PAN AFRICAN RESOURCES PLC Pan African Resources PLC
(Incorporated and registered in England and Wales, registration number 3937466)
Share code on AIM : PAF
Share code on JSE : PAN
ISIN : GB0004300496
(“Pan African Resources” or the “company” or the “group”)
Provisional audited results for the year ended 30 June 2018
Pan African Resources CEO Cobus Loots commented:
“Pan African Resources acted decisively during the year under review to reconfigure its operations for sustainable profitability. Our cost base is now significantly lower, and efficiencies and stability improved due to the restructuring we effected during the year. We are confident the group is now positioned as a lower-cost, long-life gold miner, consistent with stakeholder expectations and our key strategic objectives. All our producing assets are today generating positive cash flows through the production of low-cost gold ounces.
A key highlight of the year was the excellent progress made towards the completion of the Elikhulu tailings retreatment plant. The project poured its first gold on 16 August 2018, ahead of schedule and within the projected budget. It is expected to be a flagship operation within our low-cost, long-life asset base.
In terms of our existing operations, the regrind mill at the Barberton tailings retreatment plant was completed, which alleviated past processing challenges. Barberton Mines’ sub-vertical shaft project at Fairview, together with our current programme of accelerated underground development, will facilitate improved access to the high-grade Fairview 11-block Main Reef Complex orebody in the future.
I am pleased to report an excellent improvement in group-wide on-mine safety and congratulate Barberton Mines on achieving its one-million fatality-free shifts milestone during June 2018. Barberton Mines has also made good progress in its stakeholder engagement efforts in order to minimise operational stoppages, and these initiatives will continue across the group.
Our existing portfolio presents attractive opportunities to further the group’s profitable production growth. The Royal Sheba Project at Barberton Mines offers the potential to access low-cost near surface ounces and significantly boost Barberton Mines’ production in the short to medium term.
The Egoli Project at Evander Mines also remains an attractive opportunity as a standalone project, following the difficult but necessary decision to cease large-scale underground mining activities at 8 Shaft.
Given all the difficulties we experienced in the past year, our board elected not to recommend a final dividend for the 2018 financial year. Even though this decision was expected by most shareholders, it remains disappointing, given our group’s excellent track record of sector-leading dividends. Our board is confident that at prevailing ZAR gold prices, and as a result of the remedial measures implemented, Pan African Resources will be able to resume its attractive dividends in the near future.
Pan African Resources has started the 2019 financial year well, and we are on track to achieving our production guidance of approximately 170,000oz for the 2019 financial year. We will continue to focus on improving and expanding our portfolio, on a sustainable and value-accretive basis, to the benefit of all stakeholders.”
Key features reported in South African Rand (“ZAR” or “R”) and Pound Sterling (“GBP”)
Strategic repositioning of the group
- During the year ended 30 June 2018 (“current reporting period”), the group restructured operations to ensure the long-term sustainability and profitability of its business.
- Large-scale underground mining at Evander Mines’ underground operations, which includes 8 Shaft, 7 Shaft and the run-of-mine circuit in the Kinross metallurgical plant, was discontinued on 31 May 2018. As a result, 1,635 employees were retrenched at a cost of R161 million. Evander Mines’ underground operations was a high-cost gold producer, producing at an all-in cost of R963,882/kg or USD2,331/oz (2017: R959,976/kg or USD2,197/oz).
- With the final commissioning of Elikhulu concluded during September 2018, the group has established a material, safe, low-cost and long-life tailings reprocessing business, comprising the following operations:
o Barberton tailings retreatment plant (“BTRP”): Processing capacity of 100,000tpm @ ~1.4g/t
o Elikhulu : Processing capacity of 1,000,000tpm @ ~0.3g/t
o Evander tailings retreatment plant (“ETRP”) : Processing capacity of 200,000tpm @ ~0.3g/t
- Barberton Mines’ underground operations are forecast to produce approximately 80,000oz during the 2019 financial year, an improvement of 9.4% from 73,125oz in the 2018 financial year. At Barberton Mines, the underground development rates will be increased by approximately 60% and together with the new sub-vertical shaft, which is under construction this will facilitate improved access to additional high-grade Fairview 11-block mining platforms. These initiatives will assist in maintaining and increasing future gold production from this long-life asset.
- Recent exploration drilling at Barberton Mines’ Royal Sheba Project has increased resources by 150% from 0.36Moz (2.60Mt at 4.32g/t) to 0.9Moz (8.56Mt at 3.27g/t). The group expects to finalise a definitive feasibility study for Royal Sheba by February 2019. The project has the potential to significantly increase gold production from Barberton Mines in the next years.
- The group is now repositioned as a low-cost producer and is well placed for an improved performance in the next financial year. The repositioning has reduced the unit cost of production and increased group profitability, with the majority of its production ounces coming from low-cost and safe tailings retreatment operations.
Operational key features
- The group’s gold production for the current reporting period reduced to 160,444oz (2017: 173,285oz), primarily because of the cessation of mining at Evander Mines’ underground operations on 31 May 2018.
- The Elikhulu Project, which achieved its inaugural gold pour on 16 August 2018, was fully commissioned during September 2018, ahead of schedule. The project is still forecast to be completed within its original budget.
- Improved overall safety performances from Barberton Mines and Evander Mines.
- Barberton Mines’ Royal Sheba Project presents an opportunity to expand Barberton Mines’ production profile the short to medium term. The drilling campaign conducted during the year increased the Royal Sheba gold resource by 150%, 0.36Moz to 0.9Moz.
- The feasibility study for Evander Mines’ Egoli Project (previously referred to as the 2010 Pay Channel Project) has been updated to cater for the cessation of mining at Evander Mines’ underground operations and the construction of a new run-of-mine metallurgical plant circuit. The project remains attractive and has a revised pre-taxation internal rate of return of 34%, and a pre-taxation net present value of R1.04 billion.
- Reduced production from Barberton Mines of 90,629oz (2017: 98,508oz) due to:
o lower head grades and processing difficulties at the BTRP, after encountering coarser fraction tailings, which produced 9,241oz less compared to the prior reporting period. The BTRP completed the installation of a regrind mill in May 2018, which has effectively dealt with these processing difficulties.
o underground production for the current reporting period improved by 1,362oz, following the mining of higher grades from Fairview’s high-grade 272 and 358 platforms; and
o Barberton Mines experienced approximately 58 lost production days due to industrial action and community unrest.
- The group’s detailed operational and financial summaries, per entity, are disclosed on the Pan African Resources website at http://www.panafricanresources.com/investors/financial-reports/.
Financial key features
- The profit after taxation from the group’s continuing operations was R202.0 million (2017: R700.6 million). In GBP terms, the profit after taxation from the group’s continuing operations was GBP11.5 million (2017: GBP40.6 million).
- The group incurred a once-off impairment charge of R1.78 billion (GBP106.3 million) associated with the cessation of Evander Mines’ underground operations and the resultant retrenchment costs of R161 million (GBP9.3 million).
- As a result of the impairment charge and retrenchment costs the group’s continued and discontinued operations (“combined operations”) profit after taxation of R309.9 million (GBP17.9 million) in the prior reporting period reduced to a loss after taxation of R1.56 billion (GBP93.3 million) in the current reporting period.
- Continuing operations’ earnings per share (“EPS”) decreased to 11.16 cents per share (2017: 44.78 cents per share), while in GBP terms, continuing operations EPS decreased to a 0.63 pence per share (2017: 2.60 pence per share).
- The combined operations’ EPS decreased to a loss of (86.03) cents per share (2017: 19.81 cents earnings per share), while in GBP terms, the combined operations’ EPS decreased to a loss of (5.15) pence per share (2017: 1.14 pence earnings per share).
- Continuing operations’ headline earnings per share (“HEPS”) decreased to 18.71 cents per share (2017: 38.72 cents per share). In GBP terms, continuing operations’ HEPS decreased to 1.08 pence per share (2017: 2.24 pence per share). Refer to note 3.
- The combined operations’ HEPS decreased to 12.66 cents per share (2017: 20.17 cents per share). In GBP terms, HEPS decreased to 0.73 pence per share (2017: 1.17 pence per share). Refer to note 3.
- Revenue from continuing operations decreased to R1,873.9 million (2017: R2,158.2 million) and, in GBP terms, group revenue decreased to GBP108.5 million (2017: GBP125.1 million) as a result of a decrease in the average ZAR gold price received and gold ounces sold.
- The group’s earnings before interest taxation, depreciation and amortisation (“adjusted EBITDA”) decreased to R416.0 million (2017: R816.0 million), while in GBP terms it decreased to GBP24.2 million (2017: GBP47.3 million). Refer to note 3.
- The average ZAR gold price received decreased to R538,100/kg (2017: R542,773/kg) and, in USD terms, it increased to USD1,301/oz (2017: USD1,242/oz).
- The all-in sustaining cost per kilogramme of Barberton Mines’ underground mining operation was well controlled and only increased in ZAR terms to R507,130/kg (2017: R501,330/kg), and in USD terms the all-in sustaining cost per ounce increased to USD1,227/oz (2017: USD1,147/oz).
- The all-in sustaining cost per kilogramme of the group’s continuing tailings operations increased in ZAR terms to R297,661/kg (2017: R208,590/kg) and in USD terms, the all-in sustaining cost per ounce increased to USD720/oz (2017: USD477/oz).
- Due to the group’s lower gold production, the group’s all-in sustaining cost per kilogramme increased in ZAR terms to R561,468/kg (2017: R514,435/kg) and in USD terms, the all-in sustaining cost per ounce increased to USD1,358/oz (2017: USD1,177/oz). Refer to note 3.
- The group paid a final dividend of R185 million or GBP10.0 million (2016: R300 million or GBP17.1 million) on 21 December 2017, relating to the 2017 financial year. This dividend equated to R0.08279 per share or 0.44561 pence per share (2016: R0.1544 per share or 0.87668 pence per share).
- The sale of Phoenix Platinum Mining Proprietary Limited (“Phoenix”) to Sylvania Platinum Limited for R89 million or GBP4.8 million was concluded on 7 November 2017.
