contents
the year at a glance ..............................................................................................................2
focus areas and competitive advantage ..................................................................3
geographic location ............................................................................................................4
corporate profile and strategy ....................................................................................5
chairman’s statement ...........................................................................................................6
chief executive officer’s report ...................................................................................8
mining operations: barberton mines (pty) ltd .....................................................14
groWth proJects: amira, eagle’s nest and thomas victory-hill,
barberton, south africa ...................................................................................................17
groWth proJects: manica, mozambique ...................................................................18
groWth proJects: bogoin and dekoa, central african republic .............19
groWth proJects: akrokerri, kyereboso and u&n, ghana ............................20
gross in situ mineral resource and mineral reserve statement
for the enlarged group ....................................................................................................21
directors ....................................................................................................................................23
corporate governance .....................................................................................................25
directors’ report ..................................................................................................................30
statement of directors’ responsibilities ..............................................................33
independent auditors’ report to the members of pan african
resources plc ...........................................................................................................................34
consolidated and company income statements ...............................................35
consolidated and company balance sheets .........................................................36
consolidated and company cash floW statements .........................................38
consolidated and company statement of recognised income and
expense .........................................................................................................................................39
consolidated and company notes to the financial statements ............ 40
notice of annual general meeting ..........................................................................68
form of proxy ................................................................................................................insert
contact details ......................................................................................................................71
note to shareholders
on 31 July 2007 pan african resources plc (‘pan african’, the ‘company’ or ‘group’) acquired 74% of barberton mines (pty) limited (‘barberton’
or ‘barberton mines’) in a share-for-share transaction. ifrs3 ‘business combinations’ defines the acquirer in a business combination as the entity that
obtains control. accordingly, the combination was accounted for as a reverse. as a consequence of applying reverse acquisition accounting, the results
of the group at 30 June 2008 comprise the results of pan african for the 11 months ended 30 June 2008 and the 12 months ended 30 June 2008 of
barberton mines. the comparative figures for the group are those of barberton mines for the 12 months to 30 June 2007.
in terms of comparing pan african’s position before the acquisition of barberton mines reference is made on pages 3, 7 and 9 to pan african’s financial
position before and after the acquisition which does not treat the transaction as a reverse as per ifrs 3. this is done to allow management to highlight
the benefits of the transaction as set out in the readmission document of 31 July 2007.
the year at a glance
h
s
a
c
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n
M
o
c
e
B
I
e
V
I
t
I
s
o
P
g
n
I
K
c
a
r
t
t
s
a
F
h
t
W
o
r
g
F
o
s
t
c
e
J
o
r
P
acquisition of producing gold mine
July 2007
the acquisition of a 74% shareholding in barberton mines, mpumalanga, south africa was completed and
barberton had its first full year under the management of pan african resources plc.
power supply in south africa
February 2008
in line with the requirements placed on the mining industry, barberton initiated a 10% elective power
saving plan. through careful planning the adverse effects of the power crisis in south africa was by and
large ameliorated.
mining conventions signed in the central african republic
February and April 2008
mining conventions were signed with the government of the central african republic (‘car’) for the
bogoin and dekoa gold exploration projects.
resource upgrade at the manica gold project in mozambique
March 2008
the resource at manica was increased by 29.75 %, from 1.311moz to 1.701moz. the pre-feasibility study
is ongoing and has been delayed as a result of the mining optimisation. the company expects the process
to be complete by the end of the next financial year.
I
r
U
o
F
o
g
n
n
e
h
t
g
n
e
r
t
s
appointment of executive chairman
October 2007
pan african welcomed keith spencer to the board as the new executive chairman. keith replaced colin
bird who held a non-executive chairman position within the group.
M
a
e
t
appointment of financial director
February 2008
in line with the undertaking given to shareholders on the completion of the acquisition of barberton mines,
maritz smith was appointed as the executive financial director for pan african.
appointment of an independent, non-executive director
June 2008
John hopwood was appointed to the board of directors in the role of an independent, non-executive
director. John brings a great deal of experience to the board from both a mining and financial persepective,
being a non-executive director of gold fields and a previous partner of deloitte.
•
D preservation and growth of capital.
a
e
h
a
•
•
acquisition of further cash generative mining assets.
use strategic partnerships to grow mineable reserve base.
e
h
t
r
a
e
y
2
FocUs areas anD coMPetItIVe aDVantage
FocUs areas
oUr coMPetItIVe aDVantage
caPItal
generatIVe
•
•
•
revenue: £39.3 million
ebitda: £13.9 million
attributable profit: £ 5.5 million
costs
•
•
•
production cost: £25.2 million
total cash cost: us$ 476/oz
industry average: us$ 750/oz
sKIlleD PeoPle
•
•
•
broad skill base and technical depth
mining and metallurgy expertise coupled with exploration experience
team of 1,491 people
sUstaInaBle
groWth
•
•
•
geographical and political risk diversification
organic growth: capital expenditure of £3.0 million at barberton mines
acquisitive growth – 4 projects at a cost of £3.2 million during the last 18
months
strategIc
PartnershIPs
•
•
•
metorex limited (53.95% shareholder): first right of refusal on any gold
project developed
pangea exploration (pty) limited (4.14% shareholder): first right of
refusal on any gold project developed
shanduka resources (26% black economic empowered (‘bee’) owner of
barberton mines)
3
geograPhIc locatIon
4
corPorate ProFIle anD strategy
Pan african’s strategy is to continue building and growing a
profitable gold mining business.
the group has an exciting pipeline of projects, in addition to its barberton gold mine in mpumalanga, south africa, which
produces approximately 100,000oz of gold per annum.
the group’s growth projects are divided between on-mine and off-mine, as detailed below:
on-mine *
1. thomas victory-hill
2. amira
3. eagles nest
off-mine **
1. manica, mozambique (completing pre-feasibility study)
2. bogoin, central african republic (advanced - drilling)
3. dekoa, central african republic (early stage - soil sampling)
4. akrokerri, ghana (advanced - drilling)
5. kyereboso, ghana (advanced - drilling)
6. u&n, ghana (early stage - soil sampling)
* on-mine: projects on or around current mining areas
** off-mine: projects not close to any mining infrastructure
5
chaIrMan’s stateMent
Keith spencer
the group has run for the past eleven months as both
a mining and an exploration entity, having bedded
down the acquisition of barberton mines, creating an
emerging mid-tier gold mining company. the reverse
acquisition of barberton mines brought in metorex
limited as a major shareholder and this, together with
the previous association with pangea exploration, has
formed an exciting mix of mining and exploration skills
to take the company forward.
barberton had a good year, buoyed by the gold price.
the profits from these operations were ploughed back
into the group’s exploration efforts in mozambique, the
central african republic (‘car’)
and ghana.
exploration drilling at manica in
mozambique has been completed,
and a variety of studies are underway
on that property to determine if
there is a viable opportunity for a
mine, while taking into consideration
the location, infrastructure and fiscal
regime.
efforts in the car were stepped
up with the soil sampling at both
properties, bogoin and dekoa being
completed. reverse circulation
(‘rc’) drilling has commenced
in earnest at bogoin, to test the
anomalies which were identified, and in the coming year
it is hoped initial drilling will be completed on both
properties. this phase of drilling has been designed to
narrow down potential targets in what we believe to be
a highly prospective greenstone belt. during the year, a
mining convention for bogoin was successfully signed
with the government of the car.
6
“the golD MarKet
haD a sPectacUlar
year”
in ghana, a well-known gold province, earn-in
agreements have been concluded on two properties,
namely: kyereboso and u&n. the group acquired a
90% stake on the third property, akrokerri, on 27 june
2007. due to the nature of these agreements, the plan
is to move fast to either prove a viable ore reserve, or to
return them to their original vendors.
the mining operations at barberton’s three mines, new
consort, sheba and fairview, continued satisfactorily.
revenue was enhanced by not only the gold price, but
also the retreatment of the old dump which emanated
from the roasting process terminated in the 1980’s,
known as the calcine dump.
costs, although well managed by
the operations, were up sharply on
the tail of the increased fuel and
steel prices. since year end the
calcine retreatment process has
come to an end; however, this drop
in revenue will, to an extent, be
offset by the fact that, the group is
now totally unhedged.
the barberton area has been a
productive gold mining area for
the 130 years. during that time,
at regular
intervals, major pay
shoots have been discovered. in
this philosophy,
keeping with
is underway
to make further discoveries, as well as to explore areas
which were initially mined on surface but not followed
underground.
a concerted effort
the exploration projects remain robust, and will
be managed with the cashflows from the barberton
operations.
chaIrMan’s stateMent
electricity supply in south africa, where the barberton
operations are situated, remains a concern. the mines
are involved in a process to reduce their demand, in line
with all other south african consumers, and will continue
to engage with eskom, the electricity distributor, to
minimise downtime due to planned outages. the
operations have their own generators to keep essential
services in the gold treatment plant operational.
the gold market in south african rand terms had a
spectacular year, riding somewhat on the back of the
increasing oil price. however, post the year end, we
have seen a collapse in World economies and, although
the fundamentals for gold still remain sound in these
turbulent times, and the price remains strong in south
african rand, gold remains a safe haven, and newly
mined gold volumes are dropping worldwide, which in
the longer term must be positive for the market.
in
the world-wide collapse
stock markets and
commodities will have a knock-on effect on the group.
We, like all other mid-tier producers and explorers, will
have to adapt to the new circumstances and must review
our exploration programmes going forward. times like
the world is experiencing at the moment also bring with
them opportunities for Joint ventures (‘Jvs’) and mergers
with other gold exploration companies, and pan african
is currently well positioned to take advantage of these
opportunities.
going forward, the group will endeavour to preserve
capital and judiciously evaluate projects so that it weathers
these tough times, emerging stronger in better years to
come.
during the year, nathan steinberg resigned as the
financial director and was replaced by maritz smith.
i would like to thank nathan for his tireless efforts in
looking after the finances of the company, and welcome
maritz.
John hopwood also joined the board as a non-executive
director, and brings with him years of experience in the
gold mining industry. he will be a great asset to the
group. my sincere thanks go to my fellow directors, and
to Jan nelson, our ceo, and his team for their efforts
during the past year.
kc spencer
chairman
24 november 2008
graph showing Pan african’s audited profit / loss status for 18 months to 31 March 2006
and 15 months to 30 June 2007, before the acquisition of Barberton Mines and post
acquisition for 12 months to 30 June 2008
GBP
(000)
6,000
5,000
4,000
3,000
2,000
1,000
0
(1,000)
Acquisition of
Barberton Mines
18 Months to
31 March
2006
15 Months to
30 June 2007
12 Months to
30 June 2008
7
chIeF execUtIVe oFFIcer’s rePort
“We haVe sUccessFUlly transForMeD
the coMPany to a ProFItaBle golD
MInIng BUsIness WIth a strong Balance
sheet anD an exPerIenceD ManageMent
teaM alloWIng Us to realIse FUrther
oPPortUnItIes to groW at a tIMe When
access to caPItal resoUrces Is lIMIteD”
Jan nelson
MInIng ProFIt
eBItDa
283%
141%
total cash
costs
heaDlIne earnIngs
Per share
8
2.37%
49%
chIeF execUtIVe oFFIcer’s rePort
during the year ended 30 June 2008, the group successfully completed the acquisition of barberton mines in south africa,
effective 31 July 2007 which transformed the company from a junior gold explorer to an emerging mid-tier gold producer.
the company also invested significant capital and human resources to advance its portfolio of growth projects.
reVIeW oF strategIc oBJectIVes
before a review of operation results it would be prudent to review the strategic objectives that were envisaged by the board
as a result of the acquisition of barberton mines (as set out in the re-admission document or pre-listing statement dated 31
July 2007). a summary comparing intended objectives to those achieved are listed in the table below:
strategic objective
achieved result
turn group from loss-making position
to profitable
attributable profit of £5.5 million (12 months
ended 30 June 2008) from loss of £922,450 (15
months ended 30 June 2007)
establish the group as a producer
100,000oz/annum of gold
fund all operational activity in-house
£3.0million spent on capital expenditure *
fund and accelerate exploration activity
£3.1million spent on exploration *
acquire a mining skills base
skills base increased to 1,491 employees
provide capital to grow exploration
activity in ghana
acquired rights to three properties in ghana
initiate £1.0 million exploration
programme on the mine
£1.0 million allocated over two years and
exploration programme started
1
2
3
4
5
6
7
* this relates to fixed asset additions and capitalised exploration costs
9
chIeF execUtIVe oFFIcer’s rePort
ebitda for the period under review was £13.9
million, which incorporates 12 months of barberton
mines and 11 months of pan african (as the transaction
only became effective on 31 July 2007, one month into
the financial year reported on).
aVerage golD PrIce receIVeD (Us$/oZ) coMPareD to
total cash costs (Us$/oZ)
1200
1000
gloBal MarKets anD
golD PrIce
at the time of the barberton transaction the board of
directors believed that a slow-down in funding for
exploration companies was imminent and therefore
the group had to
transform itself so as
to fund its ongoing
activities itself. the
group changed its
strategic focus from
gold
exploration
gold mining.
to
to this effect pan
african
acquired
barberton mines,
generated
which
sufficient
capital,
to
and
accelerate
grow the exploration
this
portfolio.
was achieved in a
market where access
to capital became
increasingly difficult
and most exploration
activity slowed down
or even stopped.
Cost - US$/oz
7
0
0
2
r
e
b
m
e
t
p
e
S
7
0
0
2
r
e
b
o
t
c
O
7
0
0
2
t
s
u
g
u
A
7
0
0
2
y
l
u
J
200
600
800
400
0
7
0
0
2
r
e
b
m
e
v
o
N
the increase in inflation in the united states and the
sub-prime crisis resulted in gold being a safer haven
than the us dollar, which pointed to a rally in the
gold price. a gold price of us$750 was forecast for
the period under review with an actual average for the
period of us$823/oz. the positive outlook envisaged by
the directors was realised and is reflected in the results
presented in this report.
saFety anD traInIng
While the group conducts its activities for the safety of
its employees and runs approved training programmes
through training centres located at its mining operations,
we regret to report that two fatal accidents occurred
during the past 12 months. both accidents were at the
sheba operation; one accident involved a contractor on
20 september 2007 and the other an employee of the
mine on 19 february 2008. our sincere condolences are
extended to the families of the deceased.
FInancIal PerForMance
gross revenue from gold sales amounted to £39.3
million, total cost of production amounted to £25
million, the cost of the tax bill amounted to £4.4 million
and other expenses amounted to £2 million.
10
the ebitda includes
a hedging loss of £2.2
representing
million
10,696oz of gold sold
at a hedging price
of us$451/oz. no
further hedges have
been entered into on
gold sales after 30 June
2008 and the group is
now fully leveraged to
the gold price.
7
0
0
2
r
e
b
m
e
c
e
D
8
0
0
2
y
r
a
u
n
a
J
M
8
0
0
2
h
c
r
a
8
0
0
2
y
a
M
8
0
0
2
e
n
u
J
8
0
0
2
l
i
r
p
A
8
0
0
2
y
r
a
u
r
b
e
F
ebitda resulted
in
an attributable profit
a
of £5.5 million,
significant turn-around
from the loss of £0.922
million
the 15
for
months ended 30 June
2007 posted by pan
african for the previous
reporting period. this
reflects the impact of the acquisition of barberton mines
on the cash position of the group.
Average Gold Price (US$)
cash operating profit at barberton increased to £11.24
million (fy07: £5.73 million – which was attributable
to metorex limited) despite an increase in the cost of
production of 16.37% to £25,16 million (fy07: £21,62
million). the higher costs were linked to increases in
the prices of consumables and an increase in salaries and
wages.
the increase in mining profit was the result of a
9,000oz increase in production (mainly from surface
sources) and the spot gold price moving 28.59% higher
at us$823/oz (fy07: us$640/oz) than the previous
year. the average us$:zar exchange rate was 1.39%
weaker at zar7,30 (fy07: zar7,20) which also played
a role in terms of revenue received in south african
rands. effective zar gold price was 29.86% higher at
zar187,000/kg compared to the previous year (fy07:
zar144,000/kg).
income tax as per the consolidated income statement
has increased by 276% for the group from £1.16
million to £4.37 million as a result of an increase in the
profit margin, which results in a higher tax rate being
applied to the mine.
chIeF execUtIVe oFFIcer’s rePort
£21 million is reflected as goodwill in the consolidated
balance sheets (fy07: £nil), which is a direct result
of the reverse take over and is attributable to the
combination of pan african and barberton.
basic headline earnings per share improved from 0.35
pence reported in 2007 to 0.52 pence for the current
reporting period.
oPeratIng PerForMance
the barberton mining operations (which include the
fairview, sheba, and new consort mines) produced
99,078oz of gold, an improvement of 10% on the
previous year (fy07: 90,022oz). total underground
production however decreased by 8.43% to 82,436oz
from the previous year (fy07: 90,022) and was
the calcine dump retreatment
supplemented by
operation on surface. underground production was
down as a result of a 4.56% decrease in volume to
315,305t (fy07: 330,367t) and decrease in grade of
3.26% to 8.9g/t (fy07: 9.2g/t).
been developed and 7,167m drilled on five major
projects to address this issue (these projects are discussed
on page 17). to date good progress has been made
on these projects which should ensure an increase in
underground production in the coming year.
groWth ProJects as at
30 JUne 2008
geological work on the Manica gold project in
Mozambique continued on the fairbride prospect
area. Work comprised exploration drilling and ore
body outline drilling on both the fairbride east and
West ore bodies. drilling results confirmed ore body
continuation in both dip and strike extension down to a
depth of 350m below surface. resource remodelling was
completed during april 2008 defining a total resource
of 1.701moz (11.45mt @ 4.6g/t). Work on the pre-
feasibility study is ongoing and has been delayed as a
result of mining optimisation. the company expects
this process to be complete before the end of the next
caPItal anD exPloratIon exPenDItUre For the
PerIoD exPresseD as a % oF the total oF £6.2 MIllIon
anD accoMPanyIng Metres oF DrIllIng coMPleteD
the
surface
r e t r e a t m e n t
o p e r a t i o n
p r o d u c e d
13,513oz
of
gold at a total
cash
cost of
u s $ 2 9 1 / o z .
total mine cash
costs
increased
m a r g i n a l l y
to
by 2.37%
u s $ 4 7 6 / o z
to
compared
previous
year
(f y0 7 : $ 4 6 5 /
oz). the slight
increases in total
cost
despite
s i g n i f i c a n t
increases
in
c o n s u m a b l e s ,
steel,
such as
and
chemicals
power, coming
effect
into
underlines
the
group’s ability to successfully manage costs.
