INTEGRATED ANNUAL REPORT
FOR THE YEAR ENDED 30 JUNE 2015
S TA K E H O L D E R S • G R O W T H • P R O F I TA B L E • S U S TA I N A B L E
CONTENTS
STRATEGIC REPORT
BUSINESS OVERVIEW
Our vision and investment case
Salient features
Group highlights and challenges
Who we are
Our business model
Operating assets
Five-year review
2
3
4
6
8
10
12
STRATEGY
Our strategy
Stakeholder engagement
Chairman’s review
Board of directors
Chief executive officer’s review
Executive and operations management
16
24
26
28
30
36
PERFORMANCE REVIEW
Financial director’s review
Production for operations
Operational review
– Barberton Mines
– Evander Mines
– Phoenix Platinum
Abridged mineral resources and mineral
reserves report
40
47
50
50
54
58
62
ABOUT THIS REPORT
SCOPE AND BOUNDARY
We are pleased to present Pan African
Resources’ third integrated annual report
(the report). The report presents to our
shareholders and other stakeholders an
overview of the group’s financial and
non-financial information for the period
1 July 2014 to 30 June 2015. The report
includes the activities of the holding
company Pan African Resources and all of
its operations and subsidiaries.
The group’s subsidiaries are incorporated in
South Africa and their functional currency
is ZAR. The group’s business is conducted
in ZAR and the accounting records are
maintained in this same currency, with
the exception of precious metal product
sales, which are conducted in USD, prior to
conversion into ZAR. The ongoing review
of the results of operations conducted by
executive management and the board is
also performed in ZAR.
The report includes abbreviations and
terms which have been defined in the
glossary on
page 183.
KING III
IIRC
GRI
IFRS
PROCESS FOR DEFINING
REPORT CONTENT
The process for defining the report content
was guided by
recommendations
the
contained in the International Integrated
the
Reporting Framework,
International Integrated Reporting Council
(IIRC) in December 2013. Going forward,
we will continue to embed the guiding
principles and content elements contained
in the International Integrated Reporting
Framework.
issued by
The content in the report focuses on those
issues which materially impact our ability
to create and sustain value over the short,
medium and long term. Pan African Resources
appreciates that its business operations use
various forms of capital, including financial
capital,
capital, human
intellectual capital, manufactured capital and
social and relationship capital. Consideration
of the six forms of capital is shown in our
business model on
capital, natural
page 8.
For the purposes of this report, we define
short, medium and long term as follows:
Short term: One year
Medium term: Two to three years
Long term: Beyond three years.
the
(AIM),
report
the LSE’s
Furthermore,
has been
prepared in line with the London Stock
Investment
Exchange’s (LSE) Alternative
Market
international
market for smaller growing companies, and
the Johannesburg Stock Exchange’s (JSE)
Listings Requirements. We have also applied
the majority of principles of the King Report
on Corporate Governance (King III), with
for non-compliance on
an explanation
page 81. The UK Corporate Governance
Code (UK Code) was also taken into
consideration in the preparation of the report.
The report was further prepared based on
the Global Reporting Initiative (GRI) G3.1
standard disclosure guidelines and the Mining
and Metals Sector Disclosure Guidelines.
A separate GRI report is available on our
website at
www.panafricanresources.com.
the South African
The annual financial
statements have
been prepared in accordance with the
International Financial Reporting Standards
(IFRS),
Institute of
Chartered Accountants Financial Reporting
Guides, as issued by the Accounting Practices
Committee and the requirements of the
South African Companies Act 71 of 2008
(SA Companies Act) and the UK Companies
Act 2006 (UK Companies Act).
NAVIGATIONAL TOOLS
The following tools will assist you throughout the report
Capital reporting
For further reading on our website
www.panafricanresources.com
For further reading
in this report
Sustainable development
report reference
FEEDBACK
We welcome any feedback stakeholders may have on our integrated annual report. Please contact info@paf.co.za with your feedback. Online
http://www.panafricanresources.com. A limited number of hard copies are
copies of our integrated annual report is available on our website
available on request from the company secretary, whose details appear on the inside back cover.
Pan African Resources
Integrated Annual Report 2015
1
S
S
E
N
I
S
U
B
Sustainability review
Employee review
Safety, health and environment review
Community review
71
72
74
77
Remuneration review
Audit and risk committee report
Directors’ statement of responsibility
Certificate of the company secretary
Directors’ report
85
94
96
97
98
TRANSPARENCY AND ACCOUNTABILITY
Corporate governance review
Risk governance
80
84
ANNUAL FINANCIAL STATEMENTS
Contents to the annual financial statements
100
SHAREHOLDERS’ INFORMATION
Shareholders’ analysis
Notice of annual general meeting
Form of proxy (United Kingdom)
Form of proxy (South Africa)
Glossary
Company information
Shareholders’ diary
174
175
179
181
183
ibc
ibc
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
in
this report, other
FORWARD-LOOKING
STATEMENTS
Statements
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
believe that the expectations expressed in
such forward-looking statements or forward-
looking information are based on reasonable
assumptions, expectations, estimates and
projections.
However, these statements should not be
construed as being guarantees or warranties
(whether expressed or implied) of future
performance.
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 these statements.
Important factors that could cause actual results
to differ materially from statements expressed
in this report 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 publicly
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 other than as required by regulation.
STATEMENT FROM THE
BOARD OF DIRECTORS
The board acknowledges its responsibility to
ensure the integrity of the integrated annual
report. The board has applied its collective
mind in the preparation and presentation of
the report and is satisfied that the report
addresses all material matters and fairly presents
the integrated performance of Pan African
Resources.
Keith Spencer
Chairman
Cobus Loots
Chief executive officer
16 September 2015
EXTERNAL
ASSURANCE
INTERNAL
ASSURANCE
MANAGEMENT
ASSURANCE
ASSURANCE
Pan African Resources’ external auditors, Deloitte LLP, as the statutory auditor and Deloitte & Touche SA as the
local auditor for the JSE reporting purposes, have independently audited the financial statements for the year
ended 30 June 2015. Their unmodified audit reports are set out on
pages 102 and 103.
SUPPLEMENTARY INFORMATION
This report represents one of three elements of Pan African Resources’ 2015 financial year communication strategy with stakeholders, the other two being:
Pan African Resources’ sustainable development
report
• Contains additional non-financial disclosures
referencing GRI
• The sustainable development report is
compiled based on a self-declared GRI
Application Level B
SUSTAINABLE
DEVELOPMENT REPORT
FOR THE YEAR ENDED 30 JUNE 2015
Pan African Resources’ Mineral Resources
and Mineral Reserves report
• Provides technical information on the
mineral assets of Pan African Resources in
compliance with the South African Code
for Reporting of Mineral Resources and
Mineral Reserves (the SAMREC Code)
MINERAL RESOURCES AND
MINERAL RESERVES REPORT
FOR THE YEAR ENDED 30 JUNE 2015
S TA K E H O L D E R S • G R O W T H • P R O F I TA B L E • S U S TA I N A B L E
S TA K E H O L D E R S • G R O W T H • P R O F I TA B L E • S U S TA I N A B L E
Sustainable development
report
Mineral Resources and
Mineral Reserves report
The above documents, together with this 2015 integrated annual report, are available on the group’s website at
www.panafricanresources.com
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
2 Pan African Resources
Integrated Annual Report 2015
OUR VISION
To continue to build a precious metals business in Africa
by remaining focused on our four strategic pillars.
INVESTMENT CASE
Pan African Resources is a mid-tier African-focused
precious metals producer.
Proven business model, committed
to low-cost production and
optimising extraction efficiency
•
•
•
•
•
Culture of delivery – Barberton Mines’
BTRP and Evander Mines’ ETRP
Quality assets delivering good returns
Focused on strong and sustainable margins
Total mineral resources gold of 31.9Moz
and 0.6Moz of platinum group elements
People focused
Preferred gold investment
•
Profitable production growth from
long life assets
• Significant resource and reserve base
•
Ability to conclude further value accretive
acquisitions
Strong track record of replenishing
mineral reserves by targeting exploration and
development to increase the life of mine
•
Delivering consistent returns
• Attractive dividend yield
•
High margin assets allow for dividend
to be maintained
• Robust statement of financial position
Disciplined approach
to capital management
•
Management team that continues
to drive shareholder value
Committed to sustainability
• Focused on achieving zero harm
•
Legacy of environmentally responsible
mining
• Strong relationships with labour,
government and communities
People
Fostering relationships through
action, integrity and honesty
Action
Leadership, planning and control
Results
Delivering on all our targets without compromise
Maximise sustainable gold
Positive impact on earnings
SALIENT FEATURES
3
6.5%
2.7%
Gold sold: 175,857oz
(2014: 188,179oz)
Revenue: ZAR2,539.4 million
(2014: ZAR2,608.8 million)
52.7%
Headline earnings: ZAR213.6 million
(2014: ZAR452.0 million)
13.7%
18.7%
All-in costs per kilogram: ZAR425,084
(2014: ZAR374,015/kg)
Proposed final dividend: ZAR0.11466 per share
proposed (2014: ZAR0.1410 per share) equating to
ZAR210 million (2014: ZAR258 million)
GROUP REVENUE
ZAR millions
GOLD SOLD
oz
Phoenix Platinum
Evander Mines
Barberton Mines
2011
2011
2012
2013 2014
2015
2012
2014
2013
2015
879 1,240 1,240 1,848
98.4
71.9
58.9
0.0
133
79
101
101
972.0
438.9 1,025.8
0.0
879.7 1,240.3 1,350.3 1,511.1 1,469.0
817
0.0
68
0.0
Tailings
Surface
Underground
2011
2011
–
817
68
–
2012
2013 2014
2015
2012
2014
2013
2015
– 22,885 30,806
–
879 1,240 1,240 1,848
133
79
101
101
9,990
3,836 11,359
1,068
92,197 93,381 126,657 153,935135,061
HEADLINE EARNINGS
ZAR millions
REVENUE AND COSTS PER KILOGRAM
ZAR/kg
2011
2011
2012
2012
2013 2014
2014
2013
2015
2015
190.7
359.7
487.0
452.0
213.6
Average spot price received
All-in-costs
All-in sustaining cash costs
Cash cost
2011
306,757
217,524
217,524
175,520
2012
422,215
265,713
246,801
193,360
2013
440,824
343,949
281,551
231,439
2014
433,437
374,015
349,008
298,345
2015
446,274
425,084
402,221
349,410
Pan African Resources Integrated Annual Report 2015STRATEGIC REPORT: BUSINESSSTRATEGIC REPORT: STRATEGYSTRATEGIC REPORT: PERFORMANCETRANSPARENCY AND ACCOUNTABILITYANNUAL FINANCIAL STATEMENTSSHAREHOLDER INFORMATION
4 Pan African Resources
Integrated Annual Report 2015
GROUP HIGHLIGHTS AND CHALLENGES
Lost Time Injury Frequency Rate (LTIFR) and Reportable
Injury Frequency Rate (RIFR) improvements
BTRP continues to perform according to expectation
Evander Tailings Retreatment Plant (ETRP) steady state
production since 1 March 2015
Phoenix Platinum increased platinum group elements (PGE)
ounces sold by 42.2% to 10,245oz PGE
CHALLENGES
• Weakened and volatile commodity
prices
• Evander Mines’ low grade cycle
adversely impacted production
• Wage negotiations ongoing
• Issuance of section 54 instructions
by the DMR
Maintained an industry leading dividend yield throughout
the low precious metals price cycle
ZAR5.6 million savings through strategic sourcing of goods and
services for the gold operations
ZAR20.8 million invested to date in corporate social investment (CSI)
and socioeconomic development (SED) initiatives
In process of acquiring the Uitkomst Colliery
Pan African Resources
Integrated Annual Report 2015
5
S
S
E
N
I
S
U
B
For more information view
our full sustainable development
report available on our website
www.panafricanresources.com
at
SUSTAINABLE
DEVELOPMENT REPORT
FOR THE YEAR ENDED 30 JUNE 2015
S TA K E H O L D E R S • G R O W T H • P R O F I TA B L E • S U S TA I N A B L E
30 June
2015
ZAR million
30 June
2014*
ZAR million
DISTRIBUTION OF VALUE CREATED
ZAR2,747.4 million
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
33% Salaries
52% Suppliers
1% Community expenses
1% Financial institutions – net interest expense
1% Royalty expense
3% Taxation expense
9% Dividend paid
E
C
N
A
M
R
O
F
R
E
P
GROWTH AND CREATING
STAKEHOLDER VALUE
Pan African Resources remains committed
to creating value for all stakeholders.
is
For shareholders specifically, value
determined by share price performance,
sustainable earnings, cash flow growth and
by consistent dividend payments.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
VALUE ADDED STATEMENT
Revenue from all operations
Paid to suppliers for material and services
Value added
Income from investments***
Total value created
VALUE DISTRIBUTION
Employee costs
Capital providers
Finance costs
Dividends to equity holders of the company
Central and local government
Company taxation
Skills development levy
Corporate social investment (CSI)**
Reinvested in group to maintain and develop operations
Depreciation and amortisation
Retained profits
VALUE ADDED RATIOS
Average number of employees****
Revenue per employee (ZAR million)
Value created per employee (ZAR million)
Corporate social investment – % of profit after tax
2 539,4
(828,1)
1 711,3
1,6
1 712,9
910,8
302,2
44,2
258,0
82,8
74,4
8,4
20,8
396,3
186,1
210,2
2 608,8
(738,2)
1 870,6
8,5
1 879,1
852,6
255,1
14,8
240,3
131,1
120,8
10,3
19,0
621,3
169,2
452,1
1 712,9
1 879,1
4 334
4 426
0,6
0,4
9,9
0,6
0,4
4,2
As previously reported in the prior year.
*
** CSI includes education, food and water security, and poverty alleviation projects.
*** Income from investments includes interest received and share of associate losses and losses on disposal of assets held
for sale.
**** Average number of permanent group employees throughout the year.
GROUP – LTIFR AND RIFR
Rates per million man hours
ACCIDENT RATE
Rates per million man hours
S
T
N
E
M
E
T
A
T
S
LTIFR
RIFR
LTIFR Target
RIFR Target
2011
817
2.91
68
1.62
5.80
2.11
2012
2013
879 1,240 1,240 1,848
133
79
101
3.63
101
1.94
4.97
1.73
2.74
1.63
4.41
1.65
I
L
A
C
N
A
N
F
I
2014
2.97
1.52
3.92
1.45
2015
2.29
1.11
3.53
1.30
2011
2011
817
2.91
68
1.62
LTIFR
RIFR
TRIFR
TRIFR Target
2012
2012
2015
2013 2014
2013
879 1,240 1,240 1,848
133
79
3.63
101
1.94
2.74
1.63
101
2014
2.97
1.52
2015
2.29
1.11
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
6 Pan African Resources
Integrated Annual Report 2015
WHO WE ARE
ORGANISATIONAL STRUCTURE
100%
Emerald Panther Investment 91 Pty
Ltd (Incorporated in South Africa)
100%
Evander Gold Mining Pty Ltd
(Incorporated in South Africa)
Dormant
Evander Mining Operations
100%
Barberton Mines Pty Ltd
(Incorporated in South Africa)
100%
Evander Gold Mines Ltd
(Incorporated in South Africa)
Barberton Mining Operations
100%
Phoenix Platinum Mining Pty Ltd
(Incorporated in South Africa)
100%
PT Sands Pty Ltd
(Incorporated in South Africa)
Phoenix Platinum, Chrome Tailings
Retreatment Project
Pan African Resources Management
Services Company Pty Ltd
(Incorporated in South Africa)
Management services company that
provides management services to
operations
100%
Dormant
100%
Pan African Resources Funding
Company Pty Ltd (Incorporated in
South Africa)
Group treasury company
Note 1: During the year, Pan African Resources announced the acquisition of the Uitkomst Colliery from Shanduka (related party) and its joint venture operating partner. This acquisition is
subject to suspensive conditions typical for a transaction of this nature.
OUR HISTORY
Incorporated
as Viking
Internet PLC
in February
Admitted to
AIM in May
2000
Acquired 74% of
Barberton Mines from
Metorex Limited
Finalised the acquisition of
100% of the share capital of
Evander Mines for a total
net purchase consideration
of ZAR1.3 billion
Commissioned
Barberton Tailings
Retreatment Plant
2007
2013
2001 – 2006
2009
2015
Exploration phase
Acquired the remaining
26% of Barberton
Mines from Shanduka in
exchange for 295.7 million
shares in the company
Exercised the option to
acquire 100% of Phoenix
Platinum from Metorex
for cash in May
Commissioned
Evander Tailings
Retreatment Plant
Pan African Resources
Integrated Annual Report 2015
7
S
S
E
N
I
S
U
B
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
OUR OPERATIONS
Pan African Resources is a
mid-tier African focused precious
metals producer with quality
assets in South Africa
Towns close to project locations
Towns and cities on main roads
Provinces
Neighbouring country
BOTSWANA
Zeerust
Rustenburg
3
NORTH WEST PROVINCE
Johannesburg
Vryburg
Potchefstroom
Klerksdorp
NORTHERN CAPE
Kuruman
Taung
FREE STATE
LIMPOPO
Kruger
National
Park
MPUMALANGA
Nelspruit
GAUTENG
Pretoria
Middelburg
1
Barberton
Witbank
2
Secunda
Ermelo
KWAZULU-NATAL
1
2
3
Barberton Mines is a low cost,
high grade, greenstone belt
producing operation which has
contributed significantly to Pan
African Resources’ successful track
record. Barberton Mines production
capacity is 95,000oz Au from
underground and 20,000oz from
Barberton Tailings Retreatment
Plant (BTRP) per annum
The acquisition of Evander Mines
in 2013 was transformational for
Pan African Resources as it paved
the way for the company to
become a mid-tier gold producer
with a strong, long-term project
pipeline. Evander Mines production
capacity from underground
operations is 95,000oz per annum
and from the ETRP 10,000oz
per annum
Phoenix Platinum is a tailings
retreatment plant designed to
extract 10,000oz of platinum group
metals per annum from chrome
tailings
For further information on our operations and operating assets refer to pages 10 and 50.
