.8 |
1.7 |
(69.0) |
(7.2) |
(2,181.6) |
(7.7) |
2,189.3 |
194.3 |
594.4 |
220.7 |
0.3 |
1.6 |
47.1 |
(122.1) |
(377.4) |
452.4 |
817.0 |
Finance income |
3.3 |
13.3 |
6.2 |
2.9 |
8.6 |
0.1 |
(8.7) |
25.7 |
0.1 |
0.3 |
0.9 |
3.1 |
1.8 |
- |
0.6 |
(2.4) |
4.4 |
Finance costs |
- |
- |
(0.1) |
(54.2) |
- |
- |
- |
(54.3) |
(0.4) |
- |
(0.2) |
(47.8) |
- |
- |
(0.2) |
0.2 |
(48.4) |
Profit /(loss)
before taxation |
272.1 |
15.0 |
(62.9) |
(58.5) |
(2,173.0) |
(7.6) |
2,180.6 |
165.7 |
594.1 |
221.0 |
1.0 |
(43.1) |
48.9 |
(122.1) |
(377.0) |
450.2 |
773.0 |
Taxation |
(40.2) |
95.9 |
(18.9) |
(0.5) |
421.0 |
0.7 |
(421.7) |
36.3 |
(97.5) |
35.4 |
(9.2) |
(1.1) |
(13.6) |
4.8 |
68.3 |
(59.5) |
(72.4) |
Profit /(loss) after
taxation before inter-company charges and discontinued
operations |
231.9 |
110.9 |
(81.9) |
(59.0) |
(1,752.0) |
(6.9) |
1,758.9 |
202.0 |
496.6 |
256.4 |
(8.2) |
(44.2) |
35.3 |
(117.3) |
(308.7) |
390.7 |
700.6 |
Loss after taxation
from discontinued operations |
- |
- |
- |
- |
|
- |
(1,758.9) |
(1,758.9) |
- |
- |
- |
- |
- |
- |
- |
(390.7) |
(390.7) |
Profit /(loss) after
taxation before inter-company charges |
231.9 |
110.9 |
(81.8) |
(59.0) |
(1,752.0) |
(6.9) |
- |
(1,556.9) |
496.6 |
256.4 |
(8.2) |
(44.2) |
35.3 |
(117.3) |
(308.7) |
- |
309.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inter-company
transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management fees |
(34.0) |
(1.5) |
41.0 |
(2.0) |
(3.5) |
- |
- |
- |
(48.4) |
(14.1) |
97.9 |
(1.6) |
(7.6) |
(4.5) |
(21.7) |
- |
- |
inter-company interest
charges |
(5.1) |
- |
(6.3) |
62.3 |
(50.9) |
- |
- |
- |
(13.1) |
- |
(11.3) |
47.9 |
0.5 |
2.1 |
(26.1) |
- |
- |
Profit /(loss) after
taxation after inter-company charges |
192.8 |
109.4 |
(47.1) |
1.3 |
(1,806.4) |
(6.9) |
- |
(1,556.9) |
435.1 |
242.3 |
78.4 |
2.1 |
28.2 |
(119.7) |
(356.5) |
- |
309.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segmental assets
(Total assets excluding goodwill) |
1,434.0 |
2,838.4 |
135.9 |
12.8 |
- |
- |
- |
4,420.1 |
1,251.0 |
3,222.6 |
332.6 |
18.5 |
- |
95.2 |
- |
- |
4,919.9 |
Segmental
liabilities |
486.8 |
555.3 |
28.4 |
1,636.5 |
- |
- |
- |
2,707.0 |
426.7 |
890.1 |
77.8 |
202.0 |
- |
6.2 |
- |
- |
1,602.8 |
Goodwill |
303.5 |
- |
- |
- |
- |
- |
- |
303.5 |
303.5 |
- |
- |
- |
- |
- |
- |
- |
303.5 |
Net assets
(Excluding goodwill) (Note 7) |
947.2 |
2,283.1 |
106.5 |
(1,623.7) |
- |
- |
- |
1,713.1 |
824.3 |
2,332.5 |
254.8 |
(183.5) |
- |
89.0 |
- |
- |
3,317.1 |
Capital expenditure
(Note 8) |
210.4 |
1,261.4 |
2.2 |
- |
176.1 |
- |
- |
1,650.1 |
193.5 |
222.2 |
1.4 |
- |
15.1 |
5.4 |
175.5 |
- |
613.1 |
Adjusted EBITDA
(Note 9) |
341.6 |
150.6 |
(69.0) |
(7.2) |
(270.0) |
(2.8) |
272.8 |
416.0 |
676.3 |