Barberton
7,167m
49%
the decrease in underground production is a concern
and as a result the group spent £3.0 million on ore
replacement and growth projects at barberton mines.
for the period under review a total of 1,145.3m have
total: £6,199,292*
19,936m
21%
19%
10,262m
11%
3,569m
Manica
Ghana
CAR
financial period.
the
Bogoin
at
gold project in the
african
central
republic
(‘car’)
the 8,200m rotary
air blast
(‘rab’)
drilling programme
completed
was
leading
the
to
narrowing down of
the soil geochemical
anomaly. a widely-
spaced
29,062m
reverse circulation
(‘rc’)
programme
has commenced over
an area
in excess
of 800km² to test
the
geochemical
anomalies identified.
as at 30 June 2008,
2,062 m of rc
drilling has been
completed.
the
group
successfully signed a mining convention with the
government of the central african republic for the
Dekoa prospecting area. subsequent geological work
identified several large soil geochemical anomalies at
dekoa.
11
* this relates to fixed asset additions and capitalised exploration costs
chIeF execUtIVe oFFIcer’s rePort
includes; detailed geological field mapping, stream
sediment sampling as well as a comprehensive soil-
sampling programme. should the results of this work
prove positive, a drilling programme will follow.
groWth ProJects - Post
Balance sheet UPDate
in the car, the company has completed its first
phase drilling programme of the bogoin exploration
licence area and is currently compiling the results of the
drilling. Work will commence in q2 of the financial
period on taking bulk soil and rock samples on the
targets identified at the dekoa exploration licence area.
in ghana, all the necessary drilling to evaluate the
akrokerri and kyereboso prospects has been completed.
the company
is currently busy with geological
modelling to decide whether to initiate the second
phase of drilling or terminate exploration activity. on
the u&n property the company has completed its first
phase of soil sampling and several anomalies have been
identified. the company is currently reviewing its
geological programme for this project moving forward.
MInIng rIghts
conVersIon
barberton mines is able to mine on fairview, new
consort and sheba mines and operate in terms of
existing mining licences (ml28/2003, ml30/2003
and ml29/2003), which have been issued in terms of
section 9(1) of the minerals act of south africa. these
licences are valid until 26 october 2009 for fairview
and new consort and 26 october 2013 for sheba. the
mining licences represent old order rights in terms of
the mineral and petroleum resources development act
(mprda) of south africa, which have to be converted
to new order rights. this process involves submitting
an application for renewal of the licences in which (a)
a mines Work programme (mWp), (b) social and
labour plan (slp) and (c) environmental management
programme (emp) together with (d) black economic
empowerment (bee) plan must be included. all
the necessary documentation was submitted to the
department of minerals and energy (dme) in south
africa. no issues are expected and the group expects
the conversion process to take place within the next 12
months. in the event that the conversion is not granted
prior to the expiry of the fairview and new consort
licences, the validity of the licences is not affected until
the final decision from the minister on conversion.
View from sheba Mine and main vertical shaft
an infill soil-sampling programme was completed for
the akrokerri gold project in ghana and 7,600 m
of core drilling has been completed to define possible
extensions to the historical akrokerri underground mine
workings. as at 30 June 2008, 2,978m of drilling has
been completed. laboratory results have been received.
a 7,400 m rc drilling programme was initiated at the
Kyereboso gold project in ghana to test the proposed
mineralisation model. as at 30 June 2008, 3,600 m of
drilling has been completed.
pan african concluded an earn-in agreement to acquire
85% of an exploration property, the U&n property in
ghana from the u&n company limited. the u&n
property lies approximately 45km southwest of the town
of kumasi.
pan african can earn-in 40% of the project by spending
not less than £145,928 on a soil sampling programme
phase. should the group wish to continue work after
this phase, it must spend no less than £150,960 to earn
a further 45%. on completion of the bfs (‘bankable
feasibility study’) the group may, at it’s election,
acquire the remaining 15% at a cost based on the net
present value (‘npv’) of the asset.
all available historical exploration and geological
information at the amira, eagle’s nest and thomas
Victory hill gold projects at Barberton in south
africa were collated into a spatially referenced database.
this database has been used to define several exploration
targets. a comprehensive airborne geophysical survey
of the project will be completed to further refine
these targets. planned fieldwork for the area during
the remainder of 2008 and into the first half of 2009,
12
chIeF execUtIVe oFFIcer’s rePort
pan african is no exception to the above crisis and it is
important that shareholders understand that, in the
opinion of the directors, the current share performance is
driven by a global crisis based on emotion that is distinct
from the fundamentals of the business.
the FUtUre
remaining cash positive and strengthening the balance
sheet will remain a key objective for the board moving
forward, as a result both mining and exploration activities
will be monitored on a continuous basis to ensure this
goal is achieved. as a result, the group might from time
to time change its commitment to certain of the growth
projects currently underway.
i would like to thank my fellow directors and especially
our chairman, keith spencer, for his wise counsel
and guidance. i would again like to give credit to our
exploration teams in the field and our management
team. the general manager, casper strydom and
his management team deserve a special word of
production
congratulations
performance. last but not
to our
shareholders for their support and patience.
outstanding
least,
thanks
for
an
Jp nelson
chief executive officer
24 november 2008
resoUrce anD reserVe
Base
the total resource for the group increased in gold content
by 100% to 3.105moz (17.30mt @ 5.78g/t) from the
previous reporting period (fy07: 1,550moz: 16,28mt
@ 2.9g/t)*. this increase was the result of an upgrade in
the resource at the manica gold project in mozambique,
which contributed 5% of the increase in the inventory
as well as the additional ounces gained through the
acquisition of barberton mines, which contributed the
remaining 39% of the increased inventory. no resource or
reserve is reported for any of the other growth projects.
during the period under review, the resource in gold
content at barberton has also been increased by 3.16% to
1.903moz (7.907mt @ 7.46g/t) compared to 1.845moz
(8.54mt @ 6.72g/t) at the date of acquisition. What is
extremely encouraging is the increase in the gross in situ
grade of 11% to 7.46g/t.
the group, as a result of the acquisition of barberton
mines, is able to state a reserve for the first time of
495koz (2.16mt @ 7.13g/t). geostatistical modelling
has successfully been applied at barberton mines and an
upgrade in the total resource is due in the new financial
year.
other DeVeloPMents
the group reviewed 15 projects during the period
under review as potential acquisition targets. none of
the projects fulfilled the criteria of (a) high quality and
(b) low cost base parameters with (c) significant growth
potential. the group continues to review projects to grow
the mineable reserve base.
Post Balance sheet
eVents – gloBal MarKet
MeltDoWn
post the period under review world financial markets
have been plunged into crisis as a result of the sub-prime
home-loan lending crisis in the united states.
as a result hedge funds liquidated their positions across
their investment portfolio in order to maintain liquidity,
retail shareholders sold shares at a discount to repay loans
and institutional shareholders lost their appetite for any
new investment. the net result was that share prices
dropped severely as most junior exploration companies
lost between 50% to 75% of their market capitalisation.
this sell-off was not selectively based on the underlying
fundamentals of the businesses but on panic – generally
companies with better underlying fundamentals which
had higher share prices were sold first – in effect being
punished even more so for doing the right thing than
companies with no cash-flow or future prospects.
* these figures reflect a comparison of pan african before the acquisition of barberton mines and the new enlarged group.
13
MInIng oPeratIons
BarBerton
soUth aFrIca
Project holding
pan african completed the acquisition of 74% of
barberton mines (pty) ltd from metorex limited
in a reverse takeover. shanduka resources holds the
remaining 26% as the black economic empowerment
(bee) partner.
is situated
introduction
barberton mines
in the mpumalanga
province of south africa, approximately 370km east of
Johannesburg and comprises of three operating mines:
fairview, new consort and sheba. the three mines
situated in the barberton greenstone belt, have been in
operation since 1886. the three mines have produced
close to 8moz or 73% of the total 11moz of gold
produced from the barberton greenstone belt.
Mining Progress
Fairview
•
fairview produced 142,125 tons at a head grade of
7.9g/t
development of the ramp system continues below
60 level to access the main reef complex (‘mrc’)
reef.
this ramp will take mining to 62 level.
•
•
new consort
•
•
•
new consort produced 74,153 tons at a head of
grade 8.5g/t
the east and west orebodies have been drilled and
evaluated.
the headgears, inclines and infrastructure at both
declines have been completed and shaft sinking has
commenced.
•
•
•
14
sheba
•
sheba produced 99,027 tons at a head grade of
10.7g/t
decline to access the zwartkoppies (‘zk’) reef
below 35 level has commenced
the headgear section is complete and a winder is
being installed
re-equipping of the southwell adit, inter-levels and
incline shaft complete, and necessary development
was done to access a reserve block of reef.
BarBerton ProDUctIon taBle
tons milled
headgrade
overall recovery
production: underground
production: calcine dump
gold sold
average price: spot
average price: hedge
total cash cost usd/oz sold
capital expenditure
exchange rate - average
exchange rate - closing
(t)
(g/t)
(%)
(oz)
(oz)
(oz)
(usd/oz)
(usd/oz)
(usd/oz)
(£)
(zar/£)
(zar/£)
* 2008
**2007
**2006
**2005
**2004
315,305
330,367
313,779
316,094
349,219
8.9
91
82,436
13,513
99,078
823
451
476
9.2
92
10.7
92
11.1
92
10.4
91
90,022
99,281
103,847
106,258
-
-
-
-
89,572
99,924
102,914
106,773
640
415
465
528
438
429
433
511
427
397
455
340
2,901,792 1,637,359 1,091,965 1,021,041 1,054,288
14,68
15,56
13,95
14,18
n/a
n/a
n/a
n/a
n/a
n/a
* 74% of the 2008 results are attributable to the equity shareholders of pan african.
** results shown from 2004 to 2007 were attributable to metorex limited (previous owners of barberton mines).
reserVe rePlaceMent ProJects anD DeVeloPMent
Metres coMPleteD For the PerIoD
Project name
sheba - southwell adit
Metres Developed:
sheba - 335 zk decline
sheba - edwin bray to thomas and Joe’s luck area
consort - 45 level exploration drive
consort - 50 level declines
fairview - 60/62 level development
fairview - 3 shaft deepening
75.0m
126.0m
101.0m
140.0m
163.3m
540.0m
project recently commenced
15
BarBerton exPenDItUre
ProDUctIon cost BreaKDoWn
2008
total: £25,163,675
2007
total: £21,623,538
7%
9%
48%
24%
12%
7%
21%
28%
44%
Electricity
Production
Cost
Dump
Reclamation
Salaries
& Wages
Other
caPItal exPenDItUre oF BarBerton MInes
(excludes surface exploration programme)
3,500
3,000
2,500
2,000
GBP
(000)
1,500
1,000
500
0
2004
2005
2006
2007
2008
* 2004 to 2007 was attributable to Metorex limited (previous owners of Barberton Mines)
16
groWth ProJects
aMIra, eagle’s nest anD thoMas VIctory-hIll
BarBerton, soUth aFrIca
Project holding
the amira, eagles nest and thomas victory-hill
exploration projects fall within a prospecting licence
which has been granted to barberton mines and is
contiguous with the mine lease area. pan african has
initiated a £1 million exploration programme on the
property of which 74% of any gold discovered will be
attributable to the group.
Project Progress
all the geological data in the project area has been
collated and the group plans to initiate a soil and stream
sediment sampling programme.
17
groWth ProJects
ManIca
MoZaMBIQUe
•
•
the cost of the total exploration project to date
equates to us$1,79/oz as at 30 June 2008.
during the year under review the resource of
the project was upgraded twice. the first time
in september 2007 when it was increased by
18% from 1.311moz to 1.550moz. the second
upgrade in april 2008 was an increase of 10%
from 1.550moz to 1.701moz (11.45mt@4.6g/t).
Project holding
the manica project in mozambique is held by a local
company, explorator limitada which is a wholly-owned
subsidiary of pan african.
Project Progress
•
•
•
•
•
Work on the pre-feasibility study is ongoing but
has been delayed due to the fact that the company
is considering different mining and extraction
methods. as a result the company only expects
to complete the process by the end of the next
financial period.
drilling and orebody outline on both the fairbride
east and west orebodies was completed.
the results of these programmes showed that there
is a continuation of the mineralisation along strike
and to depth.
19,936m of drilling has been completed as at 30
June 2008.
during the year under review £1.4 million was
spent on drilling and the pre-feasibility study as at
30 June 2008.
18
groWth ProJects
BogoIn anD DeKoa
central aFrIcan rePUBlIc
Mining conventions signed
a mining convention for each of the two projects was
signed with the government of the central african
republic. both of these conventions run for a period
of 25 years each, which means that pan african has
exclusive right on both until 2033. the state has
provided a number of concessions and exemptions in
respect of taxes, duties and administrative provisions
to the benefit of the Jv. in return, the Jv will pay the
state a total of £352,240 for each convention, with the
first payment of £100,640 having been made upon
signature. should the properties reach the mining stage
the state will hold a 10% free-carry.
Project holding
the bogoin and dekoa projects in the car are held by
a local subsidiary, or oubangui sa. the shareholding
of the local subsidiary is a 50:50 Jv between pan african
and cargold limited. pan african also fulfils the role
of project manager.
Project Progress
•
•
•
the dekoa project, the larger of the two licence
areas, revealed six major gold-in-soil anomalies
with an interpreted strike length of 25km. these
anomalies were discovered through a regional
stream sediment sampling programme.
at the bogoin project the 8,200m of rotary air
blast programme was completed, which lead to a
narrowing-down of the soil geochemical anomaly.
a widely spaced 29,062m of reverse circulation
(‘rc’) drilling programme has commenced and to
date 2,062m has been completed.
19
groWth ProJects
aKroKerrI, KyereBoso anD U&n
ghana
Project holding
three projects were acquired in ghana during the year
under review: akrokerri, kyereboso and u&n.
pan african’s stake in the kyereboso and u&n projects
were acquired by way of earn-in agreement. the group
can earn-in a maximum of 85% in the u&n and 90%
in the kyereboso projects upon completing a certain
amount of exploration expenditure and work.
in the previous financial year, on 27 June 2007, the
group acquired 90% of the akrokerri project, covering
an area of 46.8km2.
the akrokerri licence is contiguous with the largest
gold producing mine in ghana, namely the obuasi gold
mine which has to date produced approximately 40moz
of gold.
Project Progress
•
•
•
•
•
the induced polarization geophysical programme
was completed at akrokerri.
the dipole-dipole geophysical programme was
completed at akrokerri.
7,600m of core drilling was completed at
akrokerri.
7,400m of core drilling was completed at
kyereboso.
as at 30 June 2008, no work had commenced on
the u&n proprety.
20
gross in situ MIneral resoUrce anD MIneral reserVe
stateMent For the enlargeD groUP
total
classification
tons
grade
(g/t)
Proved
gold
(kg)
oz
classification
tons
grade
(g/t)
gold
(kg)
oz
Measured
fairview
new consort
sheba
937,400
120,900
401,200
5.51
7.98
8.65
5,200
167,200 fairview
1,000
32,200 new consort
3,500
112,500
sheba
total Proved
1,459,500
6.65
9,700
311,900 total Measured
outside sections
manica
fairview
new consort
sheba
Probable
392,100
158,500
151,000
8.92
7.02
7.33
3,500
112,500 fairview
1,100
1,100
35,400 new consort
35,400
sheba
outside sections
manica
total Probable
701,600
8.12
5,700
183,300 total Indicated
1,722,300
309,000
356,800
507,900
2,420,000
5,316,000
Indicated
435,400
126,800
492,300
1,252,300
4,162,000
6,468,800
Inferred
•
•
barberton mines inventory stated at a cut-off of 3g/t
manica inventory stated at a cut-off of 1g/t
fairview
new consort
sheba
outside sections
manica
total Inferred
378,600
203,200
162,600
1,960,400
4,872,000
7,576,800
total Proven and
Probable
2,161,100
7.13
15,400
495,200 total Mineral
19,361,600
resource
8.18
11.40
13.80
4.79
5.53
7.20
12.29
11.72
7.49
4.49
3.76
4.92
17.71
10.49
7.21
4.13
4.89
5.53
5.78
14,100
453,300
3,500
4,900
2,400
112,500
157,500
77,200
13,400
430,800
38,300
1,231,300
5,400
1,500
3,700
5,600
173,600
48,200
119,000
180,000
15,600
501,600
31,800
1,022,400
6,700
2,100
1,200
8,100
215,400
67,500
38,600
260,400
23,800
765,200
41,900
1,347,100
112,000
3,600,800
tons
grade
(g/t)
gold
(kg)
oz
Measured
attrIBUtaBle (74% oF BarBerton anD 100% oF ManIca)
classification
classification
grade
gold
tons
oz
(g/t)
(kg)
Proved
fairview
new consort
sheba
693,700
89,500
296,900
5.51
7.98
8.65
3,800
122,200 fairview
700
2,600
22,500 new consort
83,600
sheba
total Proved
1,080,100
6.65
7,100
228,300 total Measured
outside sections
manica
1,274,500
228,700
264,000
375,800
2,420,000
4,563,000
Probable
Indicated
fairview
new consort
sheba
290,100
117,300
111,700
8.92
7.02
7.33
2,600
83,600 fairview
800
800
25,700 new consort
25,700
sheba
outside sections
manica
total Probable
519,100
8.12
4,200
135,000 total Indicated
•
•
martin bevelander, group consulting geologist for pan african, is
south african council for natural scientific professions (‘sacnasp’)
accredited and was responsible for validating the borehole intersections.
the resource statement is south african mineral resource code
(‘samrec’) compliant and has been verified.
note: as disclosed on page 18, the pre-feasibility study on manica has
not yet been completed and accordingly the resources of manica are not
yet classified as proven and probable.
fairview
new consort
sheba
outside sections
manica
total Inferred
322,200
93,800
364,300
926,700
4,162,000
5,869,000
Inferred
280,200
150,400
120,300
1,450,700
4,872,000
6,873,600
total Proven and
Probable
1,599,200
7.13
11,300
363,300 total Mineral
17,305,600
resource
8.18
11.40
13.80
4.79
5.53
7.20
12.29
11.72
7.49
4.49
3.76
4.92
17.71
10.49
7.21
4.13
4.89
5.53
5.78
10,400
334,400
2,600
3,600
1,800
83,600
115,700
57,900
13,400
430,800
31,800
1,022,400
4,000
1,000
2,700
4,200
128,600
32,200
86,800
135,000
15,600
501,600
27,500
884,200
5,000
1,600
900
160,800
51,400
28,900
6,000
192,900
23,800
765,200
37,300
1,199,200
96,600
3,105,800
the Resource numbers in the Mineral Resource and Mineral Reserve table above have been rounded to reflect the appropriate
level of confidence and as a result rounding errors may occur.
