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PAN AFRICAN RESOURCES PLC - Provisional Summarised Audited Results for the year ended 30 June 2020 - Short Form Announcement

2020/09/16 08:00:00

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                    Provisional Summarised Audited Results for the year ended 30 June 2020 - Short Form Announcement

Pan African Resources PLC
(Incorporated and registered in England and Wales under the Companies Act 1985 with registered number 3937466
on 25 February 2000)
Share code on AIM: PAF
Share code on JSE: PAN
ISIN: GB0004300496
ADR ticker code: PAFRY
(Pan African or the Company or the Group)
(Key features are reported in US dollar (US$) and South African rand (ZAR))

PROVISIONAL SUMMARISED AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2020 – SHORT FORM
ANNOUNCEMENT

KEY FEATURES
  •     The Group responded swiftly in implementing stringent policies and protocols to mitigate the impact of the
        COVID-19 pandemic on its employees and operations
  •     Gold production increased by 4.1% to 179,457oz after final refinery adjustments (2019: 172,442oz),
        exceeding the revised full-year production guidance of 176,000 oz
  •     Industry-leading safety performance, both in terms of lost-time injury and reportable injury frequency rates
  •     Revenue increased by 25.9% to US$273.7 million (2019: US$217.4 million)
  •     Profit after taxation increased by 16.6% to US$44.3 million (2019: US$38.0 million)
  •     Headline earnings increased by 93.0% to US$44.2 million (2019: US$22.9 million)
  •     Headline earnings per share increased by 92.4% to US 2.29 cents per share (2019: US 1.19 cents per share)
  •     Earnings per share increased by 16.8% to US 2.30 cents per share (2019: US 1.97 cents per share)
  •     Net cash generated by operating activities increased by 42.7% to US$53.8 million (2019: US$37.7 million)
  •     Net senior debt* decreased by 51.9% to US$62.0 million (2019: US$129.0 million)
  •     Improved net debt to net adjusted EBITDA ratio of 0.7 (2019: 2.2)
  •     Low-cost operations (including Elikhulu, BTRP and Barberton Mines’ Fairview Mine) achieved an AISC of
        US$826/oz for the Reporting Period
  •     The development of Evander Mines’ Egoli project has commenced. The project’s payback is estimated at less
        than five years from inception of construction, with funding provided on a non-dilutive basis by means of a
        dedicated debt facility
  •     Production guidance increased to 190,000oz for the year ending 30 June 2021
  •     The board has proposed a record final dividend of ZAR 312.9 million or approximately US$18.7 million, at
        prevailing exchange rates, subject to approval by shareholders at the annual general meeting (AGM)
(*Net senior debt includes senior interest-bearing debt and the outstanding gold loan balance, net of available cash)

CHIEF EXECUTIVE OFFICER’S STATEMENT

'Over the past year, our Group's operations demonstrated their resilience, with gold production in excess of the
revised guidance for the year ended 30 June 2020 (Reporting Period). This operational performance was achieved
despite the impact of the COVID-19 pandemic and the resultant restrictions imposed to curb the spread of the virus –
a testament to the robustness and operational flexibility of our diversified portfolio of assets.

Gold production from Elikhulu and the Barberton Tailings Retreatment Plant (BTRP), our low-cost surface retreatment
operations, have contributed significantly to the profitability of the Group and demonstrated the benefit of multiple
producing operations.

We are pleased to confirm that we remain firmly on track to deliver into our guided gold production of 190,000oz for
the year ending 30 June 2021, a substantial increase compared to the revised production guidance of 176,000oz for
the Reporting Period.

We successfully levered the Group's operational execution capability to bring Evander Mines' 8 Shaft (8 Shaft) pillar
project and the Prince Consort (PC) Shaft's Level 42 development at Barberton Mines’ New Consort Mine into steady-
state production, and these operations are now an integral part of our strategy to further reduce costs and increase
margins at our underground mines.
Our Group's safety performance during the Reporting Period is commendable and we will remain unrelenting in the
pursuit of our ultimate goal of zero harm in the years ahead. We are deeply saddened by the fatality that occurred
after the Reporting Period, as outlined in the subsequent events section further in the announcement.