233.7 |
(95.6) |
1.6 |
59.3 |
(6.2) |
(291.2) |
238.1 |
816.0 |
Figures are presented in millions, and values less than GBP0.5
million or R0.5 million, have been rounded to zero. |
Note 1:
All gold sales were made in the Republic of South Africa and the
majority of revenue was generated from South African financial
institutions. |
|
|
|
|
|
|
|
Note 2:
Other (expenses)/income exclude inter-company management fees and
dividends. |
Note 3:
During the current reporting period, Evander Mines underground
operations ceased mining on 31 May 2018. The ETRP buy-in operations
remain as continuing operations. |
|
|
|
|
|
|
Note 4:
Phoenix was classified as held for sale and as a discontinued
operation at 30 June 2017. The Phoenix disposal was concluded on 6
November 2017. |
Note 5:
The disposal of Pan African Resources Coal Holdings Proprietary
Limited and Uitkomst was completed on 30 June 2017 and this
business was classified as a discontinued operation. |
Note 6:
Impairment costs associated with the continuing operations
represent the carrying value of the Kinross and ETRP metallurgical
plant infrastructure. |
Note 7: All
assets are held within South Africa. The segmental assets and
liabilities above, exclude inter-company balances. |
|
|
|
|
|
|
|
|
|
|
Note 8:
Capital expenditure comprises of additions to property, plant and
equipment and mineral rights and intangible assets. |
|
|
|
|
|
|
|
|
|
|
Note 9:
Adjusted EBITDA is represented by earnings before interest,
taxation, depreciation and amortisation, impairments, discontinued
operations and profit/(loss) on disposal of investments. |
|
|
|
|
|
Summarised audited consolidated statement of changes in equity
for the year ended 30 June 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital |
Share premium |
Translation reserve |
Share option reserve |
Retained earnings |
Realisation of equity reserve |
Treasury capital reserve |
Merger reserve |
Other reserves |
Total |
|
GBP
million |
GBP
million |
GBP
million |
GBP
million |
GBP
million |
GBP
million |
GBP
million |
GBP
million |
GBP
million |
GBP
million |
Balance at 30 June
2016 |
19.4 |
108.9 |
(58.6) |
1.0 |
126.8 |
(10.7) |
(25.4) |
(10.7) |
0.3 |
151.0 |
Issue of shares |
2.9 |
37.9 |
- |
- |
- |
- |
- |
- |
- |
40.8 |
Share issue costs |
- |
(1.4) |
- |
- |
- |
- |
- |
- |
- |
(1.4) |
Profit for the
year |
- |
- |
- |
- |
17.9 |
- |
- |
- |
- |
17.9 |
Total comprehensive
income |
- |
- |
21.7 |
- |
- |
- |
- |
- |
(0.3) |
21.4 |
Dividends paid |
- |
- |
- |
- |
(17.1) |
- |
- |
- |
- |
(17.1) |
Reciprocal dividends -
PAR Gold |
- |
- |
- |
- |
3.8 |
- |
- |
- |
- |
3.8 |
Share based payment -
charge for the year |
- |
- |
- |
0.2 |
- |
- |
- |
- |
- |
0.2 |
Balance at 30 June
2017 (Note 1) |
