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
OPERATIONAL UPDATE
FOR THE YEAR ENDED 30 JUNE 2019
Pan African is pleased to provide an operational update for the
year ended 30 June 2019 (“current
reporting period”).
Pan African CEO Cobus Loots commented:
“Pan African has emerged at year-end
as a safe, low-cost and long-life gold producer, following the
successful execution of our strategy. We exceeded the full year
production guidance of 170,000 ounces, resulting in the Group’s
gold production increasing by 7.5% to 172,442oz - or 54.1% on
continuing operations relative to the corresponding reporting
period.
This has been delivered through the
cessation of the high cost underground mining at Evander Mines, the
successful commissioning of the Elikhulu tailings retreatment
plant, and Barberton Mines achieving a significant increase in
production. Critically, Barberton Mines achieved a historical
milestone of 2 million fatality free shifts during June 2019 and we commend the team for this safety
achievement.
We continue to assess the optionality
of our portfolio and are looking to build upon this year’s momentum
to drive further growth. Evander’s 8 Shaft Pillar mining is
expected to contribute an additional 20,000oz to 30,000oz per annum
for the next three years. The Group is currently reviewing the
merits of expediting the Egoli project and is assessing funding
options. Progress is also being made with the underground mining
project feasibility study at Royal Sheba and we look forward to
communicating the results to shareholders in the near future.
We are also very mindful of the
positive socio-economic impact that the mining industry has on
communities and are proud of the way we manage our stakeholder
relations. That said, we continue to experience certain challenges
amongst specific stakeholder groups, which have impacted Barberton
Mines, and are working in conjunction with law enforcement and
other stakeholders to remedy the situation.
As previously announced, the 2020
financial year production guidance will be approximately 185,000oz,
representing an important increase in our year-on-year gold
production profile.”
OPERATIONAL RESULTS
Key highlights for the current reporting period relative to the
corresponding 12 months ended 30 June
2018 (“corresponding reporting period”):
- Gold production from the Group’s continuing mining operations
increased by 54.1% to 172,442oz (2018: 111,879oz) (Note 1).
- Gold production from the Group’s continuing and discontinued
operations increased by 7.5% to 172,442oz (2018: 160,444oz).
- Barberton Mines:
- Production from the Barberton complex increased by 9.6% to
99,363oz (2018: 90,629oz);
- Underground and surface mining increased by 3.1% to 75,356oz
(2018: 73,125oz); and
- Barberton tailings retreatment plant (“BTRP”) production
increased by 37.2% to 24,007oz (2018: 17,504oz) due to an improved
tonnage throughput and recoveries following the successful
commissioning of the BTRP regrind mill in May 2018.
- Elikhulu tailings retreatment plant (“Elikhulu”):
- Processed 10.85-million tonnes from September 2018 to June
2019;
- Achieved a recovered grade of 0.133g/t; and
- Gold produced of 46,201oz (1,437kg), which excludes
pre-production gold of 736oz (22.9kg) capitalised as pre-production
income and gold inventory locked-up in the Elikhulu circuit. The
production figures include the 200,000 tonnes per month throughput
from the Evander tailings retreatment plant (“ETRP”), which was
incorporated into Elikhulu with effect from January 2019, which increased Elikhulu’s
processing capacity to 1.2-million tonnes per month.
- Evander Mines:
- Remnant mining and surface sources contributed a further
26,878oz (2018: 21,250oz).
Note 1: The continuing mining operations include:
Barberton Mines, Evander Mines’ Elikhulu and ETRP as well as the
mining and vamping of the remnant high-grade stopes as part of the
phased closure of the Evander Mines’ underground mining operation.
The continuing mining operations exclude the discontinued Evander
Mines’ large-scale underground mining operation, which produced
48,656oz in the corresponding reporting period.
SAFETY
The Group’s focus on safety and related ongoing improvements
continues to bear fruit, with material improvements in all
categories of safety statistics during the current reporting
period:
- The Group had no fatalities in the current or prior financial
year;
- The Group’s lost-time injury frequency rate per million man
hours improved substantially to 2.12 (2018: 3.73);
- The reportable injury frequency rate per million man hours
improved substantially to 0.51 (2018: 1.08); and
- Barberton Mines achieved 2-million fatality free shifts during
June 2019.