21
resoUrce groWth (gross in situ)
oz
(000)
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Acquisition of
Barberton Mines
26 July
2005
13 October
2005
2 February
2006
20 June
2006
10 September
2007
10 March
2008
Manica
Barberton
22
DIrectors
From left to right: John hopwood, Maritz smith, rob still, charles needham, simon Malone and Jan nelson (ceo)
In the centre: Keith spencer (chairman)
execUtIVe DIrectors
keith cousens spencer
bsc eng (mining)
executive chairman
member: investment and technical committee
keith cousens spencer (58) is a qualified mining
engineer with 35 years of practical mining experience.
in 1984, keith was appointed as general manager
of greenside colliery and in 1986 moved to kloof
gold mine as general manager. in 1989, he was
appointed as consulting engineer for gold fields of
south africa limited (‘gfsa’) to the following mines:
doornfontein gold mine, driefontein consolidated
gold mine, greenside colliery and tsumeb base
metals mine. he also served as managing director of
driefontein consolidated, chairman and managing
director of deelkraal gold mine, and as a board
member of all gold mines belonging to gfsa. in
1999, keith joined metorex limited first as a private
consultant and after 2 years as a permanent member of
the executive managing the Wakefield coal operations,
o’okiep copper company, barberton gold mines, and
metmin manganese mine. in 2001, keith became the
operations director for the metorex group. keith has
managed some of the largest gold mines in the world
and this expertise will now be available to the pan
african team.
Jan petrus nelson
bsc. (hons)
chief executive officer
member: investment and technical committee
after obtaining his honours degree in geology, Jan
nelson (38) embarked on a career in gold exploration
and mining in south africa, zimbabwe and tanzania.
he has over 17 years’ experience and, within this period,
held positions in mine management and operations
with harmony gold mining company limited,
hunter dickenson and gold fields limited. he also
has experience in dealing with institutional analysts,
institutional investors as well as shareholders.
maritz smith
b.com (hons)
financial director
maritz smith (32) is an employee and alternate director
of metorex limited. he obtained a bcom (hons)
accounting degree from the university of Johannesburg
in 1998 and after completing his articles with deloitte
in 2001, he qualified as a chartered accountant. mr
smith remained with deloitte until 2002 when he
joined the metorex group as group accountant. after
three years, mr smith was promoted to chief financial
officer of metorex limited in 2005, the position he
retains today.
23
DIrectors
non-execUtIVe DIrectors
robert george still
b.com (hons), cta
non executive
member: remuneration committee
member: audit committee
rob still (56) has over 23 years’ experience in mining,
specialising in mining finance. he started his career as
a chartered accountant, becoming a partner of ernst
and Whinney before leaving in 1986 to co-found
rhombus exploration limited. since then he has
been involved in the mining industry world-wide and
has held executive and non-executive directorships in
companies listed in south africa, australia, canada
and the uk. he has participated in the evaluation and
development of several new mining projects including
rhovan, ticor titanium, pangea gold fields limited,
southern mining corporation limited
(corridor
sands), great basin gold limited (burnstone) and
zimbabwe platinum mines limited. mr still was the
chief executive of pangea diamondfields plc until 30
June 2008, and is currently the deputy chairman of the
aim-quoted company. mr still holds the position of
deputy chairman for metorex limited.
anthony simon malone
b.sc., mbl, saimm, pr.eng.
non executive
chairman: investment and technical committee
simon malone (65) is a mining engineer with a business
degree who has been involved in the mining and
exploration sector throughout his career. his expertise
lies in the identification, evaluation and development
of mining assets and interface between corporate and
operational management. he was initially employed by
Jci limited, thereafter chapman Wood and griswald
in canada before returning to south africa where he
founded metorex in 1975.
charles denby stockton needham
non executive
member: remuneration committee
chairman: audit committee
charles needham (55) is the chief executive officer of
metorex limited and has been the financial director of
metorex for the past 21 years, prior to which he spent
six years with an auditing firm. he has been involved
in the mining sector his entire career and has specific
expertise in financing, financial reporting, management
reporting, hedging and company matters.
John gavin hopwood
independent, non executive director
member: remuneration committee
member: audit committee
John hopwood (55) was appointed a director in may
2008. he is also a director of gold fields limited and
a member of the board of trustees of the new africa
mining fund and chairman of the fund’s investment
committee. previous experience
includes being a
director and head of mergers and acquisitions division
at ernst & young corporate finance, south africa, and
he was an executive director of gold fields of south
africa limited from January 1992 to september 1998.
24
corPorate goVernance
although not required to as an aim company, the
directors have provided corporate governance disclosures
similar to those required of a company listed on the
main board of the london stock exchange.
coMMIttees
pan african is governed by a board of directors assisted
by
following committees: audit committee,
remuneration committee, investment and technical
committee.
the
corporate governance
is managed and monitored
by the board. the roles of chairman and group
chief executive are separate, with a clear division of
responsibilities to ensure a balance of authority between
them. these positions are held by mr keith spencer and
mr Jan nelson, respectively.
the board meets quarterly and is responsible for
preparing financial statements, monitoring executive
management, and providing direction to the group’s
activities, as well as establishing overall group policy
and providing input on strategic matters.
following the barberton acquisition and the group’s
secondary listing on the alternative exchange of the Jse
limited (‘altx’), metorex was entitled to appoint one
director to the board of pan african for every 10 percent
of the issued share capital it holds. three directors were
appointed to the board during the year under review.
currently, the board consists of three executive directors
and four non-executive directors.
the board believes the non-executive directors bring a
wealth of experience to the group and a range of skills
appropriate to facilitate the next stage of the group’s
growth,
funding,
including discovering, acquiring,
developing and operating gold projects in africa.
the board has also considered the guidance published
by the institute of chartered accountants in england
and Wales (commonly known as the turnbull report)
concerning the internal control requirements of the
combined code. in line with best practice, the group
regularly reviews and manages key business risks in
addition to managing financial risks the group faces in
the operation of its business.
accoUntaBIlIty anD
control
the board of directors acknowledges its continued
accountability in retaining full and effective control
over the group, reviewing strategy, planning operational
and financial performance, considering acquisitions,
disposals and major capital expenditure, managing
stakeholder communications as well as other material
matters reserved for its decisions. the group’s articles
of association allow provision for decision-making
between board meetings, by way of written resolutions.
internal control is an integral part of the group’s
corporate governance. the directors aim to reduce
risk, fraud or loss in a cost-effective manner by setting
standards for management to implement systems of
internal control. these systems and standards include
the proper delegation of responsibilities within a defined
framework, accounting procedures as well as an adequate
segregation of duties. employees are expected to adhere
to the highest ethical standards to guarantee that sound
business practices are conducted in a manner that will
be beyond criticism under reasonable circumstances.
Undergound miner, Barberton Mines
rIsK ManageMent
the group does not have a formalised risk committee;
rather the group’s internal financial and operational
control systems are assessed during the full quarterly
board meetings.
a comprehensive assessment of risks the group faces has
been completed. in addition to general risks it shares
with all companies, such as currency risk and foreign
exchange controls; insurance cover, economic, political,
judicial, administrative or regulatory factors, the group
has identified several risks specifically related to the
business it undertakes listed below:
•
•
cost of production, particularly input costs such as
steel and chemicals
supply of power and load-shedding
25
corPorate goVernance
•
•
•
•
•
•
•
•
•
gold theft and security of employees
volatility of the gold price and the buying or
selling of gold bullion held by central banks or
other dealers
preserving black economic empowerment (‘bee’)
shareholding
laws governing mineral rights and environmental
regulation
exploration and extraction risks
project development risks
human resources: dependence on key personnel,
the south african skills exodus and increasing cost
of labour
hiv/aids
mining
elsewhere in africa (country risk)
licences and regulatory environments
these risks are regularly monitored. during the financial
year under review, no incidents have indicated to the
board a breakdown of the internal control and systems.
a material breakdown is defined as a critical weakness
in process of financial systems which could result in a
material loss, contingency, or uncertainty requiring
disclosure in the published annual financial statements.
the executive directors and determines
BoarD coMMIttees
the remuneration committee reviews the performance
of
their
remuneration and the basis of their service agreements
with due regard to the interests of shareholders. the
remuneration committee also determines the payment
of any bonuses to executive directors and the grant of
options to employees, including executive directors,
under the company’s share option scheme. the
remuneration committee comprises charles needham
(chairman) and rob still. after the financial year-end
John hopwood, appointed in June 2008, was appointed
to this committee.
the audit committee is responsible for ensuring that
the financial performance, position and prospects of
the group are properly monitored, controlled and
reported on and for meeting the auditors and reviewing
their reports relating to accounts and internal controls.
the audit committee comprises charles needham
(chairman) and rob still. after 30 June 2008, John
hopwood was appointed to this committee.
simon malone (chairman), rob still, keith spencer
and Jan nelson make up the investment and technical
committee. this committee reviews all potential new
acquisitions to ensure that they conform to the group’s
growth strategy and vision. the committee meets on a
quarterly basis.
the executive directors, namely; keith spencer
(chairman), Jan nelson (chief executive officer)
and maritz smith (financial director) review both
26
the mining operations and the exploration projects on
a formal basis each month. this includes a detailed
review of the technical and financial parameters, as well
as capital requirements and expenditure. all parameters
are measured against the strategic plans and any
variations are discussed and action plans are put in place
to rectify such deviations.
Female miner, Barberton Mines
coMPany secretary
the company secretary is appointed by the board. all
directors have access to the advice and services of the
company secretary, who is responsible to the board for
ensuring compliance with procedures and regulations of
a statutory nature. furthermore, all directors are entitled
to seek independent professional advice concerning the
affairs of the group at the company’s expense, should
they believe that course of action would be in the best
interests of the group.
noMInateD aDVIser anD
BroKer
during the year under review, ambrian capital acted as
the nominated adviser (nomad) and broker to the
group under the aim rules. the duty of the nomad
and broker is to advise the group on compliance with
the aim rules and continuing obligations as an aim-
quoted company. after the financial year-end, rbc
capital markets was appointed as the group’s nomad
and broker.
corPorate goVernance
is committed to creating
sUstaInaBIlIty
pan african
long-term
shareholder value by embracing opportunities and
managing risk. as a corporate citizen the group
recognises it must be concerned not only with financial
returns but also with the broader impact of its activities
on other stakeholder constituencies, the environment,
and particularly the health and safety of its employees.
interaction with stakeholder groups is fundamental to
a sustainable business model, as are the group’s social
responsibility initiatives.
to
and
engagement
communication
sustainability and encourages
staKeholDer
coMMUnIcatIon
is
stakeholder
important
the
principles of transparent, honest, reliable and accessible
reporting. pan african considers the following to be its
key stakeholders: shareholders, investors, analysts and
the media; government bodies and regulators; business
partners and suppliers; employees and contractors; and
the communities where we operate or are exploring.
any material changes to the group’s structure, project
updates and any other information which may affect
the share price is disseminated simultaneously via
the london and Jse limited news services, the
local media and the group’s website. all necessary
measures are taken to ensure that unbiased, timely and
relevant communication disseminated is in line with
the listing and regulatory environments in which we
operate. operating and financial performance-related
information is released in the same manner.
the group makes presentations to
investors and
analysts, meets regularly with current and potential
institutional shareholders and investment analysts, and
attends conferences and investor days.
the executive directors are available at all times to
address any concerns or queries regarding the group and
its performance and employs independent investor and
media relations professionals in the uk and south africa
to assist its strategic communications requirements.
other
stakeholders are engaged directly
correspondence, meetings and any appropriate forum.
through
in addition, employees at barberton mines receive a
monthly newsletter and briefings as and when necessary
about information important to the group and their
health and safety.
BlacK econoMIc
eMPoWerMent
black economic empowerment (‘bee’) in the mining
sector in south africa is dealt with in the mineral and
petroleum resources development act (mprda).
it states that one of the objects of the mprda is to
substantially and meaningfully expand opportunities
for historically disadvantaged persons to enter the
mineral and petroleum industries and to benefit from
the exploitation of the nation’s mineral and petroleum
resources.
a mining charter was adopted in october 2002 to
deal with the specifics of bee in mining, and it refers
to targets of 15% of equity or attributable units of
production vesting in historically disadvantaged south
africans (‘hdsa’) in a particular mining project within
5 years of the start of the mprda (2002) and 26%
within 10 years.
the mining charter was unclear on how new
applications for licences should be made with regard to
bee, and so a clarification document was issued by the
department of minerals and energy. this document
states that if mining rights were held privately, for
those to be converted to new order mining rights, the
hdsa requirement is a minimum of 26%, and if the
rights were state held, the hdsa requirement is 51%.
for all applications made after may 2005, the hdsa
requirement is 26%.
shanduka has not been locked in indefinitely with regard
to hdsa required shareholders, this could require the
group to take remedial action if required by the dme
in south africa should the shanduka shareholding
diminish. The nature and extent of such remedial action
is not known at present, if required at all, and therefore
could present a future risk.
saFety, health anD
enVIronMent
safety
barberton mines is an iso sans 9001:2000 certified
company and
its
employees, sub-contractors and suppliers, and all others
under its managerial control. employees have a right to
work in a safe environment and effective management
of occupational health and safety is a prime group
objective.
barberton mines is committed to the following key
principles and objectives:
is committed to the safety of
•
preventing occupational accidents and diseases and
other work related adverse health effects by the
27
corPorate goVernance
•
•
•
•
•
•
•
•
•
•
and
that
adoption of a ‘total compliance’ approach
complying with all relevant legal requirements
pertaining to occupational health and safety as a
minimum standard
ensuring that all its operations have appropriate
policies, procedures and facilities so that such
standards can be achieved
integrating occupational health and safety into the
group’s overall management structure and business
performance
ensuring
employee
employees
representatives are consulted and participate
actively at all levels of the occupational health and
safety process
implementing and sustaining a programme of
general awareness and training so as to ensure that
both management and workers remain competent
to carry out duties and responsibilities assigned to
them
informing workers of their rights and ensuring that
they understand their rights.
allocating reasonable resources to implement and
perpetuate the occupational health and safety
system
co-operating with all health and safety agencies
implementing a system of audit and review to
enhance continual improvement in performance
of the occupational health and safety system and
conducting regular reviews of conformance at
board level
implementing a risk assessment process that will
effect appropriate risk management and assessment
through elimination, reduction or control
risk assessments enable barberton to measure safety
performance with the goal of achieving zero harm to
all employees, sub-contractors and suppliers and are
conducted in terms of section 11 of the mine health
and safety act (29 of 1996) and is managed by an
appointed risk assessment officer. these include the
baseline, issue base and continues risk assessment.
achievements for the 2007-2008 financial year:
a 42.50% improvement has been recorded for lost-time
injuries compared to the previous financial year resulting
in a 45% improvement in the lost day injury frequency
rate.
Fairview Gold Mine
fairview achieved 1 500 000 fatality-free shifts as at June
2008 – the last fatal accident was recorded on 20 march
2003.
sheba Mine:
sheba achieved 451,655
september 2007.
unfortunately, there were two fatal accidents recorded
during 2008, the details are as follows:
fatality-free shifts as at
28
•
•
on 20/09/2007 a contractor slipped and fell
climbing a travelling way.
19/02/2008 a rock struck an employee who fell
whilst installing mechanical props.
in both these cases, the outcome of a dme inquiry into
these fatal accidents negated the management team of
any wrongdoing.
new Consort Mine:
new consort achieved 883,624 fatality-free shifts as at
June 2008 – the last fatal accident was recorded on 18
march 2002.
pan african has established the following three-year
targets for occupational safety:
•
•
•
to achieve and maintain a physical audit rating
of not less than 90 % and a lost-time injury
frequency rate of below five throughout the
mine
to improve the mine’s safety record by 10% in
2009, 5% in 2010 and 5% in 2011 to achieve a
20% improvement in a 3-year period
to have zero fatalities
in terms of the rest of the enlarged group, the group
employs contractors who run their own health and
safety programmes.
and medical
health
barberton mines is fully compliant with the health
programme required by the dme in occupational
surveillance programmes.
hygiene
the mines have appointed a full-time occupational
hygienist to monitor and manage reporting systems;
equipped an occupational health centre and employs
a full-time occupational health nurse and a part-
time medical practitioner. tuberculoses and hiv-aids
programmes are managed by the health centre.
in terms of the rest of the enlarged group, employees
belong to their own medical scheme and are responsible
for their own health. the group does however belong
to international sos assistance (pty) ltd, a company
focused on evacuating expatriates to their country of
origin should a medical emergency arise.
environment
the environmental programme managed by barberton
is based on the environmental monitoring programme
(‘emp’) approved by the department of mineral
and energy (‘dme’), while the water and air-
monitoring programme follows the requirements of the
department of Water affairs and forestry (‘dWaf’)
and the department of environmental affairs and
tourism (‘deat’). both are managed by an internal
environmental department.
corPorate goVernance
current projects include:
•
•
•
clean-up of the old slimes dams in the flood plains
of the noordkaap river.
the removal of rock by the private crushers for
road construction and building is progressing well
and all major rock stockpiles should be removed by
2010.
a full re-assessment of the current environmental
impact by mining activities is in progress.
in terms of the enlarged group, the exploration projects
are run according to the legal requirements of each
country in terms of environmental rehabilitation.
corPorate socIal
InVestMent
production
exploring, developing and operating in africa, often in
the midst of very poor communities, means pan african
is in a position to have an impact on the sustainability of
local economic development (led), not just through
job creation or procurement opportunities, but more
directly through the provision of support for social
upliftment.
in south africa, for instance, we are committed to
funding support for community and social projects
through the barberton transformation trust. the trust
focuses on health and education by financing hiv/aids,
tuberculosis and malaria projects and sponsoring and
assisting maths and science education and bursaries.
investment
the trust also plays an important role in providing
capital investment in led enterprise development
projects in the region. it is an investment vehicle
sustainable previously
for capital
in
the
enterprises and
disadvantaged person-owned
community that can supply goods and services to
barberton mines, other mines in the region, as well as
the local community on an independent basis. the
aim is to invest in enterprise projects that can become
independent from barberton mines over the next five
years by providing scarce entrepreneurial start-up capital
and the development of opportunities for hdsa’s in
procurement activities of the mine.
•
•
•
•
•
among the other projects barberton’s trust funds:
soup kitchen for orphans and the elderly
three on-site primary schools
ambulance and first-aid services
life skills centre
small-scale commercial and community vegetable
garden
Jewellery beneficiation centre
•
Water return Project at new consort, Barberton
corPorate
resPonsIBIlIty
groWth proJects
pan african employs mostly local people to manage their
exploration projects and supplies training, equipment
and other support from the head office. a mentoring
programme involves members of the corporate team
going to site and mentoring the local management
teams.
Mozambique
pan african has initiated projects to assist the local
community by drilling water holes and providing
pumps; donated money to build a market place after
consulting with members of the community to support
their needs and has sponsored two masters degree
students at the university of mozambique.
Central African Republic
the company has donated money to a country-wide
programme for the transportation of teachers to and
from their various schools. pan african has also built
a new school in bogoin, providing all books and
equipment; has established a feeding programme,
a training programme and drilled water holes with
pumps for members of the local communities where it
is drilling.
Ghana
pan african has extended its policy into ghana and has
hired only local ghanaian contractors.
29
DIrectors’ rePort
the directors present their annual report and the audited
financial statements for the 12 month period ended 30
June 2008.
of securing the services of its executive directors and
senior employees, the retention of their services cannot be
guaranteed.
