Pan African Resources Plc Provisional Summarised Audited Results
September 16 2020 - 1:00AM
UK Regulatory
TIDMPAF
Pan African Resources PLC
(Incorporated and registered in England and Wales under the Companies Act 1985
with registered number 3937466 on 25 February 2000)
Share code on AIM: PAF
Share code on JSE: PAN
ISIN: GB0004300496
ADR ticker code: PAFRY
(Pan African or the Company or the Group)
(Key features are reported in US dollar (US$) and South African rand (ZAR))
Provisional summarised audited results for the year ended 30 June 2020 - SHORT
FORM ANNOUNCEMENT
KEY FEATURES
* The Group responded swiftly in implementing stringent policies and
protocols to mitigate the impact of the COVID-19 pandemic on its employees
and operations
* Gold production increased by 4.1% to 179,457oz after final refinery
adjustments (2019: 172,442oz), exceeding the revised full-year production
guidance of 176,000 oz
* Industry-leading safety performance, both in terms of lost-time injury and
reportable injury frequency rates
* Revenue increased by 25.9% to US$273.7 million (2019: US$217.4 million)
* Profit after taxation increased by 16.6% to US$44.3 million (2019: US$38.0
million)
* Headline earnings increased by 93.0% to US$44.2 million (2019: US$22.9
million)
* Headline earnings per share increased by 92.4% to US 2.29 cents per share
(2019: US 1.19 cents per share)
* Earnings per share increased by 16.8% to US 2.30 cents per share (2019: US
1.97 cents per share)
* Net cash generated by operating activities increased by 42.7% to US$53.8
million (2019: US$37.7 million)
* Net senior debt* decreased by 51.9% to US$62.0 million (2019: US$129.0
million)
* Improved net debt to net adjusted EBITDA ratio of 0.7 (2019: 2.2)
* Low-cost operations (including Elikhulu, BTRP and Barberton Mines' Fairview
Mine) achieved an AISC of US$826/oz for the Reporting Period
* The development of Evander Mines' Egoli project has commenced. The
project's payback is estimated at less than five years from inception of
construction, with funding provided on a non-dilutive basis by means of a
dedicated debt facility
* Production guidance increased to 190,000oz for the year ending 30 June 2021
* The board has proposed a record final dividend of ZAR 312.9 million or
approximately US$18.7 million, at prevailing exchange rates, subject to
approval by shareholders at the annual general meeting (AGM)
(*Net senior debt includes senior interest-bearing debt and the outstanding
gold loan balance, net of available cash)
CHIEF EXECUTIVE OFFICER'S STATEMENT
"Over the past year, our Group's operations demonstrated their resilience, with
gold production in excess of the revised guidance for the year ended 30 June
2020 (Reporting Period). This operational performance was achieved despite the
impact of the COVID-19 pandemic and the resultant restrictions imposed to curb
the spread of the virus - a testament to the robustness and operational
flexibility of our diversified portfolio of assets.
Gold production from Elikhulu and the Barberton Tailings Retreatment Plant
(BTRP), our low-cost surface retreatment operations, have contributed
significantly to the profitability of the Group and demonstrated the benefit of
multiple producing operations.
We are pleased to confirm that we remain firmly on track to deliver into our
guided gold production of 190,000oz for the year ending 30 June 2021, a
substantial increase compared to the revised production guidance of 176,000oz
for the Reporting Period.
We successfully levered the Group's operational execution capability to bring
Evander Mines' 8 Shaft (8 Shaft) pillar project and the Prince Consort (PC)
Shaft's Level 42 development at Barberton Mines' New Consort Mine into
steady-state production, and these operations are now an integral part of our
strategy to further reduce costs and increase margins at our underground mines.
Our Group's safety performance during the Reporting Period is commendable and
we will remain unrelenting in the pursuit of our ultimate goal of zero harm in
the years ahead. We are deeply saddened by the fatality that occurred after the
Reporting Period, as outlined in the subsequent events section further in the
announcement.
Pan African's earnings for the Reporting Period were adversely affected by
COVID-19. This impact was however largely offset by the robust gold price and
by our ability to expeditiously ramp up gold production, in line with
government directives, post the initial hard lockdown period. Despite the
impact of COVID-19, we are pleased to report increased earnings for the Group
this year.