22.3 |
145.4 |
(36.9) |
1.2 |
131.4 |
(10.7) |
(25.4) |
(10.7) |
- |
216.6 |
Disposal of treasury
shares |
- |
(0.8) |
- |
- |
- |
- |
9.8 |
- |
- |
9.0 |
Loss for the year |
- |
- |
- |
- |
(93.3) |
- |
- |
- |
- |
(93.3) |
Total comprehensive
loss |
- |
- |
(5.9) |
- |
- |
- |
- |
- |
(3.0) |
(8.9) |
Dividends paid |
- |
- |
- |
- |
(10.0) |
- |
- |
- |
- |
(10.0) |
Reciprocal dividends -
PAR Gold |
- |
- |
- |
- |
1.9 |
- |
- |
- |
- |
1.9 |
Share based payment -
charge for the year |
- |
- |
- |
0.5 |
- |
- |
- |
- |
- |
0.5 |
Balance at 30 June
2018 |
22.3 |
144.6 |
(42.8) |
1.7 |
30.0 |
(10.7) |
(15.6) |
(10.7) |
(3.0) |
115.8 |
Note 1:
Due to rounding in the statement of changes in equity, the figures
may differ to the summarised consolidated statement of financial
position. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summarised unaudited consolidated statement of changes in equity
in for the year ended 30 June 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
Share Capital |
Share Premium |
Translation reserve |
Share option reserve |
Retained earnings |
Realisation of equity reserve |
Treasury capital reserve |
Merger reserve |
Other reserves |
Total |
|
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
ZAR
million |
Balance at 30 June
2016 |
269.7 |
1,638.5 |
- |
14.0 |
1,789.9 |
(140.6) |
(548.6) |
(154.7) |
6.3 |
2,874.5 |
Issue of shares |
49.1 |
646.9 |
- |
- |
- |
- |
- |
- |
- |
696.0 |
Share issue costs |
- |
(24.0) |
- |
- |
- |
- |
- |
- |
- |
(24.0) |
Profit for the
year |
- |
- |
- |
- |
309.9 |
- |
- |
- |
- |
309.9 |
Total comprehensive
income |
- |
- |
- |
- |
- |
- |
- |
- |
(6.3) |
(6.3) |
Dividends paid |
- |
- |
- |
- |
(300.0) |
- |
- |
- |
- |
(300.0) |
Reciprocal dividends -
PAR Gold |
- |
- |
- |
- |
67.4 |
- |
- |
- |
- |
67.4 |
Share based payment -
charge for the year |
- |
- |
- |
3.2 |
- |
- |
- |
- |
- |
3.2 |
Balance at 30 June
2017 (Note 1) |
318.8 |
2,261.4 |
- |
17.2 |
1,867.2 |
(140.6) |
(548.6) |
(154.7) |
- |
3,620.7 |
Disposal of treasury
shares |
- |
(14.0) |
- |
- |
- |
- |
163.4 |
- |
- |
149.4 |
Loss for the year |
- |
- |
- |
- |
(1,556.9) |
- |
- |
- |
- |
(1,556.9) |
Total comprehensive
loss |
- |
- |
- |
- |
- |
- |
- |
- |
(55.0) |
(55.0) |
Dividends paid |
- |
- |
- |
- |
(185.0) |
- |
- |
- |
- |
(185.0) |
Reciprocal dividends -
PAR Gold |
- |
- |
- |
- |
36.1 |
- |
- |
- |
- |
36.1 |
Share based payment -
charge for the year |
- |
- |
- |
7.4 |
- |
- |
- |
- |
- |
7.4 |
Balance at 30 June
2018 |
318.8 |
2,247.4 |
- |
24.6 |
161.4 |
(140.6) |
(385.2) |
(154.7) |
(55.0) |
2,016.7 |
Note 1: Due to rounding in the statement of changes in
equity, the figures may differ to the summarised consolidated
statement of financial position.
