PAN AFRICAN RESOURCES PLC
Integrated Annual Report 2013
The African Focused Precious Metals Producer
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OUR INTEGRATED
ANNUAL REPORT
In this, the first integrated annual report (IAR) of Pan African Resources
(the Group or Company as the context determines), the board and
management have sought to provide a concise view of the Group’s
strategy, its financial and non-financial performance for the year, its
governance principles and its future prospects.
This 2013 Integrated Annual Report has been prepared in line with the
recommendations of the King Report on Governance for South Africa,
2009 (King III) and complies with the Johannesburg Stock Exchange
(JSE) Listings Requirements as well as the AIM rules of the London
Stock Exchange (LSE). The report draws on the concepts and principles
included in the Consultation Draft of the International Integrated
Reporting Framework, released in April 2013 by the International
Integrated Reporting Council (IIRC). In addition, the Global Reporting
Initiative’s (GRI) Sustainability Reporting Guidelines and its GRI 3.1
content index of standard disclosures and Metals and Mining sector
supplement have been considered in preparing this report and
identifying sustainability disclosures relevant to Pan African Resources.
The financial information provided in the consolidated and Company
annual financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) and were externally
audited by Deloitte and Touche.
This report represents one of three elements of Pan African Resources’
2013 annual communication strategy with stakeholders, the other
two being:
(cid:136)(cid:3)
(cid:3)(cid:56)(cid:76)(cid:73)(cid:3) (cid:43)(cid:86)(cid:83)(cid:89)(cid:84)(cid:180)(cid:87)(cid:3) (cid:71)(cid:83)(cid:81)(cid:84)(cid:80)(cid:73)(cid:88)(cid:73)(cid:72)(cid:3) (cid:69)(cid:82)(cid:72)(cid:3) (cid:86)(cid:73)(cid:74)(cid:73)(cid:86)(cid:73)(cid:82)(cid:71)(cid:73)(cid:72)(cid:3) (cid:43)(cid:54)(cid:45)(cid:3) (cid:71)(cid:83)(cid:82)(cid:88)(cid:73)(cid:82)(cid:88)(cid:3) (cid:77)(cid:82)(cid:72)(cid:73)(cid:92)(cid:16)(cid:3)
containing additional non-financial disclosures,
(cid:3)(cid:88)(cid:76)(cid:73)(cid:3)(cid:43)(cid:86)(cid:83)(cid:89)(cid:84)(cid:180)(cid:87)(cid:3)(cid:49)(cid:77)(cid:82)(cid:73)(cid:86)(cid:69)(cid:80)(cid:3)(cid:54)(cid:73)(cid:87)(cid:83)(cid:89)(cid:86)(cid:71)(cid:73)(cid:3)(cid:69)(cid:82)(cid:72)(cid:3)(cid:49)(cid:77)(cid:82)(cid:73)(cid:86)(cid:69)(cid:80)(cid:3)(cid:54)(cid:73)(cid:87)(cid:73)(cid:86)(cid:90)(cid:73)(cid:3)(cid:54)(cid:73)(cid:84)(cid:83)(cid:86)(cid:88)(cid:16)(cid:3)(cid:91)(cid:76)(cid:77)(cid:71)(cid:76)(cid:3)
provides detailed technical and operational information.
(cid:136)(cid:3)
The above documents, together with this 2013 Integrated Annual
Report, are available at www.panafricanresources.com. Printed copies
can be requested from the Company Secretary, whose details appear
on the inside back cover of this report.
This report covers the year 1 July 2012 to 30 June 2013 and follows on
from the 2012 Annual Report. It includes the activities of the holding
company Pan African Resources PLC, which is incorporated in England
and Wales, all of its South African operations and subsidiaries, and its
investment in Auroch Minerals NL (Auroch). During the year, the Group
divested of its 100% shareholding in Manica, its gold exploration project
in Mozambique, in exchange for a 42% equity share in Australian-listed
Auroch. No non-financial performance indicators are included in this
report for either Manica or Auroch. More information concerning
Auroch is available at www.aurochminerals.com. The acquisition of
Evander Gold Mines Limited (Evander Mines) was finalised during
the year and its financial results consolidated into the Pan African
Resources Group results with effect from 1 March 2013. Similarly,
unless otherwise stated, Evander Mines’ non-financial information is
for the four months ended 30 June 2013.
CONTENTS
COMPANY OVERVIEW
Our Vision
Highlights
About this report
Directors’ responsibility statement
Salient features
Financial summary
LEADERSHIP STATEMENTS
Chairman’s report
Board of directors
Chief executive officer’s report
Financial director’s report
Executive management – EXCO
Executive management – OPSCO
OUR BUSINESS PHILOSOPHY
Geographical location of mining operations and projects
Background – the Pan African Resources Group
Company structure
History of Pan African Resources
The global and South African mining environment
Performing against our business model
Delivering on our strategy
OPERATIONS
Operational performance
Barberton Mines
Barberton Tailings Retreatment Plant (BTRP)
Evander Mines
Phoenix Platinum
Abridged mineral resource and mineral reserve report
Sustainability review – safety
CORPORATE GOVERNANCE
The governance of our business
Stakeholder engagement and our response
The management of risk
Remuneration – rewarding effort
ANNUAL FINANCIAL STATEMENTS
Audit committee report
Directors’ report
Independent auditor’s report – United Kingdom
Independent auditor’s report – South Africa
Certificate of the company secretary
Consolidated and separate annual financial statements
Notice of annual general meeting
Acronyms and abbreviations
Glossary
Form of Proxy – UK
Form of Proxy – SA
Contact details
NAVIGATION
Front cover
1
2
4
5
7
10
14
16
24
32
33
36
37
38
39
40
43
46
50
52
56
60
64
67
86
92
96
99
104
108
109
111
112
113
114
163
168
170
173
175
Back cover
Further reading
within this IAR
Further reading online:
www.panafricanresources.com
Annual financial
statements
reference
OUR
VISION
To continue to build a precious metals
mining business in Africa by remaining focused
on our four business pillars.
GROWTH
SUSTAINABLE
STAKEHOLDER
PROFITABLE
ACHIEVING THIS THROUGH:
People
Action
Results
The bedrock of our Company
remains our people – those
men and women who come to
work daily and competently go
about their duties, often under
challenging conditions.
We believe in forstering
relationships through integrity
and honesty.
Action required proper
planning, leading, organising and
controlling. These are the basic
principles of any business.
We believe in getting things
done the right way.
We strive to deliver on all our
targets without compromising
the safety and health of
our employees, community,
environment and our future.
f
Pan African Resources PLC Integrated Annual Report 2013
HIGHLIGHTS
IN CONTEXT OF THE FOUR BUSINESS PILLARS
Profitable
Gross revenue
EBITDA
Headline
earnings
Earnings
per share
Headline earnings
per share
32.0%
18.0%
20.1%
30.2%
6.9%
£133.5 million
ZAR1,848.1 million
£53.1 million
ZAR735.2 million
£35.2 million
ZAR487.0 million
2.63p
34.51 cents
2.17p
30.07 cents
Sustainable
Group cash
balance
Group capital
expenditure incurred
All-in sustaining
cash cost
75.8%
£4.8 million
ZAR71.6 million
£27.6 million
ZAR381.6 million
14.1%
ZAR281,551/kg
Stakeholder
Barberton safety record
LTIFR
2.57
RIFR
1.51
2012: 3.26
2012: 0.74
Growth
Evander Mines
acquisition of
100%
Construction
of Barberton
Tailings
Retreatment
Plant completed.
Initiated
bursary
fund around
Barberton.
Continued support
for: Umjindi
Jewellery Projects,
Sinqobile Vegetable
Project and
Sinqobile Skills
Development
Project.
Salaries, wages,
bonuses and
retirement
Completed and
opened Sinqobile
Primary School
27.4% 1,100
of Group total
revenue
learners
Gold reserves
Gold resources
Gold sold
693%
496%
38.20%
9.20Moz
35.13Moz
130,493 oz
Pan African Resources PLC Integrated Annual Report 2013
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ABOUT
THIS REPORT
In this, the first integrated annual report (IAR) of Pan
African Resources (the Group or Company as the context
determines), the board and management have sought to
provide a concise view of the Group’s strategy, its financial
and non-financial performance for the year, its governance
principles and its future prospects.
This 2013 Integrated Annual Report has been prepared
in line with the recommendations of the King Report on
Governance for South Africa, 2009 (King III) and complies with
the Johannesburg Stock Exchange (JSE) Listings Requirements
as well as the AIM rules of the London Stock Exchange (LSE).
The report draws on the concepts and principles included
in the Consultation Draft of the International Integrated
Reporting Framework, released in April 2013 by the
International Integrated Reporting Council (IIRC). In addition,
the Global Reporting Initiative’s (GRI) Sustainability Reporting
Guidelines and its GRI 3.1 content index of standard
disclosures and Metals and Mining sector supplement have
been considered in preparing this report and identifying
sustainability disclosures relevant to Pan African Resources.
The financial information provided in the consolidated and
Company annual financial statements have been prepared in
accordance with International Financial Reporting Standards
(IFRS) and were externally audited by Deloitte and Touche.
This report represents one of three elements of Pan African
Resources’ 2013 annual communication strategy with
stakeholders, the other two being:
(cid:118) The Group’s completed and referenced GRI content
index, containing additional non-financial disclosures,
(cid:118) The Group’s Mineral Resource and Mineral Reserve
Report, which provides detailed technical and
operational information.
The above documents, together with this 2013 Integrated
Annual Report, are available at www.panafricanresources.
com. Printed copies can be requested from the Company
Secretary, whose details appear on the inside back cover of
this report.
This report covers the year 1 July 2012 to 30 June 2013
and follows on from the 2012 Annual Report. It includes
the activities of the holding company Pan African Resources
PLC, which is incorporated in England and Wales, all of its
South African operations and subsidiaries, and its investment
in Auroch Minerals NL (Auroch). During the year, the
Group divested of its 100% shareholding in Manica, its gold
exploration project in Mozambique, in exchange for a 42%
equity share in Australian-listed Auroch. No non-financial
performance indicators are included in this report for either
Manica or Auroch. More information concerning Auroch
is available at www.aurochminerals.com. The acquisition of
Evander Gold Mines Limited (Evander Mines) was finalised
during the year and its financial results consolidated into the
Pan African Resources Group results with effect from 1 March
2013. Similarly, unless otherwise stated, Evander Mines’ non-
financial information is for the four months ended 30 June
2013.
No limitations were placed on the Group in preparing this
report.
Details of Pan African Resources’ engagement with its
stakeholders appear on page 96. This engagement, together
with a review of internal information – including risk
analysis, strategic objectives, the operating environment,
performance indicators (both financial and non-financial) used
by management and the board, and the availability of other
non-financial performance indicators – instructed the content
of this report. While every effort was made to produce a
balanced report, materiality has been applied subjectively in
this first integrated report.
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Pan African Resources PLC Integrated Annual Report 2013
Management acknowledges that, notwithstanding progress
made in many areas relating to the application of integrated
and sustainability reporting practices, this report and
the activities that support the collection of non-financial
performance information have to be developed further in
the continuous journey to ensure the sustainability of Pan
African Resources. This will be done through balancing long-
term social, environmental and economic interests with the
principle of needing to maximise profits of the Group, while
acting in a responsible manner. In particular, comparative
information is often unavailable for certain environmental
and social performance
few
performance targets have been set for these indicators.
During the coming year, the Group will, where feasible, set
performance benchmarks.
indicators, and relatively
Data measurement techniques and assumptions relating to
non-financial performance indicators are provided, either
where the data is disclosed or in the glossary, appearing
on pages 48 to 89. To promote relevance, consistency and
comparability, non-financial performance
indicators are
generally disclosed by significant operation and are not
aggregated in a Group view.
As this is the Group’s first integrated report and, in some
cases, systems and processes for the recording, collection and
collation of selected non-financial performance indicators
have yet to be introduced or tested further for veracity, the
board has decided against obtaining independent assurance of
the non-financial performance indicators.
This integrated report, together with the GRI 3.1 content
index, meets application level B of the GRI Reporting
Guidelines.
Forward-looking statements
Statements in this report, other than historical facts, that
address, without limitation, exploration activities, mining
potential and future plans and objectives of Pan African
Resources are forward-looking statements and forward-
looking information that involve various risks, assumptions
and uncertainties and are not statements of fact. The
directors and management of Pan African Resources are of
the belief that the expectations expressed in such forward-
looking statements or
is
based on reasonable assumptions, expectations, estimates
and projections. However, such statements should not be
construed as being guarantees or warranties (whether
expressed or implied) of future performance.
forward-looking
information
There can be no assurance that such statements will prove to
be accurate and actual values, results and future events could
differ materially from those anticipated in such statements.
Important factors that could cause actual results to differ
materially from statements expressed in this presentation
include, among others, the actual results of exploration
activities; technical analysis; the lack of availability to Pan African
Resources of necessary capital on acceptable terms; general
economic, business and financial market conditions; political
risks; industry trends; competition; changes in government
regulations; delays in obtaining governmental approvals;
interest rate fluctuations; currency fluctuations; changes in
business strategy or development plans; and other risks.
Although Pan African Resources has attempted to identify
important factors that could cause actual results to differ
materially, there may be other factors that cause results not to
be as anticipated, estimated or intended.
Pan African Resources is not obliged to publically update any
forward-looking statements that are included in this report,
or revise any changes in events, conditions or circumstances
on which any such statements are based, occurring after the
publication date of this report.
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 such financial
statements for each financial year. Under that law, the directors
are required to prepare the Group financial statements in
accordance with IFRS as adopted by the European Union
(EU) and Article 4 of the International Accounting Standards
(IAS) Regulation, and have also chosen to prepare the parent
Company financial statements under IFRS as adopted by
the EU. Under company law, the directors must not approve
the accounts unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and of the
profit or loss of the Group for that period. In preparing these
financial statements, the IAS requires that directors:
(cid:118) Properly select and apply accounting policies,
(cid:118) present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information,
(cid:118) provide additional disclosures when compliance with the
specific requirements in IFRS 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,
(cid:118) make an assessment of the Company’s ability to continue
as a going concern.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions, and 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 United
Kingdom (UK) Companies Act 2006. 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.
The directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Pan African Resources PLC Integrated Annual Report 2013
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DIRECTORS’
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
1.
2.
3.
The financial statements, prepared in accordance with IFRS, as adopted by the EU, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as
a whole.
The management report, which is incorporated into the directors’ report, includes a fair review of the development and
performance of the business and the position of the Company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and uncertainties that they face.
That the directors are not aware of any legal proceedings or other material conditions that may impact the mining or
exploration activities of the Group.
4. The directors confirm that the Group holds title to the mining rights as set out in this report.
By order of the board.
Ron Holding
Chief Executive Officer
16 September 2013
Cobus Loots
Director
16 September 2013
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Pan African Resources PLC Integrated Annual Report 2013
SALIENT
FEATURES
2013
2012
2011
2010
2009
Operating performance
Gold mining tonnes milled
Gold head grade
Gold sold
Gold spot price received
Total gold mining cash costs
PGM 6E sold
(t)
(g/t)
(oz)
(USD/oz)
(USD/oz)
(oz)
512,869
8.6
130,493
1,553
815
6,480
308,095
10.6
94,449
1,694
776
–
296,200
10.6
92,197
1,366
781
–
313,167
10.6
98,091
1,098
650
–
313,952
10.3
97,353
867
469
–
2013
2012
2011
2010
2009
GBP
ZAR
GBP
millions millions millions millions millions millions millions millions millions millions
ZAR
ZAR
ZAR
ZAR
GBP
GBP
GBP
Statement of Comprehensive Income
Revenue
Cost of production
Mining profit
EBITDA
Impairment costs
Profit after taxation
Headline earnings
Dividends paid
1,848.1
(985.1)
776.8
735.2
(242.3)
558.9
487.0
–
133.5
(71.2)
56.1
53.1
(16.1)
42.6
35.2
–
1,240.3
(566.0)
632.3
552.5
(0.6)
358.9
359.7
(95.6)
101.1
(46.1)
51.5
45.0
(0.05)
29.2
29.3
(7.4)
879.7
(503.6)
342.3
317.0
–
190.7
190.7
(60.3)
79.2
(45.3)
30.8
28.5
–
17.2
17.2
(5.4)
817.3
(483.8)
294.2
294.5
(4.0)
173.0
174.3
–
68.5
(40.6)
24.7
25.0
(0.3)
14.5
14.6
–
762.7
(410.2)
316.5
329.4
(61.7)
116.4
135.7
(41.0)
53.0
(28.5)
22.0
22.9
(5.0)
8.1
9.4
(2.8)
2013
ZAR
2011
GBP
ZAR
millions millions millions millions millions millions millions millions millions millions
2009
ZAR
2010
ZAR
2012
ZAR
GBP
GBP
GBP
GBP
Statement of Financial Position
Non-current assets
Current assets
Total equity
Non-current liabilities
Current liabilities
3,726.2
401.5
2,568.8
1,200.9
361.2
249.3 1,143.8
26.7
367.8
172.2 1,357.5
80.0
180.8
24.1
142.9
86.1 1,064.1
173.2
28.5
992.7
102.6
146.7
14.0
98.0
11.1
97.2
15.8
90.7
13.4
9.0
857.2
203.9
847.6
131.8
81.7
74.3
17.7
73.5
11.4
7.1
850.7
62.7
713.5
122.6
77.2
67.1
4.9
56.4
9.7
6.1
Note 1:
At 30 June 2012, Phoenix Platinum had not reached steady state production, therefore all income and expenditure was capitalised.
Note 2:
Current assets at 30 June 2013 excluded non-current assets held for sale of ZAR3.2 million (GBP0.2 million) and at 30 June 2012, ZAR169.6 million (GBP13.1 million).
Pan African Resources PLC Integrated Annual Report 2013
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SALIENT
FEATURES continued
Cash flows
Cash generated from/(used in)
operating activities
Capital expenditure
Net (decrease)/increase in cash
and cash equivalents
Key ratios
Return on shareholders’ funds
Net debt:equity ratio
Current Ratio
Statistics
Shares in issue
Weighted average number of
shares in issue
Earnings per share (EPS)
Headline earnings per share
(HEPS)
Net asset value (NAV)
Dividends per share (DPS)
Year-end dividend yield
Year-end price earnings
Volume of shares traded
Volume traded as percentage
of number
in issue
Number of transactions
Value of shares traded
Traded prices
– last sale in year
– high
– low
– average price per share
traded
2013
2012
2011
2010
2009
ZAR
GBP
ZAR
millions millions millions millions millions millions millions millions millions millions
ZAR
ZAR
ZAR
GBP
GBP
GBP
GBP
668.0
381.6
48.3
(27.6)
375.2
(213.9)
30.6
(17.4)
181.7
(233.6)
16.6
(21.0)
211.4
(70.8)
18.3
(5.9)
108.5
(62.1)
8.6
(4.3)
(216.0)
(15.6)
140.8
11.5
(39.5)
(3.6)
127.0
10.6
(5.6)
(0.4)
(%)
(ratio)
(ratio)
21.8
0.04
1.1
24.7
0.04
1.1
26.4
(0.19)
2.6
28.5
(0.19)
2.6
19.2
(0.07)
1.8
19.0
(0.11)
1.8
20.4
(0.19)
2.5
19.7
(0.17)
2.5
16.3
(0.04)
0.8
14.4
(0.04)
0.8
(millions) 1,822.8 1,822.8
1,448.3
1,448.3
1,444.0
1,444.0
1,409.5
1,409.5
1,112.6
1,112.6
2.63
2.17
34.51
30.07
(millions) 1,619.8 1,619.8
(cents/
pence)
(cents/
pence)
(cents/
pence) 140.93
(cents/
pence)
(%)
(ratio)
(millions)
–
–
4.85
459.2
–
–
5.54
760.3
9.45
1,445.2
1,445.2
1,432.7
1,432.7
1,366.3
1,366.3
1,104.4
1,104.4
24.83
2.02
13.31
1.20
11.55
1.04
5.76
0.40
24.89
2.03
13.31
1.20
11.88
1.07
12.23
0.85
93.74
7.09
68.74
6.28
60.13
5.21
64.13
5.07
6.60
2.7
9.75
606.9
0.51
3.5
7.30
424.2
4.18
2.3
13.90
410.9
0.37
3.7
8.54
465.4
–
–
9.87
251.4
–
–
5.98
430.8
3.69
4.0
16.16
1,008.0
(%)
41.7
(number) 30,814
(millions) 1,762.4
25.2
16,121
74.4
41.9
21,827
1,342.6
29.3
13,593
60.2
28.5
18,343
580.0
32.2
10,533
43.7
17.8
11,542
225.2
30.6
5,322
26.3
90.6
7,233
720.5
(cents/
pence)
(cents/
pence)
(cents/
pence)
191
12.8
242
14.8
185
10.2
299
21.0
299
17.4
204
11.9
185
11.8
180
9.5
(cents/pence)
233
16.2
218
14.2
109
139
5.5
9.4
114
126
65
86
6.2
8.2
4.4
6.1
93
101
45
75
0.25
4.8
13.10
199.9
18.0
2,042
7.7
5.2
5.4
1.8
3.8
6
Pan African Resources PLC Integrated Annual Report 2013
FINANCIAL
SUMMARY
Headline earnings
)
s
n
o
i
l
l
i
m
R
A
Z
(
500
400
300
200
100
–
HEPS
)
s
t
n
e
C
(
35.0
30.0
25.0
20.0
15.0
10.0
5.0
–
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
ZAR value
ZAR value
£ value
£ value
135.7
9.4
174.3
14.6
190.7
17.2
359.7
29.3
487.0
35.2
ZAR value
£ value
12.23
0.85
11.88
1.07
13.31
1.20
24.89
2.03
30.07
2.17
Group revenue
)
s
n
o
i
l
l
i
m
R
A
Z
(
2,000
1,500
1,000
500
–
Gold sold
)
z
o
(
140,000
120,000
100,000
80,000
60,000
40,000
20,000
–
2009
2010
2011
2012
2013
2009
2010
2011
ZAR value
£ value
762.7
53.0
817.3
68.5
879.7
79.2
1,240.3
1,848.1
Surface
3,955
–
–
101.1
133.5
Underground
93,398
98,091
92,197
93,381
126,657
2012
1,068
2013
3,836
Group operational capital
ZAR cash costs vs average ZAR gold spot price received
)
s
n
o
i
l
l
i
m
R
A
Z
(
400
350
300
250
200
150
100
50
–
2009
2010
2011
2012
2013
)
g
k
/
R
A
Z
(
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
–
2009
2010
2011
2012
2013
Barberton Mines
Development Capital
Barberton Mines
Maintenance Capital
Phoenix Platinum
Construction/Maintenance
Phoenix Platinum
Mineral Rights
BTRP
Evander Mines
Development Capital
Evander Mines
Maintenance Capital
ZAR value
£ value
30.9
27.4
–
–
–
–
–
58.3
4.0
35.6
35.0
–
–
–
–
–
70.6
5.9
35.3
40.0
70.4
107.6
–
–
–
253.2
22.8
37.6
38.8
81.9
–
55.4
–
–
213.7
17.4
42.1
45.1
2.2
–
229.6
42.5
19.9
381.4
27.6
Average spot price
received (ZAR/kg)
All-in costs
(ZAR/kg)
All-in sustaining
cash costs (ZAR/kg)
Cash cost
(ZAR/kg)
251,740
267,876
306,757
422,215
440,824
155,910
189,308
217,524
265,713
343,949
155,910
189,308
217,524
246,801
281,551
136,178
158,711
175,520
193,360
231,439
Pan African Resources PLC Integrated Annual Report 2013
7
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LEADERSHIP
STATEMENTS
Chairman’s report
Board of directors
Chief executive
(cid:83)(cid:74)(cid:189)(cid:71)(cid:73)(cid:86)(cid:180)(cid:87)(cid:3)(cid:86)(cid:73)(cid:84)(cid:83)(cid:86)(cid:88)
Financial director’s
report
Executive management
8
Pan African Resources PLC Integrated Annual Report 2013
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Pan African Resources PLC Integrated Annual Report 2013
9
CHAIRMAN’S
REPORT
Keith Spencer (Chairman)
Our successful bid for
Evander Mines is a game
changer and propels the
Group into mid-tier status.
Pan African Resources is steadily fulfilling our vision of
becoming a mid-tier precious metals mining company. We
understand that successful and sustainable businesses are not
built overnight, but rather shaped, moulded and grown over
time. We also recognise that for a mining business to succeed,
and to continue to be successful, one requires a number of
elements. These include quality assets, the right people, and
the ability to mine safely and operate sustainably in our local
environment.
There is no denying that the global mining industry is currently
experiencing difficult times, and South Africa is no exception.
In addition to lower gold prices of late, South Africa has to deal
with labour unrest and cost inflation, amongst other challenges.
Amidst all of this, Pan African Resources has however been
able to distinguish itself. It has been growing prudently to mid-
tier status, through both optimisation of existing assets and
via new acquisitions. Successful growth, from a Pan African
Resources perspective, is not measured by more attributable
production ounces, but rather by sustainable increases in
profitability and earnings.
We finalised the acquisition of Evander Mines from Harmony
Gold Mining Company Limited in February this year. Through
the acquisition of Evander Mines, our Group has entered a new
and exciting chapter in our history by adding another flagship
operation. Evander Mines contributes profitable production
ounces, and also has very attractive growth projects.
Pan African Resources is absolutely committed to delivering
results with zero harm to our people, communities and
environment. It is therefore with deep regret that we have
to report on the following two fatal accidents suffered during
the year:
(cid:118) On 17 November 2012, Gert Fourie, a fitter employed at
Sheba Mine, was fatally injured on surface when he lost
control of a truck he was driving when it slid off the road
and rolled down the embankment,
(cid:118) On 7 March 2013, Velly Therry Malumane, a welder
employed underground at Sheba Mine, was fatally injured
when he was electrocuted whilst carrying out welding
operations on a load haul dumper.
In this report, we elaborate on how Pan African Resources
will continue on a sustainable track of profitable growth,
by focusing on key performance areas, such as completing
the successful integration of our recent Evander Mines
acquisition and bedding down the new Barberton Tailings
Retreatment Plant (BTRP) for optimal production. In addition,
management spends significant effort in identifying, analysing
and mitigating critical business risks. Pan African Resources
has operated according to a “four pillars” business model that
integrates the key financial, social and environmental aspects
of our operations, even before integrated reporting became
imperative in stakeholder relations.
10
Pan African Resources PLC Integrated Annual Report 2013
2013
HIGHLIGHTS
Gross revenue in GBP increased by
32.0% to £133.5 million
(2012: £101.1 million).
Gross revenue in ZAR increased by
49.0% to ZAR1,848.1 million
(2012: ZAR1,240.3 million).
Group capital expenditure in GBP incurred
£27.6 million (2012: £17.4 million).
Group capital expenditure in ZAR incurred
ZAR381.6 million
(2012: ZAR213.9 million).
Gold sold increased by 38.2% to
130,493oz (2012: 94,449oz).
Proposed dividend of ZAR0.1314 per
share or ZAR240 million to shareholders.
As the Chairman of a focused and motivated board, executive
team and workforce, it is a privilege to introduce an excellent
set of results for this financial year and to contribute to a
report that succinctly and clearly reveals the material features
of this financial year, and the strategies, analyses and forward
planning important to shareholders, investors and other
stakeholders.
The real costs of producing these
ounces, weighed against economic
drivers, must be thoroughly understood.
I am confident that the board,
executive and mine management
of Pan African Resources are well
schooled in these realities.
between our key business drivers, which include USD gold
prices, South African inflation, wage and productivity increases
and the USD/ZAR and GBP/ZAR exchange rates. Although
movements in these factors cannot be accurately predicted,
Pan African Resources models and plans using conservative
assumptions to ensure measured and consistent growth.
It is evident that some miners strive for higher gold ounce
production targets, while not paying due attention to the costs
incurred in reaching these targets. Increased gold production
may excite shareholders and appear good in annual reports,
but the real costs of producing these ounces, weighed against
economic drivers, must be thoroughly understood. I am
confident that the board, executive and mine management
of Pan African Resources are well schooled in these realities.
The board took the decision that our active participation
in the Manica gold exploration project in Mozambique was
no longer aligned with the Group’s strategy of investing and
operating producing assets. We therefore disposed of our
interest with effect from January 2013 to Australian-owned
Auroch, and we remain a significant shareholder in Auroch.
South African gold mining in context
It is no secret that the South African mining industry is
presently under duress for a number of reasons. The most
widely publicised is the labour discord following on the
Marikana tragedy. All parties should share responsibility for
this situation, and we should never allow a similar incident
to reoccur.
Societal inequality is a pressing reality in South Africa. It is,
however, beyond the ability of mid-tier mining groups such
as ours to resolve in isolation. However, we have to strive
to be part of the solution in a proactive manner. In our area
of influence, we offer our miners fair reward for their work,
recognition of their value and inputs, and a safe working
environment, in addition to supporting workers’ health
and our communities. We trust that the sound working
relationships we have developed with our employees and
their representatives will continue. We view all our employees
as valued team members who contribute their productivity
in support of Pan African Resources’ sustainable business
model. Over the past year, we created 302 employment
opportunities during the construction of the BTRP.
A further current matter is that of South African mining
legislation and conditions, laid out in the Mining Charter
and proposed amendments to the B-BBEE Act. Pan African
Resources wholeheartedly supports the intent of these
regulations and legislation, as these are areas where we can
proactively help address inequality and historic disadvantages.
We are well positioned to continue to comply with both
regulations and also best practice.
What drives our results
As a gold mining business, the ongoing viability of Pan African
Resources depends on maintaining the optimum balance
Global economic shifts often have a direct effect on gold
prices and, in recent months, these haven’t been favourable.
World demand for commodities has been erratic, and
gold prices in particular have been weak of late. A key impact
Pan African Resources PLC Integrated Annual Report 2013
11
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CHAIRMAN’S REPORT
continued
was the USA’s announcement that it will begin “tapering” its
quantitative easing programme, which has strengthened the
US dollar and weakened gold prices, although Asian demand
for physical gold remains high. How this will affect gold mining
over the next year is impossible to predict at this time, but Pan
African Resources is positioned to adapt as necessary within
our low cost and high grade model.
Future planning and outlook
The Group’s strategic thrust in the short term is to
consolidate our assets, contain or lower costs and increase
productivity. Working through all the requirements of
managing Evander Mines and effectively doubling the Group
in size required immense effort, and I thank Harmony’s
board and management for the proactive role they played in
this process. Bedding down the acquisition is continuing this
year, and we are integrating the procurement and financial
departments to realise efficiencies. An enterprise resource
planning (ERP) system rolled out at Barberton Mines in 2012
is being extended throughout the Group to enhance financial
controls and reporting.
A key focus of financial and operational management in 2014
will be to contain costs so that margins and cash generation
are maximised. The finance department, in particular, is
exploring synergies to optimise systems.
We are happy to reward our shareholders by proposing that
we recommence our dividend payment this year.
out further acquisitions that can be profitably operated within
our business model.
Appreciation and the road ahead
The board wishes to extend our sincere appreciation to our
former CEO, Jan Nelson, who resigned during the current
year. Jan’s contribution to our business was significant, and his
legacy remains.
The bedrock of Pan African Resources remains our workforce
– the men and women who daily competently go about their
duties, often under physically challenging circumstances –
to ensure that our gold arrives safely at its end destination.
That we are able to announce such excellent results is their
success, as much as it is the executive and your board. I would
also like to extend my appreciation to the board for their
support during the year.
For the immediate future, the board and management remain
realistically confident. Experienced in mining and business, we
have lived through boom and gloom economic cycles, and
manage the Group accordingly. We believe that Pan African
Resources has the business model and controls to continue
viable operations through all foreseeable economic cycles.
Keith Spencer
Chairman
With a solid platform for growth having been established, in
the longer term Pan African Resources may prudently seek
16 September 2013
12
Pan African Resources PLC Integrated Annual Report 2013
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Pan African Resources PLC Integrated Annual Report 2013
13
BOARD
OF DIRECTORS
Non-executive
Directors
Keith Spencer (63)
Lead independent*, non-executive
chairman
Appointment date: 8 Oct 2007
Qualifications: BSc Eng (Mining)
Committees: SHEQC (Chairman),
nominations, audit committee
Keith is a qualified mining engineer with
35 years of practical mining experience,
and has managed some of the largest
gold mines in the world. 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
to 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 Gold Fields of South Africa.
In 1999, Keith joined Metorex Limited, first
as a private consultant and, after two years,
as a permanent member of the executive,
managing the Wakefield Coal operations,
O’okiep Copper Company, Barberton
Mines and Metmin Manganese Mine.
In 2001, Keith became the operations
director for Metorex Limited. He was
appointed as Chairman of the board on
14 December 2011.
Phuthi Mahanyele (42)
Non-executive director – deputy
chairperson
Appointment date: 20 July 2011
Qualifications: BA Economics, MBA
Committees: remuneration
(Chairperson)
Phuthi is the CEO of Shanduka Group
(Pty) Ltd. She joined Shanduka in 2004
as the managing director of Shanduka
Energy (Pty) Ltd, a subsidiary company
of the Shanduka Group, led by Cyril
Ramaphosa. She was previously the
head of the Project Finance South
Africa unit at the Development Bank of
Southern Africa. Prior to that, Phuti was
vice president at Fieldstone, where she
joined the firm in New York in 1997 and
later transferred to the South African
office. Phuti holds a BA Economics from
Rutgers University (State University of
New Jersey, USA) and an MBA from
De Montfort University in Leicester, UK.
She completed the Kennedy School
of Government Executive Education
Program’s Global Leadership and Public
Policy for the 21st Century at Harvard
University in 2008. She is a board
member of a number of Shanduka
Group investee companies. Phuti was
appointed as the deputy Chairperson on
14 December 2011.
Rob Still (58)
Non-executive director
Appointment date: 9 Sept 2004
Qualifications: BCom (Hons), CTA
Committees: audit, remuneration
Rob has vast experience in mining,
specialising in mining finance. He started
his career as a chartered accountant,
becoming a partner of Ernst & Whinney
before leaving in 1986 to co-found
Rhombus Exploration Limited. Since
then, he has been involved in the
mining industry worldwide and has
held executive and non-executive
directorships in companies listed in South
Africa, Australia, Canada and the United
Kingdom. He has participated in the
evaluation and development of several
new mining projects and companies
including Rhovan, Ticor Titanium, Pangea
GoldFields Limited, Southern Mining
Corporation Limited (Corridor Sands),
Metorex Limited and Zimbabwe Platinum
Mines Limited. Rob is currently chairman
of Pangea Exploration (Pty) Ltd, which
provides information and analysis to
private equity finance within Africa.
* Due to share options outstanding under a previous share incentive scheme, Keith Spencer is not considered independent under UK regulations. Keith Spencer is,
however, considered independent according to King III and the JSE regulations. The board has considered his independence and believes he is independent.
14
Pan African Resources PLC Integrated Annual Report 2013
The board ensures that the business
of the enterprise is conducted with integrity
and in accordance with the highest standards of
corporate governance practice.
Executive
Directors
Ronald Holding (61)
Chief Executive Officer
Appointment date: 9 Sept 2013
Qualifications: National Diploma
for Technicians: Mining (Metalliferous)
South African Mine Managers
certificate of Competency
(Metalliferous Mining) Programme for
Management Development: University
of Cape Town
Ron has been intricately involved
with all Pan African Resources
operations since 2009 as Chief
Operating Officer, until his
appointment as Joint Interim CEO in
March this year. He commenced his
mining career in 1973 with Gencor
and has since occupied a number of
senior positions, with exposure to
the various stages of developing and
mining mineral deposits. In addition
to deep level gold mining, his vast
experience includes the mining of
platinum, diamonds and copper.
Hester Hickey (59)
Non-executive director
Appointment date: 12 April 2012
Qualifications: CA(SA)
Committees: audit (Chairperson)
Hester completed her articles at
Fisher Hoffman Stride and, after
a period as partner of Ironside
Greenwood, joined BDO Spencer
Stewart in 1990 as national technical
and training manager. She joined
Transnet in 1994 as acting head of
internal audit, to implement and
execute a transformation process
and, particularly, to transform the
internal audit department of Transnet
from a traditionally focused unit to
a more modern risk-based function.
In 1998, after a period with Ernst &
Young and Liberty Life, Hester joined
AngloGold Ashanti, initially as Group
internal audit manager and thereafter
as executive officer: head of risk – a
position held until recently. Hester is
a registered accountant, previously
served as chairperson of the South
African Institute of Chartered
Accountants (SAICA) and currently
performs board evaluations for the
Institute of Directors.
Cobus Loots (35)
Director*
Busi Sitole (37)
Financial director*
Appointment date: 26 Aug 2009
Qualifications: CA(SA), CFA®
Charterholder
Appointment date: 14 Dec 2011
Resignation: 30 September 2013
Qualifications: CA(SA)
Cobus is the Managing Director of
Shanduka Resources (Pty) Ltd. He
is a qualified chartered accountant
(SA) and a CFA® Charterholder.
He served articles with Deloitte &
Touche, and was an audit manager
with the firm before leaving to
pursue a career in mining finance.
Cobus’s experience includes mining-
specific acquisitions and finance, as
well as the management of both
exploration and producing mineral
assets. He was also formerly the
financial director of Pan African
Resources, and non-executive
director. Cobus was recently re-
appointed as the Financial director
with effect from 1 October 2013.
Busi joined Pan African Resources in
April 2011 as a finance executive and
was subsequently appointed as the
financial director in December 2011.
She is a chartered accountant, with
a BCom degree from the University
of Cape Town and BCom Honours
from the University of Natal. Prior
to joining Pan African Resources,
she had joined the Shanduka Group
in December 2007 as a principal
transactor responsible for sourcing,
executing new transactions as well
as raising capital thereof. Her other
responsibilities included monitoring
the company’s investments post-
acquisition. Busi also sat on several
boards of the company’s investee
companies. She also worked as a new
treasury products marketer at Absa
Capital and was a finance manager
at Standard Bank Structured Finance,
where she completed her three
years of TOPP articles as a trainee
accountant.
* During the financial year, Financial Director Busi Sitole was on maternity leave for a four month period. Neal Reynolds, Group Financial Manager, acted in Busi Sitole
stead during this period. Busi Sitole resigned as Financial Director effective 30 September 2013 and is replaced by Cobus Loots effective 1 October 2013.
Pan African Resources PLC Integrated Annual Report 2013
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CHIEF EXECUTIVE
OFFICER’S REPORT
Ronald Holding (Chief Executive Officer)
Pan African Resources
exceeded most of its
targets for the financial
year ended 30 June 2013,
delivering growth with
pleasing operational and
financial performances.
“Pan African Resources exceeded most of its targets for
the financial year ended 30 June 2013, delivering growth
with pleasing operational and financial performances.
Evander Mine’s acquisition and the commissioning of
the new BTRP have positioned Pan African Resources to
produce approximately 200,000 profitable ounces of gold
a year. There is also further growth potential through
the exploitation of other near term organic projects.
The board of Pan African Resources has decided to
recommend a dividend approximating ZAR0.1314 per share
or ZAR240 million to shareholders, for approval at the
annual general meeting.”
2013 highlights
Pan African has significantly increased headline earnings per
share by 20.8% in ZAR terms to 30.07 cents
(2012: 24.89 cents) and in GBP terms by 6.9% to 2.17 pence
(2012: 2.03 pence).
(cid:118) We completed the acquisition of Evander Mines.
(cid:118) We successfully poured our first gold bar at the
Barberton Mines’ BTRP.
(cid:118) Our strong Statement of Financial Position allows for
sustained results and profitable growth.
(cid:118) Our board has recommended a dividend in ZAR terms
of approximately ZAR0.1314 per share to shareholders.
Evander now a part of the Group
The Group was transformed into a mid-tier gold producer
when we acquired Evander Mines from Harmony Gold Mining
Company Limited (Harmony), on 28 February 2013. Evander
Mines will double our annual gold production profile to
200,000 oz of gold. The mine is performing as anticipated and
is currently meeting production targets. Evander contributed
34,197 oz of gold for the last four months of our financial year.
Since the signing of the Sale and Purchase agreement with
Harmony, Evander’s incumbent management team together
with our corporate office worked proactively and tirelessly
to ensure a seamless and efficient handover of systems
and processes. Evander’s integration into the Group will be
finalised in 2014.
Evander Mines’ management is committed to our organic
growth plans to exploit its mineral resources more efficiently.
During the next year we will focus on managing infrastructure
to minimise the risk of mining interruptions, contain costs and
increase gold production through targeting low capital cost
projects which have quick and sustainable returns.
the
The addition of Evander Mines contributed
achievement of the following Group production statistics for
the financial year:
in
16
Pan African Resources PLC Integrated Annual Report 2013
2013
2012 Movement
Gold mining tonnes milled
Gold head grade (g/t)
Gold sold (oz)
512,869
8.6
130,493
308,095
10.6
94,449
66.5%
(18.9%)
38.2%
Sustained performance and growth
at Barberton
Barberton Mines contributed substantially to the Group’s
success in 2013. It remains one of the lowest cost-of-
production and highest grade mines in South Africa.
The mine exceeded its production targets, producing
96,296 oz of gold during the financial year (2012: 94,449 oz).
The team commissioned the on-site BTRP on schedule and
within budget, conducting the inaugural gold pour on 28 June
2013. The BTRP not only adds approximately 20,000 oz of
gold to our annual production, it will also steadily eliminate
many of the historic and environment-degrading tailings
dumps scattered around the Barberton Mines mining area.
Phoenix Platinum –
Not quite risen from the ashes
In brief, Phoenix Platinum had a mediocre performance and
we did not achieve our target ounces. This was primarily due
The table below reflects key Statement of Comprehensive
Income figures for the Group:
to International Ferro Metals PLC halting its underground
chrome mining operation when it became uneconomical,
moving their run of mine chrome source to a highly oxidised
opencast section. Phoenix, which is designed to treat sulphide
tailings, now has to cope with the resultant serious metallurgical
challenges. We have instituted equipment and operational
changes to process the deleterious feedstock with some
success, resulting in improved production in recent months.
Phoenix Platinum processed more than 274,000 tons of
chrome tailings, and produced 6,480 oz of PGM 6Es.
This operation’s supply chain was analysed and additional
training given to improve efficiencies and reduce costs. Building
a dedicated tailings storage facility in the future will enable
oxidised material to be entirely bypassed and ameliorate the
feedstock issue.
Production and sales
of PGM 6E
Basket price received
Total cash costs
Total cash costs
EBITDA
(oz)
(ZAR/oz)
(ZAR/oz)
(ZAR/t)
(ZAR millions)
2013
2012
6,480
9,093
7,550
178
2.2
3,474
7,499
7,847
170
81.9
ZAR millions
2013
GBP millions
ZAR millions
2012
GBP millions
Movement
ZAR %
GBP %
Revenue
EBITDA
Attributable Group profit
1,848.1
735.2
558.9
133.5
53.1
42.6
1,240.3
552.5
358.9
101.1
45.0
29.2
49.0
33.1
55.7
32.0
18.0
45.9
Solid Group financial performance
The continued contribution from Barberton Mines, with the
acquisition of Evander Mines, has propelled the Group to new
heights in terms of both its gold production and profitability.
The earnings per share figures discussed in this report are
the result of a variety of production, cost and revenue factors
that underpin the financial year’s strong performance.
Gold revenue increased by 49.0% in ZAR terms but only
32.0% in GBP terms, due to the weakening of the South African
currency against all other major currencies, including the GBP
and USD. During the financial year the Group realised an
average gold price of ZAR440,424/kg (2012: ZAR422,215/kg)
and an average price for PGM 6E of ZAR292,354/kg.
Evander Mines contributed 72.2% of the increase in revenue.
The Group’s EBITDA for the financial year increased by 33.1%,
in ZAR terms mainly as a result of the inclusion of Evander
Mines’ mining profit of ZAR134.3 million.
Pan African increased earnings per share (EPS) in both cents
and pence by more than 30%. As this included a net beneficial
impact of a bargain purchase gain on the Evander acquisition
and impairments on the Group’s investments in Phoenix
Platinum and Auroch Minerals NL (Auroch), the improvment
in its headline earnings per share (EPS) was somewhat less.
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Pan African Resources PLC Integrated Annual Report 2013
17
CHIEF EXECUTIVE OFFICER’S REPORT
continued
The table below demonstrates the group’s earnings per share figures and year on year improvement:
2013
2012
Movement
ZAR millions
GBP millions
ZAR millions
GBP millions
ZAR %
GBP %
EPS
HEPS
34.51
30.07
2.63
2.17
24.83
24.89
2.02
2.03
39.0
20.8
30.2
6.9
(cid:118) On 17 November 2012, Gert Fourie passed away when
the truck he was driving left the road, overturned and
rolled down a hill at Barberton’s Sheba Mine,
(cid:118) On 7 March 2013, Velly Malumane was fatally
electrocuted while welding underground.
These tragedies were an anomaly, as Barberton Mines is
known for its good safety record. These accidents have been
thoroughly investigated to prevent any re-occurrences.
The two fatalities leads us to reflect on the overall safety of
our own operations and South African mining in general. Pan
African Resources prides itself on a superior safety record,
within an industry that has remarkably enhanced its safety
levels over the past decade.
two
impairments – amounting
Current year earnings were reduced by once-off costs
associated with
to
R242.3 million – and the Evander Mines acquisition costs of
R18.3 million. These impairments arose from the write-down
of Phoenix Platinum and Auroch investments due to the
challenges experienced at Phoenix Platinum and the impact of
lower gold prices and exploration challenges in Mozambique.
Safety –
Our Primary Concern is for our People
This past financial year was not without severe disappointments
and challenges from a safety perspective. Although safety is
the top priority at Pan African Resources, we are saddened to
report the tragic loss of two employees at Barberton Mines.
Evander Mines (cid:271) LTIFR and RIFR
)
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LTIFR
RIFR
2008
16.64
2009
10.39
4.33
2.80
2010
7.41
2.54
2011
3.72
2.64
2012
4.00
3.07
2013
2.90
1.74
18
Pan African Resources PLC Integrated Annual Report 2013
Current year safety performances at Evander Mines have
resulted in the best ever recorded Reportable Injury and Lost
Time Injury Frequency Rates for this operation
Phoenix maintained its excellent safety record, with no injuries
recorded since turning the first sod in April 2010.
In South Africa, most of the shallow and easily accessible
mineral deposits are depleted with mining now taking place
at exceptional depths. Despite these difficult conditions, the
mining industry has improved safety over the past 10 years
by 66%, to levels comparable with the United States. Fatalities
from “fall of ground”accidents have reduced by 81%, from
134 in 2003 to 26 in 2012. The industry reduced the
172 fatalities reported in 2002 to 54 in 2011.
The fact that the South African mining industry was able to
outperform every other mining country in improving safety
levels is an object lesson as to what can be done when
labour, management and government proactively collaborate
in resolving a pressing issue. This proves that with a focused
effort, all stakeholders can work together for the common
good of the industry.
South African mining in context
Despite all the social and economic difficulties in the mining
sector, currently highlighted by the anniversary of the Marikana
tragedy and demanding labour negotiations, our industry
remains a primary South African economic driver. The South
African Chamber of Mines estimates that mining is directly
responsible for 19% of all South African economic activity
and that its products support a further 25% of industrial and
other economic activity. The materials produced by South
Africa’s mines are beneficiated or processed by downstream
industries to produce many of our countries most essential
goods and services. Mining also generates a very significant
percentage of South Africa’s foreign currency reserves, and
supports our own rand.
According to the Chamber of Mines the South African mining
industry directly employed an estimated 513,000 employees
with an average annual remuneration per mining employee
of ZAR169,679 in 2011. This represents approximately 6.3%
of the country’s formal non-agricultural employment and an
increase of 169% in annual wages from 2001 to 2011.
Although a mature industry in South Africa and possibly
incorrectly perceived to be declining in importance, South
Africa as a country still has the world’s biggest stockpile of
proven mineral reserves. This is in a world where global mining
provides the raw materials for 45% of the world’s economic
activity. Although South Africa has slipped down the table of
gold producers from its previously held top spot, our country
holds approximately 12.7% of the world’s gold reserves and
produces approximately 7.8% of its annual production (2011
Chamber of Mines figures).
Our government attracts a good deal of negative media
attention at times. South African leaders have however
recognised that urgent societal and economic transformation
is required to uplift our poor and mend our society, and
their programmes over the last 20 years have done a great
deal. Since 2009 South Africa has spent ZAR860 billion rand
on infrastructure projects, with a further ZAR430 billion
allocated for additional development. This funding goes
into schools, public health, water and sanitation, as well as
expanding transport and logistics links. South Africa’s National
Development Plan will provide the “blueprint” for our future
development and growth.
South African mining has a key role to play in financing GDP
growth and helping reduce unemployment. To be able to
perform this role, we must be allowed the security of tenure
and scope to attract capital investment into maintaining and
developing mines.
Our mining industry has entered into a critical phase. For
some years now it has been the battleground of choice for
opposing political ideologies, populist leaders – and more
recently, competing trade unions.
Government has been working hard to stabilise the situation
and we are fully behind Deputy President Motlanthe’s
consensus-seeking efforts to draw all stakeholders into
working together for a sustainable future for mining.
South African mining is at this juncture right now and we call
on the leaders of all stakeholders – employees, government,
mining houses, communities and political parties – to come
to the table with the level-headed vision that South Africa
showed the world when negotiating our relatively peaceful
transition to democracy. At stake is the bedrock upon which
the South African economy was built.
Pan African has a diverse, multi-national shareholder base, but
our operations and management is proudly South African.
We are positive about the future of South Africa as a mining
investment and operating destination, nowhere else in Africa
has the established infrastructure, technical knowledge and
support, and mining history and legacy of our country. We ask
that shareholders continue to trust us to generate growth and
returns in an environment we know well.
Pan African –
A high-yielding dividend stock
We recognise that equity investors require a tangible return
on their investment.
The board has recommended a dividend approximating
ZAR240 million for the financial year 2013, equating to
ZAR0.1314 per share, resulting in a dividend cover of
2.3 times. This dividend is to be approved at the AGM on
22 November 2013.
We believe the fact that we are able to pay a dividend so soon
after the acquisition of Evander Mines, in a difficult economic
and operating environment, demonstrates the quality of the
Pan African Resources PLC Integrated Annual Report 2013
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CHIEF EXECUTIVE OFFICER’S REPORT
continued
Group’s people, assets and management’s ability to continue
to deliver results.
Subject to shareholder approval
at the AGM, we will resume
dividend payments at a proposed
dividend of ZAR0.1314 per share.
Mining reserves and resources
The Group’s approach to maximising the value of mineral
resources and reserves is based on a well-defined exploration
programme, innovation in both geological/resource modeling,
optimal mine planning, and continual optimisation of the asset
portfolio and brownfield projects.
The Group’s gold resources increased more than fivefold, due
to the successful conclusion of the Evander Mines acquisition.
Mineral resources now total 35.13 Moz of gold and 0.68 Moz
of PGM 4E (2012: 5.98 Moz of gold and 0.49 Moz of PGM 4E).
An aggressive exploration strategy at Barberton Mines
identified new resources including the Segalla and Camelot
slimes dams. Year-on-year, Barberton Mines raised its mineral
resources by 574,164 oz of contained gold.
The Evander Mines acquisition contributed to a 693% increase
in the Group’s mineral reserves to 9.20 Moz of gold.
Our successful commissioning of the BTRP at Barberton has
encouraged us to develop the Evander Tailings Retreatment
Plant (ETRP). Its tailings dumps contain a mineral reserve of
409,000 oz of gold. This additional throughput will optimise
the existing processing plant, and has a time frame of between
12 and 18 months.
Other potential organic projects at Evander include the
No. 3 Decline, which has a mineral resource of 2.30 Moz and
a time frame of between 18 and 24 months to convert to a
reasonable reserve.
Brownfield projects at Evander include Poplar and Evander
South, both at a pre-feasibility stage. Recommendations have
been submitted regarding the scope of work for a bankable
feasibility study for these two projects.
Future outlook and growth
On-mine projects
Pan African Resources successfully operates according to our
low cost and high margin business model. With the addition
of a flat, empowered management team and low overhead
structure, the Group believes that it has positioned itself as a
long-term, sustainable business.