KEY FEATURES
African mid-tier precious metals business
• Quality assets producing approximately 215,000oz of gold
Cash flow generative and dividend paying
• Progressive dividend policy and track record of sector leading
per annum
dividend payouts
• Focused on maintaining and increasing profitable production
•
Historic dividend yield in excess of 6%
ounces
Dual listed on London’s AIM and South Africa’s JSE
• Market capitalisation at 30 June 2015 of ZAR3.3 billion
• Diversified shareholder base, major South African and
international institutions
• Shanduka Resources as empowerment partner with 23.83%
direct shareholding, equating to an effective 26.2% black
economic empowerment (BEE) ownership for the purposes
of the Mineral and Petroleum Resources Development Act
(MPRDA). More detail on this transaction can be found
in our sustainable development report on the
group website
www.panafricanresources.com
• Low level of gearing with strong balance sheet
• Access to funding facilities of ZAR1.2 billion
Significant growth projects
•
Resources base in excess of 31Moz
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
8 Pan African Resources
Integrated Annual Report 2015
OUR BUSINESS MODEL
BARBERTON MINES AND BARBERTON
TAILINGS RETREATMENT PLANT (BTRP)
• Fairview, Sheba and Consort mines produce
•
•
•
~95koz of gold per annum
Average tonnages milled ~300kt in excess
of 10g/t
BTRP produces ~20koz of gold per annum
BTRP processing capacity of 1.2 million
tonnes per annum at a headgrade of 1.4g/t
PAN AFRICAN RESOURCES USES THE
SIX FORMS OF CAPITAL IN ITS BUSINESS
ACTIVITIES TO CREATE STAKEHOLDER
VALUE
FINANCIAL CAPITAL
ZAR1.2 billion
in available funding facilities
MANUFACTURED CAPITAL
Property, plant and equipment of
ZAR3.5 billion
S
T
U
P
N
I
HUMAN CAPITAL
4,326 employees
and 1,095 contractors
EVANDER MINES AND EVANDER
TAILINGS RETREATMENT PLANT (ETRP)
•
•
8 Shaft produces ~95koz of gold
per annum
Average 8 Shaft tonnages
milled ~400kt at between
5g/t – 7g/t
• ETRP produces 10koz
of gold per annum from
tailings processing
• ETRP processing capacity of
2.4 million tonnes per annum
at a headgrade of 0.3g/t
R
U
O
INTELLECTUAL CAPITAL
Barberton and Evander Mines mining and
prospecting licences, key personnel for
managing the BIOX® process
SOCIAL AND RELATIONSHIP
CAPITAL ZAR20.8 million
invested in communities
NATURAL CAPITAL
1,376,815Gj of electricity and
12,249m2 of water used by
group operations
PHOENIX PLATINUM CHROME
TAILINGS RETREATMENT PLANT (CTRP)
•
•
CTRP produces ~10koz of PGE
per annum
CTRP processing capacity
~300kt per annum
PRODUCES
~10koz
of PGEs
per annum
I
T
I
E
S A
ND OUTP U T S
PRODUCES
in excess of
215koz
of gold
per annum
O
U
R
A
C
T
I
V
OTHER ACTIVITIES
• Growing the business through
organic and acquisitive opportunities such as:
– Evander South Project
– Elikhulu Tailing Retreatment
Project
– Uitkomst Colliery
EXTERNAL ENVIRONMENT
Gold
market
Capital
and foreign
exchange
markets
9
S
S
E
N
I
S
U
B
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
O
U
R
A
C
T
I
V
I
T
I
E
S A
ND OUTP U T S
ONE
FATALITY
ACCIDENT RATES PER
MILLION MAN HOURS
TRIFR 11.14
LTIFR 2.29
RIFR 1.11
THERE ARE SOME IMPACTS
ON HUMAN AND
NATURAL CAPITAL THAT
ARE INHERENT TO MINING
ACTIVITIES
OUR IMP A C T S
CARBON EMISSIONS
OF 0.1tCO2e/t
MILLED
1,376,815Gj
OF ELECTRICITY USED
12,249m3
OF WATER
USED
REVENUE GENERATED
ZAR2,539.4 million
– ZAR2,441.0 million gold revenue
– ZAR98.4 million PGE revenue
VALUE DISTRIBUTION
EMPLOYEES
ZAR910.8 million
SHAREHOLDERS
dividends paid in
December 2014
ZAR258 million
GOVERNMENT
ZAR282.3 million
including income tax, royalty,
skills development levy, PAYE
S
E
M
O
C
T
U
O
R
U
O
CSI and SED spend of
ZAR20.8 million
REINVESTED in infrastructure
ZAR352 million
Regulatory
environment
Energy
constraints
Labour and
communities
Pan African Resources Integrated Annual Report 2015STRATEGIC REPORT: STRATEGYSTRATEGIC REPORT: PERFORMANCETRANSPARENCY AND ACCOUNTABILITYSHAREHOLDER INFORMATIONANNUAL FINANCIAL STATEMENTS
10 Pan African Resources
Integrated Annual Report 2015
N
O
T
R
E
B
R
A
B
I
I
S
G
N
L
A
T
N
O
T
R
E
B
R
A
B
)
P
R
T
B
(
T
N
A
L
P
T
N
E
M
T
A
E
R
T
E
R
I
S
E
N
M
R
E
D
N
A
V
E
I
I
S
G
N
L
A
T
R
E
D
N
A
V
E
)
P
R
T
E
(
T
N
A
L
P
T
N
E
M
T
A
E
R
T
E
R
I
M
U
N
T
A
L
P
X
N
E
O
H
P
I
OPERATING ASSETS
Pan African Resources is a mid-tier African-focused precious metals producer
with a production capacity of 215,000oz gold and 10,000oz
PGEs per annum. The group’s assets include:
• BARBERTON MINES: three gold mines and the BTRP in Mpumalanga
•
EVANDER MINES: a gold mine in Mpumalanga, ETRP and several
brownfield projects
• PHOENIX PLATINUM: the CTRP in the North West province
Ownership
Life of mine
Location
100%
20 years
Number of employees: 1,826
Number of contractors: 422
100%
15 years
Number of employees: 56
Number of contractors: 38
National roads
Mining licence
National roads
Mining licence
100%
16 years
Leandra
Poplar
New Consort Mine
Sheba Mine
Fairview Mine
New Consort Mine
Sheba Mine
Fairview Mine
Rolspruit
Kinross
Evander 8 shaft
Evander 7 shaft
Number of employees: 2,415
Number of contractors: 570
Evander South
100%
16 years
National roads
Mining licence
Leandra
Poplar
ETRP
Elikhulu
eMbalenhle
Secunda
Rolspruit
Kinross
Evander 8 shaft
Evander 7 shaft
Number of employees: 12
Number of contractors: 7
Evander South
National roads
Mining licence
ETRP
Elikhulu
eMbalenhle
Secunda
100%
28 years
Rustenburg
Middelkraal dam
Number of employees: 3
Number of contractors: 58
Xstrata Kroondal Mine
Elandskraal dumps
and pits
Kroondal dump
Buffelsfontein dams
Bapong
IFM
N4
Buffelspoort dam
Mooinooi
Hartbeespoort dam
National roads
Mining licence
MINERAL RESOURCES (Moz)
Gold
PGEs
9.2
2.2
31.9
20.5
0.1
0.1
0.6
0.4
Pan African Resources
Integrated Annual Report 2015
11
S
S
E
N
I
S
U
B
MINERAL RESERVES (Moz)
Gold
PGEs
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
1.0
10.4
9.4
0.1
0.5
0.4
Y
G
E
T
A
R
T
S
Measured
Indicated
Inferred
Proved
Probable
Description
Operational statistics
Resources and Reserves
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Located in a greenstone belt, this is a low
cost, high grade operation comprising three
mines: Fairview, Sheba and New Consort
and a recently commissioned tailings
retreatment plant (BTRP).
Mining Charter rating: 3
Located at Barberton Mines, the R320
million gold tailings retreatment plant
commenced construction in April 2012,
was completed on schedule and within
budget, and achieved its inaugural gold
pour in June 2013.
Mining Charter rating: 3
Located in the Witwatersrand basin,
current operations comprise No. 8 Shaft,
several potential development projects
– Poplar, Evander South, Rolspruit and
Elikhulu (a surface tailings retreatment
project), the Kinross metallurgical
processing plant and tailings storage facility.
Mining Charter rating: 3
A tailings retreatment project which will
exploit historically generated gold tailings
deposited in the Kinross tailings storage
facility and surface sources.
Mining Charter rating: 3
Phoenix is a tailings plant which extracts
platinum group metals from chrome tailings.
Mining Charter rating: 3
Production (tonnes milled): 260,749
81,493
Produced (oz/annum):
95,000oz of Au per annum
Capacity:
300,000
Tonnage (capacity):
10.0g/t – 11.0g/t
Headgrade:
Plant feed grade:
10.7g/t
Sustainable capital per annum: ZAR115 million
Acquired: 74% from Metorex 2007: remaining
26% from Shanduka 2009
Production (tonnes milled): 971,627
24,283
Produced (oz/annum):
25,000oz of Au per annum
Capacity:
1.2 million
Tonnage (capacity):
1.4g/t
Headgrade:
Plant feed grade:
1.4g/t
Sustainable capital per annum: ZAR2 million
Developed: Steady-state production commenced in 2013
Production (tonnes milled): 648,209
63,558
Produced (oz/annum):
95,000oz of Au per annum
Capacity:
655,000
Tonnage (capacity):
5.0g/t – 7.5g/t (includes
Headgrade:
development waste tonnes)
3.2g/t
Plant feed grade:
Sustainable capital per annum: ZAR140 million
Acquired: 100% from Harmony in March 2013
Production (tonnes milled): 647,167
Produced (oz/annum):
Capacity:
Tonnage (capacity):
Headgrade:
6,523
10,000oz of Au per annum
2.4 million
Tailings: 0.32g/t
Surface feedstock: 1.0g/t – 1.75g/t
0.5g/t
Plant feed grade:
Sustainable capital per annum: ZAR2 million
Developed: Steady-state production commenced in 2015
Production (tonnes milled): 262,119
10,245
Produced (oz/annum):
12,000oz of PGEs per annum
Capacity:
240,000
Tonnage (capacity):
3.7g/t
Headgrade:
Plant feed grade:
3.3g/t
Sustainable capital per annum: ZAR1 million
Developed: Steady-state production commenced in 2012
Resources:
Reserves:
Exploration: Ongoing
9.0Mt @ 10.7g/t (3.0Moz)
4.3Mt @ 10.1g/t (1.4Moz)
Cash cost: USD840oz
E
C
N
A
M
R
O
F
R
E
P
Resources: 20.4Mt @ 1.3g/t (0.9Moz)
13.4Mt @ 1.5g/t (0.6Moz)
Reserves:
Exploration: Ongoing
Cash cost: USD480oz
Resources: 83.5Mt @ 9.7g/t (25.9Moz)
Reserves: 28.8Mt @ 8.5g/t (7.9Moz)
Exploration: Ongoing
Cash cost: USD1,291oz
Resources: 205.3Mt @ 0.3g/t (1.9Moz)
Reserves:
38.1Mt @ 0.3g/t (0.4Moz)
Exploration: Ongoing
Cash cost: USD688oz
Resources: 6.0Mt @ 3.1g/t (0.6Moz)
Reserves: 4.8Mt @ 3.2g/t (0.5Moz)
Exploration: Ongoing
Cash cost: USD578oz
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
12 Pan African Resources
Integrated Annual Report 2015
FIVE-YEAR REVIEW
2015
2014
2013
2012
2011
908,958
1,618,794
5.4
1.0
175,857
1,212
949
10,245
948,149
815,736
5.8
1.6
188,179
1,303
897
7,204
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
–
ZAR
Millions
GBP
Millions
ZAR
Millions
GBP
Millions
ZAR
Millions
GBP
Millions
ZAR
Millions
GBP
Millions
ZAR
Millions
GBP
Millions
2,539.4
(1,987.4)
353.4
512.1
(1.0)
210.2
213.6
(258.0)
4,147.1
332.3
2,738.5
1,309.5
431.4
141.1
(110.4)
19.6
28.4
(0.1)
11.7
11.9
(14.9)
2,608.8
(1,795.9)
637.8
745.5
–
452.1
452.0
(240.3)
220.1
17.2
147.2
67.9
22.4
3,941.5
423.4
2,788.4
1,144.1
432.4
154.6
(106.4)
37.8
44.2
–
26.8
26.8
(14.7)
223.4
23.5
159.4
63.5
24.0
1,848.1
(985.1)
776.8
735.2
(242.3)
558.9
487.0
–
3,726.2
401.5
2,568.8
1,200.9
361.2
133.5
(71.2)
56.1
53.1
(16.1)
42.6
35.2
–
249.3
26.7
172.2
80.0
24.1
1,240.3
(566.0)
632.3
552.5
(0.6)
358.9
359.7
(95.6)
1,143.8
367.8
1,357.5
180.8
142.9
101.1
(46.1)
51.5
45.0
–
29.2
29.3
(7.4)
86.1
28.5
102.6
14.0
11.1
879.7
(503.6)
342.3
317.0
–
190.7
190.7
(60.3)
1,064.1
173.2
992.7
146.7
98.0
79.2
(45.3)
30.8
28.5
–
17.2
17.2
(5.4)
97.2
15.8
90.7
13.4
9.0
96.5
352.0
5.4
19.6
360.3
363.0
22.2
21.5
668.0
381.6
48.3
27.6
375.2
(213.9)
30.6
(17.4)
181.7
(233.6)
16.6
(21.0)
(36.9)
(1.7)
29.6
1.7
(216.0)
(15.6)
140.8
11.5
(39.5)
(3.6)
Operating performance
Gold mining tonnes
milled
Gold tailings processed
Gold headgrade –
mining operations
Gold headgrade –
tailings operations
Gold sold
Gold spot price
received
Total gold mining
cash costs
PGE 6E sold
(t)
(t)
(g/t)
(g/t)
(oz)
(USD/oz)
(USD/oz)
(oz)
Statement of
comprehensive income
Revenue
Cost of production
Mining profit
EBITDA
Impairment costs
Profit after taxation
Headline earnings
Dividends
Statement of financial position
Non-current assets
Current assets
Total equity
Non-current liabilities
Current liabilities
Cash flows
Cash generated from
operating activities
Capital expenditure
Net (decrease)/
increase in cash and
cash equivalents
Key ratios
Return on
shareholders’ funds
Net debt/(cash):
equity ratio
Net debt/(cash):
adjusted EBITDA
Interest cover
Current ratio
(%)
7.7
7.9
16.2
16.8
21.8
24.7
26.4
28.5
19.2
19.0
(Ratio)
0.12
0.11
0.04
0.04
0.04
0.04
(0.19)
(0.19)
(0.07)
(0.11)
(Ratio)
(Ratio)
(Ratio)
0.63
7.3
0.8
0.58
7.2
0.8
0.14
38.9
1.0
0.13
37.9
1.0
0.13
41.6
1.1
0.12
41.9
1.1
(0.46)
301.1
2.6
(0.44)
417.0
2.6
(0.22)
–
1.8
(0.35)
–
1.8
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
Integrated Annual Report 2015
13
S
S
E
N
I
S
U
B
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
2015
2014
2013
2012
2011
ZAR
Cents
GBP
Pence
ZAR
Cents
GBP
Pence
ZAR
Cents
GBP
Pence
ZAR
Cents
GBP
Pence
ZAR
Cents
GBP
Pence
Y
G
E
T
A
R
T
S
Statistics
Shares in issue
(millions)
Weighted average
number of shares
in issue
Earnings per share
(EPS)
Headline earnings
per share (HEPS)
Net asset value
(NAV)
Dividends per
share (DPS)
Average yearly
dividend yield
Price earnings
Volume of shares
traded (millions)
Volume traded as
percentage of
number in issue
Number of
transactions
Value of shares
traded (millions)
Traded prices
– last sale in year
– high
– low
– average price per
share traded
(Number)
1,831.5
1,830.0
1,822.8
1,448.3
1,444.0
(Number)
(Cents/
Pence)
(Cents/
Pence)
(Cents/
Pence)
(Cents/
Pence)
1,830.4
1,827.2
1,619.8
1,445.2
1,432.7
11.48
0.64
24.74
1.47
34.51
2.63
24.83
2.02
13.31
11.67
0.65
24.74
1.47
30.07
2.17
24.89
2.03
13.31
149.52
8.04
152.37
8.71
140.93
9.45
93.74
7.09
68.74
14.09
0.81
13.14
(%)
(Ratio)
6.3
15.7
6.7
14.9
5.6
10.79
0.80
5.7
9.69
–
–
5.5
–
–
4.8
6.60
0.51
3.0
9.7
3.6
7.3
4.18
3.0
13.9
1.20
1.20
6.28
0.37
4.0
8.5
(Number)
573.2
527.9
435.5
199.8
760.3
459.2
606.9
424.2
410.9
465.4
(%)
31.3
28.8
23.8
10.9
41.7
25.2
41.9
29.3
28.5
32.2
(Number)
29,855
21,221
28,498
11,496
30,814
16,121
21,827
13,593
18,343
10,533
(Number)
1,266.7
64.3
1,029.6
28.3
1,762.4
74.4
1,342.6
60.2
580.0
43.7
(Cents/
Pence)
(Cents/
Pence)
(Cents/
Pence)
(Cents/
Pence)
180
278
180
9.5
15.5
9.5
267
294
186
14.3
191.0
16.8
299.0
11.8
185.0
12.8
21.0
11.8
242
299
180
14.8
17.4
9.5
222
12.2
236
14.2
233.0
16.2
218
14.2
185
204
109
139
10.2
11.9
5.5
9.4
NON-FINANCIAL STATISTICS
Units
2015
2014
2013
2012
2011
Safety
Fatal injuries
LTIFR
RIFR
TRIFR
People
(Number)
(Rate/million man hours)
(Rate/million man hours)
(Rate/million man hours)
Number of employees
– Permanent
– Contractors
Employee turnover
Note 1: Information not tracked.
(Number)
(Number)
(Number)
%
1
2.29
1.11
11.14
5,421
4,326
1,095
7.0
4
2.97
1.52
9.75
5,773
4,450
1,323
6.8
3
2.74
1.63
13.42
5,686
4,351
1,335
6.6
6
3.63
1.94
15.34
Note 1
Note 1
Note 1
Note 1
Nil
2.91
1.62
16.51
Note 1
Note 1
Note 1
Note 1
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
14 Pan African Resources
Integrated Annual Report 2015
STRATEGY
Looking forward to
2016, we are well
positioned to improve
our business and
financial performance,
as we continue to drive
efficiencies, streamline
our activities and explore
growth opportunities.
Keith Spencer, chairman
The strategic report comprising business overview, strategy and
performance review on
pages 2 to 77 has been approved by the
directors and signed on behalf of the board.
Cobus Loots
Chief executive officer
16 September 2015
Pan African Resources
Integrated Annual Report 2015
15
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
N
R
E
V
O
G
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
16 Pan African Resources
Integrated Annual Report 2015
OUR STRATEGY
Pan African Resources’ strategy is to build a
mid-tier precious metals producer focusing on:
• Low cost base
• High margins
• Growth in mineral reserve base and profitable production
• Maximising recovered grade
• Positive impact on earnings
Pan African Resources’ growth strategy is aimed at identifying and exploiting
mining opportunities at margins that create stakeholder value by driving growth
in our earnings, cash flows, production and in our mineral reserve and resource
base, and by capturing the full precious metals mining value chain.
The group is profitable and cash generative at the current gold price, with the
ability to fund all on-mine sustaining capital expenditure internally and also meet
its other funding and growth commitments.