Unaudited alternative performance
measures summary for the period ended 30
June 2018
|
|
|
|
|
30 June 2018 |
30 June 2017 |
PRODUCTION CASH COST, ALL-IN SUSTAINING COSTS AND ALL-IN
COSTS |
30 June 2017 |
30 June 2018 |
USD million |
USD million |
ZAR million |
ZAR million |
186.5 |
170.9 |
Cash
costs |
2,322.3 |
2,397.5 |
184.3 |
170.1 |
Gold
cost of production |
2,311.6 |
2,369.9 |
3.7 |
2.3 |
Realisation costs |
31.5 |
47.1 |
(1.5) |
(1.5) |
Care
and maintenance costs |
(20.8) |
(19.5) |
218.1 |
204.2 |
All-in sustaining costs |
2,772.7 |
2,802.1 |
186.5 |
170.9 |
Cash
costs |
2,322.3 |
2,397.5 |
0.9 |
1.7 |
Royalties |
23.0 |
11.3 |
1.1 |
1.7 |
Community costs related to gold operations |
22.7 |
13.6 |
(0.1) |
(0.2) |
By-product credits |
(3.3) |
(1.9) |
7.3 |
6.9 |
Corporate general and administrative costs |
93.1 |
94.4 |
9.1 |
10.7 |
Development capital (sustaining) |
145.4 |
116.5 |
13.3 |
12.5 |
Maintenance capital expenditure (sustaining) |
169.5 |
170.7 |
238.7 |
214.6 |
All-in costs |
2,914.3 |
3,067.8 |
218.1 |
204.2 |
All-in
sustaining costs |
2,772.7 |
2,802.1 |
8.1 |
7.4 |
Capital
expenditure (non-sustaining) |
100.8 |
104.7 |
12.5 |
3.0 |
Voluntary severance pay/retrenchment costs (non-sustaining) |
40.8 |
161.0 |
30 June 2018 |
30 June 2017 |
|
30 June 2017 |
30 June
2018 |
GBP million |
GBP million |
SUMMARY OF ADJUSTED EBITDA |
ZAR million |
ZAR
million |
24.2 |
47.3 |
Adjusted EBITDA |
816.0 |
416.0 |
(93.3) |
17.9 |
Loss/profit after taxation |
309.9 |
(1,556.9) |
(2.1) |
4.3 |
Taxation |
72.4 |
(36.3) |
3.2 |
2.8 |
Finance
costs |
48.4 |
54.3 |
(1.5) |
(0.3) |
Finance
income |
(4.4) |
(25.7) |
8.2 |
- |
Impairments |
- |
136.6 |
- |
(5.4) |
Profit
on disposal of subsidiary |
(91.3) |
- |
- |
(0.2) |
Profit
on disposal of investment |
(4.6) |
- |
4.9 |
5.5 |
Mining
depreciation and amortisation |
94.9 |
85.1 |
104.8 |
22.7 |
Profit
after tax on discontinued operations |
390.7 |
1,758.9 |
30 June 2018 |
30 June 2017 |
AUDITED HEADLINE EARNINGS AND HEADLINE EARNINGS PER SHARE FROM
COMBINED OPERATIONS |
30 June 2017 |
30 June 2018 |
GBP million |
GBP million |
ZAR million |
ZAR million |
(93.3) |
17.9 |
Basic earnings |
309.9 |
(1,556.9) |
- |
(0.2) |
Profit on disposal of
investment |
(4.6) |
- |
|
- |
Taxation on profit on
disposal of investment |
1.0 |
|
- |
(5.4) |
Profit on disposal of
subsidiary |
(91.3) |
- |
0.3 |
- |
Adjustment on sale of
asset held for sale |
- |
4.9 |
- |
- |
Profit on disposal of
property plant and equipment |
(0.4) |
- |
- |
- |
Taxation on profit on
disposal of property plant and equipment |
0.1 |
- |
106.3 |
6.0 |
Impairment |
100.9 |
1,781.1 |
13.3 |
18.3 |
Headline
earnings |
315.6 |
229.1 |
0.73 |
1.17 |
Headline earnings per
share |
20.17 |
12.66 |
0.73 |
1.17 |
Diluted headline
earnings per share |
20.17 |
12.66 |
30 June 2018 |
30 June 2017 |
AUDITED HEADLINE EARNINGS AND HEADLINE EARNINGS PER SHARE FROM
CONTINUING OPERATIONS |
30 June 2017 |
30 June 2018 |
GBP million |
GBP million |
ZAR million |
ZAR million |
11.5 |
40.6 |
Basic earnings |
700.6 |
202.0 |
- |
(0.2) |
Profit on disposal of
Investment |
(4.6) |
- |
|
- |
Taxation on profit on
disposal of Investment |
