Pan African Resources Plc - Summarised audited results for the year ended 30 June 2024
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)
(Key features are reported in
summarised audited results for the year ended
KEY FEATURES
Production
-- Group gold production increased by 6.2% to 186,039oz (2023: 175,209oz),
in line with guidance
-- Operational enhancements and optimisation initiatives resulted in
significant improvements at Barberton Mines’ underground and Elikhulu
Tailings Retreatment Plant’s (Elikhulu) surface operations, resulting in
annual increases of:
o Gold production from Fairview and Sheba Mines increased by 13.5% to
65,580oz (2023: 57,778oz)
o Elikhulu’s gold production increased by 8.4% to 54,812oz (2023:
50,573oz)
Safety
· Significant improvement in the Group’s industry-leading safety statistics across all operations
Costs and cost outlook
-- All-in sustaining costs (AISCAPM) for the current reporting period of
US$1,354 /oz (2023: restated US$1,309 /oz) at an average exchange rate of
US$/ZAR: 18.71, marginally above guidance of between US$1,325 /oz to
US$1,350 /oz, with the delay in commissioning Evander Mines’ subvertical
hoisting shaft negatively impacting unit costs
-- AISC of US$1,170 /oz (2023: restated US$1,132 /oz) for our lower-cost
operations, which account for more than 84% (2023: 81%) of annual
production
-- 2025 AISC guidance of between US$1,350 /oz and US$1,400 /oz (assuming an
exchange rate of US$/ZAR:18.50), with the Mogale Tailings Retreatment
project’s (MTR project) low-cost production offsetting inflationary
pressures
Near-term growth projects
Surface remining operations
The MTR project’s commissioning is in progress, with steady-state production expected by latest
Underground operations
-- Evander Mines’ 8 Shaft 24 and 25 Level underground expansion project is
now scheduled to be completed by the end of September 2024 , following
delays in the equipping of the ventilation shaft for hoisting
o Equipping the 17 to 24 Level subvertical hoisting shaft will
significantly increase efficiencies by reducing reliance on the
current cumbersome conveyor belt infrastructure for ore transport
o 24 Level’s refrigeration plant will be commissioned in phases to
facilitate mining at depth
o 25 Level mining area access development has commenced
Production guidance
· 2025 financial year production guidance of 215,000oz to 225,000oz, with the expected increase in production largely attributable to the contribution from the Group’s new MTR project, but potentially impacted by:
o The delay in the commissioning of Evander Mines’ subvertical shaft, scheduled to be completed duringSeptember 2024 , could impact guidance by approximately 5,000oz o Evander Mines’ underground vamping operations and earlier production from the MTR project may offset the impact of the above-mentioned delay
Financial
-- Revenue increased by 16.8% to US$373.8 million (2023: restated US$319.9
million )
-- Profit for the year increased by 30.2% to US$78.8 million (2023:
restated US$60.5 million )
-- Headline earningsAPM increased by 32.1% to US$79.5 million (2023:
restated US$60.2 million )
-- Earnings per share increased by 32.1% to US 4.14 cents per share (2023:
restated US 3.18 cents per share) and headline earnings per shareAPM
increased by 32.2% to US 4.15 cents per share (2023: restated US 3.14
cents per share)
-- Net cash generated from operating activities declined by US$9.3million
to US$90.8 million (2023: US$100.1 million )
-- Net debtAPM increased to US$106.4 million , mainly as a result of the
construction of the MTR project (2023: US$22.0 million )
-- Available cash and undrawn debt facilities at year-end of US$95.0
million (2023: US$84.7 million ).
Proposed dividend
-- Sector-leading final dividend of ZA 22.00000 cents per share (or US
1.20946 cents per share at an exchange rate of US$/ZAR:18.19) proposed
for approval at the upcoming annual general meeting (AGM)
Environmental, social and governance (ESG) initiatives
-- The Group continues to lead the way on renewable energy initiatives and
establishing a roadmap to decarbonisation
-- Construction of Fairview Mine’s solar facility completed at Barberton
Mines in June 2024 and hot-commissioned in July 2024
-- Renewed power purchase agreement with Sturdee Energy, subject to certain
suspensive conditions, with ground clearing for construction having
commenced
-- Evander Mines’ 3ML/day water recycling plant capacity to be doubled in
the next two years
-- Rehabilitation at the MTR project’s Mogale and Soweto sites is in
progress.
CHIEF EXECUTIVE OFFICER’S STATEMENT
“I am extremely pleased to report on Pan African’s achievements and outstanding financial results for the past year. Furthermore, the Group is now poised to deliver on our next phase of value-accretive production growth at the MTR project, a testament to Pan African’s ability to continue to create value for all its stakeholders.