Barberton Mines, as is evident from the success of the BTRP,
has demonstrated a proven ability to source additional
ounces at low input costs. The social impact of the BTRP in
the Barberton area which has high unemployment, has been
very positive with the creation of an additional 83 permanent
employment opportunities. The Group will continue to ensure
historic productions levels are maintained at Barberton Mines
from the underground operations. The management team will
further ensure the BTRP is brought into full production, taking
Barberton Mines to 115,000oz of gold production.
Over the past year the mining industry has placed greater
emphasis on cost delivery, free cash flows and enhanced
BTRP – inaugural gold pour
took place on 28 June 2013.
Evander Mines Projects
Category
Poplar
Evander South
Rolspruit
Evander Mines Project
Resource
Resource
Resource
Total
Tonnes
(million)
28.5
28.3
25.5
82.3
Grade
(g/t)
6.84
6.60
10.83
6.78
Gold
(Moz)
6.27
6.01
8.87
Depth below
surface (m)
500 – 1,200
300 – 1,200
1,400 – 3,300
21.15
300 – 3,300
20
Pan African Resources PLC Integrated Annual Report 2013
shareholders returns. Without diverting from this demand we
will continue to concentrate on the efficient use of capital.
Evander Mines has commenced a lower-grade mining cycle,
until the 2015 financial year, when we will revert to the high-
grade mining cycle. In an effort to ameliorate this reduction in
revenue from the mine, we have identified and are evaluating
numerous potential organic projects at Evander Mines.
Through the process of targeting incremental ounces, cost
of production at Evander Mines will be reduced with greater
economies of scale and infrastructure synergies.
Already underway is a sweeping and vamping project at
Evander No. 7 Shaft, producing gold from previously mined out
areas. A second project to process additional surface sources
requires the conversion of one of the current autogenous
mills to a ball mill to process fines at a rate of 20,000 tonnes
per month over 21 months, thereby extending the current
LOM of surfaces sources.
A further initiative being considered is the reopening of the
No. 3 Decline mining section at Evander Mines No. 7 Shaft.
This could enable the quick recovery of additional gold. An
additional benefit of this project is that it allows access to the
2010 Payshoot exploration project, which has the potential of
a significant new mining area.
Surface tailings within the Evander Mines complex have a total
resource of 203 million tonnes at an average grade of 0.29
g/t. A total reserve of 39 million tons of tailings at 0.32 g/t
is available at Kinross. The Kinross metallurgical plant, with a
nameplate capacity of 260,000 tonnes per month, has some
180,000 tonnes per month of excess capacity. Having identified
this as a “quick value” project, we initiated the necessary
project work to bring the proposed ETRP into production.
This project entails the upgrading of the existing Evander
Mines plant, with capital spend estimated to be significantly
less costly than that of the BTRP and with expected delivery
to be within 18 months.
Phoenix Platinum will remain a focus area over next year in
order to identify alternative feedstock for the plant to process,
improve recoveries, reduce cost efficiencies and improve
production levels.
Other major projects at Evander Mines
Additional major opportunities are Poplar, Evander South
and Rolspruit projects. We have tasked SRK to perform a
bankable feasibility gap analysis on previous pre-feasibility
studies on the Poplar and Evander South projects and will,
during the 2014 financial year, consider options of progressing
these projects in a manner that will benefit the Group and
its shareholders.
The Group’s operations have sufficient reserves and resources
for long-term mining. While the gold price fluctuates through
a zone of uncertainty and mining in general is challenged by
labour, regulatory and cost pressures, Pan African will adopt
a “steady as it goes” low-expenditure approach until the
market indicates that we should develop more aggressively
for faster growth.
Partnering with our stakeholders
Local communities at Barberton Mines and Evander Mines,
are home to the majority of our operations employees. The
betterment of these communities is in the interest not just of
the Group and its employees but also the employees’ families,
their children and parents and extended families. Better living
conditions for employees and their loved ones and increasing
economic development in the local communities contributes
to South Africa’s journey and progress. Only through the
consideration and collaboration of all stakeholders will
the business succeed in aligning the needs and requirements
of all, and operate in balance and harmony.
During the year the Group’s various operations expended
some ZAR20.2 million (2012: ZAR14.4 million) on community
and local economic development projects in terms of the
approved social and labour plans (SLPs). This represents 4.2%
(2012: 4.0%) of the Group’s headline earnings.
Barberton Mines
Government has set targets for the mining industry in
terms of social development and community upliftment. At
Barberton Mines we strive not only to meet the criteria but
to exceed them. We believe in creating a community where
opportunity and development is available to all and to do so
in a sustainable manner. This means that we provide funding
and support through our community projects with the goal
that they will become fully sustainable organisations in their
own right.
As a result we have established a Transformation Trust with the
explicit aim of ensuring critical mass by having our suppliers
to invest alongside us in order to provide further financing
for investing in the community. Deloitte Consulting has been
appointed to administer the Trust. In this manner the Trust
aims to raise a further two to three million rand per annum,
over and above contributions from Barberton Mines. The
project portfolio for the Trust is aligned with the Integrated
Development Plan of the Umjindini Local Municipality.
Through Our Social and Labour Plans as well as our
Corporate and Social investment initiatives, which form part
of our approved mining licence, we operate several Local
Economic Development (LED) projects in the community of
which we are extremely proud.
At Barberton Mines, a partnership with Adopt-a-School
has resulted in the opening of the Sinqobile Primary School,
which provides education to 1,100 pupils drawn from the
local Sinqobile community. The project took three years
from the planning and consultative stage to completion and
created 39 temporary jobs during the construction period.
The majority of the construction and establishment costs
were expended with local suppliers.
Pan African Resources PLC Integrated Annual Report 2013
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continued
(cid:118) Sinqobile Primary School provides
education to 1,100 pupils.
(cid:118) 10 full-time bursary students
from the community.
The Sinqobile vegetable garden project has created nine
permanent jobs and is operated as a fully functioning small
business, providing fresh produce to the local community and
retailers.
The Community Skills Development Centre in Sinqobile
represents a significant investment in infrastructure in the
community and is designed to promote job creation and small
business development through the provision of technical
training. To date, three cooperatives have been established by
alumni of the centre. Barberton Mines assisted the Sewing
cooperative in obtaining SABS standards approval, which
affords them the opportunity to supply the Mine and other
local businesses with safety clothing. The Welding cooperative
has secured a contract with a local Hardware store to supply
steel window frames and security gates.
The Umjindi jewellery project provides metal arts and
jewellery manufacturing skills to disadvantaged youths from
the local community, through a formal training and mentorship
programme. The training is accredited by the MQA and has
resulted in the creation of 8 full time jobs to date.
Bursaries – Following on our theme of learning and the
development of our employees and
the community,
Barberton Mines implemented a fulltime bursary scheme
during the 2011 financial year. Candidates are sourced from
our local community, with the intention of offering them job
opportunities on the completion of their studies. The bursary
covers full tuition fees, accommodation, textbooks and a
monthly allowance. Currently we have 10 fulltime students
enrolled.
The mine also supports improved community health through
participating and financially supporting the local municipality
in its annual HIV/Aids awareness campaign. A follow up
campaign at local schools was also sponsored during the year.
This campaign focused on educating teachers and learners on
dealing with pupils who are affected by HIV/AIDS. Five local
schools benefitted from the program. The Department
of Education expressed its appreciation to the Mine for
supporting this initiative.
Over and above the current projects that are in place,
Barberton Mine has also committed itself to the following
new projects for the 2013/2014 financial year:
(cid:118) The expansion of the Makhanya road in the Emjindini
Township at a total project cost of ZAR2.5 million.
(cid:118) Renovation of the De Kaap Vallei primary school at Sheba
at a total project cost of ZAR800,000.
(cid:118) The construction of a library and science block
at Emjindini high school at a total project cost of
ZAR1.2 million.
Barberton Mines also support and contribute financially on a
monthly basis to the following local organisations:
(cid:118) Verulam soup kitchen in Sinqobile – monthly contribution
of ZAR12,000.
(cid:118) Thandanani soup kitchen in Emjindini – monthly
contribution of ZAR5,000.
(cid:118) Mlambongwane Home based care centre – monthly
contribution of ZAR5,000.
(cid:118) St John’s HIV orphanage – monthly contribution of
ZAR10,000.
(cid:118) De Kaap Vallei school soup kitchen – monthly
contribution of ZAR5,000.
several
Evander Mines
Evander Mines undertook
local economic
development projects which have had a direct impact
on the mining community surrounding the mine and its
labour sending area in the Eastern Cape. These projects are
conducted in partnership with the local municipalities and
are designed to support implementation of Evander Mine’s
integrated development plans.
Specific projects include:
(cid:118) An internship programme, which employs four interns
from the local community.
(cid:118) The development of an SMME business through the
construction of a bakery in Embalenhle Township. This
project is expected to take three years to complete at
an estimated cost of ZAR6 million.
22
Pan African Resources PLC Integrated Annual Report 2013
We have also been strongly supported by a well established
board that offers a broad range of experience in mining and
commerce. Their ongoing advice and guidance is invaluable in
ensuring we remain on course. During the year Shanduka, our
BEE shareholder, rendered exceptional business expertise and
contributed to our success.
We look forward to continuing our onward journey together!
Ron Holding
Chief Executive Officer
16 September 2013
(cid:118) A sustainable human settlement development, which
entailed the construction of 16 family units using local
businesses. A further 26 family units will be renovated
during 2014 financial year.
Phoenix Platinum
The Phoenix Platinum operation installed a solar powered
borehole for the Modderspruit community which provides 40
households with clean water. A second system is to be installed
at the local community hall during the 2013 financial year.
Welcome and thanks
A warm welcome to all new employees, and stakeholders to
the Pan African Resources stable and in particular, to all of
the new employees at Evander Mines. Our thanks go out to
Graham Briggs and his Harmony team for the professional
and friendly manner in which the Evander Mines deal was
undertaken and the continued support provided to Evander
Mines through the current shared services arrangement.
Pan African Resources is privileged to have the right people
at all levels in our organisation, but none are more important
than those men and women who go underground daily and
competently perform their duties, often under physically
challenging circumstances. I would like to thank the general
managers, namely Casper Strydom at Barberton Mines,
Manny da Silva at Evander Mines and Bertin Mcleod at
Phoenix Platinum for their tireless effort and achievements
during the financial year.
Underpinning our success and assisting in ensuring a bright
future for Pan African Resources are the on-mine support
crews, management and the behind the scenes corporate
employees who deliver their best for the Group. Our lean and
flat structure makes the business model possible and ensures
we continue to deliver on our set goals.
At the end of February 2013 our previous CEO, Jan Nelson,
left Pan African Resources and we thank him for his years of
service and wish him well in his future ventures.
During the current year, our shareholders entrusted us with
more than ZAR707.3 million in an oversubscribed rights issue.
We wish to thank this very distinguished shareholder base for
their continued faith and loyal support.
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Pan African Resources PLC Integrated Annual Report 2013
23
FINANCIAL
DIRECTOR’S REPORT
Cobus Loots (Director)
All the financial objectives
set in 2012 were
successfully met in 2013,
thereby ensuring Pan
African Resources finished
the year in a stronger
financial position.
Commentary on financial results
Pan African Resources is committed to creating value for all
its stakeholders. For shareholders, value is determined by
the share price performance, sustainable earnings, cashflow
growth and by dividends paid by the Company.
All of the Group’s subsidiaries are incorporated in South
Africa and their functional currency is ZAR. The Group’s
books of prime entry are maintained in ZAR and, with
the exception of product sales, which are conducted in
US dollars (USD) prior to conversion into ZAR, business
is conducted in ZAR. The ongoing review of the results of
operations conducted by executive management and by the
board is also performed in ZAR.
The Group’s presentation currency is the Pound sterling
(GBP), due to its ultimate holding Company, Pan African
Resources PLC, being incorporated in England and Wales
and dual-listed in the United Kingdom and South Africa.
In the current financial year, the average ZAR/GBP exchange
rate was ZAR13.84:1 (2012: ZAR12.27:1), and
the
closing ZAR/GBP exchange rate was ZAR15.01:1 (2012:
ZAR12:91:1). The year-on-year change in the average and
closing exchange rates of 12.8% and 16.3% respectively must
be taken into account for the purposes of translating and
comparing year-on-year results.
The commentary below analyses the current year’s results
and provides insight into the Group’s expectations for the
2014 financial year. Key aspects of the Group’s ZAR results
appear in the body of this commentary and have been
used as the basis against which its financial performance
is measured. The gross GBP equivalent figures can be
found in the Salient Features of this report, appearing on
page 5. Similarly, ZAR is the currency used in discussing
the operations’ performance, included in the Operational
performance section on page 52 to 89.
External drivers of financial results
The profitability of the Group is dictated by various economic
drivers, the most significant of which are:
(cid:118) The USD spot gold price – determines the price received
for gold and PGM 6E produced.
(cid:118) The USD/ZAR exchange rate – determines the value
received in South Africa for gold and other metals
produced and ultimately the Group’s revenue. Also drives
specific costs of production and capital goods.
(cid:118) South African general inflation, wage rate and other price
increases – which determine the rate of increase in the
major elements of the Group’s costs.
(cid:118) The GBP/ZAR exchange rate – influences the Group’s
reporting performance in GBP.
24
Pan African Resources PLC Integrated Annual Report 2013
2013
HIGHLIGHTS
Gross revenue in GBP increased by
32.0% to £133.5 million
(2012: £101.1 million).
Gross revenue in ZAR increased by
49.0% to ZAR1,848.1 million
(2012: ZAR1,240.3 million).
Group capital expenditure in GBP incurred
£27.6 million (2012: £17.4 million).
Group capital expenditure in ZAR incurred
ZAR381.6 million
(2012: ZAR213.9 million).
Gold sold increased by 38.2% to
130,493oz (2012: 94,449oz).
Proposed dividend of ZAR0.1314 per
share or ZAR240 million to shareholders.
(cid:118) Gross revenue in GBP increased by 32.0% to
£133.5 million (2012: £101.1 million). Gross revenue
in ZAR increased by 49.0% to ZAR1,848.1 million
(2012: ZAR1,240.3 million).
(cid:118) Interest rates – determines interest payable and received
for borrowings and cash on hand.
The USD precious metals spot prices
During the course of the 2013 financial year, higher gold prices
were achieved for gold sales over the first three quarters
when compared to the prior year prices. Gold prices retreated
considerably during the last quarter of the financial year
impacting the average USD gold price received for the year.
The Group realised an average gold price of USD1,553/oz for
the year, a decrease of 8.3% from the USD1,694/oz achieved
in the prior year.
Monthly gold prices in USD/oz and ZAR per kg
The Platinum price during the 2013 financial year decreased
by 3.4% to USD1,552/oz (2012: USD1,606/oz). Phoenix
Platinum achieved an average market basket price of
USD1,030/oz (2012: USD968/oz), after taking into account the
terms of the off-take agreement with Western Platinum Limited.
The USD/ZAR exchange rate
The Group converts and records its revenue from precious
metal sales in ZAR, and the deterioration in the value of
the ZAR/USD exchange rate during the financial year had a
compensating effect on the weaker USD metals price revenue.
The average ZAR/USD exchange rate was 13.9% weaker, at
ZAR8.83:1 (2012: ZAR7.75:1).
The average ZAR gold price received by the Group increased
by 4.4% to ZAR440,824/kg (2012: ZAR422,215/kg), shielded
by the weakening in the ZAR against the USD.
The average ZAR PGM 6E basket price received by the Group
increased by 21.3% to ZAR9,093/oz (2012: ZAR7,499/oz).
USD and ZAR gold prices for the previous two years are
represented graphically in the chart below.
South African inflation, wage rate
and other cost increases
During the financial year, the consumer price index (CPI), (a
primary indicator of South Africa’s inflation), was reported
at 5.5% (2012: 5.5%). The main indicator of producer price
inflation (PPI), was measured at 5.9% (2012: 6.6%).
The GBP/ZAR exchange rate
The ZAR’s performance against the GBP is a key determinant
of the GBP results and, as such, it is important for shareholders
both in South Africa and the UK to be aware of the effect
exchange has on reported results. The value of the ZAR
against the GBP deteriorated for the major part of the
financial year, with a significant weakening in the ZAR seen
from October 2012. The average GBP/ZAR exchange rate
was 12.8% weaker at ZAR13.84:1 when compared to the
previous year (2012: ZAR12.27:1).
The GBP/ZAR exchange rate for the previous year is
represented graphically in the chart on the next page.
)
g
k
/
R
A
Z
(
480,000
470,000
460,000
450,000
440,000
430,000
420,000
410,000
400,000
390,000
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
–
(
U
S
D
/
o
z
)
Jul 2012 Aug 2012
Sep 2012 Oct 2012 Nov 2012 Dec 2012
Jan 2013
Feb 2013
Mar 2013
Apr 2013
May 2013
Jun 2013
ZAR/kg
USD/oz
Pan African Resources PLC Integrated Annual Report 2013
25
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FINANCIAL DIRECTOR’S REPORT
continued
GBP/ZAR monthly exchange rates
18
16
14
12
10
8
6
4
2
-
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Exchange rate 2013
Exchange rate 2012
12.84
12.95
13.31
13.9
14.03
13.93
13.99
13.78
13.83
13.94
14.2
15.48
10.92
11.55
11.83
12.5
12.84
12.74
12.4
12.08
11.98
12.49
12.93
13.03
Interest rates
The Group pays a margin of 280 bps above the Johannesburg
interbank agreed rate (JIBAR) on our RCF balance outstanding,
and received interest on cash on hand at quoted call account
rates. Movements in interest rates affects the interest expense
and income. Currently Jibar at 30 June 2013 was quoted at
the following rates:
5.0%
1 month
5.1%
3 month
5.5%
6 month
9 month
5.6%
12 month 5.9%
Report-back on the financial
objectives as outlined in the
2012 report
All the financial objectives set in 2012 were successfully met
in 2013, thereby ensuring Pan African Resources finished the
year in a stronger financial position:
1. Maximising margins by containing costs, based on a
forecasted average gold price of ZAR400,000/kg, PGM 6E
basket price of USD1,030/oz and exchange rates of ZAR/
USD 8.34:1 and ZAR/GBP 13.26:1.
The stronger gold price that prevailed over the first three
quarters of the financial year, weaker ZAR against the USD
and overall cost containment helped the Group achieve
this objective.
2. Maximising cash generation and increasing the revolving
credit facility (RCF) to ensure sufficient funding for the
BTRP and on-mine capital expenditure.
Although the Group increased its available RCF from
ZAR150 million to ZAR600 million, it generated sufficient
internal cashflows to fund all the BTRP and on-mine capital
expenditure, amounting to ZAR381.6 million, without
drawing on this facility.
3. Securing funding for the Evander Mines transaction by
concluding a rights issue with shareholders and finalising
debt finance with third parties.
The Group successfully completed its acquisition of
Evander Mines from Harmony on 28 February 2013.
4. Integrating Evander Mines’ financial systems with those
of Pan African Resources, which also included migrating
Harmony’s shared services (currently provided to Evander
Mines) to Pan African Resources.
The Group is engaged in the integration process and is aiming
to implement a new financial system at Evander Mines. We will
further ensure that all shared services processes are migrated
by the end of the 2014 financial year.
Analysing the successful
acquisition of Evander Mines
On 30 May 2012, Pan African Resources advised shareholders
that it had entered into an agreement with Harmony to acquire
the entire issued share capital and claims against Evander
26
Pan African Resources PLC Integrated Annual Report 2013
Fair value at acquisition
Property, plant and equipment
Other non-current assets
Other investments
Environmental trust fund
Other non-current assets
Current assets
Inventory
Trade and other receivables
Cash
Non-current liabilities
Deferred tax
Provision for environmental
rehabilitation
Provision for post-retirement benefit
Current liabilities
Trade and other payables
Tax liability
Net asset acquired at fair value
Bargain purchase gain
Effective purchase price
Evander Mines dividend to Harmony
Original purchase consideration
ZAR
(millions)
GBP
(millions)
2,157.0
161.3
0.3
217.7
3.1
51.5
32.2
29.4
–
16.3
0.2
3.9
2.4
2.2
(603.5)
(178.2)
(45.1)
(13.3)
(0.9)
(0.1)
(72.9)
(0.2)
1,635.5
322.4
1,313.1
210.0
1,523.1
(5.4)
–
122.3
24.1
98.2
15.7
113.9
Mines for a purchase consideration of ZAR1,500 million.
The acquisition was concluded by a wholly-owned subsidiary
of the Company, Emerald Panther Investments 91 Pty Ltd
(Emerald Panther). In terms of the sale and purchase
agreement, the purchase price increased effectively from
1 October 2012, until the date that all conditions precedent
had been met resulting in the purchase price increasing by
ZAR23.1 million to ZAR1,523.1 million.
The Group assumed effective control over Evander Mines on
28 February 2013 and settled the final purchase consideration
of ZAR1,523.1 million in the following manner:
(cid:118) Funds raised from the shareholder rights issue of
ZAR707.3 million,
(cid:118) debt funded from a drawdown on the Group’s RCF
of ZAR350 million (total RCF facility available of
ZAR600 million),
(cid:118) cash funded from operational cash flows of
ZAR255.8 million,
(cid:118) cash generated by Evander Mines prior to Emerald
Panther taking control of ZAR210.0 million.
The ZAR210.0 million above represents cash generated
by Evander Mines between 1 April 2012 and 28 February
2013, and was paid as a dividend to Harmony prior to Pan
African Resources assuming effective control of Evander
Mines. For accounting purposes, this amount was deducted
in determining the final purchase price consideration and
investment held by Emerald Panther in Evander Mines, with
the final investment amount calculated as ZAR1,313.1 million.
A preliminary analysis of the fair value assets and liabilities
of Evander Mines at acquisition appears in the following
purchase price allocation (PPA) table, prepared in accordance
with IFRS3. This analysis resulted in a bargain purchase
consideration of ZAR322.4 million, included in earnings for
the year.
Unpacking 2013 financial performance
Revenue and profitability
2013
2012
Movement
ZAR
(millions)
GBP
(millions)
ZAR
(millions)
GBP
(millions)
Revenue
Cost of production
Mining profit
EBITDA
Profit after taxation
Headline earnings
EPS
HEPS
(cents/pence)
(cents/pence)
1,848.1
(985.1)
776.8
735.2
558.9
487.0
34.51
30.07
133.5
(71.2)
56.1
53.1
42.6
35.2
2.63
2.17
1,240.3
(566.0)
632.3
552.5
358.9
359.7
24.83
24.89
101.1
(46.1)
51.5
45.0
29.2
29.3
2.02
2.03
ZAR
(%)
49.0
74.0
22.9
33.1
55.7
35.4
39.0
20.8
GBP
(%)
32.0
54.4
8.9
18.0
45.9
20.1
30.2
6.9
Pan African Resources PLC Integrated Annual Report 2013
27
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FINANCIAL DIRECTOR’S REPORT
continued
increased by 49.0%
Pan African Resources consolidated
results
to
Group revenue year-on-year
ZAR1,848.1 million (2012: ZAR1.240.3 million). Evander
Mines contributed ZAR438.9 million, Phoenix Platinum
contributed ZAR58.9 million and Barberton Mines contributed
ZAR110 million, resulting in a ZAR607.8 million increase in
revenue. Barberton Mines recorded an increase in revenue
due to an increase in gold ounces sold and higher ZAR gold
prices achieved. The Group realised an average gold price of
ZAR440,824/kg (2012: ZAR422,215/kg) and an average price
for PGM 6E of ZAR292,355/kg.
The Group’s year-on-year total cost of production reflects
an increase by ZAR419.1 million to ZAR985.1 million (2012:
ZAR566.0 million), of which Evander Mines contributed
ZAR275.5 million, and Phoenix Platinum ZAR48.9 million
of the increase. Barberton Mines’ costs increased by 16.7%,
which contributed ZAR94.7 million to the Group’s cost of
production increase.
The Group has adopted reporting cash costs in line with
the recommendation of the World Gold Council, and the
table below reflects the consolidated Group’s overall gold
operations costs per kilogram.
The Group’s cost of production per kilogram increased by
19.7% to ZAR231,439/kg (2012: ZAR193,360/kg). Evander
Mines’ cost of production averaged ZAR259,640/kg,
compared to Barberton Mines’ average cost of production of
ZAR221,424/kg. Factors contributing to the average increase
year-on-year were salary and wages costs increases at
Barberton Mines of 16.1%, an increase in the cost of electricity
of 15.0%, mining costs increasing by 32.3%, primarily due to
higher vamping contractor costs as a result of additional
kilograms produced by this contractor. The mining costs also
included additional secondary support costs incurred at
Fairview to establish additional mineable panels.
World Gold Council cost analysis
The Group’s all-in sustaining cash cost of production per
kilogram (including direct cost of production, royalties,
associated corporate costs and overheads and sustainable
capital expenditure) increased by 14.1% to ZAR281,551/kg
(2012: ZAR 246,801/kg), largely impacted by higher on-mine
maintenance and development capital expenditure.
The Group’s all-in cost per kilogram (sustaining cost of
production plus once-off expansion capital) increased by
29.4% to ZAR343,949/kg (2012: ZAR 265,713/kg), due to
high capital expenditure incurred on the construction of
the BTRP and Evander shaft deepening project. The Group
incurred overall lower royalty costs as a result of the higher
capital expenditure on the BTRP, which is factored into the
all-in cash costs for the royalty calculation. When costs are
compared to the average gold price received of ZAR440,824/
kg during the year, it demonstrates the Group’s current overall
available gold mining margins. The Group’s EBITDA increased
by 33.1% to ZAR735.2 million (2012: ZAR552.5 million),
mainly as a result of the inclusion of Evander Mines’ EBITDA
of ZAR152.3 million.
Pan African Resources achieved an increase of 55.7% in profit
after tax to ZAR558.9 million (2012: ZAR358.9 million), due
to inter alia, the following reasons:
(cid:118) An improved performance at Barberton Mines,
(cid:118) four months profit contribution from Evander Mines,
(cid:118) bargain purchase gain of ZAR322.4 million arising on the
Evander Mines acquisition.
The bargain purchase gain was largely offset by once-off
costs, comprising of Phoenix Platinum’s impairment of
ZAR100 million, an Auroch impairment of ZAR142.3 million, a
Manica loss on disposal of asset held for sale of ZAR8.2 million
and once-off acquisition costs relating to Evander Mines of
ZAR18.7 million.
Cash cost costs
All-in sustaining cash costs
All-in costs
Units
2013
2012
Movement (%)
(ZAR/kg)
(ZAR/kg)
(ZAR/kg)
231,439
281,551
343,949
193,360
246,801
265,713
19.7
14.1
29.4
28
Pan African Resources PLC Integrated Annual Report 2013
The impairments arose as a result of, inter alia, lower precious
metal price forecasts and exploration and mining challenges in
the current depressed mining environment.
The Group’s current tax charge increased marginally by 5.4%
to ZAR167.9 million (2012: ZAR159.3 million). The significant
BTRP capital expenditure of ZAR229.6 million incurred in the
year was fully tax deductible, resulting in the effective current
tax rate decreasing to 22.2% (2012: 30.7%). Phoenix Platinum
has unredeemed capital expenditure of ZAR133.2 million at
year end, which will be utilised in the future.
The Group’s EPS in ZAR amounted to 34.51 cents
(2012: 24.83 cents) resulting in an increase of 39.0%. The
rights issue during January 2013 resulted in the weighted
average number of shares in issue increasing by 12.1% during
the year to 1,619.8 million (2012: 1,445.2 million).
The Group’s HEPS in ZAR terms amounted to 30.07 cents
(2012: 24.89 cents), an increase of 20.8%. The current year’s
HEPS differ from EPS due to the bargain purchase gain,
impairment charges and loss on disposal of asset held for sale,
which are adjusted for when calculating the HEPS. This net
adjustment amounted to ZAR71.9 million.
Readers are directed to the segmental information included
on page 129 of the annual financial statements and the
operational performance reviews for further analysis.
Because of the funds required for the acquisition of Evander
Mines, the board of directors did not propose a dividend
for the year ended 30 June 2012. Now, with the continued
satisfactory results from Barberton Mines and the successful
funding of the Evander Mines transaction, the board of
directors has proposed a dividend of ZAR240 million, or
ZAR0.1314 cents, resulting in a dividend cover of 2.3 times.
assets
Non-current
to
increased
ZAR3,726.2 million. The majority of this significant increase
is attributable to the Evander Mines acquisition and related
fair value adjustment to the property plant and equipment
acquired (ZAR2,157.0 million) as well as capital expenditure
225.8%
by
at Barberton Mines of which ZAR316.8 million, of which
ZAR229.6 million related to the BTRP and is classified as a
major project and therefore non-sustainable capital. Included
in non-current assets at 30 June 2013 is Evander Mines’
rehabilitation trust fund balance of ZAR218.7 million. The
rehabilitation trust funds are invested in interest-bearing
short-term investments or medium-term equity linked notes
issued by commercial banks.
Current assets increased by 9.2% to ZAR401.5 million as
a result of increases in inventory and accounts receivable.
Inventory increased due to the inclusion of Evander Mines’
inventory balances, which included Evander Mines’ gold stock
not yet sold. In addition BTRP’s reagent consumables were
held for the first time in the current year. The Group’s debtor
days increased to 30 days (2012: 15 days), due to larger
debtor balances at year-end.
Contributing to the increase in the Group’s equity are the
proceeds of ZAR707.3 million rights issue undertaken to fund
the Evander Mines acquisition and the increase in the current
year’s retained income, as a result of profit of after tax of
ZAR558.9 million.
by
564.2%
liabilities
increased
Non-current
to
ZAR1,200.9 million due to the inclusion of Evander Mines’
rehabilitation provision of ZAR182.3 million and Evander
Mines’ deferred tax liability of ZAR607.9 million. In addition,
Pan African Resources raised ZAR350 million in RCF debt to
fund Evander Mines’ transaction. At 30 June 2013, an amount
of ZAR165.2 million of this RCF debt remains outstanding and
is included in non-current and current liabilities. It is pleasing to
note that ZAR184.8 million was repaid within four months of
the initial ZAR350 million drawdown.
Current liabilities increased by 152.8% to ZAR361.2 million.
The majority of the increase relates to the inclusion of
Evander Mines’ trade and other payables, amounting to
ZAR192.1 million. The balance of the increase mainly relates
to Barberton Mines’ increase in trade and other payables of
ZAR58.3 million as result of the BTRP construction contracts.
Financial position and resource allocation
2013
2012
Movement
ZAR
(millions)
GBP
(millions)
ZAR
(millions)
GBP
(millions)
Non-current assets
Current assets
Total equity
Non-current liabilities
Current liabilities
3,726.2
401.5
2,568.8
1,200.9
361.2
249.3
26.7
172.2
80.0
24.1
1,143.8
367.8
1,357.5
180.8
142.9
86.1
28.5
102.6
14.0
11.1
ZAR
(%)
225.8
9.2
89.2
564.2
152.8
GBP
(%)
189.5
(6.3)
67.8
471.4
117.1
Note 1: At 30 June 2012, Phoenix Platinum had not reached steady state production, therefore all income and expenditure was capitalised as per IAS16 property,
plant and equipment
Note 2: Current assets at 30 June 2013 exclude non-current assets held for sale of ZAR3.2 million (GBP0.2 million) and at 30 June 2012, ZAR169.6 million
(GBP13.1 million).
Pan African Resources PLC Integrated Annual Report 2013
29
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FINANCIAL DIRECTOR’S REPORT
continued
The increase in the accounts payable resulted in the creditor
days increasing to 60 days (2012: 30 days).
Capital expenditure during
ZAR381.6 million as detailed per operation below.
the year amounted
to
For the year ended
30 June 2013
For the year ended
30 June 2012
Group capital
expenditure
ZAR
(millions)
GBP
(millions)
ZAR
(millions)
GBP
(millions)
Barberton Mines
BTRP
Evander Mines
Phoenix Platinum
Corporate
87.2
229.6
62.4
2.2
0.2
6.3
16.6
4.5
0.2
–
76.4
55.4
–
81.9
0.2
6.2
4.5
–
6.7
–
Total capital expenditure
381.6
27.6
213.9
17.4
Cash performance
The Group’s cash and cash equivalents decreased to
ZAR71.6 million (2012: ZAR255.5 million) due to funding
of both the Evander Mines acquisition and construction of
the BTRP. Despite these outflows, the group was still able
to generate sufficient cashflows from its operations to fund
on-mine capital expenditure and ZAR184.8 million in RCF
repayments during the year.
The Group remains cash generative with a net debt position
of only ZAR93.6 million at year-end. The cash generated by
the operations is a reflection of the quality gold assets and
the available profit margins as a result of cost control and
improved production results.
Share price performance
Pan African Resources’ share price has over the past year
performed well, relative to the FTSE/JSE gold mining index (SA
gold mining index). The Group experienced an increase in the
share price after announcing the Evander Mines transaction,
however the share price declined along with other gold
counters, as perceptions about the outlook for the global
economy changed. Pan African Resources has performed
better than its peers within the SA gold mining index.
The AIM share price performance highlights that during the
year Pan African Resources remained competitive and in line
with its peers, outperforming on occasion.
Shareholder analysis at 30 June 2013
Beneficial shareholders
holding of 3% or more
Number
of shares
Shanduka Gold (Pty) Ltd
Allan Gray
Coronation Holdings
Afena Capital
Investec Group
Prudential Group
Public Investment Corporation (PIC)
436,358,058
176,733,778
170,747,784
132,827,637
96,790,574
95,564,329
55,255,381
%
23.9
9.7
9.4
7.3
5.3
5.2
3.0
Shanduka Gold (Pty) Ltd remains our largest shareholder and
strategic partner.
30
Pan African Resources PLC Integrated Annual Report 2013
Pan African Resources vs FTSE/JSE Gold Mining Index
)
s
t
n
e
c
(
350
300
250
200
150
100
50
0
Jun 2012
Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012
Jan 2013
Feb 2013
Mar 2013
Apr 2013
May 2013
Jun 2013
Pan African Resources
FTSE/JSE Gold Mining Rebased
Pan African Resources vs FTSE All-Share Mining Index
)
e
c
n
e
p
(
22
20
18
16
14
12
10
Jun 2012
Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012
Jan 2013
Feb 2013
Mar 2013
Apr 2013
May 2013
Jun 2013
Pan African Resources
FTSE All-Share Mining Rebased
Financial objectives for 2014
Fully integrate Evander Mines into
the Pan African Resources Group
The successful conclusion of the Evander Mines acquisition
during the year required immense work and effort from
many employees within the Group and at Harmony. These
efforts have continued subsequent to the acquisition, and are
now focused on integrating the procurement and financial
departments and to realise efficiencies and cost savings.
Following the successful implementation of an enterprise
resource planning system at Barberton Mines in 2012, the
same system is to be introduced at Evander Mines, Phoenix
Platinum and Pan African Resources corporate office in order
to improve financial control and alignment of reporting.
Cost containment
The finance department will, together with operational
management, focus on cost containment in 2014, in order to
maximise margins and cash generation. In particular, we will
look at exploring synergies to optimise systems and processes
further and to ensure effective financial management and
control at a reasonable cost.
Maintain dividend payments
It is the Group’s objective to maintain dividend payments
to shareholders, subject to financial performance and future
forecasts.
Cobus Loots
Director
16 September 2013
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Pan African Resources PLC Integrated Annual Report 2013
31
EXECUTIVE MANAGEMENT
EXCO
Ron Holding (61)
Cobus Loots (35)
Chief Executive Officer*
NDT Mining Metalliferos
(Wits.Tech.)
Managers certificate of
Competency (Metalliferous Mining)
MDP (UCT)
43 years of mining-
related experience
* Appointment date 9 September 2013.
Director*
CA(SA)
CFA® Charterholder
* Busi Sitole resigned as Financial director
effective 30 September 2013 and is
replaced by Cobus Loots effective
1 October 2013.
Busi Sitole (37)
Andre van
den Bergh (57)
Financial Director
Executive: HR
CA(SA)
Diploma in HR Management
Diploma LR Management
39 years of mining-related
experience
32
Pan African Resources PLC Integrated Annual Report 2013
EXECUTIVE MANAGEMENT
OPSCO
Casper Strydom (55)
Manny da Silva (43)
Bertin Mcleod (36)
Neal Reynolds (30)
General Manager:
Barberton Mines
Mines National Higher Diploma
Metalliferous Mining
Mine Managers Certificate
37 years of mining-related
experience
General Manager:
Evander Mines
BSc Mining Engineering (Wits)
Mine Managers Certificate
of Competency
Mine Overseers Certificate
of Competency
25 years of mining-related
experience
Plant Manager:
Metallurgy
Phoenix Platinum
Btech: Chemical Engineering
Management
Development Certificate
Senior Management
Development Certificate
11 years of platinum industry
experience
Group
Financial Manager
CA(SA)
8 years of financial-related
experience
Barry Naicker (40)
Wayne Allen (44)
Mandla Ndlozi (42)
Mineral Resource and
Reserves Manager
Group
Consulting Engineer
Group SHEQC
Manager
MEng Mineral Resource
Management (Wits)
Grad Dip Engineering (MRM)
BSc (Hons) Geology and
Economic Geology
10 years of mining-related
experience
National Diploma Engineering
Mechanical Engineer’s
Certificate of Competency
MAP (Wits)
AMRE (SA)
23 years of mining-related
experience
NADSM (UNISA)
EIA (Potch University)
MDP (GIBS)
SAMTRAC (NOSA)
Integrated SHEQ Management
(Potch University)
14 years of mining-related
experience
Pan African Resources PLC Integrated Annual Report 2013
33
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OUR
BUSINESS PHILOSOPHY
Geographic location
Background
Company structure
History of Pan
African Resources
The global and
South African mining
environment
Performing against
our business model
Delivering on
our strategy
34
Pan African Resources PLC Integrated Annual Report 2013
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Pan African Resources PLC Integrated Annual Report 2013
35
GEOGRAPHIC LOCATION
OF MINING OPERATIONS AND PROJECTS
Building a sustainable and profitable South African-focused precious metals and mining
company with a low cost, high margin.
South Africa
Botswana
Pilansberg Game Reserve
Mafikeng
Kalahari
Desert
Rustenburg
Zeerust
Phoenix Platinum
Gauteng
Pretoria
Johannesburg
North West Province
Potchefstroom
Vryburg
Klerksdorp
Kuruman
Taung
Free State
Northern Cape
0
0
0
40
40
40
80
80
80
LOMETRES
KILOMETRES
KILOMETRES
N
W
E
S
Mozambique
Limpopo
Kruger National Park
Loskop Dam
Nelspruit
Barberton Mines/BTRP
Middleburg
Barberton
Witbank
Evander Mines
Secunda
Ermelo
Swaziland
Mpumalanga
KwaZulu-Natal
Towns close to project locations
Towns and cities on main roads
Neighbouring countries
Provinces
Barberton Mines
Capacity 115 koz gold
per annum
Evander Mines
Capacity 100 koz gold
per annum
Phoenix Platinum
Capacity 12 koz
PGM 6E per annum
36
Pan African Resources PLC Integrated Annual Report 2013
BACKGROUND
THE PAN AFRICAN RESOURCES GROUP
Pan African Resources is an African-focused precious metals
mining company, comprising the following operations:
(cid:118) The Barberton Mines gold mining operations, including the
BTRP, with a total annual production capacity of 115 koz
of gold.
(cid:118) The Evander Mines gold mining operations, having an annual
production capacity of 100 koz of gold.
(cid:118) Phoenix Platinum, a chrome tailings retreatment plant
(CTRP), having an annual production capacity of 12 koz
PGM 6E.
The Company also has a 42% investment in Auroch, an
Australian-listed gold exploration company, operating
in Mozambique.
The Group’s total Mineral Reserves amount to 9.20 million
ounces (Moz) of gold and 0.25 Moz of PGM 4E.
The Group’s total Mineral Resources amount to 35.13 Moz of
gold and 0.68 Moz of PGM 4E.
Pan African Resources is committed to value creation for all
its stakeholders through a strategy that places safe mining
at its core, followed by the optimal mining of quality grade
orebodies at low cash costs, in a manner that is sustainable
and with minimum impact on the environment and a beneficial
impact on the community.
Profitable growth is primarily achieved through prioritising
organic projects available within the Group’s current asset
portfolio. Where appropriate, targeted acquisitions fitting into
the Group’s business philosophy are mining of quality, high
grade low cost orebodies are considered.
Supporting this strategy are a variety of governance structures
and prioritised initiatives including skills development, education
and training; the continued good health of the workforce;
transformation in the workplace and at an ownership level;
and environmental management, rehabilitation and closure
plans. The Group partners with neighbouring communities
through
local economic development (LED) and
community investment activities.
its
The Group’s shares are listed on both AIM under the share
code PAF and on the main board of the JSE under the share
code PAN. It trades under the Gold Mining subsector of both
exchanges.
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Pan African Resources PLC Integrated Annual Report 2013
37
COMPANY
STRUCTURE
Pan African Resources PLC
(Incorporated and Registered in England and Wales under the Companies Act 1985
with registration number 3937466 on 25 February 2000)
100%
100%
100%
100%
42%
Pan African
Resources
Funding
Company
(Pty) Limited
(Incorporated
in South Africa)
Pan African Resources
Group Facilities
and Finance
Emerald
Panther
Investments 91
(Pty) Limited
(Incorporated
in South Africa)
Barberton
Mines
(Pty) Limited
(Incorporated
in South Africa)
Phoenix
Platinum Mining
(Pty) Limited
(Incorporated in
South Africa)
Auroch
Minerals NL
(Incorporated in
Australia)
Barberton Mines
Operations
and BTRP
Phoenix Platinum Chrome
Tailings Retreatment
Project
Investment Holding -
Manica gold project in
Mozambique
100%
100%
Evander Gold
Mining
(Pty) Limited
(Incorporated in
South Africa)
Evander Gold
Mines
Limited
(Incorporated
in South Africa)
New
Old
Evander Mining Operations
Evander Mining Operations
Note: Only the material subsidiaries are being disclosed in the Group structure.
38
Pan African Resources PLC Integrated Annual Report 2013
HISTORY
OF PAN AFRICAN RESOURCES
(cid:118) Incorporated as Viking Internet PLC on February 2000
and admitted to AIM in May 2000.
(cid:118) On 28 August 2012, the Group entered into an agreement
to dispose of 100% of its interest in Manica to Auroch.
(cid:118) Name changed to White Knight Investments PLC in
(cid:118) On 28 February 2013, Pan African Resources through
Emerald Panther, finalised the acquisition of 100% of the issue
share capital of Evander Mines.
(cid:118) On 1 March 2013, Firefly Investments 251 (Pty) Ltd
(renamed to Evander Gold Mining (Pty) Ltd), a wholly owned
subsidiary of Emerald Panther, purchased the assets and
liabilities of Evander Gold Mines Limited.
September 2001.
(cid:118) In December 2003, the Company completed the acquisition
of Mistral, a company holding rights in relation to gold
exploration properties in Ghana and Mozambique.
(cid:118) A reverse takeover of Brampton Capital in September 2005
resulted in the Company being readmitted to AIM as Pan
African Resources.
(cid:118) An interest in two exploration projects in the Central African
Republic was acquired in 2006.
(cid:118) A 74% interest in Barberton Mines was acquired from
Metorex Limited (Metorex) in 2007, resulting in a reverse
takeover of Pan African Resources by Metorex.
(cid:118) Pan African Resources exercised its option to acquire 100%
of Phoenix Platinum from Metorex for cash in May 2009.
(cid:118) The Group acquired the remaining 26% of Barberton Mines
from Shanduka in exchange for 295,751,549 shares in the
Company in in the same transaction.
(cid:118) Metorex disposed of its holdings in Pan African Resources
to institutional investors and Shanduka in June 2009.
(cid:118) During the financial year ended 30 June 2009, the feasibility
of the exploration projects in Ghana and the Central African
Republic were assessed, and it was concluded that these
projects did not meet the Group’s criteria to continue with
further exploration activity. Exploration activities on these
projects were then discontinued.
(cid:118) On 30 May 2012, Pan African Resources announced that it
had entered into a conditional agreement pursuant to which
Emerald Panther, a wholly owned subsidiary of Pan African
Resources, would acquire the entire issued share capital of
Evander Mines and all the shareholder loan claims against
Evander Mines from Harmony.
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Pan African Resources PLC Integrated Annual Report 2013
39
THE GLOBAL AND SOUTH AFRICAN
MINING ENVIRONMENT
Global economic conditions
The gold industry is effectively a “price take”, and gold prices,
denominated in USD, are impacted by worldwide economic
conditions.
The global recession has negatively impacted investment in
mining activities, particularly as far as exploration and capital
projects are concerned. This lack of investment should impact
the supply of commodities in years to come.
Over the past year, the global economic outlook has improved
somewhat. The world’s economy has moved beyond the threat
of a euro-led credit freeze and the USA is reporting generally –
if somewhat erratic – improving production statistics, although
the eurozone is expected to remain in recession for some
time to come. However, uncertainty remains in global financial
markets, which remain volatile. This continuing volatility may
result in cost pressures and commodity price fluctuations.
Recently, we have seen a flight of capital from emerging market
economies, which has negatively impacted the currencies and
economies in these countries.
The South African economy
The South African Reserve Bank (SARB) has held its key
repo rate at record lows in response to disappointing local
economic growth and high unemployment. South African
interest rates, however, remain relatively high compared to
the world’s developed economies, which support the South
African rand and mitigate to some extent imported and local
inflation risks. Towards the end of 2012 and the first half of
2013, continued weakness in the South African economy, the
threat of mass strike action and a lack of investor confidence,
together with signs of recovery elsewhere, saw the South
African rand weaken to its lowest levels in more than four
years. It is now considered to be severely undervalued.
Not only does the recent rand weakness impact directly on
current revenues and costs, but its inherent volatility as an
emerging market currency increases uncertainty regarding future
revenues and costs. It may be expected that a weaker South
African rand would result in a higher rand gold price; however, the
USD price of gold has also declined on signs of a global economic
recovery. As such, the rand value of gold is range-bound by the
combination of the gold price and the exchange rate.
The majority of the South African mining industry’s costs,
mainly wages and energy, are rand-based. Social pressures
have seen wages increase at rates significantly above inflation
in recent years, and the need to recapitalise and develop the
country’s energy industry has resulted in the cost of electricity
increasing by more than 25% per annum between 2008 and
2011, and 16% in 2012. Electricity tariff increases have been
limited to a much lower 8% for 2013/14, but these increases
remain above inflation. The five-year multiyear electricity price
increase determination has been set at 8%, introducing a level
of certainty to this key input cost going forward.
Changes in the market price for gold
The market price of gold is very volatile. Fluctuations in gold
prices are caused by numerous factors including speculative
positions taken by investors or traders, changes in either the
supply or demand for gold, financial market expectations
regarding the rate of inflation, the strength of the US dollar
relative to other currencies, changes in interest rates, actual
or expected gold sales and purchases by central banks, the
emergence of gold-based exchange traded funds, gold sales
by gold producers in forward transactions, global or regional
political or economic events and costs of gold production in
major gold-producing nations.
Gold prices have recently been under pressure, inter alia, as a
result of a general view that the world economy is recovering
and new regulations to curb gold imports in India.
The gold price ranged from USD1,192 to USD1,792 per
ounce in the 2013 financial year and the price of gold as at
financial year-end was USD1,192 per ounce. The average
price realised by the Group during the year was USD1,553
per ounce.
Labour disruption and trade union
activities
Employees in the South African mining industry are highly
unionised and mining companies in South Africa face labour
disruption resulting from labour disputes. Recently, trade union
strike action at underground mines has had a major effect on
the mining industry in South Africa. Inter-union rivalry, wildcat
unprotected strikes and politicking by various political factions
further complicate the industrial relations landscape.
A high incidence of violence and intimidation is often
associated with strikes, especially illegal strikes, resulting in
loss of life and serious injury and property damage. Showing
government’s commitment to the sector, South Africa’s
deputy president, the Honourable Kgalema Motlanthe, was
given the mandate to stabilise relationships between owners,
managers and labour in a manner that will promote further
investment in the sector.
40
Pan African Resources PLC Integrated Annual Report 2013
The governance of mining rights
and mining activities
In South Africa, the award and maintenance of prospecting
and mining rights are linked to meeting various obligations,
including compliance with the Mining Charter, the Mineral and
Petroleum Resources Development Act (MPRDA) and other
legislation. Compliance with the Mining Charter, measured
using a designated scorecard (Mining Charter Scorecard),
requires the achievement of equity participation in all
prospecting or mining ventures by historically disadvantaged
South Africans (HDSAs) of 26% by April 2014, and targeted
levels of participation by HDSAs in management.
The industry is also prescribed to by the Code of Good
Practice for the Minerals Industry (the Code) and the
Housing and Living Conditions Standard (the Standard). The
Code was developed to create principles to facilitate effective
implementation of minerals and mining legislation and enhance
implementation of the Mining Charter applicable to the mining
industry. The Standard aims to include the provision of housing
as an integral part of infrastructure during the development
of a mine.
The South African Department of Trade and Industry has
proposed changes to the Broad-based Black Economic
Empowerment Act, No 53 of 2003 (BEE Act) which, if
implemented, would provide a standard framework for the
measurement of black economic empowerment compliance
across all sectors of the economy. The implementation of
an all-encompassing standard framework may result in
targets previously agreed with the Department of Mineral
Resources (DMR) becoming redundant, requiring the industry
and individual mining houses to modify their approach to
transforming the industry.
Competition
The mining industry is competitive in all of its stages. Mining
companies compete for specialised equipment, components
and supplies necessary for exploration and development,
for mining claims and leases on exploration properties and
for the acquisition of mining assets.
Health and safety laws and regulations
Over the past 20 years, the South African gold mining industry
has responded to increasing demands to improve safety on
its mines, and is subject to a variety of industry-specific health
and safety laws and regulations to protect employees. The
government enforces compulsory shutdowns of operations
to enable investigations into the cause of accidents at those
operations. In particular, the so-called “section 54” safety
stoppages have become a significant issue. Stoppages can be
enforced by the Inspector of Mines for a variety of reasons
and can impact specific shafts or levels, or the entire mine.
A demonstrable commitment to safe production and good
relationships with the DMR and its representatives are key
elements to minimising the impacts of these stoppages.
Safety in South African mines has improved drastically over
recent years, with a significant decrease in fatalities and injuries
across all sectors of the industry.
Illegal mining
South Africa’s poor economic growth and high unemployment
rates incite illegal mining activities. The presence of illegal
miners on mine land and within the working area of a mine
pose serious safety risks – not just to the illegal miners, but
also to the mine’s employees. This phenomenon increases the
security costs associated with mining. Pan African Resources
is engaged in a continuous and focused effort to reduce the
impact of illegal mining on our operations.
Environmental laws and regulations
Environmental laws and regulations in South Africa are world
class and establish limits and conditions on the industry’s
extraction; use and conservation of water resources; air
emissions (including dust control); water treatment and
discharge; regulatory and community reporting; clean-up of
contamination; worker safety and community health; and
the generation, transportation, storage and disposal of solid
and hazardous wastes such as acids, radioactive materials
and mine tailings. The requirement for compliance with
environmental laws and regulations has increased in line with
international trends.
The South African industry also competes on a global basis to
attract and retain key human resources with the appropriate
technical skills and operating and managerial experience.
This is further exacerbated in the current environment of
increased mining activity across the globe.
Environmental laws and regulations are continually changing
and are generally becoming more prescriptive. Failure to
comply with applicable environmental laws and regulations
may result in the suspension or revocation of permits
and rights.
The retention of staff is particularly challenging in South
Africa where, in addition to the impacts of global industry
shortages of skilled labour, the industry is required to achieve
employment equity targets of participation by HDSAs in
management. The current shortage of critical skills and
experience in South Africa makes the development and
retention of people essential to a successful mining business.
Water quality and usage are areas of concern globally, but are
particularly significant for water-stressed South Africa, where
there is significant potential for environmental and social
impacts. Any failure to secure access to suitable water supplies,
or achieve and maintain compliance with the requirements of
the permits or licences, could result in curtailment or halting
of production at the affected operation. The South African
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Pan African Resources PLC Integrated Annual Report 2013
41
THE GLOBAL AND SOUTH AFRICAN
MINING ENVIRONMENT continued
Department of Water Affairs monitors compliance with
regard to water matters.
South African mining companies are required by law to close
their operations at the end of a mine’s life, rehabilitate the
lands mined and manage the potential for acid mine drainage.