1.0 |
|
- |
(5.4) |
Profit on disposal of
subsidiary |
(91.3) |
- |
- |
- |
Profit on disposal of
property plant and equipment |
- |
- |
- |
- |
Tax on profit on
disposal of property plant and equipment |
- |
- |
8.2 |
- |
Impairment |
- |
136.6 |
19.6 |
35.0 |
Headline
earnings |
605.7 |
338.6 |
1.08 |
2.24 |
Headline earnings per
share |
38.72 |
18.71 |
1.08 |
2.24 |
Diluted headline
earnings per share |
38.70 |
18.71 |
30 June
2018 |
30 June
2017 |
NET DEBT FOR THE GROUP |
30 June
2017 |
30 June
2018 |
GBP
million |
GBP
million |
ZAR
million |
ZAR
million |
89.8 |
4.1 |
Net
debt |
67.6 |
1,623.6 |
47.9 |
11.9 |
Revolving credit facility |
201.2 |
866.2 |
42.6 |
- |
Elikhulu term loan facility |
- |
770.0 |
- |
1.6 |
Gold
loan |
26.6 |
- |
(0.7) |
(9.4) |
Cash
and cash equivalents |
(160.2) |
(12.6) |
30 June
2018 |
30 June
2017 |
Metric |
CASH COST PER OUNCE AND KILOGRAMME |
Metric |
30 June
2017 |
30 June
2018 |
1,162 |
986 |
USD/oz |
Cash
cost |
ZAR/kg |
430,863 |
480,439 |
186.5 |
170.9 |
USD million |
Cash
costs |
ZAR million |
2,322.3 |
2,397.5 |
160,444 |
173,285 |
Oz |
Gold
sold |
kg |
5,390 |
4,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 June
2018 |
30 June
2017 |
Metric |
ALL-IN SUSTAINING COST PER OUNCE AND KILOGRAMME |
Metric |
30 June
2017 |
30 June
2018 |
1,358 |
1,177 |
USD/oz |
All-in sustaining cost |
ZAR/kg |
514,435 |
561,468 |
218.1 |
204.2 |
USD million |
All-in
sustaining costs |
ZAR million |
2,772.7 |
2,802.1 |
160,444 |
173,285 |
oz |
Gold
sold |
kg |
5,390 |
4,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 June
2018 |
30 June
2017 |
Metric |
ALL-IN COST PER OUNCE AND KILOGRAMME |
Metric |
30 June
2017 |
30 June
2018 |
1,487 |
1,237 |
USD/oz |
All-in cost |
ZAR/kg |
540,693 |
614,713 |
238.7 |
214.6 |
USD million |
All-in
costs |
ZAR million |
2,914.3 |
3,067.8 |
160,444 |
173,285 |
Oz |
Gold
sold |
kg |
5,390 |
4,990 |
Contact information |
Corporate Office
The Firs Office Building
2nd Floor, Office 201
Cnr. Cradock and Biermann Avenues
Rosebank, Johannesburg
South Africa
Office: + 27 (0) 11 243 2900
Facsimile: + 27 (0) 11 880 1240 |
Registered Office
Suite 31
Second Floor
107 Cheapside
London
EC2V 6DN
United Kingdom
Office: + 44 (0) 207 796 8644
Facsimile: + 44 (0) 207 796 8645 |
Cobus
Loots
Pan African Resources PLC
Chief Executive Officer
Office: + 27 (0) 11 243
2900 |
Deon Louw
Pan African Resources PLC
Financial Director
Office: + 27 (0) 11 243 2900 |
Phil Dexter
St James's Corporate Services Limited
Company Secretary
Office: + 44 (0) 207 796 8644 |
John Prior / Paul
Gillam
Numis Securities Limited
Nominated Adviser and Joint Broker
Office: +44 (0) 20 7260 1000 |
Sholto Simpson
One Capital
JSE Sponsor
Office: + 27 (0) 11 550 5009 |
Ross Allister/James
Bavister/David McKeown
Peel Hunt LLP
Joint Broker
Office: +44 (0) 207 418 8900 |
Julian Gwillim
Aprio Strategic Communications
Public & Investor Relations SA
Office: +27 (0)11 880 0037 |
Jeffrey Couch /Thomas
Rider
BMO Capital Markets Limited
Joint Broker
Office: +44 (0) 207 236 1010 |
Bobby
Morse
Buchanan
Public & Investor Relations UK
Office: +44 (0)20 7466 5000
Email: PAF@buchanan.uk.com |
Website:
www.panafricanresources.com |