Pan
African Resources PLC
(Incorporated
and registered in England and Wales under the Companies Act 1985
with registration 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)
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(Key
features are reported in United
States dollar (US$) or South African rand (ZAR), to the
extent relevant.)
UNaudited INTERIM FINANCIAL results for THE SIX Months
ended 31 december
2023
KEY FEATURES
Production
-
Gold
production of 98,458oz (2022: 92,307oz), an increase of 6.7%
relative to the six months ended 31 December
2022 (previous reporting period)
-
The Group
is well positioned to deliver into its 2024 financial year
production guidance of between 180,000oz to 190,000oz of gold.
Increased guidance may be considered in due course.
Safety
-
Improvement
in overall safety rates with a total recordable injury frequency
rate of 6.13 per million man hours for the year (2022: 8.54 per
million man hours)
-
Group
surface operations reported no recordable injuries for the six
months ended 31 December 2023
(reporting period) (2022: 5.14 per million man hours)
-
Barberton
Mines achieved 4 million fatality-free shifts during November 2023.
Costs
and cost outlook
-
Production
costs were well managed, despite inflationary pressures, resulting
in a reduction in all-in sustaining costs (AISC) per ounce for the
reporting period to US$1,287/oz
(2022: US$1,291/oz)
-
The
Group’s operations, which account for more than 85% of the Group’s
gold production, produced at an AISC per ounce of US$1,149/oz (2022: US$1,139/oz)
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The
Group’s tailings retreatment operations (Elikhulu Tailings
Retreatment Plant (Elikhulu) and Barberton Tailings Retreatment
Plant (BTRP)) produced at an AISC of US$894/oz (2022: US$887/oz)
-
Renewable
energy generation and water recycling, together with other
initiatives to increase the Group’s future gold production, are
expected to contribute to a decline in future real AISC
-
The AISC
per ounce guidance range for the 2024 financial year reduced to
between US$1,325/oz and US$1,350/oz (assuming an exchange rate of
US$/ZAR:18.50).
Financial
-
Net cash
from operating activities increased by 134.5% to US$27.2 million (2022: US$11.6 million)
-
Profit for
the period increased by 46.7% to US$42.4
million (2022: US$28.9
million)
-
Headline
earnings increased by 46.4% to US$42.6
million (2022: US$29.1
million)
-
Earnings
per share and headline earnings per share increased by 46.1% to US
2.22 cents per share (2022: US
1.52 cents per share)
-
Payment of
a net dividend of US$18.3 million
(2022: US$20.0 million) in
December 2023, equating to a dividend
yield of 5.9% (2022: 4.6%), at the last traded price on
30 June 2023
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Robust
financial position at the end of the reporting period, with net
debt of US$64.3 million (2022:
US$53.7 million). The increase in net
debt is primarily attributable to the capital expenditure of
US$21.6 million incurred on the
Mogale Tailings Retreatment project (MTR project)
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Liquidity
remains healthy, with access to immediately available cash of
US$31.3 million (2022: US$33.9 million) and undrawn facilities of
US$86.4 million (2022: US$52.1 million) at the reporting
period-end.
Growth
projects
-
MTR
project
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Steady-state
production expected by December
2024
-
Capital
expenditure in line with budget
-
Incremental
annual production of approximately 50,000oz, at an expected AISC
per ounce of approximately US$900/oz,
over the 20-year life-of-mine (LoM) (including the Soweto Cluster
tailings storage facilities)
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Evander
Mines’ 8 Shaft 24, 25 and 26 Level underground expansion project is
on track
-
Construction
of phase 2 of the refrigeration plant on 24 Level is currently at
an advanced stage, with completion anticipated during the 2024
financial year, as 25 Level mining operations commence
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Equipping
of the existing 17 Level underground ventilation shaft, with a
hoisting capacity of up to 40,000 tonnes per month, is also
expected to be completed during the 2024 financial year, improving
efficiencies and eliminating the majority of the existing
cumbersome conveyor system
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Dewatering
of Evander Mines’ 7 Shaft Egoli project is ongoing and once
dewatered to below 20 Level, reserve delineation drilling will
commence during the first quarter of the 2025 financial year to
further define the ore payshoot and its grade
variability
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At
Barberton Mines, the consolidated Royal
Sheba and Western Cross projects (Sheba Fault project) are
earmarked to provide sustainable ore feed for the BTRP once
existing reserves are depleted. The BTRP’s current Mineral Reserves
are adequate to maintain production for another two years albeit
with a declining profile. A regional drilling campaign has also
been initiated to identify other suitable material for
processing.