We reduced net debt during the Reporting Period by 41.2% to US$76.4 million
(2019: US$129.9 million), which resulted in a significantly improved net debt
to net adjusted EBITDA ratioAPM of 0.7 (2019: 2.2).
Group all-in sustaining costs (AISC) of US$1,147/oz includes realised hedge
losses of US$12.0 million. Excluding these realised losses, the Group's AISC
decreased to US$1,078/oz (2019: US$988/oz), which is more reflective of the
actual operational costs and in line with the Group's targeted AISC of US$1,000
/oz. The AISC for the Group's low-cost operations, comprising Elikhulu, BTRP
and Barberton Mines' Fairview Mine, was US$826/oz for the Reporting Period. We
believe the Group is well on track to produce at an AISC of below US$1,000/oz
for the 2021 financial year.
Our robust operational and financial performance over the past year, together
with a positive outlook for the year ahead, has enabled the board to recommend
a record dividend of ZAR312.9 million, or US 0.83582 cents per share, for
approval by shareholders at the upcoming AGM.
The Group will continue to invest in our compelling organic growth projects,
most notably the recently announced long-life Egoli project, which capitalises
on the substantial existing shaft and plant infrastructure, and is also fully
licenced and 'shovel-ready'. We are pleased to announce that following the
successful completion of the feasibility study, the Group has obtained credit
approval from Rand Merchant Bank for the full debt funding of the project's
capital expenditure. Additional detail on the Egoli project's development and
funding is provided further in the announcement.
We have prioritised our environmental, social and governance initiatives, as
evidenced by the level of rehabilitation spend for the Reporting Period, and
board approval for the implementation of a number of significant and
sustainable development projects. These include the 10MW renewable energy solar
photovoltaic plant at Elikhulu and a large-scale agriculture project at
Barberton Mines. The merits of a similar solar photovoltaic plant are also
being considered for Barberton Mines, as well as new agriculture projects on
rehabilitated land at Evander Mines.
We are acutely conscious of the ongoing impact of the COVID-19 pandemic and
will continue to implement stringent preventative and precautionary measures to
limit incidences of infection among our employees and in our host communities,
and minimise the potential adverse impact of the pandemic on the Group 's
operations.
In the year ahead, aligned to our strategy of delivering safe, sustainable and
high-margin gold production, we will continue to direct our focus on creating
shareholder value by optimising our operations, further de-gearing our balance
sheet and increasing dividend distributions. Furthermore, we will also continue
investing in our host communities to improve the living conditions of these
critical stakeholders.
My sincere thanks and gratitude to all of the management and employees of Pan
African for their contribution to the Group through this difficult time and for
ensuring the sustainability of our operations, now and into the future."
PROPOSED DIVID FOR THE FINANCIAL YEARED 30 JUNE 2020
The board has proposed a final dividend of ZAR312.9 million for the 2020
financial year (approximately US$18.7 million), equal to ZA 14.00000 cents per
share or approximately US 0.83582 cents per share (0.65451 pence per share).
The dividend is subject to approval by shareholders at the AGM, which is
convened for Thursday, 26 November 2020.
In light of the robust results for the Reporting Period and the favourable
financial prospects for the operations in the 2021 financial year, the board
has applied its discretion and has proposed a dividend in excess of the
Company's dividend policy's guidelines, which provide for a 40% payout ratio of
net cash generated from operating activities.
Assuming shareholders approve the final dividend, the following salient dates
would apply:
Currency conversion date Thursday, 26 November 2020
Annual General Meeting Thursday, 26 November 2020
Currency conversion announcement released by 11:00 (SA Friday, 27 November 2020
time)
Last date to trade on the JSE Tuesday, 1 December 2020
Last date to trade on the LSE Wednesday, 2 December 2020
Ex-dividend date on the JSE Wednesday, 2 December 2020
Ex-dividend date on the LSE Thursday, 3 December 2020
Record date on the JSE and LSE Friday, 4 December 2020
Payment date Tuesday, 15 December 2020
The pound sterling (GBP) and US$ proposed final dividend was calculated based
on a total of 2,234,687,537 shares in issue and an illustrative exchange rate
of US$/ZAR:16.75 and GBP/ZAR:21.39, respectively. Shareholders on the London
register should note that a revised exchange rate will be communicated before
approval at the AGM.