The chief executive’s review see on
progress.
page 30 unpacks the group’s strategic
The key enablers of our strategy are:
People
Fostering relationships through
action, integrity and honesty
Action
Leadership, planning and control
Results
Delivering on all our targets without compromise
Maximise sustainable gold
Positive impact on earnings
A WORKING STRATEGY
The four business pillars upon which our strategy is based are:
Progress
in 2015
STAKEHOLDERS
•
Proactive, strong labour relationships with
regulators, employees, unions and communities
• Zero incidents of labour unrest
•
•
•
Appropriate remuneration practices
Compliance with all relevant South African
legislation including the Mining Charter and
social and labour plans (SLP)
Final dividend paid of ZAR258 million or
GBP14.9 million (2013: ZAR240.3 million or
GBP14.7 million) during December 2014
relating to the 2014 financial year, equating to
ZAR0.1410 or 0.82 pence per share
(2013: ZAR0.1314 or 0.80 pence per share)
•
Improved safety drive for zero harm
• Ongoing community self-sustaining
development initiatives, including localised job
creation and upskilling
PROFITABLE
•
•
•
•
Mining profit ZAR353.4 million
(2014: ZAR637.8 million)
EBITDA ZAR512.1 million
(2014: ZAR745.5 million)
Attributable profit ZAR210.2 million
(2014: ZAR452.1 million)
Total gold cash cost ZAR349,410/kg
(2014: ZAR298,345/kg)
•
HEPS 11.67 cents (2014: 24.74 cents)
Pan African Resources
Integrated Annual Report 2015
17
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Progress
in 2015
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
S
T
AKEHO L D E R S
Substantially achieved
Moderate progress
Regression
P
ROFIT A B
E
L
SUSTAINABLE
•
•
•
•
•
•
Total mineral resources of 31.9Moz of gold and
0.6Moz of PGE
Total mineral reserves of 10.4Moz of gold and
0.5Moz of PGE
Cash generative
Dividend paying – Proposed dividend of
ZAR210 million or GBP9.9 million (2014:
ZAR258 million or GBP14.9 million), equating
to ZAR0.11466 per share or 0.53958 pence
per share (2014: ZAR0.1410 per share or
0.82 pence per share), subject to approval at
the annual general meeting (AGM)
Low all-in cost producer
Operations standardised and aligned with
group SHEQC policy
•
Robust life of mines per operation
S
USTAI N A B
L E
Progress
in 2015
GROW T H
Progress
in 2015
GROWTH
•
•
•
PGE ounces sold up by 42.2% to
10,245oz (2014: 7,204oz)
Successful commissioning of ETRP
within budget and on time, adding
10,000oz gold production per annum
to Evander Mines
A preliminary economic assessment
(PEA) undertaken on Evander South
brownfield project, ZAR20 million, in a
staged approach, approved for drilling
to commence in 2016 financial year
•
PEA undertaken on Elikhulu tailings
retreatment project (on hold)
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
18 Pan African Resources
Integrated Annual Report 2015
OUR STRATEGY continued
STRATEGY SCORECARD
Strategic pillar
Deliverable
2015 objectives
2015 progress
Link to risk
STAKEHOLDERS
• Ongoing engagement
•
• SLP and Mining Charter
compliance
• Return on shareholder
R S
funds
• Dividend paying
• Safety record
S
T
A
KEHO L D E
Improve and
maintain stakeholder
communication and
relationships
• Finalise negotiations of
operational employee
share ownership plan
• Maintain dividend
• Union engagement and
relationships
payments
• Zero harm
• Labour legislative
compliance
• Wage increases –
appropriate remuneration
policies
• Total taxes collected and
paid
•
Job creation
• CSI spend
PROFITABLE
P
ROFIT A B
E
L
• Attributable profit
• HEPS
• EBITDA
• Cost containment
• Average gold price
realised
• Total gold cash cost
•
Improve profitability at
operations
• Alleviate the financial
impact of the Evander
Mines’ low grade mining
cycle
• Source additional ounces
at a low cost
• Gross profit margin from
• Cost containment
gold operations
• Optimal grade/tonnage
production profiles for
operations and business
plans
• Barberton Mines: Completed
• Macroeconomic
• Operational
• Strategic
phase 2 of Emjindini Secondary
School project
• Barberton Mines: Completed
phase 1 of Makhanya road upgrade
• Evander Mines: Completed the
conversion and renovation of 42 old
hostel rooms at Muzimuhle Village into
family unit accommodation
• Barberton Mines implemented their
employee share ownership plan on
1 June 2015 and Evander Mines in the
2016 financial year
• ZAR258 million final dividend was
paid in December 2014
• Severity of accidents: One fatality
• Group salaries and wages
amounted to ZAR910.8 million
(2014: ZAR852.6 million) or 35.9%
(2014: 33.7%) of total group revenue
• Refer to value distribution in business
model
page 8
• The group’s profits decreased
• Macroeconomic
• Operational
materially from the prior year as
a result of the Evander Mines low
grade mining cycle, Barberton Mines
BIOX® plant recovering from an oil
contamination and flat ZAR
gold price
• The group strategically entered into
three collar transactions on behalf of
Evander Mines to mitigate the effect
of the ZAR gold price volatility during
its low grade mining cycle. The three
collar transactions contributed
ZAR44.7 million (2014: ZAR39 million)
before taxation
• Evander Mines sourced surface
feedstock material to process through
their available milling and plant
capacity. The adjusted ETRP
EBITDA contributed an additional
ZAR15 million to Evander Mines
Pan African Resources
Integrated Annual Report 2015
19
S
S
E
N
S
U
B
I
Strategic pillar
Deliverable
2015 objectives
2015 progress
Link to risk
GROWTH
GROW T H
• Organic (achieved within
existing infrastructure)
• Expansion
• Replacement of mineral
reserve projects for
depleted projects
• Construction and
commissioning of the
ETRP
• Review Evander South
project
• Review Elikhulu project
• Brownfield projects
• Evaluate opportunistic
• Acquisitions
projects
•
Implement earnings and
cashflow accretive growth
• Zero harm
• Maintain stakeholder
engagement and
relationships
SUSTAINABLE
S
USTAI N A B
L E
• Optimising mineral
reserves for sustainable
life of mine production
profile
• Operating profit margins
• All-in cash cost of
production per kilogram
• Enabling company culture
• Environmental compliance
• Safety record
• Sufficient working capital
for maintenance and
growth
• Decentralised and
effective management
• Engagement with local
communities
• Skills development and
training
• Macroeconomic
• Operational
• Strategic
• ETRP reached steady-state production
on 1 March 2015, adding an additional
10,000oz gold production to the
Evander Mines annual production
profile. The ETRP provides additional
flexibility to Evander Mines
• Phoenix Platinum made good
progress, with PGE ounces sold
increasing by 42.2% to 10,254oz PGE
(2014: 7,204oz PGE)
• Board approval received for in-fill
drilling at the Evander South project
to convert the mineral resource base
to a higher confidence level
• The Elikhulu project is largely sensitive
to capital expenditure. The group
is investigating new technology that
could potentially optimise the project’s
capital profile and recoveries
• The purchase of the Newcastle
Uitkomst Colliery from Oakleaf
Investments Holding 109 Proprietary
Limited (Oakleaf) and Shanduka
(related party) was announced during
the financial year. The acquisition still
remains subject to approval by the
DMR in terms of the MPRDA section
11 mining rights transfer to Pan
African Resources.
• The implementation of earnings
• Macroeconomic
• Operational
• Strategic
accretive growth remained a challenge
as a result of the low grade mining
cycle at Evander Mines and the
BIOX® plant restoration from its
oil contamination. This will remain a
priority in the new financial year to
monitor and improve on
• All-in cost of production ZAR425,084/kg
(2014: ZAR374,015/kg)
• Severity of accidents: one fatality
(2014: four fatalities)
• Group capital expenditure
incurred of ZAR352 million
(2014: ZAR363 million)
• The group remains committed to
ensuring its relationship with the
DMR will result in both improved
compliance, communication and
conflict resolution
• The group spent ZAR20.8 million
(2014: ZAR19.0 million) in the
communities of Barberton and
Evander Mines
• ZAR13.2 million (2014: ZAR14 million)
spent on skills development and
training
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
20 Pan African Resources
Integrated Annual Report 2015
OUR STRATEGY continued
ENTERPRISE RISK
MANAGEMENT APPROACH
The material factors impacting the group’s ability
to create value in the immediate future and over
the longer term can be grouped into three main
categories:
•
•
•
Macroeconomic: to an extent, beyond the
group’s control although the effects can be
anticipated to a degree and managed or
mitigated
Operational: managed
implementing policies and process controls
proactively
by
Strategic: impacting the group’s ability to execute
its strategy and therefore it can anticipate and
proactively address these issues.
activities
The identification of risks is informed by the external
environment, and the nature of the individual
operations’
environment).
Management has a process in place to set and
align objectives with the group’s mission and risk
appetite. Risks are identified and analysed in a risk
matrix format, based on the impact of the risk and
(internal
Risk register
Risk
Mitigation
the likelihood of the risk occurring. Controls in the
form of policies, procedures and standards are
established to monitor and/or mitigate the risk
on an ongoing basis. These controls and actions
to mitigate strategic risks can be implemented at
the level of individual operations, across a group
discipline or at executive management level.
The group’s board is ultimately responsible for the
identification of strategic risks and opportunities
and the management thereof. The board is
assisted by the audit committee and regularly
reviews the risk reports from the operations,
ensuring that the appropriate risk management
programmes and monitoring of progress against key
risk indicators are being effectively implemented.
Strategic workshops are conducted annually
to evaluate risks and opportunities, confirm or
amend group strategy and establish strategic
actions for the forthcoming period.
The table below describes each risk, how they
are mitigated and how these are aligned to the
group’s strategic pillars.
Self-
assessment
on progress
during 2015
Strategic
pillar
MACROECONOMIC
Gold price and
exchange rates
• Adherence to a treasury and financial risk management policy to ensure
Profitable
financial risk remains within board approved limits
• Outsourced treasury function
• Strategic hedging of gold prices and exchange rates
• Conservative debt levels
• Standby facilities to bridge working capital deficits
• Daily monitoring of group liquidity and financial risks
Capital allocation
• Consciousness of shareholders’ return requirements
Growth
• Disciplined capital budgeting
• Strategic emphasis on operational assets and close to cash flow
operations
• Execution capability to complete projects on time and within budget
• Future growth plans should take cognisance of the existing concentrated
Sustainable
sovereign exposure
• Capital and management resources are applied to enhance productivity
Profitable
and control costs
• Successful operational teams supported by a lean corporate office
• Focus on cost control to maximise profitability per production unit
• Focus on cash preservation
• Monitor electricity usage of major plant and machinery
Single country risk –
exclusive focus on
South Africa
Cost of production
inflation:
• Labour
• Electricity
• Consumables
Pan African Resources
Integrated Annual Report 2015
21
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Risk
Mitigation
Self-
assessment
on progress
during 2015
Strategic
pillar
Y
G
E
T
A
R
T
S
• Proactive, strong relationships with the National Union of Mineworker
Stakeholders
(NUM) and the United Association of South Africa (UASA)
• Recognition agreements
• Collective bargaining units
• Appropriate remuneration practices
• Compliance with all relevant South African labour legislation
• Compliance with Mining Charter and implementation of SLPs
• Recognition agreements
• Collective bargaining units
• Regulated by the Labour Act
Stakeholders
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
OPERATIONAL
Industrial action and
changes in employee
legislation
Associated union rivalry
challenging recognition
criteria – Association
of Mineworkers and
Construction Union
(AMCU) has a presence
on Barberton Mines
Safety: Fall-of-ground;
transport; blasting;
equipment handling;
underground fires; issuing
of section 54 stoppages
on Barberton Mines and
Evander Mines by the
DMR due to fatalities
• Governance of SHEQC – decentralised and subject to group
Stakeholders
standardisation and oversight
• Regular risk assessments
• Robust safety management systems
• Established standards and procedures
• Extensive employee training
• Record keeping and reporting of statistics
• Audits and legal workplace inspections
• Disaster action plans
• Fire prevention measures
•
Incentives linked to meeting objectives
Mining grade/tonnage
profile: Low grade mining
cycle at Evander Mines
• Operational flexibility in asset base and resources allocation
Profitable
• Evander and Barberton Mines’ tailings retreatment plants contribute to
stabilising production profiles
• Mineral Resource Management (MRM) optimisation to create grade
flexibility and counter the low grade cycle
• SAMREC Mineral Resource and Reserve statement supporting the
life of mine assumptions
• Short interval control meetings
• Experienced management
•
•
Incentives linked to production and grade targets
Installation of monitoring instruments for the detection of diesel at the
Barberton BIOX® plant
• Review of additional mineral resources to mitigate low grade mining
cycles at Evander Mines
• Future development planning at Evander Mines to create flexibility in
terms of grade
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
Low risk
Medium risk
High risk
22 Pan African Resources
Integrated Annual Report 2015
OUR STRATEGY continued
Self-
assessment
on progress
during 2015
Risk
Mitigation
OPERATIONAL continued
Health: Occupational
diseases; management
of HIV/Aids; silicosis;
noise-induced hearing loss
(NIHL); TB
• Medical surveillance and monitoring of diseases
• Annual medical examinations for all employees
• Daily monitoring of workplace conditions for heat, noise and airborne
pollutants
• Provision of medical facilities or medical aid coverage
• Appropriate occupational health practices
• Medical health hubs
• Managed health programmes
• Behaviour-based training, disease management programmes and
awareness programmes
• Prevalence testing, wellness programmes and anti-retroviral treatment
Environmental degradation:
Water pollution and
contaminated water
• Environmental management plans in place
• Monitoring and training
• Pollution control and water catchment dams
• Compliance with water use licence guidelines
• Recycling/reuse targets
• Control of arsenic in contained storage areas
• Action plans to deal with flooding incidents
Strategic
pillar
Stakeholders
Sustainable
Stakeholders
Sustainable
STRATEGIC
Broad-based black
economic empowerment
Succession planning
and skills retention
• Stability in Shanduka Resources’ empowerment credentials. More detail
on this transaction can be found in our sustainable development report
on the group website
www.panafricanresources.com
•
Introduction of broad-based employee share ownership programme at
operational level
Stakeholders
• Annual independent assessment of status
•
Incentives linked to the achievement of objectives
• Enterprise development funding
• Community development spend
• Training and development of own candidates through structured
training plans
• Detailed succession planning programme in place and reviewed
Sustainable
bi-annually
• Mentoring processes
• Effective retention strategy for all key disciplines
• Regularly benchmarked market-related remuneration
• Comprehensive training
• Growth opportunities
• Conduct ongoing market research on availability of scarce category skills
• Apprenticeships and learnerships
• Structured retention incentives – current, annual and long-term
•
Job-based skills training
Pan African Resources
Integrated Annual Report 2015
23
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Risk
Mitigation
STRATEGIC continued
Regulatory compliance
• Register of all titles
• Outsourced legal, tax and internal audit functions
• Cultivate good working relationships with regulators and with
representatives of the national or local government
Anti-bribery and
corruption legislation
• Anti-bribery and corruption policies
• Culture of zero tolerance towards corruption
• Ongoing training and awareness
• Specific internal controls to mitigate bribery risk
•
Independent internal and external audit functions
Strategic
pillar
Stakeholders
Stakeholders
Sustainable
Self-
assessment
on progress
during 2015
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
Reserves and resources
estimates
• Conservative gold and PGE price assumptions to determine
Sustainable
cut-off grades
• Alignment between MRM and finance departments in relation to
assumptions applied to life of mine estimates
Integration of acquisitions
and construction of new
plants
Infrastructure dependency
– power interruptions
• Extensive management experience
• Project management
• Engineering risk registers for all operations
• Scheduling of operations
• Support generators for critical functions and back-up generators provide
limited power to processing plants
• Energy-efficient programmes to reduce consumption
• Appointment of a group consulting engineer
• Planned routine maintenance contracts
• Refurbishment, major overhaul and capex investment
• Engagement with Eskom on planned and unplanned power interruptions
• Power management and load monitoring
• Energy-efficiency programmes implemented
Profitable
Growth
Growth
Profitable
Sustainable
Low risk
Medium risk
High risk
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
24 Pan African Resources
Integrated Annual Report 2015
STAKEHOLDER ENGAGEMENT
Stakeholders are integral to the group’s growth and sustainability
and have been identified as one of the four key strategic pillars.
Stakeholder feedback and concerns are therefore carefully considered
when reviewing and refining strategy. To the group’s advantage, this in
turn fosters realistic perceptions by our stakeholders of our business,
decisions and performance.
At an operational level, stakeholder engagement is the responsibility
of the general and human resources managers and at a corporate
office level the chief executive officer assumes this responsibility.
Key concerns raised operationally are governed by the management
committee and at a board level the safety, health, environment, quality
and community committee (SHEQC) oversees stakeholder concerns.
On reflection we consider our stakeholder communication to have
been a key contributor to our growth trajectory. For instance, in a
year characterised in the mining industry by widespread industrial
action, our operations had minimal organised labour unrest incidents.
During the year, Barberton Mines did however have a one-day strike
action following the issuance by the Commission for Conciliation,
Mediation and Arbitration (CCMA) of a non-resolution certificate
on the matter of AMCU seeking organisational rights. Management
successfully interdicted AMCU as they did not meet the necessary
requirements of 45% plus one membership target, as required in the
recognition agreement with NUM.
A detailed account of Pan African Resources’ stakeholders and their key concerns, as identified, is set out in the table below:
Stakeholder
What matters to stakeholders
Nature of engagement
• Return on investment
• Results presentations and
• Financial performance
• Operational performance
roadshows
• Site visits
Investors
• Union relationships
• Safe mining
• Accreditations and regulatory
compliance
• Resources and reserves
reporting
• Sustainability of the business
• Safety
• Transformation
•
Job security
• Regulatory communications
• Ad hoc one-on-one meetings
with investor community
•
Interim and full-year results
announcements
•
Integrated annual report
• Financier communications with
respect to the group’s capital
structure and compliance with
conditions of existing debt
agreements
• Media releases
• Group website
• Bargaining council forums
• Shaft committees
• Health and safety structures
• Reward and incentives
• Supervisory and disciplinary
Employees
• Holistic and occupational health
• Skills development and training
• Environmental exposure
structures
• Social media
• Publicity and posters
• Policy and procedure documents
• One-on-one supervision
• Contract negotiations
• Performance assessments
Responsibility
• Chief executive
officer
• Financial director
How feedback
informs strategy
• Poll results and
feedback from
presentations
and one-on-
one meetings
discussed at
executive
management
level
• Discussed at
operational,
executive and
board level
• Operational
human resource
managers
• Group human
resource
executive
• Group SHEQC
manager
• Group financial performance
• One-on-one meetings
• Sustainability
• Payment track record
• Growth project pipeline
Suppliers
• Loyalty
• Discussed at
operational
and executive
management
level
• General
managers
and financial
managers
• Group
procurement
manager
Pan African Resources
Integrated Annual Report 2015
25
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
Responsibility
• General
managers
• Community
liaison managers
at each
operation
• CSI officers at
each operation
• Group human
resources
executive
• Shaft/mine/
branch
committees
• General
managers
• Chief executive
officer
• General
managers
• Metallurgical
managers
How feedback
informs strategy
• Discussed at
the SHEQC
committee,
EXCO and
board level
• Discussions
between
union and
management
occur on the
mines and the
outcomes are
conveyed to the
corporate office
• Discussed at
operational,
executive and
board level
• Discussed
at executive
management
and board level
Stakeholder
What matters to stakeholders
Nature of engagement
•
Job creation
• Corporate social investment
• Environmental conservation/
protection
• Community meetings
• Media
Communities
• Health and safety
• Transformation
•
Job security
• Employee committees
• Branch committees
• Shaft committees
• Mine committees
• Fair remuneration and reward
Unions
Government
departments
• Transformation
• Mining Charter compliance
•
Job creation
• Safe mining
• Profitable mining
• Quality
• Timeous delivery
Customers
• Price
• Volumes
• Regular and frequent
communication with
Departments: DMR, Labour
Water Affairs, Education and
Public Works, local municipalities’
independent development plans
• One-on-one meetings
• Discussed
at executive
management
and board level
26
Pan African Resources
Integrated Annual Report 2015
CHAIRMAN’S REVIEW
OVERVIEW
The 2015 financial year remained a challenging one for
the global gold industry as the USD gold price declined
by 7.0% over the year under review, and the anticipated
rise in US interest rates reduced the attractiveness of
holding gold as an investment.
Despite a difficult market environment, Pan African
Resources is well positioned for the year ahead, and
continues to provide real returns to shareholders. The
group proposed a final dividend of ZAR210 million for
2015 financial year and recorded an overall profit of
ZAR210.2 million. A key highlight during the year was
the successful commissioning of the ETRP, which can
process between 180,000 and 200,000 tonnes per
month at ~0.3g/t. The ETRP will build on the success
of the BTRP and, with Phoenix Platinum, now firmly
establishes the group as a significant player in surface
tailing retreating operations.
Pan African Resources also experienced operational
difficulties, mainly due to Evander Mines’ low grade
cycle continuing throughout most of the year. The
impact of oil contamination at the BIOX® plant at
Barberton Mines further affected gold production.
The group is confident that it will be in a favourable
position going forward, with improvements at our
current operations, in particular at Evander where
mining grades have increased significantly as expected.
The Evander Mines mining licence area has significant
growth potential in the longer term, with undeveloped
contained attributable resources of more than 30Moz.
Further details on the group’s financial results are
included in the chief executive officer’s and financial
director’s reviews on
pages 30 and 40.
During the year, Pan African Resources announced the
acquisition of the Uitkomst Colliery from Shanduka
Resources and its joint venture operating partner. This
acquisition is not indicative of a departure from our
precious metals focus but was viewed by the board as
an opportunity to further contribute to group earnings
and cash flows.
Safe mining is a business imperative for the group and
we expend considerable effort in promoting a safe and
healthy work environment. Regrettably, we incurred
one fatality at our Fairview Mine at Barberton Mines
on 23 April 2015. As a board we extend our deepest
condolences to the family, friends and colleagues of the
deceased, Mr Cyprein Solomon Mkhatshwa.
