Pan African Resources Plc Trading Statement and Production Update
September 14 2018 - 4:18AM
UK Regulatory
TIDMPAF
Pan African Resources PLC
("Pan African" or "the company" or "the group")
(Incorporated and registered in England and Wales under Companies Act 1985 with
registered number 3937466 on 25 February 2000)
Share code on AIM: PAF
Share code on JSE: PAN
ISIN: GB0004300496
TRADING STATEMENT FOR THE FINANCIAL YEARED 30 JUNE 2018, PRODUCTION UPDATE
FOR 2019 FINANCIAL YEAR AND ELIKHULU COMMISSIONING
Pan African CEO Cobus Loots commented:
"The group results for the 2018 financial year are reflective of both the
incredibly challenging operational environment and the specific issues that
confronted the group over the past year. These issues, as well as the
definitive remedial actions we implemented, were well disseminated to the
market. The operational update and the commissioning of the Elikhulu plant
demonstrates that we are well on track to deliver into our 2019 targets and
look forward to the year ahead".
TRADING STATEMENT
In terms of paragraph 3.4(b) of the Listings Requirements of the JSE Limited, a
listed company is required to publish a trading statement as soon as it is
satisfied that a reasonable degree of certainty exists that the financial
results for the period to be reported upon next, will differ by at least 20%
from those of the previous corresponding period.
Pan African is incorporated in England and Wales and, accordingly, its
presentation currency is Pounds Sterling ("GBP") with a functional currency in
South African Rands ("ZAR" or "R").
The ZAR:GBP exchange rate affects the reporting of results in GBP. For the
reporting period ended 30 June 2018 ("current reporting period"), the average
prevailing ZAR:GBP exchange rate is used, 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.
For the reporting period ended 30 June 2017 ("prior reporting period"), the
average ZAR:GBP exchange rate was ZAR17.25:1. For the current reporting period,
the ZAR marginally depreciated against the GBP to an average exchange rate of
ZAR17.27:1. This 0.1% year-on-year depreciation in the average exchange rate
should be taken into account for the purposes of a comparison with the prior
reporting period.
The group records its revenue from precious metals sales in ZAR. The strength
in the value of the ZAR/USD exchange rate during the current reporting period
had an adverse impact on the USD revenue received when translated into ZAR. In
the current reporting period, the average ZAR/USD exchange rate appreciated by
5.4% to R12.86:1 (2017: R13.59:1).
Due to the cessation of mining at Evander Gold Mining Proprietary Limited
("Evander Mines") underground operations which includes 8 Shaft, 7 Shaft and
the run-of-mine circuit in the Kinross metallurgical plant, the financial
results from the Evander Mines' underground operations were classified as
discontinued operations ("discontinued operations") during the current
reporting period. The prior reporting period's figures have been re-presented
to differentiate between the discontinued operations and the results from the
remainder of the operational portfolio comprising the continuing operations
("continuing operations"). The combined results comprise the results of the
continuing operations and discontinued operations ("combined operations"). As
result of the cessation of Evander Mines' underground operations, the group
recognised a once-off impairment charge of R1.78 billion (GBP106.3 million) and
incurred retrenchments costs of R161 million (GBP9.3 million).
In the current reporting period, the group's weighted average number of shares
in issue increased by 15.7% to 1,809,726,739 shares (2017: 1,564,346,115
shares). The increase in the weighted average number of shares in issue is
predominantly due to the full-year impact of the issuance of new shares to fund
the equity component of the Elikhulu tailings retreatment project's
("Elikhulu") construction late in the prior reporting period. The disposal of
130-million Pan African shares held by PAR Gold Proprietary Limited, which had
a commensurate increase in the weighted average number of shares in issue, as
these shares had previously been treated as treasury shares. The proceeds from
the disposal were partly utilised to fund the incorporation of existing Evander
tailing retreatment plant ("ETRP") throughput into Elikhulu's processing
capacity, which will result in an increased capacity of 1.2-million tonnes per
month from December 2018.
Pan African advises shareholders that its headline earnings per share ("HEPS")
and earnings per share ("EPS") in ZAR terms from its continuing operations for
the current reporting period are expected to be between:
* HEPS: 57% to 47% lower than the 38.72 cents for the prior reporting period.
Therefore the expected HEPS range is between 16.77 cents to 20.65 cents.
* EPS: 80% to 70% lower than the 44.78 cents for the prior reporting period.
Therefore the expected EPS range is between 8.92 cents to 13.40 cents.
The group's combined operations, EPS and HEPS in ZAR terms for the current
reporting period are expected to be between:
* HEPS: 42% to 32% lower than the 20.17 cents for the prior reporting period.
Therefore the expected HEPS range is between 11.65 cents to 13.67 cents.
* EPS is expected to decrease from 19.81 cents for the prior reporting
period, to between (87.02) cents to (85.04) cents.
The HEPS and EPS in GBP terms from its continuing operations for the current
reporting period are expected to be between:
* HEPS: 56% to 46% lower than the 2.24 pence for the prior reporting period.