- Net debt increased to R1,623.6 million or GBP89.8 million (2017: R67.6 million or GBP4 million) as the group’s facilities were drawn to fund the Elikhulu Project’s capital expenditure and Evander Mines’ retrenchment costs. Refer to note 3.
| For the year ended 30 June 2018 | For the year ended 30 June 2017 | Metric | Salient features | Metric | For the year ended 30 June 2017 | For the year ended 30 June 2018 |
| 4,990 | 5,390 | (Kilogrammes) | Combined operations gold sold | (Oz) | 173,285 | 160,444 |
| 1,873.9 | 2,158.2 | (R millions) | Revenue – Continuing operations | (GBP millions) | 125.1 | 108.5 |
| 538,100 | 542,773 | (R/kg) | Average gold price received | (USD/oz) | 1,242 | 1,301 |
| 480,439 | 430,863 | (R/kg) | Cash costs (Note 3) | (USD/oz) | 986 | 1,162 |
| 561,468 | 514,435 | (R/kg) | All-in sustaining costs (Note 1) | (USD/oz) | 1,177 | 1,358 |
| 614,713 | 540,693 | (R/kg) | All-in costs (Note 3) | (USD/oz) | 1,237 | 1,487 |
| 416.0 | 816.0 | (R millions) | Adjusted EBITDA (Note 2) | (GBP millions) | 47.3 | 24.2 |
| (1,556.9) | 309.9 | (R millions) | Attributable earnings (Combined operations) | (GBP millions) | 17.9 | (93.3) |
| 202.0 | 700.6 | (R millions) | Attributable earnings (Continuing operations) | (GBP millions) | 40.6 | 11.5 |
| 229.1 | 315.6 | (R millions) | Headline earnings (Combined operations) (Note 3) | (GBP millions) | 18.3 | 13.3 |
| (86.03) | 19.81 | (cents) | EPS (Combined operations) | (pence) | 1.14 | (5.15) |
| 12.66 | 20.17 | (cents) | HEPS (Combined operations) (Note 3) | (pence) | 1.17 | 0.73 |
| 1,623.6 | 67.6 | (R millions) | Net debt (Note 3) | (GBP millions) | 4.0 | 89.8 |
| 289.4 | 330.0 | (R millions) | Total sustaining capital expenditure | (GBP millions) | 19.1 | 16.8 |
| 1,650.2 | 613.1 | (R millions) | Total capital expenditure | (GBP millions) | 35.5 | 95.6 |
| 104.6 | 201.3 | (cents) | Net asset value per share | (pence) | 12.0 | 5.8 |
| 1,809.7 | 1,564.3 | (millions) | Weighted average number of shares in issue | (millions) | 1,564.3 | 1,809.7 |
| 12.86 | 13.59 | (R/USD) | Average exchange rate | (R/GBP) | 17.25 | 17.27 |
| 13.71 | 13.04 | (R/USD) | Closing exchange rate | (R/GBP) | 16.96 | 18.09 |
Note 1: The all-in sustaining cost per kilogram and all-in cost per kilogram excludes the Elikhulu capital expenditure as well as derivative fair value mark-to-market gains / expenses and relates directly to the current gold mining operations. Refer to the alternative performance measure (“APM”) summary report for the period ended 30 June 2018.
Note 2: Adjusted EBITDA is represented by earnings before interest, taxation, depreciation and amortisation, profit/(loss) on asset held for sale, profit/(loss) on disposal of investments and (loss)/profit from discontinued operations. Refer to the APM summary report for the year ended 30 June 2018.
Note 3: Refer to the APM summary report for the period ended 30 June 2018.
CEO STATEMENT
During the year under review, the group faced unprecedented challenges, which included falling ZAR gold prices, volatile exchange rates, operational challenges at both our Barberton and Evander operations and a capricious political, labour and community relations climate in South Africa. We are however pleased to report that these issues have been decisively dealt with and the business repositioned to deliver sustainable value creation into the future.
Following the implementation of several initiatives, Pan African Resources’ assets have been repositioned to be cash flow generative through the production of low-cost gold ounces. This includes our most recent organic growth project, Elikhulu, was fully commissioned during September 2018, ahead of time and within its project budget. Though our gold production for the 2018 financial year was lower than in previous years, the restructuring has significantly decreased our cost base and improved efficiencies and stability across all our operations.
The cessation of Evander Mines’ underground operations and remedial actions at our other operations was the focus of the board and management’s attention during the year. With this exercise now largely completed, the leadership can focus on growing the group’s profitable ounce production profile in the future.
When a management team is confronted with circumstances that demand imminent action, it is imperative to be circumspect in analysing the situation and then taking decisive and expeditious remedial action. A summary of the principal challenges dealt with and opportunities realised by the group in the past financial year include:
| Segment | Challenge/Opportunity | Management action | Status |
| Evander Mines’ underground operations |
Curtailment of the cash burn at Evander Mines’ underground operations, particularly given the depressed ZAR gold price environment. Opportunity to mine the 8 Shaft pillar and perform reclamation work. |
The curtailment of large-scale underground mining operations at Evander Mines, and resultant retrenchment of 1,635 of our employees, was difficult and regrettable, however our group had no viable alternative. The management team is currently reviewing and assessing options to access and mine Evander Mines’ 8 Shaft pillar. |
The retrenchment process was successfully concluded on 31 May 2018. The requirements of S189 of South African Labour Relations Act, 66 of 1995, were complied with. The outcome of the assessment to mine the Evander Mines’ 8 Shaft pillar will be communicated in the near future. |
| Elikhulu | Construction of the Elikhulu plant - ensuring the plant is completed on schedule and within budget. | Construction commenced in August 2017, with detailed planning and co-ordination to minimise potential delays and cost overruns. | Elikhulu’s inaugural gold pour was on 16 August 2018, within one year of inception of the construction. The plant was fully commissioned during September 2018. Construction work on the enlarged Kinross tailings facility continues. |
| BTRP | Unexpected coarse fraction material encountered, resulting in reduced plant throughput and gold recoveries from the BTRP. | Installation of a regrind mill to assist with material handling and improved recoveries from the Harper dump coarse fraction material. Process of design and construction was fast tracked and completed in less than six months. | The regrind mill was successfully commissioned in May 2018, and the BTRP is again performing in line with expectations. |
| Fairview underground operations | Limited mining flexibility within the Fairview Main Reef Complex (“MRC”) orebody. |
Development of two high-grade mining platforms in the MRC orebody to improve mining flexibility. This development was completed during January 2018. Barberton Mines has increased its ongoing development rates in the 2019 financial year with the objective of establishing a third high grade platform in the Fairview 11-block by the end of June 2019. | The 358 and 272 high-grade mining platforms are currently in production with a commensurate increase in Barberton Mines’ head grade in the second half of the 2018 financial year. These platforms will be available for the next two to three years, allowing sufficient time for development into new mining areas. |
| Fairview mining operation is restricted by the hoisting capacity of its No 3 Decline, which is also used by employees to access workings below 42 Level and the high-grade 11-block of the MRC. | The Fairview sub-vertical shaft project will improve ore handling efficiencies and significantly reduce the time taken by employees to access high-grade mining platforms. The sub-vertical shaft project is estimated to improve production by approximately 7,000oz-10,000oz per annum. | The R105 million project is scheduled for completion over the next two to three years. | |
| Further organic growth | Barberton Mines’ Royal Sheba Project presents an opportunity to expand Barberton Mines’ production profile and access low-cost near-surface minable ounces over the short to medium term. We did not previously identify the near-surface opportunity at Royal Sheba and are exploring similar targets within our mining right area. | Engaged in a surface drilling campaign and appointed DRA Global to complete a feasibility to mine the Royal Sheba orebody as an open-cast mining operation and then in future an underground mining operation. | - The drilling campaign has been completed with excellent results confirming the extension of the orebody to surface. We have updated the market on the prospectivity of Royal Sheba and are now considering alternatives to expedite ‘first gold’ and a large steady-state operation. |
| Labour relations | Barberton Mines’ wage agreements expired at the end of the current reporting period. | Engaged with representative unions in order to agree a multi-year agreement to the benefit of all stakeholders. | - Concluded a three-year wage agreement with Barberton Mines’ representative unions. |
Clearly, the challenges we faced during the period, which were well communicated to the market, have significantly reduced our profitability for the 2018 financial year.
During the current reporting period, our team decisively dealt with the issues threatening the future sustainability of the group. The group is now well positioned to deliver into a much-improved performance during the 2019 financial year.
Group safety
In terms of safety performances, significant progress was made over the past year, with on-mine safety improvement campaigns contributing to these results. Further, Barberton Mines achieved its one-million fatality-free shift milestone during June 2018. To ensure continued safety improvements, the group will continue to engage independent safety experts to review each of the mining operations’ safety systems and controls. The group experienced no fatalities in the 2018 financial year (2017: three employees fatally injured). The group’s lost-time injury frequency rate remained stable at 3.73 (2017: 3.51), while the reportable injury frequency rate improved materially to 1.08 (2017: 1.53).
Evander Mines and ETRP
The decision to cease underground operations at 8 Shaft was difficult, given South Africa’s prevailing socio-economic environment, and the impact on the retrenched miners and their families. Retrenched employees were offered re-skilling opportunities, which is continuing, and we have retrained and re-employed a number of these employees into the Elikhulu Project. Environmental rehabilitation of the mine will provide further employment opportunities.
Evander Mines’ underground operations produced 48,565oz (2017: 45,304oz) of gold during the reporting period.
Gold production at ETRP reduced to 21,250oz (2017: 29,473oz). In the prior reporting period the ETRP treated incrementally more surface feedstock due to the additional milling capacity that became available because of the 7 Shaft infrastructure repairs, and the reduced production from the underground mining operation. The ETRP’s all-in sustaining cost was R306,120/kg (2017: R242,260/kg) or USD740/oz (2017: USD554/oz).
Barberton Mines and BTRP
Barberton Mines’ gold production reduced by 7,879oz to 90,629oz (2017: 98,508oz), predominantly due to the following:
- BTRP gold production reduced to 17,504oz (2017: 26,745oz) due to the re-mining operation moving to the lower-grade Harper dump following depletion of the Bramber dump, and the head grade reducing from 2.3g/t to 1.4g/t. The Harper dump material has a larger coarse fraction, which resulted in processing problems and a reduction in plant recoveries to approximately 30% on the feedstock. Barberton Mines’ underground mining production increased to 73,125oz (2017: 71,763oz). The underground tonnes milled decreased to 237,831t (2017: 246,915t), while the head grade improved to 10.3g/t (2017: 9.8g/t).
- Gold production was adversely impacted by operational disruptions from pressure groups, community unrest and unprotected strike action at the mine, which resulted in 58 lost production days. Barberton Mines has significantly increased its community engagement efforts during the current reporting period, and operational disruptions have decreased as a result of these efforts.
Mineral reserves and resources
The group’s mineral resources and reserves, compliant with the South African Code for Reporting of Mineral Resources and Mineral Reserves, 2016, are summarised as follows:
- Gold reserves of 11.2Moz (239.9Mt at 1.46g/t) (2017: 11.2Moz)
- Gold resources of 33.3Moz (331.2Mt at 3.13g/t) (2017: 34.4Moz)
In determining the group’s reserves and resources, gold reserves were modelled at R525,000/kg and gold resources at R600,000/kg. The competent person for Pan African Resources, Hendrik Pretorius, the group’s Project Geologist, has reviewed and approved the information contained in this announcement as it pertains to the mineral resources and reserves. Mr Pretorius holds a BSc (Hons) in the field of geology and a Graduate Diploma in Mining Engineering focussing on mineral resource management. He has more than 15 years’ relevant experience, is registered with the South African Council for Natural Scientific Professionals (400051/11) and is a member in good standing with the Geological Society of South Africa.
Near- to medium-term growth projects
Elikhulu Project
Elikhulu, which is expected to produce some of the lowest-cost ounces in the South African gold mining industry, is critical to Evander Mines’ return to profitability and delivering into the group’s strategic repositioning. Tailings, which were deposited over the past 70 years of mining activity, will be re-mined in line with industry best practices and consolidated into a single facility, which will mitigate environmental risks and make substantial surface areas available for other land uses, including housing and / or agriculture.
From December 2018, Elikhulu’s processing capacity will increase to 1.2-million tonnes per annum by incorporating the existing ETRP throughput, in order to benefit from the new plant’s improved efficiencies and economies of scale.
Elikhulu was constructed ahead of schedule, and was fully commissioned during September 2018. By 30 June 2018, capital expenditure of R1,256.1 million (2017: R175.5 million) had been incurred on the project. Construction on the enlarged Kinross tailings facility is continuing.