MINING SUSTAINABLY
While wide-spread labour unrest continues to pose a
significant risk to our industry in South Africa, we are
committed to maintaining good relationships with the
unions by continually adopting a proactive, consultative,
Pan African Resources
Integrated Annual Report 2015
27
27
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
The group also invested ZAR20.8 million in CSI and SED initiatives, to
further uplift the communities within which we operate. Please see
page 77 in this report and our sustainable development report on
www.panafricanresources.com, for further detail on
our website
our various community projects.
Y
G
E
T
A
R
T
S
GOVERNANCE
Pan African Resources is committed to the highest standards of
governance. It strives to embed sound corporate governance
practices into daily operations and processes throughout the group,
taking into account both local (King III) and international (the UK
Corporate Governance Code) best practice.
Phuti Mahanyele resigned as a non-executive director and deputy
chairman, effective 30 June 2015, after serving on the board for
four years. I thank Phuti for her valuable contribution to Pan African
Resources’ journey of growth from a junior exploration company to
a mid-tier mining company.
We are pleased to have appointed Rowan Smith as an independent
non-executive director on 8 September 2015 and Deon Louw as the
financial director on 1 March 2015. The board is confident that their
extensive experience in the South African mining sector will add value
to Pan African Resources.
To Ron Holding, our outgoing chief executive – thank you for your
leadership and guidance in steering Pan African Resources to where it
is today. The board welcomes Cobus Loots as the new chief executive
officer, effective 1 March 2015, and has full confidence that Cobus
and his executive management team will continue to provide the
necessary leadership required to take the group to the next level.
OUTLOOK
Looking forward to 2016, we are well positioned to improve our
business and financial performance, as we continue to drive efficiencies,
streamline our activities and explore growth opportunities. Specifically,
the upcoming financial year will see higher grades from Evander
Mines, a full year of production from the ETRP, as well as Barberton
Mines’ return to its previous production level. Notwithstanding the
recently announced business rescue decision of International Ferro
Metals Limited (IFL), Phoenix Platinum should continue to contribute
cash flows and operating profit to the group, and we also hope to
finalise our acquisition of the Uitkomst Colliery.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
open-door approach. We are pleased to report that we did not
experience significant labour disruptions at our operations during the
year under review.
Following the expiry of our operations’ wage agreements in June
2015, we are in the process of negotiating new agreements for
the years ahead. Although the road ahead in South Africa’s labour
environment will remain challenging, we appreciate that all parties
have to cooperate in order to ensure the sustainability of our industry
into the future.
The group embraces the targets for social development and
community upliftment as encapsulated in the Mining Charter. Our
operations made good progress in achieving these targets, most
notably, the employment equity targets at management level, the
ownership target, discussed below and preferential procurement. In
addition, the group has made significant progress in the conversion of
hostels into family units and continually endeavours to improve living
conditions for mineworkers at all operations.
As part of Shanduka’s restructuring and merger with Pembani, its
23.83% shareholding in Pan African Resources will now be held by
three new shareholders, being the Mabindu Trust, an investment
vehicle of the China Investment Corporation and Standard Bank
Group Limited. We calculate that this equates to an effective 26.2%
BEE ownership for purposes of the MPRDA.
We remain committed to minimising the negative environmental
impacts of our operations and continuously look to improve our
environmental performance. The group’s environmental management
is well integrated into management practices and we have established
environmental targets to further reduce our resource consumption
levels. We are pleased to report that during the period under review
there were no significant environmental incidents at any of our
operations.
In terms of our long-term environmental obligations, environmental
management plans at the mines are compliant with current regulatory
requirements. Provisions in this regard are based on the net present
value of the estimated cost of restoring the environmental disturbance.
The estimated cost of rehabilitation is reviewed annually and adjusted
as appropriate for changes in legislation or technology. We are also
constantly rehabilitating old mining areas and reducing final closure
costs in this manner.
We strongly believe that our employees and communities should
benefit from our mining activities. As such, we continue to undertake
a number of employee initiatives and community projects, with
the goal that they become fully sustainable in their own right,
over time.
APPRECIATION
I would like to thank my fellow board members for their guidance and
insight during this particularly challenging year. Thank you as well to
our shareholders, our employees, all business partners and the industry
regulators for your ongoing support of Pan African Resources.
One such employee initiative implemented at Barberton and Evander
Mines is an employee share ownership programme. Employees will
effectively hold a 5% shareholding, through a trust, in the operations
of Barberton and Evander Mines respectively. This initiative seeks
to align the objectives of Pan African Resources’ employees at its
operations with that of management and shareholders. Value will be
created for beneficiaries based on the profitability of each operation’s
performance. Further detail on this employee ownership scheme is
shown on
page 93.
Keith Spencer
Chairman
16 September 2015
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
28 Pan African Resources
Integrated Annual Report 2015
BOARD OF DIRECTORS
KEITH SPENCER (65)
BSc Eng (Mining)
Independent non-executive director – chairman
Appointed:
Committee: Audit, SHEQC (chairman)
8 October 2007
Keith is a qualified mining engineer with 47 years’ practical mining experience. He 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, South Africa including 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, South Africa. In 1999 Keith joined Metorex Limited, first as a private consultant and later
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
operations director for Metorex Limited.
PHUTHI MAHANYELE (44)
BA Economics, MBA
Non-executive director – deputy chairperson
20 July 2011
Appointed:
Committee: Remuneration
Resigned:
30 June 2015
Phuthi was the chief executive officer of the Shanduka group until 30 June 2015. She joined
Shanduka in 2004 as the managing director of Shanduka Energy Proprietary Limited, a
subsidiary company of the Shanduka group. She was previously the head of the Project Finance
South Africa unit at the Development Bank of Southern Africa. Prior to that, Phuthi was vice
president at Fieldstone, where she joined the firm in New York in 1997 and later transferred to
the South African office. She is a board member of a number of the Shanduka group investee
companies. 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.
HESTER HICKEY (61)
CA(SA), BCompt (Hons)
Independent non-executive director
Appointed:
12 April 2012
Committee: Audit (chairperson), SHEQC
Hester worked at AngloGold Ashanti, initially as group internal audit manager and later as
executive officer: head of risk. Prior to this she worked at Ernst & Young and Liberty Life
and was acting head of internal audit at Transnet. In her early career she lectured at the
University of Witwatersrand, was a partner of Ironside Greenwood and was the national
technical and training manager at BDO Spencer Steward. Hester has also previously served as
the chairperson of SAICA. She currently performs board evaluations and director training for
the IoDSA and serves on the following boards: Omnia Limited, Cashbuild Limited and African
Dawn Capital Limited. Hester is also a trustee on the Sentinel Pension Fund.
THABO MOSOLOLI (45)
BCom (Hons), CA(SA)
Independent non-executive director
Appointed:
Committee: Audit, remuneration
9 December 2013
Thabo brings a wealth of experience in financial management, corporate governance and audit,
having qualified as a chartered accountant with KPMG in 1994. Since then, he has served on
various boards as a member and chairman of audit committees in the resources and other
industries in South Africa. He is currently a director of MFT Investment Holdings, a family-
owned investment company strategically placed to seize B-BBEE investment opportunities.
Pan African Resources
Integrated Annual Report 2015
29
S
S
E
N
S
U
B
I
ROWAN SMITH (51)
BSc (Hons), BCom (Hons)
Independent non-executive director
Appointed:
Committee: Remuneration (chairman)
8 September 2014
Rowan has nearly three decades of collective experience in the resources and investment banking
industries. He was a founding shareholder and managing director of Shanduka Resources, which
he helped develop from a start-up in 2002 until his departure in 2012. Key milestones achieved
at Shanduka Resources included significant investments in Mondi Shanduka Newsprint, Mondi
Packaging, Kangra Coal, Shanduka Coal (with Glencore), Pan African Resources, DRA, Lonmin
(through Incwala), Assore and Lace Diamonds. Rowan’s post-investment involvement included
his representation on the executive committees and boards for most of the investee companies,
including an executive directorship of the Shanduka group. Before Shanduka, Rowan was a
director of Investec Bank’s Mining Finance team in Johannesburg and worked on a number of
debt and equity-based transactions in the sub-Saharan region. He also worked for Swiss-based
Société Générale de Surveillance in Geneva, which entailed the management of audits on mineral
consignments throughout the world. He started his career as a valuation geologist at the Harmony
Gold mine. Rowan is currently chairman of Rail2Rail, an adviser to Athena Capital and a director
of Hlanganani Capital.
COBUS LOOTS (37)
CA(SA), CFA® Charterholder
Executive director – chief executive officer
Appointed:
Committee: SHEQC
26 August 2009
Cobus served articles with Deloitte & Touche and became an audit manager with the firm
before leaving to pursue a career in finance. His experience includes mining-specific acquisitions
and finance as well as the management of both exploration and production of mineral assets,
most recently before 2009 as managing director of Shanduka Resources. Cobus has been a
director of Pan African Resources since 2009 (financial director during 2009–2011 and a non-
executive director during 2011–2013). He served as joint chief executive officer alongside Ron
Holding until assuming the office of financial director on 1 October 2013. Cobus was appointed
chief executive officer on 1 March 2015.
DEON LOUW (53)
CA(SA), CFA® Charterholder, PGD (Tax Law), AMCT (UK)
Executive director – financial director
Appointed: 1 March 2015
Deon has extensive finance and business experience, which includes investment banking,
advisory and business administration in the finance and mining sectors. He has fulfilled the roles
of financial director of Sentula Mining Limited, chief financial officer of Shanduka Coal, director
of resource finance advisers and head of resource structured finance at Investec Bank.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
30
Pan African Resources
Integrated Annual Report 2015
CHIEF EXECUTIVE OFFICER’S REVIEW
Pan African Resources
Integrated Annual Report 2015
31
S
S
E
N
S
U
B
I
HIGHLIGHTS
CHALLENGES
• Despite a lower dividend, we maintained an industry-leading
• Continued challenging global economy
dividend yield in a challenging operating environment
• The group remained profitable and cash flow generative,
and we are well positioned to improve profits and cash
generation in the year ahead
• BTRP continued to perform according to expectations
• Successful commissioning of ETRP
• Acquired Uitkomst Colliery (subject to suspensive
conditions), which should contribute to group
cash flows and earnings
• Evander Mines is now in a higher grade mining cycle
• Weakened commodity prices
• Evander Mines’ loss making operations
• Stability of power supply
• Wage negotiations ongoing
• Safety management to prevent
DMR section 54 instructions
OVERVIEW
I am pleased to present my first chief executive
officer’s review for the year ended 30 June 2015.
I have been a director of Pan African Resources
since 2009 and during this time have been privileged
to see our group grow in all respects, including the
number of our operations, our production output
and number of our people.
A larger group such as we are now, however,
requires more management focus to ensure that
returns to shareholders and other stakeholders are
maximised on a sustainable basis. This is particularly
true when the group’s first operating and flagship
asset is a mine like Barberton Mines, which has
been operating in some shape or form since the
1880s and still is a very high margin and profitable
operation. It is then critical that other acquisitions
and new projects do not detract from the value
of Barberton Mines but rather contribute further
value to the group.
an
incredibly
environment. Commodity
The current global and South African mining
challenging
industry presents
operating
prices,
including the prices of gold and PGEs, have reduced
substantially from the highs of a couple of years
ago. In ZAR terms, the prices of gold and PGEs
have not been as badly affected by the downturn
as other metals. However, inflationary pressures,
in particular those relating to employee costs and
electricity, have contributed to eroding margins. In
addition, the stability of South Africa’s power supply
remained a challenge during the period. Although
the group’s operations do not experience regular
load shedding, we are required to reduce power
demand over certain periods, which causes pressure
on our operations in maintaining production and a
safe working environment – a top priority for Pan
African Resources. Furthermore, safety stoppages
imposed by South Africa’s DMR are also costly to
operations.
The past year has also not been without challenges
and setbacks specific to Pan African Resources.
As a group, we acknowledge
that we cannot abdicate our
responsibility of giving our absolute
best efforts to generate market-
related returns for our shareholders
and the expectation of our other
stakeholders, simply because of the
difficult operating environment.
The lower grade mining cycle at Evander Mines
meant that the operation was loss making and also
consumed cash generated by our other operations.
The oil contamination at our BIOX® plant also cost
the group in terms of gold production and sales.
We also appreciate that shareholders, current and
future, have a universe of investment opportunities,
and in order to attract investment and support we
have to consistently differentiate ourselves.
We are cognisant that one of the positive factors
that differentiates us is the attractive and consistent
cash returns to shareholders in the form of dividends.
In light of market uncertainties, the board has
proposed a reduced dividend of ZAR210 million or
(2014: ZAR258 million or
GBP9.9 million
GBP14.9 million), equating
to ZAR0.11466
per share or 0.53958 pence per share (2014:
ZAR0.1410 per share or 0.82 pence per share),
subject to approval at the AGM, which will take
place on 27 November 2015. The reduced dividend
is however not a departure from the group’s
progressive dividend policy and the board will
consider an interim dividend in the 2016 financial
year, subject to prevailing conditions. At the prevailing
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
32 Pan African Resources
Integrated Annual Report 2015
CHIEF EXECUTIVE OFFICER’S REVIEW continued
share price of ZAR1.50 (7.5 pence) this represents a
dividend yield of 7.6%, which remains attractive.
Other than in the 2013 financial year, when the
group had to fund the acquisition of Evander Mines,
we have now established a consistent track record
of annual dividend payments, which for the last five
years can be summarised as follows:
Even though the Evander Mines turnaround, from
a low to higher grade cycle, did not occur more
rapidly, the operation is now established in higher
grade mining areas and is well positioned to deliver
an improved performance in 2016. Further positive
progress achieved during the year under review,
against measures put in place in the prior period,
are discussed below.
DIVIDEND PROPOSED
ZAR/GBP millions
2011
2012*
2013
2014
2015**
ZAR
GBP
95.6
7.4
0.0
0.0
240.3
14.7
258
14.3
210
9.9
* Foregone dividend to fund the acquisition of
Evander Gold Mines
** Proposed dividend – to be confirmed at AGM
The fact that an attractive dividend has been
recommended
the
confidence of the Pan African Resources board
of directors in the group’s underlying operations.
demonstrates
further
The safety and wellness of our people is of
paramount importance to Pan African Resources.
Although we discuss safety and health performance
in other sections of the integrated report, I believe it
appropriate that we emphasise the group’s positive
safety record as part of this report.
GROUP – LTIFR AND RIFR
Rates per million man hours
LTIFR
RIFR
LTIFR Target
RIFR Target
2011
817
2.91
68
1.62
5.80
2.11
2012
2013
879 1,240 1,240 1,848
133
79
101
3.63
101
1.94
4.97
1.73
2.74
1.63
4.41
1.65
2014
2.97
1.52
3.92
1.45
2015
2.29
1.11
3.53
1.30
• Evander Mines
ETRP was
successfully
commissioned on schedule and within budget.
The first gold elution occurred in January 2015
and it has ramped up processing to its capacity
of 180,000 to 200,000 tonnes per month at
0.31g/t. Gold production from the ETRP remains
on target and its recoveries are above the 42%
planned recoveries.
• The BTRP continued to perform according
to expectations, with 971,627 tonnes (2014:
815,736 tonnes) being processed per annum at
a headgrade of 1.4g/t (2014: 1.6g/t).
• The BIOX® plant recoveries improved to
97%,
that
following an oil contamination
hampered production in the first six months
of the financial year. Management is confident
that the operational and maintenance systems
implemented will mitigate the risk of future
contamination.
• A total of R13.4 million was spent on improving
the conveyor belt system at Evander Mines’
No. 8 Shaft, which resulted in an increase in belt
system availability – from 60% to 80%.
• Additional sources within Evander Mines were
identified and evaluated to feed the plant. Toll
treatment material from a third party was also
processed during the financial year.
• Vamping1 on Evander Mine’s No. 7 Shaft was
maintained for the full financial year and areas
have been identified and evaluated to maintain
production for the full 2016 financial year.
• The refurbishment of Fairview Nos. 2 and 3
decline shafts at Barberton Mines progressed
well and on schedule. This has allowed Fairview
to have an extra production shift per month.
STRATEGY
Good progress was made with the group’s growth
strategy, which is aimed at achieving and improving
margins, while driving ongoing growth in our mineral
reserve base. Our strong statement of financial
position and well-established cash-generative
operations are key differentiators from our peers.
These provide Pan African Resources with a
competitive advantage for further growth, through
TRIFR
TRIFR Target
1 Vamping is the mining of historical “leftovers” remaining after
previous mining operations.
Pan African Resources
Pan African Resources
Integrated Annual Report 2015
Integrated Annual Report 2015
33
33
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
N
R
E
V
O
G
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
our operations and organic project pipeline, and
also position the group to capitalise on potential
acquisition opportunities.
is
further key differentiator
the group’s
A
commitment to empowering its employees. This is
achieved through our decentralised management
structure, which enables agility. Furthermore,
the general managers at our operations take
responsibility
targets and
for delivering on
are rewarded accordingly. The corporate office
remains very lean with only 14 employees, which
assists in containing costs.
The key enablers of our strategy are: People. Action.
Results.
PEOPLE
Our commitment to people and safety remains
at the heart of our culture and is evident in the
way we operate and manage the group. The
group maintained an excellent safety record in
terms of LTIFR and RIFR as shown on
page 74.
Furthermore, each of our operations has its
own unique in-house safety training programme,
aligned to the group’s strategic objective of zero
harm. Regrettably, one fatality occurred at our
Fairview Mine in Barberton on 23 April 2015
when Mr Cyprein Solomon Mkhatshwa, a
26 year old diesel mechanic, was fatally injured while
on duty. We extend our deepest condolences to
We continued
to make good
progress in
solidifying our
position as
an African-
focused mid-
tier precious
metals miner.
the family, friends and colleagues of the deceased.
The group continues to focus on safety and has
implemented corrective actions to prevent any
further recurrences.
The increase in illegal miners operating in and
around the group’s gold operations poses additional
safety risks to our employees. As such, additional
security measures have been put in place.
Wage negotiations in the mining industry remain
a contentious issue that has been widely debated
in the media. The new financial year’s wage
negotiations are ongoing and the process remains
fluid.
Transformation, under the auspices of the Mining
Charter and Social and Labour Plans (SLP), remains
a top priority for the group. Good progress was
made during the year in achieving employment
equity targets at our operations. We calculate
that our black ownership percentage as per the
MPRDA equates to 26.2%, following the finalisation
of Shanduka’s
transaction. More
detail on this transaction can be found in our
sustainable development report on the group
website
www.panafricanresources.com.
restructuring
ACTION
Pan African Resources remains focused on creating
stakeholder value through unlocking the potential
34 Pan African Resources
Integrated Annual Report 2015
CHIEF EXECUTIVE OFFICER’S REVIEW continued
of its organic surface and brownfields development
projects. Some of the initiatives to positively
enhance the life of mine of our assets include:
• Exploration at the Fairview Mine in Barberton,
which yielded positive results, confirming the
down dip extension of the high grade 11 Block
of the Main Reef Complex orebody by a further
170 metres. This extension has resulted in
an increase in the gold mineral reserves by
236,162 ounces, thereby extending the life of
mine to 20 years.
• An
internal technical team
from Evander
Mines has been assigned to assess the merits
of developing the Evander South brownfield
project to the level of a preliminary economic
assessment. The Evander South project is
an attractive mining opportunity whereby
the Kimberley
can potentially be
exploited at shallow depths, commencing at
300 metres below surface.
reef
• A project team was assembled to conduct
a preliminary economic assessment for the
Elikhulu project, the results of which will provide
guidance on merits of this project. Elikhulu is a
tailings retreatment plant that can potentially
treat slimes at a processing capacity of up to
12 million tonnes per annum and at a
headgrade of 0.28g/t from the Winkelhaak,
Leslie and Kinross tailings storage facilities. The
total mineral resource for Elikhulu is 165Mt at
0.28g/t (1.5Moz).
• Completing the acquisition and integration of
the Uitkomst Colliery into the group.
In executing our strategy of identifying attractive
acquisition opportunities, the group entered into
agreements to acquire the Uitkomst Colliery.