PrIncIPal actIVItIes
the group’s principal activity during the period was that
of mineral exploitation and exploration. a full review
of the activity of the business and of future prospects are
contained in the chief executive officer’s report which
accompanies these financial statements, with financial and
non-financial key performance indicators shown below.
Key PerForMance
InDIcators
the group produces management reports on a monthly
basis that highlight several key performance indicators
(‘kpis’) from a corporate, operational and mangement
perspective to assess the financial position of the group.
these are highlighted in table 1 on page 32.
resUlts anD DIVIDenDs
the results
the
in
consolidated income statements on page 35. a detailed
discussion of these results can be found on page 10.
the period are disclosed
for
the directors do not recommend payment of a dividend.
PolIcy For PayMent oF
creDItors
it is the company’s policy to settle all agreed transactions
within the terms established with suppliers.
rIsK ManageMent
the key business risks to which the company is exposed
are as follows:
general exploration and extraction risks - there is no
certainty that there will be commercially recoverable
reserves in licence areas where the group is currently in
the early stages of exploration.
Project development risks - any failure to effectively
manage the company’s growth and development could
have a material adverse effect on the company’s business,
financial conditions and results.
operational risks - the company’s targets are subject to
the completion of planned operational goals on time and
within set budgets. any failure to meet these goals, in
particular through the disruption of the supply of goods
and services to the company’s operational locations,
could have an adverse effect on financial performance.
Dependence on key personnel - whilst the company
has entered into contractual arrangements with the aim
30
regulatory risks - there is no guarantee that applications
for mining licences will be granted where minerals
are discovered, or of the terms of any such licence.
although the directors believe that all current activities
are being carried out in accordance with applicable rules
or regulations, there can be no guarantee that new rules
or regulations or changes in the application of exisiting
legislation will not limit or curtail exploration, production
or development.
the board considers and reviews these risks on a strategic
and day-to-day basis in order to minimise any potential
exposure.
Financial risks - the major balances and financial risks to
which the group is exposed and the controls in place to
minimise those risks are disclosed in note 29.
Internal control
the board is responsible for maintaining a sound system
of internal controls to safeguard shareholders’ investment
and group assets. the directors monitor the operation
of internal controls. the objective of the system is to
safeguard group assets, ensure proper accounting records
are maintained and that the financial information used
within the business and for publication is reliable.
any such system of internal control can only provide
reasonable but not absolute assurance against material
mis-statement or loss.
internal financial control procedures undertaken by the
board include:
•
•
•
review of monthly financial reports and monitoring
performance.
prior approval of all
including all major investment decisions.
review and debate of treasury policy.
significant expenditure
the board has reviewed the operation and effectiveness of
the company’s system of internal control for the financial
period and the period up to the date of approval of the
financial statements.
goIng concern
the board confirms that the business is a going concern
and has reviewed its working capital requirements in
conjunction with its future funding capabilities for the
next 12 months and has found them to be adequate.
the enlarged group is largely debt free and has a
profit margin of approximately 40% after capital and
depreciation at barberton mines. should the need arise
the group can stop most exploration and capital activities
DIrectors’ rePort
and as a result the group does not currently envisage
needing to raise any capital from external sources in the
market for the next 12 months.
this confirmation is given and should be interpreted
in accordance with the provisions of s234za of the
companies act 1985.
DIrectors
the following were directors during the period under
review:
deloitte & touche llp have expressed their willingness
to continue in office as auditors and a resolution to
reappoint them will be proposed at the forthcoming
annual general meeting.
by order of the board,
Jan nelson
chief executive officer
24 november 2008
mr J p nelson
mr r g still
mr k c spencer (appointed 8 october 2007)
mr a s malone (appointed 27 July 2007)
mr c d s needham (appointed 27 July 2007)
mr m smith (appointed 21 february 2008)
mr J g hopwood (appointed 2 June 2008)
mr c bird (resigned 10 october 2007)
dr h J blignault (retired 18 January 2008)
mr n a steinberg (resigned 21 february 2008)
aUDItors
deloitte & touche llp has been appointed as auditors.
each of the persons who is a director at the date of
approval of this annual report confirms that:
•
•
so far as the director is aware, there is no relevant
audit information of which the company’s auditors
are unaware; and
the director has taken all the steps that he/she ought
to have taken as a director in order to make himself/
herself aware of any relevant audit information and
to establish that the company’s auditors are aware
of that information.
31
DIrectors’ rePort
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stateMent oF DIrectors’ resPonsIBIlItIes
the directors are responsible for preparing the annual
report and the financial statements in accordance with
applicable law and regulations.
company law requires the directors to prepare financial
statements for each financial year. the directors are
required by the ias regulation to prepare the group
financial statements under ifrss (ifrss) as adopted by
the european union and have also elected to prepare the
parent company financial statements in accordance with
ifrss as adopted by the european union. the financial
statements are also required by law to be properly
prepared in accordance with the companies act 1985
and article 4 of the ias regulation.
international accounting standard 1 requires
that
financial statements present fairly for each financial year
the company’s financial position, financial performance
and cash flows. this requires the faithful representation
of the effects of transactions, other events and conditions
in accordance with the definitions and recognition
criteria for assets, liabilities, income and expenses set
out in the international accounting standards board’s
‘framework for the preparation and presentation of
financial statements’. in virtually all circumstances, a
fair presentation will be achieved by compliance with all
applicable ifrss. however, directors are also required to:
•
•
•
properly select and apply accounting policies;
present information, including accounting policies,
in a manner that provides relevant, reliable,
comparable and understandable information; and
provide additional disclosures when compliance
with the specific requirements in ifrss are
insufficient to enable users to understand the
impact of particular transactions, other events and
conditions on the entity’s financial position and
financial performance.
the directors are responsible
for keeping proper
accounting records that disclose with reasonable accuracy
at any time the financial position of the company and
enable them to ensure that the financial statements
comply with the companies act 1985. they are also
responsible for safeguarding the assets of the company
and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
by order of the board
J p nelson
m smith
chief executive officer
financial director
24 november 2008
24 november 2008
33
InDePenDent aUDItors’ rePort to the MeMBers
oF Pan aFrIcan resoUrces Plc
We read the other information contained in the annual
report, as described in the contents section, and consider
whether it is consistent with the audited financial
statements. We consider the implications for our report
if we become aware of any apparent misstatements or
material inconsistencies with the financial statements. our
responsibilities do not extend to any further information
outside the annual report.
BasIs oF aUDIt oPInIon
We conducted our audit in accordance with international
standards on auditing (uk and ireland) issued by the
auditing practices board. an audit includes examination,
on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. it also includes
an assessment of the significant estimates and judgments
made by the directors in the preparation of the financial
statements, and of whether the accounting policies are
appropriate to the group's and company's circumstances,
consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all
the information and explanations which we considered
necessary in order to provide us with sufficient evidence to
give reasonable assurance that the financial statements are
free from material misstatement, whether caused by fraud
or other irregularity or error. in forming our opinion we
also evaluated the overall adequacy of the presentation of
information in the financial statements.
oPInIon
in our opinion
•
•
•
the financial statements give a true and fair view, in
accordance with ifrss as adopted by the european
union, of the state of the group's and the parent
company's affairs as at 30 June 2008 and of the
group's and company’s profit for the year then
ended;
the financial statements have been properly prepared
in accordance with the companies act 1985 and, as
regards the group financial statements, article 4 of
the ias regulation; and
the information given in the directors' report is
consistent with the financial statements.
deloitte & touche llp
chartered accountants and registered auditors
london, uk
24 november 2008
We have audited the group and parent company financial
statements (the ''financial statements'') of pan african
resources plc for the year ended 30 June 2008 which
comprise
the consolidated and company income
statements, the consolidated and company balance
sheets, the consolidated and company cash flow
statements, the consolidated and company statement
of recognised income and expenses and the related notes
1 to 38. these financial statements have been prepared
under the accounting policies set out therein.
this report is made solely to the company’s members, as
a body, in accordance with section 235 of the companies
act 1985. our audit work has been undertaken so that
we might state to the company’s members those matters
we are required to state to them in an auditors’ report and
for no other purpose. to the fullest extent permitted by
law, we do not accept or assume responsibility to anyone
other than the company and the company’s members
as a body, for our audit work, for this report, or for the
opinions we have formed.
resPectIVe
resPonsIBIlItIes oF
DIrectors anD aUDItors
the directors' responsibilities for preparing the annual
report and the financial statements in accordance with
applicable law and international financial reporting
standards (ifrss) as adopted by the european union are
set out in the statement of directors' responsibilities.
our responsibility is to audit the financial statements
regulatory
relevant
in accordance with
requirements and international standards on auditing
(uk and ireland).
legal and
We report to you our opinion as to whether the financial
statements give a true and fair view and whether the
financial statements have been properly prepared in
accordance with the companies act 1985 and, as
regards the group financial statements, article 4 of the
ias regulation. We also report to you whether in our
opinion the information given in the directors' report is
consistent with the financial statements. the information
given in the directors' report includes that specific
information presented in the chief executive officer’s
report that is cross referred from the business review
section of the directors' report.
in addition we report to you if, in our opinion, the
company has not kept proper accounting records, if we
have not received all the information and explanations we
require for our audit, or if information specified by law
regarding directors' remuneration and other transactions
is not disclosed.
34
consolIDateD anD coMPany IncoMe stateMents
For the year enDeD 30 JUne 2008
group
£
company
£
year ended
30 June 2008
year ended
30 June 2007
year ended
30 June 2008
notes
15 months
ended
30 June 2007
revenue
gold sales
gross revenue
realisation costs
on-mine revenue
cost of production
depreciation
mining profit
other (expenses)/income
finance income
finance costs
profit/(loss) before taxation
income tax expense
profit/(loss) for the period
attributable to:
equity holders of the parent
minority interests
5
16
8
9
9
10
13
4
39,254,557
26,684,796
39,254,557
26,684,796
(106,277)
(60,783)
39,148,280
26,624,013
(25,163,675) (21,623,538)
(1,965,872)
(1,865,997)
12,018,733
3,134,478
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(273,786)
803,561
(14,491)
(1,362,960)
217,288
49,018
39,349
37,195
(17,006)
(35,893)
–
–
11,945,229
3,951,164
24,858
(1,325,765)
(4,366,543)
(1,156,590)
–
–
7,578,686
2,794,574
24,858
(1,325,765)
5,460,067
2,067,985
24,858
(1,325,765)
2,118,619
726,589
–
–
7,578,686
2,794,574
24,858
(1,325,765)
From continuing operations:
basic earnings per share (pence)
diluted earnings per share (pence)
14
14
0.52
0.51
0.35
0.35
–
–
–
–
as the acquisition of barberton mines in the year, represented a reverse acquisition, the year ended 30 June 2008 group
income statement includes 11 months of par and 12 months of barberton mines. the group’s comparatives are those of
barberton mines.
35
consolIDateD anD coMPany Balance sheets
at 30 JUne 2008
assets
non-current assets
property, plant and equipment
intangible asset other than goodwill
goodwill
investments
rehabilitation trust fund
current assets
inventories
trade and other receivables
receivables from other group companies
cash and cash equivalents
group
£
company
£
notes
2008
2007
2008
2007
16
17
18
19
20
21
22
23
20,069,814
20,731,502
21,670
12,837,045
21,000,714
–
–
–
–
–
–
–
34,223,594
3,069,705
1,739,522
1,743,648
–
–
55,647,095
22,475,150
34,245,264
3,069,705
377,974
125,498
–
–
2,972,776
2,185,552
310,193
3,640,646
–
–
10,270,252
5,419,489
422,416
1,455,587
8,770,239
2,733,466
12,036,032
–
326,797
3,967,443
total assets
64,417,334
25,208,616
46,281,296
7,037,148
eQUIty anD lIaBIlItIes
capital and reserves
share capital
share premium account
preference share capital and premium
hedging and translation reserve
retained earnings
share option reserve
merger reserve
equity attributable to equity holders of parent
minority interest
total equity
non-current liabilities
borrowings
long-term provisions
deferred tax liabilities
current liabilities
trade and other payables
borrowings
short-term provisions
derivative financial instruments
current tax liabilities
24,25
10,998,664
4,180,032
10,998,664
4,180,032
24
24
24
24
24
24
24
26
27
28
26
27
29
37,267,475
4,076,769
37,267,475
4,076,769
–
5,578,175
(1,118,262)
(1,041,234)
–
–
–
–
9,946,021
4,485,954
(4,073,273)
(4,098,131)
285,312
128,360
491,320
296,162
(10,705,308)
(6,189,702)
1,560,000
1,560,000
46,673,902
11,218,354
46,244,186
6,014,832
3,694,869
1,576,250
–
–
50,368,771
12,794,604
46,244,186
6,014,832
16,822
115,665
2,219,954
2,284,142
5,201,245
5,526,973
7,438,021
7,926,780
–
–
–
–
–
–
–
–
2,754,795
1,926,944
37,110
1,022,316
89,269
711,085
170,017
711,903
-
1,092,232
3,055,393
586,136
–
–
–
–
–
–
–
–
6,610,542
4,487,232
37,110
1,022,316
total equity and liabilities
64,417,334
25,208,616
46,281,296
7,037,148
36
the financial statements were approved by the board of directors and authorised for issue on 24
november 2008. they were signed on its behalf by:
J p nelson
chief executive officer
24 november 2008
m smith
financial director
24 november 2008
37
consolIDateD anD coMPany cash FloW
stateMents For the year enDeD 30 JUne 2008
group
£
company
£
notes
2008
2007
2008
2007
net cash FroM/(UseD In) oPeratIng
actIVItIes
37
11,239,529
5,728,021
2,092,178
(381,921)
InVestIng actIVItIes
dividends received
additions to property, plant and equipment
additions to intangibles
proceeds on disposal of property, plant and
equipment
loans to subsidiaries
funding of rehabilitation trust fund
cash acquired with subsidiary
net cash UseD In InVestIng
actIVItIes
FInancIng actIVItIes
preference dividends paid
borrowings raised
borrowings repaid
redemption of preference share capital
shares issued
net cash (UseD In)/FroM FInancIng
actIVItIes
net Increase/(Decrease) In cash anD
cash eQUIValents
cash and cash equivalents at the beginning of the
period
effect of foreign exchange rate changes
–
–
(3,031,659)
(1,552,258)
(2,652,270)
–
473,085
(21,670)
–
–
–
–
–
–
17,302
–
–
–
(2,199,795)
(1,233,025)
4,126
(119,156)
226,164
–
–
–
(5,453,639)
(1,654,112)
(1,748,380)
–
–
(645,161)
167,661
(179,591)
(174,577)
–
(2,939,068)
–
–
–
–
–
–
–
–
–
–
–
784,624
–
784,624
67,091
(605,033)
(3,591,145)
784,624
201,082
6,390,923
482,769
1,128,422
(1,547,855)
422,416
(1,393,849)
(27,590)
(32,763)
326,797
1,874,652
368
–
cash anD cash eQUIValents at the
enD oF the PerIoD
5,419,489
422,416
1,455,587
326,797
38
consolIDateD anD coMPany stateMent oF recognIseD
IncoMe anD exPense For the year enDeD 30 JUne 2008
profit for the year/period
group
£
company
£
year ended
30 June 2008
7,578,686
year ended
30 June 2007
2,794,574
year ended
30 June 2008
24,858
15 months
ended
30 June 2007
(1,325,765)
exchange differences on translation of foreign operations
(77,028)
2,700,177
–
–
total recognised income and expense for the year/period
7,501,658
5,494,751
24,858
(1,325,765)
attributable to:
equity holders of the parent
minority interests
5,383,039
4,768,162
24,858
(1,325,765)
2,118,619
726,589
–
–
7,501,658
5,494,751
24,858
(1,325,765)
39
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
1. general InForMatIon
pan african is a company incorporated in england and Wales under
the companies act 1985. the company’s has a primary listing on
the alternative investment market (‘aim’) of the london stock
exchange and a secondary listing on the alternative exchange (‘altx’),
a division of the Jse limited. the nature of the group’s operations and
its principal activities are set out in the directors report on page 32.
the financial statements are presented in pounds sterling. foreign
operations are included in accordance with the policies set out below. the
individual financial statements of each group company are presented in
the currency of the primary economic environment in which it operates.
for the purpose of the consolidated financial statements, the results and
financial position of each group company are expressed in pounds sterling.
the financial statements have been prepared on the going concern basis.
the financial statements have also been prepared in accordance with
ifrs adopted by the european union and therefore the group financial
statements comply with article 4 of the eu ias regulation.
as a result of the reverse takeover of barberton mines mentioned below,
the group accounts have been prepared as a combination of barberton’s
accounts using ifrs.
2. accoUntIng PolIcIes
Basis of preparation and general information
the annual financial statements have been prepared under the historical-
cost basis, except for certain financial instruments which are stated at fair
value, and in accordance with international financial reporting standards.
the principal accounting policies are set out below and are consistent in
all material respects with those applied in the previous year; except where
otherwise indicated. for all periods up to and including the year 30 June
2007, the company prepared its financial statements in accordance with
the united kingdom generally accepted accounting practice (uk gaap).
these financial statements, for the year ended 30 June 2008, are the first
that the company has prepared in accordance with ifrs as adopted by the
european union (eu). the financial statements have also been prepared
in accordance with the international financial reporting interpretations
committee (ifric) interpretations and with those parts of the companies
act 1985 applicable to companies reporting under ifrs. as a result of the
conversion from uk gaap to ifrs, no adjustments have been required
to be made to the comparatives for the year ended 30 June 2007, or the
balance sheet at the transition date of 1 July 2006.
reverse acquisition
on 31 July 2007 the company acquired 74% of barberton mines (pty)
limited (‘barberton’) in a share-for-share transaction.
ifrs3 ‘business combinations’ defines the acquirer in a business
combination as the entity that obtains control. accordingly, the
combination was accounted for as a reverse acquisiton.
as a consequence of applying reverse acquisition accounting, the results of
the group at 30 June 2008 comprise the results of pan african resources
for the 11 months ended 30 June 2008 and the 12 months ended 30 June
2008 of barberton mines. the comparative figures for the group are those
of barberton mines for the 12 months to 30 June 2007.
new accounting policies adopted
IFrs 7 – Financial Instruments: Disclosure
in the current year, the group has adopted ifrs 7 financial instruments:
disclosure which is effective for annual reporting periods beginning on or
after 1 January 2007. the impact of the adoption of ifrs 7 has resulted
in increased disclosure relating to the significance of financial instruments
on the group’s financial position and performance and the nature and
extent of risks arising from these financial instruments to which the group
is exposed during the period and at year-end and the manner in which the
group manages these risks.