Therefore the expected HEPS range is between 0.97 pence to 1.20 pence.
* EPS: 81% to 71% lower than the 2.60 pence for the prior reporting period.
Therefore the expected EPS range is between 0.50 pence to 0.76 pence.
The group's combined operations HEPS and EPS in GBP terms for the current
reporting period are expected to be between:
* HEPS: 43% to 33% lower than the 1.17 pence for the prior reporting period.
Therefore the expected HEPS range is between 0.67 pence to 0.79 pence.
* EPS is expected to decrease from 1.14 pence for the prior reporting period,
to between (5.21) pence to (5.10) pence.
PRODUCTION UPDATE FOR THE 2019 FINANCIAL YEAR
Following the operational updates released during July 2018, Pan African is
pleased to provide a production update and guidance for quarter one of the 2019
financial year ("quarter one"), and further information on the group's
prospects for the remainder of the new financial year.
Barberton Mines Proprietary Limited ("Barberton Mines")
* Barberton Mines is benefitting from increased underground mining
flexibility due to, inter alia, both the high-grade 272 and 358 platforms
being available at Barberton Mines' Fairview operation. The Barberton
tailings retreatment plant ("BTRP") is also benefiting from the
installation of the regrind mill at the end of the 2018 financial year.
* Barberton Mines is forecast to produce approximately 26,000oz for quarter
one, with underground mining operations contributing more than 20,500oz,
and the BTRP more than 5,000oz. Barberton Mines is therefore on track to
deliver its annual production guidance of approximately 100,000oz for the
2019 financial year.
* Fairview commendably achieved one-million fatality free shifts during July
2018.
* The conclusion of a three-year wage agreement with the National Union of
Mineworkers and the United Association of South Africa, which was announced
on 7 September 2018, is expected to assist with operational stability and
productivity at Barberton Mines.
* As per the announcement of 6 September 2018, phase one and two of the Royal
Sheba drilling campaign, comprising 20 drill holes, has been completed with
excellent results confirming the extension of the Sheba orebody to surface.
An updated mineral reserve's report on Royal Sheba is expected by November
2018, and a definitive feasibility study by February 2019.
Evander Mines
* The ETRP and surface-source operations are expected to produce
approximately 4,000oz the first quarter. The ETRP and surface-source
production remains on track, despite production being impacted by
lower-quality surface sources being treated during the quarter.
* The group is reviewing the merits of mining Evander Mines' 8 Shaft pillar.
Further information on this initiative will be communicated in the near
future.
ELIKHULU COMMISSIONING
* The Elikhulu Project is progressing according to schedule with all phases
of the five-phase technical commissioning processes now successfully
completed. This commissioning includes the successful completion of the
"C5" or final contractual certificate dealing with production requirements,
in that the plant's tonnage throughput was achieved and the dissolved gold
content in the final leach tank has been met for a continuous period of 72
hours. In line with previous guidance, Elikhulu is expected to produce at
steady-state from October 2018.
* The incorporation of the existing ETRP's throughput into Elikhulu's
processing capacity, which will result in an increased capacity totalling
1.2-million tonnes per month, is in progress as previously communicated.
The financial information contained in this announcement has neither been
reviewed nor audited by the company's auditors. The group's audited year-end
results for the year ended 30 June 2018 will be released on 19 September 2018.
For further information on Pan African, please visit the company's website at
www.panafricanresources.com
14 September 2018
Contact information
Corporate Office Registered Office
The Firs Office Building Suite 31
2nd Floor, Office 201 Second Floor
Cnr. Cradock and Biermann Avenues 107 Cheapside
Rosebank, Johannesburg London
South Africa EC2V 6DN
Office: + 27 (0) 11 243 2900 United Kingdom
Facsimile: + 27 (0) 11 880 1240 Office: + 44 (0) 20 7796 8644
Facsimile: + 44 (0) 20 7796 8645
Cobus Loots Deon Louw
Pan African Resources PLC Pan African Resources PLC
Chief Executive Officer Financial Director
Office: + 27 (0) 11 243 2900 Office: + 27 (0) 11 243 2900
Phil Dexter John Prior / Paul Gillam
St James's Corporate Services Limited Numis Securities Limited
Company Secretary Nominated Adviser and Joint Broker
Office: + 44 (0) 20 7796 8644 Office: +44 (0) 20 7260 1000
Sholto Simpson Ross Allister/James Bavister/David
One Capital McKeown
JSE Sponsor Peel Hunt LLP
Office: + 27 (0) 11 550 5009 Joint Broker
Office: +44 (0) 20 7418 8900
Julian Gwillim Jeffrey Couch/Neil Haycock/Thomas Rider
Aprio Strategic Communications BMO Capital Markets Limited
Public & Investor Relations SA Joint Broker
Office: +27 (0)11 880 0037 Office: +44 (0) 20 7236 1010
Bobby Morse
Buchanan
Public & Investor Relations UK
Office: +44 (0)20 7466 5000
Email: PAF@buchanan.uk.com
Website: www.panafricanresources.com
END
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