Estimates of total ultimate closure and rehabilitation costs for
gold mining operations are significant and based principally
on life-of-mine (LOM) profiles, changing inflation and discount
rate assumptions, changing designs of tailings storage facilities
and current legal and regulatory requirements. Accounting
standards require that environmental liabilities are accrued
when they become known, probable and can be reasonably
estimated. Increasingly, regulators are seeking security in the
form of cash collateral or bank guarantees in respect of
environmental obligations. Pan African Resources assesses its
liabilities in this regard on an annual basis, and creates financial
provisions accordingly.
Both direct and indirect emissions of greenhouse gases
(GHGs) are receiving ever-increasing attention and increased
disclosure expectations. The South African mining industry,
through its use of fossil fuels and electricity generated by
Eskom, the local energy utility, is responsible for the emission
of substantial quantities of GHGs. In response to international
initiatives, including the Kyoto Protocol and the Durban
Platform, commitments by the South African government
to reduce the country’s emissions have led to a proposed
carbon tax, expected to be introduced in 2015. The costs of
monitoring, measuring and managing energy consumption
may well be offset by energy efficiencies achieved. However,
carbon taxes – especially those imposed on local electricity
utility Eskom – will, in all likelihood, see further increases in the
cost of electricity.
Climate change
The mining industry could be exposed to a number of
physical risks from climate change, such as changes in
rainfall rates, reduced water availability, higher temperatures
and extreme weather events. Events or conditions such as
flooding or inadequate water supplies could disrupt mining
and transport operations, mineral processing, power supplies
and rehabilitation. Furthermore, these could cause resource
shortages, damage property or equipment and increase
health and safety risks.
Investor perceptions
The gold mining sector, as a whole, has failed to deliver
adequate equity returns to investors over the last years.
Currently, investors are demanding renewed focus by the
management of gold mining companies on issues such as
capital rationalisation, reduction of expenses and profitability.
Resource nationalism
The bull market commodities have resulted in a global increase
in resource nationalism. Stakeholders in the countries and
areas in which mining companies operate are all demanding
increased participation in mining ventures. This participation
takes many forms, with increased taxation and shareholdings
by communities being two examples. Mining companies can no
longer view stakeholder engagement as ancillary to their core
business – maintaining and improving working relationships
with all stakeholders is critical to sustainability.
42
Pan African Resources PLC Integrated Annual Report 2013
PERFORMING AGAINST
OUR BUSINESS MODEL
GROWTH
SUSTAINABLE
STAKEHOLDER
PROFITABLE
The four pillars – an integrated
business and reporting model
Pan African Resources aims to create value for all our
stakeholders by operating our business at a point or
intersection where all our shareholders, our employees,
partners and the local communities in which we operate
benefit. To ensure we operate within these bounds, we use
the concept of four business pillars to drive and monitor our
performance:
(cid:118) Profitable
(cid:118) Sustainable
(cid:118) Stakeholders
(cid:118) Growth
Profitable
Ongoing profitability would be expected to be the most
logical purpose for a business, but some mining companies
appear to have overlooked this core principle in their pursuit
of more mine developments and resource ounces. They have
consequently suffered losses as a result of factors such as
over expenditure, reduced commodity prices and growing
stakeholder discord.
We are always aware that gold prices rise and fall, and
therefore strive to keep costs down in anticipation of the
lean years, when cash must still be generated for ongoing
operations and shareholders. We are mindful that investors
rightly expect due returns, so will only expand operations or
make acquisitions when the fundamentals are in place.
Profitability business pillar results in
numbers:
(cid:118) Average ZAR gold price realised ZAR440,824/kg
(2012: ZAR422,215/kg).
(cid:118) Total gold cash cost ZAR231,439/kg
(2012: ZAR193,360/kg).
(cid:118) Gross profit margin achieved from gold operations
of 47.5% (2012: 54.2%) or ZAR849.8 million
(2012: ZAR672.3 million).
(cid:118) Revenue from PGM 6E sales of ZAR58.9 million
(2012: nil).
(cid:118) EBITDA of ZAR735.2 million (2012: ZAR552.5 million),
an increase of 33.1%.
(cid:118) Attributable profit of ZAR558.9 million
(2012: ZAR358.9 million), an increase of 55.8%.
(cid:118) EPS up 39.0% to 34.51 cents (2012: 24.83 cents).
(cid:118) HEPS up 20.8% to 30.07 cents (2012: 24.89 cents).
Pan African Resources PLC Integrated Annual Report 2013
43
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PERFORMING AGAINST
OUR BUSINESS MODEL continued
Sustainable
We view sustainability broadly in two ways. The wider definition
of sustainability is that Pan African Resources’ operations and
the pursuit of financial returns should not be conducted
without heeding our broader responsibilities towards the
environment and society. For Pan African Resources itself,
sustainability means operating within parameters determined
by government laws, the market context, current and long-
term risks and opportunities, corporate governance and
financial prudence, so that the long-term viability of the
Company is not at any time threatened.
Prudent capital structuring
and investment
Pan African Resources is committed to maintaining the profit
margins at our operations as the basis for our success, and
we strive to do this safely. Should the gold price fall to a
level approaching our all-in sustainable cost of production
for any continued period, we will review all projects, capital
expenditure and costs to preserve cash. We believe that a
true measurement of our success must be based on an all-in
cash cost of production in ZAR/kg.
An enabling culture
Pan African Resources remains competitive and sustainable
by enabling a company culture that embraces our people
as our primary asset, rather than an expensive liability. We
value expertise and nurture talent, while encouraging the
free flow of ideas, trends and information between all levels.
We keep this culture of success vibrant by attracting the
best people, retaining those we have and providing training
and skills development. We also work diligently to maintain
safe underground and working conditions, supported by
continuous improvement of safety and productivity standards.
A key factor is that we encourage each individual to be an
integral part of the business. Practically, this means engendering
trust and honesty, continual listening and addressing issues
rather than people.
Pan African Resources is structured to support this flat and
mutually supportive culture by having a small corporate
office and devolving most management functions to the mine
managers and their on-site teams.
Evander Mines has brought with it management systems
inherited from Harmony. As long as these are appropriate
to that particular mining operation, Pan African Resources
will not change systems simply to match those at Barberton
Mines. We are evaluating the two operations, and where
appropriate will cross-pollinate with those systems we regard
as best practice. Following the successful implementation of an
ERP system at Barberton Mines in 2012, the same system is to
be introduced at Evander Mines to improve financial control
and reporting.
Environmental impacts
and good corporate citizenship
Pan African Resources has long accepted that human
activities are a direct cause of negative climate change, and
that our operations cannot be conducted in isolation from
environmental and social interests. Our engagement goes
beyond mere compliance with legislated environmental, social
and labour requirements. We are proud of the 1,100-learner
school we built near Barberton Mines and the food and job
opportunity projects in which Pan African Resources is involved.
Having recently acquired Evander Mines, we have evaluated
its social and environmental programmes. Certain aspects are
impressive – in particular, its internal employee development
programme, and the building of a bakery and kiosks, totalling
an investment of ZAR6 million over the last three years.
To keep this report concise in accordance with current
integrated reporting best practice, we refer you to a full
disclosure of our environmental and social impacts and
programmes on the Pan African Resources website, found at
www.panafricanresources.com
Sustainability business pillar salient
features:
(cid:118) Capital expenditure to maintain and optimise existing
assets of ZAR76.2 million (2012: ZAR38.1 million).
(cid:118) Capital expenditure to develop and extend existing
assets of ZAR75.7 million (2012: ZAR37.6 million).
(cid:118) The Evander Mines acquisition has necessitated an
increase in the Group’s capital structuring, but it remains
conservative with a net debt:equity ratio of 0.04
(2012: (0.19)).
(cid:118) The Group persists with its successful decentralised
management approach and structure.
(cid:118) There is continued successful participation and
interaction with our local communities.
(cid:118) ZAR2.9 million (2012: ZAR1.0 million) invested in
employee training and development.
(cid:118) No industrial action or material production interruptions
related to safety occurred during the year, demonstrating
our commitment to safe and sustainable operations and
strong workforce relationships.
44
Pan African Resources PLC Integrated Annual Report 2013
Company well-being is
only sustainable if all
stakeholders share and
buy into the Company
vision and strategy
Arrows represent a common
understanding, respect and attitude
towards safe performance behaviour
delivering on Company strategy that
rewards all stakeholders.
Shareholders
Profitability and
sustainability
of business
Communities
around our mining
operations
Employees and
business partners
Stakeholders
The Group’s shareholders and stakeholders are key participants
in developing the strategic objectives that inform our planning
and actions. By being involved, they understand the realities of
Pan African Resources’ operations and will easier accept that
there will be difficult years as well as good years.
During this reporting period, we actively engaged key
stakeholder groups such as our employees, communities,
investors and shareholders, regulators, analysts and the media.
We worked to ensure that these engagements were thorough
and meaningful. Stakeholder inputs were fed back into strategy,
risks, opportunities, future planning, environmental planning,
social and labour plans (SLPs), and the relevant committees
and operations. A further disclosure of Pan African Resources’
stakeholder engagement activities is included in the Corporate
Governance section of this report on pages 96 to 98.
Stakeholders business pillar salient
features:
(cid:118) There was a 21.8% return on shareholder funds in rand
terms (2012: 26.4%).
(cid:118) Proposed dividend of ZAR0.1314.
(cid:118) The Group’s overall safety record continues to improve,
although two employees were unfortunately killed at
the Barberton Mines’ site in industrial as opposed to
mining accidents.
(cid:118) Negotiated wage increases averaged 14% during the
2013 financial year.
(cid:118) Total salaries, wages and Company contributions
amounted to ZAR507.0 million (2012: ZAR293.2 million).
(cid:118) Total taxes collected and paid on behalf of the fiscus of
ZAR149.0 million (2012: ZAR102.6 million).
(cid:118) The BTRP construction created 302 jobs in the
Barberton area, and 83 permanent jobs upon completion.
(cid:118) Community social investment amounted to
ZAR20.2 million (2012: ZAR14.4 million), 4.2% of
headline earnings (2012: 4.0%).
Growth
A key aspect of Pan African Resources’ business model is the
healthy margin between our cost of production and the market
price of the metals we produce. Ensuring a significant margin
safeguards our sustainability and funds shareholder satisfaction.
Pan African Resources has no influence over metal prices, but
we can control production costs and ensure that the Group
only acquires high grade orebodies. The board has stipulated
explicit criteria for orebodies already in our Reserves and
additional projects we may consider acquiring.
Should gold prices decline, as they have recently, the Group
can continue generating profit due to the quality and cost
profile of our operations and orebodies. We have invested
considerable funds into our Mineral Resource Management
(MRM) programme, to ensure that our Resources and
Reserves are accurately mapped out for viable mining in the
medium to long term.
As stated earlier, Pan African Resources has no immediate plans
to make further acquisitions, unless exceptional opportunities
become available that fit into our high grade/low cost parameters.
On the cost of production side, we will factor in rising input
costs – electricity in particular – and the potential for wage
increases in excess of inflation due to the current mismatch
between economic reality and worker expectations.
Growth business pillar salient features:
(cid:118) Finalisation of the Evander Mines transaction and the
operations consolidation from 1 March 2013. This
acquisition will contribute an additional 100,000 oz per
annum to the Group.
(cid:118) Commissioning of the BTRP on time and within budget.
(cid:118) Phoenix Platinum operated for its first full year.
(cid:118) Gold sold totalled 130,493 oz (2012: 94,449 oz).
(cid:118) Revenue from PGM 6E sales of ZAR58.9 million (2012: nil).
(cid:118) Gold Reserve inventory increased by 693% to 9.20 Moz
(2012: 1.16 Moz).
(cid:118) Gold Resource inventory increased by 496%
to 35.13 Moz (2012:5.98 Moz).
(cid:118) PGM 4E Reserve inventory increased by 38.9%
to 0.25 Moz (2012: 0.18 Moz).
Pan African Resources PLC Integrated Annual Report 2013
45
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DELIVERING ON
OUR STRATEGY
In the year under review, the Group has achieved in all areas of our strategy through, inter alia, optimising existing operations at
Barberton Mines – an asset with a significant production life that offers high grade gold mining at a relatively low cash cost.
Growth is being realised through the successful acquisition of Evander Mines, which promises expanded future production
through an array of organic project opportunities. Following this successful transaction, further acquisitive growth opportunities
will be thoroughly investigated as and when they arise, although this isn’t a priority at present.
In addition, the Group continues to address its environmental footprint and exposure through the retreatment of various tailings
dams, both at its own gold mining operations and those arising as a result of chrome and platinum mining in South Africa’s North
West Province.
Indicators and comments on our performance against key drivers appear throughout this report. Below, we reflect on our
performance against the four key strategic initiatives identified in our 2012 Annual Report.
Strategic initiative 2012
Performance in 2013
Finalise the acquisition of Evander Gold
Mines and integrate it into the Group
(cid:118) Cash of ZAR210 million generated prior to transaction closing was offset
against Evander Mines purchase price.
(cid:118) Final cash settlement price ZAR1.313 billion.
(cid:118) ZAR707.3 million of total purchase price secured through an oversubscribed
rights issue.
(cid:118) Balance funded from internal cash resources and Nedbank/ABSA RCF of
ZAR350.0 million.
(cid:118) Results were consolidated from 1 March 2013 and integration into the Group
progressing well.
(cid:118) Management services agreement in place with Harmony until 28 February
2014 (extendable by another six months).
(cid:118) Evander Mines’ production totalled 34,197 oz for the four months ended
June 2013.
(cid:118) Investigation of project opportunities at No 7 Shaft progressing well and
additional Mineral Resources quantified.
(cid:118) The potential to treat surface material at Evander Tailings Retreatment Plant
(ETRP) will contribute further to profitability.
(cid:118) Other organic projects being investigated further.
Finalise the disposal of the Group’s
Manica operation
(cid:118) 100% of Manica sold to a wholly owned subsidiary of Australian Stock
Exchange-quoted Auroch on 31 December 2012.
(cid:118) Total potential purchase consideration of AUD6 million payable in cash and
shares in Auroch.
(cid:118) Underlying purpose of the transaction was to fund exploration activities
in Mozambique.
(cid:118) At year-end, the Group’s equity interest in Auroch amounted to 42%.
(cid:118) The balance of the purchase price is deferred until the achievement of
certain milestones.
(cid:118) The decline in both the gold price and market conditions has necessitated a
ZAR142.3 million impairment of the Group’s investment in Auroch Minerals NL
at year-end.
46
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Strategic initiative 2012
Performance in 2013
Commission the BTRP
(cid:118) The plant was commissioned on schedule and within budget (ZAR305 million),
with the inaugural gold pour taking place on 28 June 2013.
(cid:118) The project was funded entirely from internal cash resources.
(cid:118) the plant is designed to re-treat 100,000 tonnes of gold tailings per month at an
estimated average cash cost of USD725/oz.
(cid:118) The plant will ramp up to full production during the second quarter of the
financial year 2013.
(cid:118) The plant is expected to contribute an additional 20,000 oz of gold per annum.
Optimise the CTRP and produce
PGM 6E
(cid:118) Project plan was based on the retreatment of sulphide material from
International Ferrous Metals’ (IFM) Lesedi Mine.
(cid:118) PGM and chrome prices fell significantly below those forecasts at the time of
the feasibility study.
(cid:118) As a result of the poor chrome market conditions, IFM cut back operations
at its Lesedi Mine in January 2012 and eventually stopped the underground
sulphide production.
(cid:118) IFM redirected its efforts towards its open-cast section.
(cid:118) Highly oxidised tailings from open-cast chrome mining negatively impacts
on the Phoenix Platinum plant’s recovery and concentrate grade, and hence
PGM production.
(cid:118) The Group is considering expediting an additional tailings storage facility to
allow for the bypassing of the oxidised tailings and allow the plant to treat
sulphide material from the existing tailings storage facility.
(cid:118) Once the additional tailings storage facility is completed, recoveries and revenue
are expected to increase significantly.
(cid:118) The bypassing of oxide feedstock directly to the IFM tailings storage facility
has had a positive effect. The continued success of this is dependent on the
continued safe operation of the IFM tailings storage facility.
(cid:118) An impairment of ZAR100 million was raised against Phoenix Platinum at year-
end, as a result of a decline in commodity prices and operating conditions.
Pan African Resources PLC Integrated Annual Report 2013
47
OPERATIONS
STATEMENTS
Operational
performance
Barberton Mines
BTRP
Evander Mines
Phoenix Platinum
Abridged mineral
resources and mineral
reserves report
Sustainability review
48
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Pan African Resources PLC Integrated Annual Report 2013
49
OPERATIONAL
PERFORMANCE
100%
OWNERSHIP
100%
OWNERSHIP
Barberton Mines
RPTRBBTRPPTR
BTRP
(cid:118)(cid:1) 95koz of Au production capacity
per annum
(cid:118)(cid:1) Head grade: 10.0g/t
(cid:118)(cid:1) LOM: 17 years
(cid:118)(cid:1) Reserve: 11.82Mt @ 3.10g/t (1.18Moz)†
(cid:118)(cid:1) Resource: 27.95Mt @ 3.92g/t (3.52Moz)†
† Including BTRP.
(cid:118)(cid:1) 20koz of Au production capacity
capacity
y
2(cid:118)
0koz of Au production
p
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mnu
per annum
H(cid:118)
(cid:118)(cid:1) Head grade: 1.34g/t
Head grade: 1.34g/t
(cid:118)(cid:1) LOM: 12 years
12M: OL(cid:118)
M 2
ar
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eresR(cid:118)
(cid:118)(cid:1) Reserve: 7.28Mt @ 0.56g/t (0.13Moz)
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In production
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(cid:22)(cid:20)(cid:21)(cid:24)(cid:3)(cid:189)(cid:82)(cid:69)(cid:82)(cid:71)(cid:77)(cid:69)(cid:80)(cid:3)(cid:93)(cid:73)(cid:69)(cid:86)(cid:69)(cid:86)
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E
R
A
T
O
N
A
L
O
V
E
R
V
I
E
W
C
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R
P
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R
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E
G
O
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E
R
N
A
N
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I
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A
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A
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E
M
E
N
T
S
100%
OWNERSHIP
100%
OWNERSHIP
Evaan erd MMinnes
Evander Mines
Evander MMines
Phoenix Platinum
00100koz of Au production capacity
(cid:118)(cid:1) 100koz of Au production capacity
(cid:118)
per annum
per annum
yea
(cid:118) Head grade: 5.35g t
(cid:118)(cid:1) Head grade: 5.35g/t
LO 14M
(cid:118) L M: O 14
s
(cid:118)(cid:1) LOM: 14 years
7 9
(cid:118)(cid:1) Reserve: 67.99Mt @ 3.67g/t (8.02Moz)
@
esR er
(cid:118)
(cid:118) Resource: 309 15Mt @ 3 18g/t (31
(cid:118)(cid:1) Resource: 309.15Mt @ 3.18g/t (31.61Moz)
t9M @ 3 7 /t (8 0 M
ve 6
(
(cid:118)(cid:1) 12koz PGM 6E production capacity
per annum
(cid:118)(cid:1) Plant feed grade: 3.27/t
(cid:118)(cid:1) LOM: 20 years
(cid:118)(cid:1) Reserve: 5.38Mt @ 1.46g/t (0.25Moz)
(cid:118)(cid:1) Resource: 6.53Mt @ 3.27g/t (0.69Moz)
Acquis
Acquisition completed,
in production
In production
Pan African Resources PLC Integrated Annual Report 2013
51
BARBERTON MINES
Operation at a glance
Operation name
Barberton Mines gold mining operations
Parent and ownership percentage
Pan African Resources Resources PLC (100% attributable)
Company name
Country of operation
Provincial jurisdiction
Number of employees
Number of contractors
Commodity being mined
Geological setting
Mining method
Extraction method
Barberton Mines (Pty) Limited (South African incorporated)
South Africa
Mpumalanga
1,837
754
Gold
Sediments and metavolcanics within the Barberton Greenstone Belt
Underground semi-mechanised up-dip cut and fill and up-dip room and stick
Concentrator and BIOX®
Name Plate Annual Production Capacity
Tonnage (t)
Head grade (g/t)
Gold produced (oz)
Cash cost
Sustainable capital per annum
LOM
310,000
10.0
95,000
USD780/oz
ZAR100 million
17 years
Setting the scene
Barberton first produced gold in 1886 after the discovery of
the first gold nugget by Edwin Bray.
During the 1970s and 1980s, AngloVaal consolidated various
operations in the area including Sheba, New Consort and
Agnes Mines. In 1998, the Company acquired Fairview Mine
from the then owners Goldfields (previously Gencor). In 2003,
AngloVaal sold the operations, excluding Agnes, to Metorex
and, in 2006, Metorex reversed Barberton Mines into Pan
African Resources.
The Barberton Mines mining complex consists of three
mines: Fairview, New Consort and Sheba, and now the
BTRP. The three mines currently produce approximately
95,000 oz of gold per annum, with the BTRP, commissioned
in June 2013, expected to produce 20,000 oz per annum. The
combined operations are expected to produce approximately
115,000 oz of gold in the 2014 financial year.
The Biological Oxidation (BIOX®) gold extraction process
was developed at Barberton Mines and is used as a training
facility for other BIOX® plants in the industry. BIOX® is an
environmentally friendly process of releasing gold from the
sulphide that surrounds it, using bacteria that perform this
process naturally.
Barberton Mines is known for its high average head grade
and remains one of the lowest cash cost producers of gold in
the country. During 2013, the Barberton Mines team excelled,
surpassing production targets and limiting average production
cash costs to ZAR221,424/kg. As such, this relatively small
mine in the Mpumulanga contributed considerably to the
Group’s success in 2013.
52
Pan African Resources PLC Integrated Annual Report 2013
Management team
Name
Age Designation
Qualification
Experience
Casper Strydom
55
General Manager
Pierre Human
52
Manager: Mining
National Higher Diploma Metalliferous Mining
Mine Managers Certificate
36 years of mining-
related experience
Mine Overseers Certificate of Competency
Mine Managers Certificate of Competency
MDP Stellenbosch
30 years of mining-
related experience
Jonathan Irons
47
Manager: Metallurgy
Hans Grobler
49
Manager: Engineering
TP Maepa
28
Essie Esterhuizen
53
Manager: Finance and
Administration
Manager: Human
Resources
National Higher Diploma Extractive Metallurgy
Programme for Management Development
(GIBS – University of Pretoria)
Competence levels include Refractory
Gold Extraction Technologies –
(Roasting and Hydrobiological)
Mechanical Engineers Certificate of
Competency
Professional Certificated Engineer
BCom (Hons) Accounting
Completed the Gencor Learner Officials
Programme
Certificate in Personnel Management
Various other mining industry-related
certificates
Skills Development Facilitator – NQF Level 5
25 years of metallurgy-
related experience
31 years of
engineering-related
experience
9 years of financial-
related experience
31 years of human
resources-related
experience
Operational performance
2013
2012
2011
2010
2009
Tonnes milled: underground
Tonnes milled: surface
Tonnes milled: total
Head grade: underground
Head grade: surface
Head grade: total
Recovered grade
Overall recovery
Production: underground
Production: surface/calcine dumps
Gold sold
Average price: spot
Cash cost
All-in sustaining cash costs
All-in cash cost
Total cash cost
Capital expenditure
(t)
(t)
(t)
(g/t)
(g/t)
(g/t)
(g/t)
(%)
(oz)
(oz)
(oz)
(ZAR/kg)
(ZAR/kg)
(ZAR/kg)
(ZAR/kg)
(ZAR/t)
(ZAR millions)
274,398
35,086
310,484
11.8
1.5
10.6
9.6
91
95,135
1,161
96,296
450,829
221,424
273,653
350,282
2,153
316.8
282,041
26,054
308,095
11.2
1.9
10.5
9.5
91
93,381
1,068
94,449
422,215
193,360
246,801
265,713
1,844
131.8
296,200
–
296,200
–
–
10.6
9.7
91
92,043
–
92,197
306,757
175,520
217,524
217,524
1,707
75.2
313,167
–
313,167
–
–
10.6
9.7
91
97,483
–
98,091
267,876
158,711
189,308
189,308
1,537
70.2
313,952
–
313,952
–
–
10.3
9.4
91
94,909
3,955
97,353
251,740
136,178
155,910
155,910
1,313
58.7
Pan African Resources PLC Integrated Annual Report 2013
53
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BARBERTON MINES
continued
Exploiting the orebody
Underground semi-mechanised cut and fill mining continued
at all three of Barberton Mines mines and small quantities
of low grade surface material were also processed. Whilst
underground tonnages declined slightly from 2012, the
additional low grade surface volumes resulted in the operation
increasing its total tonnage milled and optimising plant
throughput. From July 2013, the traditional underground
mining operations will be supplemented by the BTRP.
Consistent recoveries and improved head grade allowed
Barberton Mines to increase its overall recovered grade to
9.64 (g/t), surpassing 2012’s gold production and sales.
Between 16% and 18% of gold is recovered by sweeping and
vamping contractors, focusing on worked-out areas and high
grade pillars. The proportion of gold production between
the three mines of Fairview, Sheba and New Consort is
approximately 50:30:20. The three mines introduce a level of
flexibility and versatility with regard to potential interruptions
and resource allocation.
The mix of ore from the mines is planned every month
to maintain the targeted grade and gold production, thus
managing the mines cash flow at an early stage in the mining
process.
Between 600 metres and 700 metres of development
are drilled every month. A total of ZAR40.9 million
(2012: ZAR37.7 million) of development capital was invested
at Barberton Mines during the year.
Mining and processing –
challenges and achievements
The mines at Barberton have been mined for more than
100 years, and current production practices have been in place
for many decades and are now embedded. The bulk of mining
takes place during the morning shift, with the evening shift
being dedicated to cleaning, dragging and hoisting. Planned
plant maintenance takes place over weekends.
However, mining of the Fairview Mine faces increasing
challenges as it becomes deeper. These challenges include
managing the orebody, increasing ventilation, and development
in the bottom of the mine to ensure orebody availability.
54
Pan African Resources PLC Integrated Annual Report 2013
During the first six months of the financial year, operating
performance was below budget, mainly attributed to a
mechanical failure of the Sheba ZK winder bull gear as well
as shaft refurbishment at the No 2 and No 3 declines at
Fairview Mine. During the second half of the financial year,
the Barberton Mines team delivered a solid performance and
exceeded expectations, their production targets resulted in
overall gold sold of 96,296 oz (2012: 94,449 oz).
and within-budget
The on-time
and
commissioning of the BTRP was a considerable achievement
during the year. This is dealt in detail on page 57.
construction
The overall 14.5% increase in total cash costs per kilogram
of gold was driven by increased vamping contractor fees
(mainly due to greater production), higher payroll costs and
electricity tariffs.
The ZAR2,153/t (2012:ZAR1,844/t) total cash costs per
tonne milled of ZAR2,153/t increased by 16.7% as a result
of increased volumes, mainly due to the additional supply of
low grade surface tonnes. The average price received for the
year was ZAR450,829/kg, resulting in Barberton Mines margin
of ZAR229,405/kg or 50.9%. Keeping costs under control
is a continuous exercise of monitoring expenditure and
identifying cost-cutting opportunities that do not compromise
safe operations.
Barberton Mines is not a member of the Chamber of Mines,
allowing it to negotiate wage rates independently. Successful
wage negotiations, albeit higher than the budget target, were
conducted with the on-mine union representatives, and no
industrial action occurred at the mine during the year. As a
result of these negotiated wages, the mine’s overall payroll
costs increased by 16.1% during the year.
The employee incentive scheme was revised during the year,
increasing the emphasis on safety targets, achieving production
targets and increasing penalties for absenteeism. During the
year, an absenteeism monitoring system was implemented
where all employees returning from sick leave are counselled
by human resources, to establish the reasons and validity of
sick leave.
Total electricity costs increased by 15% to ZAR72.1 million
(2012: ZAR62.8 million).
Barberton Mines invested more than ZAR2.7 million in
training of its workforce during 2013, an increase of 173% on
the corresponding 2012 figure.
Cost of production – current year
A graphic representation of the mines’ cost of production
appears below:
The intelligence-driven approach to security in respect
to illegal miners continues to pay dividends. The cost of
security decreased by 12.9% to ZAR25.6 million (2012:
ZAR29.4 million).
Cost of production current year
Year ended 30 June 2013 (%)
48
14
9
9
11
4
5
Salaries and wages
Mining
Processing
Engineering & technical services
Electricity
Security
Other
Totals:
ZAR660.7 million
R221,424/kg
Cost of production prior year
Year ended 30 June 2012 (%)
49
13
9
9
11
5
4
Salaries and wages
Mining
Processing
Engineering & technical services
Electricity
Security
Other
Totals:
ZAR566.0 million
R193,360/kg
Efforts continued during the year to improve the living
conditions of the workforce. Approximately 86% of the
workforce reside with their families in the local community
and surrounds and are paid a living-out allowance. The balance
of employees live in mine-provided accommodation – 6% in
single sex hostels and 8.2% in married accommodation.
The production goals for the Barberton Mines team in 2014
are clear:
(cid:118) repeat 2013’s gold production at a reasonable cash cost
(cid:118) bringing the BTRP up to steady-state production,
achieving its planned 20,000 oz per annum capacity
Risks
SA labour environment
Barberton Mines is not excluded from the current labour
turmoil experienced by the South African mining industry.
The rivalry for union dominance between the Association
of Mineworkers and Construction Union (AMCU) and the
National Union of Mineworkers (NUM) that is occurring
in the industry also affects Barberton Mines. This is one of
the biggest threats to the ongoing success of the mine. The
relationship between labour and management is regulated
by the Labour Relations Act, which requires management to
enter into a recognition agreement with the majority union.
Barberton Mines has recognition agreements with the NUM
for Category 4-8 employees and the United Association
of South Africa (UASA) representing the officials, artisans
and miners.
Aged mining infrastructure
Fairview Mine, accountable for the majority of the gold
production at Barberton Mines, has aged infrastructure that
continually needs maintenance or replacement in order to
operate successfully. The conditions of the shaft infrastructure
at No. 2 and No. 3 declines were identified as a high-risk area
more than a year ago, and a programme of refurbishment
was implemented to ameliorate the risks. This programme is
ongoing and capital to the amount of ZAR3.8 million (2012:
ZAR2.6 million) has been spent for the financial year. As
these declines are operating shafts, the refurbishments are
conducted over weekends during off periods.
Pan African Resources PLC Integrated Annual Report 2013
55
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BTRP
Operation at a glance
Operation name
Barberton tailings Retreatment Plant Project
Parent and ownership percentage
Pan African Resources Resources PLC (100% attributable)
Holding company
Country of operation
Provincial jurisdiction
Number of employees
Number of contractors
Commodity being mined
Geological setting
Mining method
Extraction method
Barberton Mines (Pty) Ltd (South African incorporated)
South Africa
Mpumalanga
83
264
Gold
Tailing dams situated at Fairview, New Consort and Sheba mines
Hydro-mining of tailings dams
CIL
Name Plate Annual Production Capacity
Tonnage (t)
Plant feed grade (g/t)
Forecast Gold produced (oz)
Cash cost
Capital expenditure forecast
LOM
1,200,000
1.34
20,000 – 25,000
USD725/oz
ZAR305 million
12 years
Setting the scene
As a consequence of successful metallurgical test work
carried out on composite drill hole samples drilled during the
previous financial year, the potential of retreating the Bramber
tailings dam was assessed in a feasibility study on the proposed
construction of a tailings retreatment plant at Fairview Mine.
The viability of a retreatment plant was confirmed in an
independent review by Venmyn Rand (Pty) Ltd.
With a forecast cost structure of USD725/oz, this project falls
well in line with the Company’s strategy of developing low
cost, high margin projects.
The LOM of the BTRP has been augmented by auger drilling
on an additional 6 Mt of tailings at the Consort tailings dam,
extending the life of the project from 6 to 12 years.
Detailed engineering, process and flow design to treat
approximately 1.2 Mt per annum was carried out by Basil
Read Matomo.
Final commissioning was completed in June 2013 and
production build-up commenced. The commissioning of the
BTRP project created 83 new jobs in the Barberton area.
When in full production, the BTRP will increase the annual
production profile at Barberton Mines by 20,000 oz, to
approximately 115,000 oz a year.
56
Pan African Resources PLC Integrated Annual Report 2013
Management team
Name
Age Designation
Qualification
Experience
Casper Strydom
55
General Manager
National Higher Diploma Metalliferous Mining
Mine Managers Certificate
36 years of mining-
related experience
Jonathan Irons
47
Manager: Metallurgy
National Higher Diploma Extractive Metallurgy
Programme for Management Development
(GIBS – University of Pretoria)
Competence levels include Refractory
Gold Extraction Technologies –
(Roasting and Hydrobiological)
25 years of metallurgy-
related experience
Ruben Mathada
33
Plant Manager
BTech Metallurgy
Richard Kunneman
52
Engineering Manager
Government Certificate of Competency
11 years of metallurgy-
related experience
24 years of
engineering-related
experience
BTRP project timeline
2012
2013
r
e
b
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A
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Progress J
u
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Complete
Complete
Complete
Complete
Complete
Complete
Complete
In Progress
Complete
Complete
Complete
Complete
Complete
Complete
Plant construction
Contract approval
Process design
Drawings and design
Ground breaking ceremony
Bulk earthworks
Civil construction
Mechanical/structural/electrical
and instrumentation construction
Commissioning/testing
Major infrastructure
Water reticulation
Electrical reticulation (Eskom)
Environmental impact assessment
EIA
Water use licence amendment
Tailings storage facility
Design
Construction
Pan African Resources PLC Integrated Annual Report 2013
57
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BTRP continued
BTRP capital expenditure
Barberton Mines spent ZAR229.6 million in the current financial year (2012: ZAR43.3 million). The capital expenditure is
related directly to the plant and tailings storage facility construction and excludes the purchase of Harper tailings and the
associated land purchased in the prior year for ZAR12.1 million.
BTRP construction
Historical capital
12 months
Forecasted capital
Forecasted
Prior year
30 June 2012
ZAR millions
ended
Amount spent
to completion
Total project
30 June 2013
ZAR millions
project to date
ZAR millions
costs
ZAR millions
forecast costs
ZAR millions
Construction
and infrastructure
Quantity surveying
Environmental
Tailings storage facility
Total
42.8
–
0.5
–
43.3
185.4
1.9
0.5
41.8
229.6
228.2
1.9
1.0
41.8
272.9
10.8
0.7
–
20.6
32.1
239.0
2.6
1.0
62.4
305.0
BTRP Life of Mine
The final stage of the BTRP was completed during June 2013. The first gold pour on 28 June 2013 was a success for the
management team of Barberton Mines, who was responsible for bringing this value-adding mineral asset to fruition. The project
was in time and within budget, testifying to excellent leadership in the project execution. The BTRP is expected to contribute an
additional 20,000 oz of gold sold to the bottom line of Barberton Mines.
An additional inferred Mineral Resource has been identified which will possibly extend the life of mine to 12 years.
Mineral Resource
As at 30 June 2013 BTRP
BTRP
Category
Measured
Indicated
Inferred
Total
Tonnes
(million)
Grade
(g/t)
–
7.28
9.72
17.00
–
1.50
1.20
1.30
Contained gold
Tonnes
–
11.23
11.58
22.81
Moz
–
0.36
0.36
0.72
Additional inferred resources include Camelot dump – 3.04 million tonnes and the Segalla dump – 6.67 million tonnes.
58
Pan African Resources PLC Integrated Annual Report 2013
Mineral Reserve modifying factors
As at 30 June 2013 BTRP
Gold price
(ZAR/kg)
Cut-off
value
(g/t Au)
Cut-off
value
(cmg/t)
Stoping
width
(cm)
Dilution
(%)
BTRP
490,000
–
–
–
–
MCF
(%)
–
PRF
(%)
36
Mineral Reserve
As at 30 June 2013 BTRP
Category
Tonnes million
Grade g/t
Contained Gold
Tonnes
BTRP
Proved
Probable
Total
–
7.28
7.28
–
0.56
0.56
–
4.07
4.07
The table below forms the keynotes to the sources of material that constitute the above Mineral Reserve.
Moz
–
0.13
0.13
Slimes dump
Fairview Bramber Low Grade
Fairview Bramber High Grade
Fairview Harper South
Fairview Harper North
Calcine Northern Segalla
Total
Tonnes
2,369,655
758,496
1,082,970
2,693,250
378,861
7,283,232
Grade
(g/t)
Au content
(kg)
0.50
1.59
0.66
0.24
0.83
0.56
1,180
1,206
709
656
314
Ounces
(oz)
37,934
38,770
22,808
21,093
10,109
4,065
130,714
NB: Grade (g/t) in the above table indicates recovered grade.
Advanced infill drilling and metallurgical testwork was concluded during the year on the Calcine Northern Segalla slimes.
The Calcine Northern Segalla tonnage increased by 30% from 290,000 tonnes (2012) to 378,861 tonnes with an attributable
10,109 oz at a recoverable grade of 0.83 g/t as shown in the table above.
Pan African Resources PLC Integrated Annual Report 2013
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EVANDER MINES
Operation at a glance
Operation name
Evander Mines
Parent and ownership percentage
Pan African Resources Resources PLC (100% attributable)
Company name
Country of operation
Provincial jurisdiction
Number of employees
Number of contractors
Commodity being mined
Geological setting
Mining method
Evander Gold Mines
South Africa
Mpumalanga
2,530
608
Gold
Evander Mines exploits the Kimberley reef in the Evander basin of the
Witwatersrand basin
Underground conventional scraper mining, rail bound equipment, with some
trackless mechanised development
Extraction method
CIL/CIP hybrid plant
Name Plate Annual Production Capacity
Tonnage (t)
Head grade (g/t)
Gold produced (oz)
Cash cost
Sustainable capital per annum
LOM
400,000
5.35
100,000
USD900/oz
ZAR100 million
14 years
Setting the scene
Evander Mines was acquired from Harmony for a total net
purchase consideration of ZAR1.313 billion. The transaction
was effective from 1 March 2013, the date from which its
results of operations have been consolidated by the Group.
In terms of the sale agreement, cash generated by the mine
between the date of signature and the effective date was
applied to reduce the purchase consideration. A management
agreement between the Group and Harmony is in place to
ensure the efficient and effective transfer of the assets.
The Evander Mines operations comprise the operating
Evander Mines No. 8 Shaft and several potential development
projects – namely Rolspruit, Poplar, Evander South and Libra
(a surface tailings storage facility), as well as the Kinross
metallurgical processing plant and tailings storage facility. At
the time of the acquisition, the total underground Resource
was 28.74 Moz (109.55 Mt at 8.16 g/t) and Reserve 7.66 Moz
(28.21 Mt at 8.45 g/t). Refer to the abridged Mineral Resource
and Mineral Reserve report on page 67 for more details
of Evander Mines’ Mineral Resources and Mineral Reserves.
The Evander Mines No 8 Shaft currently has an expected
LOM of approximately 14 years, and is expected to produce
approximately 95 koz of gold per annum.
The original Harmony-appointed management remained
intact at Evander Mines, and is led by general manager Manny
da Silva.
The management and directors are extremely pleased with
this acquisition and its performance to date. The opportunities
it presents for organic growth, and the current year’s progress
made by both the Evander Mines and head office teams in
successfully incorporating it into the Group, are most satisfying.
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Management team
Name
Age
Designation
Qualification
Experience
Manuel da Silva
43
General Manager
Marius Pelser
55
Mine Manager
Bernhard Georg
Lindner
51
Manager: Engineering
Walter Seymore
36
Manager: Mineral
Resource
Thabang Hlalele
36
Manager: Metallurgy
BSc Mining Engineering
Mine Overseers Certificate of Competency
Mine Managers Certificate of Competency
21 years mining-related
experience
Mine Overseers Certificate of Competency
Mine Managers Certificate of Competency
37 years mining-related
experience
National Higher Diploma Mechanical
Engineering.
Engineering Certificate of Competency
National Diploma in Geotechnology
34 years mining-related
experience
14 years mining-related
experience
National Diploma in Chemical Engineering
B-Tech Metallurgy
6 years mining-related
experience
Nomathema Mabikwa 40
Manager: Finance and
Administration
BCompt- Accounting Science
IMDP – UCT
Craig Richard Le Court
De Billot
44
Manager: Finance and
Administration
BCompt (Hons)
Louis Gouws van Wyk 49
Manager: Human
Resources
BA (Hons) Industrial Psychology
6 years mining-related
experience
19 years mining-related
experience
27 years mining-related
experience
Operational performance
Tonnes milled: underground
Tonnes milled: surface
Tonnes milled: total
Head grade: underground
Head grade: surface
Head grade: total
Recovered grade
Overall recovery
Production: underground
Production: surface
Gold sold
Average price: spot
Cash cost
All-in sustaining cash cost
All-in cash cost
Total cash costs
Capital expenditure
20131
127,957
74,428
202,385
7.8
1.2
5.4
5.1
96
31,522
2,675
34,197
412,641
259,640
303,790
326,061
1,365.6
62.4
(t)
(t)
(t)
(g/t)
(g/t)
(g/t)
(g/t)
(%)
(oz)
(oz)
(oz)
(R/kg)
(R/kg)
(R/kg)
(R/kg)
(R/t)
(R millions)
Note 1: Production and financial information relates to the four month period 1 March 2013 to 30 June 2013.
Pan African Resources PLC Integrated Annual Report 2013
61
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EVANDER MINES
continued
Exploiting the orebody
During the four-month period under review, underground
production was conducted through No 8 Shaft in the No 2
Decline area on 24 Level. All stoping was concentrated in the
western side of the larger Kinross Payshoot. In the old mine,
only one stope was mined, on 18 Level.
The mining plan for the development was to continue
opening Reserves on 24 Level at North 1C and 1D, as well as
developing the winzes down from 24 Level up to the fault to
25 Level. Capital was allocated to extending the new decline
down to 25 Level, starting with infrastructure development,
which is now underway. It is anticipated that the first raise will
hole in August 2014.
Stoping was to follow the upside-down Christmas tree
configuration in North 1A, 1B and 1C raise lines on 24 Level.
Some stoping was also done at North 1D on 23 Level. In the
last quarter, compressed air pressure levels were raised on
24 Level.
Mining and processing –
challenges and achievements
The most significant challenge faced at Evander Mines is the
need to haul rock along 11 conveyors from the rockface to
the bottom of No. 7 Shaft, where it is hoisted to surface.
This requires extensive supervision and means mining relies
on a single chain of infrastructural assets, with no mining
flexibility should a failure in any component occur. However,
the underground rock handling and ventilation infrastructure
was upgraded by Harmony between 2011 and 2013, and the
majority of this infrastructure is in good working condition.
There were no significant interruptions to mining operations
during the year, although the No. 1 cooling plant performed
below standard and several stoppages were necessitated by
failure in major pieces of equipment. Despite these challenges,
the operation achieved 93% of its targeted underground
production tonnes. There were no incidents of industrial
action or section 54 safety stoppages at Evander Mines.
Cost of production – current year
Despite projects to reduce energy consumption, Evander
Mines’ electricity bill increased by 17% during the year, due
to tariff rate hikes. The cost of food provided to the hostels
increased by 15%, well above the official inflation rate.
Management has introduced various initiatives to manage
costs.
Cash cost breakdown (excluding capex)
For 4 months ended 30 June 2013 (%)
51
15
1
5
19
2
7
Salaries
Mining
Processing
Engineering
Electricity
Security
Other
Totals:
£19.9 million
ZAR275.5 million
USD915/oz
In total, ZAR0.16 million was invested in training the Evander
Mines workforce during the four months ended 30 June 2013.
As at Barberton Mines, the management of absenteeism and
sick leave remains a time-consuming function, necessary to
ensure continuous, safe mining. Approximately 91 employees
(3.6% of the workforce) were either sick or absent each
working day. Evander Mines has introduced a wellness
programme. Employees who abuse their sick leave are
counselled by a social worker. If employees continue with this
practice, disciplinary steps are taken.
As a former subsidiary of Harmony, a member of the
Chamber of Mines, Evander Mines concluded a two-year
wage agreement that expired in 2013. Under the terms of
this agreement, employees received the following increases:
Categories 3 and 4:
Categories 5 to 8:
Miners/artisans and officials:
10.0%
8.5%
7.5%
Industrial action throughout the mining industry during
October 2012 resulted in additional wage adjustments being
made:
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Pan African Resources PLC Integrated Annual Report 2013
The latter two initiatives, together with other potential
value-adding projects, will require capital expenditure. Given
the challenging times the industry finds itself in at present,
management is conscious of the need to commit only to
capital expenditure that provides quick returns, following a
rigorous project evaluation.
Besides optimising Evander Mines current operations through
the above short-term initiatives, 2014 will focus on evaluating
and prioritising the larger, medium-term organic projects,
as described in the abridged Mineral Resource and Mineral
Reserve report on page 67.
(cid:118) Roll-up of Category 3 underground and surface
employees to Category 4,
(cid:118) creation of new operator categories,
(cid:118) increase in rock drill operator allowances,
(cid:118) 1.5% upward adjustment for Categories 5 to 8.
Evander Mines has two hostels with a total of 1,208 rooms,
accommodating 1,435 employees in the Category 4 to 8
bargaining unit. A detailed action plan has been developed
to meet the Mining Charter’s requirement of one person per
room by 2014. Block A, B and C family units at Musimuhle
Village are being renovated to accommodate an additional
26 families.
Risk
Mining activities moved into an area of lower gold grades
during the year. The mining of this lower grade will continue
until the first quarter of 2015. This lower grade cycle, together
with the current lack of flexibility in mining operations, makes
Evander Mines vulnerable to a falling gold price.
To mitigate this risk, management has identified the following
initiatives for 2014:
(cid:118) ETRP is at a pre-feasibility stage and indications are
positive to move this project to a bankable stage in the
following 3 to 6 months. Should the project be approved
the ETRP will generate between 8,000 oz to 10,000 oz
annually over the LOM.
(cid:118) Increase sweeping and vamping operations throughout
the current assets.
(cid:118) Upgrade an autogenous mill to a ball mill in the second
quarter of 2014, allowing for the processing of fine
surface material. It is estimated that this mill will process
the available material at a rate of 20,000 tonnes per
month for 21 months.
(cid:118) Re-open the No 3 Decline at No. 7 Shaft. This decline
was closed by Harmony in 2009 as part of the mine’s
rationalisation. However, this decline has approximately
12 months of reserves at grades similar to those in
No 8 Shaft. In addition, working this decline will provide
access to the 2010 payshoot, an area of interest for
further exploration.
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Pan African Resources PLC Integrated Annual Report 2013
63
PHOENIX PLATINUM
Operation at a glance
Operation name
Phoenix Platinum CTRP
Parent and ownership percentage
Pan African Resources Resources PLC (100% attributable)
Company name
Country of operation
Provincial jurisdiction
Number of employees
Number of contractors
Commodity being mined
Geological setting
Mining method
Extraction method
Phoenix Platinum (Pty) Ltd (South African incorporated)
South Africa
North west
4
58
Platinum (61.2%), Palladium (18.7%), Rhodium (7.3%), Gold (0.3%),
Ruthenium (8.6%) and Iridium (3.9%) (PGM 6Es)
Chrome tailings from ore mined from the MG1 and MG2 seams of the
Bushveld Igneous Complex
Current arisings tailings produced by IFM during its mining operation are
delivered directly to the CTRP, in addition to material from old tailings dams
SMD bead milling and floatation (concentrate is delivered to Lonmin’s
Mooinooi Smelter for toll extraction)
Name Plate Annual Production Capacity
Float feed tonnage (t)
Plant feed grade (g/t)
PGM 6E produced (oz)
Cash cost
Sustainable capital per annum
LOM
240,000
3.27
12,000: Sulphide feedstock; 7,200: Oxide feedstock
USD855/oz
ZAR2 million
20 years
Setting the scene
The chrome tailings retreatment plant (CTRP or Phoenix
Platinum) was designed to treat sulphide material from
International Ferrous Metals Limited’s (‘IFM’) Lesedi Mine.
IFM initially supplied Phoenix with sulphide-rich material
from its Lesedi underground operations. However, IFM cut
back drastically on operations at Lesedi in January 2012 and
started mining oxidised material from an open cast section.
This resulted in oxidised tailings being blended into the
Phoenix feedstock.
The metallurgy of oxidised tailings negatively affects recovery
and concentrate grade in the CTRP. This in turn results in
poor PGM concentrate production. The oxide versus sulphide
ratio has increased since beginning November 2012 and
100% oxide material is now being mined by IFM. The Group
is currently exploring the expediting of an additional Tailings
Storage Facility (‘TSF’) that will allow management at Phoenix
to bypass oxidised tailings. Once the TSF is completed the
Group will expect recoveries and revenue to increase
significantly at this time.
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Pan African Resources PLC Integrated Annual Report 2013
Management team
Name
Age Designation
Qualification
Experience
Bertin Mcleod
36
Plant Manager:
Metallurgy
BTech: Chemical Engineering
Management Development Certificate
Senior Management Development Certificate
10 of platinum industry
experience
Avinash Kandhai
31
Cost Accountant
BTech: Accounting
Phumzile Mokoena 25
Metallurgist
BTech: Chemical Engineering
John Martin
57
Plant Engineer
Diploma (T4): Electrical Engineering
Hendrik Snyman
39
Manager: Metanza
BEng Metallurgical (Extractive)
Certificate in Business Management
Certificate in Leadership Programme
Professional Engineer
Hector Mapheto
32
Operations Manager:
Metanza
BSc Eng Chemical
Professional Engineer
Daniel Maponya
32
Site Manager:
Fraser
National Diploma: Civil Engineering
Mine Residue Deposits Certificate
BTech: Engineering Water
Operational performance
7 years of mining
experience and eight
years of financial
experience
1 year of metallurgy-
related experience
25 years of
engineering-related
experience
16 years of metallurgy-
related experience
7 years of metallurgy-
related experience
4 years of tailings dams
experience
Plant feed – Lesedi
Plant feed – IFM opencast
Plant feed – IFM toll
Plant feed – Buffelsfontein dumps
Head grade
Plant recovery
Chrome content in concentrate
Production and sales of PGM 4E
Basket price received
Total cash costs
Total cash costs
Capital expenditure
2013
20121
(t)
(t)
(t)
(t)
(g/t)
(%)
(%)
(oz)
(ZAR/oz)
(ZAR/oz)
(ZAR/t)
(ZAR millions)
16,216
76,258
7.607
174,109
3.68
21
2.20
6,480
9,093
7,551
178
2.2
58,185
33,627
–
32,652
4.16
21
2.49
3,474
7,499
7,847
170
81.9
Note 1: Phoenix Platinum was fully commissioned for accounting purposes on 1 July 2012, therefore all associated revenues and costs were capitalised
in the prior year.
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Pan African Resources PLC Integrated Annual Report 2013
65
PHOENIX PLATINUM
continued
Mining and processing –
challenges and achievements
To mitigate the effect of the highly oxidised feed source,
the following actions have been implemented:
(cid:118) The re-mining from surface tailings (the re-mining of
sulphide-rich tailings discards that have been stored on
the IFM tailings storage facility) was increased by 38% to
compensate for the loss in recoverable ounces.
(cid:118) To reduce the chrome content in the concentrate being
supplied to Lonmin, a reagent (an oxide collector) was
introduced into the CTRP floatation section. Excessive
chrome content in the concentrate leads to chrome
penalties from Lonmin.
The current CTRP tailings storage facility has limited capacity.
A new long-term tailings storage facility has been designed
and the necessary EIA and water usage licence applications
have been submitted. This long-term facility will allow Phoenix
Platinum to bypass any oxidised chrome tailings from IFM
directly to the new site, thereby enabling more re-mining
tonnages to be treated in the CTRP.
The effect of the increased re-mining tonnages and the oxide
collector has led to improved recoveries at the CTRP, from
21% in 2012 to 26% in May 2013 and 29% in June 2013
respectively.
Cost of production – current year
In this year, the electricity price increased by 8% and wage
increases impacted on the cost per ounce and the cost per
tonne processed. To manage these unit costs, management
targeted additional material for processing through the plant,
and further ramping up of volumes will continue in 2014.
Various laboratory tests were conducted to reduce chrome
fees charged by Lonmin, and a new reagent was introduced
to the process, reducing the chrome fees by nearly 50%. In
addition, local suppliers were sourced to supply consumables
previously obtained from overseas suppliers, with prices linked
to South Africa’s CPI.
Costs were well contained. Re-mining costs were reduced by
5.9% to ZAR3.2 million (2012: ZAR3.4 million).
To improve efficiencies, a training shift was introduced,
dedicated to improving employees’ know-how and safety
awareness. In addition, Saturday work hours were introduced
for the engineering team to reduce plant downtime.