Barberton Mines’ Royal Sheba Project
Barberton Mines’ Royal Sheba Project is an opportunity to expand the operation’s production profile and access low-cost near-surface minable ounces over the short to medium term. Shareholders are referred to the announcement on 6 September 2018, detailing the exploration results from the Royal Sheba orebody.
Evander Mines’ Egoli Project – Reassessed mining feasibility study
The Egoli Project is adjacent to the 7 Shaft infrastructure and extends from the boundary of Taung Gold International Limited’s 6 Shaft mining right.
Shareholders were informed on 1 February 2018 of the updated resource statement of the Egoli Project and subsequently on 28 March 2018 that the group would reassess the mining feasibility study, conducted by DRA Global, into the viability of the Egoli Project as a standalone project following the cessation of mining at Evander Mines’ underground operations. The project remains attractive, with more than one-million ounces of contained gold in measured and indicated categories.
The results of an optimisation study based on the DRA Global feasibility study are:
§ The mining operation is planned to ensure waste and reef are hoisted separately.
§ The life-of-mine is expected to be 11 years.
§ Average recoverable gold of approximately 23,500 ounces per annum during the initial four-year development phase, and an average of approximately 79,000 ounces per annum for the remaining seven years thereafter is forecast.
§ A new metallurgical plant would be constructed, and the existing Evander Mines’ 7 Shaft infrastructure would be used for hoisting.
§ Peak funding requirement is forecast at approximately R870 million.
§ An internal rate of return (real, pre-taxation) of 34%, with a payback period of two years following the initial four-year development period is forecast. This projection is based on an assumed gold price of R547,000/kg.
§ Project, pre-taxation, net present value is R1.04 billion at a 12.4% real discount rate.
§ An incremental all-in sustaining cost per kilogramme of approximately R300,000/kg, or USD650/oz, on average, over the life-of-mine.
§ An average gold recovery rate of 95% and a mine call factor of 85%.
§ The total resources remain at 9.4Mt @ 9.75g/t equating to 2.95Moz.
Barberton Mines’ sub-vertical shaft project at Fairview
Shareholders were previously advised that the Fairview mining operation is restricted by the hoisting capacity of its No 3 Decline, which is used to access workings below 42 Level and the high-grade 11-block of the MRC. During the period under review, Fairview commenced the development required in preparation for the construction of the new sub-vertical shaft. The project cost is forecast at approximately R105 million over two to three years. Following the commissioning of this shaft, it is expected that productivity improvements will yield an additional 7,000oz - 10,000oz of gold per annum due to the increased hoisting capacity.
Wage agreements
As announced on 7 September 2018, Barberton Mines successfully concluded a three-year wage agreement with the National Union of Mineworkers (“NUM”) and the United Association of South Africa (“UASA”) (“the agreement”). NUM and UASA represent the majority of employees at Barberton Mines. The Agreement provides for an average annual wage increase of approximately 6.5% and 5.5% for NUM and UASA members, respectively, over the three years. The negotiations were successfully concluded with no industrial action or work stoppages. The agreement should assist in providing certainty and sustainability to all stakeholders in the coming years.
Outlook
Key focus areas for the 2019 financial year include:
- continuing to improve our safety performance, and environmental, social and governance compliance across operations;
- delivering into the gold production guidance of approximately 170,000oz;
- ensuring Elikhulu delivers to expectation and incorporating ETRP’s throughput into Elikhulu’s processing capacity;
- increase the statement of financial position flexibility and capacity;
- focus on growth opportunities such as:
o The Royal Sheba Project
o Evander Mines’ 8 Shaft pillar project
o Evander Mines’ Egoli Project
o Barberton Mines’ sub-vertical shaft
- Re-initiate dividend payments
The group continues to evaluate acquisitive opportunities, particularly within other African jurisdictions, in accordance with its rigorous capital allocation criteria.
I would like to thank my fellow board members for their guidance, support and insight during the past financial year. Further, a sincere thanks to the executive management team and all employees, who continued to show commitment and dedication during this challenging period.
Finally, to our stakeholders, thank you for your ongoing support of Pan African Resources. While times may be marked by turbulence and volatility, we believe the group, with its current strategic direction, is well positioned to maximise value for our shareholders and our other stakeholders in the year ahead and well into the future.
FINANCIAL PERFORMANCE
Exchange rates and their impact on results
All of the group’s subsidiaries are incorporated in South Africa and their functional currency is ZAR. The group’s business is conducted in ZAR and the accounting records are maintained in this same currency, with the exception of precious metal product sales, which are transacted in USD prior to conversion into ZAR. The ongoing review of the operational results by executive management and the board is also performed in ZAR.
The group’s presentation currency is GBP due to its ultimate holding company, Pan African Resources, being incorporated in England and Wales and being dual-listed in the United Kingdom (“UK”) and South Africa.
During the current reporting period the average ZAR:GBP exchange rate was R17.27:1 (2017: R17.25:1) and the closing ZAR:GBP exchange rate was R18.09:1 (2017: R16.96:1). The year-on-year change in the average and closing exchange rates of 0.1% and 6.7%, respectively, must be taken into account for the purposes of translating and comparing year-on-year results, and in the event of material transactions, the exchange rate on the date of the material transaction is used to translate earnings from ZAR to GBP.
The group records its revenue from precious metals sales in ZAR and the strength in the value of the ZAR:USD exchange rate during the current reporting period had a negative impact on the USD revenue received when translated into ZAR. The average ZAR:USD exchange rate was 5.4% stronger at R12.86:1 (2017: R13.59:1).
The commentary below analyses the current and prior reporting period’s results. Key aspects of the group’s ZAR results appear in the body of this commentary and have been used as the basis against which its financial performance is measured. The gross GBP equivalent figures can be calculated by applying the exchange rates as detailed above.
Analysing the group’s financial performance for continuing operations
1) Revenue
Gold sales from continuing operations declined year-on-year by 13.2% to R1,873.9 million (2017: R2,158.2 million) mainly impacted by:
1) The average ZAR gold price received decreasing by 0.9% to R538,100/kg (2017: R542,773/kg).
2) Gold ounces sold from continuing operations decreasing by 12.6% to 111,879oz (2017: 127,981oz).
Revenue from Evander Mines’ underground operations of R811.4 million (2017: R767.2 million) has been disclosed in discontinued operations following the cessation of mining at this operation.
2) Cost of production
Cost of production (including realisation costs) for continuing operations increased by 4.4% to R1,376.7 million (2017: R1,318.9 million).
The main cost contributors that impacted the year-on-year increase during the current reporting period are summarised as follows:
- Salaries and wages (represents 38.9% of the gold cost of production) increased by 7.6% to R535.1 million (2017: R497.1 million). Salaries and wage rates increased in line with the gold labour agreements signed at the respective operations.
- Electricity costs (represents 9.6% of the gold cost of production) increased by 8.3% to R132.5 million (2017: R122.3 million). The increase is higher than the National Energy Regulator of South Africa’s approved average national increase of 5.2% from 1 April 2018, because of higher electricity consumption associated with the surface re-mining operation and Barberton Mines’ new refrigeration plant installed at Fairview during July 2017.
- Mining and processing costs (represents 33.7% of gold cost of production) decreased by 6.7% to R463.3 million (2017: R496.3 million). The decrease was due to less surface sources being processed at Evander Mines in the current reporting period.
- Engineering and technical costs (represents 6.7% of gold cost of production) increased by 13.0% to R92.7 million (2017: R82.0 million).
Cash cost per kilogramme from continuing operations increased by 19.6% to R387,194/kg (2017: R323,692/kg). The increase was predominantly due to the group’s gold sold decreasing by 12.6% to 111,879oz (2017: 127,981oz) and the cost of production increasing by 4.4%.
3) Realisations costs
The group’s realisation costs increased to R34.6 million (2017: R17.5 million). The realisation costs relate predominantly to refining charges, paid to Gauteng Refinery for gold extracted and recovered from the Kinross plant civil infrastructure.
4) Depreciation costs
Depreciation from continuing operations decreased by 10.3% to R85.1 million (2017: R94.9 million). The depreciation charge is based on the available units of production over the life of the operations and the depreciation charge reduced commensurate with the decrease in production.
5) Other expenditure and income
Other expenses increased to R74.0 million (2017: R4.1 million). The increase in other expenses is due to the group realising a pre-tax gain of R94.7 million in the prior reporting period on the mark-to-market fair value adjustment of a derivative instrument entered into to mitigate gold price risk.
6) Finance income and costs
Finance income increased to R25.7 million (2017: R4.4 million), following an increase in interest earned on the group’s rehabilitation funds. Finance costs increased to R54.3 million (2017: R48.4 million), due to an increase in group debt during the current reporting period.
7) Taxation
The taxation charge of the group’s continuing operations decreased to a credit of R36.3 million (2017: R72.5 million) due to:
· An increase in the deferred tax credit of R63.6 million (2017: R7.9 million) because of the reduction in the long-term taxation rate to 19.2% from 23.1% for the Evander Mines’ surface operations.
· Decrease in the current taxation charge to R27.3 million (2017: R80.4 million).
Discontinued operations
In the current reporting period the group’s discontinued operations comprised of:
- Phoenix; and
- Evander Mines’ underground operations
In the prior reporting period the group’s discontinued operations comprised of:
- Phoenix; and
- Uitkomst Colliery Proprietary Limited (“Uitkomst”).
Phoenix, under discontinued operations, recorded a loss of R6.9 million in the current reporting period, for the period 1 July 2017 – 6 November 2017. This loss comprised of R2 million in operational losses and a R4.9 million loss on asset held for sale.
Due to the cessation of mining at Evander Mines’ underground operations, the financial results from this operation has been classified as a discontinued operation in the current reporting period.
Losses from discontinued operations have increased to R1.76 billion (2017: R390.7 million), which includes an impairment charge of R1.78 billion and retrenchment costs of R161 million, for the Evander Mines’ underground operations.
EPS and HEPS
The combined operations EPS in ZAR decreased to a loss of (86.03) cents per share (2017: 19.81 cents per share). The combined operations HEPS in ZAR decreased to 12.66 cents per share (2017: 20.17 cents per share).
The EPS and HEPS are calculated by applying the group’s weighted average number of shares in issue to the attributable and headline earnings. The weighted average number of shares in issue increased by 15.7% to
1,809.7-million shares (2017: 1,564.3-million shares). The increase in shares was attributed to the additional 291.5-million shares issued in the equity raise concluded on 12 April 2017 for the equity tranche of the Elikhulu Project, and the disposal of 130-million shares held by PAR Gold Proprietary Limited (“PAR Gold”) on 30 May 2018.
Refer to the reconciliation of the earnings and headline earnings in the APM summary report for the period ended 30 June 2018.
Net debt
Total debt facilities utilised at 30 June 2018 increased to R1,636.6 million (2017: R227.8 million) and cash holdings declined to R12.6 million (2017: R160.2 million), resulting in an increase in net debt to R1,623.6 billion (2017: R67.6 million). The increase in net debt was predominantly due to the R1.26 billion capital expenditure incurred on the Elikhulu Project, operational losses from Evander Mines’ underground operations and retrenchment costs of R161 million. Refer to the APM summary report for the period ended 30 June 2018.