40
new and revised International Financial reporting standards not yet
adopted
at the date of authorisation of these financial statements, the following
standards and interpretations which have not been applied in these
financial statements were in issue but not yet effective:
ifrs 8 operating segments
ifric 11 ifrs 2 – group and treasury share transactions
ifric 12 service concession arrangements
ifric 14 ias 19—the limit on a defined benefit asset,
ifrs3
minimum funding requirements and their interaction
business combinations (revised)
the directors anticipate that the adoption of these standards and
interpretations in future periods will have no material impact on the
financial statements of the group except for additional segment disclosures
when ifrs 8 comes into effect for periods commencing on or after 1
January 2009.
Basis of consolidation
the consolidated financial statements incorporate the financial statements of
the company and entities controlled by the company (its subsidiaries) to
30 June each year. control is achieved where the company has the power to
govern the financial and operating policies of an investee enterprise so as to
obtain benefits from its activities.
on acquisition, the assets and liabilities of a subsidiary are measured at
their fair values at the date of exchange of assets given, liabilities incurred
or assumed and equity instruments issued by the group in exchange for
control of the acquiree plus any costs directly attributable to the business
combination. the interest of minority shareholders is stated at the minority’s
proportion of the fair values of the assets and liabilities recognised.
the results of the subsidiaries acquired or disposed of during the year are
included in the consolidated income statement from the effective date of
acquisition or up to the effective date of disposal, as appropriate.
inter-company transactions and balances between group entities are
eliminated on consolidation.
Business combinations
acquisitions of subsidiaries and businesses are accounted for using the
purchase method. the cost of the business combinations is measured as
the aggregate of the fair values (at the date of exchange) of assets given,
liabilities incurred or assumed, and equity instruments issued by the group
in exchange for control of the acquiree, plus any costs directly attributable
to the business combination. the acquiree’s identifiable assets, liabilities
and contingent liabilities that meet the conditions, for recognition under
ifrs 3 business combinations are recognised at their fair values at the
acquisition date, except for non-current assets (or disposal groups) that are
classified as held-for-sale in accordance with ifrs 5 non-current assets
held-for-sale and discontinued operations, which are recognised and
measured at fair value less costs-to-sell.
goodwill arising on acquisition are recognised as an asset, and initially
measured at cost, being the excess of the cost of the business combination
over the group’s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities recognised. if, after reassessment,
the group’s interest in the net fair value of the acquiree’s identifiable
assets, liabilities and contingent liabilities exceeds the cost of the business
combination, the excess is recognised immediately in profit or loss.
the interest of minority shareholders in the acquiree is initially measured
at the minority’s proportion of net fair value of the assets, liabilities and
contingent liabilities recognised.
Property, plant and equipment
mining assets
mining assets, including mine development costs and mine plant facilities,
are recorded at cost of acquisition less provision for impairment and
accumulated depreciation.
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
expenditure incurred to develop new ore bodies, to define mineralisation
in existing ore bodies, to establish or expand productive capacity and
expenditure designed to maintain productive capacities, are capitalised
until commercial levels of production are achieved.
mineral and surface rights
mineral and surface rights are recorded at cost of acquisition less provision
for impairment and accumulated depreciation.
land
land is shown at cost and is not depreciated.
gain or loss on disposal or retirement of assets
the gain or loss arising on the disposal or retirement of an item of
property, plant and equipment is determined as the difference between the
sales proceeds and the carrying amount of the asset and is recognised in
profit or loss.
Depreciation
depreciation of mining assets and mineral and surface rights
mining assets, mine development costs, mineral and surface rights and
plant mine facilities are depreciated over the life of the mines to their
residual values using the units-of-production method based on estimated
proved and probable ore reserves or where impractical, directors’ estimates
subject to a maximum life of mine of 20 years.
the assets of the underlying mines are depreciated over the following
periods:
barberton mines
12 years
other mining plant and equipment is depreciated on the straight-line
basis over the shorter of the life of the mine or their estimated useful lives.
Depreciation of non-mining assets
buildings and other non-mining assets are recorded at cost and depreciated
on the straight-line basis over their expected useful lives, which vary
between 4 to 10 years.
Mining exploration
expenditure on exploration activities is capitalised until the viability of
the mining venture has been proven. if the mining venture is subsequently
considered non-viable the expenditure is charged against income as and
when that fact becomes known.
Impairment (except for goodwill)
at each balance sheet date, the group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. if any such indication
exists both the value in use and the recoverable amount of the asset
is estimated in order to determine the extent of the impairment loss (if
any). Where it is not possible to estimate the recoverable amount of an
individual asset, the group estimates the recoverable amount of the cash-
generating unit to which the asset belongs.
impairment losses are immediately recognised as an expense. a reversal of
an impairment loss is recognised immediately in the income statement,
unless the relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation increase.
goodwill
goodwill arising on consolidation represents the excess of the cost of
acquisition over the group’s interest in the fair value of the identifiable
assets and liabilities of a subsidiary, associate or jointly controlled entity at
the date of acquisition. goodwill is initially recognised as an asset at cost
and is subsequently measured at cost less accumulated impairment losses.
for the purpose of impairment testing, goodwill is allocated to each of
the group’s cash generating units (‘cgu’) expected to benefit from the
synergies of the combination. cash-generating units to which goodwill
has been allocated are tested for impairment annually, or more frequently
when there is an indication that the unit may be impaired. if the
recoverable amount of the cash-generating unit is less than the carrying
amount of the unit, the impairment loss is allocated first to reduce the
carrying amount of any goodwill allocated to the unit and then to the
other assets of the unit pro rata on the basis of the carrying amount of
each asset in the unit. an impairment loss recognised for goodwill is not
reversed in a subsequent period.
on disposal of a subsidiary, associate or jointly controlled entity, the
attributable amount of goodwill is included in the determination of the
profit or loss on disposal.
the group’s policy for goodwill arising on the acquisition of a subsidiary
is described above.
taxation
the charge for current tax is based on the results for the year as adjusted for
items which are non-deductible or disallowed. it is calculated using tax rates
that have been enacted or substantively enacted by the balance sheet date.
deferred tax is accounted for using the balance sheet liability method in
respect of temporary differences arising from differences between the
carrying amount of assets and liabilities in the financial statements and
the corresponding tax basis used in the computation of taxable profit. in
principle, deferred tax liabilities are recognised for all taxable temporary
differences, and deferred tax assets are recognised to the extent that it is
probable that taxable profit will be available against which deductible
temporary differences can be utilised. such assets and liabilities are not
recognised if the temporary difference arises from goodwill or from the
initial recognition (other than a business combination) of other assets and
liabilities in a transaction, which affects neither tax nor accounting profit.
deferred tax is calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled, based on tax rates
(and laws) that have been enacted or substantively enacted by the balance
sheet date. the measurement of deferred tax liabilities and asset reflects the
tax consequences that would follow from the manner in which the group
expects, at the reporting date, to recover or settle the carrying amount of
its assets and liabilities. deferred tax is charged or credited to the income
statement, except when it relates to items credited or charged directly to
equity, in which case the deferred tax is also recorded within equity, or
where they arise from the initial accounting for a business combination. in
a business combination, the tax effect is taken into account in calculating
goodwill or in determining the excess of the acquirer’s interest in the net
fair value of the acquiree’s identifiable assets, liabilities and contingent
liabilities over the cost of the business combination.
the carrying amount of deferred tax assets are reviewed at each balance
sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or parts of the asset
to be recovered.
Provisions
provisions are recognised when the group has a legal or constructive
obligation resulting from past events and it is probable that an outflow
of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation.
the amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the balance sheet
date, taking into account the risks and uncertainties surrounding the
obligation.
41
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
When some or all of the economic benefits required to settle a provision
are expected to be received from a third party, the receivable is recognised
as an asset if it is virtually certain that reimbursement will be received and
the amount of the receivable can be measured reliably.
Foreign currencies
transactions in currencies other than the functional currency of the
relevant subsidiary are initially recorded at the rates of exchange ruling on
the dates of the transactions. monetary assets and liabilities denominated
in such currencies are retranslated at the rates ruling at the balance sheet
date. profits and losses arising on exchange are dealt with in the income
statement.
in order to hedge its exposure to foreign exchange risks, the group
may enter into forward contracts (see note 29 for details of the group’s
accounting policies in respect of such derivative financial instruments).
on consolidation, the assets and liabilities of the group’s foreign
operations are translated into pounds sterling at exchange rates ruling
at the balance sheet date. income and expense items are translated at
the average exchange rates for the period. exchange differences arising
from the translation of foreign operations are classified as equity and are
recognised as income or expenses in the period in which the operation
is disposed of. translation differences on foreign loans to subsidiaries
which are classified as equity loans are accounted for as non-distributable
reserves.
goodwill and fair value adjustments arising on the acquisition of a foreign
operation are treated as assets and liabilities of the reporting entity and are
recorded using the exchange rate at the date of the transaction.
consumable stores and product inventories
consumable stores are valued at the lower of cost, determined on a
weighted average basis, and estimated net realisable value. net realisable
value represents the estimated selling price less all estimated costs of
completion and costs to be incurred in marketing, selling and distribution.
obsolete and slow-moving consumable stores are identified and are written
down to their economic or realisable values. product inventories are valued
at the lower of cost, determined on a weighted-average basis, and net
realisable value. costs include direct mining costs and mine overheads.
retirement benefits
payments to defined contribution retirement benefit plans are charged as
an expense as they fall due. payments made to state-managed schemes are
dealt with as defined contribution plans where the group’s obligations
under the schemes are equivalent to those arising in a defined contribution
retirement benefit plan.
Post-retirement benefits other than pension
certain companies within the group provide retirement benefits by way
of medical-aid schemes for employees. charges to the income statement
are based on an accrual basis. the estimated cost for retiree health-care is
accrued during the participants’ actual service periods, up to the date they
become eligible for full benefits.
equity participation plan
equity-settled share-based payments to employees and others providing
similar services are measured at the fair value of the equity instruments
at the grant date. details regarding the determination of the fair value of
equity-settled share-based transactions are set out in note 33.
the fair value determined at the grant date of the equity-settled share-
based payments is expensed on a straight-line basis over the vesting period,
based on the group’s estimate of equity instruments that will eventually
vest. at each balance sheet date, the group revises its estimate of the
number of equity instruments expected to vest. the impact of the revision
of the original estimates, if any, is recognised in profit or loss over the
42
remaining vesting period, with a corresponding adjustment to the equity-
settled employee benefits reserve.
Provision for environmental rehabilitation costs
long-term environmental obligations are based on barberton mines (pty)
ltd environmental plans, in compliance with current environmental and
regulatory requirements.
full provision is made based on the net present value of the estimated cost
of restoring the environmental disturbance that has occurred up to the
balance sheet date. increases due to additional environmental disturbances
are capitalised and amortised over the remaining lives of the mines.
the estimated cost of rehabilitation is reviewed annually and adjusted as
appropriate for changes in legislation or technology. cost estimates are not
reduced by the potential proceeds from the sale of assets or from plant
clean-up at closure.
Provision for closure costs
the group provides for closure costs other than rehabilitation costs when
the directors have prepared a detailed plan for closure of the particular
operation, the remaining life of which is such that significant changes to
the plan are unlikely; and the directors have raised a valid expectation in
those affected that it will carry out the closure by starting to implement
that plan or announcing its main features to those affected by it.
revenue recognition
revenue represents the value of minerals sold, excluding value-added tax
and is recognised when goods are delivered and risk and reward has passed,
and is measured at the fair value of the consideration received or receivable.
interest income is accrued on a time basis, by reference to the principal
outstanding and at the interest rates applicable, which is the rate that exactly
discounts estimated future cash receipts through the expected life of the
financial asset to that asset’s net carrying amount.
dividend income from investments is recognised when the shareholders’
rights to receive payment have been established.
revenue is recognised when the buyer takes title, provided:
(a) it is probable that delivery will be made;
(b) the item is on hand, identified and ready for delivery to the buyer at
the time the sale is recognised;
(c) the buyer specifically acknowledges the deferred delivery instruc-
tions; and
(d) the usual payment terms apply.
Investment
investments are recognised and derecognised on trade date where the
purchase or sale of an investment is under a contract whose terms require
delivery of the investment within the timeframe established by the market
concerned, and are initially measured at fair value, plus transaction costs,
except for those financial assets classified as at fair value through profit or
loss, which are initially measured at fair value.
fixed asset investments in subsidiaries are shown at cost less provision for
impairment.
loans and receivables
trade receivables, loans and other receivables that have fixed or
determinable payments that are not quoted in an active market are
classed as loans and receivables. loans and receivables are measured at
amortised cost using the effective interest method, less an impairment.
interest income is recognised by applying the effective interest rate, except
for short-term receivables when the recognition of interest would be
immaterial.
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
Impairment of financial assets
financial assets, other than those at fair value through profit and loss
(‘fvtpl’), are assessed for indicators of impairment at each balance sheet
date. financial assets are impaired where there is objective evidence that,
as a result of one or more events that occurred after the initial recognition
of the financial asset, the estimated future cash flows of the investment
have been negatively impacted.
Derecognition of financial assets
the group derecognises a financial asset only when the contractual rights
to the cash flows from the asset expire; or it transfers the financial asset and
substantially all the risks and rewards of ownership of the asset to another
entity. if the group neither transfers nor retains substantially all the risks
and rewards of ownerships and continues to control the transferred asset,
the group recognises its retained interest in the asset and an associated
liability for amounts it may have to pay. if the group retains substantially
all the risks and rewards of ownership of a transferred financial asset, the
group continues to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received.
Financial liabilities and equity instruments issued by the group
classification as debt or equity
debt and equity instruments are classified as either financial liabilities or
as equity in accordance with the substance of the contractual arrangement.
equity instruments
an equity instrument is any contract that evidences a residual interest
in the assets of an entity after deducting all of its liabilities. equity
instruments issued by the group are recorded at the proceeds received, net
of direct issue costs.
Financial liabilities
financial liabilities are classified as either financial liabilities fvtpl or
“other financial liabilities”.
Financial liabilities at FVtPl
financial liabilities are classified as at fvtpl where the financial liability
is either held for trading or it is designated as at fvtpl.
a financial liability is classified as held for trading if:
•
•
•
it has been incurred principally for the purpose of repurchasing in
the near future; or
it is part of an identified portfolio of financial instruments that the
group manages together and has a recent actual pattern of short-
term profit-taking; or
it is a derivative that is not designated and effective as a hedging
instrument.
a financial liability other than a financial liability held for trading may be
designated as at fvtpl upon initial recognition if:
•
•
•
such designation eliminates or significantly reduces a measurement
or recognition inconsistency that would otherwise arise; or
the financial liability forms part of a group of financial assets or
financial liabilities or both, which is managed and its performance
is evaluated on a fair value basis, in accordance with the group’s
strategy, and
documented
information about the grouping is provided internally on that basis;
or
risk management or
investment
it forms part of a contract containing one or more embedded
derivatives, and ias 39 Financial instruments: Recognition and
Measurement permits the entire combined contract (asset or liability)
to be designated as at fvtpl.
financial liabilities at fvtpl are stated at fair value, with any resultant
gain or loss recognised in profit or loss. the net gain or loss recognised in
profit or loss incorporates any interest paid on the financial liability.
other financial liabilities
other financial liabilities are subsequently measured at amortised cost
using the effective interest method, with interest recognised on an effective
yield basis.
the effective interest method is a method of calculating the amortised cost
of a financial liability and of allocating interest expense over the relevant
period. the effective interest rate is the rate that discounts the estimated
future cash payments through the expected life of the financial liability, or,
where appropriate, a shorter period.
Derecognition of financial liabilities
the group derecognises financial liabilities when, and only when, the
group’s obligations are discharged, cancelled or they expire.
Derivative financial instruments
in the ordinary course of its operations, the group enters into a variety
of derivative financial instruments to manage its exposure to commodity
prices, volatility of interest rates and foreign exchange rate risk.
derivatives are initially recognised at cost at the date a derivative contract
is entered into and are subsequently re-measured to their fair value at each
balance sheet date. the resulting gain or loss is recognised in profit or loss
immediately unless the derivative is designated and effective as a hedging
instrument, in which event the timing of the recognition in profit or loss
depends on the nature of the hedge relationship.
a derivative is presented as a non-current asset or a non-current liability if
the remaining maturity of the instrument is more than 12 months and it is
not expected to be realised or settled within 12 months. other derivatives
are presented as current assets or current liabilities.
hedge accounting
the group designates certain hedging instruments, which include
derivatives, embedded derivatives and non-derivatives in respect of foreign
currency risk, as either fair value hedges, cash flow hedges, or hedges of
net investments in foreign operations. hedges of foreign exchange risk or
firm commitments are accounted for as cash flow hedges.
at the inception of the hedge relationship, the entity documents the
relationship between the hedging instrument and the hedged item, along
with its risk management objectives and its strategy for undertaking
various hedge transactions. furthermore, at the inception of the hedge
and on an ongoing basis, the group documents whether the hedging
instrument that is used in a hedging relationship is highly effective in
offsetting changes in fair values or cash flows of the hedged item.
note 29 sets out details of the fair values of the derivative instruments
used for hedging purposes. movements in the hedging reserve in equity
are also detailed in the statement of changes in equity.
Fair value hedge
changes in the fair value of derivatives that are designated and qualify as
fair value hedges are recorded in profit or loss immediately, together with
any changes in the fair value of the hedged item that are attributable to
the hedged risk. the change in the fair value of the hedging instrument
and the change in the hedged item attributable to the hedged risk are
recognised in the line of the income statement relating to the hedged item.
hedge accounting is discontinued when the group revokes the hedging
relationship, the hedging instrument expires or is sold, terminated, or
exercised, or no longer qualifies for hedge accounting. the adjustment to
the carrying amount of the hedged item arising from the hedged risk is
amortised to profit or loss from that date.
43
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
these projections are reviewed by the board and adjusted from time
to time. the current life of mine has been independently aduited
by srk in a competent persons report (‘cpr’) on barberton,
dated 4 July 2007, and is available on the company’s website at
www.panafricanresources.com
estimates made of legal or constructive obligations resulting in the
raising of provisions, and the expected date of probable outflow
of economic benefits to assess whether the provision should be
discounted;
estimates of mineral resources and ore reserves in accordance with
the samrec code (2000) for south african properties. such
estimates relate to the category for the resource (measured, indicated
or inferred), the quantum and the grade.
estimates of the carrying value of goodwill are limited to the
estimates of mineral resource; and
estimates of the fair value of assets at acquisition are made in
accordance with ifrs and take into account the replacement value
of assets, in particular, intagibles related to exploration.
•
•
•
•
cash flow hedge
the effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedges are deferred in equity. the
gain or loss relating to the ineffective portion is recognised immediately
in profit or loss, and is included in the “other gains and losses” line of the
income statement.
amounts deferred in equity are recycled in profit or loss in the periods
when the hedged item is recognised in profit or loss, in the same line of
the income statement as the recognised hedged item. however, when the
forecast transaction that is hedged results in the recognition of a non-
financial asset or a non-financial liability, the gains and losses previously
deferred in equity are transferred from equity and included in the initial
measurement of the cost of the asset or liability.
hedge accounting is discontinued when the group revokes the hedging
relationships, the hedging instrument expires or is sold, terminated, or
exercised, or no longer qualifies for hedge accounting. any cumulative gain
or loss deferred in equity at that time remains in equity and is recognised
when the forecast transaction is ultimately recognised in profit or loss.