66
Pan African Resources PLC Integrated Annual Report 2013
Cash cost breakdown (excluding capex)
Year ended 30 June 2013 (%)
Totals:
£3.5 million
ZAR48.9 million
ZAR7,550/oz
27
17
11
1
13
3
5
7
16
Labour cost
Site production cost
Tailings cost
Transport and Lab cost
Consumables
Indirect site cost
Admin cost
Electricity and utilities
Refinery fees
Cash cost breakdown (excluding capex)
Year ended 30 June 2012 (%)
Totals:
£2.2 million
ZAR27.3 million
ZAR7,847/oz
27
17
11
1
13
3
5
7
16
Labour cost
Site production cost
Tailings cost
Transport and Lab cost
Consumables
Indirect site cost
Admin cost
Electricity and utilities
Refinery fees
Note: Phoenix Platinum was fully commissioned for accounting purposes on 1 July
2012, therefore all associated revenues and costs were capitalised in the prior year.
Only six shifts were lost in the past year due to absenteeism
and sick leave.
Salary scales in the Rustenburg/Brits mining region were
benchmarked and employee salaries adjusted accordingly. The
current workforce is not unionised.
ABRIDGED MINERAL RESOURCES
AND MINERAL RESERVES REPORT
Scope of report
The following abridged information has been extracted from
the Mineral Resource and Mineral Reserve Report 2013,
which is available at http://www.panafricanresources.com.
The Mineral Resource and Mineral Reserve Report 2013 is
a key component of the Pan African Resources suite of 2013
annual reports produced to record the Group’s performance
regarding its finances, operations and sustainability activities for
the year ended 30 June 2013.
This report conforms to the standards described by the South
African Code for the Reporting of Exploration Results, Mineral
Resources and Mineral Reserves (the SAMREC Code, 2007
edition). Pan African Resources asserts its legal entitlement to
the Mineral Resources and Reserves reported on here.
The Mineral Resource is inclusive of the Mineral Reserve
component. Information is presented either by operation,
mine or project. The following tables and graphs are used
to illustrate developments across operations of Pan African
Resources, during the 2013 financial year:
(cid:118) Resource and reserve tables by Group, mine and project.
(cid:118) Development sampling results.
(cid:118) Year-on-year reconciliation of the Group Mineral
Resource and Mineral Reserve.
Note: The rounding of numbers in the abridged Mineral
Resources and Mineral Reserves report may result in minor
computational discrepancies.
Group Mineral Resource
and Reserve strategy
Pan African Resources intends to realise its vision through
the strategic acquisition and development of precious metal
assets close to or in production, that:
(cid:118) Are profitable – significant grade margin and a low cash
cost profile.
(cid:118) Are sustainable – a long production life.
(cid:118) Show growth – potential to grow organically.
(cid:118) Benefit stakeholders – a significant socio-economic win.
Pan African Resources’ Mineral Resource Management (MRM)
philosophy is that a detailed understanding of the mineral
asset undoubtedly contributes to its optimal extraction. From
this standpoint, it is clear that the ‘orebody dictates’ through
its various characteristics and, when aligned effectively to the
business model, can yield significant returns.
Profitable – Pan African Resources’ mineral assets are located
in geological terrains that are described as world-class quality
mineral assets with high grade and significant tonnage profiles.
Barberton Mines is located in the Barberton Greenstone
Belt, a unique ancient geological setting that hosts economic
shear gold that is among the most consistent high grade gold
deposits globally (2013: 9.64 g/t recovered grade). Evander
Mines is located in the Witwatersrand Basin, the world’s most
renowned gold-producing region. Evander Mines is one of the
substantial, remaining Mineral Resources that is untapped in
the basin (2013: 31.61 Moz Mineral Resource and 8.01 Moz
Mineral Reserve). The Phoenix Platinum operation re-treats
tailings from ore derived from the famous Bushveld Igneous
Complex, the largest mineral resource of PGMs in the world.
Within the accepted MRM framework of survey, geology,
resource estimation and mine planning, functions on the
operations are focused towards maximising and optimising
the value of the residing mineral assets. The key operational
focus is to integrate all intellectual capital and technical data
to enhance the Mineral Resource confidence in relation to
volume and grade. Efficient and effective LOM plans are
designed to execute mining methods that are safe and low
cost. The low cost base allows the orebody to be extracted
at optimal cut-off grades to yield the desired financial margins.
Group Mineral Resource –
gold ↑ 496%.
Group Mineral Reserve –
gold ↑ 693%.
Pan African Resources PLC Integrated Annual Report 2013
67
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ABRIDGED MINERAL RESOURCES
AND MINERAL RESERVES REPORT
continued
Sustainable – MRM at Barberton Mines, Evander Mines and
Phoenix Platinum has the strategic role of applying best
practices in identifying, optimising and realising the value of
the mineral asset through converting it from an initial inferred
Resource at the exploration phase through to a proved
Reserve at the production stage, and ultimately to a saleable
product. The diligent application of this methodology allows
for greenfield, brownfield, near mine and organic growth
projects to be realised and economic value added to deliver a
sustainable business model, see figure below.
set of organic and brownfield projects – ETRP, Evander Mines
No 7 Shaft No 3 Decline, Rolspruit, Evander South, Poplar
and Libra – that are at an advanced confidence and economic
value, see figure on page 69. This enables Pan African Resources
to grow organically and sustainably, benefiting all stakeholders.
The successful commissioning of the BTRP in June 2013 is
a testament to the leadership at Pan African Resources in
creating value from its mineral assets. This organic growth
project will add 20,000 oz/annum of production ounces.
Growth – Pan African Resources strives to create value by
growing its major asset – the Mineral Resource and Mineral
Reserve of the Company. This drive is based on an active
acquisition strategy, a well-defined exploration programme,
innovation in both geological/Resource modelling, optimal
mine planning, and continual optimisation of the asset portfolio.
Stakeholder – Pan African Resources is pleased to note that
there were no production stoppages due to labour issues
during the year under review. This had a positive impact on
realising the targeted grade tonnage profiles for each of the
operations, resulting in excellent quantities of ounces being
produced.
The acquisition of Evander Mines has propelled Pan African
Resources into a mid-tier status. The Group has increased its
mineral asset significantly, as outlined in this report. The mineral
assets of Evander Mines comprise an operating mine and a
The Group is committed to complying with the MPRDA and
achieving the objectives of the Mining Charter. In this regard,
it continues to engage with stakeholders, both within and
outside the Group.
Target
(Project/Company
/Mine)
Filter 1 *
Desktop Study
(Initial Financial
Model)
Filter 2 ‡
Detailed Review
(Technical and
Financial)
Recommendation
* Filter 1: Type/size/grade of onebody; economic/political risk; infrastructure/services.
‡ Filter 2: NPV; IRR; other financial parameters.
68
Pan African Resources PLC Integrated Annual Report 2013
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(cid:32)
(cid:24)
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(cid:33)
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(cid:34)
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PROJECT VALUE
Pan African Resources PLC Integrated Annual Report 2013
69
(cid:36)
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ABRIDGED MINERAL RESOURCES AND MINERAL
RESERVES REPORT
continued
Group Mineral Resource – gold
The total Mineral Resource for the Group increased from 5.89 Moz in June 2012 to 35.13 Moz in June 2013 – a gross annual
increase of 29.24 Moz or 496%. Of this, 3.52 Moz can be attributed to Barberton Mines and a significant 31.61 Moz can be
attributed to the acquisition of Evander Mines.
As at 30 June 2013
Pan African Resources
Mineral Resource
Pan African Resources
Category
Measured
Indicated
Inferred
Total
Tonnes
(million)
Grade
(g/t)
6.78
273.39
56.94
337.11
10.58
2.38
6.04
3.10
Contained gold
tonnes
68.27
655.10
369.36
1,092.73
Moz
2.19
21.06
11.88
35.13
Barberton Mines’ Mineral Resources had a positive variance of 574,164 oz contained gold. This was a result of the addition of
new Resources from an aggressive exploration strategy at each of the operating mines and the inclusion of Segalla and Camelot
slimes dams into the Mineral Resource.
Group Mineral Reserve – gold
Pan African Resources’ Mineral Reserve increased from 1.16 Moz in June 2012 to 9.20 Moz in June 2013 – a gross annual increase
of 8.04 Moz, and a 693% increase. Of this, 1.18 Moz can be attributed to Barberton Mines, while the acquisition of Evander Mines
contributed 8.02 Moz.
As at 30 June 2013
Pan African Resources
Mineral Reserve
Pan African Resources
Category
Proved
Probable
Total
Tonnes
(million)
Grade
(g/t)
Contained gold
tonnes
Moz
4.42
75.39
79.81
6.98
3.23
3.43
29.03
256.95
285.98
0.93
8.27
9.20
Barberton Mines had a positive variance of 18,547 oz. Mining depletion accounted for 87,128 oz..
70
Pan African Resources PLC Integrated Annual Report 2013
Group Mineral Resource Table PGM 4E
The Group’s total Mineral Resource PGM 4E increased from 0.49 Moz in June 2012 to 0.68 Moz in June 2013 - a gross annual
increase of 0.19 Moz, and a 39% increase. Of this, 0.16 Moz can be attributed to IFM Reserves (2012).
As at 30 June 2013
Pan African Resources
Mineral Resource
Pan African Resources
Category
Measured
Indicated
Inferred
Total
Tonnes
(million)
Grade
(g/t)
2.00
3.40
1.10
6.50
2.68
3.57
3.37
3.27
PGM 4E
tonnes
5.23
12.22
3.85
21.30
Moz
0.17
0.39
0.12
0.68
Group Mineral Reserve Table PGM 4E
Pan African Resources Resources’ Mineral Reserve PGM 4E increased from 0.18 Moz in June 2012 to 0.25 Moz in June 2013 –
a gross annual increase of 0.07 Moz, and a 39% increase. This significant increase can be attributed to the IFM Proven and Probable
Reserves (2012) for Lesedi Mine.
As at 30 June 2013
Pan African Resources
Mineral Reserve
Pan African Resources
Category
Proved
Probable
Total
Tonnes
(million)
Grade
(g/t)
PGM 4E
tonnes
1.96
3.42
5.38
1.21
1.61
1.46
2.36
5.50
7.86
Moz
0.07
0.18
0.25
Group organic growth
Extensive exploration drilling was conducted during the year, focusing on defining the geometries of the various orebodies on
each mine. This geo-scientific knowledge assisted in increasing the confidence of the mineral resource, and thus supported the
LOM plans and the Company’s business plan. A well-designed mine plan for accessing and developing the orebody – outlined in
the tables below, resulted in significant gold attributed ounces to the mineral resource for the year.
Exploring the orebody – exploration drilling
Operation
Barberton Mines
Evander Mines
Phoenix Platinum
Total
metres
Number of
boreholes
Average
channel width
(cm)
No. of
intersections
above cut off
Average
grade
(g/t)
Total
expenditure
(ZARm)
16,937
1,803
–
191
22
–
110
63
–
95
4
–
19.58
32.62
–
5. 87
1.65
–
Accessing the orebody – on-reef development
Operation
Barberton Mines
Evander Mines
Phoenix Platinum
Total on-reef
development
(m)
2 128,5
1 333,0
–
Average grade
(g/t)
6.92
56.44
–
Pan African Resources PLC Integrated Annual Report 2013
71
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ABRIDGED MINERAL RESOURCES AND MINERAL
RESERVES REPORT
continued
Developing the orebody – capital ore Reserve projects: Barberton Mines
Project
Sheba – pillar development
Sheba – Edwin Bray to Thomas and Joe’s Luck area
Fairview –11 Level Royal reef
Fairview – 1# ore Reserve opening
Fairview – No 3 Shaft deepening
Fairview – 62 Level
Consort – 40 Level
Consort – 50 Level Decline West
Consort – MMR pillar development
Y/E 30 June
2013
(m)
Y/E 30 June
2012
(m)
Y/E 30 June
2011
(m)
Potential
Resource target
(oz)
317
102
0.1
179
228
601
252.2
150
129.4
303
491
109
267
197
149
34
123
2,006
17,000
14,821
1,600
278,000
10,000
26,000
(new target area)
Capital Ore Reserve Projects: Evander Mines
Project
2 decline 24-25 level
25 A block ventilation
Y/E 30 June
2013
(m)
Y/E 30 June
2012
(m)
Y/E 30 June
2011
(m)
Potential
Resource target
(oz)
554
124
778
0
201
0
1,200,000
Barberton Mines
Barberton Mines is situated in the Magisterial District of
Barberton, Mpumalanga, Republic of South Africa, some
370 km east of Johannesburg and 47 km south-east of
Nelspruit. The mineralisation at Barberton Mines is classified
as Achaean epigenetic hydrothermal lode gold deposits
within a granite greenstone terrain. The grade and the
structure in the ore shoots are highly erratic in nature and
most of the data for evaluating Resource blocks are derived
from development adjacent to the mining blocks and from
the position of the present mining areas. The tectonic
structure and orebody geometry are modelled using the
Lynx orebody modelling system.
Barberton Mines has continued with the application of semi-
mechanised cut and fill mining method. The mineral rights
pertaining to Barberton Mines were issued by the DMR in
terms of Item 7 of Schedule II of the Minerals and Petroleum
Resources Development Act, 2002 (No 28 of 2002) (MPRDA).
Mineral rights to Barberton Mines comprise of three separate
mining rights for the three different mining operations. All
three operations’ old order rights were converted to the sole
and exclusive “new order” right to mine on 28 April 2011.
72
Pan African Resources PLC Integrated Annual Report 2013
Y-5,00 0
Y-10, 000
Y-15, 000
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New Consort Mine
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(cid:15)
(cid:16)
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(cid:10)
Bullion
(cid:14)
(cid:12)
Clutha Mine
Thomas and Joe’ s Luck
(cid:17)
Margaret, Mamba and Eureka
(cid:25)
(cid:5)(cid:8)
To Kaapmuiden
To Kaapmuiden
(cid:14)(cid:31)(cid:39)(cid:46)(cid:50)(cid:39)(cid:35)(cid:51)(cid:1)(cid:26)(cid:41)(cid:39)(cid:42)(cid:35)(cid:47)(cid:1)(cid:12)(cid:31)(cid:42)
(cid:23)
(cid:10)(cid:31)(cid:46)(cid:32)(cid:35)(cid:46)(cid:48)(cid:44)(cid:43)(cid:1)(cid:21)(cid:39)(cid:43)(cid:35)(cid:47)
Fairview Mine
(cid:10)(cid:31)(cid:46)(cid:32)(cid:35)(cid:46)(cid:48)(cid:44)(cid:43)(cid:1)(cid:21)(cid:39)(cid:43)(cid:35)(cid:47)(cid:1)
(cid:10)(cid:17)(cid:23)(cid:29) (cid:21)(cid:35)(cid:48)(cid:31)(cid:41)(cid:41)(cid:49)(cid:46)(cid:37)(cid:39)(cid:33)(cid:31)(cid:41)(cid:1)(cid:24)(cid:41)(cid:31)(cid:43)(cid:48)
(cid:53)(cid:1)
(cid:19)
Victory Hill
Sheba Mine
Royal Sheba Mine
(cid:21)
(cid:22)
(cid:20)
(cid:18)
(cid:24)
(cid:25)(cid:44)(cid:52)(cid:31)(cid:41)(cid:1)(cid:26)(cid:38)(cid:35)(cid:32)(cid:31)(cid:1)(cid:26)(cid:41)(cid:39)(cid:42)(cid:35)(cid:47)(cid:1)(cid:12)(cid:31)(cid:42)(cid:47)
E agles Nes t Mine
Barbrook Fault
0
0
0
,
0
4
+
X
0
0
0
,
5
4
+
X
0
0
0
To Nelspruit
,
0
5
+
X
(cid:25)
(cid:6)(cid:3)
n
n i a
o
v
e
d D
n
e a
c
n
e
r
F l o
(cid:10)(cid:31)(cid:46)(cid:32)(cid:35)(cid:46)(cid:48)(cid:44)(cid:43)
LEGEND:
0
0
0
,
5
5
+
X
SCALE:
(cid:3)
(cid:4)(cid:2)(cid:7)(cid:40)(cid:42)
Geology of Barberton.
Infrastructure:
(cid:21)(cid:31)(cid:39)(cid:43)(cid:1)(cid:25)(cid:44)(cid:31)(cid:34)(cid:47)
(cid:27)(cid:44)(cid:51)(cid:43)(cid:47)
(cid:26)(cid:38)(cid:31)(cid:36)(cid:48)(cid:47)
(cid:21)(cid:39)(cid:43)(cid:35)(cid:34)(cid:1)(cid:23)(cid:49)(cid:48)(cid:1)(cid:9)(cid:46)(cid:35)(cid:31)(cid:47)
(cid:21)(cid:39)(cid:43)(cid:35)(cid:1)(cid:9)(cid:49)(cid:48)(cid:38)(cid:44)(cid:46)(cid:39)(cid:47)(cid:31)(cid:48)(cid:39)(cid:44)(cid:43)(cid:1)(cid:10)(cid:44)(cid:49)(cid:43)(cid:34)(cid:31)(cid:46)(cid:52)
(cid:22)(cid:35)(cid:51)(cid:1)(cid:23)(cid:46)(cid:34)(cid:35)(cid:46)(cid:1)(cid:24)(cid:46)(cid:44)(cid:47)(cid:45)(cid:35)(cid:33)(cid:48)(cid:39)(cid:43)(cid:37)(cid:1)(cid:9)(cid:46)(cid:35)(cid:31)
Geology:
(cid:22)(cid:35)(cid:41)(cid:47)(cid:45)(cid:46)(cid:49)(cid:39)(cid:48)(cid:1)(cid:26)(cid:49)(cid:39)(cid:48)(cid:35)
(cid:19)(cid:31)(cid:31)(cid:45)(cid:1)(cid:28)(cid:31)(cid:41)(cid:41)(cid:35)(cid:39)(cid:1)(cid:27)(cid:44)(cid:43)(cid:31)(cid:41)(cid:39)(cid:48)(cid:35)
(cid:23)(cid:43)(cid:50)(cid:35)(cid:46)(cid:51)(cid:31)(cid:33)(cid:38)(cid:48)(cid:1)(cid:15)(cid:46)(cid:44)(cid:49)(cid:45)
(cid:18)(cid:31)(cid:42)(cid:35)(cid:47)(cid:44)(cid:43)(cid:1)(cid:26)(cid:33)(cid:38)(cid:39)(cid:47)(cid:48)(cid:1)(cid:10)(cid:35)(cid:41)(cid:48)
(cid:21)(cid:44)(cid:44)(cid:34)(cid:39)(cid:35)(cid:47)(cid:1)(cid:15)(cid:46)(cid:44)(cid:49)(cid:45)
(cid:14)(cid:39)(cid:37)(cid:1)(cid:27)(cid:46)(cid:35)(cid:35)(cid:1)(cid:15)(cid:46)(cid:44)(cid:49)(cid:45)
(cid:30)(cid:51)(cid:31)(cid:46)(cid:48)(cid:40)(cid:44)(cid:45)(cid:45)(cid:39)(cid:35)(cid:47)(cid:1)(cid:14)(cid:44)(cid:46)(cid:42)(cid:31)(cid:48)(cid:39)(cid:44)(cid:43)
(cid:14)(cid:31)(cid:49)(cid:41)(cid:48)
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S
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I
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V
I
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W
C
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R
P
O
R
A
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E
G
O
V
E
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N
A
N
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ABRIDGED MINERAL RESOURCES AND MINERAL
RESERVES REPORT
continued
Mineral Resource table – Barberton Mines
Mineral Resource at 30 June 2013
Operations
Sheba
Consort
Fairview
Total mines
Slimes dumps
Surface ore
Outside sections
Total Barberton Mines
Classification
tonnes
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
1,001,200
1,575,200
1,850,000
4,426,300
385,900
184,800
279,100
849,800
1,813,000
896,100
956,400
3,665,600
3,200,200
2,656,100
3,085,500
8,941,700
–
7,283,200
11,138,600
18,421,800
192,300
–
214,300
183,100
397,400
3,200,200
10,345,900
14,407,200
27,953,300
g/t
7.52
5.31
4.70
5.56
8.67
11.58
8.99
9.41
7.76
18.70
19.65
13.54
7.80
10.26
9.73
9.19
–
1.54
1.20
1.27
1.79
–
6.19
5.69
5.96
7.80
3.88
3.08
3.92
kg
7,530
8,360
8,703
24,593
3,347
2,139
2,508
7,993
14,076
16,755
18,798
49,629
24,952
27,254
30,008
82,215
–
11,227
13,392
24,619
344
–
1,327
1,042
2,369
24,952
40,152
44,442
oz
242,083
268,791
279,796
790,671
107,593
68,766
80,629
256,988
452,559
538,693
604,353
1,595,605
802,235
876,251
964,779
2,643,264
–
360,946
430,548
791,548
11,057
–
42,664
33,511
76,176
802,235
1,290,917
1,428,838
109,546
3,521,990
74
Pan African Resources PLC Integrated Annual Report 2013
Mineral Reserve table – Barberton Mines
Mineral Reserve at 30 June 2013
Operations
Sheba
Consort
Fairview
Total mines
Slimes dumps
Surface ore
Total Barberton Mines
Classification
tonnes
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Probable
Probable
Proved
Probable
Total
529,500
1,562,700
2,092,200
89,700
149,000
238,600
1,132,900
917,400
2,050,200
1,752,100
2,629,100
4,381,000
7,283,000
153,800
1,752,000
10,066,100
11,818,200
g/t
6.52
4.27
4.84
7.83
7.71
7.76
6.29
14.50
9.96
6.44
8.04
7.40
0.56
1.16
6.44
2.52
3.10
kg
3,450
6,676
10,126
702
1,149
1,851
7,126
13,302
20,428
11,278
21,127
32,405
4,066
179
11,278
25,371
36,650
oz
110,934
214,626
325,560
22,562
36,943
59,505
229,115
427,664
656,779
362,612
679,233
1,041,845
130,714
5,752
362,612
815,699
1,178,311
As at 30 June 2013, Barberton Mines reported a Mineral Reserve of 1,178,311 oz and Mineral Resource of 3,521,990 oz
contained gold. The measured and indicated Mineral Resources are inclusive of those Resources modified to produce the Mineral
Reserves. Reserves are reported as mill-delivered tonnes at the grade recovered, having duly considered all modifying factors.
The report date for Resources and Reserves was moved from end March to end June, to bring it in line with Evander Mines’
reporting cycle and the Group’s year end.
The graph below illustrates Mineral Reserve sensitivities to a changing gold price.
Mineral Reserve sensitivities Barberton
)
0
0
0
(
z
o
1,200
1,000
800
600
400
200
–
200,000
250,000
300,000
350,000
400,000
450,000
500,000
550,000
600,000
16
14
12
10
8
6
4
2
–
g
/
t
oz (000)
g/t (Reserve grade)
661
13.77
754
11.75
876
9.14
ZAR/kg Gold Price
1,001
8.25
1,009
7.69
1,030
7.49
1,064
7.15
1,070
7.10
1,075
7.03
Pan African Resources PLC Integrated Annual Report 2013
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ABRIDGED MINERAL RESOURCES AND MINERAL
RESERVES REPORT
continued
Competent person
Frans Chadwick, the Chief Surveyor at Barberton Mines, signs
off the Mineral Resources for Barberton Mines. He is a
member of the South African Council for Professional and
Technical Surveyors (PLATO) (PMS0033). He is based at
Fairview Mine, GMO Building, Barberton, 1300.
Evander Mines
Evander Mines is located approximately 120 km south-east
from Johannesburg in Mpumalanga Province. Evander Mines’
mineral asset comprises a set of Mineral Resources ranging
from early prefeasibility studies to a production mine.
The current revenue streams for Evander Mines are
generated from the Evander Mines No 8 Shaft and surface
sources. The principal economical horizon mined at Evander
Mines is the Kimberley Reef, which was deposited in the
Witwatersrand sedimentary basin, ca 2,300 million years ago.
Evander Mines No 8 Shaft is situated in the distal part of the
Evander Basin. The Kimberley Reef is the only economical
horizon that is mined and is developed as the Kinross
Payshoot, illustrated in Figure 4 below.
Evander Mines No. 8 Shaft mining method is footwall
development to reef horizon and then developing on reef
horizon (raise). The mining follows an upside-down Christmas
tree sequence to extract the reef horizon. Old areas of the
mine are also cleaned up by means of vamping activities.
The mineral rights pertaining to Evander Mines were issued
by the DMR in terms of Item 7 of Schedule II of the MPRDA,
and were registered on 15 October 2010.
(cid:65)
(cid:76)(cid:69)(cid:71)(cid:69)(cid:78)(cid:68)
(cid:77)(cid:105)(cid:110)(cid:101)(cid:114)(cid:97)(cid:108)(cid:32)(cid:82)(cid:105)(cid:103)(cid:104)(cid:116)(cid:115)(cid:32)(cid:65)(cid:114)(cid:101)(cid:97)
(cid:82)(cid:101)(cid:101)(cid:102)(cid:32)(cid:76)(cid:111)(cid:115)(cid:115)(cid:32)(cid:40)(cid:78)(cid:111)(cid:114)(cid:109)(cid:97)(cid:108)(cid:32)(cid:70)(cid:97)(cid:117)(cid:108)(cid:116)(cid:41)
(cid:82)(cid:101)(cid:118)(cid:101)(cid:114)(cid:115)(cid:101)(cid:32)(cid:70)(cid:97)(cid:117)(cid:108)(cid:116)
(cid:83)(cid:117)(cid:98)(cid:111)(cid:117)(cid:116)(cid:99)(cid:114)(cid:111)(cid:112)(cid:32)(cid:111)(cid:102)(cid:32)(cid:75)(cid:105)(cid:109)(cid:98)(cid:101)(cid:114)(cid:108)(cid:101)(cid:121)(cid:32)(cid:82)(cid:101)(cid:101)(cid:102)
(cid:83)(cid:117)(cid:103)(cid:97)(cid:114)(cid:98)(cid:117)(cid:115)(cid:104)(cid:32)(cid:70)(cid:97)(cid:117)(cid:108)(cid:116)
(cid:73)(cid:110)(cid:116)(cid:101)(cid:114)(cid:109)(cid:101)(cid:100)(cid:105)(cid:97)(cid:116)(cid:101)(cid:32)(cid:82)(cid:101)(cid:101)(cid:102)(cid:32)(cid:83)(cid:117)(cid:98)(cid:111)(cid:117)(cid:116)(cid:99)(cid:114)(cid:111)(cid:112)
(cid:83)(cid:116)(cid:114)(cid:97)(cid:116)(cid:105)(cid:103)(cid:114)(cid:97)(cid:112)(cid:104)(cid:105)(cid:99)(cid:32)(cid:68)(cid:105)(cid:112)(cid:32)(cid:68)(cid:105)(cid:114)(cid:101)(cid:99)(cid:116)(cid:105)(cid:111)(cid:110)
(cid:75)(cid:105)(cid:109)(cid:98)(cid:101)(cid:114)(cid:108)(cid:101)(cid:121)(cid:32)(cid:82)(cid:101)(cid:101)(cid:102)
(cid:77)(cid:105)(cid:110)(cid:101)(cid:100)(cid:32)(cid:111)(cid:117)(cid:116)(cid:32)(cid:65)(cid:114)(cid:101)(cid:97)(cid:32)(cid:111)(cid:102)(cid:32)(cid:75)(cid:105)(cid:109)(cid:98)(cid:101)(cid:114)(cid:108)(cid:101)(cid:121)(cid:32)(cid:82)(cid:101)(cid:101)(cid:102)
(cid:69)(cid:118)(cid:97)(cid:110)(cid:100)(cid:101)(cid:114)(cid:32)(cid:87)(cid:101)(cid:115)(cid:116)(cid:32)(cid:80)(cid:114)(cid:111)(cid:115)(cid:112)(cid:101)(cid:99)(cid:116)(cid:105)(cid:110)(cid:103)(cid:32)(cid:82)(cid:105)(cid:103)(cid:104)(cid:116)
(cid:79)
(cid:69)(cid:118)(cid:97)(cid:110)(cid:100)(cid:101)(cid:114)(cid:32)(cid:83)(cid:111)(cid:117)(cid:116)(cid:104)(cid:32)(cid:80)(cid:114)(cid:111)(cid:115)(cid:112)(cid:101)(cid:99)(cid:116)(cid:105)(cid:110)(cid:103)(cid:32)(cid:82)(cid:105)(cid:103)(cid:104)(cid:116)
(cid:65)(cid:45)(cid:66)(cid:32)(cid:99)(cid:114)(cid:111)(cid:115)(cid:115)(cid:32)(cid:115)(cid:101)(cid:99)(cid:116)(cid:105)(cid:111)(cid:110)(cid:32)(cid:76)(cid:105)(cid:110)(cid:101)
(cid:67)(cid:111)(cid:109)(cid:112)(cid:114)(cid:101)(cid:115)(cid:115)(cid:105)(cid:111)(cid:110)(cid:97)(cid:108)(cid:32)(cid:115)(cid:116)(cid:114)(cid:101)(cid:115)(cid:115)(cid:32)(cid:100)(cid:105)(cid:114)(cid:101)(cid:99)(cid:116)(cid:105)(cid:111)(cid:110)
(cid:66)
(cid:117)(cid:108)(cid:116)
(cid:97)
(cid:117)(cid:115)(cid:104)(cid:32)(cid:70)
(cid:97)(cid:114)(cid:98)
(cid:103)
(cid:117)
(cid:83)
(cid:8217)
(cid:83)
(cid:48)
(cid:50)
(cid:79)
(cid:54)
(cid:50)
(cid:8217)
(cid:83)
(cid:53)
(cid:50)
(cid:79)
(cid:54)
(cid:50)
(cid:8217)
(cid:83)
(cid:48)
(cid:51)
(cid:79)
(cid:54)
(cid:50)
(cid:8217)
(cid:83)
(cid:53)
(cid:51)
(cid:79)
(cid:54)
(cid:50)
(cid:48)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:32)(cid:52)(cid:107)(cid:109)
(cid:83)(cid:99)(cid:97)(cid:108)(cid:101)(cid:58)
Geology at Evander Mines depicting the Kinross Payshoot.
(cid:79)(cid:50)(cid:56)(cid:32)(cid:53)(cid:53)(cid:8217)(cid:69)
(cid:79)(cid:50)(cid:57)(cid:32)(cid:48)(cid:48)(cid:8217)(cid:69)
(cid:79)(cid:50)(cid:57)(cid:32)(cid:48)(cid:53)(cid:8217)(cid:69)
(cid:79)(cid:50)(cid:57)(cid:32)(cid:49)(cid:48)(cid:8217)(cid:69)
(cid:79)(cid:50)(cid:57)(cid:32)(cid:49)(cid:53)(cid:8217)(cid:69)
76
Pan African Resources PLC Integrated Annual Report 2013
Mineral Resource table – Evander Mines
Operations
Classification
tonnes
Evander Mines No 8 Shaft
Measured
Indicated
Inferred
Total
Evander Mines surface sources
Measured
Indicated
Inferred
Total
Evander Mines No 7 Shaft (vamping) Measured
Evander Mines No 7 Shaft No 3
Decline
Libra (ETRP incl.)
Rolspruit
Poplar
Evander South
Total Evander Mines
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
2,565,437
2,687,695
11,386,966
16,640,099
290,160
46,186
161,880
498,226
67,550
–
–
67,550
653,447
567,640
5,540,222
6,761,309
–
202,909,694
–
202,909,694
–
24,533,910
937,985
25,471,895
–
18,739,880
9,776,663,
28,516,543
–
13,557,535
14,728,265
28,285,799
3,576,294
263,042,540
42,531,982
309,151,115
Mineral Resource 30 June 2013
g/t
14.06
15.56
10.23
11.68
0.94
0.76
0.93
0.92
3.29
–
–
3.29
10.30
9.15
10.78
10.60
–
0.29
–
0.29
–
10.89
9.17
10.83
–
7.16
6.22
6.84
–
7.93
5.37
6.60
kg
oz
36,083
41,808
116,489
194,380
1,160,000
1,344,000
3,745,000
6,249,000
274
35
150
459
222
–
–
222
6,733
5,195
59,736
71,664
–
9,000
1,000
5,000
15,000
7,000
–
–
7,000
216,000
167,000
1,921,000
2,304,000
–
59,004
1,897,000
–
–
59,004
1,897,000
–
–
267,227
8,592,000
8,599
276,000
275,826
8,868,000
–
–
134,214
4,315,000
60,773
1,954,000
194,987
6,269,000
–
–
107,466
3,455,000
79,157
2,545,000
186,623
6,000,000
12.11
43,312
1,392,000
2.34
7.64
3.18
614,949
19,771,000
324,905
10,446,000
983,167
31,609,000
Pan African Resources PLC Integrated Annual Report 2013
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ABRIDGED MINERAL RESOURCES AND MINERAL
RESERVES REPORT
continued
Mineral Reserve table – Evander Mines
Operations
Classification
Evander Mines No 8 Shaft
Evander Mines surface sources
Proved
Probable
Total
Proved
Probable
Total
Evander Mines No 7 Shaft (vamping) Proved
Libra (ETRP incl.)
Rolspruit
Total Evander Mines
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
tonnes
2,347,199
2,345,485
4,692,685
256,000
–
256,000
67,550
–
67,550
–
39,615,959
39,615,959
–
23,362,565
23,362,595
2,670,749
65,324,009
67,994,759
Mineral Reserve at 30 June 2013
g/t
kg
7.37
7.61
7.49
1.02
–
1.02
2.80
–
2.80
–
0.32
0.32
–
8.60
8.60
6.65
3.55
3.67
17,300
17,860
35,161
261
–
261
189
–
189
–
12,713
12,713
–
201,006
201,006
17,750
231,580
249,330
oz
556,000
574,000
1,130,000
8,000
–
8,000
6,000
–
6,000
–
409,000,
409,000
–
6,462,000
6,462,000
570,000
7,445,000
8,015,000
As at 30 June 2013, Evander Mines reported a Mineral Reserve of 8,015,000 oz and Mineral Resource of 31,609,000 oz contained
gold. The measured and indicated Mineral Resources are inclusive of those Resources modified to produce the Mineral Reserves.
Reserves are reported as mill-delivered tonnes at the head grade, having duly considered all modifying factors.
The graph below illustrates Mineral Reserve sensitivities to a changing gold price.
Mineral Reserve sensitivities Evander No. 8 Shaft
)
0
0
0
z
o
(
2,500
2,000
1,500
1,000
500
–
16
14
12
10
8
6
4
2
–
g
/
t
200,000
250,000
300,000
350,000
400,000
450,000
500,000
550,000
600,000
ZAR/kg Gold Price
oz (000)
131.83
631.96
1,126.24
1,358.96
1,419.70
1,443.40
1,464.63
1,880.81
1,922.26
g/t (Reserve grade)
13.72
9.43
8.42
7.97
7.78
7.70
7.61
6.90
6.76
78
Pan African Resources PLC Integrated Annual Report 2013
POPLAR PROJECT
(cid:17)(cid:31)(cid:32)(cid:28)(cid:19)(cid:33)
ROLSPRUIT PROJECT
POPLAR PROJECT EXTENSION
EV ANDER SOUTH PROJECT
EV ANDER 8 SHAFT
E7
E5
E6
E1
E8
E10
E9
E2
E3
LEGEND
(cid:18)(cid:25)(cid:19)(cid:24)(cid:35)(cid:34)
(cid:16)(cid:32)(cid:23)(cid:33)(cid:19)(cid:35)(cid:26)(cid:31)(cid:30)(cid:19)(cid:28)(cid:1)(cid:18)(cid:25)(cid:19)(cid:24)(cid:35)(cid:34)
(cid:15)(cid:26)(cid:30)(cid:23)(cid:22)(cid:2)(cid:31)(cid:36)(cid:35)(cid:1)(cid:12)(cid:33)(cid:23)(cid:19)(cid:34)
Mineral Resources
(cid:15)(cid:23)(cid:19)(cid:34)(cid:36)(cid:33)(cid:23)(cid:22)
(cid:14)(cid:30)(cid:22)(cid:26)(cid:21)(cid:19)(cid:35)(cid:23)(cid:22)
(cid:14)(cid:30)(cid:24)(cid:23)(cid:33)(cid:33)(cid:23)(cid:22)
Mineral Reserves
(cid:17)(cid:33)(cid:31)(cid:37)(cid:23)(cid:30)(cid:1)(cid:19)(cid:30)(cid:22)(cid:1)(cid:17)(cid:33)(cid:31)(cid:20)(cid:19)(cid:20)(cid:28)(cid:23)
EV ANDER SOUTH PROJECT EXTENSION
(cid:3)
(cid:18)(cid:21)(cid:19)(cid:28)(cid:23)
(cid:7)(cid:27)(cid:29)
(cid:16)(cid:5)(cid:10) (cid:8)(cid:8)(cid:38)(cid:13)
(cid:16)(cid:5)(cid:11) (cid:3)(cid:3)(cid:38)(cid:13)
(cid:16)(cid:5)(cid:11) (cid:3)(cid:8)(cid:38)(cid:13)
(cid:16)(cid:5)(cid:11) (cid:4)(cid:3)(cid:38)(cid:13)
Map illustrating Evander projects.
Competent person
The competent person for Evander Mines, Barry Naicker, the Group Mineral Resource Manager, signs off the Mineral
Resources for Evander Mines. He is a member of the South African Council for Scientific Professions (400234/10). He has
a Master’s degree in mineral resource management from Witwatersrand University and a Bachelor of Science (Honours)
in economic geology. He has 12 years of experience in economic geology and mineral resource management.
He is based at First Floor, The Firs, cnr Cradock Avenue and Biermann Avenue, Rosebank, 2196, Gauteng.
Pan African Resources PLC Integrated Annual Report 2013
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ABRIDGED MINERAL RESOURCES AND MINERAL
RESERVES REPORT
continued
Group mineral inventory reconciliation (gold) year-on-year
Resource
table (Au)
Measured
Indicated
Inferred
Total
Reserve
table (Au)
Proved
Probable
Total
Resource at June 2012
Resource at June 2013
+/– variance
% variance year-on-year
Mt
g/t
t Au
Moz
Mt
g/t
t Au
Moz
Mt
g/t
t Au
Moz
Mt
g/t
t Au
Moz
14.76
23.02
29.91
67.7
3.13
2.68
2.51
46.17
61.72
75.01
1.48
6.78
10.58
68.27
2.19
(7.98)
(2.77)
22.1
0.71
(54.1)
(88.5)
47.9
48.0
1.98
273.39
2.38
655.10
21.06
250.37
2.37
593.38
19.08
1,087.6
88.4
961.4
963.6
2.42
56.94
6.04
369.36
11.88
27.03
10.89
294.35
9.46
90.4
433.9
392.4
390.9
2.7
182.9
5.89
337.11
3.10 1,092.73
35.13
269.41
3.38
909.83
29.24
397.9
125.1
497.4
496.4
Reserve at June 2012
Reserve at June 2013
+/– variance
% variance year-on-year
Mt
g/t
t Au
Moz
Mt
g/t
t Au
Moz
Mt
g/t
t Au
Moz
Mt
g/t
t Au
Moz
1.57
9.77
11.34
7.49
2.49
3.18
11.73
24.34
36.07
0.38
0.78
1.16
4.42
6.98
29.03
75.39
79.81
3.23
256.95
3.43
285.98
0.93
8.27
9.20
2.85
6.07
17.30
0.55
181.50
81.00
147.50
144.70
65.62
68.47
3.54
232.61
7.49
671.60
142.40
955.70
960.30
3.65
249.91
8.04
603.80
114.80
692.80
693.10
* Manica Mineral Resource & Mineral Reserve was not included in the Mineral Resource and Mineral Reserve 2013 Report.
80
Pan African Resources PLC Integrated Annual Report 2013
Phoenix Platinum
The concept of recovering the PGM 6Es from tailings was pioneered by Phoenix Platinum through an antecedent company
GB Mining (Pty) Ltd which, together with Aquarius Platinum Limited, built the RK1 floatation plant in the Kroondal area.
Pan African Resources acquired 100% of Phoenix Platinum from Metorex on 21 May 2009. Phoenix Platinum recovers
PGM 6Es from old tailings and current arisings through mineral rights agreements from the IFM Lesedi Mine dams and current
arisings, the Elandskraal dumps and pits, and the Kroondal dump. These tailings are covered through various agreements with
Phoenix Platinum to be the feed source for a 240 ktpa CTRP.
Northern
Limb
Polokwane
(Pietersburg)
Eastern
Limb
Western
Limb
Mokopane
(Potgietersrus)
Nylstroom
Groblersdal
Rustenburg
Pretoria
Dullstroom
Middelburg
er
Riv
uit
pr
s
Bier
ult)
Plat
d elb
n glo
m a n
A
( A
Northam
Platinum
(cid:16)
(cid:15)
AngloPlat
(Union)
Northam
Saulspoort
Mogwase
PILANESBERG ALKALINE
COMPLEX
R
5
1
0
Heystekrand
Ledig
Sun
City
AngloPlat
(Bafokeng-
Rasimone))
C
r
o
c
o
d
i
l
e
RUSTENBURG LAYERED SUITE:
R
i
v
e
r
MERENSKY REEF
LEGEND:
Chromitite
Anorthosite
Norite
Pyroxenite
Upper
Group
Middle
Group
UG2
UG1
MG4
MG3
MG2
MG1
LG7
Lower
Group
LG6 & LG6A
LG5
UPPER ZONE
PYROX ENITE MARKER
MAIN ZONE
UPPER CRITICAL ZONE
LOWER CRITICAL ZONE
LOWER ZONE
MARGINAL ZONE
Atlanta
Vaalkop
Dam
Beestekraal
R
5
1
1
Impala
Lease
R
5
6
5
R556
AngloPlat
(Rustenburg)
Aquarius
AngloPlat
(Kroondal)
(cid:14)(cid:5)
Aquarius
AngloPlat
(Marikana)
Barplats
(cid:8)(cid:35)(cid:28)(cid:37)(cid:36)
Lonmin
(Marikana)
AngloPlat
(Pandora)
Barplats
(Crocodile River)
R
511
(cid:14)(cid:5)
Bapong
Mooinooi
Buffelsfontein Dams
and Current Arisings
R514
Kroondal Dump
Elandskraal Dumps and Pits
(cid:2)
(cid:3)(cid:6)(cid:29)(cid:31)
LEGEND:
N4
Rustenburg
l
l
S
u
i
t
e
B
u
s
h
v
e
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o
m
p
e
x
R
u
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t
e
n
b
u
r
g
L
a
y
e
r
e
d
(cid:12)(cid:25)(cid:22)(cid:33)(cid:40)(cid:21)(cid:1)(cid:11)(cid:35)(cid:21)(cid:32)(cid:28)(cid:37)(cid:25)(cid:1)(cid:17)(cid:38)(cid:28)(cid:37)(cid:25)
(cid:19)(cid:34)(cid:34)(cid:25)(cid:35)(cid:1)(cid:20)(cid:33)(cid:32)(cid:25)
(cid:13)(cid:21)(cid:28)(cid:32)(cid:1)(cid:20)(cid:33)(cid:32)(cid:25)
(cid:13)(cid:25)(cid:35)(cid:25)(cid:32)(cid:36)(cid:29)(cid:42)(cid:1)(cid:16)(cid:25)(cid:25)(cid:26)
(cid:19)(cid:11)(cid:4)(cid:1)(cid:16)(cid:25)(cid:25)(cid:26)
(cid:19)(cid:34)(cid:34)(cid:25)(cid:35)(cid:1)(cid:9)(cid:35)(cid:28)(cid:37)(cid:28)(cid:23)(cid:21)(cid:30)(cid:1)(cid:20)(cid:33)(cid:32)(cid:25)
(cid:12)(cid:33)(cid:40)(cid:25)(cid:35)(cid:1)(cid:9)(cid:35)(cid:28)(cid:37)(cid:28)(cid:23)(cid:21)(cid:30)(cid:1)(cid:20)(cid:33)(cid:32)(cid:25)
(cid:12)(cid:33)(cid:40)(cid:25)(cid:35)(cid:1)(cid:20)(cid:33)(cid:32)(cid:25)
(cid:13)(cid:21)(cid:35)(cid:27)(cid:28)(cid:32)(cid:21)(cid:30)(cid:1)(cid:20)(cid:33)(cid:32)(cid:25)
(cid:18)(cid:35)(cid:21)(cid:32)(cid:36)(cid:39)(cid:21)(cid:21)(cid:30)(cid:1)(cid:17)(cid:38)(cid:34)(cid:25)(cid:35)(cid:27)(cid:35)(cid:33)(cid:38)(cid:34)
(cid:15)(cid:28)(cid:30)(cid:21)(cid:32)(cid:25)(cid:36)(cid:22)(cid:25)(cid:35)(cid:27)(cid:1)(cid:7)(cid:30)(cid:29)(cid:21)(cid:30)(cid:28)(cid:32)(cid:25)(cid:1)(cid:9)(cid:33)(cid:31)(cid:34)(cid:30)(cid:25)(cid:41)(cid:1)
(cid:10)(cid:21)(cid:38)(cid:30)(cid:37)
(cid:18)(cid:33)(cid:40)(cid:32)
(cid:10)(cid:21)(cid:35)(cid:31)(cid:1)(cid:8)(cid:33)(cid:38)(cid:32)(cid:24)(cid:21)(cid:35)(cid:28)(cid:25)(cid:36)
(cid:16)(cid:33)(cid:21)(cid:24)
(cid:16)(cid:21)(cid:28)(cid:30)(cid:40)(cid:21)(cid:42)
(cid:16)(cid:28)(cid:39)(cid:25)(cid:35)
(cid:18)(cid:21)(cid:28)(cid:30)(cid:28)(cid:32)(cid:27)(cid:36)(cid:1)(cid:21)(cid:32)(cid:24)(cid:1)(cid:9)(cid:38)(cid:35)(cid:35)(cid:25)(cid:32)(cid:37)(cid:1)(cid:7)(cid:35)(cid:28)(cid:36)(cid:28)(cid:32)(cid:27)(cid:36)(cid:1)(cid:17)(cid:33)(cid:38)(cid:35)(cid:23)(cid:25)(cid:36)
(cid:19)(cid:29)(cid:30)(cid:36)(cid:1)(cid:25)(cid:30)(cid:22)(cid:28)(cid:35)(cid:22)(cid:31)(cid:1)(cid:22)(cid:32)(cid:25)(cid:1)(cid:37)(cid:29)(cid:26)(cid:1)(cid:30)(cid:32)(cid:27)(cid:33)(cid:35)(cid:31)(cid:22)(cid:37)(cid:30)(cid:33)(cid:32)(cid:1)(cid:29)(cid:26)(cid:35)(cid:26)(cid:30)(cid:32)(cid:1)(cid:31)(cid:22)(cid:41)(cid:1)(cid:32)(cid:33)(cid:37)(cid:1)(cid:23)(cid:26)(cid:1)(cid:35)(cid:26)(cid:34)(cid:35)(cid:33)(cid:25)(cid:38)(cid:24)(cid:26)(cid:25)(cid:1)(cid:33)(cid:35)(cid:1)(cid:37)(cid:35)(cid:22)(cid:32)(cid:36)(cid:31)(cid:30)(cid:37)(cid:37)(cid:26)(cid:25)(cid:1)(cid:30)(cid:32)(cid:1)(cid:22)(cid:32)(cid:41)(cid:1)(cid:27)(cid:33)(cid:35)(cid:31)(cid:1)(cid:39)(cid:30)(cid:37)(cid:29)(cid:33)(cid:38)(cid:37)(cid:1)(cid:34)(cid:35)(cid:30)(cid:33)(cid:35)(cid:1)(cid:39)(cid:35)(cid:30)(cid:37)(cid:37)(cid:26)(cid:32)(cid:1)(cid:34)(cid:26)(cid:35)(cid:31)(cid:30)(cid:36)(cid:36)(cid:30)(cid:33)(cid:32)(cid:1)(cid:27)(cid:35)(cid:33)(cid:31)(cid:1)(cid:20)(cid:26)(cid:32)(cid:31)(cid:41)(cid:32)(cid:1)(cid:17)(cid:22)(cid:32)(cid:25)(cid:1)(cid:2)(cid:16)(cid:37)(cid:41)(cid:3)(cid:1)(cid:14)(cid:37)(cid:25)(cid:4)(cid:1)(cid:12)(cid:35)(cid:22)(cid:34)(cid:29)(cid:30)(cid:24)(cid:36)(cid:1)(cid:23)(cid:41)(cid:1)(cid:13)(cid:32)(cid:37)(cid:26)(cid:35)(cid:22)(cid:24)(cid:37)(cid:30)(cid:33)(cid:32)(cid:4)
(cid:10)(cid:8)(cid:5)(cid:7)(cid:15)(cid:21)(cid:16)(cid:9)(cid:17)(cid:21)(cid:16)(cid:29)(cid:33)(cid:26)(cid:32)(cid:30)(cid:40)(cid:1)(cid:10)(cid:11)(cid:18)(cid:42)(cid:6)(cid:5)
Geology of the Western limb of the Bushveld Complex.
Pan African Resources PLC Integrated Annual Report 2013
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P
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A
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E
G
O
V
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A
N
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ABRIDGED MINERAL RESOURCES AND MINERAL
RESERVES REPORT
continued
The Buffelsfontein, Elandskraal and Kroondal Mineral Resource originates from the mining of the chromitite layers of the Bushveld
Igneous Complex. The chromitite layers in the western limb of the Bushveld Igneous Complex are confined to the critical zone
of the layered complex and are grouped from the bottom upwards, into lower, middle and upper groups.
The middle group consists of four chromitite seams of which the sixth seam, numbered from bottom (MG1) to top (MG4) is
being mined. The mining that took place at Elandskraal and at Buffelsfontein (IFM Lesedi Mine) are from the MG1 and MG2 seams.
The MG1 seams sits in the Lower Critical Zone of the Bushveld Complex, whereas MG2 is in the Upper Critical Zone of the
Bushveld Complex.
Mineral Resource table – Phoenix Platinum
Operations
Classification
Buffelsfontein tailings dams
Measured
Indicated
Inferred
Total
Buffelsfontein current arisings
Measured
Total Buffelsfontein
Elandskraal
Kroondal
Total Phoenix Platinum
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Mineral Resource at 30 June 2013
tonnes
494,000
–
274,000
768,000
–
3,230,000
826,000
4,056,000
494,000
3,230,000
1,100,000
4,824,000
1,149,000
145,000
42,000
1,336,000
316,000
50,000
–
366,000
1,959,000
3,425,000
1,142,000
6,526,000
g/t
3.66
–
2.72
3.38
–
3.66
3.66
3.66
3.66
3.66
3.43
3.61
2.45
2.04
2.00
2.39
2.00
2.00
–
2.00
2.68
3.57
3.37
3.27
kg
1,808
–
745
2,553
–
11,822
3,023
14,845
1,808
11,822
3,768
17,398
2,815
295
84
oz
58,130
–
23,961
82,091
–
380,079
97,197
477,276
58,130
380,079
121,158
559,367
90,506
9,510
2,701
3,194
102,717
632
100
–
732
5,255
12,218
3,852
21,325
20,319
3,215
–
23,534
168,952
392,817
123,844
685,614
82
Pan African Resources PLC Integrated Annual Report 2013
Mineral Reserve table – Phoenix Platinum
Operations
Classification
Buffelsfontein tailings dams
Buffelsfontein current arisings
Total Buffelsfontein
Elandskraal
Kroondal
Total Phoenix Platinum
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Mineral Reserve at 30 June 2013
g/t
1.65
–
1.65
–
1.65
1.65
1.65
1.65
1.65
1.10
0.92
1.08
0.90
0.90
0.90
1.21
1.61
1.46
kg
814
–
814
–
5,320
5,320
814
5,320
6,133
1,267
133
1,400
284
45
329
2,365
5,498
7,863
oz
26,158
–
26,158
–
171,036
171,036
26,158
171,036
197,194
40,728
4,280
45,007
9,144
1,447
10,590
76,030
176,762
252,792
tonnes
494,000
–
494,000
–
3,230,000
3,230,000
494,000
3,230,000
3,724,000
1,149,000
145,000
1,294,000
316,000
50,000
366,000
1,959,000
3,425,000
5,384,000
Group mineral inventory reconciliation (PGM 4E) – year-on-year
Resource
table
Resource at June 2012
Resource at June 2013
+/– variance
% variance year-on-year
(PGM 4E)
Mt
g/t
t PGM
Moz
Mt
g/t
t PGM
Moz
Mt
g/t
t PGM
Moz
Mt
g/t
t PGM
Moz
Measured
Indicated
Inferred
Total
Reserve
table
3.22
0.83
0.80
4.85
3.09
3.25
3.33
3.16
9.98
2.68
2.67
15.33
0.32
0.09
0.09
0.49
2.00
3.40
1.10
6.50
2.68
3.57
3.37
3.27
5.23
12.22
3.85
21.30
0.17
0.39
0.12
0.68
(1.22)
2.57
0.30
1.65
3.89
3.71
3.93
3.62
(4.75)
(0.15)
(37.90) 126.00
(47.60)
(46.90)
9.54
1.18
5.97
0.30 309.60 114.20 356.00 333.30
0.03
0.19
37.50 118.10
44.20
33.30
34.00 114.50
38.90
38.80
Resource at June 2012
Reserve at June 2013
+/– variance
% variance year-on-year
(PGM 4E)
Mt
g/t
t PGM
Moz
Mt
g/t
t PGM
Moz
Mt
g/t
t PGM
Moz
Mt
g/t
t PGM
Moz
Proved
Probable
Total
3.22
0.83
4.05
1.39
1.46
1.41
4.49
1.21
5.70
0.14
0.04
0.18
1.96
3.42
5.38
1.21
1.61
1.46
2.36
5.50
7.86
0.07
0.18
0.25
(1.26)
2.59
1.33
1.69
1.66
1.62
(2.13)
(0.07)
(39.10) 121.60
(47.40)
(50.00)
4.29
2.16
0.14 312.00 113.50 354.50 350.00
0.07
32.80 115.20
37.90
38.90
Competent person
The competent person for Phoenix Platinum, Barry Naicker, the Group Mineral Resource Manager, signs off the Mineral Resources
for Phoenix Platinum. He is a member of the South African Council for Scientific Professions (400234/10). He has a Master’s
degree in mineral resource management from Witwatersrand University and a Bachelor of Science (Honours) in economic
geology. He has 12 years of experience in economic geology and mineral resource management.