Located in KwaZulu-Natal in South Africa, it is
a high grade thermal export quality coal deposit
with metallurgical applications. The Uitkomst
Colliery was acquired from Oakleaf and Shanduka
for a cash consideration of ZAR200 million. The
Uitkomst Colliery is an existing operational mine
and the acquisition is expected to be earnings
and cash flow accretive to Pan African Resources.
It contains a coal mineral resource of 25.7 million
tonnes, of which 22.1 million tonnes can be classed
as measured or indicated, in accordance with
the SAMREC Code. The area also has additional
exploration potential. Current operations at
the Uitkomst Colliery demonstrate that it can
readily produce yields of high grade coal suitable
for export or local metallurgical markets. The
Uitkomst Colliery currently sells approximately
400,000 tonnes of coal per annum.
The acquisition will be funded from existing debt
facilities and internally generated cash flows and is
subject to approval by the DMR of the MPRDA
section 11 mining rights transfer to Pan African
Resources. The group’s exposure to coal, through
this acquisition, also provides a natural hedge against
an anticipated increase in rising energy prices in
South Africa, as the coal price and electricity costs
are correlated. The Uitkomst Colliery acquisition is
not a divergence from the group’s existing strategy
and precious metals focus.
A total of seven DMR section 54 instructions were
issued during the year under review which caused
stoppages to our operations. These stoppages were
mainly due to certain operating procedures and
administrative processes, all of which were resolved
and the orders set aside.
RESULTS
Group financial performance
Group revenue year-on-year decreased by 2.7% to
ZAR2,539.4 million (ZAR2,608.8 million). In terms
of costs, the total cost of production was up 10.7%
to ZAR1,987.4 million (2014: ZAR1,795.9 million).
During the year, a profit of ZAR44.7 million (2014:
ZAR39.0 million) was contributed through hedging
activities.
The group’s total ounces of gold sold during the
financial year was 175,857oz (2014: 188,179oz),
which was below our planned annual production
from our current portfolio of assets and
infrastructure. With our strategic initiatives in place,
we anticipate achieving a target of approximately
215,000oz of gold and approximately 10,000oz of
platinum for the financial year to 30 June 2016. In
the longer term, there is a significant undeveloped
resource of over 30Moz at Evander Mines, as
detailed in the Mineral Resources and Mineral
Reserves report on
page 62.
focused on
Capital expenditure was
the
commissioning of the ETRP, capital development
on Evander 25 level to gain access to the higher
grade panels and ensuring the infrastructure of both
gold operations was maintained to sustain future
production.
Please refer to the financial director’s report on
page 40 and the financial statements for further
detail.
Operational performance
Our flagship asset, Barberton Mines, continues
to underpin the group’s performance with high-
margin underground production. It remains one of
the lowest production cost mines in South Africa.
The BTRP supports Barberton Mines as a long life,
low cost gold producer. The BTRP has increased
efficiencies and further dilutes the costs at the mine
as a whole.
As discussed at the beginning of my review, Evander
Mines has pushed through its low grade cycle and is
well positioned to deliver an improved performance
going forward. Evander Mines recorded a loss
as per
the group’s segmental reporting of
ZAR32.5 million (2014: ZAR71.1 million profit)
(excluding inter-company management fees and
interest on funding from treasury).
At our CTRP, Phoenix Platinum’s performance
continued to improve as it recorded a profit of
ZAR15.2 million (2014: ZAR3.7 million). Plant
recovery rates increased to 44% during the year
(2014: 29%), due to the adjustment of the re-
agent suite and improved current arisings provided
by IFL as a result of mining at their Lesedi Mine.
Post the financial year-end, IFL’s subsidiary was
placed in business rescue which puts the tailings
feed from this operation at risk. Phoenix Platinum
is also dependent on IFL for the provision of
certain services, including water and electricity. The
impact of this business rescue process on Phoenix
Platinum’s operations is still uncertain but the
company has access to other sources of chrome
tailings with which to continue its operations.
The 10.6% depreciation of the ZAR against the
USD exchange assisted as a hedge against the
7% decline in USD gold price. This resulted in the
group all-in costs of ZAR425,084/kg which included
ETRP capital costs of ZAR95.1 million (attributing
ZAR17,389/kg to the group’s all-in cost per
kilogram) remaining below the average gold price
received of ZAR446,274/kg.
Please refer to the individual mining operations’
pages 50 to 61 for further
performance on
detail.
LOOKING AHEAD
Having implemented corrective strategies, the
group is well positioned to deliver an improved
performance in 2016. We believe there are
opportunities to increase production and improve
the operational performance with a view to
improve the long-term productivity and economics,
while continuing to create shareholder value. Going
forward, the key focus areas for the group include:
•
•
Improved operational performance at Evander
Mines
Improved cost of production profile and
operational margins
• Conclusion and integration of Uitkomst Colliery
into the Pan African Resources group
• Operational safety and compliance.
APPRECIATION
I extend my thanks and appreciation to Ron
Holding, the outgoing chief executive officer. Ron’s
experience and expertise remains available to the
group, through an exclusive consulting arrangement
as the group’s technical adviser.
We welcome Deon Louw who joined us on
1 March 2015 as financial director to further boost
our executive management team.
On behalf of the executive team, we extend our
thanks to our management, our general managers
and all staff for their hard work and perseverance
that continues to allow Pan African Resources
to operate successfully. We also thank our fellow
directors for their support and guidance.
We look forward to an exciting year ahead, despite
the challenging environment for gold miners globally,
and aim to further enhance shareholder value.
Cobus Loots
Chief executive officer
16 September 2015
Pan African Resources
Integrated Annual Report 2015
35
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
36 Pan African Resources
Integrated Annual Report 2015
EXECUTIVE AND OPERATIONS MANAGEMENT
EXECUTIVE MANAGEMENT
COBUS LOOTS (37)
Chief executive officer
CA(SA), CFA® Charterholder
Committee: SHEQC
See directorate on page 29 for CV
ANAKI KARIGANI (47)
Chief operating officer
BSc Mining Engineering, MSc Project Management
Committee: SHEQC
23 years of mining-related experience
DEON LOUW (53)
Financial director
CA(SA), CFA® Charterholder, PGD (Tax Law), AMCT (UK)
See directorate on page 29 for CV
OPERATIONS COMMITTEE (OPSCO)
ANDRÉ VAN DEN BERGH (59)
Executive: human resources
Diploma in Human Resources Management, Diploma in Labour
Relations Management
Committee: SHEQC
40 years of mining-related experience
CASPER STRYDOM (57)
General manager: Barberton Mines
Mines National Higher Diploma, Metalliferous Mining Mine Managers
Certificate
39 years of mining-related experience
BAND MALUNGA (42)
General manager: Evander Mines
BTech Mining Engineering
22 years of mining-related experience
Pan African Resources
Integrated Annual Report 2015
37
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
OPERATIONS COMMITTEE (OPSCO) continued
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
BERTIN MCLEOD (38)
Plant manager: Metallurgy Phoenix Platinum
BTech: Chemical Engineering Management Development Certificate,
Senior Management Development Certificate
13 years of platinum industry experience
NEAL REYNOLDS (32)
Group financial controller
BCom Accounting (Hons), CA(SA)
10 years of finance-related experience
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
BARRY NAICKER (42)
Group mineral resource and reserves manager
MEng Mineral Resource Management (Wits), Grad Dip Engineering
(MRM), BSc (Hons) Geology and Economic Geology
WAYNE ALLEN (46)
Group consulting engineer
National Diploma Engineering, Mechanical Engineer’s Certificate of
Competency, MAP (Wits), AMRE (SA)
14 years of mining-related experience
24 years of mining-related experience
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
MANDLA NDLOZI (44)
Group SHEQC manager
NADSM (Unisa), EIA (PU for CHE), MDP (GIBS), SAMTRAC
(NOSA), Integrated SHEQ Management (Potch University)
Committee: SHEQC
16 years of mining-related experience
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
38 Pan African Resources
Integrated Annual Report 2015
PERFORMANCE
REVIEW
Pan African Resources’
share price was
impacted by the volatile
gold price over the
past two years but has
out-performed its peers
during the period under
review.
Deon Louw, financial director
Pan African Resources
Pan African Resources
Integrated Annual Report 2015
Integrated Annual Report 2015
39
39
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
40 Pan African Resources
Integrated Annual Report 2015
FINANCIAL DIRECTOR’S REVIEW
HIGHLIGHTS
CHALLENGES
• Payment of ZAR258 million dividend in December 2014
• Volatile gold price environment
• Refinance of the group’s existing debt facilities on favourable
• PGE market prices declined
Pan African Resources
Integrated Annual Report 2015
41
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
• Electricity increases and interrupted supply
• Mitigating the Evander Mines low grade mining cycle
Y
G
E
T
A
R
T
S
terms and conditions
• ETRP achieving steady state production on
1 March 2015 and increasing Evander Mines’
production profile by 10,000oz of gold per
annum
• Phoenix Platinum achieving 10,000oz of PGEs
and remaining cash positive and profitable
KEY FINANCIAL STATISTICS
For the year ended
30 June 2015
For the year ended
30 June 2014
Movement
ZAR
millions
2,539.4
(1,987.4)
353.4
512.1
210.2
213.6
11.48
11.67
GBP
millions
141.1
(110.4)
19.6
28.4
11.7
11.9
0.64
0.65
ZAR
millions
2,608.8
(1,795.9)
637.8
745.5
452.1
452.0
24.74
24.74
GBP
millions
154.6
(106.4)
37.8
44.2
26.8
26.8
1.47
1.47
1,830.4
1,830.4
1,827.2
1,827.2
ZAR
%
(2.7)
10.7
(44.6)
(31.3)
(53.5)
(52.7)
(53.6)
(52.8)
0.2
GBP
%
(8.7)
3.8
(48.1)
(35.7)
(56.3)
(55.6)
(56.5)
(55.8)
0.2
Revenue
Cost of production
Mining profit
EBITDA
Profit after taxation
Headline earnings
EPS (cents/pence)
HEPS (cents/pence)
Weighted average number
of shares in issue (millions)
VALUE CREATION
Pan African Resources remains committed to creating value for all stakeholders. For shareholders specifically, value is determined by share price
performance, sustainable earnings, cash flow growth and by consistent dividend payments. The table below shows the group’s progress against
these objectives and the link to our strategic pillars.
FY2015 objective
Progress in FY2015
Maintain attractive
dividend payments
Improve profitability from
current operations
Implement earnings
and cash flow accretive
growth
• ZAR258 million final dividend was paid in December 2014
• The group’s profits decreased materially as result of the Evander Mines low
grade mining cycle and Barberton Mines’ BIOX® plant oil contamination
and relatively flat ZAR gold price
• The group strategically entered into three collar transactions on behalf of
Evander Mines to mitigate the effect of the ZAR gold price volatility during
its low grade mining cycle. The collar transaction contributed profits of
ZAR44.7 million (2014: ZAR39 million) before taxation
• The implementation of earning accretive growth remained a challenge as a
result of the low grade mining cycle at Evander Mines
• Evander Mines’ ETRP reached steady state production on 1 March 2015,
therefore adding an additional 10,000oz gold production to the Evander
Mines production profile. The ETRP will provide additional flexibility to
Evander Mines during future low grade mining cycles
Achieved –
yes/no/partly
Link to
strategic pillars
• Substantially
achieved
• Moderate
progress
• Stakeholders
• Profitable
• Moderate
progress
• Growth
• Profitable
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
42 Pan African Resources
Integrated Annual Report 2015
FINANCIAL DIRECTOR’S REPORT continued
AVERAGE GOLD PRICE
USD/oz and ZAR/kg
31/07/2013
30/06/2015
2
4
8
0
1
4
,
6
3
1
1
3
4
,
1
8
3
5
3
4
,
7
8
3
9
1
4
,
9
4
1
6
1
4
,
9
3
7
5
0
4
,
4
7
8
9
2
4
,
6
9
4
1
6
4
,
9
7
1
2
6
4
,
5
4
8
9
3
4
,
5
6
4
1
3
4
,
5
6
4
6
3
4
,
6
0
2
9
4
4
,
9
3
3
4
4
4
,
0
0
5
6
3
4
,
3
1
0
6
3
4
,
4
4
2
9
1
4
,
0
5
0
4
4
4
,
4
0
3
5
6
4
,
8
3
3
7
5
4
,
8
9
9
6
5
4
,
3
1
3
2
6
4
,
9
7
8
0
6
4
,
8
4
4
7
6
4
,
7
8
2
1
,
7
4
3
1
,
9
4
3
1
,
6
1
3
1
,
6
7
2
1
,
5
2
2
1
,
5
4
2
1
,
1
0
3
1
,
6
3
3
1
,
9
9
2
1
,
8
8
2
1
,
9
7
2
1
,
1
1
3
1
,
6
9
2
1
,
9
3
2
1
,
2
2
2
1
,
6
7
1
1
,
2
0
2
1
,
2
5
2
1
,
7
2
2
1
,
9
7
1
1
,
8
9
1
1
,
9
9
1
1
,
2
8
1
1
,
ZAR/kg
USD/oz
AVERAGE PGE PRICE
USD/oz and ZAR/kg
31/07/2013
30/06/2015
5
2
0
1
1
,
0
0
7
1
1
,
3
2
3
1
1
,
9
1
9
0
1
,
4
0
2
1
1
,
4
0
9
0
1
,
8
7
9
1
1
,
7
4
1
2
1
,
6
6
2
2
1
,
7
7
9
1
1
,
0
3
0
2
1
,
0
4
3
2
1
,
2
5
4
2
1
,
3
1
4
2
1
,
8
0
0
2
1
,
4
0
3
1
1
,
9
0
9
0
1
,
9
9
3
1
1
,
5
9
5
1
1
,
4
2
3
1
1
,
2
3
3
1
1
,
0
7
2
1
1
,
4
7
1
1
1
,
3
6
8
0
1
,
1
1
1
1
,
4
6
1
1
,
3
3
1
1
,
2
0
1
1
,
9
9
0
1
,
3
5
0
1
,
6
0
1
1
,
5
0
1
1
,
1
4
1
1
,
5
3
1
1
,
6
5
1
1
,
7
5
1
1
,
8
6
1
1
,
4
6
1
1
,
6
9
0
1
,
9
1
0
1
,
4
8
9
2
9
9
3
0
0
1
,
7
7
9
0
4
9
9
3
9
5
3
9
3
8
8
ZAR/kg
USD/oz
MONTHLY EXCHANGE RATES
Exchange rate
31/07/2013
30/06/2015
ZAR/GDP
7
0
5
1
.
6
5
5
1
.
3
8
5
1
.
4
9
5
1
.
0
4
6
1
.
5
9
6
1
.
3
8
7
1
.
9
1
8
1
.
8
8
7
1
.
5
6
7
1
.
3
5
7
1
.
2
0
8
1
.
1
2
8
1
.
2
8
7
1
.
8
8
7
1
.
4
8
7
1
.
0
5
7
1
.
6
9
7
1
.
5
5
7
1
.
5
7
7
1
.
8
0
8
1
.
1
9
7
1
.
7
4
8
1
.
5
1
9
1
.
ZAR/USD
3
9
9
.
5
0
0
1
.
0
0
0
1
.
1
9
9
.
9
1
0
1
.
5
3
0
1
.
3
8
0
1
.
9
9
0
1
.
5
7
0
1
.
5
5
0
1
.
1
4
0
1
.
6
6
0
1
.
6
6
0
1
.
6
6
0
1
.
6
9
0
1
.
9
0
1
1
.
9
0
1
1
.
9
4
1
1
.
6
5
1
1
.
9
5
1
1
.
6
0
2
1
.
0
0
2
1
.
6
9
1
1
.
1
3
2
1
.
OPERATING ENVIRONMENT
The local mining economic environment remained
depressed as commodity prices continued to fall,
adversely impacting profits and confidence across
this sector. In addition, the average ZAR to USD
exchange rate weakened by 10.6% during the year
under review, as a result of structural challenges
within the South African economy including the
energy crisis, policy uncertainty and anaemic
economic growth.
The group’s profitability is impacted by various
external and economic drivers, the most significant
of which are:
• USD precious metal spot prices – determines
the price received for gold and PGE produced
• USD/ZAR exchange rate – determines the
value received in ZAR for gold and other metals
produced and ultimately the group’s revenue.
This also drives specific costs of production and
capital goods
• South African general inflation, wage rate and
other price increases – determines the rate
of increase in the group’s costs – the most
significant of which is salary and wage costs,
followed by electricity costs
• GBP/ZAR exchange rate – influences the
group’s reporting performance in GBP
•
Interest rates – determines interest payable and
received for borrowings and surplus cash resources.
USD PRECIOUS METALS SPOT
PRICES
During the course of the year the average USD gold
and PGE basket prices achieved were substantially
lower than the previous year. The group realised
an average gold price of USD1,212/oz, a decrease
of 7.0% from the USD1,303/oz achieved in the
prior year.
The market PGE basket price (applying the
Phoenix Platinum prill split) during the year
decreased by 10.2% to USD1,008/oz (2014:
USD1,122/oz). Phoenix Platinum achieved an
average PGE basket price of USD839/oz (2014:
USD965/oz), after taking into account the terms
of its off-take agreement with Western Platinum
Limited, a subsidiary of Lonmin PLC.
USD/ZAR EXCHANGE RATE
The group records its revenue from precious metals
sales in ZAR and the depreciation in the value of
the ZAR/USD exchange rate during the year had
a compensating effect on the weaker USD metals
price revenue received. The average ZAR/USD
exchange rate was 10.6% weaker at ZAR11.45:1
(2014: ZAR10.35:1).
Pan African Resources
Integrated Annual Report 2015
43
S
S
E
N
S
U
B
I
Despite the lower USD gold price, the average ZAR gold price
received by the group increased by 3.0% to ZAR446,274/kg
(2014: ZAR433,437/kg), as a result of the weakening of the ZAR
against the USD exchange rate.
Eskom increases of 12.7% in the financial year. Eskom’s most recent
announcement alludes to potential increases of up to 25% in the
2016 financial year, which will have a material adverse effect on the
group’s production costs if NERSA approves the increase.
The average ZAR PGE basket price received by the group decreased
by 3.8% to ZAR9,603/oz (2014: ZAR9,987/oz), also benefiting to
some extent from the weaker ZAR.
SOUTH AFRICAN INFLATION, WAGE RATE
AND OTHER COST INCREASES
During the year the CPI was reported at 4.7% (2014: 6.6%) while PPI
was recorded at 3.7% (2012: 8.1%). The group’s negotiations with its
recognised unions are still ongoing for the new financial year.
ELECTRICITY PRICE INFLATION
Electricity is the second largest cost contributor at ZAR275.4 million
(2014: ZAR253.7 million) representing 13.9%, of the group’s total
cost of production. The group’s electricity increases in the current
year amounted to 8.6% (2014: 8%) versus the NERSA approved
GBP/ZAR EXCHANGE RATE
Given that the ZAR’s performance against the GBP is a key
determinant of the GBP results, it is important for shareholders
both in South Africa and in the UK to be aware of the effect this
exchange rate has on reported results. The value of the ZAR against
the GBP deteriorated for the major part of the year under review.
The average ZAR/GBP exchange rate was 6.6% lower at ZAR18.00:1
when compared to the previous year (2014: ZAR16.88:1).
INTEREST RATES
The group incurs a margin of 250 basis points (previously 280 basis
points) above the Johannesburg Interbank Agreed Rate (JIBAR) on
any balance outstanding on its Revolving Credit Facility (RCF) and
receives interest on surplus funds at quoted bank call account rates.
Changes in interest rates affect the group’s interest expense and
income. JIBAR at 30 June 2015 was quoted at 6.0% (2014: 5.7%).