Environmental,
social and governance initiatives
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Construction
of Fairview Mine’s 8.75MW solar plant is progressing with plant
commissioning expected during June
2024
-
Barberton
Mines and Evander Mines handed over
community Social and Labour Plan infrastructure development
projects, including new classrooms and science and computer
laboratories, that will benefit some 2,800 community learners
annually
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Commenced
environmental rehabilitation at the MTR project sites, which is
already positively impacting the environment and local living
conditions.
Sudan exploration
-
On-the-ground
exploration activities included geological mapping and sampling and
target generation for planned drilling activities, with drilling
expected to commence during the last quarter of the 2024 financial
year.
This
announcement contains inside information.
CHIEF
EXECUTIVE OFFICER’S STATEMENT
Cobus Loots, Pan African’s chief executive officer,
commented:
“Pan
African delivered an excellent safety, production and financial
performance for the reporting period, which positions the Group
well to deliver on our production and cost guidance for the full
financial year. We are deeply saddened by the fatality that
occurred at Elikhulu after the reporting period, as outlined in the
subsequent events section further in the
announcement.
Despite
inflationary pressures, the Group managed to curtail AISC, with
unit costs benefiting from increased gold production, the Group’s
cost-conscious culture and the weaker US$/ZAR exchange
rate.
The
higher US$ gold price, improved production and cost and capital
discipline contributed to the much-improved cash generation of
US$27.2 million, an increase of more
than 130% when compared to the previous reporting period. This cash
flow generation has resulted in the Group’s robust financial
position, even after taking into account the MTR project’s capital
expenditure and the net dividend of US$18.3
million paid to shareholders in December 2023.
The
Group’s surface remining operations performed exceptionally well,
with their sub US$900/oz AISC
contributing significantly to Group production, cash flows and
profits. The BTRP benefited from operational enhancements and the
optimisation of the carbon-in-leach process, which reduced AISC by
over 10% to US$650/oz, making it one
of the world’s lowest-cost gold producers. Our long-life MTR
project, once commissioned later this calendar year, will also add
meaningfully to the Group’s surface production portfolio and its
valuation. With the MTR project’s incremental production of
approximately 50,000oz per year, almost 50% of the Group’s annual
gold production will be sourced from low-cost, long life surface
remining operations.
In
addition to being a compelling investment proposition, large-scale
tailings retreatment operations provide much-needed economic
stimulus and employment in defunct mining regions with challenging
socio-economic conditions. Our ‘beyond compliance’ community
development strategy, in collaboration with other critical role
players, has a tangible and meaningful positive impact in the areas
where we operate.
The
introduction of continuous operations at Barberton Mines’
Fairview and Sheba Mines has made a
positive impact on production and further improvements will become
evident once optimisation of the underground infrastructure is
fully implemented. While Consort Mine has experienced geotechnical
challenges, we believe that the contractor operating model is
appropriate for the scale of this operation going forward. We are
excited by the initial exploration results from drilling programmes
being undertaken, using the latest geological software to unlock
the seemingly unlimited potential of Barberton’s orebodies, which
have been continuously mined for almost 140 years.