He is based at First Floor, The Firs, cnr Cradock Avenue and Biermann Avenue, Rosebank, 2196, Gauteng.
Pan African Resources PLC Integrated Annual Report 2013
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ABRIDGED MINERAL RESOURCES AND MINERAL
RESERVES REPORT
continued
Pan African Resources uses the SAMREC Code, which sets
out the internationally recognised procedures and standards
for reporting Mineral Resources and Mineral Reserves in
South Africa. This code was developed by the South African
Institute of Mining and Metallurgy and is the recommended
guideline for Reserve and Resource reporting for companies
listed on the JSE Limited. In reporting Resources and Reserves,
distinct cognisance has also been taken to comply with AIM
Rules for Mining and Oil and Gas Companies of the London
Stock Exchange.
Definitions as per
the SAMREC Code
The definitions of Mineral Resource and Mineral Reserve, as
contained in the 2007 edition of the SAMREC Code, are as
follows:
A ‘Mineral Resource’ is a concentration or occurrence of
material of economic interest in or on the Earth’s crust in
such form, quality and quantity that there are reasonable
and realistic prospects for eventual economic extraction.
The location, quantity, grade, continuity and other geological
characteristics of a Mineral Resource are known, or estimated
from specific geological evidence, sampling and knowledge
interpreted from an appropriately constrained and portrayed
geological model. Mineral Resources are subdivided, and must
so be reported, in order of increasing confidence in respect
of geo-scientific evidence, into Inferred, Indicated or Measured
categories.
An ‘Inferred Mineral Resource’ is that part of a Mineral
Resource for which volume or tonnage, grade and mineral
content can be estimated with only a low level of confidence.
It is inferred from geological evidence and sampling and
assumed but not verified geologically or through analysis of
grade continuity. It is based on information gathered through
appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes that may be limited in
scope or of uncertain quality and reliability.
An ‘Indicated Mineral Resource’ is that part of a Mineral
Resource for which tonnage, densities, shape, physical
characteristics, grade and mineral content can be estimated
with a reasonable level of confidence. It is based on information
from exploration, sampling and testing of material gathered
from locations such as outcrops, trenches, pits, workings and
drill holes. The locations are too widely or inappropriately
spaced to confirm geological or grade continuity but are
spaced closely enough for continuity to be assumed.
A ‘Measured Mineral Resource’ is that part of a Mineral
Resource for which tonnage, densities, shape, physical
characteristics, grade and mineral content can be estimated
with a high level of confidence. It is based on detailed and
reliable information from exploration, sampling and testing
of material from locations such as outcrops, trenches, pits,
workings and drill holes. The locations are spaced closely
enough to confirm geological and grade continuity.
A ‘Mineral Reserve’ is the economically mineable material
derived from a Measured or Indicated Mineral Resource
or both. It includes diluting and contaminating materials
and allows for losses that are expected to occur when the
material is mined. Appropriate assessments to a minimum
of a Pre-Feasibility Study for a project and a Life of Mine
Plan for an operation must have been completed, including
consideration of, and modification by, realistically assumed
mining, metallurgical, economic, marketing, legal, environmental,
social and governmental factors (the modifying factors). Such
modifying factors must be disclosed.
A ‘Probable Mineral Reserve’ is the economically mineable
material derived from a Measured or Indicated Mineral
Resource or both. It is estimated with a lower level of
confidence than a Proved Mineral Reserve. It includes diluting
and contaminating materials and allows for losses that are
expected to occur when the material is mined. Appropriate
assessments to a minimum of a Pre-Feasibility Study for a
project or a Life of Mine Plan for an operation must have
been carried out, including consideration of, and modification
by, realistically assumed mining, metallurgical, economic,
marketing, legal, environmental, social and governmental
factors. Such modifying factors must be disclosed.
A ‘Proved Mineral Reserve’ is the economically mineable
material derived from a Measured Mineral Resource. It is
estimated with a high level of confidence. It includes diluting
and contaminating materials and allows for losses that are
expected to occur when the material is mined. Appropriate
assessments to a minimum of a Pre-Feasibility Study for a
project or a Life of Mine Plan for an operation must have
been carried out, including consideration of, and modification
by, realistically assumed mining, metallurgical, economic,
marketing, legal, environmental, social and governmental
factors. Such modifying factors must be disclosed.
84
Pan African Resources PLC Integrated Annual Report 2013
Pan African Resources’ reporting in
compliance with SAMREC
To meet the requirements of the SAMREC Code that
the material reported as a Mineral Resource should have
“reasonable and realistic prospects for eventual economic
extraction”, Pan African Resources has determined an
appropriate cut-off grade, which has been applied to
the quantified mineralised body according to a process
incorporating a long-term view on future economic modifying
factors. In applying this process, Pan African Resources uses
a gold price of ZAR550,000/kg to derive a cut-off grade to
determine the Mineral Resources at each of its underground
operations.
Barberton Mines employs a weighted arithmetic mean and an
inverse distance estimation technique, while Evander Mines
uses a kriging estimation method to create an estimated grade
model. The in-house developed Mineral Resource optimiser
tool was applied to the Mineral Resource inventory. At the
underground mines, this is done by defining the optimal cut-
off as the lowest grade at which an orebody can be mined
such that the total profits, under a specified set of mining
parameters, are maximised.
The Mineral Resource is converted to Mineral Reserve,
using the modifying factors listed below. Cut-off grades are
determined using the optimiser programme.
(cid:118) The database inventory of all Mineral Resource blocks,
(cid:118) an assumed gold price – ZAR490,000/kg,
(cid:118) planned production rates for each mine,
(cid:118) mine call factor (MCF),
(cid:118) plant recovery,
(cid:118) planned cash operating costs and other efficiency factors
are calculated using historical achievements as a baseline.
The Mineral Reserves represent that portion of the measured
and indicated Resources above cut-off in the LOM plan
and have been estimated after consideration of the factors
affecting extraction, including mining, metallurgical, economic,
marketing, legal, environmental, social and governmental
factors. A range of disciplines, including geology, survey,
planning, mining engineering, rock engineering, metallurgy,
financial management, human resources management and
environmental management, has been involved at each mine
in the LOM planning process and the conversion of Resources
into Reserves.
The modifying factors related to the ore flow that are used
to convert the Mineral Resources to Mineral Reserves
through the LOM planning process are stated for each shaft
in the Mineral Resource and Mineral Reserve Report 2013.
For these factors, historical information was used.
Phoenix Platinum and BTRP are optimised on a 100%
extraction plan on their Mineral Reserves. No selectivity
is applied on tonnages, and thus no cut-off grades are
determined. Modifying factors for these projects are detailed
in the Mineral Resource and Mineral Reserve Report 2013.
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Pan African Resources PLC Integrated Annual Report 2013
85
SUSTAINABILITY REVIEW
Ensuring a healthy and safe workplace
The full sustainability report can be found on the Company
website, www.panafricanresources.com.
(cid:118) exercising their right to work in a healthy and safe
environment and their responsibility to withdraw from an
unhealthy or dangerous situation.
Approach
We consider safe and healthy working conditions to be vital
to the sustainability of our operations, and we are committed
to fostering an environment where employees at all levels are
empowered and engage freely around safety, health, environment,
quality and community (SHEQC) matters. During the past year,
we have updated the Group’s SHEQC Charter and Policy to
reflect our ongoing objectives of zero injuries and continually
improving the culture of health and safety at our operations.
In terms of this charter, we strive for world-class health
and safety performance and aim to prevent all incidents
and accidents at our operations in a reasonably practicable
manner. We also strive to minimise hazards inherent in the
working environment.
the Occupational Health and Safety Policy
Specifically,
embedded in the charter commits Pan African Resources to:
(cid:118) Continually improving occupational health and safety
performance through the setting and achievement of goals,
(cid:118) providing a working environment that is conducive to
good health and safety,
(cid:118) managing risks in the workplace and ensuring that there is
adequate surveillance of workplaces and employees,
(cid:118) complying with applicable legal requirements and with
other requirements to which the organisation subscribes;
in the absence of relevant occupational health and safety
laws, the Company will apply best practice standards
and procedures,
(cid:118) ensuring that appropriate resources, training and
All Pan African Resources operations comply with the Mine
Health and Safety Act (Act 29 of 1996).
The year in numbers
Consolidated performance figures are not presented due to
the acquisition of Evander Mines, which has only four months
effective reporting within the Group. Please refer to the GRI
content index on our website www.panafricanresources.com
for relevant figures.
Safety
A constant awareness of and commitment to safety underpins
all our operations. We are committed to implementing and
complying with legal and other safety requirements, and
continually work towards world-class health and safety
standards for all our employees.
It is with regret that we have to report two fatalities which
occurred at Barberton Mines. On 17 November 2012, a
truck left the road, overturned and rolled down a hill at Sheba
Mine, fatally injuring the driver. On 7 March 2013, a welder
was fatally electrocuted whilst working underground. The
board and management of Pan African Resources extend
their deepest condolences to the family, friends and colleagues
of Gert Fourie and Velly Malumane.
Subsequent to these accidents, employees were counselled
and engaged as to possible causes and remedial actions to
prevent similar accidents happening in the future. To encourage
them to work safe, each employee, supervisor and manager
also signed a commitment pledge.
personal protective equipment are provided to improve
occupational health and safety,
Barberton Mines regrets to report two fatalities at its Barberton
Mines operation during July 2013.
(cid:118) ensuring that employees and contractors have the
relevant skills to perform work-related tasks in a safe
manner and that they are aware of their individual health
and safety obligations and rights.
Employees and contractors working at our operations play
an essential role in achieving occupational health and safety
objectives through:
(cid:118) Taking ownership of, and participating in, occupational
health and safety management programmes and initiatives
and complying with standards and procedures,
Barberton Mines
In the 2013 financial year, Barberton Mines’ total recordable
injury frequency rate (TRIFR) improved from 25.10 to 19.22
per million man hours worked, and the lost time injury
frequency rate (LTIFR) improved from 3.26 to 2.57 per million
man hours worked. Due to two fatalities at the operation,
the reportable injury frequency rate (RIFR) has shown a
regression from 0.74 to 1.51 per million man hours worked.
86
Pan African Resources PLC Integrated Annual Report 2013
Barberton Mines Total-recordable
injury frequency rate
)
s
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(
40
35
30
25
20
15
10
5
–
2009
2010
2011
2012
2013
Total recordable
injury frequency rate
37.80
33.30
22.60
25.10
19.22
Barberton Mines (cid:271) LTIFR and RIFR
)
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7
6
5
4
3
2
1
–
LTIFR
RIFR
2008
4.80
3.08
2009
6.30
1.68
2010
4.20
0.91
2011
2.03
0.51
2012
3.26
0.74
2013
2.57
1.51
Pan African Resources PLC Integrated Annual Report 2013
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SUSTAINABILITY
REVIEW (continued)
Barberton Mines – Fatality injury frequency rate
12 Months
ended
2009
12 Months
ended
2010
12 Months
ended
2011
12 Months
ended
2012
12 Months
ended
2013
Fatal Injury Frequency Rate (rate per
million man hours worked)
–
0.18
–
0.18
0.30
Evander Mines
With Pan African Resources only managing Evander Mines
for the last four months of the period under review, it is
not possible to consolidate annual safety statistics. However,
Evander Mines’ five-year safety record is presented.
Evander Mines’ TRIFR improved from 7.99 to 7.70 per million
man hours worked. The LTIFR has shown a vast improvement
from 4.00 to 2.90 per million man hours worked, and its
RIFR has improved from 3.07 to 1.70 per million man hours
worked.
Evander Mines Total recordable
injury frequency rate
)
s
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(
15
12
9
6
3
–
2009
2010
2011
2012
2013
Total recordable
injury frequency rate
14.60
13.91
10.86
7.99
7.70
88
Pan African Resources PLC Integrated Annual Report 2013
Evander Mines (cid:271) LTIFR and RIFR
)
s
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(
18
16
14
12
10
8
6
4
2
–
LTIFR
RIFR
2008
16.64
2009
10.39
4.33
2.80
2010
7.41
2.54
2011
3.72
2.64
2012
4.00
3.07
2013
2.90
1.74
Phoenix Platinum
Phoenix Platinum recorded a zero LTIFR and RIFR for the
reporting year – a sound demonstration of our zero tolerance
safety record.
The Phoenix Platinum team strives to eliminate potential
hazards, thus ensuring a safe workplace for its employees
by constantly mitigating day-to-day operational
risks,
communicating identified challenges and training accordingly,
and through visible leadership.
Key safety efforts and achievements
Evander Mines
The metallurgical plant achieved 365 white flag (injury-free)
days on 13 June 2013.
Phoenix Platinum
The operation recorded no lost time or recordable injuries in the
2013 financial year. A significant milestone of two years without
any lost time or reportable injuries was realised.
General
Apart from the challenges of improving and maintaining safety
at our operations, following the Evander Mines’ acquisition the
board restructured the corporate office, among other things by
appointing Mandla Ndlozi as Group SHEQC Manager to drive
and standardise safety programmes across the Group operations.
We continue to pursue improvements in the health and safety
of our workforce, and review our procedures regularly as
part of our focus on a behavioural-based safety approach. An
example of this is Evander Mines’ Vuka Sizwe safety programme,
which is now entering its third phase of implementation.
A major initiative at our operations is a fall-of-ground
identification system that concentrates on early morning
examinations by the teams and, if necessary, triggers an action
response programme.
Pan African Resources PLC Integrated Annual Report 2013
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CORPORATE
GOVERNANCE
The governance of
our business
Stakeholder
engagement and our
response
The management
of risk
Remuneration –
rewarding effort
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Pan African Resources PLC Integrated Annual Report 2013
91
THE GOVERNANCE
OF OUR BUSINESS
Approach
The board of directors
that corporate
governance is essential to protect the interests of all
stakeholders. It remains committed to compliance with all
legal requirements and the application of sound corporate
governance principles.
recognises
The board of directors ensures that the business of the Group
is conducted with openness, integrity and accountability.
Statement of compliance
Pan African Resources complies with the UK Companies Act,
AIM rules and the JSE Listings Requirements.
The board of directors acknowledges the valuable
contribution that the application of the King Code of
Governance for South Africa, 2009 (King III) has with
regard to good corporate governance. Wherever practical,
the board of directors applies the recommendations
contained within King III. In the Company’s 2012 Annual
Repor t, the board of directors identified five areas where
it believed it was deficient with regard to the application
of the King III principles, and has worked hard to rectify
these shortcomings. To formalise the management of
its application of King III, the Company has adopted the
Institute of Directors of South Africa (IoDSA) Governance
Assessment Instrument (GAI), allowing for the maintenance
of a register of its progress in applying the principles of
King III and the Listings Requirements of the JSE Limited.
The IoDSA, GAI register can be found on the Company’s
website (www.panafricanresources.com).
The overall score rating as per the GAI was AAA, highligting
the highest application of King III.
The Group complies with the mandatory principles of King III:
in terms of paragraph 3.84 of the JSE Listings Requirements.
Structures
The Pan African Resources board has a unitary structure,
comprising three independent non-executive directors, two non-
executive directors and two executive directors. The Chairman
of the board is an independent non-executive director.
According to the Company’s Articles of Association, the
board may consist of not less than four and not more than
eight members. At the end of the financial year under review,
the board consisted of six members, details of whom appear
on page 14. The board is required to meet at least once every
quarter in terms of the Company’s Articles of Association.
On 28 February 2013, Jan Nelson resigned from the board
and as Chief Executive Officer (CEO) to pursue other
opportunities. Cobus Loots and Ron Holding were appointed
as Joint Interim CEOs, with effect from 1 March 2013.
Ron Holding was appointed to the board on 9 September
2013 as the CEO and Cobus Loots as the Financial director
with effect from 1 October 2013. Busi Sitole resigned as the
Financial director with effect from 30 September 2013.
The Board Charter details the manner in which business is to
be conducted by the board in accordance with the principles
of sound corporate governance, and is reviewed by the board
on an annual basis. A copy of the Board Charter is available
from the Group Company Secretary on request.
In accordance with the Company’s Articles of Association, a
director appointed since the last annual general meeting (AGM)
is required to be re-elected at the next AGM of the Company.
The appointment of directors is a formal and transparent
process and is a matter for the entire board, assisted by the
nominations committee, which is tasked with identifying and
recommending directors who will add the appropriate balance
of skills and experience to the board. In addition, the Articles of
Association require that at least one third of the directors are
subject to retirement by rotation every year. The nominations
committee, having assessed the performance of those directors
who are due for re-election, makes a formal recommendation
for re-election to the board and shareholders. In this regard,
the nominations committee, having concluded its assessment,
recommends the re-election of the retiring directors, as detailed
in the Notice of the AGM on page 163.
On appointment, all directors are provided with information
aimed at broadening their understanding of their fiduciary
duties and responsibilities, the regulatory, statutory and
governance
framework, the Group, and the business
environment and markets in which it operates. All directors
are expected to keep abreast of changes and trends in the
Group’s business and markets.
The role of non-executive directors, who are independent of
management, are to protect shareholders’ interests, including
those of minority shareholders. Non-executive directors
are also responsible for ensuring that individual directors or
groups of directors are subject to appropriate scrutiny in their
decision-making.
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The roles of the chairman of the board and the CEO are
kept separate.
Through the board Chairman and the Group Company
Secretary, the directors have access, at all reasonable
times, to all relevant Company information and to senior
management, to assist them in the discharge of their duties
and responsibilities and to enable them to take informed
decisions. Directors are also allowed to obtain independent
professional advice for the furtherance of their duties,
if necessary, at the Company’s expense, subject to prior
notification to the board Chairman or Company Secretary
and in line with the Group’s procurement policies.
St James’ Corporate Services Limited has been the Group’s
Company Secretary since 8 July 2008. The Group Company
Secretary provides a central source of advice to the board
on ensuring compliance procedures and regulations of
a statutory nature. In addition to the Group Company
Secretary’s statutory and other duties, it provides the board
as a whole, directors individually and the committees with
guidance as to the manner in which their responsibilities
should be discharged in the best interests of the Company.
The appointment and removal of the Group Company
Secretary is a matter for the board as a whole.
One Capital is, in accordance with the Listings Requirements
of the JSE Limited, the Company’s appointed sponsor. One
Capital is responsible for ensuring that the Company is at all
times guided and advised as to the application of the Listings
Requirements of the JSE Limited.
Cannacord Genuity is the Company’s nominated adviser
(NOMAD) and joint broker, together with finnCap Limited
in the UK. The duty of the NOMAD and joint broker is to
advise the Group on compliance concerning the AIM Rules
and continuing obligations as an AIM quoted company.
The board has established various committees, on which
non-executive directors play important roles. Terms of
reference are in place for all these committees, and these
were reviewed during the year. The terms of reference of the
committees are available from the Group Company Secretary
on request. All committees are chaired by independent
non-executive directors except for the Remuneration
Committee. The formation of these committees does not in
any way absolve the board of its overall responsibility to the
shareholders and the Company. As such, each committee is
required to report back to the board at each board meeting.
In addition to regularly attending board and board committee
meetings, the executive directors and senior management
review both the mining operations and the exploration
projects on a formal basis each month. This includes a detailed
review of 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 put in place to
rectify such deviations. Investment and technical decisions
form part of the board’s responsibilities.
Details of the membership of the board and committees,
attendance at meetings, and a summary of responsibilities are
set out in the table below.
Element of
governance
structure
Pan African
Resources
board
Roles and responsibilities
Members
Attendance
at meetings
The board remains the focal point of the Company’s corporate
governance system, and is ultimately accountable and responsible for
the key governance process and the sustainable growth, performance
and affairs of the Company.
The board’s purpose is to ensure that it retains full and effective
control over the Company that it directs and controls, by ensuring that
management is guided by established goals and strategies.
Busi Sitole, the financial director, was on maternity leave from
1 February 2013 until 1 June 2013. Neal Reynolds was the acting
Financial director during Busi Sitole’s maternity leave of four months.
Busi Sitole resigned with effect from 30 September 2013 to focus on
personal commitments.
Keith Spencer
(Chairman)
Rob Still
Phuti Mahanyele
Hester Hickey
Cobus Loots
Busi Sitole (resigned
with effect from
30 September
2013)
Jan Nelson
(resigned
28 February 2013)
5/5
5/5
4/5
4/5
5/5
3/5
3/4
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Pan African Resources PLC Integrated Annual Report 2013
93
THE GOVERNANCE
OF OUR BUSINESS continued
Attendance
at meetings
2/2
2/2
2/2
2/2
Members
Hester Hickey
(Chairperson)
Rob Still
Cobus Loots
Keith Spencer
appointed on
22 June 2013
Element of
governance
structure
Audit
committee
Roles and responsibilities
The audit committee reviews the effectiveness of the risk management
process and internal control in the Group. In particular, the committee
is responsible for:
(cid:118) Overseeing integrated reporting process,
(cid:118) ensuring that a combined assurance model is applied,
(cid:118) overseeing the internal audit function,
(cid:118) reviewing the expertise, resources and experience of the Company’s
finance function,
(cid:118) forming an integral component of the risk management process,
(cid:118) recommending the appointment of the external auditor.
Three of the committee members are independent non-executive directors.
The fourth committee member, Cobus Loots, is considered a non-executive
committee member, whilst not independent due to being a representative
of a significant shareholder. Keith Spencer is considered an independent
director in terms of King III. As a result of having historical share options
issued during 2007, the UK Companies Act does not consider Keith Spencer
independent. The committee’s report appears on page 108.
External auditors, internal auditors, CEO, financial director and financial
executives are always invited to attend the audit committee meetings.
Remuneration
committee
This committee’s function is to approve a broad remuneration strategy
for the Group and to ensure that directors and senior executives are
adequately remunerated for their contribution to Pan African Resources’
operating and financial performance. Details of the remuneration of the
Company’s executive and non-executive directors and senior executives
appear in note 32 to the annual financial statements.
Phuti Mahanyele
(Chairperson)
Rob Still
Jan Nelson
(resigned
28 February 2013)
Nominations
committee
Information regarding the Company’s remuneration philosophy and
policies appear in the remuneration section of this report on page 104.
The nominations committee is required to review the composition of
the board and board committees and to make recommendations to the
board in this regard. The appointment of directors is a transparent and
formal procedure governed by the nominations committee’s mandate
and terms of reference as well as the Board Charter. With regard to
composition of the board, the committee ensures that its size, diversity
and demographics makes the board effective and that it is structured to
ensure a wide range of skills, views, knowledge and experience to meet
the Company’s strategic objectives. The committee also ensures that a
formal succession plan for the board is in place, and that induction and
ongoing training and development of directors continues.
Keith Spencer
(Chairman)
Rob Still
Phuti Mahanyele
2/2
2/2
1/2
4/4
4/4
4/4
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Pan African Resources PLC Integrated Annual Report 2013
Element of
governance
structure
Safety, health,
environment
and community
(SHEQC)
committee
Roles and responsibilities
Members
The SHEQC Committee is the cornerstone of ensuring the Company
maintains its social licence to operate through the following activities
(cid:118) Establishing a safety, health, environment and community policy
framework for the Company,
(cid:118) strategically reviewing the safety performance of all operations
compared to the policy framework,
(cid:118) implementing corrective measures when necessary to achieve the
objectives of the policy framework,
(cid:118) establishing a Social and Ethics Committee as a sub-committee of the
SHEQC Committee, which will perform the functions required on
behalf of subsidiary companies.
Keith Spencer
(Chairman)
Ron Holding
Hester Hickey
Thandeka Ncube
Jan Nelson
(resigned
28 February 2013)
Attendance
at meetings
4/4
4/4
4/4
1/4
2/2
Monitoring of performance
In accordance with the Board Charter, an evaluation of the
board, its committees and individual directors, including
the Chairman, is in the process of being implemented. The
nominations committee assesses the independence of non-
executive directors annually.
In 2013, an assessment of the performance of the board and
its committees was conducted by the board, in line with the
latest recommendations of King III (released in the form of
practice notes). The assessments found the structures and
processes governing the board and its committees were well
established and functioning satisfactorily. It also found that
the board had fulfilled its role and responsibilities and had
discharged its responsibility to the Company, shareholders
and other stakeholders.
Codes of conduct
The directors, management and staff of Pan African Resources
are committed to the following code of ethics:
“As leaders and employees of Pan African Resources, we
hereby commit ourselves to the highest ethical conduct and
agree to:
(cid:118) Respect the laws of the Republic of South Africa and of
any other country in which we may operate or visit.
(cid:118) Live the principle of integrity in all our activities and
refrain from any behaviour, overt and otherwise, that may
damage the organisation’s image and or performance of
whatever nature.
(cid:118) Treat our employees and any other person with
dignity, respect and in a just manner irrespective of
race, religion, gender, disability, age or nationality or any
other characteristic.
(cid:118) Be honest in all our dealings and undertake to distance
ourselves from any activity that has the potential of being
regarded as inconsistent with what is expected of a
responsible Company and individual.
(cid:118) Avoid any potential conflict of interest and when it may
exist, disclose it to affected parties without any delay.
(cid:118) Reject any form of bribery and act upon any non-
compliance as strongly as possible.
(cid:118) Accept the full responsibility and ultimate accountability
when we make decisions that may impact on the health
and safety of our employees and the communities in
which we operate, and take full responsibility for the
environment and the well-being of the communities.
(cid:118) Assist in developing our colleagues and teams to
become worthy team players and responsible South
African citizens.
The board has introduced a Bribery and Corruption Policy
and has adopted a zero-tolerance approach to bribery and
corruption, and will uphold all laws relevant to countering
bribery and corruption in all jurisdictions in which the Group
operates. This policy has been communicated to all employees
and contractors.
All directors and employees are prohibited from dealing in
shares during any period in which price-sensitive information
is available. The CEO distributes memoranda informing the
affected parties of these periods. Should a senior employee
or director wish to trade Pan African Resources shares,
written permission must be obtained from either the CEO
or Financial director.
A register of directors’ interests is maintained and updated at
board meetings.
Board statement
The board considers that this integrated annual report
complies in all material respects with the relevant statutory
requirements of the various regulations governing disclosure
and reporting by Pan African Resources, and that the annual
financial statements comply in all material respects with the
UK’s companies acts as well as with IFRS. As such, the board
approves the content of the Integrated Annual Report 2013,
including the annual financial statements.
Pan African Resources PLC Integrated Annual Report 2013
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STAKEHOLDER ENGAGEMENT
AND OUR RESPONSE
Approach and principles
The Group defines stakeholders as people, groups or
organisations that have a direct interest in Pan African
Resources in that they can affect – or be affected by – its
operations, policies and procedures. Stakeholders are
identified at both an operations level and by the various
governance structures of the Group. Identified stakeholders
include: shareholders, prospective shareholders, investment
analysts and lenders (investors); employees, unions and
contractors (employees); communities; suppliers; government,
regulatory authorities and civil society (society).
Proactive and sincere stakeholder engagement is fundamental
to the Group preserving and building on its social and
relationship capital and moving it further along the road to
achieving its goal of a profitable and sustainable business.
Stakeholder engagement is undertaken at all levels of the
enterprise following the principles of inclusiveness, materiality
and responsiveness. As such, stakeholders participate in
outlining key elements of the Group’s response to material
economic, social and environmental issues, and the Group’s
business is conducted at the intersection of the interests
of its dominant, definitive and dependent stakeholders.
This approach ensures that there exists a common
understanding and frequent communication at the core of
the collective interest.
Stakeholder engagement can be conducted in one of two
ways: direct engagement involving verbal, direct written or
visual communication with targeted stakeholder groupings;
or indirect engagement, represented by compliance with
regulations and standards expected to deliver on stakeholder
issues and concerns.
Direct engagement is the approach used for investors
through regular presentations and roadshows, including
operational visits; communication through the London
Stock Exchange and
JSE news services; one-on-one
communication with executive management and members
of the board; the publication of interim and full-year financial
results and an annual integrated report; and the provision of
financial information demonstrating conformance with debt
covenants.
Direct engagement with the employee stakeholder grouping
is conducted through various structures including bargaining
council
forums; shaft committees; health and safety
structures; and supervisory and disciplinary structures. The
methods of communication involved scheduled meetings,
briefings, emails and posters, standard policy and procedures
documents, one-on-one supervision and instruction, contract
negotiations, and performance discussions.
Direct community engagement frequently takes place at
operational level where operational management, community
liaison officers and the community social investment
department engage with ward councillors, the IDP and
LED offices and the communities themselves at scheduled
community meetings. Various media
communication
channels are used to inform the communities and their
representatives.
Indirect engagement with a variety of stakeholders – in
particular, those in the society and community groupings –
is achieved through compliance with a range of regulations
and guidelines, including: the Mining Charter, the Mine Health
and Safety Act, environmental and water management acts,
the UK and South African companies’ acts, and the listing
requirements of AIM and the JSE. Achieving compliance
and informing regulators requires regular and frequent
communication with the departments of Mineral Resources,
Labour, Water Affairs, Education and Public Works, and local
municipalities and IDP and LED offices.
Company well-being is
only sustainable if all
stakeholders share and
buy into the Company
vision and strategy
Arrows represent a common
understanding, respect and attitude
towards safe performance behaviour
delivering on Company strategy that
rewards all stakeholders.
Shareholders
Profitability and
sustainability
of business
Communities
around our mining
operations
Employees and
business partners
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Pan African Resources PLC Integrated Annual Report 2013
Status of material issues identified
Issue
Stakeholders
Status/response
Safe mining
Employees Society
Investors
Safety statistics for the individual operations, which have shown an overall
improvement, are provided on pages 86 to 89. Regrettably, two employees lost
their lives while on duty at Barberton Mines during the year. Gert Fourie and
Velly Malumane were both fatally injured.
Transformation
Employees Society
Investors
The Group enjoys a constructive and valuable relationship with a BEE partner,
Shanduka Resources, via its wholly owned subsidiary Shanduka Gold, which owns
25.3% of Pan African Resources.
The Group complies with both the Employment Equity and Skills Development
Acts. The Group’s progress in achieving its employment equity targets is
summarised below:
Top management
Senior management
Middle management
Junior management
Other officials
2013
target
(%)
2013
actual
(%)
2012
actual
(%)
45
46
40
57
95
36
46
38
55
95
20
27
32
45
57
Pan African Resources supports the development of small and medium black-
owned enterprises. Procurement spend from BEE entities during the year was as
follows:
Barberton Mines
Capital goods
Services
Consumable goods
Evander Mines
Capital goods
Services
Consumable goods
2012
actual
(%)
26
42
34
2013
target
(%)
30
40
60
2013
target
(%)
30
60
40
2013
actual
(%)
90
78
40
2013
actual
(%)
37
23
42
During the 2013 financial year, the Group invested a total of ZAR20.2 million
(2012: ZAR14.4 million) in projects designed to improve the quality of life of
members of neighbouring communities.
Barberton Mines continues with its Barberton Mines Transformation Trust,
established in 2011 and funded through contributions from the operation and its
suppliers. Contributions to the trust can be applied in the determination of the
suppliers’ B-BBEE contributor status.
Evander Mines now forms part of the Group and, as such, enjoys support from the
Shanduka Group in terms of transformation initiatives.
Pan African Resources PLC Integrated Annual Report 2013
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STAKEHOLDER ENGAGEMENT
AND OUR RESPONSE continued
Issue
Stakeholders
Status/response
Environmental
management
Society
Communities
Job security and
creation
Employees
Communities
Society
The Group’s operations are directed by an integrated SHEQC Charter.
In particular, the Environmental Policy commits Pan African Resources to:
continual improvement in the assessment of its environmental performance
and the prevention of pollution; the integration of environmental management
practices throughout the Group; minimising the use of consumptive resources
and promoting the reduction and recycling of waste; rehabilitating disturbed
land and protecting biodiversity; exercising prudence with critical ecological
resources; managing environmental risk in the workplace; complying with applicable
legal requirements; and training and educating its employees in environmental
responsibilities.
All operations have EMPs approved by the DMR. Barberton Mines submitted an
amended EMP in 2010 and is still awaiting approval.
Statistics relating to the Group’s impact on the environmental are provided in the
GRI Report www.panafricanresources.com
The Group’s total payroll cost amounted to ZAR507.0 million.
No redundancies occurred during the year. Employee turnover is monitored
and reported on in the GRI content index on the Group’s website at
www.panafricanresources.com.
ZAR2.9 million was invested in the training and development of employees across
the Group.
Statistics relating to training and learnerships appears in the table below:
Profitable mining
Investors Society
Communities
The Group returned to paying dividends during the 2013 financial year, following
its decision to forgo a dividend in 2012 due to the cash demands of the Evander
Mines acquisition.
Total taxes collected on behalf of the South African government amounted to
ZAR149.0 million during 2013. Other direct taxes paid by the Group to the
South African fiscus amounted to ZAR117.7 million.
Direct investment in the Group’s surrounding communities amounted to
ZAR20.2 million.
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THE MANAGEMENT
OF RISK
The management of risk
The board of directors, supported by the work of the audit
committee, is ultimately responsible for the management and
mitigation of risks that impact upon the Group’s operations,
its employees and the environment and communities in which
it operates. The Group follows a formal risk management
programme, engaging with employees, assurance service
providers, insurers, regulatory bodies, local communities
and specialist risk advisors. The culture of the Group is
that everyone associated with it assumes responsibility for
conducting themselves in conformance with established
policies and procedures, to minimise the potential occurrence
of any risk event and constantly to seek opportunities to
improve performance and efficiencies.
The identification of risks is informed by the external
environment, described on pages 40 to 42, and the nature of
the individual operations’ activities. At first glance, risks could
be described as either strategic or operational. However,
so many of the strategic risks require mitigating strategies
to be implemented at the operations, the Group does not
distinguish between the types of risk. Risks can be identified at
an operational level, during risk workshops, and through the
strategy-setting process.
Initiatives to mitigate risks at the operational level are designed
to ensure continuous, safe and responsible production of gold
and PGMs. Each of the Group’s operations maintains a risk
register, which includes risk identification, risk mitigating factors
and responsibilities.
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The board regularly reviews the risk reports from the
operations,
risk
management programmes are implemented, and monitoring
progress against key risk indicators such as safety statistics.
the appropriate
thus ensuring
that
The board, together with executive management, is also
responsible for the identification of strategic risks and
opportunities. Strategic workshops are conducted to evaluate
risks and opportunities, confirm or amend Group strategy and
establish strategic actions for the forthcoming period. Controls
and actions to mitigate strategic risks can be implemented at
the individual operations, across a Group discipline (human
resources, for example) or at executive management level.
Risks and our achievements
The board and executive management believe that within
every risk lies an opportunity for Pan African Resources
to improve its financial, operational or social performance,
enhance its reputation, strengthen its team and create value
for all its stakeholders in the short, medium and long term. As
such, the risks described below are also seen as key areas of
opportunity for the Group. Specific identified opportunities
relating to the exploitation of Mineral Resources and Mineral
Reserves are discussed in more detail on pages 67 to 85.
Pan African Resources PLC Integrated Annual Report 2013
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THE MANAGEMENT
OF RISK continued
Risk
Mitigation strategies
Outcomes
Safety statistics for the individual
operations are provided on
pages 86 to 89.
Safety – including fall of
ground, transport, blasting,
equipment handling and
underground fires
(cid:118) SHEQC Charter.
(cid:118) Safety management systems, including standard
operating procedures and regular risk assessments.
(cid:118) Legal appointments of responsible persons.
(cid:118) Workplace safe declarations.
(cid:118) Seismic monitoring.
(cid:118) Rock mechanic engineers are involved with mine
planning, design and operation.
(cid:118) DMR mandatory code of practice to combat rockfall
events implemented.
(cid:118) Support standards for stoping and
development applied.
(cid:118) MQA accredited employee training – both general
and job-specific.
(cid:118) Communication through managers, safety
representatives, safety meetings and
safety committees.
(cid:118) Record keeping and reporting of statistics.
(cid:118) Blasting schedules.
(cid:118) Adequate signage of dangers and risks.
(cid:118) Legal workplace inspections.
(cid:118) Disaster action plans.
(cid:118) Fire prevention measures.
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Risk
Mitigation strategies
Outcomes
The profitability of the
Group’s operations and
the cash flows generated
are significantly affected by
changes in precious metal
prices and the Group’s cost
of production
The Group’s results of
operations and financial
condition may be materially
adversely affected by
appreciation in the value of
the ZAR against the USD
and GBP.
Industrial action work
stoppages and higher
operating costs as the
result of wage settlements
or changes in employment
legislation
The average price of gold
realised during the period
resulted in positive margins
achieved.
Management of costs remained
in line with expectations and
increases operational all-in cost
of production was a result of
– wage rate increases
– electricity increases
– BTRP capital expenditure
– Evander Mines Shaft Deeping
Project.
The average USD/ZAR
exchange rate was 13.9%
weaker, at ZAR8.83:1, compared
to the previous year (2012:
ZAR7.75:1).
The average ZAR/GBP exchange
rate was 12.8% weaker at
ZAR13.84:1 compared to
the previous year (2012:
ZAR12.27:1). Therefore Group
results in GBP would be
materially affected by a 12.8%
movement year-on-year.
No industrial action took place
at any of the Group’s operations
during the year.
(cid:118) Historically, the Group has sold its gold at prevailing
market prices and has not entered into any price
hedging arrangements to establish a price in advance
for the sale of future gold production. Such hedging
opportunities, together with economic indicators
and an informed outlook for the price of gold, are
considered on a regular basis by both the executive
management and the board.
(cid:118) The Group is committed to being a high-grade, low
cash cost gold producer. Appropriate mineral resource
management ensures optimum grade tonnage profiles
are achieved on a sustainable basis.
(cid:118) all costs are monitored and addressed in detail to
ensure sufficient cash flows are available to meet all
stakeholder requirements.
(cid:118) Capital and management resources are applied to
improve underground working conditions, enhancing
productivity and controlling costs.
(cid:118) Should the gold price fall to a level approaching the
Group’s all-in cost of production for any sustained
period, a review of all projects, capital expenditure
and costs would be performed to focus on
cash preservation.
(cid:118) The Group is managed by experienced teams at the
operations and supported by a lean and experienced
executive team.
(cid:118) The Group’s policy is not to hedge its exposure to
foreign exchange rate fluctuations.
(cid:118) Exchange rates are monitored daily.
(cid:118) The Group focuses on cost control to maximise
profitability per production unit.
(cid:118) The Group complies with all of the relevant South
African labour legislation.
(cid:118) Unions are recognised in line with labour legislation
and engaged with on a frequent and regular basis.
(cid:118) The Group engages with collective bargaining units,
either directly or through the Chamber of Mines.
(cid:118) The Group has adopted appropriate remuneration
practices to reward all levels of employees, based on
the Group’s production and financial performance.
(cid:118) In terms of the Mining Charter, the Group prepares
and implements social and labour plans, which include
employee training and development goals.
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THE MANAGEMENT
OF RISK continued
Risk
Mitigation strategies
Outcomes
Employee turnover is
monitored and reported on
in the GRI content index on
the Group’s website at www.
panafricanresources.com.
The Group’s performance
in appointing HDSAs to
management positions is
reflected in the table under
the heading Transformation in
the Stakeholder Engagement
and our Response section on
page 97.
BTRP commissioned on time
and on budget.
Successful integration of the
Evander Mines acquisition.
Total Group gold production
increased by 38.2% and gold
reserves by 69.4%.
Recording and reporting
incidences of occupational
diseases. These statistics are
provided in the GRI content
index on the Group’s website
at www.panafricanresources.com.
The Group’s ability to
recruit and retain skilled and
experienced employees is
critical to the success of its
operations
(cid:118) SLPs.
(cid:118) Recruitment and training strategy.
(cid:118) Appropriate remuneration.
(cid:118) Employee health initiatives.
(cid:118) In-house training and development.
(cid:118) Talent pool and mentorship.
Integrating new acquisitions
and construction of new
plants
Health – liabilities related to
occupational diseases and
the management of the high
incidence of HIV/Aids in the
workforce
(cid:118) BTRP construction was monitored on a daily basis.
(cid:118) A management and service agreement was signed
with Harmony when acquiring the Evander Mines
operation, to ensure a smooth and managed
handover of responsibilities.
(cid:118) An integration programme for all aspects of the
Evander Mines operation was prepared and has been
strictly managed during the year.
(cid:118) Annual medical examinations for all employees.
(cid:118) Daily monitoring of workplace environment for heat,
noise and airborne pollutants.
(cid:118) Targets and limits set for noise, heat and dust.
(cid:118) Standard operating procedures for working with
cement and asbestos products.
(cid:118) Ventilation control.
(cid:118) Personal protective equipment.
(cid:118) Health clinic.
(cid:118) First aid training.
(cid:118) Awareness campaigns.
(cid:118) Voluntary HIV counselling and testing.
(cid:118) Free condoms and antiretroviral drugs.
(cid:118) Entrance and exit medical screenings.
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Risk
Mitigation strategies
Outcomes
Environmental degradation –
water pollution
Illegal mining and theft
(cid:118) Zero-discharge mines.
(cid:118) Environmental management programmes.
(cid:118) Pollution control and water catchment dams.
(cid:118) Sealing of underground water sources.
(cid:118) Compliance with water use licence guidelines.
(cid:118) Recycling/reuse targets.
(cid:118) Containment of arsenic-contaminated storage areas.
(cid:118) Engagement with the Department of Water Affairs
regarding the outstanding water licence of Sheba
Mine.
(cid:118) Access controls.
(cid:118) Attendance registers.
(cid:118) Security patrols.
(cid:118) Camera surveillance.
(cid:118) Mine clearance procedures.
(cid:118) Disciplinary procedures.
(cid:118) Communication and awareness campaigns.
(cid:118) Engagement with authorities and community.
(cid:118) Remedial action of historic pollution.
Number and value of fines or
sanctions for non-compliance.
These statistics are provided
in in the GRI content index on
the Group’s website at www.
panafricanresources.com.
Significant progress has been
made in securing the mines’
properties and limiting access
to the workings. This is reflected
in the reduced security costs at
Barberton Mines.
Poor governance resulting
in non-compliance with
legislation and/or regulations
(cid:118) The Group has appointed a JSE sponsor and a UK
NOMAD to ensure compliance with regard to
corporate governance and public disclosure.
The Group has remained
compliant throughout the year.
Unavailability of
infrastructure (including
power interruptions)
(cid:118) Safety and environmental management systems.
(cid:118) Operational management engage the services of
environmental specialists to ensure compliance with
regulations and compliance thereof.
(cid:118) Private contractors required to comply with
Company systems.
(cid:118) Regular audits.
(cid:118) Statutory site inspections.
(cid:118) Engineering risks registers for all operations.
(cid:118) Appointment of a Group consulting engineer.
(cid:118) Planned routine maintenance and
maintenance contracts.
(cid:118) Equipment registers.
(cid:118) Critical spares maintained.
(cid:118) Refurbishment, major overhaul and capital
expenditure programmes.
(cid:118) Engagement with Eskom on planned
power interruptions.
(cid:118) Back-up generators provide limited power to
processing plants.
(cid:118) Power management and load monitoring.
(cid:118) Energy-efficiency programmes.
Production and financial
indicators.
Readers are referred to the
Operational performance
section of this report, on pages
52 to 89.
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REMUNERATION
Remuneration – Rewarding effort
All the executive directors have employment contracts with
the Company and are remunerated by the Company for
services performed.
In accordance with the Company’s Articles of Association,
non-executive directors are entitled to directors’ fees (refer
to annual financial statements note 32. These fees are paid
quarterly in arrears.
The remuneration committee comprises one independent
non-executive director and one non-executive director.
The invitees of the remuneration committee are the Group
CEO, the Financial director and the Executive: Human
Resources, all of whom are are excluded from the meeting
in the event that their remuneration and/or benefits are
discussed. The remuneration committee meets at least twice
a year. It reviews the performance of the CEO, executives and
senior management and sets the scale, structure and basis of
their remuneration and the terms of their service agreements
with due regard to the interest of all stakeholders and the
performance of the Company.
Basic salary and benefits are reviewed annually against
competitive market data and analysis (PwC Remchannel
Survey).
Short-term incentives paid annually are based on the
Company’s performance. The collective key performance
areas (KPAs) account for 80% and are based on gold sold
ounces, costs of production and safety targets, whereas the
individual KPAs account for 20% and are specific to the person
concerned. These are objective measurements based on the
Company’s actual achievements versus the set business plan
for the financial year.
Share options
The Equity Share Option Plan was discontinued (2008) and
has been replaced with the Pan African Resources Group
Share Appreciation Bonus Plan. The main objective of the
Group Share Appreciation Bonus Plan is to give appropriate
incentives to selected employees who are employed at a
managerial level within the Group to ensure retention of key
skills required for the ongoing profitable performance and
growth of Pan African Resources, its subsidiary companies
and any other entities that Group controls and to align
management interests with those of shareholders of Pan
African Resources.
Further details in terms of the Equity Share Option Plan and
the Group Share Appreciation Bonus Plan are disclosed in
the annual financial statements notes 33 and 27. Additional
information in relation to the Equity Share Option Plan and
the Group Share Appreciation Bonus Plan can be obtained
from the Group Company Secretary.
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Pan African Resources PLC Integrated Annual Report 2013
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ANNUAL
FINANCIAL STATEMENTS
Audit Committee
report
Directors’ report
Independent auditor’s
report
(cid:39)(cid:73)(cid:86)(cid:88)(cid:77)(cid:189)(cid:71)(cid:69)(cid:88)(cid:73)(cid:3)(cid:83)(cid:74)(cid:3)(cid:88)(cid:76)(cid:73)(cid:3)
Company secretary
Consolidated and
Company statement
of comprehensive
income
Consolidated and
Company statement
(cid:83)(cid:74)(cid:3)(cid:189)(cid:82)(cid:69)(cid:82)(cid:71)(cid:77)(cid:69)(cid:80)(cid:3)(cid:84)(cid:83)(cid:87)(cid:77)(cid:88)(cid:77)(cid:83)(cid:82)
Consolidated and
Company statement
(cid:83)(cid:74)(cid:3)(cid:71)(cid:69)(cid:87)(cid:76)(cid:3)(cid:190)(cid:83)(cid:91)(cid:87)
Consolidated and
Company statement
of changes in equity
(cid:50)(cid:83)(cid:88)(cid:73)(cid:87)(cid:3)(cid:88)(cid:83)(cid:3)(cid:88)(cid:76)(cid:73)(cid:3)(cid:189)(cid:82)(cid:69)(cid:82)(cid:71)(cid:77)(cid:69)(cid:80)(cid:3)
statements
106
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Pan African Resources PLC Integrated Annual Report 2013
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AUDIT
COMMITTEE REPORT
Financial statements
The committee has evaluated the Group financial statements
for the year ended 30 June 2013 and, based on the information
provided to the committee, considers that the Group complies, in
all material respects, with the requirements of the Companies Act
and International Financial Reporting Standards (IFRS).
The requirements from King III are continuously being assessed and
improved on with significant issues resolved.
External auditor
The committee nominated the South African and UK firm of
Deloitte & Touche for reappointment as external auditors of the
Pan African Group.
The committee satisfied itself through enquiry that the external
auditors are independent as defined by the Companies Act and as
per the standards stipulated by the auditing profession.
The Audit Committee, in consultation with executive management,
agreed to the terms of engagement. The audit fee for the external
audit has been considered and approved for the 2013 financial
year-end, taking into consideration such factors as the timing of the
audit, the extent of the work required and the scope.
The committee approved a non-audit services policy which
determines the nature and extent of any non-audit services
which Deloitte & Touche may provide to the Company. The policy
allows for limited tax and corporate governance advice as well as
the provision of reporting accountant services in relation to capital
market transactions.
Financial Director
During the financial year, Financial Director Busi Sitole was on
maternity leave for a four-month period. Neal Reynolds, Group
Financial Manager, acted in Busi Sitole’s stead during this period.
Busi Sitole resigned as Financial Director effective 30 September
2013, and is replaced by Cobus Loots effective 1 October 2013.
The directors have considered the functioning of Pan African
Resources financial department and believe that it functions
effectively, with the required controls and systems in place.
The committee has assessed and is satisfied that the new Financial
Director, Cobus Loots, has the appropriate skill, expertise and
experience as required by the JSE Listings Requirement 3.84(h).
Internal auditor
The committee plays an oversight role of internal audit by approval
of the internal audit plan and review of the reporting of any findings
on a regular basis. The committee satisfied itself that the internal audit
function is independent and has the necessary resources, standing
and authority to discharge its duties. The Head of Internal Audit has
direct access to the Chairman of the Audit Committee and internal
audit are invited to attend each Audit Committee meeting.
Accounting practices
and internal control
Based on the available and communicated information, together
with discussions with the independent external auditor, the
committee is satisfied that there was no material breakdown in
the internal accounting controls during the financial year under
review. The committee reviewed the auditor’s report to those
charged with governance and can report that there were no
material issues requiring immediate additional attention. The value-
added issues raised are receiving the appropriate attention to
ensure increased effectiveness in all areas of financial and business
systems and controls.
On behalf of the Audit Committee
HH Hickey
Chairperson: Audit Committee
16 September 2013
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Pan African Resources PLC Integrated Annual Report 2013
DIRECTORS’
REPORT
The directors present their annual report and the audited financial
statements for the year ended 30 June 2013.
Principal activities
The Group’s principal activity during the year was gold and platinum
mining. A full review of the activities of the business and of future
prospects is contained in the Chief Executive Officer’s report that
accompanies these financial statements, with financial and non-
financial key performance indicators shown on page 16.
Results and dividends
The results for the year are disclosed in the Consolidated Statement
of Comprehensive Income on page 114. The salient features of
these results can be found on page 5.
The Pan African Resources board of directors previously stated the
Company’s policy is to pay an annual dividend, subject to the capital
requirements of the Company. Following the successful acquisition
of Evander Mines, the board of directors has therefore proposed
to declare a dividend in respect of the 2013 financial year subject to
the approval of the shareholders at the next AGM. Currently, with
the satisfactory results from Barberton Mines and Evander Mines,
the board of directors remains committed to continue with the
Company’s dividend policy and has resumed the dividend payment
in the 2013 financial year.
The board of directors proposes a final dividend for the year ended
30 June 2013 of ZAR240 million (GBP15.21 million). The proposed
final dividend is calculated on 1,825,834,263 issued shares currently
outstanding, equating to ZAR0.1314 per share or approximately
0.831 pence per share (2012: Nil), and is to be approved by
shareholders at the forthcoming AGM of the Company.