When a forecast transaction is no longer expected to occur, the cumulative
gain or loss that was deferred in equity is recognised immediately in profit
or loss.
cash and cash equivalents
cash and cash equivalents comprise cash-on-hand and demand deposits,
and other short-term highly liquid investments that are readily convertible
to a known amount of cash and are subject to an insignificant risk of
changes in value.
Joint Ventures
Joint ventures (‘Jvs’) are consolidated on a proportianate basis according
to the level of ownership held by the group.
3. crItIcal accoUntIng estIMates anD
JUDgeMents
in preparing the annual financial statements in terms of ifrs, the group’s
management is required to make certain judgements, estimates and
assumptions that may materially affect reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reported year and the related disclosures.
the estimates and judgements are based on historical experience, current
and expected future economic conditions and other factors. actual results
may differ from these estimates.
Judgements made by management
the following judgements, apart from those involving estimates (as
mentioned below) have been made by management in the process of
applying the group’s accounting policies that have the most significant
effect on the amounts recognised in the financial statements:
•
in determining
provisions
including
the present obligation of
and
decommissioning
estimates made
environmental
rehabilitation;
•
•
estimates made in determining the recoverable amount of assets
where there is an indication that an asset may be impaired, this
includes the estimation of cash flows and the discount rates used;
estimates made in determining the life of the mines;
the life of mine is determined from development plans based on
mine management’s estimates and includes total mineral reserve and
a portion of the mineral resource. these plans are updated on an
annual basis and take into consideration the actual current cost of
extraction, as well as certain forward projects.
44
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
4. reVenUe
an analysis of the group’s revenue is as follows:
group
£
company
£
year ended
30 June 2008
year ended
30 June 2007
year ended
30 June 2008
15 months
ended
30 June 2007
39,254,557
26,684,796
–
–
217,288
49,018
39,349
37,195
group
£
company
£
year ended
30 June 2008
year ended
30 June 2007
year ended
30 June 2008
15 months
ended
30 June 2007
(3,941,764)
(4,189,422)
(11,440,555)
(9,444,599)
(4,135,470)
(2,718,663)
(3,662,348)
(3,378,598)
(1,983,538)
(1,892,256)
(25,163,675) (21,623,538)
-
-
-
-
-
-
-
-
-
-
-
-
sale of goods
finance income
5. cost oF ProDUctIon
mining
salaries and wages
processing
engineering and technical
administration
6. segMental analysIs
Primary segment
for management purposes, the group is currently organised into two reporting divisions – exploration and gold mining. these
divisions are the basis on which the group reports its primary segment information.
revenue
Mining profit
Depreciation
assets
liabilities
before depreciation
£
%
£
%
£
%
£
%
£
%
2008
exploration
–
–
–
–
–
–
35,146,917
gold mining
39,254,557
100% 13,984,605 100%
1,965,872
100% 28,269,703
–
–
–
–
–
–
21,000,714
24%
44%
32%
–
–
14,048,563 100%
–
–
goodwill
group
2007
exploration
39,254,557
100% 13,984,605 100%
1,965,872
100% 64,417,334
100%
14,048,563 100%
–
–
–
–
–
–
–
–
–
–
gold mining
26,684,796
100% 5,000,474 100%
1,865,997
100% 25,208,616
100%
12,414,013 100%
group
26,684,796
100% 5,000,474 100%
1,865,997
100% 25,208,616
100%
12,414,013
100%
45
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
6. segMental analysIs (contInUeD)
secondary segment
total sales by
customer location
Depreciation
assets
liabilities
capital additions
£
%
£
%
£
%
£
%
£
%
2008
south africa
39,254,557 100% 1,965,872 100% 28,269,703
44% 13,533,982
96% 2,751,735 91%
other*
goodwill
2007
south africa
other*
–
–
–
–
–
–
– 15,146,917
24% 514,581
4% 279,924
9%
– 21,000,714
32%
–
–
–
–
39,254,557 100% 1,965,872 100% 64,417,334 100% 14,048,563 100% 3,031,659 100%
26,684,796 100% 1,865,997 100% 25,208,616 100% 12,414,013 100% 1,552,258 100%
–
–
–
–
–
–
–
–
–
–
26,684,796 100% 1,865,997
100% 25,208,616 100% 12,414,013 100% 1,552,258 100%
* Other includes all the Exploration locations.
7. oPeratIng leases
at the balance sheet date, the group had outstanding commitments under non-cancellable operating leases mainly in
respect of office equipment, security cameras, building rentals and compressors, which fall due as follows:
group
£
company
£
year ended
30 June 2008
year ended
30 June 2007
year ended
30 June 2008
15 months
ended
30 June 2007
Within one year
years 2 to 5
123,733
287,750
411,483
111,857
348,718
460,575
minimum lease payments under operating leases
recognised as an expense in the year:
104,956
109,844
–
–
–
–
–
–
–
–
operating lease payments represent rentals payable by the group for certain of its office equipment and underground
equipment. leases are negotiated for an average term of three to five years.
46
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
8. other (exPenses)/IncoMe
dividends received - subsidiaries
foreign exchange loss
exploration costs
investments written off
dump retreatment rebate
sundry other
9. FInance IncoMe/(costs)
interest received - bank
interest paid - bank
10. ProFIt/(loss) For the PerIoD
profit/(loss) for the year has been arrived at after charging:
management fee
- metorex
- shanduka
share option expense
exploration expenditure
depreciation
impairment
staff costs
group
£
company
£
year ended
30 June 2008
year ended
30 June 2007
year ended
30 June 2008
15 months
ended
30 June 2007
–
–
–
–
–
–
–
–
–
777,898
473,085
(74,791)
–
–
–
–
–
(75,009)
(4,800)
–
(273,786)
25,663
(412,785)
(1,283,151)
(273,786)
803,561
(14,491)
(1,362,960)
group
£
company
£
year ended
30 June 2008
year ended
30 June 2007
year ended
30 June 2008
15 months
ended
30 June 2007
217,288
49,018
39,349
37,195
(17,006)
(35,893)
–
–
200,282
13,125
39,349
37,195
group
£
company
£
year ended
30 June 2008
year ended
30 June 2007
year ended
30 June 2008
15 months
ended
30 June 2007
348,924
343,161
50,819
156,952
47,934
35,844
22,274
183,962
1,965,872
1,865,997
–
–
–
–
195,158
–
–
–
–
–
222,206
75,009
–
–
11,440,555
9,444,599
242,187
162,231
47
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
11. aUDItors’ reMUneratIon
the analysis of auditors’ remuneration is as follows:
group
£
company
£
year ended
30 June 2008
year ended
30 June 2007
year ended
30 June 2008
15 months
ended
30 June 2007
fees payable to the company’s auditors for the
audit of the company’s annual accounts
10,000
21,750
10,000
10,000
fees payable to the company’s auditors and their
associates for other services to the group
The audit of the consolidated financial statements
- the audit of the company’s subsidiaries pursuant
to legislation
total audit fees
- corporate finance services relating to the report-
ing accounting work for the acquisition
total non audit fees
30,000
22,086
62,086
80,000
80,000
–
–
–
–
–
–
21,750
10,000
10,000
–
–
–
–
–
–
12. staFF costs
group
company
the average number of employees were:
corporate
mining
exploration
their aggregate remuneration comprised:
Wages and salaries
social security costs
other pension costs
year ended
30 June 2008
year ended
30 June 2007
year ended
30 June 2008
15 months
ended
30 June 2007
number
number
5
1,548
3
1,556
7
1,477
7
1,491
£
1
–
1
2
2
–
2
4
£
10,467,253
8,544,643
242,187
162,231
–
–
973,302
899,956
–
–
–
–
11,440,555
9,444,599
242,187
162,231
* all company staff costs have been allocated to the various exploration projects.
48
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
13. IncoMe tax exPense
group
£
company
£
year ended
30 June 2008
year ended
30 June 2007
year ended
30 June 2008
15 months
ended
30 June 2007
south african normal taxation
- current year
deferred taxation (see note 28)
- current year
4,192,231
611,892
174,312
544,698
total taxation charge - continuing operations
4,366,543
1,156,590
–
–
–
–
–
–
profit/(loss) before taxation - continuing operations
11,945,229
3,951,164
24,858
(1,325,765)
taxation at the domestic taxation rate of 28%
(2007: 29%) (uk 2008: 28.75%; 2007:29.75%)
non-deductible expenses
taxation rate differentials on non-mining income
(utilisation)/creation of tax losses
3,344,664
1,145,838
7,174
(394,415)
10,759
10,752
1,369,523
(358,403)
–
–
–
–
–
–
(7,174)
394,415
taxation expense for the year
4,366,543
1,156,590
unredeemed capital expenditure/assessable tax loss
available and recognised in deferred taxation
–
382,005
–
–
%
–
–
%
effective taxation rates
statutory rate
tax rate differentials on non-mining income
non-deductible expenses
utilisation/creation of tax losses
effective taxation rate
%
28.00%
11.47%
0.09%
(3.0%)
28.09%
%
29.00%
28.75%
29.75%
–
0.27%
–
–
–
–
–
(28.75%)
(29.75%)
29.27%
–
–
there are no significant unrecognised timing differences associated with undistributed profits of overseas subsidiaries.
south african mining tax on mining income is determined according to a formula which takes into account the profit
and revenue from mining operations. south african mining taxable income is determined after the deduction of all
mining capital expenditure, with the proviso that this cannot result in an assessed loss. capital expenditure amounts not
deducted are carried forward as unredeemed capital expenditure to be deducted from future mining income.
14. earnIngs Per share
earnings per share (‘ePs’)
eps is based on the group’s net profit for the year attributable to equity holders of the parent, divided by the weighted
average number of shares in issue during the year.
from continuing operations
basic eps
share options
diluted eps
2008
Weighted
average
number of
shares
net profit
2007
Weighted
average
number of
shares
earnings
per share
(pence)
earnings
per share net profit
(pence)
5,460,067 1,043,789,285
0.52 2,067,985
593,740,476
0.35
–
30,000,000
(0.01)
–
–
–
5,460,067 1,073,789,285
0.51 2,067,985 593,740,476
0.35
49
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
14. earnIngs Per share (contInUeD)
headline earnings per share
headline earnings per share is based on the group’s headline earnings divided by the weighted average number of
shares in issue during the year.
reconciliation between earnings and headline earnings from continuing operations
2008
net profit
shares
earnings
per share net profit
(pence)
2007
shares
earnings
per share
(pence)
headline earnings per share
5,460,067 1,043,789,285
0.52 2,067,985
593,740,476
0.35
share options
–
30,000,000
(0.01)
–
–
–
diluted headline earnings per share
5,460,067 1,073,789,285
0.51 2,067,985
593,740,476
0.35
headline earnings per share is required to be disclosed in terms of the listing requirements of the Jse limited. no
reconciliation is performed as earnings per share is the same as headline earnings per share.
15. DIVIDenDs
in view of the funding requirements of the new projects and the exploration projects, no dividend is declared for the 12
months ended 30 June 2008 (2007 - nil).
16. ProPerty, Plant anD eQUIPMent
groUP
cost
land * Mineral
rights
Building and
Infrastructure
Plant and
Machinery
shafts
exploration other
total
at 1 July 2006
8,034
5,445,913
1,534,009
7,632,623
13,583,183
additions
disposals
foreign currency translation
–
–
–
–
–
–
776,444
802,745
(30,487)
–
reserve
(600)
(407,045)
(114,656)
(592,191)
(1,029,051)
Balance at 30 June 2007
7,434
5,038,868
1,419,134
7,786,389
13,357,096
–
–
–
–
–
–
28,203,762
–
–
–
–
1,579,189
(30,487)
(2,143,543)
27,608,921
additions
–
–
–
794,283
1,687,964
269,488
279,924
3,031,659
foreign currency translation
reserve
(659)
(446,941)
(125,676)
(690,642)
(1,184,755)
–
–
(2,448,673)
Balance at 30 June 2008
6,775
4,591,927
1,293,458
7,890,030
13,860,305
269,488
279,924
28,191,907
50
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
16. ProPerty, Plant anD eQUIPMent (contInUeD)
accUMUlateD DePrecIatIon
land * Mineral
rights
Building and
Infrastructure
Plant and
Machinery
shafts
exploration other
total
at 1 July 2006
(1,094,576)
(306,539)
(1,471,705)
(2,552,855)
charge for the year
–
(334,994)
(94,500)
(556,102)
(880,401)
foreign currency translation
reserve
Balance at 30 June 2007
charge for the year
foreign currency translation
reserve
–
–
–
–
75,636
21,182
141,029
176,406
(1,353,934)
(379,857)
(1,886,778)
(3,256,850)
(323,994)
(91,280)
(581,804 )
(968,794)
138,806
38,855
200,259
343,278
Balance at 30 June 2008
– (1,539,122)
(432,282)
(2,268,323)
(3,882,366)
–
–
–
–
–
–
–
–
–
–
–
(5,425,675)
(1,865,997)
414,253
(6,877,419)
(1,965,872)
721,198
–
(8,122,093)
carryIng aMoUnt
at 30 June 2007
at 30 June 2008
coMPany
cost
Balance at 30 June
2007
additions
Balance at 30 June
2008
accUMUlateD
DePrecIatIon
Balance at 30 June
2007
Balance at 30 June
2008
carryIng aMoUnt
at 30 June 2007
at 30 June 2008
7,434
3,684,934
1,039,496
5,899,611 10,100,246
–
– 20,731,502
6,775 3,052,805
861,176
5,621,707
9,977,939
269,488
279,924 20,069,814
land
Mineral
rights
Building and
Infrastructure
Plant and
Machinery
shafts
exploration other
total
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
21,670
21,670
21,670
21,670
–
–
–
–
–
–
21,670
21,670
* details of land are maintained in a register at the company’s registered office, which may be insepected by a
member or their duly authorised agents.
the group reviews the residual values used for purposes of depreciation calculations annually.
51
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
17. IntangIBle asset other than gooDWIll
exploration
balance at 1 July 2007
acquired (note 34)
additions
exploration expenditure
purchase of 20% of manica
balance at 30 June 2008
18. gooDWIll
group
£
company
£
2008
2007
2008
2007
–
6,588,340
–
2,652,270
3,596,435
12,837,045
–
–
–
–
–
–
goodwill acquired in a business combination is allocated at acquisition to the cash-generating units (cgus) that are
expected to benefit from that business combination. goodwill is allocated as follows:
arising on reverse acquisition of barberton
mines (note 34)
balance at 1 July 2007
additonal amount recognised from business
combination of barberton mines
Balance at 30 June 2008
group
£
company
£
2008
2007
2008
2007
21,000,714
21,000,714
-
21,000,714
21,000,714
-
-
-
-
-
-
-
-
-
-
–
–
–
-
-
-
-
-
the group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be
impaired.
the recoverable amounts of the cgus are determined from value-in-use calculations. the key assumptions for the
value-in-use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and
direct costs during the period. management estimates discount rates using pre-tax rates that reflect current market
assessments of the time value of money and the risks specific to the cgus. the growth rates are based on industry
growth forecasts. changes in selling prices and direct costs are based on past practices and expectations of future
changes in the market (refer to note 34).
the group prepares cash-flow forecasts derived from the most recent financial budgets approved by management for
the next five years and extrapolates cash flows for the following five years based on an estimated growth rate. this rate
does not exceed the average long-term growth rate for the relevant markets.
52
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
19. InVestMents
investments
company
£
2008
2007
34,223,594
3,069,705
34,223,594
3,069,705
at 30 June 2008 the company held the following shares in subsidiary undertakings:
country of
Incorporation
south africa
Principal
activity
mining
Proportion of
capital held
by country
carrying
amount
74% 31,010,450
name of Undertaking
barberton mines (pty) ltd
or oubangui sa
explorator limitada
central african republic exploration
mozambique
exploration
exploration
par-african resources (ghana) limited
ghana
mistral resource development corporation
limited
brampton capital overseas limited
viking internet limited
british virgin isles
british virgin isles
exploration
exploration
england and Wales
dormant
50%
100%
100%
100%
100%
100%
30,827
88,972
23,640
584,704
2,485,000
1
metorex limited is the ultimate controlling company of par. the metorex group is the only group of which par is a
member. metorex is listed and incorporated in south africa and their financial statements are publicly available.
20. rehaBIlItatIon trUst FUnD
group
£
funds held in trust fund (refer to note 27)
2008
2007
2008
1,739,522
1,743,648
1,739,522
1,743,648
company
2007
£
-
-
company
2007
£
-
-
group
£
2008
2007
2008
377,974
377,974
125,498
125,498
21. InVentorIes
consumable stores
-
-
-
-
53
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
22. traDe anD other receIVaBles
trade receivables
other receivables and prepayments
amounts owed by subsidiaries
group
£
company
£
2008
2007
2008
2007
2,630,863
1,123,664
310,193
–
341,913
1,061,888
–
–
–
–
292,159
3,348,487
2,972,776
2,185,552
310,193
3,640,646
there are no amounts owing that are past due and not impaired. the average credit period is 18 days (2007: 15 days).
no interest is charged on trade receivables.
before accepting any new customers, the group uses a credit bureau or performs a credit assessment to assess the
potential customers’ credit limit and credit quality.
the fair value of trade receivables is not materially different from the carrying value presented. no receivables have
been pledged as security.
23. cash anD cash eQUIValents
cash and cash equivalents comprise cash held by the group and short-term bank deposits with an original maturity of
three months or less. the carrying amount of these assets approximates their fair value
cash and cash equivalents
credit facilities
group
£
company
£
2008
2007
2008
2007
5,419,489
422,416
1,455,587
326,797
the group has the following credit facilities at 30 June 2008:
overdraft facility
asset finance facility
guarantee
credit card
2,570,694
106,091
192,802
8,676
564,181
437,240
-
-
2,878,263
1,001,421
-
-
-
-
-
-
-
-
-
-
the overdraft facility is unsecured and the asset finance facility is secured.