Summary of the long-term debt liabilities:
| Revolving credit facility | Evander Mines gold loan | Elikhulu term facility | Total | |||||
| 30 June 2018 | 30 June 2017 | 30 June 2018 | 30 June 2017 | 30 June 2018 | 30 June 2017 | 30 June 2018 | 30 June 2017 | |
| ZAR (millions) | ZAR (millions) | ZAR (millions) | ZAR (millions) | ZAR (millions) | ZAR (millions) | ZAR (millions) | ZAR (millions) | |
| Non-current portion | 778.0 | 180.5 | - | - | 770.0 | - | 1,548.0 | 180.5 |
| Current portion | 88.2 | 20.7 | - | 26.6 | - | - | 88.2 | 47.3 |
| Total | 866.2 | 201.2 | - | 26.6 | 770.0 | - | 1,636.2 | 227.8 |
The group’s compliance to the revolving credit facility debt covenants are summarised below:
| Covenant | Measurement | 30 June 2018 | 30 June 2017 |
| Net-debt-to-equity ratio | Must be less than 1:1 | 0.78 | 0.02 |
| Net-debt-to-adjusted EBITDA ratio (note 1) | Must be less than 2.5:1 | 3.73 | 0.08 |
| Interest cover ratio (note 2) | Must be greater than 4 times | 4.61 | 19.32 |
| Debt service cover ratio | Must be greater than 1.3 times | 3.84 | 9.11 |
Note 1: The net debt to EBTIDA covenant is only measurable on 31 December 2019 to cater for the construction of Elikhulu and commensurate increase in cash flows for measurement purposes.
Note 2: The interest cover ratio covenant was reduced to 2.3 times until December 2018, where after it will increase to 4 times.
Capital expenditure
Group capital expenditure for the current reporting period has been summarised per operation in the table below:
| Barberton Mines | Evander Mines | Elikhulu | Corporate | Total | |
| ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | |
| Development capital | 68.1 | 48.4 | - | - | 116.5 |
| Maintenance capital | 42.9 | 127.8 | - | 2.2 | 172.9 |
| Sustaining capital total | 111.0 | 176.2 | - | 2.2 | 289.4 |
| Expansion capital | 99.4 | 5.3 | 1,256.1 | - | 1,360.8 |
| Total capital expenditure | 210.4 | 181.5 | 1,256.1 | 2.2 | 1,650.2 |
Cash flow summary
Cash generated by operations (after dividends) decreased by R250.5 million to a deficit of R202.1 million (2017: R48.4 million), due to the lower gold production, Evander Mines’ operational losses and retrenchment costs of R161 million. The 2017 financial year dividend payment (net of PAR Gold reciprocal dividends) of R148.9 million (2016: R232.6 million) was paid on 21 December 2017.
The cash outflows from investing activities increased to R1,545.4 million (2017: R491.0 million), largely due to:
- capital expenditure incurred of R1,601.4 million (2017: R612.7 million);
- contributions to the rehabilitation trust of R26.2 million (2017: nil);and
- proceeds from the sale of Phoenix of R89.0 million (2017: R142.1 million proceeds from the disposal of investments/subsidiaries and property plant and equipment).
Net cash inflows from financing activities increased to R1,599.9 million (2017: R551.1 million), largely due to the utilisation of the group’s debt facilities to fund operational and project capital expenditure, offset by proceeds on the disposal of PAR Gold treasury shares of R149.8 million (2017: nil).
COMMITMENTS REPORTED IN ZAR AND GBP
The group identified no material contingent liabilities in the current or prior reporting period.
The group had contracted outstanding open orders at period end of R434.3 million (2017: R1.22 billion), or GBP24.0 million (2017: GBP72.0 million). Outstanding orders in the current reporting period related primarily to the Elikhulu Project.
Authorised commitments for the new financial year, not yet contracted for, totalled R254.5 million (2017: R328.7 million) or GBP14.1 million (2017: GBP19.4 million).
At 30 June 2018, the group had guarantees in place of R24.6 million (2017: R24.6 million) or GBP1.4 million
(2017: GBP1.4 million) in favour of Eskom Holdings SOC Limited, and R14.0 million (2017: R14.0 million) or
GBP0.8 million (2017: GBP0.8 million) in favour of the DMR.
Operating lease commitments, which fall due within the next financial year, amounted to R16.3 million
(2017: R2.7 million) or GBP0.9 million (2017: GBP0.16 million).
FAIR VALUE INSTRUMENTS
Financial instruments measured at fair value are grouped into levels 1 to 3 based on the extent to which fair value is observable.
The levels are classified as follows:
Level 1: Fair value is based on quoted prices in active markets for identical financial assets or liabilities.
Level 2: Fair value is determined using inputs, other than quoted prices included within level 1, which are observable for the asset or liability.
Level 3: Fair value is determined on inputs not based on observable market data.
Level 1 financial instruments:
Pan African Resources holds 13,064,381 shares in MC Mining Limited (previously known as Coal of Africa Limited). The investment was fair valued at R56.7 million or GBP3.1 million (2017: R127.6 million or GBP7.5 million), at the reporting date. The fair value of the listed investment is treated as Level 1 of the fair value hierarchy, as the share price is quoted on a stock exchange.
The group’s rehabilitation funds are valued at R364.3 million (2017: R320.6 million) or GBP20.1 million (2017: GBP18.9 million), which comprise of predominantly equity-linked notes and interest-bearing call accounts.
Level 2 financial instruments:
During the current and prior reporting period, the group had exposure to financial derivatives comprising a cost-collar hedge. The mark-to-market value of this cost-collar asset at 30 June 2018 was R4.0 million or GBP0.2 million (2017: nil)
The group’s cash settled share option liability, which is valued on a mark-to-market basis according to the company’s quoted share price, amounted to R9.6 million or GBP0.5 million (2017: R46.4 million or GBP2.7 million).
Level 3 financial instruments:
The group’s employee share ownership plan (“ESOP”) liability is accounted for on a cash settled share option basis and valued on a mark-to-market basis on the net present value of the discounted future cash flows applicable to the beneficiaries of the schemes. The ESOP liability was R10.3 million or GBP0.6 million (2017: R1.9 million or GBP0.11 million).
DIVIDENDS
Dividend paid and recommended
During the current reporting period the group paid a dividend of R185 million or GBP10.0 million (2016: R300 million or GBP17.1 million), on 21 December 2017, relating to the 2017 financial year. This dividend equated to R0.08279 per share or 0.44561 pence per share (2016: R0.15438 per share or 0.87668 pence per share). As result of the cessation of mining at Evander Mines’ underground operations and the associated retrenchment costs, the board has not recommended a dividend for the current reporting period. With Pan African Resource’s business being repositioned to secure sustainable low-cost, higher-margin production, the group’s prospect of reintroducing dividends will improve in the next year.
The group received reciprocal PAR Gold dividends of R36.1 million (2016: R67.4 million), resulting in a net dividend paid of R148.9 million (2016: R232.6 million) to external shareholders.
Dividend policy
Pan African Resources aspires to pay a regular dividend to its shareholders. In balancing this cash return to shareholders with the group’s strategy of generic and acquisitive growth, Pan African Resources believes a target pay-out ratio of 40% of net cash generated from operating activities - after allowing for the cash flow impact of sustaining capital, contractual debt repayments and the cash flow impact of once-off items - is appropriate. This measure aligns dividend distributions with the cash generation potential of the business. In proposing a dividend, the board will also take into account the company’s financial position, future prospects, satisfactory solvency and liquidity assessments and other factors deemed relevant at the time. The board also allows itself flexibility to deviate from the above policy, when deemed appropriate.
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS AND ACCOUNTING POLICIES
The provisional audited results announcement has been prepared using accounting policies that comply with the International Financial Reporting Standards (“IFRS”) adopted by the European Union and South Africa, which are consistent with those applied in the financial statements for the prior year ended 30 June 2017.
The provisional audited results announcement is only a summary of the information in the Integrated Annual Report and does not contain full or complete details. Any investment decision by investors and/or shareholders should be based on consideration of the final Integrated Annual Report, as a whole, to be published on the company’s website in due course.
ALTERNATIVE PERFORMANCE MEASURE (“APM”)
The provisional audited results announcement contains both statutory measures and alternative performance measures which, in management’s view, reflect the underlying performance of the business and provide a more meaningful comparison of how the group’s business is managed and measured on a day-to-day basis.
Alternative performance measures are non-GAAP (Generally Accepted Accounting Practice) measures and provide supplementary information to assist with the understanding of the group’s financial results and with the evaluation of operating performance for all the periods presented. Alternative performance measures, however, are not a measure of financial performance under IFRS as adopted by the European Union and South Africa and should not be considered as a substitute for measures determined in accordance with IFRS. As the group’s alternative performance measures are not defined terms under IFRS they may therefore not be comparable with similarly titled measures reported by other companies.
Refer to the APM summary report for the period ended 30 June 2018.
JSE LIMITED (“JSE”) LISTING
The company has a dual primary listing on the JSE in South Africa and the AIM market (“AIM”) of the London Stock Exchange.
This provisional audited results announcement has been prepared in accordance with the framework concepts and the measurement and recognition requirements of IFRS and the SAICA Financial Reporting Guides as issued by the Accounting Practice Committee, and the Financial Pronouncements as issued by the Financial Reporting Standards Council and contains the minimum information as required by International Accounting Standard 34. The accounting policies are in terms of IFRS and are consistent with those applied in the 2017 consolidated financial statements.
The group's South African external auditors, Deloitte & Touche, have issued their opinion on the consolidated financial statements and the provisional summarised consolidated financial statements for the year ended 30 June 2018. The audits for both the summarised and full set of financial statements conducted in accordance with International Standards on Auditing. Deloitte & Touche have expressed unmodified opinions on the consolidated financial statements and the provisional summarised consolidated financial statements. Copies of the audit reports are available for inspection at the company's registered office. Any reference to future financial performance included in this provisional audited results announcement has not been reviewed or reported on by the group's South African external auditors.
The auditor’s report does not report on the APMs (excluding headline earnings and HEPS) contained in this announcement. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor’s engagement they should obtain a copy of that report, together with the accompanying financial information, from the company’s registered office.
These provisional summarised consolidated financial statements are extracted from the audited consolidated financial statements. The directors take full responsibility for the preparation of the provisional summarised audited results and confirm the financial information and related commentary has been correctly extracted from the underlying group consolidated financial statements.
AIM LISTING
The financial information for the year ended 30 June 2018 does not constitute statutory accounts as defined in sections 435(1) and 435(2) of the UK Companies Act 2006 (“Companies Act 2006”) but has been derived from those accounts. Statutory accounts for the year ended 30 June 2017 have been delivered to the Registrar of Companies and those for 2018 will be delivered following the company's annual general meeting. Deloitte LLP, the external auditor registered in the UK, has reported on these accounts for the year ended 30 June 2018.
Deloitte LLP’s audit report for 30 June 2018 was unqualified, did not include a reference to any matters to which auditors draw attention by way of emphasis of matter, and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006. These statutory accounts have been prepared in accordance with IFRS and IFRS Interpretations Committee interpretations adopted for use by the European Union, with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
DIRECTORSHIP CHANGES AND DEALINGS
Current reporting period
No directorship changes took place during the period under review.
However, the following director dealings in securities took place:
Mr JAJ Loots participated in the following company shares transactions:
- On 22 February 2018, Mr JAJ Loots entered into a contract for difference derivative (“CFDs”) for 200,000 shares at a price of GBP0.08 per share.
- On 27 September 2017, Mr JAJ Loots purchased 108,000 shares at an average price of R2.35 per share.
- On 29 September 2017, Mr JAJ Loots entered into a CFD for 200,000 shares at average of GBP12.747p per share.
Mr JAJ Loots had 668,675 shares and 400,000 CFD’s at period end, representing 0.05% of the total issued shares.