Note 1: The dividend in GBP is based on an exchange rate on 13 September 2013 of
ZAR15.76:1, and approximates GBP15.2 million. The final exchange rate will
be communicated upon final approval at the AGM.
Policy for payment of creditors
It is the Company’s policy to settle all agreed transactions within
the terms established with suppliers. The Company’s target credit
days are 60 days.
Risk management
The key business risks to which the Company is exposed have
been considered and addressed under the operational review of
each business segment. Refer to page 52 for gold operations and
page 64 for platinum operations.
A separate risk committee is not considered necessary, as this
role is fulfilled by the board, its sub-committees and executive
management. The identification and management of critical risks is
a strategic focus area for executive management, reviewed on a
monthly basis and, together with action plans, reported regularly
to the board. Executive management has the ability to call for
emergency board meetings, should the need arise. Risk registers
for each business segment are in place. The board has reviewed the
current risks to the business and, at the time of reporting, believes
that the current business risks do not exceed the risk appetite of
the Group.
Residual risks include the current South African labour market and
associated union rivalry, USD gold price, USD/ZAR exchange rate,
and government and regulatory frameworks, as well as unforeseen
natural disasters.
The board believes that the current processes of identifying and
dealing with risks are effective.
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 misstatement or loss.
Internal financial control procedures undertaken by the board
include:
(cid:118) Review of monthly financial reports and
monitoring performance.
(cid:118) Review of internal audit reports and follow-up action of
weaknesses identified by these reports.
(cid:118) Review of competency and experience of senior
management staff.
(cid:118) Prior approval of all significant expenditure, including all major
investment decisions.
(cid:118) Review and debate of treasury and other policies.
The board has reviewed the operation and effectiveness of
the Group’s system of internal control for the financial year 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 that
it has reviewed the business’s working capital requirements in
conjunction with its future funding capabilities for at least the next
12 months, and has found them to be adequate. The Group has
secured a ZAR600 million RCF with Nedbank Limited and ABSA
Limited. The Group utilised ZAR350 million (GBP23.3 million) of
the RCF to fund the Evander Mines acquisition and has since been
able to further settle ZAR185 million (GBP12.3 million), resulting in
a closing balance of ZAR165 million (GBP11.0 million) at year-end.
Management is not aware of any material uncertainties that may
cast significant doubt on the Group’s ability to continue as a
going concern. Should the need arise, the Group can cease most
exploration and capital activities, and by doing so conserve cash.
Pan African Resources PLC Integrated Annual Report 2013
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DIRECTORS’
REPORT continued
Events after the reporting period
Refer to note 36 to the Annual Financial Statements.
Directors
The following were directors during the year under review and
subsequently:
KC Spencer (Chairman)*
P Mahanyele
JP Nelson (resigned on 28 February 2013)
YB Sitole (resigned effective 30 September 2013)
JAJ Loots
RG Still*
H Hickey*
R Holding (appointed on 9 September 2013)
* Independent non-executive director.
(cid:118) so far as the director is aware, there is no relevant information
of which the Group’s auditor is unaware,
(cid:118) the director has taken all the steps that he/she ought to have
taken as a director in order to make him/herself aware of any
relevant audit information and to establish that the Group’s
auditor is aware of that information.
This confirmation is given and should be interpreted in accordance
with S418 of the UK Companies Act 2006.
Deloitte LLP has expressed its willingness to continue in office as
auditor, and a resolution to reappoint it will be proposed at the
forthcoming AGM.
By order of the board.
Auditor
Deloitte LLP has been appointed as auditor until the conclusion of
the next AGM.
Each of the persons who are directors at the date of approval of
this annual report confirms that:
Ron Holding
Chief Executive Officer
16 September 2013
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Pan African Resources PLC Integrated Annual Report 2013
INDEPENDENT AUDITOR’S REPORT
UNITED KINGDOM
To the members of Pan African Resources PLC
We have audited the financial statements of Pan African Resources PLC for the year ended 30 June 2013 which comprise the Group and
Parent Company Statements of Comprehensive Income, the Group and Parent Company Statements of Financial Position, the Group and
Parent Company Cash Flow Statements, the Group and Parent Company Statements of Changes in Equity and the related notes 1 to 39.
The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. 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
auditor’s 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 auditor
As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements
in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting
policies are appropriate to the Group’s and the parent Company’s circumstances and have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we
read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If
we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion:
(cid:118) the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 30 June 2013 and
of the Group’s profit and the parent company’s loss for the year then ended;
(cid:118) the financial statements have been properly prepared in accordance with IFRS as adopted by the European Union; and
(cid:118) the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent
with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
(cid:118) adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from
branches not visited by us; or
(cid:118) the parent company financial statements are not in agreement with the accounting records and returns; or
(cid:118) certain disclosures of directors’ remuneration specified by law are not made; or
(cid:118) we have not received all the information and explanations we require for our audit.
David Paterson
Senior Statutory Auditor
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
16 September 2013
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INDEPENDENT AUDITOR’S REPORT
SOUTH AFRICA
To the shareholders of Pan African Resources PLC
We have audited the consolidated and separate financial statements of Pan African Resources PLC set out on pages 114 to 162, which comprise
the statements of financial position as at 30 June 2013, and the statements of comprehensive income, statements of changes in equity and
statements of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory
information.
Directors’ responsibility for the consolidated financial statements
The Company’s directors are responsible for the preparation and fair presentation of these consolidated and separate financial statements in
accordance with International Financial Reporting Standards and for such internal control as the directors determine is necessary to enable
the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated and separate financial statements based on our audit. We conducted our audit
in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the consolidated and separate financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial
position of Pan African Resources PLC as at 30 June 2013, and its consolidated and separate financial performance and consolidated and
separate cash flows for the year then ended in accordance with International Financial Reporting Standards.
Deloitte & Touche
Registered Auditor
Per: MLE Tshabalala
Partner
16 September 2013
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Pan African Resources PLC Integrated Annual Report 2013
CERTIFICATE OF THE
COMPANY SECRETARY
I hereby certify that Pan African Resources PLC has lodged with the Registrar of Companies all such returns as are required of a public
company in terms of the Companies Act 2006. All such returns are true, correct and up to date.
St James’s Corporate Services Limited
17 September 2013
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Pan African Resources PLC Integrated Annual Report 2013
113
CONSOLIDATED AND COMPANY STATEMENT OF
COMPREHENSIVE INCOME
for the year ended 30 June 2013
Notes
4
4
5
5
16, 17
8
38
19
19
10
4, 9
9
10
13
Revenue
Gold sales
Platinum sales
Realisation costs
On-mine revenue
Gold cost of production
Platinum cost of production
Mining depreciation
Mining profit
Other (expenses)/income
Bargain purchase gain
Loss in associate
Loss on disposal of asset held for sale
Impairments
Royalty costs
Net income before finance income and finance costs
Finance income
Finance costs
Profit before taxation
Taxation
Profit after taxation
Other comprehensive income:
Items that may be reclassified subsequently
to profit and loss
Foreign currency translation differences
Total comprehensive income for the year
Profit attributable to:
Owners of the parent
Total comprehensive income attributable to:
Owners of the parent
Group*
Company
30 June 2013
(Audited)
£
30 June 2012
(Audited)
£
30 June 2013
(Audited)
£
30 June 2012
(Audited)
£
129,277,438
4,257,512
(226,738)
133,308,212
(67,646,119)
(3,535,046)
(5,998,267)
56,128,780
(5,652,226)
24,114,255
(152,312)
(586,138)
(16,143,604)
(3,198,622)
54,510,133
1,454,659
(1,257,696)
101,068,596
–
(163,217)
100,905,379
(46,122,811)
–
(3,259,010)
51,523,558
(5,916,227)
–
–
–
(48,238)
(3,848,450)
41,710,643
652,267
(136,765)
54,707,096
(12,133,063)
42,226,145
(12,984,511)
–
–
–
–
–
–
–
–
(3,229,348)
–
(152,312)
(586,138)
(18,058,860)
–
(22,026,658)
1,079,235
–
(20,947,423)
289,876
–
–
–
–
–
–
–
–
21,644,712
–
–
–
–
–
21,644,712
551,154
–
22,195,866
–
42,574,033
29,241,634
(20,657,547)
22,195,866
(20,228,836)
(10,248,051)
(1,596,822)
(7,013,252)
22,345,197
18,993,583
(22,254,369)
15,182,614
42,574,033
29,241,634
(20,657,547)
22,195,866
42,574,033
29,241,634
(20,657,547)
22,195,866
22,345,197
18,993,583
(22,254,369)
15,182,614
22,345,197
18,993,583
(22,254,369)
15,182,614
Earnings per share (pence)
Diluted earnings per share (pence)
14
14
2,63
2,62
2,02
2,01
–
–
–
–
* Pan African Resources Plc (Pan African Resources) acquired Evander Gold Mines Limited (Evander Mines) on 28 February 2013. Therefore the audited financial statements at
30 June 2013 consolidate four months of Evander Mines financial results.
114
Pan African Resources PLC Integrated Annual Report 2013
CONSOLIDATED AND COMPANY STATEMENT OF
FINANCIAL POSITION
as at 30 June 2013
ASSETS
Non-current assets
Property, plant and equipment and mineral rights
Other intangible assets
Deferred taxation
Goodwill
Investments
Investments in associate
Rehabilitation trust fund
Current assets
Inventories
Receivables from other Group companies
Current tax asset
Trade and other receivables
Cash and cash equivalents
Non-current assets held for sale
Total assets
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Share premium
Translation reserve
Share option reserve
Retained income
Realisation of equity reserve
Merger reserve
Group
Company
30 June 2013
(Audited)
£
30 June 2012
(Audited)
£
30 June 2013
(Audited)
£
30 June 2012
(Audited)
£
Notes
16
17
28
18
19
19
20
21
34
22
23
35
24
209,489,677
340,484
312,798
21,000,714
–
1,199,071
16,973,713
62,411,655
–
–
21,000,714
–
–
2,662,934
85,141
–
267,281
–
122,007,254
1,182,606
–
126,209
–
–
–
50,101,244
–
–
249,316,457
86,075,303
123,542,282
50,227,453
6,595,740
–
1,479,339
13,904,416
4,768,916
1,868,735
–
–
6,828,047
19,782,179
–
12,524,940
–
1,221,443
3,304,949
–
19,505,668
–
1,621,219
17,812,893
26,748,411
28,478,961
17,051,332
38,939,780
213,191
13,135,215
–
13,155,070
276,278,059
127,689,479
140,593,614
102,322,303
18,228,342
94,515,562
(22,166,345)
1,031,955
102,005,124
(10,701,093)
(10,705,308)
14,482,623
51,149,299
(1,937,509)
904,902
59,432,741
(10,701,093)
(10,705,308)
18,228,342
94,515,562
(6,754,874)
897,658
16,224,374
–
1,560,000
14,482,623
51,149,299
(5,158,052)
792,143
36,881,921
–
1,560,000
Equity attributable to owners of the parent
172,208,237
102,625,655
124,671,062
99,707,934
Total equity
Non-current liabilities
Long-term provisions
Long-term liabilities
Deferred taxation
Current liabilities
Trade and other payables
Current portion of long-term liabilities
Payable to other Group companies
Current tax liability
172,208,237
102,625,655
124,671,062
99,707,934
26
27
28
25
27
34
14,821,152
11,132,960
54,049,440
3,043,954
868,881
10,088,530
80,003,552
14,001,365
–
390,681
–
390,681
23,202,052
864,218
–
–
7,709,729
–
–
3,352,730
1,758,875
–
13,772,996
–
–
429,565
–
429,565
886,569
–
1,298,235
–
24,066,270
11,062,459
15,531,871
2,184,804
Total equity and liabilities
276,278,059
127,689,479
140,593,614
102,322,303
Ron Holding
Chief Executive Officer
Cobus Loots
Director
Pan African Resources PLC Integrated Annual Report 2013
115
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CONSOLIDATED AND COMPANY STATEMENT
OF CASH FLOWS
for the year ended 30 June 2013
Group
Company
Notes
30 June 2013
£
30 June 2012
£
30 June 2013
£
30 June 2012
£
Net cash generated from/(used in)
operating activities
Investing activities
Dividends received
Deposit
Additions to property, plant and equipment
and mineral rights
Net cash outflows from the acquisition of Evander
Additions to intangibles
Investments acquired
Loans from/(to) subsidiaries
Proceeds on disposals of assets
Funding of the rehabilitation trust fund
37
48,265,537
30,575,270
(757,723)
(8,392,150)
–
–
–
(1,548,779)
–
–
24,500,396
(1,548,779)
16
38
(27,566,533)
(96,006,400)
–
–
–
10,555
359,172
(17,424,906)
–
(505,273)
–
–
–
115,970
(12,542)
–
–
(72,026,895)
9,415,791
–
–
(13,202)
–
–
–
(6,836,569)
–
–
Net (cash used in)/generated from investing activities
(123,203,206)
(19,362,988)
(62,623,646)
16,101,846
Financing activities
Proceeds from borrowings
Borrowings repaid
Loans from subsidiaries
Shares issued
Share issue costs
34,763,874
(22,545,100)
–
50,614,255
(3,502,273)
24
–
–
–
–
–
–
258,686
–
50,614,255
(3,502,273)
–
–
1,298,235
258,686
–
Net cash from financing activities
59,330,756
258,686
47,111,982
1,556,921
Net (decrease)/increase in cash and
cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of foreign exchange rate changes
(15,606,913)
19,782,179
593,650
11,470,968
10,123,822
(1,812,611)
(16,269,387)
17,812,893
1,761,443
9,266,617
11,546,466
(3,000,190)
Cash and cash equivalents at the end of the year
23
4,768,916
19,782,179
3,304,949
17,812,893
During the year, the Group completed a major non-cash transaction with regards to its disposal of Manica projects (refer to note 35).
116
Pan African Resources PLC Integrated Annual Report 2013
CONSOLIDATED AND COMPANY STATEMENT
OF CHANGES IN EQUITY
for the year ended 30 June 2013
GROUP
Balance at 30 June 2011
Issue of shares
Total comprehensive
income
Dividends paid
Share-based payment
– charge for the year
Balance at 30 June 2012
Issue of shares
Share issue costs
Other reserves
Total comprehensive
income
Share-based payment
– charge for the year
Share
capital
£
Share
premium
account
£
Translation
reserve
£
Share
option
reserve
£
Retained
earnings
£
Realisation
of equity
reserve
£
Merger
reserve
£
Total
£
14,440,406
42,217
50,932,830
216,469
8,310,542
–
861,450
–
37,607,283
–
(10,701,093)
–
(10,705,308)
–
90,746,110
258,686
–
–
–
– (10,248,051)
–
–
–
–
29,241,634
(7,416,176)
–
–
43,452
–
–
–
–
–
–
18,993,583
(7,416,176)
–
43,452
14,482,623
3,745,719
–
–
51,149,299
46,868,536
(3,502,273)
–
(1,937,509)
–
–
–
904,902
–
–
–
59,432,741
–
–
(1,650)
(10,701,093)
–
–
–
(10,705,308) 102,625,655
50,614,255
(3,502,273)
(1,650)
–
–
–
–
–
– (20,228,836)
–
42,574,033
–
–
127,053
–
–
–
–
22,345,197
–
127,053
Balance at 30 June 2013
18,228,342
94,515,562
(22,166,345)
1,031,955 102,005,124
(10,701,093)
(10,705,308) 172,208,237
Share
capital
£
Share
premium
account
£
Translation
reserve
£
Share
option
reserve
£
Retained
earnings
£
Realisation
of equity
reserve
£
Merger
reserve
£
Total
£
COMPANY
Balance at 30 June 2011
Issue of shares
Total comprehensive
income
Dividends paid
Share-based payment
– charge for the year
Balance at 30 June 2012
Issue of shares
Share issue costs
Total comprehensive loss
Share-based payment
– charge for the year
14,440,406
42,217
50,932,830
216,469
1,855,200
–
777,585
–
22,102,231
–
–
–
–
–
–
–
(7,013,252)
–
–
–
22,195,866
(7,416,176)
–
14,558
–
14,482,623
3,745,719
–
–
51,149,299
46,868,536
(3,502,273)
–
(5,158,052)
–
–
(1,596,822)
792,143
–
–
–
36,881,921
–
–
(20,657,547)
–
–
–
105,515
–
Balance at 30 June 2013
18,228,342
94,515,562
(6,754,874)
897,658
16,224,374
–
–
–
–
–
–
–
–
–
–
–
1,560,000
–
91,668,252
258,686
–
–
15,182,614
(7,416,176)
–
14,558
1,560,000
–
–
–
99,707,934
50,614,255
(3,502,273)
(22,254,369)
–
105,515
1,560,000 124,671,062
Pan African Resources PLC Integrated Annual Report 2013
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NOTES TO FINANCIAL STATEMENTS: ACCOUNTING
POLICIES AND FINANCIAL REPORTING
TERMS
for the year ended 30 June 2013
1 GENERAL INFORMATION
Pan African is a Company incorporated in England and Wales under the Companies Act 2006. The Company has a dual primary listing
on the AIM Market (‘AIM’) of the London Stock Exchange and JSE Limited (JSE). The nature of the Group’s operations and its principal
activities relate to gold and PGE mining and exploration activities. The financial statements are presented in Pounds Sterling. Foreign
operations are included in accordance with the policies set out below. The individual financial results of each Group Company are
maintained in their functional currencies, which are determined by reference to 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 is 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 the International Financial Reporting Standards (IFRS) adopted by
the European Union and South Africa.
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. 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.
Historic reverse acquisition
On 31 July 2007 the Company acquired 74% of Barberton Mines (Pty) Ltd (Barberton) in a share-for-share transaction. IFRS 3 ‘Business
Combinations’ defines the acquirer in a business combination as the entity that obtains control. Accordingly, the combination was
accounted for as a reverse acquisition.
Going concern
The financial position of the Group, its cash flows and liquidity position are described in these financial statements. In addition, note 29
to the financial statements includes the Group’s objectives, policies and processes for managing its capital; its financial risk management
objectives; details of its financial instruments and its exposure to credit, foreign currency, commodity price, interest rate and liquidity risk.
Management is not aware of any material uncertainties which may cast significant doubt on the Group’s ability to continue as a going
concern. Based on the current status of the Group’s finances, the directors have formed a judgement, at the time of approving the
Financial Statements, that there is a reasonable expectation that the Group has, or will have, adequate resources to enable the Group to
continue to meet its financial commitments for the foreseeable future. Accordingly, the directors continue to adopt the going concern
basis in preparing the financial statements. Further details are provided in the going concern section of the Directors’ Report.
New and revised International Financial Reporting Standards not yet adopted
The Group applies all applicable IFRS in preparation of the financial statements. Consequently, all IFRS statements adopted by the
European Union that were effective at 30 June 2013 and are relevant to its operations have been applied.
At the date of authorisation of these financial statements, the following standards and interpretations, which have been applied in these
financial statements, for the first time, were in issue and effective as at 30 June 2013:
New and revised International Financial Reporting Standards
Effective date
IAS 12
Deferred Tax: Recovery of Underlying Assets (amendment)
IAS 1
Presentation of Items of Other Comprehensive Income (amendment)
Annual periods beginning on or after
1 January 2012
Annual periods beginning on or after
1 July 2012
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:
118
Pan African Resources PLC Integrated Annual Report 2013
New and revised International Financial Reporting Standards
Effective date
IFRS 1
First-time Adoption of International Financial Reporting Standards
– Amendments for government loan with a below-market rate of
interest when transitioning to IFRSs
IFRS 1
First-time Adoption of International Financial Reporting Standards
– Amendments resulting from Annual Improvements 2009-2011 Cycle
(repeat application, borrowing costs)
Annual periods beginning on or after
1 January 2013
Annual periods beginning on or after
1 January 2013
IFRS 7
Financial Instruments: Disclosures
– Amendments enhancing disclosures about offsetting of financial assets
Annual periods beginning on or after
1 January 2013
and financial liabilities
IFRS 9
Financial Instruments
IFRS 10
Consolidated Financial Statements
IFRS 10
Consolidated Financial Statements
– Amendments to transitional guidance
IFRS 11
Joint Arrangements
IFRS 11
Joint Arrangements
– Amendments to transitional guidance
IFRS 12
Disclosure of Interests in Other Entities
IFRS 12
Disclosure of Interests in Other Entities
– Amendments to transitional guidance
IFRS 13
Fair Value Measurement
Annual periods beginning on or after
1 January 2013
Annual periods beginning on or after
1 January 2013
Annual periods beginning on or after
1 January 2013
Annual periods beginning on or after
1 January 2013
Annual periods beginning on or after
1 January 2013
Annual periods beginning on or after
1 January 2013
Annual periods beginning on or after
1 January 2013
Annual periods beginning on or after
1 January 2013
IAS 1
IAS 16
Presentation of Financial Statements
– Amendments resulting from Annual Improvements 2009 – 2011
Annual periods beginning on or after
1 January 2013
Cycle (comparative information)
Property, Plant and Equipment
– Amendments resulting from Annual Improvements 2009 – 2011
Annual periods beginning on or after
1 January 2013
Cycle (servicing equipment)
IAS 19
Employee Benefits
IAS 27
Separate Financial Statements
IAS 28
Investments in Associates
Annual periods beginning on or after
1 January 2013
Annual periods beginning on or after
1 January 2013
Annual periods beginning on or after
1 January 2013
IAS 32
IAS 34
Financial Instruments: Presentation
– Amendments resulting from Annual Improvements 2009 – 2011
Annual periods beginning on or after
1 January 2013
Cycle (tax effect of equity distributions
Interim Financial Reporting
– Amendments resulting from Annual Improvements 2009 – 2011
Annual periods beginning on or after
1 January 2013
Cycle (interim reporting of segment assets)
IFRIC 20
Stripping Costs in the Production Phase of a Surface Mine
Annual periods beginning on or after
1 January 2013
Pan African Resources PLC Integrated Annual Report 2013
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NOTES TO FINANCIAL STATEMENTS: ACCOUNTING
POLICIES AND FINANCIAL REPORTING
TERMS continued
for the year ended 30 June 2013
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:
New and revised International Financial Reporting Standards
Effective date
IFRS 10
IFRS 12
IAS 27
Consolidated Financial Statements
– Amendments for investments entities
Disclosure of Interests in Other Entities
– Amendments for investment entities
Separate Financial Statements
– Amendments for Investment Entities
IAS 32
Financial Instruments: Presentation
IAS 36
Impairment of Assets
IAS 39
Financial Instruments: Recognition and Measurement
IFRIC 21
Levies
Annual periods beginning on or after
1 January 2014
Annual periods beginning on or after
1 January 2014
Annual periods beginning on or after
1 January 2014
Annual periods beginning on or after
1 January 2014
Annual periods beginning on or after
1 January 2014
Annual periods beginning on or after
1 January 2014
Annual periods beginning on or after
1 January 2014
IFRS 7
Financial Instruments: Disclosures
– Amendments requiring disclosures about the initial application of IFRS 9
Annual periods beginning on or after
1 January 2015
IFRS 9
Financial Instruments
Annual periods beginning on or after
1 January 2015
The impact of the adoption of the above standards and interpretations still needs to be considered, but is not expected to have a material
impact on the financial results.
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. The results of the subsidiaries acquired or disposed of during the year
are included in the consolidated Statement of Comprehensive Income 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 a business combination 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. 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 acquisitions is 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 as a bargain purchase consideration. 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.
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Change in ownership interest
In terms of IAS 27, changes in a parent’s ownership interest in a subsidiary that do not result in a change of control are accounted for as
equity transactions.
Investment in associate
An associate is an entity over which the group and the company have significant influence and that is neither a subsidiary nor an interest
in a joint venture.
In the Company’s separate financial statements, an investment in associate is stated at fair value less impairment losses, if any. An
investment in associate is accounted for in the consolidated financial statements using the equity method of accounting. The investment
in associate in the consolidated balance sheet is initially recognised at fair value and adjusted thereafter for the post acquisition change in
the group’s share of net assets of the investment.
Property, plant and equipment
Mining assets
Mining assets, including mine development costs and mine plant facilities, are recorded at cost less provision for impairment and
accumulated depreciation.
Expenditure incurred after feasibility stage 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, is capitalised within capital under construction
until commercial levels of production are achieved. Capital under construction is not depreciated. All revenue generated during the
commissioning phase is capitalised back to the property, plant and equipment as per IAS16.
Mineral and surface rights
Mineral and surface rights are recorded at cost 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
Mining assets, mineral and surface rights mining assets, mine development costs, mineral and surface rights and plant mine facilities are
depreciated over the estimated life of mine (‘LOM’) to their residual values using the units-of-production method linked to the reserves
and resources on a straight line basis.
Other mining plant and equipment is depreciated on the straight-line basis over the shorter of the LOM 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 three to ten years.
Research, development, mineral exploration and evaluation costs
Research, development, mineral exploration and evaluation costs are expensed in the year in which they are incurred until they result in
projects that the Group:
(cid:118) Evaluate as being technically or commercially feasible,
(cid:118) has sufficient resources to complete development,
(cid:118) can demonstrate will generate future economic benefits.
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NOTES TO FINANCIAL STATEMENTS: ACCOUNTING
POLICIES AND FINANCIAL REPORTING
TERMS continued
for the year ended 30 June 2013
Once these criteria are met, all directly attributable development costs and ongoing mineral exploration and evaluation costs are
capitalised within other intangible assets. Capitalisation of pre-production expenditure ceases when the mining property is capable of
commercial production.
Capitalised pre-production expenditure is assessed for impairment in accordance with the Group accounting policy stated below:
Impairment (except for goodwill)
At each Statement of Financial Position 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, the recoverable amount of
the asset being the higher of fair value less costs to sell or value in use 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 (‘CGU’) to which the asset belongs. Impairment losses are immediately recognised as an expense.
A reversal of an impairment loss is recognised in the Statement of Comprehensive Income.
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 CGUs 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 CGU may be impaired. If the recoverable amount of the CGU is less than the carrying amount of the CGU,
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 CGU, pro rata on the basis of the carrying amount of each asset in the CGU. 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.
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 Statement of Financial Position date.
Deferred tax is accounted for using the 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 Statement of Financial Position date. The measurement
of deferred tax liabilities and assets 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 Statement
of Comprehensive Income, 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 Statement of Financial Position 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 assets to be recovered.
Revenues, expenses and assets are recognised net of the amount of associated VAT, unless VAT incurred is not recoverable from the
taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and
payables are stated inclusive of the amount of VAT receivable or payable. The net amount of VAT recoverable from, or payable to, the
taxation authority is included with other receivables or payables in the consolidated statement of financial position.
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Provisions
Provisions are recognised when the Group has a legal or constructive obligation resulting from past events, 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 Statement
of Financial Position date, taking into account the risks and uncertainties surrounding the obligation.
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.
Lease assets
The Group leases certain property, plant and equipment. A lease is classified as a finance lease if it transfers substantially all the risks and
rewards incidental to ownership to the Group. Other leases are classified as operating leases.
Finance lease assets are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present
value of the minimum lease payments.
Operating leases
Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts
recognised as an expense and the contractual payments are recognised as an operating lease liability.
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 other currencies are translated at the rates
ruling at the Statement of Financial Position date. Profits and losses arising on exchange are recorded in the Statement of Comprehensive
Income. In order to hedge its exposure to foreign exchange risks, the Group may enter into forward contracts. On consolidation, the
assets and liabilities of the Group’s foreign operations are translated into Pounds Sterling at exchange rates ruling at the Statement of
Financial Position 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 also accounted
for as equity.
Inventories
Inventories include the gold bullion on hand, 6PGE concentrate, gold or 6PGE in process and consumable stores.
Bullion on hand and 6PGE concentrate 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.
Gold or 6PGE in process inventories represent materials that are currently in the process of being converted to a saleable gold or 6PGE
product. The gold or 6PGE in process inventories are valued only if they are reliably measurable and are valued at the average cost of the
material fed to process plus the in-process conversion costs.
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.
Retirement and pension 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 and are charged as an expense as they fall due.
Post-retirement benefits other than pension
Historically Barberton Mines and Evander Mines provided retirement benefits by way of medical-aid scheme contributions for certain
employees. The practice has been discontinued for some years. The net present value of estimated future costs of Company contributions
Pan African Resources PLC Integrated Annual Report 2013
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NOTES TO FINANCIAL STATEMENTS: ACCOUNTING
POLICIES AND FINANCIAL REPORTING
TERMS continued
for the year ended 30 June 2013
towards medical aid schemes for these retirees is recorded as a provision on the Group Statement of Financial Position. The provision is
reviewed annually with movements in the provision recorded in the Statement of Comprehensive Income.
Equity participation plan
Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date. 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 Statement of Financial Position 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 the Statement of Comprehensive Income, such that the cumulative expense reflects the revised estimate, with
corresponding adjustments to the equity-settled employee benefits reserve.
Cash participation plan
Cash-settled share-based payments to employees are measured at the fair value of the cash instruments at the grant date. The fair
value determined at the grant date of the cash-settled share-based payments is expensed on a straight-line basis over the vesting
period, based on the Company’s estimate of cash instruments that will eventually vest. At each Statement of Financial Position date, the
Company revises its estimate of the number of cash instruments expected to vest. The impact of the revision of the original estimates,
if any, is recognised in the Statement of Comprehensive Income, such that the cumulative expense reflects the revised estimate, with
corresponding adjustments to the cash-settled employee benefits liability.
Provision for environmental rehabilitation costs
Long-term environmental obligations are based on Barberton Mines, Evander Mines and Phoenix Platinum environmental plans, in
compliance with current environmental and regulatory requirements. The provision is based on the net present value of the estimated cost
of restoring the environmental disturbance that has occurred up to the Statement of Financial Position 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.
Contributions to rehabilitation trust
Contributions are made to a dedicated environmental rehabilitation trust to fund the estimated cost of rehabilitation during and at the
end of the life of the Group’s mines. The trust’s assets are recognised separately on the balance sheet as non-current assets at fair value.
Interest earned on funds invested in the environmental rehabilitation trust is accrued on a time : proportion basis and credited to the
provision for environmental rehabilitation costs.
Provision for decommissioning costs
The Group provides for decommissioning costs, other than rehabilitation costs, if any, 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
Sales 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 that:
(cid:118) It is probable that delivery will be made,
(cid:118) the item is on hand, identified and ready for delivery to the buyer at the time the sale is recognised,
(cid:118) the buyer specifically acknowledges the deferred delivery instructions,
(cid:118) the usual payment terms apply.
Loans and receivables
Trade receivables, loans and other receivables that have fixed or determinable payments and 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
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impairment if necessary. Interest income is recognised by applying the effective interest rate, except for short-term receivables, when the
recognition of interest would be immaterial.
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
Statement of Financial Position 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 financial asset 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 when it transfers
the financial asset and substantially all the risks and rewards of ownerships of the asset to another entity. If the Group neither transfers
nor retains substantially all the risks and rewards of ownership 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 at 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:
(cid:118) It has been incurred principally for the purpose of repurchasing in the near future;
(cid:118) 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;
(cid:118) 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:
(cid:118) Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
(cid:118) 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 documented risk management or investment strategy, and
information about the Grouping is provided internally on that basis;
(cid:118) 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. The Group has no financial liabilities classified as FVTPL.
Other financial liabilities
Other financial liabilities are initially valued at fair value and subsequently measured at amortised cost using the effective interest method,
with interest recognised on an effective yield basis.
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NOTES TO FINANCIAL STATEMENTS: ACCOUNTING
POLICIES AND FINANCIAL REPORTING
TERMS continued
for the year ended 30 June 2013
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 only when the Group’s obligations are discharged, cancelled or they expire.
Derivative financial instruments
In the ordinary course of its operations, the Group may enter 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 Statement of Financial Position date. The resulting gain or loss is recognised in Statement of Comprehensive Income
immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in
Statement of Comprehensive Income 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 may designate 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 effective in offsetting changes in fair values or cash
flows of the hedged item.
Fair value hedge
Changes in the fair value of any 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 Statement of
Comprehensive Income 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.
Cash flow hedge
The effective portion of changes in the fair value of any 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 Statement of Comprehensive Income. 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 Statement of Comprehensive Income 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.
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Non-current assets held-for-sale
A non-current asset is designated as held-for-sale when its carrying amount will be recovered principally through a sale transaction rather
than through continuing use and the asset is available for immediate sale in its present condition and the sale is highly probable. A sale is
considered highly probable if management is committed to a plan to sell the non-current asset, an active divestiture programme has been
initiated, the non-current assets is marketed at a price reasonable to its fair value and the disposal is expected to be completed within
one year from classification. Non-current assets held-for-sale are stated at lower of carrying value and fair value less cost to sell and are
reviewed for impairment at each subsequent reporting date.
At the time of classification as held for sale, these assets are reviewed for impairment. The impairment charged to the income statement
is the excess of the carrying value of the non-current asset and its expected net selling price (fair value less costs to sell). At each
subsequent reporting date, the carrying values are reassessed for possible impairment. A reversal of impairment is recognised for any
subsequent increase in net selling price but not in excess of the cumulative impairment loss already recognised. No depreciation is
provided on non-current assets from the date they are classified as held-for-sale.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The
chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been
identified as the Pan African Resources Executive Committee. Management has determined the operating segments of the Group based
on the reports reviewed by the Executive Committee that are used to make strategic decisions. The Executive Committee considers the
business principally according to the nature of the products and service provided, with the segment representing a strategic business unit.
The reportable operating segments derive their revenue primarily from mining, extraction, production and selling of gold and 6PGEs.
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.
Critical accounting estimates and judgements made by management
The following judgements, that have the most significant effect on the amounts recognised in the financial statements, have been made
by management in the process of applying the Group’s accounting policies:
(cid:118) Estimates made in determining the present obligation of environmental provisions including decommissioning and rehabilitation (this
includes the scope and timing of work required, the related costs and the discount rate used).
(cid:118) Estimates made in determining the recoverable amount of assets, this includes the estimation of cash flows and the discount rates
used (including future production levels, commodity price and costs).
(cid:118) 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 from time to time and take into consideration the actual current
cost of extraction, as well as certain forward projections. These projections are reviewed by the board,
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.
(cid:118) Estimates of the recoverability of goodwill and intangible assets.
(cid:118) Estimates involved in feasibility studies related to exploration and growth projects and hence the recoverability of any related capital
expenditure.
(cid:118) Estimates made in determining the fair values of assets and liabilities at acquisition in terms of IFRS 3 ‘Business Combinations’,
together with any resulting goodwill or gains on bargain purchase considerations.
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Pan African Resources PLC Integrated Annual Report 2013
127
NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
4 REVENUE
Gold sales
Platinum sales
Finance income
5 COST OF PRODUCTION
Gold cost of production
Salaries and wages
Mining
Processing
Engineering and technical services
Electricity
Security
Administration and other
Platinum cost of production
Salaries and wages
Mining
Other plant operation costs
Electricity
Additional refining costs
6 SEGMENTAL ANALYSIS
Group
Company
30 June 2013
£
30 June 2012
£
30 June 2013
£
30 June 2012
£
129,277,438
4,257,512
1,454,659
101,068,596
–
652,267
–
–
1,079,235
134,989,609
101,720,863
1,079,235
–
–
551,154
551,154
(33,352,148)
(10,020,621)
(4,460,161)
(5,165,876)
(8,993,056)
(3,476,653)
(2,177,604)
(22,477,760)
(6,026,400)
(4,081,816)
(4,070,486)
(5,114,015)
(2,393,207)
(1,959,127)
(67,646,119)
(46,122,811)
(973,776)
(655,780)
(1,544,243)
(219,661)
(141,586)
(3,535,046)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
A segment is a distinguishable component of the Group that is engaged in providing products or services in a particular business sector
or segment, which is subject to risk and rewards that are different to those of other segments. The Group’s business activities were
conducted through five business segments:
(cid:118) Barberton Mines (Pty) Limited (Barberton Mines), located in Barberton South Africa.
(cid:118) Evander Gold Mining (Pty) Limited and Evander Gold Mines Limited (collectively known as Evander Mines), located in Evander
South Africa.
(cid:118) Phoenix Platinum Mining (Pty) Limited (Phoenix Platinum).
(cid:118) corporate and growth projects, which includes Auroch investments.
(cid:118) Pan African Resources Funding Company (Pty) Limited (Funding Company).
The Chief Executive Officer reviews the operations in accordance with the disclosures presented on the next page.
128
Pan African Resources PLC Integrated Annual Report 2013
30 June 2013
30 June 2012
Barberton
Mines
Evander
Mines
Phoenix
Platinum
Corporate
and
growth
projects
Funding
com-
pany
****
£
£
£
£
£
Barberton
Mines
Phoenix
Platinum*
Corporate
and
growth
projects
£
£
£
Group
£
Group
£
6
SEGMENTAL
ANALYSIS
continued
Revenue
Gold sales***
Platinum sales
Realisation costs
97,564,881 31,712,557
–
(47,468)
–
(179,270)
–
4,257,512
–
On-mine revenue
Cost of production
Depreciation
4,257,512
97,385,611 31,665,089
(47,739,505) (19,906,614) (3,535,046)
(941,061)
(3,000,640) (2,056,566)
–
–
–
–
–
–
– 129,277,438 101,068,596
–
–
–
(163,217)
4,257,512
(226,738)
– 133,308,212 100,905,379
–
(46,122,811)
–
(3,259,010)
(71,181,165)
(5,998,267)
–
–
–
–
–
–
–
–
–
–
–
–
101,068,596
–
(163,217)
100,905,379
(46,122,811)
(3,259,010)
Mining profit
Other expenses **
Bargain purchase
Loss from associate
Loss on disposal of asset
held for sale
Impairment costs
Royalty costs
Net income/(loss) before
finance income and finance
costs
Finance income
Finance costs
Profit/(loss) before
taxation
Taxation
46,645,466
(2,188,879)
9,701,909
(8,783)
– 24,114,255
–
–
(218,595)
–
(221,604) (3,231,154)
–
(152,312)
–
–
–
(1,806)
–
–
56,128,780
(5,652,226)
24,114,255
(152,312)
51,523,558
(1,484,792)
–
–
–
–
(59,957) (4,371,478)
–
–
–
–
51,523,558
(5,916,227)
–
–
–
–
(2,450,476)
–
–
(748,146)
–
(586,138)
(2,495,480) (13,648,124)
–
–
–
–
–
(586,138)
(16,143,604)
(3,198,622)
–
(48,238)
(3,848,450)
–
–
–
–
–
–
–
(48,238)
(3,848,450)
42,006,111 33,059,235
283,229
(296,888)
77,463
(107,810)
(2,935,679) (17,617,728)
1,093,967
–
–
–
(1,806)
–
(852,998)
54,510,133
1,454,659
(1,257,696)
46,142,078
96,202
(136,765)
(59,957) (4,371,478)
551,154
–
4,911
–
41,710,643
652,267
(136,765)
41,975,764 33,045,576
(962,917)
(11,408,506)
(2,935,679) (16,523,761)
286,257
(24,863)
(854,804)
54,707,096
(23,034) (12,133,063)
46,101,515
(13,058,128)
(55,046) (3,820,324)
–
73,617
42,226,145
(12,984,511)
Profit/(loss) after taxation
30,567,258 32,082,659
(2,960,542) (16,237,504)
(877,838)
42,574,033
33,043,387
18,571
(3,820,324)
29,241,634
Segmental assets (total
assets excluding goodwill)
Segmental liabilities
Goodwill
Net assets (excluding
goodwill)
Capital expenditure
63,530,231 172,971,365
65,569,101
25,018,515
–
21,000,714
13,897,511
320,175
–
4,867,060
11,178
2,151,222 11,010,809
–
–
255,277,345
104,069,822
21,000,714
48,864,455 19,617,673 38,206,637
1,235,655
275,378
23,552,791
–
–
21,000,714
106,688,765
25,063,824
21,000,714
38,511,716 107,402,264
4,506,501
22,886,611
13,577,336
160,879
2,715,838 (10,999,631)
–
12,542
151,207,523
27,566,533
25,311,664 19,342,295 36,970,982
13 201
10,739,237 6,672,468
81,624,941
17,424,906
All assets are held within South Africa. The segmental assets and liabilities above, exclude inter-company balances.
*
Costs directly attributable to Phoenix Platinum, along with attributable overheads, were capitalised to capital under construction in the prior years. On 1 July 2012
Phoenix Platinum was fully commissioned for accounting purposes, therefore all costs and revenue incurred and received, respectively, were allocated to Statement of
Comprehensive Income in the current year.
** Other expenses exclude inter-company management fees and dividends.
*** All gold sales were made in the Republic of South Africa and the majority of revenue (more than 90%) was generated from a single customer, Rand Refinery.
**** The Funding Company was established during the 2013 financial year with effect from 1 March 2013.
Pan African Resources PLC Integrated Annual Report 2013
129
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NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
7 OPERATING LEASES
At the financial year end, the Group and Company 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:
Not later than one year
Later than one year and no later than five years
Minimum lease payments under operating leases
recognised as an expense in the year
Leases are negotiated for an average term of three to
five years.
8 OTHER (EXPENSES)/INCOME
Dividends received – subsidiaries
Management fees
Foreign exchange gain/(loss)
Operating leases
Non-mining depreciation
Non-executive directors’ fees
Executive directors’ fees
Equity-settled share option expense (refer to note 33)
Cash-settled share option expense (refer to note 27)
Auditors fees
Salaries head office
Investor and public relations
New business
Evander Mines deal costs
Legal fees
Community projects
Profits arising from realised financial instruments
(refer to note 29)
Profit on disposal of assets
Other net income/(expense)
Group
Company
30 June 2013
£
30 June 2012
£
30 June 2013
£
30 June 2012
£
109,462
96,609
206,071
125,066
211,447
336,513
92,191
73,210
165,401
99,221
192,256
291,477
124,554
135,073
83,222
87,684
–
–
79,861
(124,554)
(41,197)
(223,376)
(1,068,060)
(127,053)
(209,465)
(198,979)
(2,310,305)
(249,245)
(230,304)
(1,348,819)
(59,025)
(1,462,907)
1,589,595
11,768
319,839
–
–
850,775
(135,073)
(57,617)
(205,120)
(363,638)
(43,452)
(775,049)
(135,515)
(1,301,623)
(229,683)
(1,629,808)
–
(116,943)
(1,183,416)
–
–
(590,065)
–
1,378,483
(44,061)
(83,222)
(40,154)
(223,376)
(1,068,060)
(105,515)
(22,903)
(112,073)
(2,310,305)
(249,245)
(230,304)
(1,348,819)
(58,370)
(310)
1,589,595
–
(300,709)
24,500,396
1,486,277
850,775
(87,684)
(46,985)
(205,120)
(363,638)
(14,558)
(425,430)
(79,397)
(1,301,623)
(229,683)
(1,629,808)
–
(76,313)
(9,378)
–
–
(723,119)
(5,652,226)
(5,916,227)
(3,229,348)
21,644,712
9
FINANCE INCOME/(COSTS)
Interest received – bank
Interest paid – bank
1,454,659
(1,257,696)
652,267
(136,765)
1,079,235
–
Net finance income
196,963
515,502
1,079,235
551,154
–
551,154
130
Pan African Resources PLC Integrated Annual Report 2013
NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
10 PROFIT BEFORE TAXATION
Profit before taxation has been arrived at after charging:
Management fee expense/(income)
– Shanduka Gold Pty Ltd (Shanduka)
– Barberton Mines
– Phoenix Platinum
Equity-settled share option expense (refer to note 33)
Cash-settled share options expense (refer to note 27)
Mining depreciation
Impairment costs
Staff costs
Royalty costs
New business
Evander Mines deal costs
Operating leases
Impairment costs
Property, plant and equipment and mineral rights
(refer to note 16)
Phoenix Platinum inter-company investments
(refer to note 34)
Investment in Auroch (refer to note 19)
11 AUDITORS’ REMUNERATION
Fees payable to the Company’s auditors for the audit
of he Company’s annual financial statements
Audit of the consolidated financial statements
Audit of the Company’s subsidiaries pursuant to
legislation
Under provision of audit fee in the prior year
Group
Company
30 June 2013
£
30 June 2012
£
30 June 2013
£
30 June 2012
£
76,203
–
–
127,053
209,465
5,998,267
16,143,604
36,636,229
3,198,622
230,304
1,348,819
124,554
77,887
–
–
43,452
775,049
3,316,627
48,238
23,779,383
3,848,450
–
–
135,073
–
(1,161,720)
(216,763)
105,515
22,903
40,154
18,058,860
2,310,305
–
230,304
1,348,819
83,222
–
(1,241,823)
(244,453)
14,558
425,430
46,985
–
1,301,623
–
–
–
87,684
6,662,225
48,238
–
–
9,481,379
–
–
8,327,781
9,731,079
16,143,604
48,238
18,058,860
9,000
68,973
83,611
37,395
12,077
58,824
56,118
8,496
9,000
68,973
–
34,100
–
–
–
–
12,077
58,824
–
8,496
79,397
–
–
6,177
6,177
Total audit fees
198,979
135,515
112,073
Other services rendered by the auditors
Tax advisory services
Corporate finance services
Other
Total non-audit fees
14,000
271,491
–
285,491
–
–
6,177
6,177
14,000
271,491
–
285,491
All audit fees were paid within South Africa with the exception of £38,000 (2012: £32,000) which was paid in the United Kingdom.
The majority of the £285,491 non-audit fee was paid to Deloitte in the United Kingdom and relates to corporate finance reviews*
performed during the acquisition of Evander Mines, of which £266,764 has been deducted from share premium, as part of share
issue costs.
*
Services performed were in respect of UK regulatory requirements in relation to the fund raising for the Evander acquisition and do not affect the external auditor’s
independence.
Pan African Resources PLC Integrated Annual Report 2013
131
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NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
12 STAFF COSTS
The average number of employees were:
Corporate
Evander Mines
Phoenix Platinum
Barberton Mines
Their aggregate remuneration comprised:
Salary and wages
Other retirement costs (refer to note 30)
13 TAXATION
INCOME TAX EXPENSE
South African normal taxation
– current year
– prior year
Deferred taxation
– current year
Total taxation charge
Profit before taxation
Taxation at the domestic taxation rate of 28%
(Exempt income)/Non-deductible expenses
Taxation rate differential
Tax effect of utilisation of tax losses
Group
Company
30 June 2013
£
30 June 2012
£
30 June 2013
£
30 June 2012
£
14
2,328
3
1,815
4,160
12
–
3
1,820
1,835
14
–
–
–
14
12
–
–
–
12
34,179,081
2,457,148
22,302,552
1,476,831
2,225,242
85,063
1,253,599
48,024
36,636,229
23,779,383
2,310,305
1,301,623
6,605,516
48,535
11,134,846
–
–
–
5,479,012
1,849,665
(289,876)
–
–
–
12,133,063
54,707,096
15,317,987
(2,211,489)
(973,435)
–
12,984,511
42,226,145
11,823,321
12,167
1,149,023
–
(289,876)
(20,947,423)
(5,865,278)
5,056,481
–
518,921
–
22,195,866
6,214,842
(6,169,150)
–
(45,692)
Taxation expense for the year
12,133,063
12,984,511
(289,876)
Effective taxation rates:
Statutory rate
Taxation rate differential
Non-deductible expenses/(exempt income)
Tax effect of utilisation of tax losses
Effective taxation rate
%
28,00
(1,78)
(4,04)
–
22,18
%
28,00
2,72
0,03
–
30,75
%
28,00
–
(24,14)
(2,48)
1,38
–
%
28,00
–
(27,79)
(0,21)
–
There are no significant unrecognised temporary differences associated with undistributed profits of overseas subsidiaries. South African
income 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
these deductions 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. At year-end the Group has £8,875,902 (2012: £11,999,313) of unredeemed
capital expenditure carried forward and deductible against future profits, held within Phoenix Platinum. No deferred tax asset has been
recognised in relation to this, as there is insufficient evidence of future taxable profits.
.
132
Pan African Resources PLC Integrated Annual Report 2013
14 EARNINGS PER SHARE
Basic and diluted earnings per share
Basic and diluted earnings per share are based on the Group’s profit for the year attributable to owners of the parent, divided by the
weighted average number of shares in issue during the year.
30 June 2013
Weighted
average
number of
shares
Net profit
£
Earnings
per share
(Pence)
Net profit
£
30 June 2012
Weighted
average
number
of shares
From continuing operations:
Basic EPS
Share options
42,574,033 1,619,756,902
6,176,989
–
2.63
(0.01)
29,241,634
–
1,445,202,485
8,085,456
Diluted EPS
42,574,033 1,625,933,891
2.62
29,241,634
1,453,287,941
Earnings
per share
(Pence)
2.02
(0.01)
2.01
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:
Earnings as reported
Adjustments:
Impairment costs
Bargain purchase gain
Loss on disposal of asset held
for sale
16,143,604
(24,114,255)
586,138
–
–
–
30 June 2013
Weighted
average
number
of shares
Net profit
£
Earnings
per share
(Pence)
Net profit
£
30 June 2012
Weighted
average
number
of shares
42,574,033 1,619,756,902
2.63
29,241,634
1,445,202,485
Earnings
per share
(Pence)
2.02
0.01
0.00
0.00
48,238
–
17,922
–
–
–
0.99
(1.49)
0.04
2.17
(0.01)
Headline earnings per share*
Share options
35,189,520 1,619,756,902
6,176,989
–
29,307,794
–
1,445,202,485
8,085,456
2.03
(0.01)
Diluted headline earnings per
share
35,189,520 1,625,933,891
2.16
29,307,794
1,453,287,941
2.02
* Headline earnings per share is required to be disclosed in terms of the Listings Requirements of the JSE Limited.
Net asset value per share
Tangible net asset value per share*
Group
30 June 2013
(Pence)
Group
30 June 2012
(Pence)
9.45
3.77
7.09
4.56
* Total assets less goodwill, non-current assets held for sale ,non-current liabilities, current liabilities and mineral rights and mining property.
Pan African Resources PLC Integrated Annual Report 2013
133
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A
N
Y
O
V
E
R
V
I
E
W
L
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A
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E
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S
H
P
I
S
T
A
T
E
M
E
N
T
S
O
U
R
B
U
S
I
N
E
S
S
P
H
I
L
O
S
O
P
H
Y
I
O
P
E
R
A
T
O
N
A
L
O
V
E
R
V
I
E
W
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
A
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T
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M
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S
NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
15 DIVIDENDS
The board of directors has proposed a dividend of approximately ZAR240,000,000 million (£15,228,4261) for the 2013 year, equating
to ZAR0.1314 per share (0.83p per share1), resulting in a dividend cover of 2.3 times. Because of the anticipated cash flow associated
with the acquisition of Evander Mines, the board did not propose a dividend for the year ended 30 June 2012.
Note 1: The GBP proposed dividend was calculated based on 13 September 2013 closing exchange rate of ZAR15.76:1. The UK shareholders are to note that a revised
exchange rate will be communicated prior to final approval at the AGM. Therefore the proposed dividend is approximately 0.83p.