UNPACKING THE GROUP’S FINANCIAL PERFORMANCE
Revenue, costs, profitability and dividends
Performance
2015 financial year commentary
Revenue
The group’s revenue, year-on-year, decreased by 2.7% to ZAR2,539.4 million (2014: ZAR2,608.8 million). The decrease
was predominantly due to the following reasons:
• Gold sold decreased by 6.5% to 175,857oz (2014:188,179oz)
• The average ZAR gold price received increased by 3% to ZAR446,274/kg (2014: ZAR433,437/kg). This increase
was driven by the weakening of the average ZAR/USD exchange rate by 10.6% to ZAR11,45:1 (2014: ZAR10,35:1)
and the USD gold price decreasing by 7.0% USD1,212/oz (2014: USD1,303/oz)
•
Increased PGE revenues contributed an additional 1% year-on-year to the group revenue
Average gold price
and PGE price
The group realised an average gold price increase of 3% to ZAR446,274/kg (2014: ZAR433,437/kg) and an average
PGE basket price received was ZAR9,603/oz (2014: ZAR9,987/oz)
Cost of production
Pan African Resources’ year-on-year total cost of production increased by 10.7% to ZAR1,987.4 million
(2014: ZAR1,795.9 million).
• The cost of production increased with the addition of the new ETRP which reached steady state production by
the end of March 2015. Additional tailings and surface feedstock processed resulted in a ZAR54.1 million increase
in production costs. Excluding the ETRP, the effective cost increase was 7.7% year-on-year
•
The group’s salaries and wages remained well controlled and increased by 5.1% to ZAR910.8 million
(2014: ZAR866.7 million). This increase was due to:
– The wage agreement increase being linked to the consumer price index (CPI) plus 1% (7.15% and 6.6% granted
to NUM and UASA respectively)
– The average number of employees (excluding capital employees) decreased by 2% to 3,939 (2014: 4,020)
• The group’s electricity costs increased by 8.6% to ZAR275.4 million (2014:ZAR253.7 million) being lower than
the Eskom increases as result of reduced electricity consumption, load clipping and S54 safety stoppages issued by
the DMR
Cash costs
The group’s cost of production per kilogram increased by 17.1% to ZAR349,410/kg (2014: ZAR298,345/kg)
The 17.1% increase was due to:
• Gold sold decreasing by 6.5% to 175,857oz (2014: 188,179oz)
• The group’s total cost of production, as highlighted above, increasing by 10.7%
• Lower headgrades mined compared to the previous year
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
44 Pan African Resources
Integrated Annual Report 2015
FINANCIAL DIRECTOR’S REPORT continued
Performance
2015 financial year commentary
All-in-sustaining cash
costs
The group’s all-in sustaining cash cost of production per kilogram (including direct cost of production, royalties,
associated corporate costs and overheads and sustaining capital expenditure) increased by 15.2% to ZAR402,221/kg
(2014: ZAR349,008/kg). The group’s all-in-sustaining cash costs were primarily impacted by:
• Evander Mines’ lower grade mining cycle and resultant decrease in the group’s gold sold
• The group’s total cost of production increasing by 10.7%
All-in cost
The all-in cost per kilogram (sustaining cost of production and once-off expansion capital) increased by 13.7% to
ZAR425,084/kg (2014: ZAR374,015/kg), due to:
Gold collar derivatives
• Gold sold decreasing by 6.5% to 175,857oz (2014:188,179oz)
• Once-off capital expenditure to complete the construction of the ETRP which amounted to ZAR95.1 million
(2014: ZAR79.2 million). The ETRP capital expenditure equated to ZAR17,389/kg (2014: ZAR13,534/kg) of the
group’s all-in cost per kilogram
The group entered into short-term strategic hedges to protect its Evander Mines’ and other operations’ revenue, cash
flows and dividends payments against severe adverse price movements in the ZAR price of gold. During the current
financial year, the group realised a pre-tax profit of ZAR44.7 million (2014: ZAR39 million) from these transactions,
which are recorded under other income and expense line in the statement of comprehensive income. The transaction
income was also factored into Evander Mines all-in sustaining costs
Profit after tax and
headline earnings
Profit after taxation decreased by 53.5% to ZAR210.2 million (2013: ZAR452.1 million) and the corresponding
headline earnings decreased to ZAR213.6 million (2014: ZAR452.0 million), primarily due to:
• The group’s revenue decreasing by ZAR69.4 million
• The group’s cost of production increasing by ZAR191.5 million
EPS and HEPS
The group’s EPS in ZAR was 11.48 cents (2014: 24.74 cents), a decrease of 53.6%. The group’s HEPS in ZAR terms
decreased by 52.8% to 11.67 cents (2014: 24.74 cents). The difference between the EPS and HEPS, was due to the
attributable earnings being adjusted by the loss and the associated impairment upon the disposal of Auroch Minerals
NL. Refer to the financial statements for the reconciliation between EPS and HEPS
The EPS and HEPS is calculated by applying the group’s weighted average number of shares to the attributable and
headline earnings, which increased by 0.2% to 1,830.4 million (2014:1,827.2 million)
Taxation
The group’s total taxation charge decreased by 38.4% to ZAR74.4 million (2014: ZAR120.8 million) due to:
• A reduction in gold profit margins due to the cost of production increases and lower gold ounces sold relative to
the prior year
Dividend
• A reduction in gold profit margins due to the cost of production increases and lower gold ounces sold relative to
the prior year
• A decrease in deferred taxation as a result of Evander Mines recognising unredeemed capital of ZAR322 million
(2014: ZAR139.1 million) as well as an assessed loss to be carried forward of ZAR88.1 million (2014: Nil)
The group paid a final dividend of ZAR258 million (GBP14.9 million) during December 2014 equating to
ZAR0.1410 per share (0.82 pence per share), and in the prior financial year ZAR240.3 million (GBP14.9 million),
equating to ZAR0.1314 per share (0.80 pence per share)
In light of market uncertainties, the board has proposed a reduced dividend of ZAR210 million or GBP9.9 million
(2014: ZAR258 million or GBP14.9 million), equating to ZAR0.11466 per share or 0.53958 pence per share
(2014: ZAR0.1410 per share or 0.82 pence per share), subject to approval at the AGM which will take place on
27 November 2015. The reduced dividend is however not a departure from the group’s progressive dividend policy
and the board will consider an interim dividend in the 2016 financial year subject to prevailing conditions
Note: The GBP proposed dividend was calculated based on an exchange rate of ZAR21.25:1. 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 0.53958 pence per share
Pan African Resources
Integrated Annual Report 2015
45
S
S
E
N
S
U
B
I
FINANCIAL POSITION AND RESOURCE ALLOCATION
Non-current assets
Current assets
Total equity
Non-current liabilities
Current liabilities
For the year ended
30 June 2015
For the year ended
30 June 2014
Movement
ZAR
millions
4,147.1
332.3
2,738.5
1,309.5
431.4
GBP
millions
220.2
17.2
147.2
67.9
22.4
ZAR
millions
3,941.5
423.4
2,788.4
1,144.1
432.4
GBP
millions
223.4
23.5
159.4
63.5
24.0
ZAR
%
5.2
(21.5)
(1.8)
14.5
(0.2)
GBP
%
(1.4)
(26.8)
(7.7)
6.9
(6.7)
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Non-current assets increased by 5.2% to ZAR4,147.1 million (2014: ZAR3,941.5 million). The increase was partly attributable to further capital
expenditure during the year amounting to ZAR352 million (2014: ZAR363 million), and is detailed by operation below:
GROUP CAPITAL EXPENDITURE
E
C
N
A
M
R
O
F
R
E
P
Barberton Mines
BTRP
Evander Mines
ETRP
Phoenix Platinum
Corporate
Total capital expenditure
For the year ended
30 June 2015
For the year ended
30 June 2014
ZAR
millions
GBP
millions
ZAR
millions
GBP
millions
109.3
3.3
143.1
95.1
0.6
0.6
352.0
6.1
0.2
7.9
5.3
–
0.1
19.6
110.3
40.7
131.3
79.2
0.4
1.1
363.0
6.5
2.4
7.8
4.7
–
0.1
21.5
Movement
ZAR
%
(0.9)
(91.9)
9.0
20.1
50.0
(45.5)
(3.0)
GBP
%
(6.2)
(91.7)
1.3
12.8
–
–
(8.9)
Included in non-current assets is the rehabilitation trust fund balance
of ZAR312.3 million (2014: ZAR278.4 million), which increased by
ZAR33.9 million as a result of growth in the underlying investment
portfolio. The rehabilitation trust
investment portfolio
comprises investments in guaranteed equity linked notes, government
bonds and equities.
fund’s
Current assets decreased by 21.5% to ZAR332.3 million (2014:
ZAR423.4 million). This was as a result of inter alia:
• A decrease in cash on hand to ZAR64.2 million (2014:
ZAR101.2 million)
• Accounts
receivable decreased
to ZAR184.5 million
(2014:
ZAR210.7 million) as a result of lower outstanding gold shipments
at year-end relative to the prior year. Inventory decreased to
ZAR67.6 million (2014: ZAR96.2 million) due to the Evander Mines
holding lower quantities of gold bearing inventory at year-end.
Non-current liabilities increased by 14.5% to ZAR1,309.5 million
(2014: ZAR1,144.1 million). The increase is largely attributable
to the increase in the non-current portion of the revolving credit
facility balance and the gold loan of ZAR314.8 million (2014:
ZAR146.6 million).
Current liabilities remained relatively constant at ZAR431.4 million
(2014: ZAR432.4 million), with an increase in the current portion of
the revolving credit facility, the gold loan and account payable, off-set
by a reduction in the year-end tax liability.
S
T
N
E
M
E
T
A
T
S
The decrease in the group’s equity is a result of a decrease in
retained earnings, due to the dividend paid of ZAR258 million (2014:
ZAR240.3 million) for the 2015 financial year being more that the
profit after taxation of ZAR210.2 million (2014: ZAR452.1 million)
for the 2015 financial year.
remains
The group
liquid with a net debt position of
ZAR321.1 million (2014: ZAR101.0 million) at year-end, which
includes a gold loan of ZAR139.6 million. The group continues to be
profitable and cash flow generative, which has resulted in group net
debt being reduced from ZAR458.6 million at December 2014 to
ZAR321.1 million in the six months preceding the end of the 2015
financial year.
TREASURY AND GROUP FUNDING
Revolving credit facility
The group has refinanced its existing revolving credit facility with a
consortium of local banks. The new facility has a tenure of five years,
and increases the revolving credit facility’s limit from ZAR600 million
to ZAR800 million, with a two year option at Pan African Resources’
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
46 Pan African Resources
Integrated Annual Report 2015
FINANCIAL DIRECTOR’S REPORT continued
election (subject to the banks’ approval) to increase the facility to
ZAR1.1 billion. The revolving credit facility comes at a reduced margin
(JIBAR plus 2.5% compared to 2.8%) and facility fee and provides
Pan African Resources with access to a long-term debt facility with
flexible terms at a competitive rate, which will be used to fund its
organic and acquisitive growth aspirations.
implemented a centralised
Working capital and debt management
in
The group
Pan African Resources Funding Company Proprietary Limited
(Funding Company), a wholly owned subsidiary of Pan African
Resources, with the objective of centrally managing all aspects of the
group’s financial risk.
treasury
function
SHARE PRICE AND RETURN
PERFORMANCE
Pan African Resources’ share price was impacted by the volatile gold
price over the past two years but has out-performed its peers during
the period under review, as reflected in the UK FTSE and JSE J150
gold indices graphs.
LOOKING AHEAD
Pan African Resources’ executives will be focusing on:
• Generating adequate cash flow to maintain the dividend payments
• Completing the acquisition of the Uitkomst Colliery and integrating
it into the group
• Continuing to implement value accretive opportunities to grow the
group’s profitability.
Deon Louw
Financial director
16 September 2015
PAN AFRICA RESOURCES RELATIVE TO FTSE
GOLD MINES INDEX
Pence
PAN AFRICA RESOURCES RELATIVE TO JSE
GOLD MINES INDEX (J150)
Cents
1/07/2014
30/06/2015
1/07/2014
30/06/2015
PAN LN
FTSE
.
8
4
1
.
4
3
1
.
8
4
1
.
5
3
1
.
8
4
1
.
0
4
1
.
5
2
1
.
5
1
1
.
3
2
1
6
9
.
.
5
2
1
.
5
0
1
.
3
1
1
.
6
0
1
.
8
2
1
.
0
3
1
.
0
2
1
.
0
2
1
.
8
1
1
.
3
1
1
.
8
2
1
.
9
1
1
.
5
2
1
.
4
1
1
.
0
0
1
.
0
0
1
PAN
J150
7
6
2
8
5
2
5
6
2
5
6
2
6
5
2
4
7
2
6
2
2
6
2
2
4
1
2
1
7
1
7
0
2
0
9
1
2
0
2
4
0
2
0
1
2
0
7
2
9
1
2
6
4
2
5
0
2
9
0
2
5
1
2
3
4
2
2
2
2
8
9
1
9
8
1
9
8
1
Pan African Resources
Integrated Annual Report 2015
47
S
S
E
N
S
U
B
I
PRODUCTION FOR OPERATIONS
Underground and
surface operations
Tailings operations
Total continuing operations
Year
ended
30 June
Barberton
Mines
Evander
Mines
Units
Total
BTRP
ETRP
Barberton
Mines
Total
Evander
Mines
Total
Group
Total
Tonnes milled –
underground
Tonnes milled –
surface (note 1)
Tonnes milled –
total underground
and surface
Tonnes processed –
tailings (note 2)
Tonnes processed –
surface feedstock
Tonnes processed
– total tailings and
surface feedstock
Tonnes milled and
processed – total
Headgrade –
underground
Headgrade –
surface
Headgrade – total
underground and
surface
Headgrade –
tailings
Headgrade –
surface feedstock
Headgrade – total
tailings and surface
feedstock
Headgrade –
total
Recovered
grade
Overall recovery –
underground
operations
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
(t)
(t)
(t)
(t)
(t)
(t)
(t)
(t)
(t)
(t)
(t)
(t)
(t)
(t)
(g/t)
(g/t)
(g/t)
(g/t)
(g/t)
(g/t)
(g/t)
(g/t)
(g/t)
(g/t)
(g/t)
(g/t)
(g/t)
(g/t)
(g/t)
(g/t)
(%)
(%)
254,673
381,986
636,659
263,574
395,127
658,701
6,076
266,223
272,299
28,547
260,901
289,448
260,749
648,209
908,958
292,121
656,028
948,149
–
–
–
–
–
–
–
–
–
–
–
–
254,673
381,986
636,659
263,574
395,127
658,701
6,076
266,223
272,299
28,547
260,901
289,448
260,749
648,209
908,958
292,121
656,028
948,149
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
971,627
507,444
971,627
507,444 1,479,071
815,736
–
815,736
–
815,736
–
–
139,723
–
–
–
139,723
139,723
–
–
971,627
647,167
971,627
647,167 1,618,794
815,736
–
815,736
–
815,736
260,749
648,209
908,958
971,627
647,167
1,232,376 1,295,376 2,527,752
292,121
656,028
948,149
815,736
–
1,107,857
656,028 1,763,885
10.9
11.5
1.4
1.3
10.7
10.5
–
–
–
–
–
–
10.7
10.5
9.7
9.4
91%
90%
4.6
5.2
1.1
1.4
3.2
3.7
–
–
–
–
–
–
3.2
3.7
3.0
3.6
97%
96%
7.1
7.7
1.1
1.4
5.3
5.8
–
–
–
–
–
–
5.3
5.8
5.0
5.4
93%
92%
–
–
–
–
–
–
1.4
1.6
–
–
1.4
1.6
1.4
1.6
0.8
0.9
–
–
–
–
–
–
–
0.3
–
1.1
–
0.5
–
0.5
–
0.3
–
–
–
10.9
11.5
1.4
1.3
10.7
10.5
1.4
1.6
–
–
1.4
1.6
3.3
3.9
2.7
3.1
80%
80%
4.6
5.2
1.1
1.4
3.2
3.7
0.3
–
1.1
–
0.5
–
1.8
3.7
1.7
3.6
7.1
7.7
1.1
1.4
5.3
5.8
1.0
1.6
1.1
–
1.0
1.6
2.6
3.8
2.2
3.3
93%
96%
85%
86%
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
48 Pan African Resources
Integrated Annual Report 2015
PRODUCTION FOR OPERATIONS continued
Underground and
surface operations
Tailings operations
Total continuing operations
Year
ended
30 June
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
Overall recovery –
tailings operations
Gold production –
underground
operations
Gold production –
surface operations
Gold production –
tailings operations
Gold production –
surface feedstock
Gold sold2
Average ZAR gold
price received
Barberton
Mines
Evander
Mines
Units
Total
BTRP
ETRP
–
–
–
–
–
–
57%
56%
81,315
53,746
135,061
87,979
65,956
153,935
178
9,812.53
9,990
759
10,600
11,359
–
–
–
–
54%
–
–
–
–
–
Barberton
Mines
Total
Evander
Mines
Total
57%
56%
54%
0%
Group
Total
56%
56%
81,315
53,746
135,061
87,979
65,956
153,935
178
759
9,813
9,990
10,600
11,359
–
–
–
–
–
–
–
–
–
–
–
–
24,283
2,494
24,283
2,494
26,776
22,885
–
22,885
–
22,885
–
–
4,029
–
–
–
4,029
4,029
–
81,493
63,558
145,051
24,283
6,523
105,776
70,081
175,857
88,738
76,556
165,294
22,885
–
111,623
76,556
188,179
(%)
(%)
(oz)
(oz)
(oz)
(oz)
(oz)
(oz)
(oz)
(oz)
(oz)
(oz)
(ZAR/kg)
446,246
447,474
446,784
447,387
430,797
446,508
445,922
446,274
(ZAR/kg)
435,464
430,801
433,304
434,394
–
435,244
430,801
433,437
Average USD gold
price received
2015
(USD/oz)
2014
(USD/oz)
1,212
1,309
1,216
1,295
1,214
1,302
1,215
1,305
1,113
–
1,213
1,346
1,216
1,295
1,212
1,303
ZAR cash cost
ZAR all-in
sustaining cash
costs
ZAR all-in cost
2015
2014
2015
2014
2015
2014
(ZAR/kg)
309,289
475,338
382,048
176,734
266,453
278,859
455,896
349,410
(ZAR/kg)
258,972
384,150
316,948
163,977
–
239,496
384,150
298,345
(ZAR/kg)
375,914
532,767
444,644
185,280
266,453
332,151
507,980
402,221
(ZAR/kg)
311,756
445,665
373,776
170,111
–
282,716
445,665
349,008
(ZAR/kg)
382,620
539,315
451,280
185,280
735,262
337,317
557,553
425,084
(ZAR/kg)
321,342
478,933
394,330
227,286
–
302,058
478,933
374,015
USD cash cost
2015
(USD/oz)
2014
(USD/oz)
840
778
USD all-in
sustaining cash
cost
2015
(USD/oz)
1,021
2014
(USD/oz)
937
USD all-in cost
2015
(USD/oz)
1,039
2014
2015
(USD/oz)
966
(ZAR/t)
3,007
2014
(ZAR/t)
2015 (ZAR million)
2,447
109.3
ZAR cash cost
per tonne
(note 3)
Capital
expenditure
(note 4)
1,291
1,154
1,447
1,339
1,465
1,439
1,450
1,394
143.1
1,038
952
1,208
1,123
1,226
1,185
1,896
1,719
252.5
480
493
503
511
503
683
137
143
3.3
688
688
1,899
84
–
758
740
902
874
916
934
744
751
95.1
112.6
1,238
1,154
1,380
1,339
1,515
1,439
767
1,394
238.2
949
897
1,093
1,049
1,155
1,124
756
990
350.8
2014 (ZAR million)
110.3
210.5
320.8
40.7
–
151.0
210.5
361.5
Pan African Resources
Integrated Annual Report 2015
49
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Underground and
surface operations
Tailings operations
Total continuing operations
Year
ended
30 June
Barberton
Mines
Evander
Mines
Units
Total
BTRP
ETRP
Barberton
Mines
Total
Evander
Mines
Total
Average
exchange rate
2015
(ZAR/USD)
2014
(ZAR/USD)
11.45
10.35
11.45
10.35
11.45
10.35
Revenue
2015 (ZAR million)
1,131.1
884.6
2,015.7
2014 (ZAR million)
1,201.9
1,025.8
2,227.7
Cost of
production
2015 (ZAR million)
2014 (ZAR million)
783.9
714.8
939.7
1,723.7
914.7
1,629.5
All-in sustainable
cost of production
All-in cost of
production
2015 (ZAR million)
952.8
1,053.2
2,006.0
2014 (ZAR million)
860.5
1,061.2
1,921.7
2015 (ZAR million)
969.8
1,066.2
2,036.0
2014 (ZAR million)
886.9
1,140.4
2,027.3
Adjusted EBITDA
(note 5)
2015 (ZAR million)
2014 (ZAR million)
301.8
420.9
32.4
128.3
334.3
549.2
11.45
10.35
337.9
309.2
133.5
116.7
139.9
121.1
139.9
161.8
203.7
193.1
Group
Total
11.45
10.35
12.04
–
11.45
10.35
11.45
10.35
87.4
1,469.0
972.0
2,441.0
–
1,511.1
1,025.8
2,536.9
54.1
–
917.4
831.5
993.8
1,911.2
914.7
1,746.2
54.1
1,092.7
1,107.3
2,200.0
–
981.6
1,061.2
2,042.8
149.2
1,109.7
1,215.4
2,325.1
–
1,048.7
1,140.4
2,189.1
15.0
–
505.5
614.0
47.4
128.3
552.9
742.3
Note 1: Surface source tonnes allocated to ETRP from 1 March 2015.