Pan African’s earnings for the Reporting Period were adversely affected by COVID-19. This impact was however largely
offset by the robust gold price and by our ability to expeditiously ramp up gold production, in line with government
directives, post the initial hard lockdown period. Despite the impact of COVID-19, we are pleased to report increased
earnings for the Group this year.

We reduced net debt during the Reporting Period by 41.2% to US$76.4 million (2019: US$129.9 million), which resulted
in a significantly improved net debt to net adjusted EBITDA ratioAPM of 0.7 (2019: 2.2).

Group all-in sustaining costs (AISC) of US$1,147/oz includes realised hedge losses of US$12.0 million. Excluding these
realised losses, the Group’s AISC decreased to US$1,078/oz (2019: US$988/oz), which is more reflective of the actual
operational costs and in line with the Group’s targeted AISC of US$1,000/oz. The AISC for the Group’s low-cost
operations, comprising Elikhulu, BTRP and Barberton Mines’ Fairview Mine, was US$826/oz for the Reporting Period.
We believe the Group is well on track to produce at an AISC of below US$1,000/oz for the 2021 financial year.

Our robust operational and financial performance over the past year, together with a positive outlook for the year
ahead, has enabled the board to recommend a record dividend of ZAR312.9 million, or US 0.83582 cents per share,
for approval by shareholders at the upcoming AGM.

The Group will continue to invest in our compelling organic growth projects, most notably the recently announced
long-life Egoli project, which capitalises on the substantial existing shaft and plant infrastructure, and is also fully
licenced and 'shovel-ready'. We are pleased to announce that following the successful completion of the feasibility
study, the Group has obtained credit approval from Rand Merchant Bank for the full debt funding of the project’s
capital expenditure. Additional detail on the Egoli project’s development and funding is provided further in the
announcement.

We have prioritised our environmental, social and governance initiatives, as evidenced by the level of rehabilitation
spend for the Reporting Period, and board approval for the implementation of a number of significant and sustainable
development projects. These include the 10MW renewable energy solar photovoltaic plant at Elikhulu and a large-
scale agriculture project at Barberton Mines. The merits of a similar solar photovoltaic plant are also being considered
for Barberton Mines, as well as new agriculture projects on rehabilitated land at Evander Mines.

We are acutely conscious of the ongoing impact of the COVID-19 pandemic and will continue to implement stringent
preventative and precautionary measures to limit incidences of infection among our employees and in our host
communities, and minimise the potential adverse impact of the pandemic on the Group 's operations.

In the year ahead, aligned to our strategy of delivering safe, sustainable and high-margin gold production, we will
continue to direct our focus on creating shareholder value by optimising our operations, further de-gearing our
balance sheet and increasing dividend distributions. Furthermore, we will also continue investing in our host
communities to improve the living conditions of these critical stakeholders.

My sincere thanks and gratitude to all of the management and employees of Pan African for their contribution to the
Group through this difficult time and for ensuring the sustainability of our operations, now and into the future.'



PROPOSED DIVIDEND FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

The board has proposed a final dividend of ZAR312.9 million for the 2020 financial year (approximately US$18.7
million), equal to ZA 14.00000 cents per share or approximately US 0.83582 cents per share (0.65451 pence per share).
The dividend is subject to approval by shareholders at the AGM, which is convened for Thursday, 26 November 2020.
In light of the robust results for the Reporting Period and the favourable financial prospects for the operations in the
2021 financial year, the board has applied its discretion and has proposed a dividend in excess of the Company’s
dividend policy’s guidelines, which provide for a 40% payout ratio of net cash generated from operating activities.

Assuming shareholders approve the final dividend, the following salient dates would apply:

 Currency conversion date                                                                Thursday, 26 November 2020
 Annual General Meeting                                                                  Thursday, 26 November 2020
 Currency conversion announcement released by 11:00 (SA time)                              Friday, 27 November 2020
 Last date to trade on the JSE                                                             Tuesday, 1 December 2020
 Last date to trade on the LSE                                                           Wednesday, 2 December 2020
 Ex-dividend date on the JSE                                                             Wednesday, 2 December 2020
 Ex-dividend date on the LSE                                                              Thursday, 3 December 2020
 Record date on the JSE and LSE                                                             Friday, 4 December 2020
 Payment date                                                                             Tuesday, 15 December 2020


The pound sterling (GBP) and US$ proposed final dividend was calculated based on a total of 2,234,687,537 shares in
issue and an illustrative exchange rate of US$/ZAR:16.75 and GBP/ZAR:21.39, respectively. Shareholders on the
London register should note that a revised exchange rate will be communicated before approval at the AGM.