The
development of Evander Mines’ 24, 25 and 26 Level project is
progressing well, with ramped-up mining operations at 24 Level
already contributing to the replacement of ounces as mining from
the 8 Shaft’s pillar nears completion. The significant capital
expenditure already spent on this project to improve and optimise
the infrastructure will enable consistent and sustainable
production of an average of 65,000oz annually from this operation
in the long term, and allow it to maintain its status as one of the
lowest-cost underground gold mines in Southern Africa.
Following
the recommencement of our gold exploration activities in
Sudan, steady progress has been
made by our in-country team, with the mapping and sampling
activities of shallow orebodies for the prioritisation of initial
drill targets.
In the
short term, our priority is to deliver into the production guidance
for the 2024 financial year and commission the MTR project on
schedule and within budget, which will elevate Pan African into the
next tier of global gold producers.
We are
well positioned to deliver on our operational and strategic
objectives for the 2024 financial year, and if the current gold
price tailwinds persist, shareholders can look forward to a
continuation of the reporting period’s excellent financial
performance for the full financial year.”
DIRECTORS’ RESPONSIBILITY
The
information in this announcement has been extracted from the
unaudited interim financial results for the six months ended
31 December 2023. The short-form
announcement has not been reviewed by the Company’s auditors. The
unaudited interim financial results have been prepared under the
supervision of the financial director, Deon
Louw. This short-form announcement is the responsibility of
the directors of Pan African and is only a summary of the
information contained in the full announcement which was released
on SENS on 14 February
2024.
Any
investment decisions should be based on the full announcement and
the Group’s detailed operational and financial
summaries.
AVAILABILITY OF THE FULL ANNOUNCEMENT
The full
announcement is accessible via the JSE link at
https://senspdf.jse.co.za/documents/2024/jse/isse/pan/INT2023.pdf
and via
the Company’s website at
https://www.panafricanresources.com/wp-content/uploads/Pan-African-Resources-interim-results-SENS-announcement-2024.pdf
Copies of
the full announcement may also be requested by emailing
ExecPA@paf.co.za and
electronically via the sponsor (sponsor@questco.co.za) at no charge
during business hours.
The
Company has a dual primary listing on the JSE Limited in
South Africa and the Alternative
Investment Market of the London Stock Exchange, a secondary listing
on the A2X Market as well as a sponsored Level 1 American
Depository Receipt programme in the
United States of America through the Bank of New York
Mellon.
For
further information on Pan African, please visit the Company's
website at
www.panafricanresources.com
Rosebank
14 February 2024
Corporate
information
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Corporate
Office
The Firs
Building
2nd Floor,
Office 204
Cnr
Cradock and Biermann Avenues
Rosebank,
Johannesburg
South
Africa
Office: +
27 (0) 11 243 2900
info@paf.co.za
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Registered
Office
107
Cheapside
2nd
Floor
London
EC2V
6DN
United
Kingdom
Office: +
44 (0) 20 7796 8644
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Chief
executive officer
Cobus
Loots
Office: +
27 (0) 11 243 2900
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Financial
director and debt officer
Deon
Louw
Office: +
27 (0) 11 243 2900
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Head:
Investor relations
Hethen
Hira
Tel: + 27
(0) 11 243 2900
Email:
hhira@paf.co.za
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Website:
www.panafricanresources.com
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Company
secretary
Jane
Kirton
St
James's Corporate Services Limited
Office: +
44 (0) 20 7796 8644
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Nominated
adviser and joint broker
Ross
Allister/Bhavesh Patel
Peel
Hunt LLP
Office:
+44 (0) 20 7418 8900
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JSE
sponsor
Ciska
Kloppers
Questco
Corporate Advisory Proprietary Limited
Office: +
27 (0) 11 011 9200
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Joint
broker
Thomas
Rider/Nick Macann
BMO
Capital Markets Limited
Office:
+44 (0) 20 7236 1010
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Joint
broker
Matthew
Armitt/Jennifer Lee
Joh.
Berenberg, Gossler & Co KG (Berenberg)
Office:
+44 (0) 20 3207 7800
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