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PAN AFRICAN RESOURCES PLC - Operational update for the six months ended 31 December 2020

Release Date: 22/01/2021 09:00
Code(s): PAN     PDF:  
Wrap Text
Operational update for the six months ended 31 December 2020

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
ADR ticker code: PAFRY
(Pan African or the Company or the Group)


Pan African is pleased to provide shareholders with an operational update for the six months ended
31 December 2020 (Current Reporting Period).

Key Operational Results for the Current Reporting Period

    •   Industry leading safety performance maintained with improvements in reportable rates
        across all Group operations
    •   Group gold production increased by 5.9% to 98,386oz (2019: 92,941oz)
    •   Gold production from Barberton Mines for the period was 52,354oz, while Elikhulu and
        Evander Mines produced 26,863oz and 19,169oz respectively
    •   Operations have continued to implement and maintain stringent policies and protocols to
        mitigate the effects of the ongoing COVID-19 pandemic on employees and production
    •   ESG projects, including the 10MW renewable energy solar photovoltaic plant at Evander
        Mines and large-scale agriculture projects in Barberton Mines, are on track for
        commissioning in Q3 2021
    •   Group net debt decreased by 47.3% to US$65.2 million (2019: US$123.7million)
    •   Pan African is on track to deliver its full year production guidance of approximately

Pan African CEO Cobus Loots commented:

“Pan African’s financial results and increase in gold production for the first six months of the year
demonstrates a commendable operational and safety performance, amidst the challenges of the
ongoing COVID-19 pandemic.

Barberton Mine’s gold production of 52,354oz for the Current Reporting Period deserves recognition
and demonstrates the excellent progress that this flagship asset and its operating team have made
in reserve development and infrastructure optimisation.

Group net debt decreased by 47.3% to US$65.2 million relative to the six months ended 31 December
2019 (Corresponding Reporting Period), notwithstanding a record final Rand dividend distribution
for the June 2020 financial year, paid in December 2020.

We expect operations at the Evander Mines’ 8 Shaft pillar to deliver a much-improved performance
during the remainder of the 2021 financial year, as the pillar mining activities gather momentum.

We have now commenced with early preparation work and limited capital expenditure for the
execution phase of the Egoli project. We expect to finalise the debt funding package within the first
quarter of the 2021 calendar year. This organic growth project will contribute considerably to our
future gold production.
The construction of the solar photovoltaic plant at Evander Mines will commence during the first
quarter of the 2021 calendar year, with first power expected to be generated during the third quarter
of the 2021 calendar year. This plant will be one of the first of its kind in the South African mining
sector and demonstrates our commitment to ESG initiatives. In conjunction with several other
projects, it also underpins the Group’s profitability and sustainability.

The Group remains on track to produce 190,000 oz of gold for the financial year ending 30 June 2021,
and we are committed to continue creating value for our stakeholders by positioning Pan African as
a sustainable, safe, high-margin and long-life gold producer. We look forward to presenting our
interim results on 16 February 2021.”


The Group continued to maintain an industry-leading safety performance with a focus on new safety
initiatives and interventions in its pursuit of a zero-harm working environment.

    •    The lost-time injury frequency rate (‘LTIFR’) improved to 1.64 (2019: 1.69) per million man
    •    The reportable injury frequency rate (‘RIFR’) improved to 0.65 (2019: 0.85) per million man
    •    Regrettably, the Group experienced one fatality at Barberton Mines (2019: Zero) during July
         2020. The details of the fatal accident were discussed in the year end results announcement
         released on 16 September 2020
    •    Evander Gold Mine achieved an excellent RIFR of 1.01 (2019:3.71) per million man hours
    •    Elikhulu experienced no lost-time and reportable injuries during the past 6 months,
         contributing to the Group's commendable safety performance

Barberton Mines

Barberton Mines’ production increased by 10.6% to 52,354oz (2019: 47,356oz) for the Current
Reporting Period. Underground production increased by 15.3% to 42,350oz (2019: 36,737oz) and
Barberton Tailings Retreatment Plant (BTRP) production remained stable at 10,004oz (2019:
10,619oz) for the Current Reporting Period.