No transfers between the Johannesburg and London registers, between the commencement of trading on Wednesday,
2 December 2020 and close of business on Friday, 4 December 2020 will be permitted.

No shares may be dematerialised or rematerialised between Wednesday, 2 December 2020 and Friday, 4 December
2020, both days inclusive.

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 11.20000 cents per share. Foreign investors may qualify for a lower dividend
taxation rate, subject to completing a dividend taxation declaration and submitting it to Computershare Investor
Services Proprietary Limited or Link Asset Services, who manage the South African and UK registers, respectively. The
Company's South African income taxation reference number is 9154588173. The proposed dividend will be paid out
of the Company's retained earnings, without drawing on any other capital reserves.


AUDIT OPINION

The Group's external auditor, PricewaterhouseCoopers LLP ('PwC'), have issued their opinion on the consolidated
annual financial statements for the year ended 30 June 2020.

There have been two key audit matters identified by PwC which relate to the Impairment assessments of goodwill,
intangible assets and property, plant and equipment and mineral rights – Group, and the Impact of COVID-19 –
Group and Parent Company. Further details on these key audit matters can be found in the full auditor’s report
which is available on the Company’s website https://www.panafricanresources.com/wp-content/uploads/Pan-
African-Resources-integrated-annual-report-2020.pdf.

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 provisional 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 provisional summarised audited results for the
year ended 30 June 2020, but this short-form announcement itself has not been reviewed by the Company’s auditors.
The provisional summarised audited results have been prepared under the supervision of the Financial Director, Deon
Louw. This short-form announcement is the responsibility of the directors of Pan African and is only a summary of the
information contained in the full announcement.

Any investment decisions should be based on the full announcement and the group’s detailed operational and financial
summaries.


AVAILABILITY OF FULL ANNOUNCEMENT

The full announcement is accessible via the JSE link at
https://senspdf.jse.co.za/documents/2020/jse/isse/pan/FYE2020.pdf
and via the Company’s website at https://www.panafricanresources.com/wp-content/uploads/Pan-African-
Resources-year-end-results-SENS-announcement-2020.pdf

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 South Africa and the AIM market of the London Stock Exchange
(AIM) as well as a sponsored level 1 ADR programme in the USA through the Bank of New York Mellon


For further information on Pan African, please visit the Company's website at

www.panafricanresources.com

Rosebank
16 September 2020

Contact information

Corporate Office                                 Registered Office

The Firs Office Building                         Suite 31

2nd Floor, Office 204                            Second Floor

Cnr. Cradock and Biermann Avenues                107 Cheapside

Rosebank, Johannesburg                           London

South Africa                                     EC2V 6DN

Office: + 27 (0)11 243 2900                      United Kingdom

info@paf.co.za                                   Office: + 44 (0)20 7796 8644

Cobus Loots                                      Deon Louw

Pan African Resources PLC                        Pan African Resources PLC

Chief Executive Officer                          Financial Director

Office: + 27 (0)11 243 2900                      Office: + 27 (0)11 243 2900

Phil Dexter/Jane Kirton                          Ross Allister/David McKeown

St James's Corporate Services Limited            Peel Hunt LLP

Company Secretary                                Nominated Adviser and Joint Broker

Office: + 44 (0)20 7796 8644                     Office: +44 (0)20 7418 8900

Ciska Kloppers                                   Thomas Rider/Neil Elliot

Questco Corporate Advisory Proprietary Limited   BMO Capital Markets Limited

JSE Sponsor                                      Joint Broker

Office: + 27 (0)11 011 9200                      Office: +44 (0)20 7236 1010

Hethen Hira                                      Website: www.panafricanresources.com
Pan African Resources PLC

Head: Investor Relations
Tel: + 27 (0)11 243 2900
E-mail: hhira@paf.co.za

Date: 16-09-2020 08:00:00
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