Mr GP Louw participated in the following company shares transactions:
- On 28 September 2017, Mr GP Louw purchased 45,000 shares at an average price of R2.35 per share.
- On 23 February 2018, Mr GP Louw purchased 75,000 shares at R1.30 per share.
Mr GP Louw had 257,450 shares at period end, representing 0.01% of the total issued shares.
Mr T Mosololi, on 6 October 2017, purchased 20,000 shares at R2.30. Mr T Mosololi had 50,000 shares outstanding at period end, representing 0.01% of total issued shares.
Mr K Spencer had 3,000,000 shares at period end, representing 0.13% of the total issued shares.
No dealings in the securities by the directors of the company took place between the period end and the date of the publication of this announcement.
SHARES ISSUED
No additional issuance of shares during the current reporting period.
GOING CONCERN
The group closely monitors and manages its liquidity risk by means of a centralised treasury function. Cash forecasts are regularly produced, and sensitivities run for different scenarios including, but not limited to, changes in commodity prices and different production profiles from the group’s producing assets. The group had R485 million of available debt facilities and R12.6 million of cash and cash equivalents at 30 June 2018. Based on the current status of the group’s finances, having considered going concern forecasts and reasonably possible downside scenarios, including a ZAR gold price of R525,000/kg (USD1,270/oz at a prevailing ZAR:USD average exchange rate R12.86:1), and reduced production volumes, the group’s forecasts demonstrate it will have sufficient liquidity headroom to meet its obligations in the ordinary course of business, and will comply with financial covenants for the 12 months from the date of approval of the financial statements.
The board has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the group continues to adopt the going concern basis of accounting in preparation of the 30 June 2018 financial statements.
EVENTS AFTER THE REPORTING PERIOD
The group had no material events after the reporting period.
SEGMENT REPORTING
A segment is a distinguishable component of the group engaged in providing products or services in a particular business sector or segment, which is subject to risks and rewards different from those of other segments. The group's business activities were conducted through the following business segments:
Continuing operations:
- Barberton Mines (including BTRP), located in Barberton, South Africa;
- Evander Mines (ETRP and Elikhulu, excluding the 8 Shaft underground mining operation), located in Evander, South Africa;
- Corporate, located in Johannesburg, South Africa; and
- Pan African Resources Funding Company Proprietary Limited (“Funding Company”), located in Johannesburg, South Africa.
Discontinued operations:
- Phoenix, located near Rustenburg, South Africa;
- Uitkomst Colliery, located in Newcastle, South Africa; and
- Evander Mines’ underground operations (including 8 Shaft, 7 Shaft and the run-of-mine circuit in the Kinross Metallurgical plant), located in Evander, South Africa.
The executive committee reviews the operations in accordance with the disclosures presented above.
Cobus Loots Deon Louw
Chief Executive Officer Financial Director
19 September 2018
| Pan African Resources PLC | ||||
Summarised consolidated statement of profit or loss and other comprehensive income for the period ended 30 June 2018 | ||||
| 30 June 2018 | 30 June 2017 | 30 June 2018 | 30 June 2017 | |
| (Audited) | (Audited) (Note 1) | (Unaudited) | (Unaudited) (Note 1) | |
| Continuing operations | GBP million | GBP million | ZAR million | ZAR million |
| Revenue | 108.5 | 125.1 | 1,873.9 | 2,158.2 |
| Gold sales | 108.5 | 125.1 | 1,873.9 | 2,158.2 |
| Realisation costs | (2.0) | (1.0) | (34.6) | (17.5) |
| On - mine revenue | 106.5 | 124.1 | 1,839.3 | 2,140.7 |
| Gold cost of production | (77.7) | (75.4) | (1,342.1) | (1,301.4) |
| Mining depreciation | (4.9) | (5.5) | (85.1) | (94.9) |
| Mining profit | 23.9 | 43.2 | 412.1 | 744.4 |
| Other (expenses) | (4.2) | (0.3) | (74.0) | (4.1) |
| Profit on disposal of investment | - | 0.2 | - | 4.6 |
| Profit on disposal of subsidiary | - | 5.4 | - | 91.3 |
| Continuing operations - Impairment costs | (8.2) | - | (136.6) | - |
| Royalty costs | (0.4) | (1.1) | (7.2) | (19.2) |
| Net income before finance income and finance costs | 11.1 | 47.4 | 194.3 | 817.0 |
| Finance income | 1.5 | 0.3 | 25.7 | 4.4 |
| Finance costs | (3.2) | (2.8) | (54.3) | (48.4) |
| Profit before taxation | 9.4 | 44.9 | 165.7 | 773.0 |
| Taxation | 2.1 | (4.3) | 36.3 | (72.4) |
| Profit after taxation - continuing operations | 11.5 | 40.6 | 202.0 | 700.6 |
| Discontinued operations | ||||
| Loss from discontinued operations | (104.8) | (22.7) | (1,758.9) | (390.7) |
| (Loss)/Profit after taxation | (93.3) | 17.9 | (1,556.9) | 309.9 |
| Other comprehensive (loss)/income: | ||||
| Items that have been or may subsequently be reclassified to the statement of profit or loss (net of tax): | ||||
| Fair value movement on available for sale investment | (3.9) | (0.1) | (70.9) | (1.7) |
| Taxation on fair value movement on available for sale investment | 0.9 | - | 15.9 | - |
| Items that will not be reclassified to the statement of profit or loss (net of tax): | ||||
| Profit on disposal of available for sale investment | - | (0.2) | - | (4.6) |
| Foreign currency translation differences | (5.9) | 21.7 | - | - |
| Total comprehensive (loss)/income for the year | (102.2) | 39.3 | (1,611.9) | 303.6 |
| (Loss)/Profit attributable to: | ||||
| Owners of the parent | (93.3) | 17.9 | (1,556.9) | 309.9 |
| Total comprehensive (loss)/income attributable to: | ||||
| Owners of the parent | (102.2) | 39.3 | (1,611.9) | 303.6 |
| Earnings per share - combined operations | (5.15) | 1.14 | (86.03) | 19.81 |
| Diluted earnings per share - combined operations | (5.15) | 1.14 | (86.03) | 19.80 |
| Earnings per share - continuing operations | 0.63 | 2.60 | 11.16 | 44.78 |
| Diluted earnings per share - continuing operations | 0.63 | 2.60 | 11.16 | 44.76 |
Note 1: The prior reporting period’s figures have been represented in accordance with IFRS 5 non-current assets held for sale and discontinued operations.
| Summarised consolidated Statement of Financial Position as at 30 June 2018 | ||||
| 30 June 2018 | 30 June 2017 | 30 June 2018 | 30 June 2017 | |
| (Audited) | (Audited) | (Unaudited) | (Unaudited) | |
| GBP million | GBP million | ZAR million | ZAR million | |
| ASSETS | ||||
| Non-current assets | ||||
| Property, plant and equipment and mineral rights | 192.8 | 224.7 | 3,488.3 | 3,810.7 |
| Other intangible assets(Note 1) | - | 0.1 | 0.6 | 1.2 |
| Deferred taxation | 6.2 | 0.8 | 112.3 | 12.9 |
| Long-term inventory | 0.6 | 0.7 | 10.3 | 11.6 |
| Long-term receivables | 1.3 | 2.5 | 24.0 | 43.0 |
| Goodwill | 21.0 | 21.0 | 303.5 | 303.5 |
| Investments | 3.1 | 7.5 | 56.7 | 127.6 |
| Rehabilitation funds | 20.1 | 18.9 | 364.3 | 320.6 |
| 245.1 | 276.2 | 4,360.0 | 4,631.1 | |
| Current assets | ||||
| Inventories | 2.7 | 5.1 | 48.9 | 85.7 |
| Current taxation asset | 0.7 | 1.1 | 12.5 | 18.1 |
| Trade and other receivables | 14.8 | 13.7 | 268.6 | 233.1 |
| Current portion of long-term receivables | 0.9 | - | 17.2 | - |
| Financial instruments assets(Note 1) | 0.2 | - | 4.0 | - |
| Cash and cash equivalents | 0.7 | 9.4 | 12.6 | 160.2 |
| 20.0 | 29.3 | 363.8 | 497.1 | |
| Non-current assets held for sale | - | 5.6 | - | 95.2 |
| TOTAL ASSETS | 265.1 | 311.1 | 4,723.8 | 5,223.4 |
| EQUITY AND LIABILITIES | ||||
| Capital and reserves | ||||
| Share capital | 22.3 | 22.3 | 318.8 | 318.8 |
| Share premium | 144.6 | 145.4 | 2,247.4 | 2,261.4 |
| Translation reserve | (42.8) | (36.8) | - | - |
| Share option reserve | 1.7 | 1.2 | 24.6 | 17.2 |
| Retained earnings | 30.0 | 131.3 | 161.4 | 1,867.1 |
| Realisation of equity reserve | (10.7) | (10.7) | (140.6) | (140.6) |
| Treasury capital reserve | (15.6) | (25.4) | (385.2) | (548.6) |
| Merger reserve | (10.7) | (10.7) | (154.7) | (154.7) |
| Other reserves | (3.0) | - | (55.0) | - |
| Equity attributable to owners of the parent | 115.8 | 216.6 | 2,016.7 | 3,620.6 |
| Total equity | 115.8 | 216.6 | 2,016.7 | 3,620.6 |
| Non-current liabilities | ||||
| Long-term provisions | 15.1 | 11.7 | 273.4 | 197.7 |
| Long-term liabilities | 86.5 | 12.3 | 1,565.0 | 208.4 |
| Deferred taxation | 14.3 | 38.9 | 259.5 | 660.5 |
| 115.9 | 62.9 | 2,097.9 | 1,066.6 | |
| Current liabilities | ||||
| Trade and other payables | 27.6 | 27.1 | 505.2 | 458.9 |
| Current portion of long term liabilities | 5.2 | 4.1 | 93.5 | 70.3 |
| Current taxation liability (Note 1) | 0.6 | - | 10.5 | 0.8 |
| 33.4 | 31.2 | 609.2 | 530.0 | |
| Liabilities directly associated with non-current assets held for sale | - | 0.4 | - | 6.2 |
| TOTAL EQUITY AND LIABILITIES | 265.1 | 311.1 | 4,723.8 | 5,223.4 |
Note 1: Figures are presented in millions, and values less than GBP0.5 million or R0.5 million, have been rounded to zero.