16 PROPERTY, PLANT AND EQUIPMENT AND MINERAL RIGHTS
Mineral
rights and
mining
property
£
Land*
£
Building
and infra-
structure
£
Plant and
machinery
£
Capital
under
construction
£
Shafts and
exploration
£
Other
£
Total
£
Group
COST
Balance at 30 June 2011
Transfer from other intangible
assets***
Additions
Disposal
Impairment**
Foreign currency translation reserve
Re-classified as non-current assets
held for sale
Balance at 30 June 2012
Arising from the acquisition of
Evander Mines (refer to note 38)
Reclassification of software costs to
other intangible assets
Transfer from other intangible
assets*****
Additions
Disposal
Foreign currency translation reserve
31,990
21,827,105
1,993,070
17,601,217
6,148,219
32,227,319
241,977
80,070,897
–
170,041
–
–
(13,332)
120,885
814,845
–
–
(4,208,205)
–
263,455
–
–
(317,765)
–
2,544,706
(18,876)
(48,238)
(2,813,744)
–
9,938,461
–
–
(1,433,315)
–
3,603,515
–
–
(5,105,568)
–
89,883
–
–
120,885
17,424,906
(18,876)
(48,238)
(41,454) (13,933,383)
–
–
–
(742,089)
–
–
–
(742,089)
188,699
18,554,630
1,938,760
16,522,976
14,653,365
30,725,266
290,406
82,874,102
2,472,770
83,465,070
16,223,711
41,574,902
17,577,384
–
–
–
(715,792)
–
–
–
– 161,313,837
–
(715,792)
–
–
–
–
765,513
–
(296,288) (12,452,533) (2,101,467)
–
–
–
10,739,524 (10,739,524)
19,014,400
4,322,776
–
(5,780)
(4,581,738)
(7,896,994)
–
3,451,302
–
(4,560,735)
–
12,542
–
–
27,566,533
(5,780)
(93,620) (31,983,375)
Balance at 30 June 2013
2,365,181
89,567,167
16,826,517
64,541,612
35,923,887
29,615,833
209,328 239,049,525
ACCUMULATED DEPRECIATION
Mineral
rights and
mining
property
£
Building
and infra-
structure
£
Plant and
machinery
£
Capital
under
construction
£
Shafts and
exploration
£
Other
£
Total
£
(3,221,174)
(264,219)
–
(926,393)
(57,985)
–
(6,615,060)
(1,674,409)
954
– (10,209,706)
(1,262,397)
–
–
–
(46,549) (21,018,882)
(3,316,627)
(57,617)
954
–
–
505,546
–
144,498
446,047
1,142,580
–
–
–
1,623,460
–
9,977
446,047
3,426,061
Land*
£
–
–
–
–
–
–
(2,979,847)
(839,880)
(6,699,888)
–
(9,848,643)
(94,189) (20,462,447)
–
–
–
–
–
(1,004,630)
(4,166,745)
494,536
–
(441,816)
–
151,754
174,105
(3,147,399)
(2,495,480)
1,148,749
–
(18,761)
–
1,462
–
(1,249,508)
–
1,473,432
–
(41,197)
–
24,097
174,105
(5,903,311)
(6,662,225)
3,294,030
–
(7,656,686)
(1,129,942) (11,019,913)
(17,299)
(9,624,719)
(111,289) (29,559,848)
188,699
15,574,783
1,098,880
9,823,088
14,653,365
20,876,623
196,217
62,411,655
Balance at 30 June 2011
Charge for the year****
Disposal
Re-classified as non-current assets
held for sale
Foreign currency translation reserve
Balance at 30 June 2012
Reclassification of software costs to
other intangible assets
Charge for the year****
Impairment******
Foreign currency translation reserve
Balance at 30 June 2013
CARRYING AMOUNT
At 30 June 2012
At 30 June 2013
2,365,181
81,910,481
15,696,575
53,521,699
35,906,588
19,991,114
98,039 209,489,677
134
Pan African Resources PLC Integrated Annual Report 2013
16 PROPERTY, PLANT AND EQUIPMENT AND MINERAL RIGHTS continued
Mineral
rights and
mining
property
£
Land*
£
Building
and infra-
structure
£
Plant and
machinery
£
Capital
under
construction
£
Shafts and
exploration
£
Other
£
Total
£
COMPANY
COST
Balance at 30 June 2011
Additions
Foreign currency translation reserve
Balance at 30 June 2012
Additions
Foreign currency translation reserve
Balance at 30 June 2013
ACCUMULATED DEPRECIATION
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
236,206
13,202
(39,114)
210,294
12,542
(28,331)
236,206
13,202
(39,114)
210,294
12,542
(28,331)
194,505
194,505
Mineral
rights and
mining
property
£
Land*
£
Building
and infra-
structure
£
Plant and
machinery
£
Capital
under
construction
£
Shafts and
exploration
£
Balance at 30 June 2011
Charge for the year
Foreign currency translation reserve
Balance at 30 June 2012
Charge for the year
Foreign currency translation reserve
Balance at 30 June 2013
CARRYING AMOUNT
At 30 June 2012
At 30 June 2013
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Other
£
(46,549)
(46,985)
9,449
(84,085)
(40,154)
14,875
Total
£
(46,549)
(46,985)
9,449
(84,085)
(40,154)
14,875
(109,364)
(109,364)
126,209
126,209
85,141
85,141
*
**
***
****
Details of land is maintained in a register held at the offices of Barberton Mines and Evander Mines, which may be inspected by a member or their duly
authorised agents. The Group reviews the residual values used for purposes of depreciation calculations annually.
The final impairment of the Segalla Plant held at Barberton Mines, refer to note 35.
Reclassification of Phoenix Platinum exploration expenditures from exploration and evaluation assets to property, plant and equipment as per IFRS 6 (“Exploration for
and evaluation of mineral resources”) due to technical feasibility and commercial viability of the project being demonstrated (refer to note 17).
The direct mining depreciation, excluding other non-mining depreciation, totals £5,998,267 (this includes a depreciation charge of £136,153 in note 17) (2012:
£3,259,010) as disclosed in the statement of comprehensive income. Other non-mining depreciation of £41,197 (2011: £57,617), is disclosed in other (expenses)/
income in note 8.
Capitalisation of Phoenix Platinum on 1 July 2012 due to reaching steady state production.
*****
****** During the year, as a result of falling commodity prices and operational problems arising since first production, the Group recorded an impairment charge of
£6,662,225 in respect of Phoenix Platinum. The impairment was based on its estimated fair value (less cost to sell), using a post-tax real discount rate of 16.25%
applied to estimated post-tax cash flows. The assumed long-term PGM 6E basket price was USD1,040/oz. It has been allocated between Phoenix Platinum
(£2,495,480) and Corporate and Growth Projects (£4,166,745) segments.
Mineral rights and mining property are depreciated over the life of mine (Barberton Mines, 17 years (2012: 17 years), Evander Mines,
14 years (2012: nil) and Phoenix Platinum, 20 years (2012: 17 years)).
Pan African Resources PLC Integrated Annual Report 2013
135
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NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
17 OTHER INTANGIBLE ASSETS
SOFTWARE COSTS
Balance at 30 June 2012/11
Reclassification of software costs from property plant and
equipment and mineral rights
Current year depreciation
Foreign currency translation reserve
Balance at 30 June 2013/12
EXPLORATION AND EVALUATION ASSETS
Balance at 30 June 2012/11
Exploration expenditure
Transfer to property, plant and equipment and mineral rights
Foreign currency translation reserve
Transfer to assets held for sale*
Balance at 30 June 2013/12
Group
30 June 2013
£
Group
30 June 2012
£
Notes
16
16
35
–
541,687
(136,153)
(65,050)
340,484
–
–
–
–
–
–
–
–
–
–
–
14,214,426
505,273
(120,885)
(1,711,403)
(12,887,411)
–
*
The exploration and evaluation assets transferred to non-current assets held for sale relate to the Manica project in
Mozambique.
18 GOODWILL
Goodwill acquired in a business combination is allocated at
acquisition to the cash-generating units (“CGU’s”) that are
expected to benefit from that business combination. All the
Group’s goodwill has been allocated to Barberton Mines CGU.
Group
Company
30 June 2013
£
30 June 2012
£
30 June 2013
£
30 June 2012
£
Opening and closing balance
21,000,714
21,000,714
–
–
The Group tests the Barberton Mines goodwill carrying amount annually for impairment, or more frequently if there are indications that
goodwill may be impaired. The goodwill carrying amount is not considered to be impaired and the review was performed in accordance
with the Group’s accounting policies.
The recoverable amounts of the CGU’s 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 year.
Management estimates the discount rate using post-tax rate of 11.00% (2012:11.88%) for Barberton Mines, which reflect the current
market assessments of the time value of money and the risks specific to the CGU to the extent not already reflected in the cash flows
being discounted, an average gold price of ZAR400,000/kg ($1,261/oz) over the life of projects. The life of project was estimated at
17 years for Barberton Mines. Changes in selling prices and direct costs are based on past practices and expectations of future changes in
the market.
136
Pan African Resources PLC Integrated Annual Report 2013
19 INVESTMENTS AND INVESTMENTS IN ASSOCIATE
At 30 June 2013 the Company and Group held the following shares in subsidiary and associate undertakings:
Name of undertaking
Barberton Mines
Phoenix Platinum
Auroch
Pan African Resources
Funding Company
Proprietary Limited*
Emerald Panther **
Other Investments
Country of
incorporation
Principal
activity
South Africa Mining
South Africa Mining
Australia
Exploration
South Africa
South Africa
Finance
Holding
Company
Opening balance
Issue of share in Auroch Minerals NL (Auroch)
Loss in associate
Impairment of Investment in Auroch***
Impairment in Phoenix Platinum
Issue of shares in Emerald Panther Investments 91 (Pty) Ltd
(Emerald Panther)/Evander Mines
Issue of shares in Funding Company
Other investments
Group
Company
Proportion
of capital
effectively
held by
Company
Carrying
amount
30 June 2013
Carrying
amount
30 June 2012
Carrying
amount
30 June 2013
Carrying
amount
30 June 2012
100%
100%
42%
100%
100%
–
–
1,182,606
–
–
16,465
–
–
–
–
–
–
45,770,663
4,209,696
1,182,606
45,770,663
4,330,581
–
263
72,026,632
–
–
–
–
1,199,071
123,189,860
50,101,244
Group
Company
30 June
2013
£
30 June
2012
£
30 June
2013
£
30 June
2012
£
–
4,501,947
(152,312)
(3,167,029)
–
–
–
16,465
–
–
–
–
–
–
–
–
50,101,244
4,501,947
(152,312)
(3,167,029)
(120,885)
50,101,244
–
–
–
–
72,026,632
263
–
–
–
–
Closing balance
1,199,071
– 123,189,860
50,101,244
*
**
Funding Company was established for the purpose of providing funding for the Group’s activities.
Emerald Panther is a company acquired to facilitate the acquisition of Evander Mines from Harmony, and therefore holds the investment in Evander Mines (refer to
note 38). Emerald Panther holds 100% of Evander Gold Mines Ltd and Evander Gold Mining (Pty) Ltd, which are both incorporated in South Africa, and operate in mining.
*** During the year the Group disposed of its investment in the Manica exploration project to Auroch. The consideration (refer to note 35) partly comprised a 42% shareholding
in Auroch which was recorded at fair value at the date of acquisition, and has been subsequently treated as an investment in associate. The transaction triggered a loss on
disposal of £586,138 which took into consideration the Group’s best estimate of the fair value of the related deferred consideration of £7,024,203 (refer to note 35),
recorded as a non-current financial asset. At year-end the Group re-measured the recoverability of both its 42% shareholding and the deferred consideration and, due to
a significant fall in the gold price and related challenges in the mining environment, recorded a £3,167,209 impairment against the carrying value of its direct shareholding
(based on Auroch’s year-end share price, being the best estimate of its fair value) and also fully impaired the £7,024,203 financial asset. The resulting total impairment
charge (after exchange rate movements), was £9,481,379. Further details of the financial asset are included in note 29.
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Pan African Resources PLC Integrated Annual Report 2013
137
NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
20 REHABILITATION TRUST FUND
Funds held in trust fund (refer to note 26)
Opening balance as at 30 June 2012
Interest earned on the rehabilitation fund
Foreign currency translation reserve
Closing balance as at 30 June 2012
Arising from the acquisition of Evander Mines (refer to note 38)
Interest earned on the rehabilitation fund
Foreign currency translation reserve
Barberton Mines
£
Evander Mines
£
Total
£
3,013,385
115,970
(466,421)
2,662,934
–
123,839
(381,611)
–
–
–
–
16,282,652
68,676
(1,782,777)
3,013,385
115,970
(466,421)
2,662,934
16,282,652
192,515
(2,164,388)
Closing balance as at 30 June 2013
2,405,162
14,568,551
16,973,713
The cash arising from the fund contributions is held at Pan African Resources Group Rehabilitation Trust.
The amounts are invested in interest-bearing short-term investments or medium-term equity-linked notes issued by commercial banks.
21 INVENTORIES
Consumable stores
Mineral stocks
Provision for obsolete stock
22 TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables and prepayments
VAT receivable
Deposit paid*
Group
30 June 2013
£
Group
30 June 2012
£
Company
30 June 2013
£
Company
30 June 2012
£
4,564,282
2,276,532
(245,074)
1,964,622
9,116
(105,003)
6,595,740
1,868,735
–
–
–
–
–
–
–
–
10,812,937
1,082,911
2,008,568
–
4,176,485
249,253
853,530
1,548,779
1,194,826
26,617
–
–
17,977
54,463
–
1,548,779
13,904,416
6,828,047
1,221,443
1,621,219
*
The deposit relates to a non-refundable amount paid to Harmony as a break fee with regards to the Evander Mines acquisition. This payment was deducted off the final
purchase price as per the acquisition agreement, on 28 February 2013.
The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the statement of financial position are
net of allowances for doubtful receivables of £36,051 (2012: £16,763) relating to other receivables, estimated by the Group’s management
based on the current economic environment and individual debtor circumstance. The credit risk on liquid funds is limited because the
counterparties are dealt with in accordance with the Group’s credit policy. Rand Refinery (Pty) Ltd is the one major customer that
represents more than 5% of the trade receivables balance for the individual companies (Barberton Mines and Evander Mines), and
Western Platinum Limited (subsidiary of Lonmin PLC) is the one major customer that represents more than 5% of the trade receivables
balance of Phoenix Platinum.
The average credit period is:
Number of days
Group
30 June 2013
30 June 2012
30
15
The ageing of trade receivables increased due to the acquisition of Evander Mines and Phoenix Platinum reaching steady state production.
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 customer’s
credit limit and credit quality. The Group only transacts with credit-worthy customers and large institutions within South Africa.
The fair value of trade receivables is not materially different from the carrying value presented. No receivables have been pledged as
security.
138
Pan African Resources PLC Integrated Annual Report 2013
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
The Group has the following credit facilities:
Nedbank Limited revolving credit facility*
ABSA Bank Limited revolving credit facility*
Absa Bank Limited overdraft facility
(held at Barberton Mines)
Absa Bank Limited credit card facilities
Guarantee**
USD trading facility***
*
The Group has secured a five-year revolving credit facility with
Nedbank Limited and ABSA Bank Limited. The facility carries an
interest rate of the monthly JIBAR rate plus 2.8% margin, and is
secured against a portion of Barberton Mines, Evander Mines and
Phoenix Platinum property, plant and equipment. The unutilised
portion of the revolving credit facilities held by Nedbank Limited
and ABSA Limited, at 30 June 2013 was £28,980,680 (refer to
note 27). The ABSA Limited overdraft facility at Barberton Mines
remains unsecured and unitilised at year-end. The Barberton Mines
overdraft facility attracts interest at prime in South Africa.
**
The guarantees relate to £1,638,448 for Eskom (electricity utility)
and £931,966 for the Department of Minerals and Resources
(DMR).
*** The USD trading facility relates to trading facilities held by
Barberton Mines for the purposes of trading USD for ZAR Rand on
USD gold sales.
24 SHARE CAPITAL
Authorised
2,000,000,000 (2012: 2,000,000,000) ordinary
shares of £0.01 each
Issued and fully paid-up 1,822,834,263 (2012:
1,448,262,361) ordinary shares of £0.01 each
Group
Company
30 June 2013
£
30 June 2012
£
30 June 2013
£
30 June 2012
£
4,768,916
19,782,179
3,304,949
17,812,893
19,986,676
19,986,676
11,615,841
–
1,199,201
99,933
2,570,414
6,329,114
1,587,498
38,719
1,143,979
7,356,700
–
–
–
66,622
–
–
50,172,014
21,742,737
66,622
–
–
77,439
–
–
–
77,439
20,000,000
20,000,000
20,000,000
20,000,000
18,228,342
14,482,623
18,228,342
14,482,623
The following cash issue of shares were made during the year:
During the year under review the Company announced the issue and allotment of 374,571,902 new ordinary shares in respect of share
options exercised and rights offer issue:
– On 25 October 2012, 3,000,000 shares issued to Mr A Esterhuizen at 7 pence per share, in relation to share options exercised.
–
On 17 January 2013, 370,071,902 shares issued as part of the rights offer issue at 14 pence per share, in relation to the acquisition of
Evander Mines from Harmony.
–
On 31 May 2013, 1,500,00 shares issued to Mr KC Spencer at 6 pence per share, in relation to share options exercised.
Current number of equity-settled share options outstanding at 30 June 2013 is 9,782,100 (2012: 14,282,100).
Pan African Resources PLC Integrated Annual Report 2013
139
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I
O
P
E
R
A
T
O
N
A
L
O
V
E
R
V
I
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W
C
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P
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A
T
E
G
O
V
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A
N
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NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
Group
Company
30 June 2013
£
30 June 2012
£
30 June 2013
£
30 June 2012
£
25 TRADE AND OTHER PAYABLES
Trade and other payables
Accruals and other payables
VAT payable
Other
11,514,399
10,671,829
189,708
826,116
3,140,458
4,532,185
37,086
–
–
743,051
189,708
826,116
Total trade and other payables
23,202,052
7,709,729
1,758,875
166,869
681,689
38,011
–
886,569
The average credit period is:
30 June 2013
30 June 2012
Number of days
59
25
The ageing of trade payables increased due to the acquisition of Evander Mines.
The fair value of trade payables is not materially different from the carrying value presented.
Group
26 LONG-TERM PROVISIONS
Group
Company
Decommissioning
and Rehabilitation
£
Total
£
Total
£
Balance at 30 June 2011
Provided during the year
Foreign currency translation reserve
Balance at 30 June 2012
Provision arising from acquisition of Evander
Mines (refer to note 38)
Provided during the year
Foreign currency translation reserve
Balance at 30 June 2013
Balance at 30 June 2012
Long-term provisions
Current provisions
Balance at 30 June 2013
Long-term provisions
Current provisions
Decommissioning
and Rehabilitation
£
3,386,591
115,970
(458,607)
3,386,591
115,970
(458,607)
3,043,954
3,043,954
13,325,862
359,172
(1,907,836)
13,325,862
359,172
(1,907,836)
14,821,152
14,821,152
3,043,954
–
3,043,954
–
3,043,954
3,043,954
14,821,152
–
14,821,152
–
14,821,152
14,821,152
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Rehabilitation provision
The provision includes the estimate of the costs of decommissioning and the cost of environmental and other remedial work such as
reclamation costs, close down and restoration and pollution control. Estimates 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 South African laws and regulations. The
provision represents the net present value of the best estimate of the expenditure required to settle the obligation to decommission and
rehabilitate environmental disturbances caused by mining operations. These costs are expected to be incurred over the life of mine, which
is estimated at 17 years for Barberton Mines and 14 years for Evander Mines.
The following rates were used in the calculation of the rehabilitation provision for the Group (includes, Barberton Mines, Evander Mines
and Phoenix Platinum):
Growth rate
Risk free rate
140
Pan African Resources PLC Integrated Annual Report 2013
30 June 2013
30 June 2012
6%
7.89%
6.5%
7.96%
27 LONG-TERM LIABILITIES
Cash-settled share options:
Opening balance
Expense for the year
Foreign currency translation reserve
Group
Company
30 June 2013
£
30 June 2012
£
30 June 2013
£
30 June 2012
£
797,513
209,465
(127,724)
69,456
775,049
(46,992)
429,565
22,903
(61,787)
27,329
425,430
(23,194)
Closing balance
879,254
797,513
390,681
429,565
Post-retirement benefits:
Opening balance
Arising from the acquisition of Evander Mines (refer to note 38)
Utilised for the year
Foreign currency translation reserve
Closing balance
Revolving credit facilities:
Opening balance
Drawdowns
Finance costs incurred
Repayments of capital
Repayments of finance costs
Transfer to current portion
Foreign currency translation reserve
Closing balance
Total
71,368
65,434
(11,832)
(16,189)
111,829
–
(24,586)
(15,875)
108,781
71,368
–
34,763,874
852,998
(22,545,100)
(834,241)
(864,218)
(1,228,388)
10,144,925
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11,132,960
868,881
390,681
429,565
Current and non-current portions of revolving credit facilities
Current portion – interest to be paid in the next 12 months
Non-current portion – interest to be paid after 12 months until full repayment
Non-current portion – capital to be paid on maturity
Group
30 June 2013
£
Group
30 June 2012
£
864,218
3,830,564
11,009,143
15,703,925
–
–
–
–
Terms of the revolving credit facilities:
Interest rate:
Interest rate margin:
Term of loan:
Repayment period:
Final repayment date:
Financial covenant limits:
Jibar (quoted at 5.05% at year-end)
2.8%
5 years
Full repayment of the outstanding at the end of 5 years.
7 March 2018
The ratio of the net debt to equity must be less than 1:1 (measured
on a half-yearly basis)
The interest cover ratio (refer to note 29) must be greater than four
times (measured on a half-yearly basis).
The ratio of net debt to EBITDA (refer to note 29), as defined in the
agreement, must be less than 2.5:1 (measured on a half- yearly basis)
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Pan African Resources PLC Integrated Annual Report 2013
141
NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
27 LONG-TERM LIABILITIES (continued)
Bonds as security for revolving credit facilities
The following bonds were entered into by the Group:
Continuing covering mortgage bond B1534/2013 – Barberton Mines/Bowwood and Main No. 40 (Pty) Ltd.
Continuing covering mortgage bond B1740/2013 – Evander Mines/Bowwood and Main No. 40 (Pty) Ltd.
Special notarial bond BN6785/2013 – Barberton Mines/Bowwood and Main No. 40 (Pty) Ltd.
Special notarial bond BN6912/2013 – Evander Mines/Bowwood and Main No. 40 (Pty) Ltd.
General notarial bond BN7075/2013 – Barberton Mines/Bowwood and Main No. 40 (Pty) Ltd.
General notarial bond BN6592/2013 – Evander Mines/Bowwood and Main No. 40 (Pty) Ltd.
*
On 9 May 2011, the Company established a cash-settled share appreciation right programme entitling selected executives and employees of the Group, as approved by
the board of directors of the Company, to be allocated notional shares in the Group. These notional shares confer the conditional right on the participant to be paid a cash
settlement equal to the appreciation in the Company share price from the date of allocation to the date of surrender or deemed surrender of notional shares. Participation
in the share appreciation programme is subject to the agreement of a selected participant and acceptance by said participant of the rules and regulations governing the
share appreciation programme.
Group cash-settled share options
The share appreciation settlement is determined no later than the sixth anniversary of the date that the notional shares are allocated.
However, the participant can elect, subject to approval by the Companies Remuneration Committee (Remco), to surrender his/her
notional shares and receive the share appreciation settlement at a date prior to the sixth anniversary date.
The share appreciation settlement is regarded as remuneration for income tax purposes and thus subject to the deduction of PAYE and
all other taxes and contributions via the payroll of the relevant subsidiary. These taxes are for the account of the participant.
No share appreciation rights settlements can be made until after the period, calculated from the date the notional shares were allocated,
until:
(cid:118) Two years has elapsed, in which event not more than 25% of the total number of notional shares allocated,
(cid:118) three years has elapsed, in which event not more than 50% of the total number of notional shares allocated,
(cid:118) four years has elapsed, in which event all of the notional shares allocated,
(cid:118) or any lesser amount of notional shares may be surrendered. Notional shares which a participant is entitled to surrender are referred
to as “surrenderable notional shares”.
Remco may, by resolution, amend and postpone any of these vesting periods, with the consent of the participant concerned.
The participant is entitled, within a period of 60 days after the date of resignation, to surrender all his/her surrenderable notional shares
and request the payment of the share appreciation bonus in respect thereof. If the participant is subject to retirement (including early
retirement approved by the Company after the age of 55 in terms of Company policy), retrenchment, death or permanent disability, the
participant or the participant’s estate is entitled, within a period of six months after the termination date, to surrender all his/her
surrenderable notional shares and request the payment of the share appreciation settlement in respect thereof.
Details of the share options outstanding during the year, in relation to this scheme, are as follows:
30 June 2013
30 June 2012
Outstanding at 1 July
Granted during the year
Exercised during the year
Forfeited in the year
Weighted
average
exercise price
(Rand)
1,15
2,18
1,15
1,15
Number
of options
31,863,103
29,869,622
(967,500)
(8,410,148)
Outstanding and exercisable at 30 June
1,74
52,355,077
Cash-settled share options are valued annually at fair value.
These fair values were calculated using the Binomial pricing model. The inputs in the model were
as follows:
Weighted average share price (ZAR)
Weighted average exercise/strike price (ZAR)
Expected volatility
Expected life
Risk free rate
Expected dividend yield
Weighted
average
exercise price
(Rand)
1,15
–
–
1,15
1,15
Number
of options
33,669,103
–
–
(1,806,000)
31,863,103
30 June 2013
30 June 2012
2.10
2.13
45.00%
3 – 4 years
7.00 – 7.54%
3.50%
1.96
1.15
50.00%
3 – 4 years
5.83 – 6.14%
4.00%
The Group recognised total expenses of £209,465 (2012: £775,049) relating to cash-settled share-based payments transactions during
the reporting period.
142
Pan African Resources PLC Integrated Annual Report 2013
27 LONG-TERM LIABILITIES (continued)
Vesting schedule 2013
Description
Grant date
Vesting
period (years)
Vesting
period (days)
Vesting date
Valuation
(ZAR)
Options
granted
Tranche 1
Tranche 2
Tranche 3
Tranche 1
Tranche 2
Tranche 3
Tranche 1
Tranche 2
Tranche 3
Tranche 1
Tranche 2
Tranche 3
Tranche 1
Tranche 2
Tranche 3
11 May 2011
11 May 2011
11 May 2011
6 March 2013
6 March 2013
6 March 2013
1 April 2013
1 April 2013
1 April 2013
1 May 2013
1 May 2013
1 May 2013
1 June 2013
1 June 2013
1 June 2013
Vesting schedule 2012
2
3
4
2
3
4
2
3
4
2
3
4
2
3
4
731
1 096
1 461
11 May 2013
11 May 2014
11 May 2015
731 6 March 2015
1 096 6 March 2016
1 461 6 March 2017
1 April 2015
1 April 2016
1 April 2017
1 May 2015
1 May 2016
1 May 2017
1 June 2015
1 June 2016
1 June 2017
731
1 096
1 461
731
1 096
1 461
731
1 096
1 461
0.77
0.77
0.77
0.79
0.79
0.79
0.84
0.84
0.84
0.90
0.90
0.90
0.84
0.84
0.84
4,895,739
5,863,239
11,726,478
1,762,450
1,762,450
3,524,900
3,450,157
3,450,157
6,900,314
1,276,730
1,276,730
2,553,461
978,068
978,068
1,956,136
Options
expected
to vest
4,895,739
5,863,239
11,726,478
1,762,450
1,762,450
3,524,900
3,450,157
3,450,157
6,900,314
1,276,730
1,276,730
2,553,461
978,068
978,068
1,956,136
52,355,077
52,355,077
Valuation
(ZAR)
Options
granted
Options
expected
to vest
0.97
0.99
1.01
7,965,776
7,965,776
15,931,551
7,189,113
6,829,657
12,976,348
31,863,103
26,995,118
Description
Grant date
Tranche 1
Tranche 2
Tranche 3
9 May 2011
9 May 2011
9 May 2011
Vesting
period (years)
Vesting
period (days)
2
3
4
731
1 096
1 461
Vesting date
9 May 2013
9 May 2014
9 May 2015
Participation in share-based and other long-term incentive schemes is restricted to employees and directors as described above.
Pan African Resources PLC Integrated Annual Report 2013
143
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NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
Group
Company
Note
30 June 2013
£
30 June 2012
£
30 June 2013
£
30 June 2012
£
28 DEFERRED TAXATION
Deferred tax liabilities
Property, plant and equipment
Provisions
Investment in rehabilitation trust
Other
Net deferred tax liabilities
55,332,754
(4,667,052)
3,400,586
(16,848)
10,841,728
(673,643)
–
(79,555)
54,049,440
10,088,530
Reconciliation of deferred tax liabilities:
Net deferred liabilities
at the beginning of the year
Transfer to deferred tax asset
Arising from the acquisition of Evander Mines
Deferred tax charge for the year
Deferred tax asset raised
during the current year
Foreign currency translation reserve
10,088,530
79,555
45,132,359
5,744,025
9,841,695
–
–
1,849,665
38
13
(200,340)
(6,794,689)
–
(1,602,830)
Net deferred liabilities at the end of the year
54,049,440
10,088,530
–
–
–
–
–
–
–
–
–
–
–
–
Deferred tax assets
Property, plant and equipment
Provisions
Other
Reconciliation of deferred tax assets:
Net deferred assets
at the beginning of the year
Transfer from deferred tax liabilities
Deferred tax credit for the year
Foreign currency translation reserve
Net deferred assets at the end of the year
Note
13
57,139
289,940
(34,281)
312,798
–
79,555
265,013
(31,770)
312,798
–
–
–
–
–
–
–
–
–
–
267,281
–
267,281
–
–
289,876
(22,595)
267,281
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Deferred tax assets not recognised for the Company amounted to £9,536 (2012: £169,980). These relate to assessed losses carried
forward as a result of temporary differences.
Assessed loss carried forward for the Company amounted to £34,056 (2012: £607,071). Unredeemed capital expenditure in relation to
Phoenix Platinum carried forward was £8,875,902 (2012: £11,999,313).
144
Pan African Resources PLC Integrated Annual Report 2013
29 FINANCIAL INSTRUMENTS
The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the sustainable return
to shareholders through the optimisation of the debt and equity ratios. The Group’s overall strategy remains unchanged from the
prior year.
Components of capital and financial covenants:
Cash and cash equivalents
Interest-bearing debt
Net interest-bearing liabilities/(assets)
Equity
Group
Company
30 June 2013
£
30 June 2012
£
30 June 2013
£
30 June 2012
£
(4,768,916)
11,009,143
(19,782,179)
–
(3,304,949)
–
6,240,227
172,208,237
(19,782,179)
102,625,655
(3,304,949)
124,671,062
(17,812,893)
–
(17,812,893)
99,707,934
Net debt to equity ratio (%)*
0.04
(0.19)
(0.03)
(0.18)
Finance costs of the revolving credit facilities
Earnings before interest and taxation
852,998
54,510,133
–
41,710,643
–
(22,026,658)
–
21,644,712
Interest cover ratio
Earnings before interest, taxation, depreciation and
amortisation, impairment, bargain purchase gain,
loss on associate and loss on disposal of asset
held for sale (“EBITDA”)
64
–
–
–
53,123,887
45,017,891
(3,381,660)
21,644,712
Net debt to EBITDA
0.12
(0.44)
0.98
(0.82)
Financial covenant limits:
The ratio of the net debt to equity must be less than 1:1
(measured half-yearly).
The interest cover ratio must be greater than four times
(measured half-yearly).
The ratio of Net Debt to EBITDA must be less
than 2.5:1 (measured half-yearly).
Categories of financial instruments:
Financial assets:
Cash and cash equivalents
Investment in associate
Receivables
Financial liabilities:
Trade and other payables
Long-term liabilities
Current portion of long-term liabilities
4,768,916
1,199,071
10,812,937
22,186,228
10,253,706
864,218
19,782,179
–
4,176,485
7,672,643
–
–
3,304,949
1,182,606
1,194,826
17,812,893
–
17,977
743,051
–
–
849,483
–
–
* Net debt is calculated on cash and cash equivalents less interest-bearing debt.
All of the financial instruments above are carried at amortised cost.
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S
Pan African Resources PLC Integrated Annual Report 2013
145
NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
29 FINANCIAL INSTRUMENTS (CONTINUED)
Financial risk management objectives
The Group seeks to minimise the effects of financial 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 a means of mitigating the risk.
The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the statement of financial position are
net of allowances for doubtful receivables of £36,051 (2012: £16,763) relating to other receivables, estimated by the Group’s management
based on the current economic environment and individual debtor circumstance. The credit risk on liquid funds is limited because the
counterparties are dealt with in accordance with the Group’s credit policy. Rand Refinery (Pty) Ltd is the one major customer that
represents more than 5% of the trade receivables balance for the individual companies (Barberton Mines and Evander Mines), and
Western Platinum Limited (subsidiary of Lonmin PLC) is the one major customer that represents more than 5% of the trade receivables
balance of Phoenix Platinum.
Customers above 5%:
Rand Refinery (Pty) Ltd
Western Platinum Limited (subsidiary of Lonmin PLC)
30 June 2013
£
30 June 2012
£
8,379,514
1,387,795
2,570,181
–
9,767,309
2,570,181
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 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 specifically ensure USD receipts are converted into ZAR as
quickly and economically as possible.
Commodity price risk
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 receipts.
Interest rate and liquidity risk
Fluctuations in interest rates impact on 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. 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 to meet the Group’s normal and contingent funding needs.
146
Pan African Resources PLC Integrated Annual Report 2013
29 FINANCIAL INSTRUMENTS (continued)
Currency and commodity price risk
Currency and gold spot price
Pound Sterling/ZAR exchange rate
USD gold spot price ($/oz)
Foreign currency/gold price sensitivity
2013
2012
Closing rate at
30 June 2013
Average rate
for the year
ended 30 June
2013
15,01
1,192
13,84
1,587
Impact of
10% currency or
gold price
movement on
profit
£
9,334,799
6,411,352
The Pound Sterling carrying amount of the Group’s foreign currency denominated monetary assets and liabilities at statement of
financial position date is as follows:
2013
Assets
Liabilities
2012
Assets
Liabilities
Impact of 10%
currency
movement on
translation
reserve
£*
26,748,411
24,066,270
24,316,737
21,878,427
28,478,961
11,062,459
25,889,965
10,056,781
* The functional currency within the Group is ZAR therefore the sensitivity details the effect of the ZAR/GBP exchange rate on the foreign currency translation reserve.
Commodity zero cost collar
The Group entered into a zero cost collar gold transaction during the year, no similar transactions were undertaken in the prior year. On
30 June 2013 the Group realised a profit of £1,589,595 upon agreeing to terminate the contract with ABSA Bank Limited.
Financial instruments (derivatives)
Group
Company
Opening balance
Financial instruments during the year
Fair valuing of financial instruments
Financial instruments realised during the year
Closing balance
30 June 2013
£
30 June 2012
£
30 June 2013
£
30 June 2012
£
–
1,589,595
–
(1,589,595)
–
–
–
–
–
–
1,589,595
–
(1,589,595)
–
–
–
–
–
C
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G
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N
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Pan African Resources PLC Integrated Annual Report 2013
147
NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
29 FINANCIAL INSTRUMENTS (continued)
Terms of the zero cost collar gold transaction
Call option terms:
Trade date
Commodity
Total notional quantity
Option style
Option type
Commodity option buyer
Option term
Strike price per unit
Put option terms:
Trade date
Commodity
Total notional quantity
Option style
Option type
Commodity option buyer
Option term
Strike price per unit
26 June 2013
Gold
78,000 ounces (2,426 kilograms)
Asian
Call
ABSA Bank Limited
From and including 31 May 2013, to and including 30 June 2015 (2 years)
ZAR518,500 per kilogram
26 June 2013
Gold
78,000 ounces (2,426 kilograms)
Asian
Put
ABSA Bank Limited
From and including 31 May 2013, to and including 30 June 2015 (2 years)
ZAR425,000 per kilogram
Interest rate risk
The Group is exposed to interest rate risk as entities within the Group borrow and invest funds at both fixed and floating interest rates.
Interest rate sensitivity
Based on the low level of interest-bearing balances on the statement of financial position, an interest rate sensitivity is not performed as
the interest rate exposure for the Group is immaterial.
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
forecasts and actual cash flows and matching maturity profiles of financial assets and liabilities.
The Group has access to financing facilities at Barberton Mines and its Funding company, of which the total unutilised portion as at
30 June 2013 is £28,980,680 (2012: £11,615,841) (refer to note 23). The Group expects to meet its other obligations from operating
cash flows and proceeds of maturing financial assets.
148
Pan African Resources PLC Integrated Annual Report 2013
29 FINANCIAL INSTRUMENTS (continued)
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 to 5 years
£
Total
£
Group
2013
Trade and other payables
Long-term liabilities (non-interest-bearing)
Long-term liabilities (interest-bearing)
Other short-term liabilities
Group
2012
Trade and other payables
Long-term liabilities
Other short-term liabilities
Company
2013
Trade and other payables
Long-term liabilities
Other short-term liabilities
2012
Trade and other payables
Long-term liabilities
Other short-term liabilities
–
–
7,85%
–
22,186,228
–
864,218
–
–
988,035
14,839,707
–
22,186,228
988,035
15,703,925
–
–
–
–
–
–
–
–
–
–
7,709,729
–
–
–
868,881
–
7,709,729
868,881
–
743,051
–
–
886,569
–
–
–
390,681
–
–
429,565
–
743,051
390,681
–
886,569
429,565
–
Fair value of financial instruments
The directors consider that the carrying amounts of financial assets and liabilities recorded approximate their fair values.
Financial asset (right to future share)*
Opening balance
Right to future shares raised on sale
Foreign currency translation reserve
Closing balance before impairment
Impairment
Closing balance
Group
£
30 June 2013
–
7,024,203
(460,153)
6,564,050
(6,564,050)
–
*
The financial asset relates to the right to future shares in Auroch based on the future milestones being achieved. The milestones (as disclosed in note 35) are considered to
have a low probability of being achieved due to the current challenging mining environment and commodity prices. Therefore the financial asset was fully impaired.
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Pan African Resources PLC Integrated Annual Report 2013
149
NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
30 POST-RETIREMENT BENEFIT INFORMATION
All employees are required to be members of either the Barberton Pension Umbrella Fund, Sentinel Retirement Fund, Mine Workers
Provident Fund or the Shanduka Group Provident Fund. These are defined contribution funds and are registered under and governed by
the South African Pensions Fund Act, 1956, as amended. The assets of the scheme are held separately from those of the Group in funds
and they are in the control of the trustees. The total costs charged to the Statement of Comprehensive Income of £2,457,148
(2012: £1,476,831) represent employer contributions payable to the schemes by the Group 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. The balance of post-retirement medical
benefits were £108,781 (2012: £71,368).
31 COMMITMENTS, CONTINGENT LIABILITIES AND GUARANTEES
Group
Commitments
The Group had outstanding open orders contracted for at year-end of £4,840,876 (2012: £12,305,025).
Authorised commitments for the new financial year not yet contracted for totalled £9,626,040 (2012: £30,197,687).
Contingent liabilities
The Group had no contingent liability in the current financial year or prior year.
Guarantees
The Group had guarantees of £1,638,448 (2012: £298,345) in favour of Eskom, and £931,966 (2012: £226,122) in favour of the
Department of Mineral Resources at year-end.
Company
There were no commitments, contingent liabilities and guarantees for the Company for the year ended 30 June 2013 (2012: nil).
32 DIRECTORS’ EMOLUMENTS
The key management personnel for which remuneration has been disclosed below are considered to be the
executive directors, non-executive directors and R Holding:
Group
30 June
2013
£
30 June
2012
£
Executive
Emoluments
Share options exercised
Total
Non-executive
Emoluments
Total
Total remuneration
1,068,059
–
363,638
–
1,068,059
363,638
223,376
205,120
223,376
205,120
1,291,435
568,758
Share
options
exercised
£
Basic
remune-
ration
£
Retire-
ment
fund
£
Life and
disability
plan Allowances
£
£
Other
Remune-
ration
£
Bonuses
£
Total
2013
£
Total
2012
£
–
–
–
–
144,990
–
83,809
–
–
11,224
–
–
1,716
11,561
–
17,627
719,653
–
–
49,399
–
28,081
925,603
–
142,457
262,755
39,091
61,792
228,799
11,224
1,716
29,188
719,653
77,480
1,068,060
363,638
Individual
Executive
Mr J Nelson #
Mr JAJ Loots *
Miss YB Sitole
Total
150
Pan African Resources PLC Integrated Annual Report 2013
32 DIRECTORS’ EMOLUMENTS (continued)
Individual
Non-Executive
Mr RG Still
Mrs P Mahanyele*
Mr KC Spencer
Mr CM
Ramaphosa*
Mr JAJ Loots*
Mrs HH Hickey**
Total
Three highest paid
non-executive
directors
P Human
R Holding
C Strydom
Share
options
exercised
£
Basic
remune-
ration
£
Retire-
ment
fund
£
Life and
disability
plan
£
Directors’
fees
£
Other
remune-
ration
£
Bonuses
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
48,497
33,348
86,196
–
21,787
33,548
223,376
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
30 June
2013
£
48,497
33,348
86,196
–
21,787
33,548
Total
30 June
2012
£
46,102
36,545
76,041
21,243
19,448
5,741
223,376
205,120
Total
30 June
2013
£
Total
30 June
2012
£
Share
options
exercised
£
85,285
–
–
Basic
remune-
ration
£
114,355
158,552
142,489
Retire-
ment
fund
£
9,354
25,991
14,448
Life and
disability
plan Allowances
£
£
–
3,246
–
6,541
21,909
4,928
Other
remune-
ration
£
Bonuses
£
–
–
–
40,665
43,541
50,571
256,200
253,239
212,436
–
235,972
219,540
* Directors’ fees accruing to these directors are paid by the Company to Shanduka Group (Pty) Ltd.
** Director was appointed on 12 April 2012.
# Director resigned on 27 February 2013. Upon resignation Mr J Nelson received an additional payment of £719 653.
Executive directors
Upon resignation of Mr J Nelson as CEO on 27 February 2013, R Holding and JAJ Loots were appointed as joint interim CEOs. During
the year under review, Miss B Sitole was CFO.
Non-executive directors
During the year under review, the non-executive directors were Mr RG Still, Mr KC Spencer, Mrs P Mahanyele, Mr JAJ Loots and
Mrs HH Hickey.
No retirement fund contributions are currently made by the Company on behalf of non-executive directors.
Non-executive directors are entitled to the following fees as approved annually by the Remuneration Committee for services rendered,
based on their appointment to the respective board sub-committees, and meetings attended:
Board of directors Chairman
Board of directors Deputy Chairman
Board of directors
Remuneration Committee
Audit Committee
SHEC Committee
Nominations Committee
30 June 2013
Chairperson/
Deputy
chairperson
£
30 June 2012
Chairperson/
Deputy
chairperson
£
37,795
22,232
–
6,670
6,670
6,670
6,670
39,834
23,432
–
7,030
7,030
7,030
7,030
30 June 2013
30 June 2012
Member
£
–
–
17,341
4,446
4,446
4,446
4,446
Member
£
–
–
18,277
4,686
4,686
4,686
4,686
Pan African Resources PLC Integrated Annual Report 2013
151
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NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
32 DIRECTORS’ EMOLUMENTS (continued)
Total
options
outstanding
1 July 2012
Grant
date
Strike price
(pence)
Options
granted/
(exercised)
during the
period
Grant/
(exercise)
date
Mr KC Spencer
3,000,000 21 July 2008
5.2
(1,500,000) 24 May 2013
Total
3,000,000
–
(1,500,000)
Options
granted/
(exercised)
during
the period
Grant/
(exercise)
date
Grant
date
Strike price
(pence)
21 July
2005
9 August
2004
21 July
2008
2.0
(6,000,000)
2.5
(4,000,000)
6 October
2010
4 November
2010
5.2
–
–
(10,000,000)
Total options
outstanding
1 July 2011
6,000,000
4,000,000
3,000,000
13,000,000
Mr J Nelson
Mr R G Still
Mr K C Spencer
Total
Grant/
(exercise)
price
(pence)
(5.2)
–
Grant/
(exercise)
price
(pence)
(2.0)
(2.5)
–
–
Total
options
30 June
2013
Transferred
out
–
–
1,500,000
1,500,000
Transferred
out
Total options
outstanding
30 June 2012
–
–
–
–
–
–
3,000,000
3,000,000
Directors’ dealings in shares
During the year under review Mr R Holding had participated in the following transactions in the Company’s shares:
(cid:118) On 11 January 2013 subscribed for 127,500 shares at ZAR1.90 per share in the Group’s rights offer issue.
(cid:118) On 3 March 2013 purchased 125,000 shares at a price of ZAR2.16 per share.
(cid:118) On 22 April 2013 purchased 100,000 shares at a price between ZAR1.90 and ZAR1.95 per share.
At 30 June 2013 Mr R Holding held a total of 852,500 (2012: 500,000) shares representing 0.05% of the issued share capital.
During the year under review Mr J Nelson had participated in the following transactions in the Company’s shares:
(cid:118) On 11 January 2013 purchased 13,157 shares at ZAR1.90 per share in the Group’s rights offer issue.
(cid:118) On 24 February 2013 sold 135,600 shares at a price of ZAR2.65 per share.
Mr J Nelson had 1,000,000 shares remaining upon his resignation on 1 March 2013 (2012: 1,122,442) shares, representing 0.05% of the
issued share capital.
During the year under review Mr JAJ Loots had participated in the following transactions in the Company’s shares:
(cid:118) On 11 January 2013 purchased 16,575 shares at ZAR1.90 per share in the Group’s rights offer issue.
(cid:118) On 1 March 2013 purchased 100,000 shares at GBP0.16 per share.
At 30 June 2013 Mr JAJ Loots held a total of 181,575 (2012: 65,000) shares representing 0.01% of the issued share capital.
During the year under review Mr KC Spencer had participated in the following transaction in the Company’s shares:
(cid:118) On 31 May 2013 1,500,000 shares were issued to Mr KC Spencer at ZAR0.83 per share, in relation to share options exercised.
At 30 June 2013 Mr KC Spencer held a total of 1,500,000 shares (2012: nil), representing 0.08% of the issued share capital.
152
Pan African Resources PLC Integrated Annual Report 2013
32 DIRECTORS’ EMOLUMENTS (continued)
During the year under review Mr RG Still had participated in the following transactions in the Company’s shares (both in his personal
capacity and related entities):
Mr RG Still in his personal capacity:
(cid:118) On 11 January 2013 purchased 510,000 shares at ZAR1.90 per share in the Group’s rights offer issue.
At 30 June 2013 Mr RG Still in his personal capacity, held 2,510,000 (2012: 2,000,000) shares, representing 0.14% of the issued share
capital.
Mr RG Still related entities dealings:
Mr RG Still is a director of Pangea Exploration (Proprietary) Limited (Pangea) and a trustee of a family trust (The Alexandra Trust) which
owns 50% of Pangea. Mr RG Still is therefore deemed to have an indirect, non-beneficial interest in Pangea’s holding in the Company and
Pangea holds 0.12% of the current issued share capital of the Company. Mr RG Still is also a deemed to have an indirect, non-beneficial
interest in The Alexandra Trust’s holding in the Company.
During the year under review The Alexandra Trust and Pangea had the following dealings in shares:
Pangea
(cid:118) On 11 January 2013 Pangea purchased 457,418 shares at ZAR1.90 per share in the Group’s rights offer issue.
At 30 June 2012 Pangea held a total of 2,251,214 (2012: 1,793,796) shares representing 0.12% of the issued share capital.
Alexandra Trust
(cid:118) On 11 January 2013 purchased 3,169,880 shares at ZAR1.90 per share in the Group’s rights offer issue.
(cid:118) On 11 January 2013 purchased additional 72,836 shares at ZAR1.90 per share in the Group’s right offer issue, in an application for
surplus rights offer shares.
(cid:118) On 30 April 2013 sold 1,700,000 shares at a price of ZAR2.22 per share.
(cid:118) On 8 May 2013 sold 1,000,000 shares at a price of ZAR2.24 per share.
(cid:118) On 9 May 2013 sold 1,100,000 shares at a price of ZAR2.34 per share.
(cid:118) On 10 May 2013 sold 200,000 shares at a price of ZAR2.35 per share.
At 30 June 2013 The Alexandra Trust held a total of 11,673,616 (2012: 12,430,900) shares representing 0.64% of the issued share capital.
Shanduka Gold (Pty) Ltd – Directors’ dealings
Mr JAJ Loots and Mrs P Mahanyele, at 30 June 2013 were permanent employees of the Shanduka Group (Pty) Ltd (Shanduka Group),
the ultimate holding company of Shanduka. Mrs P Mahanyele is a shareholder of the Shanduka Group, and further holds options to
acquire shares in the Shanduka Group. Mr JAJ Loots also holds options to acquire shares in the Shanduka Group. Neither Mr JAJ Loots
nor Mrs P Mahanyele owns or has options to acquire more than 2% of the Shanduka Group.
Shanduka sold the following nil paid letters prior to the Group’s rights issue:
(cid:118) Between 13 December 2012 and 2 January 2013, sold 23,183,516 nil paid letters at a price range of between ZAR0.36 and
ZAR0.50.
Shanduka subscribed for 70,189,473 shares at R1.90 in the Group’s rights offer issue.
At 30 June 2013 Shanduka held 436,358,058 shares, representing 23.94% of the issued share capital.
Shanduka at 30 June 2013 held 436,358,058 shares, representing 23.94% of the issued share capital.
Cash-settled options
Total options
outstanding
1 July 2012 Grant date
Mr J Nelson *
Mr R Holding**
Mr C Strydom**
Mr A van den Bergh**
Miss B Sitole
5 805 000 Monday, 9 May 2011
5 127 134 Monday, 9 May 2011
4 650 000 Monday, 9 May 2011
3 625 177 Monday, 9 May 2011
1 619 487 Tuesday, 1 May 2012
20 826 798
* Executive director – resigned on 27 February 2013..
** Highest paid non-directors.
Options
granted/
(exercised)
during the
period
Grant/
(exercise)
date
Grant/
(exercise)
price
(pence)
Options
forfeited
Total
options
30 June
2013
–
–
–
–
–
–
–
–
–
–
–
–
– (5,805,000)
–
–
–
–
–
– 5,127,134
– 4,650,000
– 3,625,177
– 1,619,487
– (5,805,000) 15,021,798
Strike
price
(pence)
0.11
0.11
0.11
0.11
0.14
0.11
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Pan African Resources PLC Integrated Annual Report 2013
153
NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
33 EQUITY-SETTLED SHARE OPTIONS
On 1 September 2005, the Company established a share option programme relating to equity-settled share options entitling specific
employees, officers, directors and qualifying consultants as approved by the board of directors of the Company and its subsidiaries to
purchase shares in the Company. The share option exercise price is determined using the closing price at which shares are traded on the
JSE or AIM (as determined by the board of directors), on the trading date immediately preceding the date upon which the board
authorised the grant of the opportunity to acquire the relevant share options, as the case may be to a participant. Pursuant to resolutions
of the board passed in accordance with the rules of the share option programme, share options may be released from the share option
programme to participants, share options may be exercised by participants and allocation shares may be, delivered to participants as
follows for allocations prior to 21 July 2008:
(cid:118) 33.33% of the total number of shares allocated after one year has elapsed from the grant date by the participant of the grant,
(cid:118) up to 66.67% of the total number of shares allocated after two years have elapsed from the grant date by the participant of the grant,
(cid:118) the balance of the shares allocated after three years have elapsed from the grant date by the participant of the grant,
and for allocations subsequent to 21 July 2008 as follows:
(cid:118) 25% of the total number of shares allocated after one year has elapsed from the grant date by the participant of the grant,
(cid:118) up to 50% of the total number of shares allocated after two years have elapsed from the grant date by the participant of the grant,
(cid:118) up to 75% of the total number of shares allocated after three years have elapsed from the grant date by the participant of the grant,
(cid:118) the balance of the shares after four years have elapsed from the grant date by the participant of the grant; provided that the board may,
at its discretion, anticipate or postpone such dates.
An option holder may not exercise a share option under the share option programme by later than the end of the year preceding the
tenth anniversary of the grant date. Upon death of an option holder the estate would be entitled to exercise the options vested to date
within 12 months of the date of death, if the options are not exercised the total available share options would lapse. The directors have
the discretion to approve the vesting of the deceased total number of unvested share options.
The number of vested share options to which an option holder is entitled to expires after a period of six months due to resignation,
retirement, redundancy or disability of the option holder.
The number and weighted average exercise price of share options is as follows:
Outstanding at 1 July
Exercised during the year
Outstanding 30 June
30 June 2013
30 June 2012
Weighted average
exercise price
Number
of options
Weighted average
exercise price
6.4p
6.5p
6.4p
14,282,100
(4,500,000)
9,782,100
5.2p
6.3p
6.4p
Number
of options
18,503,750
(4,221,650)
14,282,100
Vested
Unvested
Vested
Unvested
Total number share options at year-end
9,782,100
–
10,112,100
4,170,000
The fair value of services received for share options granted is based on the fair value of share options granted, measured by using for
all issues prior to 20 March 2010 a Black-Scholes model and a variant of the Binomial model for issues on the 20 March 2010, with the
following inputs:
Last fair value measurements
30 June 2010
30 June 2008
R0.68
R0.68
58.61%
3 to 6 years
8.15%
R0.62
R0.70
72.39%
1 to 3 years
5.31%
Share price
Exercise price
Expected volatility
Expected life
Risk-free interest rate
154
Pan African Resources PLC Integrated Annual Report 2013
33 EQUITY-SETTLED SHARE OPTIONS (continued)
A Company dividend rate has not been determined and therefore is not taken into account in option fair value calculations. The
volatility of the Company’s share price on each date of grant was calculated as the average of volatilities of share prices of the
Company on the corresponding dates. The volatility of share price of the Company was calculated as the average of annualised
standard deviations of daily continuously compounded returns on the Company’s stock, calculated over 1 to 4 years back from the
date of grant. Therefore, volatility of the Company’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 persistence.