We find ourselves in a very favourable gold price environment, with the metal appreciating by more than 20% in US$ terms in the past year, and generally positive sentiment on its near-term prospects. However, we also recognise that, although fortuitous, the commodity price tailwinds may not last indefinitely. We therefore have to use this opportunity to ensure our business model remains robust, and continue to position our assets for long-term sustainability.
The fact that gold equities continue to underperform the gold price, reflects investor concerns pertaining to capital allocation and sustainable value creation in the sector.
Certainly, the recent escalations in AISC globally (now around
Pan African can demonstrate a track record of sector-leading returns and dividends to shareholders, despite occasional challenging operating conditions and the age of our underground operations (Barberton Mines has been producing for almost 140 years). Our enviable record is reflective of the quality of and optionality inherent in our portfolio, and also of management’s unrelenting focus on disciplined capital allocation and cost control.
With the additional production from the MTR project, our Group will be firmly positioned as a mid-tier producer, with production growing by approximately 25% and a commensurate reduction in the Group’s unit costs of production - a feat that larger gold miners may find difficult to emulate, given the scale of their operations.
This year marks the 10th time that I am reporting in my capacity as chief executive officer and, in reflecting on the past and where the Group is now, I believe that Pan African has attractive prospects and is well-positioned to continue “Mining for a Future”.
THE LAST DECADE AND THE WORLD IN WHICH WE NOW OPERATE
Economically and politically, the world has been tumultuous and volatile during this time. Economically, it had to deal with challenging financial cycles and the impact of COVID-19. The pandemic and subsequent escalating geopolitical conflicts, especially in
The South African economy faced the consequences of power curtailment, state capture and low levels of investor confidence. Social upheaval reached a boiling point during the riots of
GOLD REAFFIRMING ITS STATUS AS A SAFE-HAVEN ASSET
Gold has regained its safe-haven status amid ongoing higher-than-expected worldwide inflation and anxiety over geopolitics, elections and monetary policy – all predictable reasons for the value of gold to appreciate. Gold has historically been considered an inflation hedge, however cooling inflation and the expected reduction in worldwide interest rates should also support gold’s investment case.
The perceived ‘weaponisation’ of the US$, following the outbreak of war in
We believe that investing in a gold equity such as Pan African has several advantages to a direct gold holding. The Company provides its shareholders with a cash return in the form of dividends, increased leverage to the gold price, substantial near-term production growth and a number of internal growth opportunities, evidenced by our project pipeline.
A DECADE AS CHIEF EXECUTIVE OFFICER
In the early 2010s, Pan African was a single-asset company, holding only the Barberton Mines underground operations.
Over the past 10 years, the Group has successfully diversified into a long-life, high-margin operator, with multiple assets, improved flexibility and reduced volatility. We have also increased profitable production and investor returns. Shareholders have received returns through both compound capital growth of more than 10% per year over the past few years and an increasing annual dividend. Pan African has regularly featured in the Top 10 of the JSE’s Top 100 performing companies over the past few years. More recently in 2024, it has been the best-performing gold stock on the JSE year to date, with the share price increasing by over 80% since the beginning of the calendar year and 100% year-on-year. The AIM recorded a similar performance, where the share is also trading at all-time high levels.
Value-adding projects completed by the Group’s incumbent management team and board during the last ten years include:
• Securing, funding, construction and operation of transformative surfaces assets
-- BTRP
-- Evander Tailings Retreatment Plant
-- Elikhulu
-- The MTR project
• Evander Mines’ underground restructuring
-- 8 Shaft pillar mining
-- Level 24 to 26 development
• Group renewable energy initiatives
-- Evander Mines’ solar plant
-- Barberton Mines’ solar plant
While South African gold mining is often seen as a sunset industry, we believe that the country still presents attractive opportunities. In 2022, we acquired Mineral Resources from
Pan African is proud of our demonstrated record of delivering large projects on time and within budget, in an industry where this is lacking at times.
The gold price is at an all-time high, and this trend is expected to continue in the foreseeable future. Pan African has over 30Moz of
THIS YEAR’S FINANCIAL RESULTS
Pan African has delivered an outstanding set of operational and financial results for the 2024 financial year. Notably, revenue increased by 16.8%, supported by a 4.9% increase in gold sales to 184,885oz (2023: restated 176,216oz) and an 11.3% increase in the average US$ gold price received during this period. The increased production and revenue demonstrate that steps taken to improve operational efficiencies are yielding positive results.
The Group has made significant progress in advancing its growth projects, with the development of Evander Mines’ 24 to 25 Level project and the commissioning of the MTR project being prioritised.
Total capital expenditure for the year amounted to
AISC has increased marginally to
Cash holdings declined to
Liquidity remains healthy, with access to immediately available cash and undrawn facilities at financial year-end of
These outstanding results are largely attributable to Pan African’s culture of strict capital allocation discipline and circumspect investment decisions.