The increased production from Barberton Mines is principally due to:

    •    Improved mining flexibility and available face length with the establishment of three high
         grade platforms at the Fairview mine, as well as the extension of the strike length on the 256
         and 257 platforms through active delineation drilling and systematic development. Fairview
         mine has now established concurrent multiple platform availability.
    •    Improved recoveries at BTRP following the implementation of an oxygen Carbon-in-leach
         (CIL) addition project, resulting in the feed sources achieving a higher recovery than
         previously estimated.
    •    The high-grade section at New Consort’s Prince Consort (PC) Shaft 42 Level being successfully
         extracted, this orebody remains continuous along the planned strike length and up-dip to 41

Elikhulu tailings retreatment plant (Elikhulu)

Gold production from Elikhulu decreased by 8.3% to 26,863oz (2019: 29,301oz) during the Current
Reporting Period, as a result of:

    •   Lower gold recoveries from the re-mining activities on Kinross Dam 1 and 2 during the
        Current Reporting Period. As per the mine plan, re-mining activities have subsequently
        moved to Kinross Dam 3, and Kinross Dam 3’s material indicates an improvement in
        recoveries of approximately 5-10%, albeit at a lower head grade, relative to Dam 1 and 2
    •   Plant throughput was constrained by preventative maintenance and improvement work to
        sections of the lower Elikhulu tailings storage facility compartment and the installation of
        elevated drains. This work will be complete in February 2021, where after tonnage
        throughput will again be increased.

Gold production from Elikhulu is expected to increase in the second half of the 2021 financial year.

Evander Mines’ 8 Shaft Pillar project (8 Shaft Pillar) and surface sources

Production from the Evander Mines operations increased by 17.7% to 19,169oz (2019: 16,284oz).

Underground production increased by 9.1% to 12,607oz (2019: 11,553oz). The ramp-up in
production of the 8 Shaft Pillar was slower than expected during the Current Reporting Period, as a
result of:

    •   Difficulties encountered with the initial installation of underground support pseudo-packs,
        which have now been resolved following the introduction of dry tailings and additional grout
        ranges for filler use.
    •   Production delays due to fracturing of the shaft lining following the establishment of the
        pillar mining in the vicinity of the shaft.

Production from the 8 Shaft Pillar is expected to further improve during the second half of the 2021
financial year.

The increased production from surface sources of 6,562oz (2019: 4,731oz) also contributed
positively to the Group’s production for the Current Reporting Period.

Evander Mines Egoli Project (Egoli)

Early works and preparation for the execution phase of the Egoli project has commenced. Finalisation
of the legal agreements for the implementation of Egoli’s debt funding package is also currently
underway. Inception of the project’s construction is expected in the next month, with phase -1
construction and development expected to be completed in 18 months, followed by phase-2
development and equipping in the next 18 months thereafter. First gold is expected to be produced
within 20 months from the project’s inception.

Group net debt
The Group’s net debt decreased by 47.3% to US$65.2 million (2019: US$123.7 million). Relative to
the 30 June 2020 financial year-end, Group net debt decreased by 14.7% from US$76.4 million to
US$65.2 million. The Group’s debt is denominated in South African Rand and, in US Dollar terms,
the decline in net debt compared to the 30 June 2020 financial year-end, was impacted by the
strengthening of the Rand relative to the US Dollar at a closing rate of US$/ZAR14.70 compared to
US$/ZAR17.33 as at 30 June 2020.

The reduction in the net debt was achieved notwithstanding the cash outflow associated with the
record net Rand dividend payment to shareholders in December 2020 of US$18.4 million (2019:
US$2.9 million).

Interim results for the six months ended 31 December 2020

Pan African will announce its interim results on 16 February 2021.

The information contained in this update is the responsibility of the Pan African board of directors
and has not been reviewed or reported on by the Group’s external auditors.


22 January 2021

This announcement contains inside information.

For further information on Pan African and its ESG initiatives, please visit the Company's website at

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                                                 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

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:
Pan African Resources PLC
Head: Investor Relations
Tel: + 27 (0)11 243 2900

Date: 22-01-2021 09:00:00
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