Note 2: ETRP production for January and February 2015 was capitalised according to IAS 16 (204,024t producing 17kg or 547oz gold).
Note 3: Split between ETRP and Surface feedstock cost per tonne is R40.9/t and R238.3/t respectively, averaging at R84/t.
Note 4: Included in the Evander Mines capital for the prior year is an amount of ZAR79.2 million relating to the construction of the ETRP.
Note 5: Adjusted EBITDA is represented by earnings before interest, taxation, depreciation and amortisation, bargain purchase gain, impairments and loss on disposal of associate.
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
50 Pan African Resources
Integrated Annual Report 2015
OPERATIONAL REVIEW
BARBERTON MINES
HIGHLIGHTS
•
Increased gold mineral reserves by 236,162 ounces, resulting in the extension of the life of mine to
20 years
• Remained one of the lowest cost producers in the South African gold industry
• BTRP continued to perform well – 80,100 tonnes per month at a recovered grade of 0.8g/t
CHALLENGES
• Four DMR section 54 safety stoppage instructions halted production for a total of six days
• An oil contamination in the BIOX® plant negatively impacted production
• Production tonnes below targets
LOOKING AHEAD
• Achieving and maintaining production targets
• Achieving planned capex projects to establish new ore reserves
• Exploring new retreatment projects to extend the life of the BTRP and possible additional gold from
other sources
• Continuing to maintain costs
Barberton Mines consists of three mines: Fairview,
Sheba and New Consort, and now the BTRP.
Fairview produces 50% of Barberton Mines’ gold production with Sheba and New Consort
producing 30% and 20%, respectively. Operating three mines continues to provide flexibility and
versatility in terms of resource allocation.
The mix of high grade ore from the mines is planned monthly to maintain the targeted grade/
tonnage profile and gold production, giving Barberton Mines the advantage of managing cash flows
from an early stage in the mining process. The operation has a proven track record of consistently
delivering a solid performance, driven to a large extent by an embedded culture of cost control.
The mining methods used are an underground semi-mechanised up-dip cut and fill and up-dip
room and stick. An estimated 16%–18% of gold is recovered by sweeping and vamping contractors
focusing on worked-out areas and mining high grade pillars. Gold is extracted using the BIOX®
gold extraction process, an environmentally friendly process, which uses bacteria to release gold
from the sulphide ore.
Gold was originally discovered in the Barberton area in 1886 and comprises the sediments
and metavolcanics within the Barberton Greenstone Belt. Barberton Mines has therefore been
mined for over a century with current production practices now embedded. Given the aged mine
infrastructure, the operations undergo ongoing maintenance and refurbishment.
Pan African Resources
Integrated Annual Report 2015
51
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
MANAGEMENT STRUCTURE
Y
G
E
T
A
R
T
S
Casper Strydom (57)
General manager
39
years
National Higher Diploma Metalliferous Mining
Mine Managers Certificate
Mining-related experience
Pierre Human (54)
Manager: mining
+30
years
Mine Overseers Certificate of
Competency, MDP Stellenbosch
Mining-related experience
Jonathan Irons (49)
Manager: metallurgy
National Higher Diploma Extractive
Metallurgy, Programme for
Management Development (GIBS –
University of Pretoria),
Competence levels include:
Refractory, Gold Extraction
Technologies – (Roasting and Hydro
biological)
Metallurgy-related experience
+25
years
Hans Grobler (53)
Manager: engineering
(Trackless, Consort and Surface)
Mechanical Engineers Certificate
of Competency, Professional
Certificated Engineer
Engineering-related experience
+30
years
Oupa Thobeha (41)
Manager: engineering (Fairview and
Sheba)
National Diploma Electrical and
Mechanical Engineering, N4 Business
Management, Qualified Assessor
Engineering-related experience
+8
years
Essie Esterhuizen (56)
Manager: human resources
Gencor Learner Officials Programme,
Certificate in Personnel Management
Skills Development Facilitator – NQF
Level 5
HR-related experience
+30
years
Martin Pieters (34)
Manager: finance and administration
BCom Accounting, BCom (Hons)
Financial Management, CIMA,
CGMA, BA (Theology)
Mining-related experience
4
years
Elize Jacobs (38)
Manager: group procurement
+5
years
Bluris
Mining-related experience
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
52 Pan African Resources
Integrated Annual Report 2015
OPERATIONAL REVIEW: BARBERTON MINES continued
CASH COST BREAKDOWN – 2015
Totals:
GBP51.0 million
ZAR917.4 million
USD758/oz
42% Salaries
12% Mining
19% Processing
8% Engineering
10% Electricity
3% Security
6% Other
CASH COST BREAKDOWN – 2014
Totals:
GBP49.3 million
ZAR831.5 million
USD740/oz
45% Salaries
12% Mining
19% Processing
8% Engineering
10% Electricity
3% Security
3% Other
THE YEAR IN REVIEW
Sales and production
Barberton Mines’ (including BTRP) gold sold
decreased by 5.2% to 105,776oz (2014: 111,623oz).
The total combined ZAR cash cost per kilogram
term, increased by 16.4% to ZAR278,859 (2014:
ZAR239,496/kg). The combined USD cash costs
per ounce increased by 2.4% to USD758/oz (2014:
USD740/oz).
Barberton Mines’ (excluding BTRP) gold sold
decreased by 8.2% to 81,493oz (2014: 88,738oz).
Tonnes milled from mining operations decreased
by 10.7% to 260,749t (2014: 292,121t), due to
a decrease in surface tonnes milled to 6,076t
(2014: 28,547t) and the underground mining
tonnes decreased to 254,673t (2014: 263,574t).
The underground headgrade dropped to 10.9g/t
(2014: 11.5g/t). The decrease in gold sold from
underground and surface mining operations was
largely due to the BIOX® plant oil contamination
and operational S54 safety stoppages enforced by
the DMR. Operational and maintenance systems
have been implemented to mitigate the risk of
future oil contaminations, and safety improvements.
Barberton Mines’ (excluding BTRP) ZAR cash
costs per kilogram terms increased by 19.4% to
ZAR309,289/kg (2014: ZAR258,972/kg), while
USD cash costs per ounce increased by 8.0%
to USD840/oz (2014: USD778/oz). The cash
cost
lower
increases were exacerbated by
gold production due to the BIOX® plant’s oil
contamination and the DMR stoppages affecting
tonnage production.
The total cost of production (including off-mine
costs) increased by 10.3% to ZAR917.4 million
(2014: ZAR831.5 million). The main year-on-year
cost contributors were the following:
• Salaries and wages increased by 4.7% to
ZAR387.2 million (2014: ZAR369.9 million).
The increase was as a result of the wage
agreement settlement, which was average CPI
plus 1% (7.15% and 6.6% granted to NUM
and UASA respectively). The total increase in
salaries and wages was lower than the increase
in the wage agreement as a result of lower
incentives paid (which are linked to the mine’s
productivity and profitability). In addition to this
the average number of employees (excluding
capital employees) employed during the year
decreased by 1% to 1,675 (2014: 1,690).
• Mining
by
5.3%
costs
to
increased
ZAR108 million (2014: ZAR102.6 million),
mainly due to an increase in vamping contractors’
costs of 6.5%. The mining costs excluding those
of the vamping contractors’ remained flat year-
on-year as a result of the lower tonnages mined.
• Processing
costs
(excluding
the BTRP)
decreased by 1.6% to ZAR60.8 million (2014:
ZAR61.8 million) because of the lower tonnages
mined and therefore processed.
• Engineering and
services costs
technical
increased by 12.2% to ZAR71.8 million (2014:
ZAR64.0 million). Barberton Mines incurred an
additional cost of ZAR7.4 million for secondary
support on Fairview Mine to assist in accessing
additional high grade pillars and panels.
• The cost of electricity increased by 11.5%
to ZAR95.8 million (2013: ZAR85.9 million).
Pan African Resources
Integrated Annual Report 2015
53
S
S
E
N
S
U
B
I
average reserve grade of 35g/t that has been declared for the MRC.
The mineralised widths range between 7 – 15 metres.
Recent borehole results in the 11 Block are detailed below:
Borehole number
Bh 5940
Bh 5816
Bh 5849
Bh 5864
Channel
width
cm
687
691
1,626
1,383
Grade
g/t
53.30
120.03
50.22
43.82
LOOKING AHEAD
Barberton Mines aims to improve levels of production by focusing
on BIOX® recoveries, increased tonnages aligned with our incentive
system, in conjunction with cost containment in order to avoid margin
erosion. The management team remains committed to improving
their safety performance and working with the DMR to reduce safety
stoppages.
BTRP
Sales and production
Gold sold from the BTRP was 24,283oz (2014: 22,885oz) for the year.
Tonnes processed improved to 971,627t (2014: 815,736t) at a lower
headgrade of 1.4g/t (2014: 1.6g/t) which was offset by an increase
in tonnes processed and an increase in plant recoveries to 57%
(2014: 56%).
Barberton Mines’ (excluding BTRP) ZAR cash costs per kilogram
increased by 19.4% to ZAR309,289/kg (2014: ZAR258,972/kg), while
USD cash costs per ounce increased by 8.0% to USD840/oz (2014:
USD778/oz). The cash cost increases were worsened by lower gold
production due to the BIOX® plant’s oil contamination and the DMR
stoppages affecting tonnage production.
The BTRP’s ZAR cash costs increased by 7.8% to ZAR176,734/kg
(2014: ZAR163,977/kg) and USD cash costs per ounce were
USD480/oz (2014: USD493/oz).
LOOKING AHEAD
The Sheba and New Consort tailings dams will provide potential future
sources of tailings which has supported the increased BTRP life of
operation to 15 years (2014: 12 years) The BTRP has a mineral reserve
of 0.6Moz (13.4Mt @ 1.5g/t). The BTRP payback period was 18 months
since commissioning on 1 July 2013, therefore the increase in the BTRP
life of operation will result in further surplus free cash flows.
Electricity costs excluding the BTRP increased by 9.3% to
ZAR83.8 million (2014: ZAR76.7 million), which was lower
than the average 12.7% increase in Eskom tariffs due to lower
tonnages mined from underground. The electricity cost of
the BTRP increased by 30.4% to ZAR12.0 million (2014:
ZAR9.2 million), due to throughput tonnes processed increasing
by 19.1%, combined with Eskom tariff increases of 12.7%.
• Security costs were well controlled and only increased by 3.0% to
ZAR27.6 million (2014: ZAR26.8 million).
• Administration and other costs
increased by 0.6%
to
ZAR33.4 million (2014: ZAR33.2 million).
• The BTRP operating
costs
increased by 14.4%
to
ZAR133.5 million (2014: ZAR116.7 million) as a result of
the additional 155,891 tonnes processed for the year under
review. There was an additional increase in the lime costs of
ZAR6.1 million to assist with the BTRP thickener settlement.
Installation and equipping costs also increased by ZAR7.2 million
mainly due to corrosion maintenance performed on the three
carbon in leach tanks at the BTRP to sustain production levels.
Barberton Mines’ ZAR combined all-in cash cost per kilogram
increased by 11.7% to ZAR337,317/kg (2014: ZAR302,058/kg).
The total combined USD all-in cash cost per ounce decreased
by 1.9% to USD916/oz (2014: USD934/oz). This increase in the
ZAR all-in cash costs was mainly as a result of the following:
• Decrease in gold sold by 5.2% to 105,776oz (2014: 111,623oz)
• Cost of production increased by 10.3% to ZAR917.4 million
(2014: ZAR831.5 million)
• The increase was offset by a decrease in capital expenditure to
ZAR112.6 million (2014: ZAR151 million) with the finalisation of
the BTRP construction of ZAR40.7 million in the prior year.
Capital expenditure
Total capital expenditure at Barberton Mines decreased by
25.4% to ZAR112.6 million (2014: ZAR151 million). Maintenance
capital expenditure of ZAR44.2 million (2014: ZAR33.3 million)
and development capital expenditure of ZAR53.7 million (2014:
ZAR50.5 million) was incurred.
Expansion capital of ZAR14.7 million (2014: ZAR67.2 million) was
spent on the development of the Fairview ventilation raise borehole
project to improve operating environment conditions. Expansion
capital incurred in the prior year was ZAR26.5 million for the
Fairview ventilation raise borehole project and ZAR40.7 million for
the finalisation and commissioning of the BTRP.
New ore reserve and exploration drilling projects have yielded
positive results, confirming the down dip extension of the high grade
11 Block of the MRC orebody by a further 170 metres. This extension
to the MRC orebody has resulted in an annual increase in Barberton
Mines’ mineral reserves by 236,162 ounces, thereby extending the life
of mine of Barberton Mines to 20 years.
The Fairview MRC orebody has been the primary gold contributor
towards gold produced at Barberton Mines. This orebody is an
epigenetic hydrothermal lode-gold deposit with a strike length that
ranges between 70 – 120 metres and also extending to depth. Gold
mineralisation is associated with arsenopyrite and pyrite with an
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
54 Pan African Resources
Integrated Annual Report 2015
OPERATIONAL REVIEW
EVANDER MINES
HIGHLIGHTS
• ETRP commenced in January 2015 – processing 200,000 tonnes per month at 0.31g/t
• Capital spend on ETRP was below budget
CHALLENGES
• Three DMR section 54 safety stoppage instructions halted production for a total of six days
• Underground mining operations and infrastructure constraints delayed production
turnaround – high grade mining cycle only commenced in June 2015
• Production tonnes below targets
LOOKING AHEAD
•
Investigating the viability of constructing ‘Elikhulu’ – a tailings retreatment plant to
treat slimes at about 12 million tonnes per annum at a headgrade of 0.28g/t
• Assessing the merits of progressing the Evander South project up the value chain
Evander Mines exploits the Kimberley reef
in the Evander basin, part of the greater
Witwatersrand basin. Mining methods
employed are underground conventional
scraper mining and rail bound equipment
with some trackless mechanised
development.
With No. 8 Shaft at a depth of 2.5km, it takes the workforce approximately an hour to
reach the mining area via a lift and locomotive and two chairlifts. The rock is then hauled
along 11 conveyors from the rock face to the bottom of No. 7 Shaft, where it is hoisted
to surface. The gold is extracted at a CIL hybrid plant.
Pan African Resources
Integrated Annual Report 2015
55
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
MANAGEMENT STRUCTURE
Y
G
E
T
A
R
T
S
Band Malunga (42)
General manager
22
years
BTech Mining Engineering
Mining-related experience
Marius Pelser (57)
Manager: mining
39
years
Mine Overseers Certificate of
Competency
Mining-related experience
Thabang Masuku (37)
Manager: metallurgy
National Diploma in Chemical
Engineering, BTech Metallurgy
Mining-related experience
8
years
Bernhard Lindner (52)
Manager: engineering
National Higher Diploma Mechanical
Engineering, Engineering Certificate
of Competency
Mining-related experience
33
years
PHOTO TO BE PLACED
PHOTO TO BE PLACED
PHOTO TO BE PLACED
Walter Seymore (37)
Manager: ore reserve
16
years
National Diploma in Geotechnology
Mining-related experience
Anthony Maki (47)
Manager: human resources
Master of Business Administration,
Advanced Diploma in Labour,
Relations, National Diploma in
Human Resources
Mining-related experience
13
years
Craig de Billot (45)
Manager: finance and administration
21
years
BCompt (Hons)
Mining-related experience
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
Dr Lerato Maiphetlho (45)
Manager: occupational medical
practitioner
BSc Med, MBChB, FCPHM(SA) OM,
MMed (COM)
Medical-related experience
6
years
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
56 Pan African Resources
Integrated Annual Report 2015
OPERATIONAL REVIEW: EVANDER MINES continued
CASH COST BREAKDOWN – 2015
Totals:
GBP55.2 million
ZAR993.8 million
USD1,238/oz
48% Salaries and wages
12% Mining
9% Processing
6% Engineering and technical services
18% Electricity
1% Security
6% Administration
CASH COST BREAKDOWN – 2014
Totals:
GBP54.2 million
ZAR914.7 million
USD1,154/oz
49% Salaries and wages
12% Mining
4% Processing
7% Engineering and technical services
18% Electricity
1% Security
9% Administration
THE YEAR IN REVIEW
Sales and production
For the year under review Evander Mines’ gold sold
decreased by 8.5% to 70,081oz (2014: 76,556oz).
Underground and surface sources tonnes milled
decreased by 1.2% to 648,209t (2014: 656,028t).
The decrease in tonnes milled was largely due
to challenges related to underground mining
operations and infrastructure constraints, Eskom
power interruptions and DMR safety stoppages.
These issues adversely impacted production output.
The mine has implemented corrective actions,
including
improved maintenance protocols on
the underground conveyor belt system, thereby
improving availability of the conveyor belts from 60%
to 80%. The mine also improved the monitoring and
pump infrastructure of its No. 8 Shaft dewatering
pumps, thereby reducing the risk of shaft flooding.
The on-site management
team has been
strengthened with a renewed management focus on
achieving operational and production targets.
The total cost of production (including off-mine
costs) increased by 8.6% to ZAR993.8 million
(2014: ZAR914.7 million). The cost of production
includes additional cost in relation to the new ETRP
plant and related surface feedstock. The cost of
production (excluding the ETRP costs) therefore
only increased by 2.7% to ZAR939.7 million.
The combined ZAR cash costs per kilogram
increased by 18.7% to ZAR455,896/kg (2014:
ZAR384,150/kg). USD cash costs per ounce
increased by 7.3%
(2014:
USD1,154/oz). This increase was mainly as a result
of the lower grade cycle which led to gold sales
decreasing by 8.5% to 70,081oz (2014: 76,556oz)
and the cost of production increasing by 8.6% to
ZAR993.8 million (2014: ZAR914.7 million).
to USD1,238/oz
ETRP
Pan African Resources remains focused on creating
stakeholder value through unlocking the potential
of its organic surface and brownfield exploration
projects. In this regard, Evander Mines successfully
commissioned its ETRP and the first gold was
eluted in January 2015. The ETRP has now ramped
up processing to its capacity of 180,000 to 200,000
tonnes per month at 0.3g/t of tailings and 1.1g/t
of surface feedstock. Gold production from the
ETRP was on target and its recoveries from tailings
sources are currently above plan at 48% (plan 42%),
while additional surface sources aided in increasing
the ETRP overall recovery to 53.7%.
The ETRP was operational for four months of the
current financial year and its ZAR cash costs per
kilogram amounted to ZAR266,453/kg, equating
to USD cash costs per ounce of USD688/oz. The
ETRP contributed an additional 2,494 ounces of
gold from its tailings sources and 4,029 ounces from
surface feedstock.
The total construction capital spend on the ETRP
was approximately ZAR174.3 million, which was
substantially below the original ZAR200 million
project budget.