RESTRUCTURE OF REVOLVING CREDIT
FACILITY (“RCF”) DEBT FACILITY AND INTRODUCTION OF A GOLD LOAN
The restructured RCF facility referred to in the operational
update announced on 17 May 2019,
became effective on 3 June 2019. The
Group’s senior debt will amortise in terms of the following
repayment profile:
Amortisation
profile |
RCF
available balance
(R million) |
Repayments
(R million) |
Up to 15 June
2020 |
1,000 |
250 |
15 June 2020 |
750 |
25 |
15 December 2020 |
725 |
25 |
15 June 2021 |
700 |
50 |
15 September 2021 |
650 |
50 |
15 December 2021 |
600 |
50 |
15 March 2022 |
550 |
50 |
15 June 2022 |
500 |
500 |
The repayment profile of the Elikhulu project’s term debt
facility, comprising quarterly, equal principal instalments of R50
million, commencing in September
2019, is unaffected by the restructuring of the RCF.
In light of the strong prevailing rand gold price and the
opportunity it presents to lock in an attractive cash margin and
reduce interest costs, the Group entered into a gold loan for
20,000oz with Rand Merchant Bank
(“RMB”) a division of First Rand Bank Limited, in July 2019. In exchange for an upfront cash
receipt of R394 million, the Group will deliver 12 monthly
instalments of 1666.67oz to RMB, commencing on 31 July 2019, in settlement of the gold
loan.
The gold loan effectively locks in a gold price of approximately
R633,000/kg or US$1,414/oz on 622kg
of gold, representing approximately 11% of the Group’s guided gold
production for the 2020 financial year. The proceeds of this gold
loan will be used to reduce the balance of the RCF debt, resulting
in a material interest saving for the Group over the next 12
months.
PROTEST ACTION AFFECTING BARBERTON
MINES
Barberton Mines has recently experienced a number of lost
production days due to its roadways being blocked and the
destruction of mine property by protestors demanding employment and
commercial concessions from the mine.
These protests are unrelated to normal industrial action and are
initiated and supported by politicians and criminals who believe
that extortion by means of violence is a legitimate social
objective. The mine has been supported by the South African
Police’s Public Order Policing Division to control these protests,
protect Pan African’s employees and preserve its assets.
Whilst Pan African is cognisant of the levels of unemployment in
South Africa and the resultant
social impact flowing therefrom, these actions will only exacerbate
the country’s economic problems and further disincentivises
investment in the mining sector.
Pan African will take the appropriate action to protect its
employees and assets in the interest of all its stakeholders,
supported by the South African law enforcement authorities.
Interdicts have been served and further criminal and civil actions
will follow against certain individuals and organisations. The
Company will keep its stakeholders informed of developments.
The financial and other information contained in this
announcement has neither been reviewed nor audited by the Company’s
external auditors.
For further information on Pan African, please visit the
Company’s website at www.panafricanresources.com.
Rosebank
12 July 2019
Contact
information |
Corporate Office
The Firs Office Building
2nd Floor, Office 204
Cnr. Cradock and Biermann Avenues
Rosebank, Johannesburg
South Africa
Office: + 27 (0) 11 243 2900 |
Registered Office
Suite 31
Second Floor
107 Cheapside
London
EC2V 6DN
United Kingdom
Office: + 44 (0) 207 796 8644 |
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
Numis Securities Limited
Nominated Adviser and Joint Broker
Office: +44 (0) 20 7260 1000 |
Ciska Kloppers
Questco Corporate Advisory (Proprietary) Limited
JSE Sponsor
Office: + 27 (0) 11 011 9200 |
Ross Allister/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/Neil
Elliot/Thomas Rider
BMO Capital Markets Limited
Joint Broker
Office: +44 (0) 207 236 1010 |
Bobby Morse/Chris
Judd
Buchanan
Public & Investor Relations UK
Office: +44 (0)20 7466 5000
paf@buchanan.uk.com |
Website:
www.panafricanresources.com
|