There are no market conditions attached to the exercise of the share options.
The Group recognised total expenses of £127,053 (2012: £43,452) related to equity-settled share-based payment transactions during
the reporting period.
Participation in share-based and other long-term incentive schemes is restricted to employees and directors.
34 RELATED PARTY TRANSACTIONS
The Group entered into the following transactions and held year-end balances with related parties:
Company
– Dividends received from Barberton Mines
– Fee received from Barberton Mines
– Fee Received from Phoenix Platinum
– Directors’ fees paid to Shanduka
Receivable from other Group Companies
– Barberton Mines
– Evander Mines
– Phoenix Platinum***
Payable to other Group Company
– Evander Mines
– Barberton Mines (loan payable)
– Funding Company
Payable to other related parties
– Fee payable to Shanduka **
Barberton Mines
– Dividends paid to Company
– Fees paid to Company
– Fees paid to Shanduka
Receivable from other Group Companies
– Receivable from Company
Payable to other Group Companies
– Accounts payable to Company
Funding Company
– Finance income from Evander Gold Mining (Pty) Ltd
Receivable from other Group Companies
– Receivable from Company
– Receivable from Evander Mines
Statement of Comprehensive
Income transactions
Statement of Financial
Position transactions
30 June 2013
£
30 June 2012
£
30 June 2013
£
30 June 2012
£
–
(1,161,720)
(216,763)
55,136
(24,500,396)
(1,241,823)
(244,453)
116,328
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,161,720
76,203
24,500,396
1,241,823
77,887
–
–
(865,245)
–
–
–
–
–
–
–
1,194,826
4,210,542
8,314,398
–
–
19,505,668
–
(13,772,763)
(233)
–
–
–
–
–
(1,298,235)
–
(28,058)
–
–
–
13,772,763
1,298,235
(1,194,826)
–
233
10,988,018
–
–
–
–
C
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G
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Pan African Resources PLC Integrated Annual Report 2013
155
NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
Company
34 RELATED PARTY
TRANSACTIONS (continued)
***Phoenix Platinum
– Fees paid to Company
Payable to other Group Companies
– Payable to Company***
Evander subsidiaries
Receivable from other Group Company
– Receivable from Evander Gold Mining (Pty) Ltd
Payable to other Group Company
– Payable to Evander Gold mining (Pty) Ltd
Evander Gold Mines Ltd****
– Gold sales invoiced to Evander Gold Mining (Pty) Ltd
– Cost of gold Production from Evander Gold Mining
(Pty) Ltd
Receivable from other Group Company
– Receivable from Evander Gold Mining (Pty) Ltd
– Receivable from Evander subsidiaries
Payable to other Group Company
– Payable to Evander Gold Mining (Pty) Ltd
– Payable to Evander subsiadiaries
Evander Gold Mining (Pty) Ltd****
– Gold purchases from Evander Gold Mines Ltd
– Cost of gold production income invoiced to Evander
Gold Mines Ltd
– Finance costs paid to Funding Company
Receivable from other Group Company
– Receivable from Evander Gold Mines Ltd
– Payable to Evander Gold Mines Ltd
Payable to other Group Companies
– Payable to Funding Company
– Payable to Company
–
–
–
(26,363,367)
26,102,343
–
–
–
–
(26,102,343)
26,363,367
865,245
–
–
–
–
* These related party transactions related to Pan African and eliminate on consolidation.
** Included in trade and other payables.
***Company loan to Phoenix Platinum reconciliation:
Carrying amount of loan before impairment
Impairment of inter-company loan
Net carrying amount inter-company loan
Statement of Comprehensive
Income transactions
Statement of Financial
Position transactions
30 June 2013
£
30 June 2012
£
30 June 2013
£
30 June 2012
£
216,763
244,453
–
–
–
(8,314,398)
(19,505,668)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8,480,858
(198,369)
–
–
27,711,569
198,369
(27,570,010)
(8,480,858)
–
–
–
27,570,010
(27,711,569)
(10,988,018)
(4,210,542)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Company
30 June 2013
£
16,642,179
(8,327,781)
8,314,398
Total investment by Company, held in Phoenix Platinum comprises the acquisition investment and a inter-company loan. At year-end the
inter-company loan was impaired due to external (reduction in metal prices) and internal (reduction in production, and lower plant mine
recoveries) indicators. The impairment was calculated using a weighted average cost of capital (WACC) of 16.25%.
**** Evander Gold Mines Ltd and Evander Gold Mining (Pty) Ltd are collectively referred to as Evander Mines due to a interim-mining arrangement in place since
1 March 2013.
156
Pan African Resources PLC Integrated Annual Report 2013
35 NON-CURRENT ASSET HELD FOR SALE
The carrying value of non-current assets held for sale on 30 June 2013 are as follows:
Description
Opening balance
Explorator Limitada*
– Transferred from intangibles*
– Transferred from inter-company loan account*
Explorator Limitada – transferred from investments*
Mistral Resource Development Corporation –
transferred from investments*
Brampton Capital Overseas Limited –
transferred from investments*
Barberton Mines – Segalla Plant**
Disposal of Manica projects***
Foreign currency translation reserve
Group
Company
30 June 2013
£
30 June 2012
£
30 June 2013
£
30 June 2012
£
13,135,215
–
–
–
–
–
–
(12,887,411)
(34,613)
–
12,887,411
12,887,411
–
–
–
13,155,070
–
–
–
–
–
–
247,804
–
–
–
–
(12,887,411)
(267,659)
–
9,996,393
–
9,996,393
88,972
584,705
2,485,000
–
–
–
213,191
13,135,215
–
13,155,070
*
The Company had in the prior year agreed to sell free of encumbrances its wholly-owned subsidiary, Mistral’s shareholdings’ to
Auroch for a AU$2,000,000 cash consideration and 25,000,000 consideration shares in Terranova, with an option to receive additional
Deferred Cash Consideration (if payable) and Deferred Consideration Shares (if to be issued), the details of which are set out below.
The disposal of our Manica exploration project (which is accounted for within the corporate and growth segment) allows us to
remain focused on our strategy of the development and growth of our South African-based operating assets.
Should at any time during the period of four years from the date of the completion of the Transaction any of the deferred consideration
Milestones be achieved, then Auroch would pay the Company the following deferred cash consideration payments upon achievement of
each of the milestones as set out below:
(cid:118) AU$1,000,000 upon achievement of the 400koz Milestone 1.
(cid:118) AU$1,000,000 upon achievement of the 1,000koz Milestone 2.
(cid:118) AU$1,000,000 upon achievement of a Bankable Feasibility Study Milestone.
(cid:118) AU$1,000,000 upon achievement of a Capacity Milestone.
collectively, the Deferred Cash Consideration.
In addition, Auroch would issue to the Company the deferred consideration shares upon the achievement of certain milestones as set
out below:
(cid:118) 20,066,667 shares to be issued upon achievement of the 400koz Milestone 1.
(cid:118) 20,066,667 shares to be issued upon achievement of the 1,000koz Milestone 2.
(cid:118) 24,366,667 shares to be issued upon achievement of the Bankable Feasibility Study Milestone or at Auroch’s election payment of
AU$7,310,000 in cash.
(cid:118) 7,166,667 shares to be issued upon achievement of the Capacity Milestone, or at Auroch’s election, payment of AU$2,150,000 in
cash, collectively, the Deferred Consideration Shares.
Milestone 1 – 400koz Milestone means delineation of at least 400,000 ounces of JORC Inferred gold Resource of oxide ore with a cut
off grade of 1.25g/t being defined on the Northern and/or Southern shear zones of the Mining Concession (including the existing 90,000
ounces of JORC Inferred gold Resource of oxide ore at a cut off grade of 1.25g/t that has already been delineated on the Mining
Concession). Milestone 2 – 1,000koz Milestone means delineation of at least 1,000,000 ounces of a Joint Ore Reserves Committee Code
(JORC) Inferred gold Resource of oxide ore with a cut off grade of 1.25g/t being defined on the Northern and/or Southern shear zones
of the Mining Concession (including the existing 90,000 ounces of JORC Inferred gold Resource of oxide ore at a cut off grade of 1.25g/t
that has already been delineated on the Mining Concession and any ounces of JORC Inferred gold Resource of oxide ore that satisfied
the 400koz Milestone).
*** During the year the Group completed this disposal, as described further in note 19. A loss on disposal arose as follows:
Pan African Resources PLC Integrated Annual Report 2013
157
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NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
35 NON-CURRENT ASSET HELD FOR SALE (continued)
Issue of share in Auroch (refer to note 19)
Deferred consideration
Foreign currency translation reserve
Net book value
Loss on disposal of asset held for sale
** The decision was taken in the prior financial year to sell the Segalla plant, at Barberton Mines.
An offer of £213,191 was received for the plant.
Opening balance
Cost
Accumulated depreciation
Impairment
Foreign currency translation reserve
Net book value
Company
£
4 501 947
7,024,203
11,526,150
775,123
(12,887,411)
586,138
Group
30 June 2013
£
30 June 2012
£
247,804
–
–
–
(34,613)
213,191
–
742,089
(446,047)
(48,238)
–
247,804
36 EVENTS AFTER THE REPORTING PERIOD
The Company announced on 2 September 2013 that a new issue of ordinary shares of 1p each had been made following the exercise
of share options granted in 2007 under the Company’s share option plan. The share issue was for 3,000,000 shares at a price of
ZAR0.83 per share to an ex-employee.
The Company announced the following appointments and resignations on 4 September 2013:
(cid:118) Mr R Holding was appointed as the chief executive officer effectively immediately.
(cid:118) Miss B Sitole resigned as the financial director, effective 30 September 2013 to focus on personal commitments.
(cid:118) Mr JAJ Loots was appointed as the new financial director effective 1 October 2013. Mr JAJ Loots has held positions both as the
prior financial director and as a non-executive director within the Group.
158
Pan African Resources PLC Integrated Annual Report 2013
37 RECONCILIATION OF PROFIT BEFORE TAXATION TO
CASH GENERATED BY/(USED IN) OPERATIONS
Profit before taxation
Adjusted for
Dividends received
Impairment
Equity-settled and cash-settled share options costs
Net finance income
Profit on disposal of assets
Royalty costs
Bargain purchase gain
Loss on disposal of asset held for sale
Loss on associate
Non-mining depreciation
Mining depreciation
Other
Operating cash flows before working capital changes
Working capital changes
Increase in inventories
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Non-cash items
Cash generated by/(utilised in) operations
Income taxes paid
Royalties paid
Net finance income
Dividends paid
Net cash from/(used in) operating activities
Taxation paid during the year:
Taxation charge per the statement of comprehensive income
Less: Deferred taxation
Taxation payable at beginning of the year
Taxation receivable/(payable) at end of the year
Foreign currency translation reserve
Taxation paid during the year
Group
30 June 2013
£
30 June 2012
£
54,707,096
2,092,224
–
16,143,604
336,518
(196,963)
(11,768)
3,198,622
(24,114,255)
586,138
152,312
41,197
5,998,267
(41,448)
42,226,145
7,516,314
–
48,238
818,501
(515,502)
–
3,848,450
–
–
–
57,617
3,259,010
–
56,799,320
49,742,459
4,818,817
(650,582)
(871,992)
(4,666,510)
10,043,929
313,390
(411,533)
(1,024,867)
(139,062)
924,880
61,618,137
49,091,877
(10,116,451)
(3,549,657)
313,508
–
(8,364,216)
(3,251,717)
515,502
(7,416,176)
48,265,537
30,575,270
£
12,133,063
(5,479,012)
6,654,051
2,870,283
1,322,671
(730,554)
£
12,984,511
(1,849,665)
11,134,846
689,543
(2,878,642)
(581,531)
10,116,451
8,364,216
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Pan African Resources PLC Integrated Annual Report 2013
159
NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
37 RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH
GENERATED BY/(USED IN) OPERATIONS (continued)
Royalty paid during the year:
Royalty costs payable at beginning of the year
Royalty costs receivable acquired
Royalty costs payable at end of the year
Royalty costs charge for the year
Foreign currency translation reserve
Royalty paid during the year
38 ACQUISITION OF EVANDER MINES
Group
30 June 2013
£
30 June 2012
£
482,447
(33,436)
156,668
3,198,622
(254 644)
76,991
–
(474,087)
3,848,450
(199,637)
3,549,657
3,251,717
On 28 February 2013, the Group acquired 100% of the recorded voting shares of Evander Mines, thus obtaining control of Evander
Mines. Cash consideration paid for the acquisition was ZAR1,313,104,110. It was determined that this transaction represents a business
combination with Emerald Panther identified as the acquirer. The Group began consolidating the operating results, cash flows and net
assets of Evander Mines from 1 March 2013. Evander Mine was a public unlisted mining company that was wholly owned by Harmony.
The tables below present the purchase cost and our provisional allocation of the purchase price to the assets and liabilities acquired. This
allocation was calculated as at the date of acquisition to reflect the provisional determination of the fair values of the assets and liabilities
acquired. The significant adjustments were to increase property, plant and equipment by ZAR1,057,772,388 and deferred income taxes
by ZAR464,741,606, with a corresponding bargain purchase gain of ZAR322,443,757 recognised in the consolidated results. There were
no significant adjustments made to the consolidated statements of comprehensive income after applying these adjustments retroactively
to the acquisition date.
Purchase cost
Purchase consideration (based on 1 October 2012 effective date)
Increased consideration (for the period 1 October 2012 to 28 February 2013)
Dividend payment by Evander Mines
Cash acquired with Evander Mines
Net cash consideration
The purchase consideration was funded entirely by cash, as follows:
Rights issue
Proceeds from long-term debt
Break fee paid from operational cash
Operational cash
Foreign currency translation reserve
28 February 2013
ZAR
£
1,500,000,000
23,104,110
(210,000,000)
112,178,888
1,727,862
(15,705,044)
1,313,104,110
(29,354,529)
98,201,706
(2,195,306)
1,283,749,581
96,006,400
707,301,534
350,000,000
50,000,000
205,802,576
–
50,321,260
25,729,051
3,739,296
15,391,136
3,020,963
1,313,104,110
98,201,706
160
Pan African Resources PLC Integrated Annual Report 2013
38 ACQUISITION OF EVANDER MINES (continued)
Summary of final purchase price allocation
Property, plant and equipment
Other non-current assets
Other investments
Environmental trust fund
Other non-current assets
Current assets
Inventory
Trade and other receivables
Cash
Non-current liabilities
Deferred tax
Provision for environmetal rehabilitation
Provision for post-retirement benefit
Current liabilities
Trade and other payables
Tax liability
Net assets acquired at fair value
Bargain purchase gain*
Effective purchase price
Fair value
at acquisition
ZAR
Fair value
at acquisition
£
2,157,007,971
257,129
217,723,481
3,059,085
51,547,305
32,223,423
29,354,529
(603,487,340)
(178,186,760)
(874,951)
(72,853,204)
(222,801)
161,313,837
–
19,230
16,282,652
228,775
–
3,855,013
2,409,859
2,195,306
–
(45,132,359)
(13,325,862)
(65,434)
–
(5,448,394)
(16,662)
1,635,547,867
(322,443,757)
122,315,961
(24,114,255)
1,313,104,110
98,201,706
*The bargain purchase gain arose due to net consideration paid being less than the fair value of assets and liabilities acquired.
In accordance with the acquisition method of accounting, the acquisition cost has been allocated to the underlying assets acquired and
liabilities assumed, based upon their estimated fair values at the date of acquisition. BDO Corporate Finance was used to assist the Group
in determining the fair value of the mining rights and property plant and equipment acquired.
Evander Mines results, post- and pre-acquisition
Post-acquisition revenue, profit/(loss) (from 1 March 2013 to 30 June 2013)
Pre-acquisition revenue, profit/(loss) (from 1 July 2012 to 28 February 2013)
Evander results for the financial year under review
Revenue
£
Profits after tax
£
31,712,557
64,447,224
7,968,404
9,499,890
96,159,781
17,468,294
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Pan African Resources PLC Integrated Annual Report 2013
161
NOTES
TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2013
39 SHAREHOLDER ANALYSIS
Register date: 28 June 2013
Issued share capital: 1,822,834,263 shares
Shareholder spread
1 – 1 000 shares
1 001 – 10 000 shares
10 001 – 100 000 shares
100 001 – 1 000 000 shares
1 000 001 shares and over
Total
Distribution of shareholders
Banks
Brokers
Close Corporations
Endowment Funds
Individuals
Insurance Companies
Investment Companies
Medical Aid Schemes
Mutual Funds
Nominees and Trusts
Other Corporations
Pension Funds
Private Companies
Public Companies
Total
Public/non-public shareholders
Non-public shareholders
Director
Strategic holder (more than 10%)
Public shareholders
Total
Beneficial shareholders holding of 3% or more
Shanduka Gold (Pty) Ltd
Allan Gray
Coronation Holdings
Afena Capital
Investec Group
Prudential Group
Public Investment Corporation
Number of
shareholders
549
2,349
2,490
637
201
6,226
4
19
96
21
5,014
28
7
12
111
633
61
129
73
18
6,226
6
5
1
6,220
6,226
%
8.82
37.73
39.99
10.23
3.23
Number of
shares
262,464
11,431,742
81,519,334
190,070,823
1,539,549,900
%
0,01
0,63
4,47
10,43
84,46
100.00
1,822,834,263
100,00
0.06
0.31
1.54
0.34
80.53
0.45
0.11
0.19
1.78
10.17
0.98
2.07
1.17
0.30
198,127
18,193,900
7,306,460
5,282,665
160,003,442
35,931,883
27,258,780
7,221,633
400,633,796
404,667,204
1,508,056
290,848,924
457,332,365
6,447,028
0.01
1.00
0.40
0.29
8.78
1.97
1.50
0.40
21.98
22.20
0.08
15.96
25.09
0.35
100.00
1,822,834,263
100.00
0.10
0.08
0.02
453,794,963
17,436,905
436,358,058
99.90
1,369,039,300
24.90
0.96
23.94
75.10
100.00
1,822,834,263
100.00
436,358,058
176,733,778
170,747,784
132,827,637
96,790,574
95,564,329
55,255,381
23.94
9.70
9.37
7.29
5.31
5.24
3.03
162
Pan African Resources PLC Integrated Annual Report 2013
NOTICE OF ANNUAL GENERAL
MEETING
NOTICE IS HEREBY GIVEN that the 2013 Annual General Meeting
of Pan African Resources Plc will be held at the offices of Canaccord
Genuity Limited, Eighth Floor, 88 Wood Street, London EC2V 7QR
on 22 November 2013 at 10:00 (all times stated are United Kingdom
times unless otherwise stated) to consider and, if thought fit, transact
the following business:
12
Ordinary Business
1
To receive and adopt the Directors’ report, the Audited
Statement of Accounts and Auditors’ report for the year ended
30 June 2013.
2
3
4
5
6
7
8
9
To approve the payment of a final dividend for the year ended
30 June 2013 of ZAR0.1314 per share.
To re-elect Mrs HH Hickey as a member of the Audit
Committee.
To re-elect Mr RG Still as a member of the Audit Committee.
To re-elect Mr KC Spencer as a member of the Audit
Committee.
To endorse the Company’s Remuneration Policy for the year
ended 30 June 2013.
To re-elect Mr KC Spencer as a Director of the Company, who
retires by rotation pursuant to the Articles of Association of the
Company.
To re-elect Ms P Mahanyele as a Director of the Company, who
retires by rotation pursuant to the Articles of Association of the
Company.
To re-elect Mr RA Holding as a Director of the Company, who
was appointed since the last Annual General Meeting.
10
To re-appoint Deloitte 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 11 will be proposed as an Ordinary
Resolution and Resolutions 12 and 13 will be proposed as Special
Resolutions:
11
THAT the Directors be and are hereby generally and
unconditionally authorised pursuant to Section 551 of the
Companies Act 2006 (“the Act”), in substitution for all previous
powers granted to them thereunder, to exercise all the powers
of the Company to allot and make offers to allot equity
securities (within the meaning of Section 560 of the Act) up to
an aggregate nominal amount of £6,140,181.87; 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 2014,
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 equity securities to
be allotted after such expiry and the Directors may allot equity
securities pursuant to any such offer or agreement as if the
authority conferred hereby had not expired.
THAT the Directors be and they are hereby empowered
pursuant to Section 570 of the Companies Act 2006 (“the
Act”), in substitution for all previous powers granted thereunder,
to allot equity securities (within the meaning of Section 560
of the Act) for cash pursuant to the authority granted by
resolution 7 above as if Section 561 (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 2014, whichever is the earlier,
and such power is limited to the allotment of equity securities:
(a)
in connection with rights issues to holders of ordinary
shares where the equity 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
£1,827,897.26 (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 Pan African Resources Plc
Share Option Plan; and
(c)
up to a maximum aggregate value of £913,948.63 (being
approximately 5 per cent. of the issued share capital of
the Company as at the date of this notice) otherwise
than pursuant to paragraphs (a) and (b) 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.
The allotment of shares for cash in accordance with this
resolution shall comply to the extent required with English
law the AIM Rules for Companies and with the provisions
of the JSE Limited (“JSE”) Listings Requirements (“Listings
Requirements”) pertaining to general issues of shares for
cash, which in summary provide as follows:
(cid:118) The equity securities which are the subject of the issue
for cash must be of a class already in issue or, where
this is not the case, must be limited to such securities or
rights that are convertible into a class already in issue,
(cid:118) such shares may only be issued or sold, as the case may
be, to public shareholders as defined in the Listings
Requirements, and not to related parties,
(cid:118) the maximum discount (if any) at which such shares
may be issued or sold, as the case may be, is 10% of
the weighted average traded price of such shares on
the JSE over the 30 business days preceding the date
Pan African Resources PLC Integrated Annual Report 2013
163
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NOTICE OF ANNUAL GENERAL
MEETING
of determination or agreement of the issue or selling
price, as the case may be,
(cid:118) after the Company has issued shares in terms of this
general authority representing, on a cumulative basis
within a financial year, 5% or more of the number
of shares in issue prior to that issue, the company
will publish an announcement containing full details
of the issue as set out in section 11.22 of the
Listings Requirements.
13
That the Company be generally and unconditionally authorised
for the purposes of section 701 of the Companies Act 2006
(“the Act”) to make market purchases (as defined in section
693 of the Act) of ordinary shares of the Company on such
terms and in such manner as the Directors shall determine
provided that:
(a)
the maximum aggregate number of ordinary shares
which may be purchased is £913,948.63 (representing
approximately 5 per cent of the issued share capital of the
Company at the date of this notice);
(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 2014, 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); and
(e)
any market purchases by the Company of ordinary shares
in the Company as contemplated in this resolution shall
comply, to the extent required, with the provisions of the
Listings Requirements pertaining to the general authority
to repurchase securities for cash, which in summary
provide as follows:
(cid:118) Such repurchases are effected through the order book
operated by the JSE trading system and done without
any prior understanding or arrangement between
the Company and a counterparty, unless the JSE
otherwise permits,
(cid:118) the company and its subsidiaries are enabled by their
Articles of Association to acquire such shares,
(cid:118) such repurchases are made at a price no greater than
10% above the weighted average market price at
which the Company’s shares traded on the JSE over
the five business days immediately preceding the date
on which the transaction is effected,
(cid:118) at any point in time, the Company appoints only one
agent to effect any repurchase on the Company’s behalf,
(cid:118) the directors will ensure that a resolution by the board
was taken authorising such repurchases, confirming
that the company and its subsidiaries engaged in such
repurchases have passed solvency and liquidity test
and confirming that since such tests were performed
there have been no material adverse changes to the
financial position of the Group,
(cid:118) such repurchases are not conducted during prohibited
periods as defined by the Listings Requirements, unless
the company has complied with the conditions set out
in paragraph 5.72(h) of the Listings Requirements.
The other general information referred to in paragraph
11.26(b) of the Listings Requirements regarding the
company is contained elsewhere in this notice of annual
general meeting, as follows:
(cid:118) Directors and management of the company and of its
material subsidiary, on pages 14 to 33,
(cid:118) major shareholders on page 30,
(cid:118) directors’ interests in the Company’s shares, on
pages 152 to 153,
(cid:118) Company’s share capital, on page 139.
Material change
Furthermore, neither the Company nor its subsidiaries is involved in
any legal or arbitration proceedings, nor are any such proceedings
pending or threatened, that may have or have had any material effect
on the Group’s financial position.
Directors’ responsibility statement
The directors of the Company, whose names are given on page 4
of the Group’s Integrated Annual Report in which this notice is
incorporated, collectively and individually accept full responsibility for
the accuracy of the information given in this notice, and certify that
to the best of their knowledge and belief there are no facts that have
been omitted which would make any statement false or misleading,
and that all reasonable enquiries to ascertain such facts have been
made and that this notice contains all information required by the
Listings Requirements.
Material change
The directors of the Company confirm that there has not been any
material change in the financial or trading position of the Company
and its subsidiaries that has occurred since the end of the last
financial period.
The intention of the directors is that the repurchase of the Company’s
shares will be effected within the parameters laid down by this
resolution as well as by the Act, the JSE and the board, as and when the
directors of the company deem such repurchases to be appropriate,
having regard for prevailing market and business conditions. The
directors will ensure that the requisite prior resolution of the board
164
Pan African Resources PLC Integrated Annual Report 2013
has been taken authorising such repurchases, confirming that the
Company and its subsidiaries engaged in such repurchases have
passed the solvency and liquidity test and confirming that since such
tests were performed there have been no material adverse changes
to the financial position of the Group.
After considering the effect of a general repurchase within the
parameters set out above, the directors are of the view that for a
period of at least 12 months after the date of the annual general
meeting referred to in this notice:
(cid:118) The Company and the Group would in the ordinary course of
their business be able to pay their debts.
(cid:118) The consolidated assets of the Company and the Group would
exceed the consolidated liabilities of the company and the
Group respectively, such assets and liabilities being fairly valued
and recognised and measured in accordance with the accounting
policies used in the 2013 audited Annual Financial Statements of
the company and the Group.
(cid:118) The issued capital and reserves of the Company and the Group
would be adequate for the purposes of the company and the
Group’s ordinary business.
(cid:118) The company and the Group’s working capital would be
adequate for ordinary business purposes.
Notes:
(i)
(ii)
The Company will publish an announcement complying with
the Listings Requirements if and when an initial and successive
3% tranche(s) of its shares have been repurchased in terms of
the aforementioned general authority.
The Company’s sponsor will provide a letter to the JSE,
regarding the directors’ statement as to the adequacy of the
Group’s working capital, before the company commences
any share repurchases in terms of the general authority being
hereby sought.
By Order of the Board.
St James’s Corporate Services Limited
Company Secretary
23 October 2013
Suite 31, Second Floor
107 Cheapside
London
England
EC2V 6DN
Pan African Resources PLC Integrated Annual Report 2013
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NOTICE OF ANNUAL GENERAL MEETING
EXPLANATORY NOTES
Entitlement to attend and vote
The Company specifies that only those members registered on the
Company’s register of members at:
(cid:118) 18:00 on 20 November 2013; or,
(cid:118) if the AGM is adjourned, 48 hours prior to the adjourned meeting,
shall be entitled to attend and vote at the AGM.
Appointment of proxies
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.
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.
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, you may photocopy
this form.
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, 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
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:
(cid:118) Completed and signed,
(cid:118) sent or delivered to Capita Asset Services, PXS, 34 Beckenham
Road, Beckenham, BR3 4TU or Computershare Investor Services
(Pty) Limited, Ground Floor, 70 Marshall Street, Johannesburg 2001,
South Africa (PO Box 61051, Marshalltown 2107, Johannesburg,
South Africa); no later than 10:00 on 20 November 2013.
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
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
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 applies 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 Asset Services, PXS, 34 Beckenham
Road, Beckenham BR3 4TU or Computershare Investor Services
(Pty) Limited, Ground Floor, 70 Marshall Street, Johannesburg 2001,
South Africa (PO Box 61051, Marshalltown 2107, Johannesburg, South
Africa).
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
In order to revoke a proxy instruction you will need to inform the
Registrar 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 Asset Services
or Computershare Investor Services (Pty) Limited no later than
10:00 on 20 November 2013. 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.
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Pan African Resources PLC Integrated Annual Report 2013
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
As at 18:00 on 22 October 2013, the Company’s issued share
capital comprised 1,827,897,263 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 18:00 on 22 October 2013 was 1,827,897,263.
Directors’ interests and documents on
display
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.
CREST
CREST members who wish to appoint a proxy or proxies through
the CREST electronic proxy appointment service may do so for the
meeting and any adjournment(s) thereof by using the procedures
described in the CREST manual. CREST personal members or other
CREST sponsored members and those CREST members who have
appointed a voting service provider(s), should refer to their CREST
sponsor or voting service provider(s), who will be able to take the
appropriate action on their behalf.
In order for a proxy appointment or instruction made using the
CREST service to be valid, the appropriate CREST message (a
“CREST Proxy Instruction”) must be properly authenticated in
accordance with Euroclear’s specifications and must contain the
information required for such instructions, as described in the
CREST Manual. The message, regardless of whether it constitutes
the appointment of a proxy or to an amendment to the instruction
given to a previously appointed proxy must, in order to be valid, be
transmitted so as to be received by the issuer’s agent (ID: RA10)
by 10:00 on 20 November 2013 (or 48 hours preceding the date
and time for any adjourned meeting). For this purpose, the time
of receipt will be taken to be the time (as determined by the
timestamp applied to the message by the CREST Applications Host)
from which the issuer’s agent is able to retrieve the message enquiry
to CREST in the manner prescribed by CREST. After this time any
change of instructions to proxies appointed through CREST should
be communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or
voting service providers should note that Euroclear does not make
available special procedures in CREST for any particular messages.
Normal system timings and limitations will therefore apply in relation
to the input of CREST Proxy Instructions. It is the responsibility of
the CREST member concerned to take (or, if the CREST member is
a CREST personal member or sponsored member or has appointed
a voting service provider(s) to procure that his CREST sponsor or
voting service provider(s) take(s) such action as shall be necessary to
ensure that a message is transmitted by means of the CREST system
by any particular time). In this connection, CREST members and,
where applicable, their CREST sponsors or voting service providers
are referred, in particular, to those sections of the CREST manual
concerning practical limitations of the CREST system and timings.
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167
ACRONYMS
AND ABBREVIATIONS
Abbreviation
Definition
Abbreviation
Definition
AGM
AIM
AMCU
AMG
ARV
Au
Annual general meeting
Alternative Investment Market
Association of Mineworkers and
Construction Union
Average mining grade
Antiretroviral
Gold
EU
FIFR
FTSE
European Union
Fatal injury frequency rate
Financial Times and Stock Exchange
FVTPL
Fair value through profit and loss
g/t
GAI
Grams/tonne
Governance Assessment Instrument
GBP/ £
Pound sterling
Auroch
Auroch Minerals NL
Barberton Mines Barberton Mines (Pty) Limited
BEE/BBBEE
BEE Act
Black economic empowerment/broad-based
black economic empowerment
Broad-based Black Economic Empowerment
Act, No 53 of 2003
BIOX®
Biological Oxidation
BTRP
CEO
CGU
CIL
CIP
cmg/t
CPI
Barberton Tailings Retreatment Plant
Chief executive officer
Cash-generating unit
Carbon-in-leach
Carbon-in-pulp
Centimetre gram per ton
Consumer price index
Cr2O3
Chromium oxide
CSI
CTRP
DMR
DPS
dti
Corporate social investment
Chrome Tailings Retreatment Plant
Department of Mineral Resources
Dividends per share (DPS)
South African Department of Trade and
Industry
EBITDA
Earnings before interest, taxation, depreciation
and amortisation
EIA
EMP
EPS
ERP
ETRP
Environmental impact assessment
Environmental management plan
Earnings per share
Enterprise resource planning
Evander Tailings Retreatment Plant
GDP
GHGs
GRI
HDSA
HEPS
IAS
IDP
IFM
IFRS
IIRC
IoDSA
JIBAR
JORC
JSE
Kg
King III
Koz
KPA
LED
LOM
LSE
LTIFR
M
MCF
Moz
Gross domestic product
Greenhouse gases
Global Reporting Initiative
Historically disadvantaged South African
Headline earnings per share
International Accounting Standards
Integrated development plan
International Ferro Metals Limited
International Financial Reporting Standards
International Integrated Reporting Council
Institute of Directors of South Africa
Johannesburg interbank agreed rate
Joint Ore Reserves Committee Code
Johannesburg Stock Exchange Limited
kilogram
King Code of Governance for South Africa,
2009
Kilo ounces
Key performance assessment
Local economic development
Life of mine
London Stock Exchange
Lost time injury frequency rate
Metres
Mine call factor
Million ounces
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Abbreviation
Definition
Abbreviation
Definition
MPRDA
The South African Mineral and Petroleum
Resources Development Act 28 of 2002
MQA
MRM
Mt
Mt
NAV
Mining Qualifications Authority
Mineral Resource Management
Million tonnes
Metric tonnes
Net asset value
NOMAD
Nominated adviser
NUM
National Union of Mineworkers
OPSCO
Operations committee
Oz
Ounce
Pan African
Resources or
the Company
PGM
Phoenix
Platinum
PLATO
PPA
PPE
PRF
PwC
RCF
Pan African Resources PLC
Platinum Group Metals
Phoenix Platinum Mining (Pty) Limited
South African Council for Professional and
Technical Surveyors
Purchase price allocation
Personal protective equipment
Overall plant recovery factor
PricewaterhouseCoopers
Revolving credit facility
Remco
Remuneration Committee
RIFR
SABS
SAICA
Recordable injury frequency rate
South African Bureau of Standards
South African Institute of Chartered
Accountants
SAMREC Code
South African Code for Reporting of
Exploration Results, Mineral Resources and
Mineral Reserves
SARB
SENS
SHEQC
South African Reserve Bank
Stock Exchange News Service
Safety, health, environment, quality and
community
SIFR
SLP
SMD
SMME
T
UASA
USA
USD
TRIFR
TSF
UK
VAT
WACC
ZAR
Serious injury frequency rate
Social and labour plan
Stirred media detritor
Small, medium and micro enterprises
Tonnes
United Association of South Africa
United States of America
United States dollar
Total recordable injury frequency rate
Tailings storage facility
United Kingdom
Value-added tax
Weighted average cost of capital
South African rand
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GLOSSARY
OF TERMS AND ABBREVIATIONS
Term
Adit
AIM rules
Definition
Term
Definition
A mining tunnel that is mined from the side
of a mountain or mining pit.
Contained gold
The total gold content (tons multiplied by
grade) of the material being described.
Rules and responsibilities in relation to
Alternative Investment Market companies, as
set out by the London Stock Exchange.
Current arisings The live tailings discarded by the chrome
operators’ washing plant and fed directly to
a CTRP.
Decline
Underground evacuation at an inclined angle
– normally a shaft.
Earnings before
interest, taxation,
depreciation and
amortisation
(EBITDA)
An approximate measure of a company’s
operating cash flow, based on data from
the company’s statement of comprehensive
income, which is calculated by adding back
interest expense, taxes, depreciation and
amortisation to profit after taxation. . Non-
recurring items such as bargain purchase gain,
loss on sale of asset held for sale and loss on
associate are also added back.
Earnings per
share
Attributable profit to the parent company
divided by the weighted average number of
shares.
Effective tax rate Current and deferred taxation as a
percentage of net profit before taxation.
Fatal injury
frequency rate
Number of fatalities per one million man
hours worked.
Global
Reporting
Initiative’s
Sustainability
Reporting
Guidelines
An international standard that enables
organisations to assess their sustainability
performance and disclose the results in a
similar way to financial reporting
Grade
The metal content of ore.
Greenfield
project
Projects started from scratch, generally on
unused land with no information on the
mineral deposit.
Greenstone Belt Geological zone of variably metamorphosed
matic to ultramatic volcanic sequences with
associated sedimentary rocks that occur
within Archaen and Proterozoic cratons
between granite and gneiss.
Headline
earnings per
share
Hydro-mining
Headline earnings attributable to the parent
company divided by the weighted average
number of shares.
A form of mining that uses high-pressure jets
of water to wash down and dislodge rock or
move sediment.
All-in cash costs All-in cash costs include direct operating
costs for all mining and processing sites,
royalty costs, rehabilitation costs, corporate
administration, sustainable capital costs and
major capital projects. The all-in cash costs
would exclude income taxes.
All-in sustaining
cash costs
Autogenous
mills
All-in sustainable costs include direct
operating costs for all mining and processing
sites, royalty costs, rehabilitation, corporate
administration, sustainable capital costs. The
all-in sustaining cash costs would exclude
income taxes.
Self-grinding mills, where a rotating drum
throws larger rocks of ore in a cascading
motion, which causes impact breakage of
these larger rocks and compressive grinding
of finer particles.
Biological
Oxidation
(BIOX®)
An environmentally friendly process of
releasing gold from the sulphide that
surrounds it, using bacteria that perform this
process naturally.
Black economic
empowerment
Brownfield
project
Cash cost
A South African government programme
to redress the inequalities of apartheid
by giving previously disadvantaged groups
who are South African citizens economic
opportunities previously not available to
them. These opportunities may include
skills development, ownership, employment
equity, socio-economic development and
preferential procurement.
Expansion, upgrading of a greenfield project,
where limited information is available on the
mineral deposit
Cash costs include direct operating costs
for all mining and processing sites, but are
exclusive of royalty costs, income taxes,
depreciation and rehabilitation costs, as well
as corporate administration and capital costs.
Chrome tailings Discards from a chrome washing plant, either
historical (tailings dams) or new (current
arisings).
A flotation plant constructed to recover
PGMs from chrome tailings.
Chrome tailings
retreatment
programme
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Term
Definition
Term
Definition
Indicated
Resource
Inferred
Resource
Part of a Mineral Resource for which tonnage,
densities, shape, physical characteristics, grade
and mineral content can be estimated with a
reasonable level of confidence.
Part of a Mineral Resource for which volume
or tonnage, grade and mineral content can be
estimated with only a low level of confidence.
Integrated
annual report
A holistic and integrated representation of
the company’s performance in terms of both
its finance and its sustainability.
King Report on
Governance for
South Africa,
2009
South Africa’s third ground-breaking report
on corporate governance, issued by the
King Committee on Corporate Governance
in 2009; King report compliance is a
requirement for companies listed on the JSE.
Life of mine
Number of years that the operation is
planning to mine and treat ore, and is taken
from the current mine plan.
Local economic
development
A process where local government, public,
business and non-governmental partners
work together with local communities to
create better conditions for economic growth
and employment generation.
Lost time injury
frequency rate
The number of lost time injuries per one
million man hours worked.
Metallurgical
plant
A processing plant that treats ore and
extracts gold.
Mineral Reserve The economically mineable material derived
from a Measured or Indicated Mineral
Resource or both. It includes diluting and
contaminating materials and allows for losses
that are expected to occur when the material
is mined.
A concentration or occurrence of material of
economic interest in or on the Earth’s crust
in such form, quality and quantity that there
are reasonable and realistic prospects for
eventual economic extraction.
Mineral
Resource
Mining Charter
The broad-based social-economic
empowerment charter for the South African
mining industry.
Open-cast
mining
Payshoot
A surface mining technique of extracting rock
or minerals from the earth by their removal
from an open pit or borrow.
A linear to sub-linear zone within a reef
for which gold grades or accumulations are
predominantly above the cut-off grade.
Plant recovery
factor
Ratio, expressed as a percentage, of the
mass of the specific mineral product actually
recovered from ore treated at the plant
to its total specific mineral content before
treatment.
Proved Reserve The economically mineable material derived
Reportable
injury frequency
rate
Reserve Base
from a Measured Mineral Resource. It is
estimated with a high level of confidence.
The number of reportable injuries per one
million man hours worked.
A mineral reserve reported as a mineable
production estimate – the probable and
proved reserve.
Revolving credit
facility
Credit repeatedly available up to a specified
amount as periodic repayments are made.
SAMREC
Social and
labour plan
Stoping
Tailings
South African Code for Reporting of
Exploration Results, Mineral Resources and
Mineral Reserves.
A complex, strategic intervention, planning
and implementation document consisting of
a variety of targets and strategies to promote
socio-economic growth and development,
promote employment and the advancement
of the social and economic welfare and
promote the use of skills and empower
historically disadvantaged South Africans, in
the community and area in which industrial
activity (mining and production) takes place.
The process of excavating ore underground.
The materials left over after the process of
separating the valuable fraction from the
uneconomic fraction (gangue) of an ore.
Tailings (slimes)
dam
Dam facilities designed to store discarded
tailings.
Total recordable
injury frequency
rate
The number of total recordable injuries per
one million man hours worked.
Underground
mining
Mining activities occurring below the earth’s
surface.
Pan African Resources PLC Integrated Annual Report 2013
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Pan African Resources PLC Integrated Annual Report 2013
FORM OF PROXY
UNITED KINGDOM
(Incorporated and registered in England and Wales under Companies Act 1985 with registration number 3937466 on 25 February 2000)
Share code on AIM: PAF ISIN: GB0004300496 Share code JSE: PAN
This Form of Proxy is for use by all non-South African shareholders and for South African certificated shareholders and South African own
name dematerialised shareholders only.
I/We, the undersigned, being a member of the above-named company, hereby appoint the Chairman of the Meeting or (see notes 1 and 3)
Name of proxy
Number of shares proxies appointed over
as my/our proxy to attend, speak and vote on my/our behalf at the Annual General Meeting of Pan African Resources Plc to be held at the office
of Canaccord Genuity Limited, Eighth Floor, 88 Wood Street, London EC2V 7QR at 10:00 on 22 November 2013 and at any adjournment thereof.
If you wish to appoint multiple proxies please see note 1 below. ❑ Please also tick here if you are appointing more than one proxy.
For
Against
Withheld* Discretionary**
Voting
The proxy will vote on the undermentioned resolutions, as indicated.
ORDINARY BUSINESS:
1.
2.
3.
4.
5.
6.
7.
8.
9.
To receive the accounts and the reports of the directors and auditor thereon
To approve the payment of a final dividend for the year ended 30 June 2013
To re-elect Mrs HH Hickey as a member of the Audit Committee.
To re-elect Mr RG Still as a member of the Audit Comittee.
To re-elect Mr KC Spencer as a member of the Audit Committee.
To endorse the Company’s Remuneration Policy.
To re-elect Mr KC Spencer as a Director of the Company
To re-elect Ms P Mahanyele as a Director of the Company
To re-elect Mr RA Holding as a Director of the Company
10. To re-appoint Deloitte LLP as auditor of the Company and to authorise the
Directors to determine their remuneration
SPECIAL BUSINESS:
11. To authorise the Directors to allot equity securities
12. To disapply the statutory pre-emption rights
13. To approve market purchases of Ordinary Shares
If this form is signed and returned without any indication as to how
the proxy shall vote, he or she will exercise his or her discretion
both as to how he or she votes (and whether or not he or she
abstains from voting).
* The ‘Vote Withheld’ option is to enable you to abstain on the
specified resolution. Please note a ‘Vote Withheld’ has no legal
effect and will not be counted in the votes ‘For’ and ‘Against’.
** If you select ‘Discretionary’ or fail to select any of the given
options, the proxy is authorised to vote (or abstain from voting) at
his or her discretion on the specified resolution. The proxy is also
authorised to vote (or abstain from voting) on any other business,
which may properly come before the meeting.
Print Name:
Signature:
Address:
(BLOCK CAPITALS)
Dated this
day of
2013
For
Against
Withheld* Discretionary**
Voting
Notes
1.
To appoint as a proxy a person other than the Chairman of the meeting insert the full name
in the space provided. To appoint more than one proxy you may photocopy this form. Please
indicate the proxy holder’s name and the number of shares in relation to which they are
authorised to act as your proxy (which, in aggregate, should not exceed the number of shares
held by you). Please also indicate if the proxy instruction is one of multiple instructions being
given. All forms must be signed and should be returned together in the same envelope. A proxy
need not be a member of the Company.
2.
3.
4.
5.
6.
7.
This form is for use of shareholders only and will be used only in the event of a poll being
directed or demanded.
You may, if you wish, delete the words “the Chairman of the Meeting” and substitute the
names(s) of your choice. Please initial such alteration.
To be effective, this form of proxy must be lodged at the Company’s registrars, Capita Asset
Services, PXS, 34 Beckenham Road, Beckenham BR3 4TU or Computershare Investor Services
(Pty) Ltd, Ground Floor, 70 Marshall Street, Johannesburg 2001, South Africa not later than 48
hours before the start of the meeting.
In the case of a corporation, the form must be executed under its common seal or under the
hand of an officer or attorney duly authorised in writing.
In the case of joint holders, the signature of any of them will suffice but the names of all joint
holders should be shown. The vote of the senior joint holder who tenders a vote whether in
person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders
and for this purpose seniority shall be determined by the order in which the names stand in the
Register of Members in respect of the joint holding.
Dematerialised shareholders in South Africa who are not own name dematerialised shareholders
and who wish to attend the AGM should instruct their CSDP or broker to issue them with the
necessary authority 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.
8.
Shares held in uncertificated form (i.e. in CREST) may be voted through the CREST Proxy Voting
Service in accordance with the procedures set out in the CREST manual.
Pan African Resources PLC Integrated Annual Report 2013
173
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Business Reply
Licence Number
RSBH-UXKS-LRBC
Third fold and tuck in
1
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PXS
34 Beckenham Road
BECKENHAM
BR3 4TU
Third Fold
174
Pan African Resources PLC Integrated Annual Report 2013
FORM OF PROXY
SOUTH AFRICA
(Incorporated and registered in England and Wales under Companies Act 1985 with registration number 3937466 on 25 February 2000)
Share code on AIM: PAF ISIN: GB0004300496 Share code JSE: PAN
This Form of Proxy is for use by all non-South African shareholders and for South African certificated shareholders and South African own
name dematerialised shareholders only.
I/We, the undersigned, being a member of the above-named company, hereby appoint the Chairman of the Meeting or (see notes 1 and 3)
Name of proxy
Number of shares proxies appointed over
as my/our proxy to attend, speak and vote on my/our behalf at the Annual General Meeting of Pan African Resources Plc to be held at the office
of Canaccord Genuity Limited, Eighth Floor, 88 Wood Street, London EC2V 7QR at 10:00 on 22 November 2013 and at any adjournment thereof.
If you wish to appoint multiple proxies please see note 1 below. ❑ Please also tick here if you are appointing more than one proxy.
The proxy will vote on the undermentioned resolutions, as indicated.
ORDINARY BUSINESS:
For
Against
Withheld* Discretionary**
Voting
1.
2.
3.
4.
5.
6.
7.
8.
9.
To receive the Accounts and the reports of the directors and auditor thereon
To approve the payment of a final dividend for the year ended 30 June 2013
To re-elect Mrs HH Hickey as a member of the Audit Committee.
To re-elect Mr RG Still as a member of the Audit Committee.
To re-elect Mr KC Spencer as a member of the Audit Committee.
To endorse the Company’s Remuneration Policy.
To re-elect Mr KC Spencer as a Director of the Company
To re-elect Ms P Mahanyele as a Director of the Company
To re-elect Mr RA Holding as a Director of the Company
10. To re-appoint Deloitte LLP as auditor of the Company and to authorise the
Directors to determine their remuneration
SPECIAL BUSINESS:
11. To authorise the Directors to allot equity securities
12. To disapply the statutory pre-emption rights
13. To approve market purchases of Ordinary Shares
If this form is signed and returned without any indication as to how
the proxy shall vote, he or she will exercise his or her discretion
both as to how he or she votes (and whether or not he or she
abstains from voting).
* The ‘Vote Withheld’ option is to enable you to abstain on the
specified resolution. Please note a ‘Vote Withheld’ has no legal
effect and will not be counted in the votes ‘For’ and ‘Against’.
** If you select ‘Discretionary’ or fail to select any of the given
options, the proxy is authorised to vote (or abstain from voting) at
his or her discretion on the specified resolution. The proxy is also
authorised to vote (or abstain from voting) on any other business,
which may properly come before the meeting.
Print Name:
Signature:
Address:
(BLOCK CAPITALS)
Dated this
day of
2013
For
Against
Withheld* Discretionary**
Voting
Notes
1.
To appoint as a proxy a person other than the Chairman of the meeting insert the full name
in the space provided. To appoint more than one proxy you may photocopy this form. Please
indicate the proxy holder’s name and the number of shares in relation to which they are
authorised to act as your proxy (which, in aggregate, should not exceed the number of shares
held by you). Please also indicate if the proxy instruction is one of multiple instructions being
given. All forms must be signed and should be returned together in the same envelope. A proxy
need not be a member of the Company.
2.
3.
4.
5.
6.
7.
This form is for use of shareholders only and will be used only in the event of a poll being
directed or demanded.
You may, if you wish, delete the words “the Chairman of the Meeting” and substitute the
names(s) of your choice. Please initial such alteration.
To be effective, this form of proxy must be lodged at the Company’s registrars, Capita Asset
Services, PXS, 34 Beckenham Road, Beckenham BR3 4TU or Computershare Investor Services
(Pty) Ltd, Ground Floor, 70 Marshall Street, Johannesburg 2001, South Africa not later than 48
hours before the start of the meeting.
In the case of a corporation, the form must be executed under its common seal or under the
hand of an officer or attorney duly authorised in writing.
In the case of joint holders, the signature of any of them will suffice but the names of all joint
holders should be shown. The vote of the senior joint holder who tenders a vote whether in
person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders
and for this purpose seniority shall be determined by the order in which the names stand in the
Register of Members in respect of the joint holding.
Dematerialised shareholders in South Africa who are not own name dematerialised shareholders
and who wish to attend the AGM should instruct their CSDP or broker to issue them with the
necessary authority 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.
8.
Shares held in uncertificated form (i.e. in CREST) may be voted through the CREST Proxy Voting
Service in accordance with the procedures set out in the CREST manual.
Pan African Resources PLC Integrated Annual Report 2013
175
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POSTAGE WILL
BE PAID BY THE
ADDRESSEE
NO POSTAGE
NECESSARY
IF POSTED IN
SOUTH AFRICA
(cid:19)
(cid:17)
(cid:20)
(cid:7)
(cid:1)
(cid:23)
(cid:22)
(cid:21)
(cid:18)
(cid:7)
BUSINESS REPLY SERVICE
LICENCE NO. J 5563
(cid:4)(cid:3)(cid:2)(cid:5)(cid:1)(cid:10)(cid:6)(cid:13)(cid:14)(cid:8)(cid:6)(cid:9)(cid:9)(cid:15)(cid:12)(cid:16)(cid:11)
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Pan African Resources PLC Integrated Annual Report 2013
CONTACT
DETAILS
Corporate Office
The Firs Office Building
1st Floor, Office 101
cnr. Cradock and Biermann Avenues
Rosebank, Johannesburg
South Africa
Office: + 27 (0) 11 243 2900
Facsmile: + 27 (0) 11 880 1240
Registered Office
Suite 31
Second Floor
107 Cheapside
London
EC2V 6DN
United Kingdom
Office: + 44 (0) 207 796 8644
Facsmile: + 44 (0) 207 796 8645
Ron Holding
Pan African Resources PLC
Chief Executive Officer
Office: + 27 (0) 11 243 2900
Cobus Loots
Pan African Resources PLC
Director
Office: + 27 (0) 11 243 2900
Justine James
Gable Communications
Public Relations – UK
Office: +44 (0)207 193 7463
Andrew Chubb
Canaccord Genuity Limited
Nominated Adviser and Joint Broker
Office: +44 (0)207 523 8350
Nigel Gordon
Fasken Martineau LLP
Solicitors in the UK
Office: +44 (0)207 917 8500
Louise Brugman
Vestor Media & Investor Relations
Public & Investor Relations
Office: +27 (0) 11 787 3015
Phil Dexter
St James’s Corporate Services Limited
Company Secretary
Office: + 44 (0) 207 499 3916
Elizabeth Johnson
finnCap Ltd
Joint Broker
Office: + 44 (0) 207 220 0500
Sholto Simpson
One Capital
JSE Sponsor
Office: + 27 (0) 11 550 5009
www.panafricanresources.com
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www.panafricanresources.com