PROPOSED DIVIDEND FOR THE FINANCIAL YEAR ENDED
The board has proposed a final dividend of
Assuming shareholders approve the final dividend, the following salient dates would apply:
______________________________________________________________________________ |Annual general meeting |Thursday, 21 November 2024 | |__________________________________________________|___________________________| |Currency conversion date |Thursday, 21 November 2024 | |__________________________________________________|___________________________| |Currency conversion announcement released by 11:00|Friday, 22 November 2024 | |(SA time) | | |__________________________________________________|___________________________| |Last date to trade on the JSE |Tuesday, 26 November 2024 | |__________________________________________________|___________________________| |Last date to trade on the LSE |Wednesday, 27 November 2024| |__________________________________________________|___________________________| |Ex-dividend date on the JSE |Wednesday, 27 November 2024| |__________________________________________________|___________________________| |Ex-dividend date on the LSE |Thursday, 28 November 2024 | |__________________________________________________|___________________________| |Record date on the JSE and LSE |Friday, 29 November 2024 | |__________________________________________________|___________________________| |Payment date |Tuesday, 10 December 2024 | |__________________________________________________|___________________________|
The British Pound (GBP) and US$ proposed final dividend were calculated based on a total of 2,222,862,046 shares in issue and an illustrative exchange rate of US$/ZAR:18.19 and GBP/ZAR: 23.01, respectively.
No transfers between the
No shares may be dematerialised or rematerialised between Wednesday,
The South African dividends taxation rate is 20% per ordinary share for shareholders who are liable to pay dividends taxation, resulting in a net dividend of ZA
AUDIT OPINION
The Group's external auditor,
The audit of the consolidated annual financial statements was conducted in accordance with the International Standards on Auditing. PwC has expressed an unmodified opinion on the consolidated annual financial statements. A copy of the audited annual financial statements and the audit report is available for inspection at the issuer's registered office. Any reference to future financial performance included in this summarised audited results announcement has not been reviewed or reported on by the Group's external auditor.
DIRECTORS’ RESPONSIBILITY
The information in this announcement has been extracted from the summarised audited results for the year ended
Any investment decisions should be based on the full announcement and the Group’s detailed operational and financial summaries.
AVAILABILITY OF ANNUAL FINANCIAL STATEMENTS AND SUMMARISED AUDITED RESULTS
The annual financial statements (together with PwC’s audit opinion thereon) have been released on SENS and is available for viewing via the JSE link at https://senspdf.jse.co.za/documents/2024/jse/isse/pan/FYE2024.pdf
and via the Company’s website at https://www.panafricanresources.com/wp-content/uploads/Pan-African-Resources-integrated-annual-report-2024.pdf .
The summarised audited results for the year ended
Copies of the full announcement may also be requested by emailing ExecPA@paf.co.za
The Company has a dual primary listing on the JSE in
For further information on Pan African, please visit the Company's website at
Rosebank
___________________________________________________________________________ |Corporate information | |___________________________________________________________________________| |Corporate Office |Registered Office | | | | |The Firs Building |2nd Floor | | | | |2nd Floor, Office 204 |107 Cheapside | | | | |Cnr. Cradock and Biermann Avenues |London | | | | |Rosebank, Johannesburg |EC2V 6DN | | | | |South Africa |United Kingdom | | | | |Office: + 27 (0)11 243 2900 |Office: + 44 (0)20 3869 0706 | | | | |info@paf.co.za|info@paf.co.za | |______________________________________|____________________________________| |Chief Executive Officer |Financial Director and debt officer | | | | |Cobus Loots |Deon Louw | | | | |Office: + 27 (0)11 243 2900 |Office: + 27 (0)11 243 2900 | |______________________________________|____________________________________| |Head: Investor Relations | | | | | |Hethen Hira |Website: www.panafricanresources.com| |Tel: + 27 (0)11 243 2900 | | |E-mail: hhira@paf.co.za | | |______________________________________|____________________________________| |Company Secretary |Nominated Adviser and Joint Broker | | | | |Jane Kirton |Ross Allister/Georgia Langoulant | | | | |St James's Corporate Services Limited |Peel Hunt LLP | | | | |Office: + 44 (0)20 3869 0706 |Office: +44 (0)20 7418 8900 | |______________________________________|____________________________________| |JSE Sponsor and JSE Debt Sponsor |Joint Broker | | | | |Ciska Kloppers |Thomas Rider/Nick Macann | | | | |Questco Corporate Advisory Proprietary|BMO Capital Markets Limited | |Limited | | | |Office: +44 (0)20 7236 1010 | |Office: + 27 (0)11 011 9200 | | |______________________________________|____________________________________| | |Joint Broker | | | | | |Matthew Armitt/Jennifer Lee | | | | | |Joh. Berenberg, Gossler & Co KG | | |(Berenberg) | | | | | |Office: +44 (0)20 3207 7800 | |______________________________________|____________________________________|
