PAF Pan African Resources Plc

 
TIDMPAF 
 
Pan African Resources PLC 
 
(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 
 
("Pan African Resources" or "the Company" or "the Group") 
 
UPDATE ON OPERATIONS AMID COVID-19 NATIONAL LOCKDOWN REGULATIONS, NEW FY2020 
PRODUCTION GUIDANCE AND UPDATE ON GROUP DEBT REDUCTION 
 
Update on Group Operations and COVID-19 National Lockdown Regulations 
 
As previously communicated to shareholders, on 9 April 2020, the South African 
government announced an extension of the National Lockdown period ("Lockdown 
Extension"), enacted in terms of the South African Disaster Management Act 
("the Regulations") from 16 April 2020 to 30 April 2020, in an ongoing effort 
to curtail the spread of the COVID-19 (coronavirus) pandemic. 
 
The Regulations pertaining to the Lockdown Extension provided for a phased 
ramp-up of mining capacity to 50% of normalised production during the lockdown 
period, provided that all the preventative and mitigating controls were in 
place to curtail the spread of the COVID-19 virus. In response to these 
amendments, the Group implemented plans to recall 50% of its employees at the 
Company's Barberton Mines and Evander Mines surface and underground operations 
("Group Operations"). 
 
On 23 April 2020, the South African government announced that the country would 
be entering a period of phased lifting of the lockdown restrictions from 1 May 
2020, resulting in the previous Level-five hard lockdown, that commenced on 27 
March 2020, being reduced to a Level-four lockdown. Level-four lockdown 
restrictions require a risk-based and gradual approach to recalling employees. 
It enables open cast mines and surface operations to operate at up to 100% of 
normal capacity, and all other mines at 50% capacity. 
 
In response to this announcement, the Group commenced the recall of permitted 
employees for the phased recommencing of Group Operations in compliance with 
legal requirements, with all the required safety protocols and procedures in 
place. 
 
The recall of employees at the Group's Operations in terms of these Level-four 
lockdown regulations is now well advanced, with the surface operations at the 
Elikhulu Tailings Retreatment Plant and the Barberton Tailings Retreatment 
Plant producing at close to full capacity from early May 2020. 
 
Revised FY2020 Production Guidance 
 
As announced on 30 March 2020, the Group suspended its original FY2020 
production guidance of 185,000oz as a result of the anticipated COVID-19 impact 
on the Group's mining operations. 
 
As expected, production at the Group's operations was severely affected during 
the lockdown months of March and April 2020. The Group was however able to 
mitigate some of the impact through continued mining activities at its surface 
operations, which was staffed by a materially reduced employee complement, and 
also with limited high-grade underground mining at Barberton Mines. 
 
The Group is now in a position to advise shareholders that it expects the 
revised gold production for the 2020 financial year to be approximately 
176,000oz, including capitalised production from the #8 Shaft Pillar operation. 
 
The revised production guidance is a decrease of only 5% from the previous 
guided  production of 185,000oz, due to the Group's ability to increase output 
from surface toll treatment and low grade  surface stockpile processing 
initiatives, in substitution of underground production. The substituted 
production was however at a reduced margin, when compared to normal margins 
earned on ounces  produced from underground. 
 
The revised production guidance is based , inter-alia, on the assumptions that 
the Group can continue surface operations at close to maximum capacity for the 
remainder of the 2020 financial year and underground operations continuing at 
50% of personnel capacity, consistent with current Level-four restrictions. 
 
The approximate split of expected full year gold production between operations 
is as follows: 
 
                                     Full Year 
 
Production ounce profile: 
 
Barberton Mines - Underground:         64,000 
 
Barberton Tailings Retreatment         21,000 
Plant: 
 
Evander Mines - Underground and        31,000 
tolling: 
 
Elikhulu:                              59,000 
 
Total ounces produced:                 175,000 
 
Statement of Financial Position 
 
The Group remained cashflow positive during the lockdown period. Assuming that 
the prevailing ZAR gold price of approximately ZAR1 million/kg (approximately 
USD1,680/oz) can be sustained for the remainder of the 2020 financial year, the 
Group is expected to reduce its senior interest-bearing debt (including the 
outstanding gold loan balance), net of projected available cash, to 
approximately ZAR1.3 billion (USD70 million) assuming an exchange rate of ZAR/ 
USD:18.50 from ZAR1.8 billion (USD129 million) at 30 June 2019. This represents 
a reduction in senior interest-bearing debt of 23% and 28% relative to the debt 
levels at 31 December 2019 and 30 June 2019, respectively. 
 
In light of the Group's elevated senior debt levels at inception of the 2020 
financial year, a number of short-term zero-cost collar hedges were entered 
into during the course of the 2020 financial year to underpin the Group's 
cashflows and its ability to redeem its senior debt.  The remaining hedges for 
the 2020 and 2021 financial year are detailed hereunder: 
 
                                2 Months               6 Months 
 
                         1 May 2020 - 30 June   1 July 2020 - 31 Dec 
                         2020                   2020 
 
Ounces hedged:                   21,820                 50,000 
 
Average floor price - R/        683,226                 708,000 
Kg: 
 
Average ceiling price -         847,109                 925,829 
R/Kg: 
 
Importantly, the Group is unhedged post 31 December 2020. 
 
COVID-19 Programme of Relief and Assistance (CPR) 
 
As previously communicated, the Group initiated a CPR programme to assist with 
alleviating the adverse impact of the COVID-19 pandemic in its host communites 
and for its employees. The programme commenced at the end of April 2020 with 
the distribution of food and hygiene hampers to its employees, contractors and 
vulnerable families in communities in close proximity to the Group's 
operations. The programme's rollout will continue during May 2020 and 
approximately 5,400 hampers will be provided with a total value of almost R5 
million during the current phase of the programme. 
 
In the light of the ongoing pandemic, the Group will continue its initiatives 
to assist some of its most vulnerable stakeholders in the months ahead. 
 
"It is crucial for the country's economy to be restarted and the phased 
approach adopted by the government to achieve this is practical in fighting the 
pandemic and enabling businesses and communities to survive during this 
tumultuous period. We have implemented preventative and precautionary measures 
at our operations to ensure the health and well-being of employees as they 
return to work, and we look forward to working with all stakeholders in the 
operational ramp-up.  We expect that we still have a long battle ahead against 
COVID-19, however, I wish to commend all of our employees for the manner in 
which they have worked together during this period. The strategic repositioning 
of our Group some years ago, as a safe and high-margin producer with multiple 
operations and the flexibility to withstand short-term external shocks, should 
continue to serve all stakeholders well." commented Cobus Loots, CEO of Pan 
African Resources. 
 
Pan African Resources will continue to provide shareholders with updates on 
progress at its  operations as further information becomes available. 
 
Rosebank 
 
11 May 2020 
 
For further information on Pan African Resources, 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                        Office: + 27 (0)11 243 2900 
2900 
 
Phil Dexter/Jane Kirton                       John Prior 
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 
 
Ciska Kloppers                                Ross Allister/David McKeown 
Questco Corporate Advisory Proprietary        Peel Hunt LLP 
Limited                                       Joint Broker 
JSE Sponsor                                   Office: +44 (0)20 7418 8900 
Office: + 27 (0)11 011 9200 
 
Hethen Hira                                   Thomas Rider/Neil Elliot 
Pan African Resources PLC                     BMO Capital Markets Limited 
Head : Investor Relations                     Joint Broker 
Tel: + 27 (0)11 243 2900                      Office: +44 (0)20 7236 1010 
E-mail: hhira@paf.co.za 
 
Website: www.panafricanresources.com 
 
 
 
END 
 

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