| Summarised consolidated statement of cash flows for the year ended 30 June 2018 | ||||
| 30 June 2018 | 30 June 2017 | 30 June 2018 | 30 June 2017 | |
| (Audited) | (Audited) | (Unaudited) | (Unaudited) | |
| GBP million (Note 1) | GBP million (Note 1) | ZAR million (Note 1) | ZAR million (Note 1) | |
| NET CASH (USED IN)/GENERATED FROM OPERATIONS AFTER TAXATION, ROYALTIES AND FINANCE CHARGES | (3.3) | 16.5 | (53.2) | 281.0 |
| Dividends paid net of PAR Gold reciprocal dividend | (8.2) | (13.3) | (148.9) | (232.6) |
| NET CASH (USED IN)/GENERATED FROM OPERATING ACTIVITIES | (11.5) | 3.2 | (202.1) | 48.4 |
| INVESTING ACTIVITIES | ||||
| Additions to property, plant and equipment and mineral rights | (92.7) | (35.5) | (1,601.4) | (612.7) |
| Additions to other intangible assets | - | (0.1) | (0.3) | (0.4) |
| Rehabilitation funds contributions | (1.5) | - | (26.2) | - |
| Proceeds on disposals of Property plant and equipment and mineral rights | - | 0.4 | - | 7.0 |
| Increase in long term loans receivables | (0.4) | (1.2) | (6.5) | (20.0) |
| Proceeds from disposal of subsidiary, net of cash | - | 6.6 | - | 111.7 |
| Proceeds on disposals of investment | 4.8 | 1.4 | 89.0 | 23.4 |
| NET CASH USED IN INVESTING ACTIVITIES | (89.8) | (28.4) | (1,545.4) | (491.0) |
| FINANCING ACTIVITIES | - | - | - | - |
| Proceeds from borrowings | 90.0 | 47.8 | 1,535.0 | 817.0 |
| Borrowings repaid | (5.8) | (54.0) | (100.0) | (915.0) |
| Proceeds/(settlement) of financial instruments | 0.9 | (1.4) | 15.5 | (22.9) |
| Proceeds from disposal of treasury shares | 8.9 | - | 149.4 | - |
| Shares issued | - | 40.8 | - | 696.0 |
| Share issue costs | - | (1.4) | - | (24.0) |
| NET CASH FROM FINANCING ACTIVITIES | 94.0 | 31.8 | 1,599.9 | 551.1 |
| NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS | (7.3) | 6.6 | (147.6) | 108.5 |
| Cash and cash equivalents at the beginning of the year | 9.4 | 2.7 | 160.2 | 52.6 |
| Cash and cash equivalents from discontinued operations | - | (0.1) | - | (0.9) |
| Effect of foreign exchange rate changes | (1.4) | 0.2 | - | - |
| CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR | 0.7 | 9.4 | 12.6 | 160.2 |
Note 1: Figures are presented in millions, and values below GBP0.5 million or R0.5 million, have been rounded to zero.
Note 2: The cash settled share option costs have been represented in cash generated from operating activities from financing activities in the current and prior reporting period.
Summarised audited consolidated segment report for the year ended 30 June 2018 | |||||||||||||||||
| 30 June 2018 | 30 June 2017 | ||||||||||||||||
| Continuing operations | Discontinued operations | Continuing operations | Discontinued operations | ||||||||||||||
| Barberton Mines | Evander Mines (Continuing operations) (Note 3) | Corporate office and growth projects | Funding Company | Evander Mines (Discontinued operations) (Note 3) | Phoenix Platinum (Note 4) | Reclassification | Group | Barberton Mines | Evander Mines (Continuing operations) (Note 3) | Corporate office and growth projects | Funding Company | Uitkomst Colliery (Note 5) | Phoenix Platinum (Note 4) | Evander Mines (Discontinued operations) (Note 3) | Reclassification | Group | |
| GBP million | GBP million | GBP million | GBP million | GBP million | GBP million | GBP million | GBP million | GBP million | GBP million | GBP million | GBP million | GBP million | GBP million | GBP million | GBP million | GBP million | |
| Revenue | |||||||||||||||||
| Gold sales (Note 1) | 87.2 | 21.3 | - | - | 47.0 | - | (47.0) | 108.5 | 97.3 | 27.8 | - | - | - | - | 44.5 | (44.5) | 125.1 |
| Platinum Sales | - | - | - | - | - | 1.4 | (1.4) | - | - | - | - | - | - | 4.8 | - | (4.8) | - |
| Coal sales | - | - | - | - | - | - | - | - | - | - | - | - | 25.1 | - | - | (25.1) | - |
| Realisation costs | (0.4) | (1.6) | - | - | (0.7) | - | 0.7 | (2.0) | (0.6) | (0.4) | - | - | - | - | (0.8) | 0.8 | (1.0) |
| On - mine revenue | 86.8 | 19.7 | - | - | 46.3 | 1.4 | (47.7) | 106.5 | 96.7 | 27.4 | - | - | 25.1 | 4.8 | 43.7 | (73.6) | 124.1 |
| Gold cost of production | (65.9) | (11.8) | - | - | (59.5) | - | 59.5 | (77.7) | (61.2) | (14.2) | - | - | - | - | (58.6) | 58.6 | (75.4) |
| Platinum cost of production | - | - | - | - | - | (1.6) | 1.6 | - | - | - | - | - | - | (5.0) | - | 5.0 | - |
| Coal cost of production | - | - | - | - | - | - | - | - | - | - | - | - | (21.7) | - | - | 21.7 | - |
| Depreciation and amortisation | (4.2) | (0.7) | - | - | (6.1) | - | 6.1 | (4.9) | (4.7) | (0.8) | - | - | (0.7) | (0.9) | (5.0) | 6.6 | (5.5) |
| Mining Profit | 16.7 | 7.2 | - | - | (19.3) | (0.2) | 19.5 | 23.9 | 30.8 | 12.4 | - | - | 2.7 | (1.1) | (19.9) | 18.3 | 43.2 |
| Other (expenses)/income (Note 2) | (0.7) | 0.9 | (4.0) | (0.4) | (11.5) | - | 11.5 | (4.2) | 4.6 | 0.5 | (5.5) | 0.1 | 0.2 | (0.1) | (1.8) | 1.7 | (0.3) |
| Loss from associate | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Profit on disposal of investment | - | - | - | - | - | - | - | - | - | - | 0.2 | - | - | - | - | - | 0.2 |
| Profit on disposal of subsidiary | - | - | - | - | - | - | - | - | - | 5.4 | - | - | - | - | - | 5.4 | |
| Continuing operations - impairment costs (Note 6) | - | (8.2) | - | - | (98.1) | - | 98.1 | (8.2) | - | - | - | - | - | (6.0) | - | 6.0 | - |
| Adjustment on sale of asset held for sale | - | - | - | - | - | (0.3) | 0.3 | - | - | - | - | - | - | - | - | - | - |
| Royalty costs | (0.4) | - | - | - | (0.2) | - | 0.2 | (0.4) | (1.0) | (0.1) | - | - | (0.1) | - | (0.2) | 0.3 | (1.1) |
| Net income / (loss) before finance income and finance costs | 15.6 | (0.1) | (4.0) | (0.4) | (129.1) | (0.5) | 129.6 | 11.1 | 34.4 | 12.8 | 0.1 | 0.1 | 2.8 | (7.2) | (21.9) | 26.3 | 47.4 |
| Finance income | 0.2 | 0.8 | 0.4 | 0.1 | 0.5 | - | (0.5) | 1.5 | - | - | 0.1 | 0.2 | 0.1 | - | - | (0.1) | 0.3 |
| Finance costs | - | 0.1 | - | (3.3) | (0.2) | - | 0.2 | (3.2) | - | - | - | (2.8) | - | - | - | - | (2.8) |
| Profit /(loss) before taxation | 15.8 | 0.8 | (3.6) | (3.6) | (128.8) | (0.5) | 129.3 | 9.4 | 34.4 | 12.8 | 0.2 | (2.5) | 2.9 | (7.2) | (21.9) | 26.2 | 44.9 |
| Taxation | (2.3) | 5.6 | (1.2) | - | 24.4 | 0.1 | (24.5) | 2.1 | (5.7) | 2.0 | (0.5) | (0.1) | (0.8) | 0.3 | 4.0 | (3.5) | (4.3) |
| Profit /(loss) after taxation before inter-company charges | 13.5 | 6.4 | (4.8) | (3.6) | (104.4) | (0.4) | 104.8 | 11.5 | 28.7 | 14.8 | (0.3) | (2.6) | 2.1 | (6.9) | (17.9) | 22.7 | 40.6 |
| Loss after taxation from discontinued operations | - | - | - | - | - | (104.8) | (104.8) | - | - | - | - | - | - | - | (22.7) | (22.7) | |
| Profit /(loss) after taxation before inter-company charges | 13.5 | 6.4 | (4.8) | (3.6) | (104.4) | (0.4) | - | (93.3) | 28.7 | 14.8 | (0.3) | (2.6) | 2.1 | (6.9) | (17.9) | - | 17.9 |
| Inter-company transactions | |||||||||||||||||
| Management fees | (2.0) | (0.1) | 1.8 | (0.1) | (0.2) | 0.6 | - | - | (2.8) | (0.8) | 5.7 | (0.1) | (0.4) | (0.3) | (1.3) | - | - |
| inter-company interest charges | (0.3) | - | (0.4) | 3.6 | (2.9) | - | - | - | (0.8) | - | (0.6) | 2.8 | - | 0.1 | (1.5) | - | - |
| Profit /(loss) after taxation after inter-company charges | 11.2 | 6.3 | (3.4) | (0.1) | (107.5) | 0.2 | - | (93.3) | 25.1 | 14.0 | 4.8 | 0.1 | 1.7 | (7.1) | (20.7) | - | 17.9 |
| Segmental assets (Total assets excluding goodwill) | 79.3 | 156.9 | 7.5 | 0.7 | - | - | - | 244.4 | 73.8 | 190.0 | 19.6 | 1.1 | - | 5.6 | - | - | 290.1 |
| Segmental liabilities | 26.9 | 30.7 | 1.6 | 90.5 | - | - | - | 149.7 | 25.2 | 52.5 | 4.6 | 11.9 | - | 0.4 | - | - | 94.6 |
| Goodwill | 21.0 | - | - | - | - | - | - | 21.0 | 21.0 | - | - | - | - | - | - | - | 21.0 |
| Net assets (excluding goodwill) (Note 7) | 52.4 | 126.2 | 5.9 | (89.8) | - | - | - | 94.7 | 48.6 | 137.5 | 15.0 | (10.8) | - | 5.2 | - | - | 195.5 |
| Capital Expenditure (Note 8) | 12.2 | 73.0 | 0.1 | - | - | - | - | 85.3 | 11.2 | 10.2 | 0.1 | - | 0.9 | 0.3 | 12.9 | - | 35.6 |
| Adjusted EBITDA (Note 9) | 19.8 | 8.8 | (4.0) | (0.4) | (15.6) | (0.2) | 15.8 | 24.2 | 39.1 | 13.6 | (5.5) | 0.1 | 3.5 | (0.3) | (16.9) | 13.7 | 47.3 |
Figures are presented in millions, and values less than GBP0.5 million or R0.5 million, have been rounded to zero. Note 1: All gold sales were made in the Republic of South Africa and the majority of revenue was generated from South African financial institutions. | |||||||||||||||||
| Note 2: Other (expenses)/income exclude inter-company management fees and dividends. | |||||||||||||||||
| Note 3: During the current reporting period, Evander Mines underground operations ceased mining on 31 May 2018. The ETRP buy-in operations remain as continuing operations. | |||||||||||||||||
| Note 4: Phoenix was classified as held for sale and as a discontinued operation at 30 June 2017. The Phoenix disposal was concluded on 6 November 2017. | |||||||||||||||||
| Note 5: The disposal of Pan African Resources Coal Holdings Proprietary Limited and Uitkomst was completed on 30 June 2017 and this business was classified as a discontinued operation. | |||||||||||||||||
| Note 6: Impairment costs associated with the continuing operations represent the carrying value of the Kinross and ETRP metallurgical plant infrastructure. | |||||||||||||||||
| Note 7: All assets are held within South Africa. The segmental assets and liabilities above, exclude inter-company balances. | |||||||||||||||||
| Note 8: Capital expenditure comprises of additions to property, plant and equipment and mineral rights and intangible assets. | |||||||||||||||||
| Note 9: Adjusted EBITDA is represented by earnings before interest, taxation, depreciation and amortisation, impairments, discontinued operations and profit/(loss) on disposal of investments. | |||||||||||||||||
| Summarised unaudited consolidated segment report for the year ended 30 June 2018 | |||||||||||||||||
| 30 June 2018 | 30 June 2017 | ||||||||||||||||
| Continuing operations | Discontinued operations | Continuing operations | Discontinued operations | ||||||||||||||
| Barberton Mines | Evander Mines (Continuing operations) (Note 3) | Corporate office and growth projects | Funding Company | Evander Mines (Discontinued operations) (Note 3) | Phoenix Platinum (Note 4) | Reclassification | Group | Barberton Mines | Evander Mines (Continuing operations) (Note 3) | Corporate office and growth projects | Funding Company | Uitkomst Colliery (Note 5) | Phoenix Platinum (Note 4) | Evander Mines (Discontinued operations) (Note 3) | Reclassification | Group | |
| ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | |
| Revenue | |||||||||||||||||
| Gold sales (Note 1) | 1,506.5 | 367.4 | - | - | 811.4 | - | (811.4) | 1,873.9 | 1,679.2 | 479.0 | - | - | - | - | 767.2 | (767.2) | 2,158.2 |
| Platinum Sales | - | - | - | - | - | 24.7 | (24.7) | - | - | - | - | - | - | 82.2 | - | (82.2) | - |
| Coal sales | - | - | - | - | - | - | - | - | - | - | - | 432.8 | - | - | (432.8) | - | |
| Realisation costs | (7.7) | (26.9) | - | - | (12.5) | - | 12.5 | (34.6) | (10.5) | (7.0) | - | - | - | - | (14.0) | 14.0 | (17.5) |
| On - mine revenue | 1,498.8 | 340.5 | - | - | 798.9 | 24.7 | (823.6) | 1,839.3 | 1,668.7 | 472.0 | - | - | 432.8 | 82.2 | 753.2 | (1,268.2) | 2,140.7 |
| Gold cost of production | (1,138.0) | (204.1) | - | - | (1,027.8) | - | 1,027.8 | (1,342.1) | (1,056.2) | (245.2) | - | - | - | - | (1,010.2) | 1,010.2 | (1,301.4) |
| Platinum cost of production | - | - | - | - | - | (28.2) | 28.2 | - | - | - | - | - | - | (86.4) | - | 86.4 | - |
| Coal cost of production | - | - | - | - | - | - | - | - | - | - | - | - | (375.0) | - | - | 375.0 | - |
| Depreciation and amortisation | (72.8) | (12.3) | - | - | (106.1) | - | 106.1 | (85.1) | (81.9) | (13.0) | - | - | (12.2) | (15.0) | (86.2) | 113.4 | (94.9) |
| Mining Profit | 288.0 | 124.1 | - | - | (335.0) | (3.5) | 338.5 | 412.1 | 530.6 | 213.8 | - | - | 45.6 | (19.2) | (343.2) | 316.8 | 744.4 |
| Other (expenses)/income (Note 2) | (12.7) | 14.9 | (69.0) | (7.2) | (198.0) | 0.7 | 197.3 | (74.0) | 81.3 | 8.6 | (95.6) | 1.6 | 2.7 | (2.0) | (30.4) | 29.7 | (4.1) |
| Profit on disposal of investment | - | - | - | - | - | - | - | - | - | - | 4.6 | - | - | - | - | - | 4.6 |
| Profit on disposal of subsidiary | - | - | - | - | - | - | - | - | - | - | 91.3 | - | - | - | - | - | 91.3 |
| Continuing operations - impairment costs (Note 6) | - | (136.6) | - | - | (1,644.5) | - | 1,644.5 | (136.6) | - | - | - | - | - | (100.9) | - | 100.9 | - |
| Adjustment on sale of asset held for sale | - | - | - | - | - | (4.9) | 4.9 | - | - | - | - | - | - | - | - | - | - |
| Royalty costs | (6.5) | (0.7) | - | - | (4.1) | - | 4.1 | (7.2) | (17.5) | (1.7) | - | - | (1.2) | - | (3.8) | 5.0 | (19.2) |
| Net income / (loss) before finance income and finance costs | 268.8 | 1.7 | (69.0) | (7.2) | (2,181.6) | (7.7) | 2,189.3 | 194.3 | 594.4 | 220.7 | 0.3 | 1.6 | 47.1 | (122.1) | (377.4) | 452.4 | 817.0 |
| Finance income | 3.3 | 13.3 | 6.2 | 2.9 | 8.6 | 0.1 | (8.7) | 25.7 | 0.1 | 0.3 | 0.9 | 3.1 | 1.8 | - | 0.6 | (2.4) | 4.4 |
| Finance costs | - | - | (0.1) | (54.2) | - | - | - | (54.3) | (0.4) | - | (0.2) | (47.8) | - | - | (0.2) | 0.2 | (48.4) |
| Profit /(loss) before taxation | 272.1 | 15.0 | (62.9) | (58.5) | (2,173.0) | (7.6) | 2,180.6 | 165.7 | 594.1 | 221.0 | 1.0 | (43.1) | 48.9 | (122.1) | (377.0) | 450.2 | 773.0 |
| Taxation | (40.2) | 95.9 | (18.9) | (0.5) | 421.0 | 0.7 | (421.7) | 36.3 | (97.5) | 35.4 | (9.2) | (1.1) | (13.6) | 4.8 | 68.3 | (59.5) | (72.4) |
| Profit /(loss) after taxation before inter-company charges and discontinued operations | 231.9 | 110.9 | (81.9) | (59.0) | (1,752.0) | (6.9) | 1,758.9 | 202.0 | 496.6 | 256.4 | (8.2) | (44.2) | 35.3 | (117.3) | (308.7) | 390.7 | 700.6 |
| Loss after taxation from discontinued operations | - | - | - | - | - | (1,758.9) | (1,758.9) | - | - | - | - | - | - | - | (390.7) | (390.7) | |
| Profit /(loss) after taxation before inter-company charges | 231.9 | 110.9 | (81.8) | (59.0) | (1,752.0) | (6.9) | - | (1,556.9) | 496.6 | 256.4 | (8.2) | (44.2) | 35.3 | (117.3) | (308.7) | - | 309.9 |
| Inter-company transactions | |||||||||||||||||
| Management fees | (34.0) | (1.5) | 41.0 | (2.0) | (3.5) | - | - | - | (48.4) | (14.1) | 97.9 | (1.6) | (7.6) | (4.5) | (21.7) | - | - |
| inter-company interest charges | (5.1) | - | (6.3) | 62.3 | (50.9) | - | - | - | (13.1) | - | (11.3) | 47.9 | 0.5 | 2.1 | (26.1) | - | - |
| Profit /(loss) after taxation after inter-company charges | 192.8 | 109.4 | (47.1) | 1.3 | (1,806.4) | (6.9) | - | (1,556.9) | 435.1 | 242.3 | 78.4 | 2.1 | 28.2 | (119.7) | (356.5) | - | 309.9 |
| Segmental assets (Total assets excluding goodwill) | 1,434.0 | 2,838.4 | 135.9 | 12.8 | - | - | - | 4,420.1 | 1,251.0 | 3,222.6 | 332.6 | 18.5 | - | 95.2 | - | - | 4,919.9 |
| Segmental liabilities | 486.8 | 555.3 | 28.4 | 1,636.5 | - | - | - | 2,707.0 | 426.7 | 890.1 | 77.8 | 202.0 | - | 6.2 | - | - | 1,602.8 |
| Goodwill | 303.5 | - | - | - | - | - | - | 303.5 | 303.5 | - | - | - | - | - | - | - | 303.5 |
| Net assets (Excluding goodwill) (Note 7) | 947.2 | 2,283.1 | 106.5 | (1,623.7) | - | - | - | 1,713.1 | 824.3 | 2,332.5 | 254.8 | (183.5) | - | 89.0 | - | - | 3,317.1 |
| Capital expenditure (Note 8) | 210.4 | 1,261.4 | 2.2 | - | 176.1 | - | - | 1,650.1 | 193.5 | 222.2 | 1.4 | - | 15.1 | 5.4 | 175.5 | - | 613.1 |
| Adjusted EBITDA (Note 9) | 341.6 | 150.6 | (69.0) | (7.2) | (270.0) | (2.8) | 272.8 | 416.0 | 676.3 | 233.7 | (95.6) | 1.6 | 59.3 | (6.2) | (291.2) | 238.1 | 816.0 |
Figures are presented in millions, and values less than GBP0.5 million or R0.5 million, have been rounded to zero. | |||||||||||||||||
| Note 1: All gold sales were made in the Republic of South Africa and the majority of revenue was generated from South African financial institutions. | |||||||||||||||||
| Note 2: Other (expenses)/income exclude inter-company management fees and dividends. | |||||||||||||||||
| Note 3: During the current reporting period, Evander Mines underground operations ceased mining on 31 May 2018. The ETRP buy-in operations remain as continuing operations. | |||||||||||||||||
| Note 4: Phoenix was classified as held for sale and as a discontinued operation at 30 June 2017. The Phoenix disposal was concluded on 6 November 2017. | |||||||||||||||||
| Note 5: The disposal of Pan African Resources Coal Holdings Proprietary Limited and Uitkomst was completed on 30 June 2017 and this business was classified as a discontinued operation. | |||||||||||||||||
| Note 6: Impairment costs associated with the continuing operations represent the carrying value of the Kinross and ETRP metallurgical plant infrastructure. | |||||||||||||||||
| Note 7: All assets are held within South Africa. The segmental assets and liabilities above, exclude inter-company balances. | |||||||||||||||||
| Note 8: Capital expenditure comprises of additions to property, plant and equipment and mineral rights and intangible assets. | |||||||||||||||||
| Note 9: Adjusted EBITDA is represented by earnings before interest, taxation, depreciation and amortisation, impairments, discontinued operations and profit/(loss) on disposal of investments. | |||||||||||||||||
| Summarised audited consolidated statement of changes in equity for the year ended 30 June 2018 | ||||||||||
| Share capital | Share premium | Translation reserve | Share option reserve | Retained earnings | Realisation of equity reserve | Treasury capital reserve | Merger reserve | Other reserves | Total | |
| GBP million | GBP million | GBP million | GBP million | GBP million | GBP million | GBP million | GBP million | GBP million | GBP million | |
| Balance at 30 June 2016 | 19.4 | 108.9 | (58.6) | 1.0 | 126.8 | (10.7) | (25.4) | (10.7) | 0.3 | 151.0 |
| Issue of shares | 2.9 | 37.9 | - | - | - | - | - | - | - | 40.8 |
| Share issue costs | - | (1.4) | - | - | - | - | - | - | - | (1.4) |
| Profit for the year | - | - | - | - | 17.9 | - | - | - | - | 17.9 |
| Total comprehensive income | - | - | 21.7 | - | - | - | - | - | (0.3) | 21.4 |
| Dividends paid | - | - | - | - | (17.1) | - | - | - | - | (17.1) |
| Reciprocal dividends - PAR Gold | - | - | - | - | 3.8 | - | - | - | - | 3.8 |
| Share based payment - charge for the year | - | - | - | 0.2 | - | - | - | - | - | 0.2 |
| Balance at 30 June 2017 (Note 1) | 22.3 | 145.4 | (36.9) | 1.2 | 131.4 | (10.7) | (25.4) | (10.7) | - | 216.6 |
| Disposal of treasury shares | - | (0.8) | - | - | - | - | 9.8 | - | - | 9.0 |
| Loss for the year | - | - | - | - | (93.3) | - | - | - | - | (93.3) |
| Total comprehensive loss | - | - | (5.9) | - | - | - | - | - | (3.0) | (8.9) |
| Dividends paid | - | - | - | - | (10.0) | - | - | - | - | (10.0) |
| Reciprocal dividends - PAR Gold | - | - | - | - | 1.9 | - | - | - | - | 1.9 |
| Share based payment - charge for the year | - | - | - | 0.5 | - | - | - | - | - | 0.5 |
| Balance at 30 June 2018 | 22.3 | 144.6 | (42.8) | 1.7 | 30.0 | (10.7) | (15.6) | (10.7) | (3.0) | 115.8 |
| Note 1: Due to rounding in the statement of changes in equity, the figures may differ to the summarised consolidated statement of financial position. | ||||||||||
| Summarised unaudited consolidated statement of changes in equity in for the year ended 30 June 2018 | ||||||||||
| Share Capital | Share Premium | Translation reserve | Share option reserve | Retained earnings | Realisation of equity reserve | Treasury capital reserve | Merger reserve | Other reserves | Total | |
| ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | ZAR million | |
| Balance at 30 June 2016 | 269.7 | 1,638.5 | - | 14.0 | 1,789.9 | (140.6) | (548.6) | (154.7) | 6.3 | 2,874.5 |
| Issue of shares | 49.1 | 646.9 | - | - | - | - | - | - | - | 696.0 |
| Share issue costs | - | (24.0) | - | - | - | - | - | - | - | (24.0) |
| Profit for the year | - | - | - | - | 309.9 | - | - | - | - | 309.9 |
| Total comprehensive income | - | - | - | - | - | - | - | - | (6.3) | (6.3) |
| Dividends paid | - | - | - | - | (300.0) | - | - | - | - | (300.0) |
| Reciprocal dividends - PAR Gold | - | - | - | - | 67.4 | - | - | - | - | 67.4 |
| Share based payment - charge for the year | - | - | - | 3.2 | - | - | - | - | - | 3.2 |
| Balance at 30 June 2017 (Note 1) | 318.8 | 2,261.4 | - | 17.2 | 1,867.2 | (140.6) | (548.6) | (154.7) | - | 3,620.7 |
| Disposal of treasury shares | - | (14.0) | - | - | - | - | 163.4 | - | - | 149.4 |
| Loss for the year | - | - | - | - | (1,556.9) | - | - | - | - | (1,556.9) |
| Total comprehensive loss | - | - | - | - | - | - | - | - | (55.0) | (55.0) |
| Dividends paid | - | - | - | - | (185.0) | - | - | - | - | (185.0) |
| Reciprocal dividends - PAR Gold | - | - | - | - | 36.1 | - | - | - | - | 36.1 |
| Share based payment - charge for the year | - | - | - | 7.4 | - | - | - | - | - | 7.4 |
| Balance at 30 June 2018 | 318.8 | 2,247.4 | - | 24.6 | 161.4 | (140.6) | (385.2) | (154.7) | (55.0) | 2,016.7 |
Note 1: Due to rounding in the statement of changes in equity, the figures may differ to the summarised consolidated statement of financial position.