No transfers between the Johannesburg and London registers, between the
commencement of trading on Wednesday, 2 December 2020 and close of business on
Friday, 4 December 2020 will be permitted.
No shares may be dematerialised or rematerialised between Wednesday, 2 December
2020 and Friday, 4 December 2020, both days inclusive.
The South African dividends taxation rate is 20% per ordinary share for
shareholders who are liable to pay dividends taxation, resulting in a net
dividend of ZA 11.20000 cents per share. Foreign investors may qualify for a
lower dividend taxation rate, subject to completing a dividend taxation
declaration and submitting it to Computershare Investor Services Proprietary
Limited or Link Asset Services, who manage the South African and UK registers,
respectively. The Company's South African income taxation reference number is
9154588173. The proposed dividend will be paid out of the Company's retained
earnings, without drawing on any other capital reserves.
AUDIT OPINION
The Group's external auditor, PricewaterhouseCoopers LLP ("PwC"), have issued
their opinion on the consolidated annual financial statements for the year
ended 30 June 2020.
There have been two key audit matters identified by PwC which relate to the
Impairment assessments of goodwill, intangible assets and property, plant and
equipment and mineral rights - Group, and the Impact of COVID-19 - Group and
Parent Company. Further details on these key audit matters can be found in the
full auditor's report which is available on the Company's website https://
www.panafricanresources.com/wp-content/uploads/
Pan-African-Resources-integrated-annual-report-2020.pdf.
The audit of the consolidated annual financial statements was conducted in
accordance with the International Standards on Auditing. PwC has expressed an
unmodified opinion on the consolidated annual financial statements. A copy of
the audited annual financial statements and the audit report is available for
inspection at the issuer's registered office. Any reference to future financial
performance included in this provisional summarised audited results
announcement has not been reviewed or reported on by the Group's external
auditor.
DIRECTORS' RESPONSIBILITY
The information in this announcement has been extracted from the provisional
summarised audited results for the year ended 30 June 2020, but this short-form
announcement itself has not been reviewed by the Company's auditors. The
provisional summarised audited 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.
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/2020/jse/isse/pan/FYE2020.pdf
and via the Company's website at https://www.panafricanresources.com/wp-content
/uploads/Pan-African-Resources-year-end-results-SENS-announcement-2020.pdf
Copies of the full announcement may also be requested by emailing
ExecPA@paf.co.za
The Company has a dual primary listing on the JSE in South Africa and the AIM
market of the London Stock Exchange (AIM) 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
Contact information
Corporate Office Registered Office
The Firs Office Building Suite 31
2nd Floor, Office 204 Second Floor
Cnr. Cradock and Biermann Avenues 107 Cheapside
Rosebank, Johannesburg London
South Africa EC2V 6DN
Office: + 27 (0)11 243 2900 United Kingdom
info@paf.co.za Office: + 44 (0)20 7796 8644
Cobus Loots Deon Louw
Pan African Resources PLC Pan African Resources PLC
Chief Executive Officer Financial Director
Office: + 27 (0)11 243 2900 Office: + 27 (0)11 243 2900
Phil Dexter/Jane Kirton Ross Allister/David McKeown
St James's Corporate Services Limited Peel Hunt LLP
Company Secretary Nominated Adviser and Joint Broker
Office: + 44 (0)20 7796 8644 Office: +44 (0)20 7418 8900
Ciska Kloppers Thomas Rider/Neil Elliot
Questco Corporate Advisory Proprietary Limited BMO Capital Markets Limited
JSE Sponsor Joint Broker
Office: + 27 (0)11 011 9200 Office: +44 (0)20 7236 1010
Hethen Hira Website: www.panafricanresources.com
Pan African Resources PLC
Head: Investor Relations
Tel: + 27 (0)11 243 2900
E-mail: hhira@paf.co.za
END
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