54
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
24. stateMent oF changes In eQUIty
groUP
share
share
Preference
hedging and
retained
share option
Merger
Minority
total
capital
Premium
share
translation
earnings
reserve
reserve
Interest
account
capital and
reserve
premium
Balance at 1 July 2006
4,180,032 4,076,769 8,422,793 (3,741,411) 2,895,683
92,516
(6,189,702)
1,017,403
10,754,0823
issue of shares
acquisition of par
redemption of shares
current year movement
profit for the year
dividends (pre-acquisiton)
share-based payment -
charge for the year
–
–
–
–
–
–
–
–
–
–
–
– (2,844,618)
–
–
–
2,700,177
–
–
–
–
–
–
–
–
–
–
–
–
– 2,067,985
– (477,714)
–
–
35,844
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– (2,844,618)
–
2,700,177
726,589
2,794,574
(167,742)
(645,456)
–
35,844
Balance at 30 June 2007
4,180,032 4,076,769 5,578,175 (1,041,234) 4,485,954
128,360
(6,189,702)
1,576,250 12,794,604
issue of shares
6,818,632 33,190,706
–
redemption of shares
current year movement
profit for the year
share-based payment -
charge for the year
current year merger reserve
–
–
–
–
–
– (5,578,175)
–
–
–
–
–
–
–
–
–
–
(77,028)
–
–
–
– 5,460,067
–
–
–
–
–
–
–
–
156,952
–
–
–
–
–
– 40,009,338
– (5,578,175)
–
(77,028)
2,118,619
7,578,686
–
156,952
–
(4,515,606)
– (4,515,606)
Balance at 30 June 2008
10,998,664 37,267,475
– (1,118,262) 9,946,021
285,312 (10,705,308)
3,694,869 50,368,771
coMPany
share
share
Preference
hedging
retained
share option
Merger
total
capital
Premium
share
and
earnings
reserve
reserve
account
capital and
translation
premium
reserve
Balance at 1 april 2006
4,077,532
3,978,178
issue of shares
loss for the year
share-based payment -
charge for the year
102,500
98,591
–
–
–
–
Balance at 30 June 2007
4,180,032
4,076,769
issue of shares
profit for the year
share-based payment -
charge for the year
6,818,632 33,190,706
–
–
–
–
Balance at 30 June 2008
10,998,664 37,267,475
–
–
–
–
–
–
–
–
–
– (2,772,366)
73,956
1,485,000
6,842,300
–
–
– (1,325,765)
–
–
201,091
(1,325,765)
–
–
222,206
75,000
297,206
– (4,098,131)
296,162
1,560,000
6,014,832
–
–
–
–
24,858
–
–
–
195,158
– 40,009,338
–
–
24,858
195,158
– (4,073,273)
491,320
1,560,000 46,244,186
55
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
25. share caPItal
authorised
2,000,000,000 (2007: 1,000,000,000) ordinary
shares of £0.01 each
Issued and fully paid up 1,099,866,438 (2007:
418,003,235) ordinary shares of £0.01 each
group
£
company
£
2008
2007
2008
2007
20,000,000
10,000,000
20,000,000
10,000,000
10,998,664
4,180,032
10,998,664
4,180,032
the following issue of shares were made during the year:
a) 28,122,727 ordinary shares were issued at 2.79p per share under the terms of the share option agreement
b) 60,000,000 ordinary shares were issued at 6p on 27 July 2007 for a 20% share in Manica purchased from Pangea
Exploration (Pty) Ltd
c) 593,740,476 ordinary shares were issued at 6p in 31 July 2007 in terms of the reverse acquisition of Barberton Mines
(Pty) Ltd
26. BorroWIngs
amount due within 12 months
amount due for settlement after 12 months
total borrowings
group
£
company
£
2008
2007
2008
2007
89,269
16,822
106,091
170,017
115,665
285,682
–
–
–
–
–
–
borrowings represent instalment finance loans and are secured by plant and equipment with a net book value of
£249, 786 and bear interest at south african prime less 1.5% and are repayable in periods that vary from 5 to 16
months.
27. ProVIsIons
groUP
balance at 1 July 2006
provided during the year
utilised during the year
Balance at 30 June 2007
provided during the year
utilised during the year
foreign currency translation reserve
Balance at 30 June 2008
long term provisions
current provisions
56
Post-
retirement
Benefits
rehabilitation
leave pay and
bonuses
total
164,663
2,018,676
645,950
2,829,289
–
117,200
229,350
346,550
(16,397)
148,266
–
2,135,876
(163,397)
711,903
(179,794)
2,996,045
–
205,822
229,352
435,174
(13,307)
(11,969)
122,990
(62,968)
(163,398)
(239,673)
(181,766)
2,096,964
(66,772)
711,085
(260,507)
2,931,039
122,990
2,096,964
–
2,219,954
–
–
711,085
711,085
122,990
2,096,964
711,085
2,931,039
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
27. ProVIsIons (contInUeD)
coMPany
there are no provisions in the company.
Post retirement benefits - refer to note 30
rehabilitation trust fund
the group is exposed to environmental liabilities relating to its mining operations. estimates of the cost of
environmental and other remedial work such as reclamation costs, close down and restoration and pollution control
are made on an annual basis, based on the estimated life of the mine, following which payments are made to a
rehabilitation trust set up as required by the minerals act and regulations. this represents the net present value of the
best estimate of the expenditure required to settle the obligation to rehabilitate environmental disturbances caused by
mining operations. these costs are expected to be incurred over a period in excess of 20 years.
leave pay
the provision for leave pay is provided for, based on the total cost of employment of employees and the amount of
leave days owing to them.
28. DeFerreD tax
Deferred tax liabilities
property, plant and equipment
provisions
net deferred tax liabilities
group
£
company
£
2008
2007
2008
2007
5,541,169
5,903,155
(339,924)
(376,182)
5,201,245
5,526,973
–
–
–
–
–
–
group
£
2008
2007
company
£
2008
2007
reconciliation of deferred tax liabilities
net deferred tax liabilities at the beginning of the year
5,526,973
4,991,104
deferred tax charge for the year
translation difference
net deferred tax liabilities at end of the
year
174,312
(500,040)
544,698
(8,829)
5,201,245
5,526,973
–
–
–
–
–
–
–
–
57
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
29.
FInancIal InstrUMents
the group manages its capital to ensure that the group will be able to continue as a going concern while maximising
the return to stakeholders through the optimisation of the debt and equity balances. the group's overall strategy
remains unchanged from 2007.
group
£
company
£
2008
2007
2008
2007
106,091
285,682
–
–
(5,419,489)
(422,416)
(1,455,587)
(326,979)
(5,313,398)
(136,733)
(1,455,587)
(326,979)
50,368,771
12,794,603
46,244,186
6,014,832
(11%)
(1%)
(3%)
(5%)
5,419,489
422,416
1,455,587
326,797
2,972,776
2,185,552
310,193
3,640,646
–
–
–
–
2,860,886
2,212,626
37,110
1,022,306
–
1,092,232
–
–
capital risk Management
interest-bearing debt
cash and cash equivalents
net interest-bearing debt
equity
net debt to equity ratio (%)
categories of Financial Instruments
Financial assets
cash and cash equivalents
receivables
derivative instruments
Financial liabilities
amortised cost
derivative instruments
Financial risk Management objectives
the group seeks to minimise the effects of these risks by using derivative financial instruments to hedge risk exposures
where appropriate. the use of financial derivatives is governed by the group’s policies approved by the board of
directors, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial
derivatives and non-derivative financial instruments, and the investment of excess liquidity. compliance with the
policies and exposure limits is reviewed on a continuous basis. the group does not enter into or trade financial
instruments, including derivative financial instruments, for speculative use.
credit risk
credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to
the group. the group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient
collateral, where appropriate, as means of mitigating the risk.
the group's credit risk is primarily attributable to its trade receivables. the amounts presented in the balance sheet
are net of allowances for doubtful receivables of £267 (2007:£nil), estimated by the group's management based on
the current economic environment. the credit risk on liquid funds is limited because the counterparties are dealt with
in accordance with the group’s credit policy. the group has no amounts from major customers that represent more
than 5% of the trade receivables balance for the individual companies.
the group does not have any significant credit risk exposure to any single counterparty or any group of counterparties
having similar characteristics. the group defines counterparties as having similar characteristics if they are related
entities.
58
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
29.
FInancIal InstrUMents (continued)
Market risk
the group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and
the gold price. Where appropriate, the group enters into a variety of derivative financial instruments to manage its
exposure to foreign currency risk and the commodity price risk. market risk exposures are measured using sensitivity
analysis.
Foreign currency and commodity price risk
the group undertakes certain transactions in foreign currencies. hence, exposures to exchange rate fluctuation arise.
exchange rate exposures are managed within approved policy parameters.
the group may enter into forward contracts to hedge their exposure to fluctuations in gold prices and exchange rates
on specific transactions. the contracts are matched with anticipated future cash flows from gold sales.
currency risk
currency
pound sterling / rand
Foreign currency sensitivity
closing rate average rate
15.56
14.68
Impact of
10% currency
movement on
profit/loss
696,188
the pounds sterling carrying amount of the group's foreign currency denominated monetary assets and liabilities at
balance sheet date is as follows:
2008
assets
liabilities
2007
assets
liabilities
Denominated
in south
african
rand
£
£
total
6,129,852
2,262,413
8,392,265
2,321,740
433,055
2,754,795
2,607,968
1,926,944
–
–
2,607,968
1,926,944
Fair value of financial instruments
gains and losses on instruments for hedging are not recognised until the exposure that is being hedged is itself
recognised.
commodity hedges - on balance sheet
group and company
unrecognised gains and losses on instruments used for hedging at year end are:
59
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
29.
FInancIal InstrUMents (continued)
2008
gold
2007
gold
Maturity
Volume
ave forward
rate
Fair value loss
–
–
–
–
6 months
333 kg
r102 245 / kg
1,092,244
Interest rate and liquidity risk
fluctuations in the interest rates impact on the value of short-term investment and financing activities, giving rise to
interest rate risk.
in the ordinary course of business, the group receives cash proceeds from its operations and is required to fund
working capital and capital expenditure requirements. the cash is managed to ensure that surplus funds are invested
to maximise returns whilst ensuring that capital is safeguarded to the maximum extent by only investing with
reputable financial institutions.
contractual arrangements for committed borrowing facilities are maintained with several banking counterparties to
meet the group’s normal and contingent funding.
Interest rate risk
the group is exposed to interest rate risk as entities within the group borrow funds at both fixed and floating interest
rates.
Interest rate sensitivity
based on the minor long term liability balances on the balance sheet, an interest rate sensitivity is not performed as the
interest rate exposure to the group is minimal.
liquidity risk
ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate
liquidity risk management framework for the management of the group's short term funding and liquidity
management requirements. the group manages liquidity risk by maintaining adequate reserves, banking facilities and
reserve borrowings facilities by continually monitoring forecast and actual cash flows and matching maturity profiles
of financial assets and liabilities.
the group has access to financing facilities, of which the total unused portion is £2.9 million (2007: £1.0 million)
(refer to note 23). the group expects to meets its other obligations from operating cash flows and proceeds of
maturing financial assets.
liquidity risk analysis
the following table indicates the group's remaining contractual maturity from its financial liabilities:
Weighted
average
interest rate %
less than 12
months
1 - 5 years
total
groUP
2008
trade payables
long term liabilities
short term liabilities
60
–
2,754,795
–
2,754,795
14%
14%
–
16,822
89,269
–
16,822
89,269
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
29.
FInancIal InstrUMents (continued)
2007
trade payables
long term liabilities
short term liabilities
coMPany
2008
trade payables
2007
trade payables
Weighted
average
interest rate %
less than 12
months
1 - 5 years
total
–
1,926,944
–
14%
14%
–
115,665
170,017
–
1,926,944
115,665
170,017
Weighted
average
interest rate %
less than 12
months
total
–
433,050
433,050
–
1,026,493
1,026,493
Fair value of financial instruments
the directors consider that the carrying amounts of financial assets and liabilities recorded approximate their fair
values.
30. Post retIreMent BeneFIt InForMatIon
all full time employees are required to be members of either the barberton retirement fund, metorex pension
fund, sentinel retirement fund or mine Workers provident fund. these are defined contribution funds are
registered under and governed by the pension act, 1956 as amended. the assets of the scheme are held separately
from those of the company in funds and they are in the control of the trustees.
the total costs charged to the income statement of £655,381 represent employer contributions payable to the
schemes by the company at rates specified in the rules of the scheme.
the calculation of the provision for post retirement medical benefits is performed internally by management using
the south african revenue services life expectancy tables as the benefits payable are a fixed amount per pensioner.
61
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
31. coMMItMents, contIngent lIaBIlItIes anD gUarantees
groUP
commitments
the group had outstanding open orders on open votes contracted for at year-end of £139,147 (2007: £49,950).
contingent liabilities
the group had a contingent liability of £nil (2007: £9,068) for repairs carried out by the patcon sales (proprietary)
limited under guarantees.
guarantees
the group had guarantees of £192,802 (2007:£215 054) favourable to eskom, and £1,285 (2007: £nil)
favourable to the department of mineral affairs at year end.
coMPany
there were no commitments, contingent liabilities and guarantees for the company for the year ended 30 June
2008 (2007: £nil)
32. DIrectors’ eMolUMents
executive directors
emoluments
company contributions
share options
total
non-executive directors
emoluments
total
total remuneration
Individual directors'
emoluments
executive
mr k c spencer * ◊
mr J nelson
mr n steinberg †
mr m smith * ◊
total
2008
£
2007
£
88,715
–
510,000
598,715
38,750
38,750
637,465
74,571
–
‡87,636
162,207
30,000
30,000
192,207
share
option
profit
£
Basic
salary
Bonuses
£
£
share
option
expense
£
company
contributions
2008
total
2007
total
£
£
£
–
–
–
510,000
78,000
10,715
–
–
–
–
–
–
510,000
78,000
10,715
–
–
–
–
–
–
–
88,715
162,207
–
–
–
–
88,715
162,207
‡ for the 15 months ended 30 June 2007.
* mr k c spencer and mr m smith were appointed during the current year.
◊ mr k c spencer, mr m smith, mr a s malone and mr c d s needham are directors of metorex limited,
therefore no remuneration is paid to them directly. a management fee is charged to par by metorex limited.
refer to the metorex limited annual report for 30 June 2008 for detail on their remuneration.
† mr n steinberg resigned during the year. nathan steinberg is a partner in munslows, a firm of chartered
certified accountants. that firm charged fees of £30,000 (2007: £17,625).
62
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
32. DIrectors’ eMolUMents (contInUeD)
non-executive Directors
non-executive directors consist of mr r g still, dr h blignault, mr a s malone ◊, mr c d s needham ◊ and mr
J hopwood.
dr h blignault and mr n a steinberg resigned during the current year. non-executive directors are entitled to
£15,000 (2007:£13,750) per annum for services rendered.
2008 share options
mr k c spencer
mr J nelson
mr n steinberg
mr r g still
dr h blignault
mr J hopwood
mr a s malone
mr c d s needham
mr m smith
total
total
options
1 July 2007
options
granted
options
exercised
–
3,000,000
–
18,000,000
5,200,000
4,000,000
–
–
–
–
– (12,000,000)*
–
–
–
1,000,000
–
–
–
–
–
–
–
–
–
–
27,200,000 4,000,000
–
(12,000,000)
* the market price at date of exercise was 6p (9,000,000) and 7p (3,000,000)
2007 share options
mr k c spencer
mr J nelson
mr n steinberg
mr r g still
dr h blignault
mr a s malone
mr c d s needham
total
total
options
1 July 2006
–
18,000,000
5,200,000
4,000,000
5,000,000
–
–
32,200,000
options
granted
options
exercised
–
–
–
–
(5,000,000)
–
–
–
–
–
–
–
–
–
–
average
option
price
(pence)
6.2
2.0
2.8
2.5
–
6.2
–
–
–
average
option
price
cents
–
2.0
2.8
2.5
2.0
–
–
total
options
30 June
2008
3,000,000
6,000,000
5,200,000
4,000,000
–
1,000,000
–
–
–
19,200,000
total
options
30 June
2007
–
18,000,000
5,200,000
4,000,000
–
–
–
(5,000,000)
27,200,000
Directors’ interests in shares
as at 30 June 2008, none of the directors held any shares in the capital of pan african, other than mr a s malone,
who held 1,289,230 ordinary shares (2007: nil). there have been no changes to these holdings since the year end.
substantial shareholdings
pan african is aware of the following substantial interests in the group’s issued share capital as at 31 october 2008:
Percentage of
issued share
capital
number of
ordinary
shares
metorex ltd
brait s.a.
pangea exploration (pty)
ltd
bmo nesbitt burns
sunvest corporation ltd
593,740,476
69,326,975
45,601,534
34,300,000
33,200,000
53.95%
6.30%
4.14%
3.12%
3.02%
63
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
33. share BaseD oPtIons
on 1 september 2005, the company established a share option programme that entitles all employees, officers,
directors and qualifying consultants and its subsidiaries to purchase shares in the company. in accordance with
these programmes, options are exercisable at the market price of the shares at the date of the grant. directors
determine to whom options are granted.
the exercise of options granted to senior employees is at the approval of the board having regard to the grantee’s
fulfillment of obligations to the group, achievement of targets and conduct of duties. in the event of the grantee’s
ceasing to hold employment or office, the options will lapse unless exercised within 30 days. options may be
exercised over a period of 3 years, calculated from the first anniversary of teh date of granting the option and in 3
equal tranches, subject to the directors discretion. a maximum of 12.25% of the authorised share capital of par
are available under the scheme.
the number and weighted average exercise price of share options is as follows:
30 June 2008
30 June 2007
Weighted
average exercise
price
number of
options
Weighted
average exercise
price
number of options
outstanding at 1 July
granted during the period
exercised during the period
lapsed in period
outstanding and exercisable at 30
June
3.40p
6.50p
2.70p
nil
57,822,727
17,122,273
(26,500,000)
(1,500,000)
4.70p
46,945,000
3.15p
5.50p
4.00p
nil
3.40p
54,000,000
7,000,000
(1,677,273)
(1,500,000)
57,822,727
the fair value of services received for share options granted is based on the fair value of share options granted,
measured using a black scholes model, with the following inputs:
options granted during the year
number of
option
option price
£
Fair Value
16 august 2007
2 June 2008
total
share price
exercise price
expected volatility
expected life
risk-free interest rate
6,500,000
10,622,273
17,122,273
0.065
0.062
–
2008
0.062
0.070
72.39%
1-3 years
5.31%
422,500
658,581
1,081,081
2007
3.5
3.75
71.98%
3-4 years
4.0%
the group does not expect to pay any dividends during the contractual life of the share options.
the volatility of the group’s share price on each date of grant was calculated as the average of volatilities of share
prices of the group on the corresponding dates. the volatility of share price of the group was calculated as
the average of annualised standard deviations of daily continuously compounded returns on the group’s stock,
calculated over 1,2 and 3 years back from the date of grant. therefore, volatility of the group’s share prices was
calculated over the period commensurate with the expected life of the options under consideration, giving more
weight to more recent historical data to account for volatility persistance.
there are no market conditions attached to the exercise of the share options.
the group recognised total expenses of £156,952 (2007: £35,844) related to equity settled share-based payment
transactions
64
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
34. acQUIsItIons
effective 27 July 2007, the company acquired 74% of barberton mines (pty) ltd, for £35.6 million satisfied by
the issue of 593,740,476 new shares at 6p per share. the transaction constituted a reverse takover in terms of ifrs
3: business combinations. accordingly, barberton has been treated for accounting purposes as acquiring pan
african, the current year results incorporate a full year of barberton and 11 months of pan african and prior year
comparatives represent the results of barberton for 12 months prior to the transaction. ifrs 3 also requires the cost
of the transaction to represent the fair value of pan african immediately prior to the deal being £25.7 million. the
fair value of the acquired net assets of pan african amounted to £5.9 million at acquisition, which gave rise to the
recognition of goodwill amounting to £19.8 million, which is to be tested for impairment on an annual basis against
the net asset value of the new pan african group. in addition, transaction costs of £1.2 million formed part of the
cost of acquisition and allocated to goodwill.
the net loss from pan african since the date of acquisition was £1.9 million.