Unaudited alternative performance measures summary for the period ended 30 June 2018
| 30 June 2018 | 30 June 2017 | PRODUCTION CASH COST, ALL-IN SUSTAINING COSTS AND ALL-IN COSTS | 30 June 2017 | 30 June 2018 |
| USD million | USD million | ZAR million | ZAR million | |
| 186.5 | 170.9 | Cash costs | 2,322.3 | 2,397.5 |
| 184.3 | 170.1 | Gold cost of production | 2,311.6 | 2,369.9 |
| 3.7 | 2.3 | Realisation costs | 31.5 | 47.1 |
| (1.5) | (1.5) | Care and maintenance costs | (20.8) | (19.5) |
| 218.1 | 204.2 | All-in sustaining costs | 2,772.7 | 2,802.1 |
| 186.5 | 170.9 | Cash costs | 2,322.3 | 2,397.5 |
| 0.9 | 1.7 | Royalties | 23.0 | 11.3 |
| 1.1 | 1.7 | Community costs related to gold operations | 22.7 | 13.6 |
| (0.1) | (0.2) | By-product credits | (3.3) | (1.9) |
| 7.3 | 6.9 | Corporate general and administrative costs | 93.1 | 94.4 |
| 9.1 | 10.7 | Development capital (sustaining) | 145.4 | 116.5 |
| 13.3 | 12.5 | Maintenance capital expenditure (sustaining) | 169.5 | 170.7 |
| 238.7 | 214.6 | All-in costs | 2,914.3 | 3,067.8 |
| 218.1 | 204.2 | All-in sustaining costs | 2,772.7 | 2,802.1 |
| 8.1 | 7.4 | Capital expenditure (non-sustaining) | 100.8 | 104.7 |
| 12.5 | 3.0 | Voluntary severance pay/retrenchment costs (non-sustaining) | 40.8 | 161.0 |
| 30 June 2018 | 30 June 2017 | 30 June 2017 | 30 June 2018 | |
| GBP million | GBP million | SUMMARY OF ADJUSTED EBITDA | ZAR million | ZAR million |
| 24.2 | 47.3 | Adjusted EBITDA | 816.0 | 416.0 |
| (93.3) | 17.9 | Loss/profit after taxation | 309.9 | (1,556.9) |
| (2.1) | 4.3 | Taxation | 72.4 | (36.3) |
| 3.2 | 2.8 | Finance costs | 48.4 | 54.3 |
| (1.5) | (0.3) | Finance income | (4.4) | (25.7) |
| 8.2 | - | Impairments | - | 136.6 |
| - | (5.4) | Profit on disposal of subsidiary | (91.3) | - |
| - | (0.2) | Profit on disposal of investment | (4.6) | - |
| 4.9 | 5.5 | Mining depreciation and amortisation | 94.9 | 85.1 |
| 104.8 | 22.7 | Profit after tax on discontinued operations | 390.7 | 1,758.9 |
| 30 June 2018 | 30 June 2017 | AUDITED HEADLINE EARNINGS AND HEADLINE EARNINGS PER SHARE FROM COMBINED OPERATIONS | 30 June 2017 | 30 June 2018 |
| GBP million | GBP million | ZAR million | ZAR million | |
| (93.3) | 17.9 | Basic earnings | 309.9 | (1,556.9) |
| - | (0.2) | Profit on disposal of investment | (4.6) | - |
| - | Taxation on profit on disposal of investment | 1.0 | ||
| - | (5.4) | Profit on disposal of subsidiary | (91.3) | - |
| 0.3 | - | Adjustment on sale of asset held for sale | - | 4.9 |
| - | - | Profit on disposal of property plant and equipment | (0.4) | - |
| - | - | Taxation on profit on disposal of property plant and equipment | 0.1 | - |
| 106.3 | 6.0 | Impairment | 100.9 | 1,781.1 |
| 13.3 | 18.3 | Headline earnings | 315.6 | 229.1 |
| 0.73 | 1.17 | Headline earnings per share | 20.17 | 12.66 |
| 0.73 | 1.17 | Diluted headline earnings per share | 20.17 | 12.66 |
| 30 June 2018 | 30 June 2017 | AUDITED HEADLINE EARNINGS AND HEADLINE EARNINGS PER SHARE FROM CONTINUING OPERATIONS | 30 June 2017 | 30 June 2018 |
| GBP million | GBP million | ZAR million | ZAR million | |
| 11.5 | 40.6 | Basic earnings | 700.6 | 202.0 |
| - | (0.2) | Profit on disposal of Investment | (4.6) | - |
| - | Taxation on profit on disposal of Investment | 1.0 | ||
| - | (5.4) | Profit on disposal of subsidiary | (91.3) | - |
| - | - | Profit on disposal of property plant and equipment | - | - |
| - | - | Tax on profit on disposal of property plant and equipment | - | - |
| 8.2 | - | Impairment | - | 136.6 |
| 19.6 | 35.0 | Headline earnings | 605.7 | 338.6 |
| 1.08 | 2.24 | Headline earnings per share | 38.72 | 18.71 |
| 1.08 | 2.24 | Diluted headline earnings per share | 38.70 | 18.71 |
| 30 June 2018 | 30 June 2017 | NET DEBT FOR THE GROUP | 30 June 2017 | 30 June 2018 |
| GBP million | GBP million | ZAR million | ZAR million | |
| 89.8 | 4.1 | Net debt | 67.6 | 1,623.6 |
| 47.9 | 11.9 | Revolving credit facility | 201.2 | 866.2 |
| 42.6 | - | Elikhulu term loan facility | - | 770.0 |
| - | 1.6 | Gold loan | 26.6 | - |
| (0.7) | (9.4) | Cash and cash equivalents | (160.2) | (12.6) |
| 30 June 2018 | 30 June 2017 | Metric | CASH COST PER OUNCE AND KILOGRAMME | Metric | 30 June 2017 | 30 June 2018 |
| 1,162 | 986 | USD/oz | Cash cost | ZAR/kg | 430,863 | 480,439 |
| 186.5 | 170.9 | USD million | Cash costs | ZAR million | 2,322.3 | 2,397.5 |
| 160,444 | 173,285 | Oz | Gold sold | kg | 5,390 | 4,990 |
| 30 June 2018 | 30 June 2017 | Metric | ALL-IN SUSTAINING COST PER OUNCE AND KILOGRAMME | Metric | 30 June 2017 | 30 June 2018 |
| 1,358 | 1,177 | USD/oz | All-in sustaining cost | ZAR/kg | 514,435 | 561,468 |
| 218.1 | 204.2 | USD million | All-in sustaining costs | ZAR million | 2,772.7 | 2,802.1 |
| 160,444 | 173,285 | oz | Gold sold | kg | 5,390 | 4,990 |
| 30 June 2018 | 30 June 2017 | Metric | ALL-IN COST PER OUNCE AND KILOGRAMME | Metric | 30 June 2017 | 30 June 2018 |
| 1,487 | 1,237 | USD/oz | All-in cost | ZAR/kg | 540,693 | 614,713 |
| 238.7 | 214.6 | USD million | All-in costs | ZAR million | 2,914.3 | 3,067.8 |
| 160,444 | 173,285 | Oz | Gold sold | kg | 5,390 | 4,990 |
| Contact information | |
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Registered Office Suite 31 Second Floor 107 Cheapside London EC2V 6DN United Kingdom Office: + 44 (0) 207 796 8644 Facsimile: + 44 (0) 207 796 8645 |
|
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 / Paul Gillam Numis Securities Limited Nominated Adviser and Joint Broker Office: +44 (0) 20 7260 1000 |
|
Sholto Simpson One Capital JSE Sponsor Office: + 27 (0) 11 550 5009 |
Ross Allister/James Bavister/David McKeown Peel Hunt LLP Joint Broker Office: +44 (0) 207 418 8900 |
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Julian Gwillim Aprio Strategic Communications Public & Investor Relations SA Office: +27 (0)11 880 0037 |
Jeffrey Couch /Thomas Rider BMO Capital Markets Limited Joint Broker Office: +44 (0) 207 236 1010 |
|
Bobby Morse Buchanan Public & Investor Relations UK Office: +44 (0)20 7466 5000 Email: PAF@buchanan.uk.com | |
| Website: www.panafricanresources.com | |