2008
commodity
Date of
acquisition
Porportion of
share acquired
cost of
acquisition
barberton mines (pty) ltd
gold
31 July 2007
74%
35,624,429
the major classes of assets and liabilities are as follows:
non current assets *
current assets
total assets
non current liabilities
current liabilities
total liabilities
net assets
cost of acquisition
fair value of par
transaction costs
total value of par
net asset value (as above)
goodwill arising on acquisition
Impact of the acquisition on the results of the group
6,588,340
520,529
7,108,869
-
1,242,108
1,242,108
5,866,761
25,707,197
1,160,278
26,867,475
(5,866,761)
21,000,714
barberton mines contributed £7,553,828 since acquisition, to the profit of the group for the current year.
* no fair value uplift has been allocated to the resources of manica or the group’s other exploration projects as
none of these projects have proven and probable reserves assigned to them for the reasons outline on page 21.
consequently there is a wide range of uncertainty as to these projects’ underlying fair values at the date of transac-
tion and it has been concluded that the most reliable estimate is the historic costs incurred on each project. no
other intangible assets arose in connection with the transaction and accordingly all excess purchase consideration
arising has been allocated to goodwill as detailed in note 18.
65
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
35. relateD PartIes
the company entered into the follwoing transactions and held year end balances with related parties:
pref dividends received from barberton
loans to subsidiaries
barberton
mistral resources
or oubangui
par-african (ghana)
Income statement
Balance sheet
2008
£
2007
£
2008
£
2007
£
(473,085)
–
–
–
91,170
8,102,311
1,616,887
transactions between the group and other related parties are disclosed below:
mr r g still is a director of pangea exploration (pty) ltd which is owned as to 33% by a trust connected with his
family. the exploration expense of £22,274 was made on behalf of pan african by pangea exploration, in respect
of the manica project in accordance dated 19 november 2003. the group has reimbursed pangea exploration and
the transaction was at arms length.
during the year, 60,000,000 ordinary shares were issued at 6p for a 20% share in, purchased from pangea
exploration (pty) ltd of which mr r g still is a director
the remuneration of the directors who are the only key management personnel of the group is shown in note
32 - directors’ emoluments.
36. Post Balance sheet eVents
there are no significant subsequent events between 30 June 2008 and the date of this report.
66
consolIDateD anD coMPany notes to the
FInancIal stateMents For the year enDeD 30 JUne 2008
37. reconcIlIatIon oF ProFIt/(loss) BeFore taxatIon to cash generateD By/(UtIlIseD
In) oPeratIons
group
£
company
£
year ended
30 June 2008
year ended
30 June 2007
year ended
30 June 2008
15 months
ended
30 June 2007
profit/(loss) before taxation
11,945,229
3,951,164
24,858
(1,325,765)
adjusted for:
dividends received
investments written off
exploration costs written off
share options costs
net finance income
depreciation
operating profit/(loss) before working capital
changes
Working capital changes
(increase)/decrease in inventories
(increase)/decrease in trade and other receivables
(decrease)/increase in trade and other payables
and provisions
non cash items
cash generated by/(utilised in) operations
income taxes paid
net finance income
1,925,622
1,903,168
–
–
156,952
–
–
13,164
37,133
(200,282)
(13,125)
1,968,952
1,865,997
(317,276)
(473,085)
–
–
195,158
(39,349)
–
264,820
4,800
75,009
222,206
(37,195)
–
13,870,851
5,854,332
(292,418)
(1,060,945)
(1,108,630)
(122,733)
2,345,247
641,829
(252,476)
(787,224)
(504,104)
435,174
11,424
–
–
(228,132)
3,330,453
(1,367,016)
95,964
(985,206)
641,829
–
–
–
12,762,221
5,731,600
2,052,829
(419,116)
(1,722,974)
(16,703)
–
–
200,282
13,125
39,349
37,195
net cash from/(used in) operating activities
11,239,529
5,728,021
2,092,178
(381,921)
38. transItIon to IFrs
the group’s financial statements for the year ended 30 June 2008 have been prepared as a combination of barberton
due to the reverse takeover during the period. barberton has historically prepared financial statements under ifrs
and so no adjustments are required to the group accounts. the company only accounts have been prepared under
ifrs for the first time for the year ended 30 June 2008. the adoption of ifrs has not required any adjustments to
the financial statements for the previous year prepared under uk gaap.
67
notIce oF annUal general MeetIng
notice is hereby given that the ninth annual general meeting of pan african resources plc will be held at the offices of fasken
martineau llp, fourth floor, 17 hanover square, london W1s 1hu on monday, 22 december 2008 at 12h00 (all times stated are
united kingdom times unless otherwise stated) to consider and, if thought fit, transact the following business:
orDInary BUsIness
1.
2.
3.
4.
5.
6.
to receive and adopt the directors’ report, the audited
statement of accounts and auditors’ report for the year
ended 30 June 2008.
to re-elect mr r g still as a director of the company who
retires by rotation pursuant to the articles of association
of the company.
to re-elect mr c d s needham as a director, who retires
by rotation pursuant to the articles of association of the
company.
to re-elect mr J g hopwood as a director, who was
appointed during the period.
to re-elect mr m smith as a director, who was appointed
during the period.
to appoint deloitte & touche llp as auditors of the
company and to authorise the directors to determine
their remuneration.
sPecIal BUsIness
as special business, to consider and if thought fit, to pass the
following resolutions of which resolution 7 will be proposed
as an ordinary resolution and resolutions 8, 9 and 10 will be
proposed as special resolutions:
7.
that the directors be and are hereby generally and
unconditionally authorised pursuant to section 80 of the
companies act 1985 (‘the act’), in substitution for all
previous powers granted to them, to exercise all the powers
of the company to allot and make offers to allot relevant
securities (within the meaning of section 80(2) of the act)
up to an aggregate nominal amount of £8,994,108.38;
such authority shall, unless previously revoked or varied by
the company in general meeting, expire on the conclusion
of the next annual general meeting of the company or on
31 december 2009, whichever is the earlier, provided that
the company may, at any time before such expiry, make
an offer or enter into an agreement which would or might
require relevant securities to be allotted after such expiry
and the directors may allot relevant securities pursuant to
any such offer or agreement as if the authority conferred
hereby had not expired.
8.
that the directors be and they are hereby empowered
pursuant to section 95 of the companies act 1985 (the
“act”), in substitution for all previous powers granted
thereunder, to allot equity securities (within the meaning
of section 94 of the act) for cash pursuant to the authority
granted by resolution 6 above as if section 89(1) of the
act did not apply to any such allotment provided that this
power shall expire at the conclusion of the next annual
general meeting of the company or on 31 december
2009, whichever is the earlier, and such power is limited to
the allotment of equity securities:
the equity
shares where
(a) in connection with rights issues to holders of
ordinary
securities
respectively attributable to the interests of such
holders are proportionate (as nearly as may be
practicable) to the respective numbers of ordinary
shares held by them, but subject to such exclusions
or other arrangements as the directors may deem
necessary or expedient to deal with any fractional
entitlements or any legal or practical problems
under law of, or the requirements of any regulatory
body or any recognised stock exchange in, any
territory;
(b) up to a maximum aggregate nominal value of
£469,450 in connection with the exercise of
options granted to various parties (including
directors) over an aggregate of 46,945,000
ordinary shares;
(c) up to a maximum aggregate nominal value of
£1,100,589.16 (being 10 per cent. of the issued
share capital of the company as at the date of this
notice) in connection with the granting of options
by the company granted in accordance with the
this document is important and requires your immediate attention. if you are in any doubt about the contents of this
document you should consult a person authorised under the financial services and markets act 2000 who specialises in advising on the acquisition of
shares and other securities.
if you have sold or otherwise transferred all of your shares in pan african resources plc (the “company”), please send this document, together with the
accompanying form of proxy to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected
for transmission to the purchaser or transferee. if you have sold only part of your holding of shares in pan african resources plc, please contact your
stockbroker, bank or other agent through whom the sale was effected immediately.
dematerialised shareholders in south africa who are not own name dematerialised shareholders and who wish to attend the agm should instruct their
central securities depository participant (‘csdp’) or broker to issue them with the necessary letter of representation to attend the meeting in person,
in the manner stipulated in the custody agreement governing the relationship between such shareholders and their csdp or broker. these instructions
must be provided to the csdp or broker by the cut-off time and date advised by the csdp or broker for instructions of this nature. dematerialised
shareholders in south africa who are not own name dematerialised shareholders and who cannot attend but who wish to vote at the agm should
provide their csdp or broker with their voting instructions, in the manner stipulated in the custody agreement governing the relationship between such
shareholders and their csdp or broker. these instructions must be provided to the csdp or broker by the cut-off time and date advised by the csdp
or broker for instructions of this nature.
68
notIce oF annUal general MeetIng
pan african resources plc share option plan;
and;
substitution for, and to the exclusion of, the existing
articles of association, with immediate effect.
(d) up to a maximum aggregate value of £643,046.22
in connection with the exercise of the option
to shanduka resources (proprietary)
granted
limited (“shanduka”) to subscribe for ordinary
shares;
(e) up to a maximum aggregate value of £2,086,115.79
in connection with the exercise of the option
granted to shanduka to require the company
to acquire all of shanduka’s 26 per cent. interest
in barberton mines
(proprietary) limited
in consideration of the issue of shares in the
company; and
(f ) up to a maximum aggregate value of £1,100,589.16
(being approximately 10 per cent. of the issued
share capital of the company as at the date of this
notice) otherwise than pursuant to paragraphs (a)
to (e) above), save that the company may, before
such expiry make an offer or agreement which
would or might require equity securities to be
allotted after such expiry and the directors may
allot equity securities in pursuance of any such
offer or agreement as if the authority conferred
hereby had not expired.
9.
that the company be generally and unconditionally
authorised for the purposes of section 166 of the
companies act 1985 to make market purchases (as
defined in section 163 of that act) of ordinary shares of
the company on such terms and in such manner as the
directors of the company shall determine provided that:
(a) the maximum aggregate number of ordinary
shares which may be purchased is 110,058,916
(representing approximately 10 per cent of
the issued share capital of the company at 28
november 2008);
(b) the minimum price (excluding expenses) which
may be paid for each ordinary share is 1p;
(c) the maximum price (excluding expenses) which
may be paid for any ordinary share does not exceed
5 per cent. above the average closing price of such
shares for the five business days on the london
stock exchange prior to the date of purchase; and
(d) this authority shall expire at the conclusion of the
next annual general meeting of the company or
on 31 december 2009, whichever is the earlier,
unless such authority is renewed prior to that time
(except in relation to the purchase of ordinary
shares the contract for which was concluded before
the expiry of such authority and which might be
executed wholly or partly after such expiry).
10.
that the articles of association contained in a document
produced to the meeting and signed by the chairman for
the purposes of identification be approved and adopted
as the new articles of association of the company in
by order of the board
st James’s corporate services limited
company secretary
28 november 2008
6 st James’s place
london
england
sW1a 1np
exPlanatory notes
entitlement to attend and vote
1.
pursuant to regulation 41 of the uncertificated securities
regulations 2001, the company specifies that only those
members registered on the company’s register of members
at:
12h00 on saturday, 20 december 2008; or,
if the agm is adjourned, at 18h00 on the day two days
prior to the adjourned meeting, shall be entitled to attend
and vote at the agm.
•
•
appointment of proxies
2. if you are a member of the company at the time set out
in note 1 above, you are entitled to appoint a proxy to
exercise all or any of your rights to attend, speak and vote
at the agm and you should have received a proxy form
with this notice of meeting. you can only appoint a proxy
using the procedures set out in these notes and the notes
to the proxy form.
3. a proxy does not need to be a member of the company
but must attend the agm to represent you. details of
how to appoint the chairman of the agm or another
person as your proxy using the proxy form are set out in
the notes to the proxy form. if you wish your proxy to
speak on your behalf at the agm you will need to appoint
your own choice of proxy (not the chairman) and give
your instructions directly to them.
4. you may appoint more than one proxy provided each
proxy is appointed to exercise rights attached to different
shares. you may not appoint more than one proxy to
exercise rights attached to any one share. to appoint
more than one proxy, please contact capita registrars
or computershare investor services (pty) ltd who will
arrange for the appropriate documentation to be provided
to you.
5. a vote withheld is not a vote in law, which means that
the vote will not be counted in the calculation of votes
for or against the resolution. if you either select the
“discretionary” option or if no voting indication is given,
69
notIce oF annUal general MeetIng
if you submit more than one valid proxy appointment,
the appointment received last before the latest time for the
receipt of proxies will take precedence.
termination of proxy appointments
9.
in order to revoke a proxy instruction you will need to
inform the company by sending a signed hard copy
notice clearly stating your intention to revoke your proxy
appointment as above. in the case of a member which is
a company, the revocation notice must be executed under
its common seal or signed on its behalf by an officer of the
company or an attorney for the company. any power of
attorney or any other authority under which the revocation
notice is signed (or a duly certified copy of such power or
authority) must be included with the revocation notice.
the revocation notice must be received by capita
registrars or computershare investor services (pty) ltd
no later than 12h00 on saturday, 20 december 2008. if
you attempt to revoke your proxy appointment but the
revocation is received after the time specified then, subject
to the paragraph directly below, your proxy appointment
will remain valid.
appointment of a proxy does not preclude you from
attending the agm and voting in person. if you have
appointed a proxy and attend the agm in person, your
proxy appointment will automatically be terminated.
Issued shares and total voting rights
10. as at 18h00 on 27 november 2008, the company’s issued
share capital comprised 1,100,589,162 ordinary shares of
1p each. each ordinary share carries the right to one vote
at a general meeting of the company and, therefore, the
total number of voting rights in the company as at 18h00
on 27 november 2008 was 1,100,589,162.
Directors interests and documents on
display
11. a statement or summary of transactions of directors (and
their family interests) in the share capital of the company
and copies of their service contracts will be available for
inspection at the company’s registered office during
normal business hours (saturdays and public holidays
excepted) from the date of this notice until the conclusion
of the agm and will also be available for inspection at
the place of the agm for at least 15 minutes prior to and
during the meeting
your proxy will vote or abstain from voting at his or her
discretion. your proxy will vote (or abstain from voting) as
he or she thinks fit in relation to any other matter which is
put before the agm.
appointment of proxy using hard copy
proxy form
6. the notes to the proxy form explain how to direct your
proxy how to vote on each resolution or withhold their
vote.
•
•
•
to appoint a proxy using the proxy form, the form must
be:
completed and signed;
to Capita Registrars at Proxies
sent or delivered
department, the registry, 34 beckenham road, kent,
br3 4tu or computershare investor services (pty) ltd,
ground floor, 70 marshall street, Johannesburg 2001,
south africa (po box 61051, marshalltown, 2107,
Johannesburg, south africa); or
received by Capita Registrars or Computershare Investor
services (pty) ltd no later than 12h00 on saturday, 20
december 2008.
in the case of a member which is a company, the proxy
form must be executed under its common seal or signed
on its behalf by an officer of the company or an attorney
for the company.
any power of attorney or any other authority under which
the proxy form is signed (or a duly certified copy of such
power or authority) must be included with the proxy
form.
appointment of proxy by joint
members
7. in the case of joint holders, where more than one of
the joint holders purports to appoint a proxy, only the
appointment submitted by the most senior holder will be
accepted. seniority is determined by the order in which
the names of the joint holders appear in the company’s
register of members in respect of the joint holding (the
first-named being the most senior).
changing proxy instructions
8. to change your proxy instructions simply submit a new
proxy appointment using the methods set out above. note
that the cut-off time for receipt of proxy appointments (see
above) also apply in relation to amended instructions; any
amended proxy appointment received after the relevant
cut-off time will be disregarded.
Where you have appointed a proxy using the hard-copy
proxy form and would like to change the instructions
using another hard-copy proxy form, please contact
capita registrars, the registry, proxies department,
34 beckenham road, beckenham, kent br3 4tu or
computershare investor services (pty) ltd, ground floor,
70 marshall street, Johannesburg 2001, south africa (po
box 61051, marshalltown, 2107, Johannesburg, south
africa);.
70
contact DetaIls
UnIteD KIngDoM
soUth aFrIca
registered office, company secretary and investor
relations (uk)
st James’s corporate services limited
6 st James’s place
london
sW1a 1np
united kingdom
tel: +44 (0) 20 7499 3916
fax: +44 (0) 20 7491 1989
email: phil.dexter@corpserv.co.uk
corporate office
viewpoint house
cnr. main street and orchard avenue
bordeaux
randburg
south africa
tel: +27 (0) 11 777 7840
fax: +27 (0) 11 777 7843
email: nicole@paf.co.za
nominated advisors (nomad)
rbc capital markets
71 queen victoria street
london
ec4v 4de
united kingdom
tel: +44 (0) 20 7029 7881
fax: +44 (0) 20 7029 7924
email: martin.eales@rbccm.com
auditors
deloitte & touche llp
2 new street square
london
ec4 3bz
united kingdom
tel: +44 (0) 20 7936 3000
fax: +44 (0) 20 7583 1198
www.deloitte.co.uk
solicitors
fasken martineau llp
17 hanover square
london
W1s 1hu
london
united kingdom
tel: +44 (0) 20 7917 8500
fax: +44 (0) 20 7917 8555
email: ngordon@fasken.co.uk
registrars (uk)
capita registrars
northern house
Woodsome bridge
huddersfield
hd8 0la
tel: from uk - 0871 664 0300
(calls cost 10p per minute plus network charges)
tel: outside uk +44 20 8639 399
sponsor (rsa)
macquarie first south corporate finance (pty) ltd
the place
1 sandton drive
south Wing
sandown
Johannesburg
south africa
tel: +27 11 (0) 583 2000
fax: +27 11 (0) 583 2161
email: amanda.markman@macquarie.com
transfer securities (rsa)
computershare investor services (pty) ltd
70 marshall street
Johannesburg
south africa
tel: +27 (0) 11 370 5085
fax: +27 (0) 11 688 5248
email: maree.fourie@computershare.co.za
public relations (rsa)
fdbeachhead
1st floor
lumley house
177 Jan smuts avenue
rosebank
south africa
tel: +27 (0) 11 214 2400
fax: +27 11 (0) 214 2405
email: jennifer.cohen@fd.com
postal address
po box 2768
pinegowrie
2125
south africa
Website
www.panafricanresources.com
company registration number
3937466
71