Growth projects at Evander Mines
An internal technical team from Evander Mines has
been assigned to assess the merits of developing the
Evander South project to the level of a preliminary
economic assessment. The Evander South project
is an attractive mining opportunity whereby the
Kimberley reef can potentially be exploited at
shallow depths, commencing at 300 metres below
surface. Evander South has an estimated mineral
resource of 4.9Moz (20.1Mt @ 7.7g/t).
the
assessment on
In light of the positive results of the ETRP, Pan
African Resources will undertake a preliminary
economic
viability of
constructing ‘Elikhulu’, a tailings retreatment plant at
Evander Mines, which can potentially treat slimes
at a processing capacity of up to 12 million tonnes
per annum and at a headgrade of 0.28g/t from
the Winkelhaak, Leslie and Kinross tailings storage
facilities. The total mineral resource for Elikhulu is
165 million tonnes at 0.28g/t (1.5Moz).
The main year-on-year cost contributors were
the following:
• Salaries and wages increased by 5.4% to
ZAR473.0 million (2014: ZAR448.9 million).
The increase was as a result of the Chamber
of Mines wage agreement which was average
CPI plus 1% (7.15% and 6.6% granted to NUM
and UASA respectively). The increase was
lower than the average Chamber increase,
due to the implementation of a voluntary
separation programme to optimise employee
numbers. The average number of employees
(excluding capital employees) employed during
the year decreased by 2.8% to 2,247 (2014:
2,312). The ETRP employed an additional
13 employees during the year. The cost of
the voluntary separation programme was
ZAR12.9 million and was recorded in other
income and expenses on the statement of
comprehensive
into
income and
Evander Mines’ all-in sustaining costs per kilogram.
factored
• Mining
costs
to
increased
ZAR120.3 million (2014: ZAR113.3 million) due
to additional vamping occurring in No. 2 and 3
declines, and inflation-linked cost increases.
6.2%
by
• Processing costs
increased by 174.3% to
ZAR88.6 million (2014: ZAR32.3 million), due
to the additional ETRP costs of ZAR51 million.
• Engineering and
services costs
technical
increased by 1.6% to ZAR64.9 million (2014:
ZAR63.9 million).
• Electricity and water costs increased by 7.1%
to ZAR175.8 million (2014: ZAR164.2 million).
The electricity costs that related to the ETRP
amounted to ZAR2.1 million for the four
months ended 30 June 2015. The increase
in electricity and water excluding the ETRP
increased by 5.8% to ZAR173.7 million (2014:
ZAR164.2 million). The Eskom electricity tariff
increase implemented for the period under
review was 12.7%, however Evander Mines
electricity consumption decreased due
to
power optimisation projects, load clipping, and
section 54 safety stoppages issued by the DMR.
• Security costs decreased by 11.8%
to
ZAR11.2 million (2014: ZAR12.7 million) as a
result of renegotiated rates.
to ZAR51.3 million
• Administration and other costs decreased
by 13.1%
(2014:
ZAR59.0 million) as result of management’s
drive to reduce unnecessary overheads during
the low grade cycle.
costs
the production
• ETRP cost of production which is incorporated
in
above
amounted to ZAR54.1 million. The ETRP costs
comprise ZAR51 million for processing costs,
ZAR2.1 million for electricity and ZAR1 million
for salaries.
listed
Evander Mines’ ZAR combined all-in cash cost per
kilogram increased by 16.4% to ZAR557,553/kg
(2014: ZAR478,933/kg). The total combined USD
all-in cash cost per ounce decreased by 5.3% to
USD1,515/oz (2014: USD1,439/oz). This increase in
all-in cash costs was mainly as a result of the following:
• Decrease in gold produced by 8.5% to 70,081oz
(2014: 76,556oz)
• Cost production
increased by 8.6%
ZAR993.8 million (2014: ZAR914.7 million)
to
• Once-off expansion capital related to the ETRP
plant construction of ZAR95.1 million (2014:
ZAR79.2 million), equating to ZAR43,597/kg
(2014: ZAR33,268/kg).
capital
Capital expenditure
Total capital expenditure at Evander Mines was
(2014: ZAR210.5 million).
ZAR238.2 million
Maintenance
was
expenditure
(2014: ZAR27.9 million)
ZAR38.6 million
capital expenditure was
and development
ZAR104.5 million
(2014: ZAR103.4 million).
Expansion capital related to the ETRP plant
(2014:
construction was ZAR95.1 million
ZAR79.2 million).
LOOKING AHEAD
Evander Mines will assess the merits of developing
the Evander South project to further boost
production levels. Evander Mines will continue to
investigate the viability of constructing the Elikhulu
tailings retreatment plant to treat slimes at about
12 million tonnes per annum at a headgrade of
0.28g/t, with a specific focus on reducing the overall
project capital.
Pan African Resources
Integrated Annual Report 2015
57
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
58 Pan African Resources
Integrated Annual Report 2015
OPERATIONAL REVIEW
PHOENIX PLATINUM
HIGHLIGHTS
• 44% increase in PGE ounces sold
•
Increase in PGE recoveries from 29% to 44%
• Capital spend on ETRP was below budget
CHALLENGES
• Declining commodity prices
•
International Ferro Metals business rescue proceedings
LOOKING AHEAD
• Optimising mineral reserves from Elandskraal and Kroondal (122.534oz)
• Continuing to contain costs
Phoenix Platinum recovers PGEs from
CTRP located on IFL’s Lesedi Mine. The
Buffelsfontein, Elandskraal and Kroondal
mineral resources originate from the
mining of chromitite seams from the
Bushveld Igneous Complex.
The Bushveld Igneous Complex is host to the world’s largest deposits of PGEs. The
operation is expected to produce PGEs over a life of mine of 28 years. It has a total
process capacity of 240kt per annum.
The PGEs are extracted in the flotation plant and the concentrate is delivered to
Lonmin’s Mooi Nooi Smelter for toll extraction.
The CTRP was designed to treat sulphide material from the Lesedi Mine, which is
supplied to Phoenix Platinum with sulphide-rich material, as a current arising.
Pan African Resources
Integrated Annual Report 2015
59
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
MANAGEMENT STRUCTURE
Y
G
E
T
A
R
T
S
Bertin Mcleod (38)
Plant manager: metallurgy
BTech Chemical Engineering Management
Development Certificate, Senior Management
Development Certificate
Platinum industry-related experience
13
years
John Martin (59)
Plant engineer
+27
years
Mine Overseers Certificate of
Competency, MDP Stellenbosch
Engineering-related experience
9
years
Avinash Kandhai (33)
Cost accountant
BTech Accounting
Platinum industry-related experience
and 10 years financial experience
Hendrik Snyman (42)
Manager: Metanza1
BEng Metallurgical (Extractive),
Certificate in Business Management,
Certificate in Leadership
Programme, Professional Engineer
Metallurgy-related experience
+17
years
Hector Mapheto (35)
Operations manager: Metanza1
BSc Eng Chemical, Professional
Engineering
Metallurgy-related experience
10
years
Daniel Maponya (35)
Site manager: Fraser2
National Diploma: Civil Engineering,
Mine Residue Deposits Certificate,
BTech: Engineering Water
Seven years of tailings dams
experience
7
years
1 Metanza Mineral Processors Proprietary Limited provides differentiated outsourced operations and maintenance services to the mineral processing industry.
2 Fraser Alexander outsources the operation and maintenance of mineral processing plants.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
60 Pan African Resources
Integrated Annual Report 2015
OPERATIONAL REVIEW: PHOENIX PLATINUM continued
CASH COST BREAKDOWN – 2015
Totals:
GBP3.8 million
ZAR67.8 million
USD578/oz
PGE PRODUCTION TABLE:
Year ended
30 June
Units
25% Labour
21% Site production cost
11% Tailings cost
1% Transport and lab cost
13% Consumables
4% Indirect site cost
2% Administration cost
23% Realisation and refining
CASH COST BREAKDOWN – 2014
Totals:
GBP3.3 million
ZAR55.6 million
USD746/oz
29% Labour
22% Site production cost
12% Tailings cost
1% Transport and lab cost
14% Consumables
5% Indirect site cost
6% Administration cost
11% Realisation and refining
Tonnes processed – tailings
Headgrade – tailings
Overall recovery
PGE sold
Average ZAR PGE price received
Average USD PGE price received
ZAR cash cost
ZAR all-in sustaining cash costs
ZAR all-in cost
USD cash cost
USD all-in sustaining cash cost
USD all-in cost
ZAR cash cost per tonne
Capital expenditure
Average exchange rate
Revenue
Cost of production
All-in sustainable cost of production
All-in cost of production
Adjusted EBITDA
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
(t)
(t)
(g/t)
(g/t)
(%)
(%)
(oz)
(oz)
(oz)
(oz)
(USD/oz)
(USD/oz)
(ZAR/oz)
(ZAR/oz)
(ZAR/kg)
(ZAR/kg)
(ZAR/kg)
(ZAR/kg)
(USD/oz)
(USD/oz)
(USD/oz)
(USD/oz)
(USD/oz)
(USD/oz)
(ZAR/t)
(ZAR/t)
(ZAR million)
(ZAR million)
(ZAR/USD)
(ZAR/USD)
(ZAR million)
(ZAR million)
(ZAR million)
(ZAR million)
(ZAR million)
(ZAR million)
(ZAR million)
(ZAR million)
(ZAR million)
(ZAR million)
Tailings
operations
Phoenix
Platinum
262,119
251,182
3.31
3.65
44
29
10,245
7,204
9,603
9,987
839
965
6,621
7,723
7,016
7,977
7,016
7,977
578
746
613
771
613
771
259
222
0.6
0.4
11.45
10.35
98.4
71.9
67.8
55.6
71.9
57.5
71.9
57.5
27.7
16.0
THE YEAR IN REVIEW
Sales and production
Phoenix Platinum made good progress on
improving operations in the year under review.
PGE ounces sold increased by 42.2% to 10,245oz
PGE (2014: 7,204oz PGE). Overall plant recoveries
increased significantly to 44% (2014: 29%). The
cessation of International Ferro Metals Limited
(IFL) operations at Skychrome, which mined mainly
oxidised material and its replacement with sulphide
material from its underground operation at Lesedi
Mine resulted in an improvement in the quality of
feedstock being treated; this in conjunction with the
introduction of new re-agents in the metallurgical
process were the main contributors to the higher
recoveries.
IFL, and a
Pan African Resources’ shareholders are referred
to the regulatory announcement published on
26 August 2015 by
follow-on
announcement by Pan African Resources on
27 August 2015, whereby IFL announced that as a
result of deteriorating business conditions, its South
African subsidiary, International Ferro Metals (SA)
Proprietary Limited (IFMSA), has entered into
business rescue. Business rescue is a statutory
means of enabling a financially distressed company
to continue business, under the supervision of a
business rescue practitioner, protected from its
creditors.
Phoenix Platinum is situated on the IFMSA property
and a portion of the feedstock for the Phoenix
Platinum operation (currently approximately 20%)
is obtained from tailings arising from IFMSA’s
current processing activities. Phoenix Platinum is
not solely reliant on material from IFMSA and has
alternative sources of feedstock. Phoenix Platinum
sources electricity, water and certain other services
from IFMSA.
At this stage, Phoenix Platinum is not in a position
to fully assess the impact of the business rescue
proceedings on the operation. Phoenix Platinum
and Pan African Resources will work closely with the
IFMSA business rescue practitioner to ensure that
the operations and interests of Phoenix Platinum
are safeguarded, which
includes the services
currently provided by IFMSA. All stakeholders will
be kept informed as these discussions progress.
Phoenix Platinum will be looking at alternative
feedstock from its Elandskraal and Kroondal tailings
dams to maintain production and mitigate any
shortfalls arising from IFMSA.
The effective average ZAR PGE basket price
received decreased by 3.8% to ZAR9,603/oz
(2014: ZAR9,987/oz). Cost per ounce of
production decreased by 14.3% to ZAR6,62/oz
(2014: ZAR7,723/oz). In USD terms the PGE
basket price received decreased by 13.1% to
USD839/oz
(2014: USD965/oz). The USD
cash costs per ounce decreased by 22.5% to
USD578/oz (2014: USD746/oz).
The total cost of production increased by 21.9% to
ZAR67.8 million (2014: ZAR55.6 million). The main
year-on-year cost contributors were the following:
• Salaries and wages increased by 10.7% to
ZAR19.6 million (2014: ZAR17.7 million),
comprising a standard increase of 7.5% granted
to the employees and also incentive bonus
scheme for achieving production and profit
targets.
• Processing costs
increased by 30.9%
to
ZAR43.6 million (2014: ZAR33.3 million). The
plant incurred higher chrome content and
increased tonnages delivered to the smelter,
resulting
in chrome charges and refining
charges increasing to ZAR13.7 million (2014:
ZAR7.2 million).
• Electricity
costs
increased by 2.8%
to
ZAR3.7 million (2014: ZAR3.6 million). Phoenix
Platinum electricity costs increases were below
Eskom’s tariff increase of 12.7% due to the
optimisation of the plant’s mill to reduce power
consumption.
CAPITAL EXPENDITURE
Total capital expenditure at Phoenix Platinum
remained
(2014:
ZAR0.4 million).
steady at ZAR0.6 million
LOOKING AHEAD
Phoenix Platinum aims to optimise resources from
Elandskraal and Kroondal to maintain production
and profitability. On 29 June 2015 Phoenix Platinum
signed a new agreement to secure the PGE rights
to the Elandskraal resource. The haulage contract
to transport the Elandskraal material to Phoenix
Platinum has been awarded and processing will
commence during September 2015. During the
new financial year the Elandskraal material will be
batch treated in the CTRP to conduct re-agent
suite test work.
During the 2016 financial year, 60,000 tonnes of
the Kroondal resource will be processed in the
CTRP. Re-agent test work will be conducted on this
material during the latter part of the year.
Pan African Resources
Integrated Annual Report 2015
61
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
62 Pan African Resources
Integrated Annual Report 2015
ABRIDGED
MINERAL RESOURCES
AND MINERAL RESERVES
REPORT
Pan African Resources
has an exceptional asset
base and attractive
growth opportunities,
in both established
projects and brownfield
exploration prospects.
Barry Naicker, group mineral resource manager
MINERAL RESOURCES AND
MINERAL RESERVES HIGHLIGHTS
in context of our four strategic pillars
Pan African Resources
Pan African Resources
Pan African Resources
Integrated Annual Report 2015
Integrated Annual Report 2015
Integrated Annual Report 2015
63
S
S
E
N
S
U
B
I
MINERAL RESOURCES AND
MINERAL RESERVES REPORT
FOR THE YEAR ENDED 30 JUNE 2015
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
S TA K E H O L D E R S • G R O W T H • P R O F I TA B L E • S U S TA I N A B L E
For more information view
our full mineral resources and mineral
reserves report available on our website
www.panafricanresources.com
at
Y
G
E
T
A
R
T
S
MINERAL TENURE
Stakeholder ENGAGEMENT
LONGEVITY in operations
Organised LABOUR
Local ECONOMIC
DEVELOPMENT
S
T
AKEHO L D E R S
HIGH GRADE/
LOW COST producer
ETRP performing as anticipated
BTRP at steady state production
Barberton Mines: 10.9g/t
Evander Mines: 4.6g/t
Phoenix Platinum: 3.3g/t
(head grade – g/t)
P
ROFIT A B
E
L
MINERAL RESOURCES
Gold 31.9MOZ
PGEs 0.6MOZ
ORGANIC GROWTH PROJECTS
BARBERTON MINES – MRC OREBODY EXTENSION,
CLUTHA MINE AND EVANDER SHAFT 8 – 26 LEVEL
BROWNFIELD PROJECTS
EVANDER SOUTH, ELIKHULU (TAILINGS PLANT),
POPLAR AND ROLSPRUIT
S
USTAI N A B
L E
GROW T H
MINERAL RESERVES
LIFE OF MINE
Gold 10.1Moz UP 3.0%
BARBERTON MINES
20 YEARS
PGEs 0.5Moz DOWN 3.9%
EVANDER MINES
16 YEARS
ETRP in PRODUCTION
PHOENIX PLATINUM
28 YEARS
Life of mine INCREASED
BTRP
ETRP
15 YEARS
16 YEARS
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
64 Pan African Resources
Integrated Annual Report 2015
ABRIDGED MINERAL RESOURCES AND
MINERAL RESERVES STRATEGY
Pan African Resources has an exceptional asset base and attractive growth opportunities,
in both established projects and brownfield exploration prospects. Strategy in this
regard is based on global best practice in mineral resource management (MRM) to
aggressively explore and develop projects that will become next generation long-term
business units.
This strategy includes:
• Improving the conversion of mineral resources to mineral reserves by accessing, developing and exploiting
underground orebodies and surface assets
• Unlocking the value of major organic projects
• Identifying new expansion opportunities to sustain growth.
S
T
AKEHO L D E R S
S
USTAI N A B
L E
• Mineral tenure secured
• Compliance with all relevant
South African labour legislation
• Compliance with MPRDA,
Mining Charter and
implementation of social and
labour plans
• Proactive, strong
relationships with regulators,
organised labour and
communities
• Mineral Resources
Gold 31.9Moz, PGEs 0,6Moz
• Organic growth projects:
Evander Shaft 8 – 26 level,
Fairview Mine – MRC
orebody
Brownfield projects:
Elikhulu, Evander South, Poplar,
Rolspruit
• Accretive acquisitions
P
ROFIT A B
E
L
GROW T H
• Mineral Reserves
Gold 10.4Moz, PGEs 0.5Moz
• Cash-generative
• Attractive dividend
• Continual low cash cost
gold production
• Life of mine (LOM)
– years:
Barberton Mines – 20
Evander Mines – 16
Phoenix Platinum – 28
BTRP – 15
ETRP – 16
• High grade/low cost
producer
Barberton Mines: 10.9
Evander Mines: 4.6
Phoenix Platinum: 3.3
(Head grade – g/t)
• Attributable profit
• Earnings per share
Pan African Resources
Integrated Annual Report 2015
65
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
HIGHLIGHTS
Exploration drilling at Barberton Mines, confirming the down dip extension of the high grade 11 Block
of the main reef complex (MRC) orebody by a further 170 metres. Annual increase in Barberton Mines’
mineral reserves by 236,162 ounces
Positive results of the ETRP, feasibility study undertaken on the viability of constructing “Elikhulu”
Internal technical team has been assigned to assess the merits of progressing the Evander South brownfield
project to the level of a feasibility study
The Sheba and New Consort tailings dams will provide potential future sources of tailings and will support
the increased BTRP life of operation to 15 years (2014: 12 years)
EXPLORATION
DEVELOPMENT
PROJECT
MINE CONSTRUCTION
MINE
PRODUCTION
Mineral
Resources
Reconnaissance
Inferred
Proved
Probable
Measured
Indicated
Evander 7 Shaft
No.3 Decline
Elikhulu
Rolspruit
Poplar
Evander South
Mineral
Reserves
Barberton Mines
Evander 8 Shaft
Phoenix Platinum
BTRP
ETRP
E
U
L
A
V
T
C
E
J
O
R
P
DESK TOP STUDY
DISCOVERY
Figure 1: Project life cycle of mineral assets at Pan African Resources
FEASIBILITY
STUDY
PROJECT
COMMISSIONING
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
The evolution of a project from initial testing to commissioning can take 12 to 18 months or longer, and involves a series of study stages to
reach investment approval and implementation.
We distinguish the group from our peers by having a clear focus on growth and only mining resources that must be profitable in all parts of the
price cycle, in order to deliver long-term economic value to Pan African Resources. The graph above demonstrates the group’s mineral assets
within the value chain and how value is released through projects such as the BTRP and ETRP.
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
66 Pan African Resources
Integrated Annual Report 2015
ABRIDGED MINERAL RESOURCES AND MINERAL RESERVES REPORT continued
SCOPE OF REPORT
This abridged version of the Pan African Resources
Mineral Resource and Mineral Reserve Report 2015
(MR&MR) conforms to the standards determined
by the South African Code for the Reporting of
Exploration Results, Mineral Resource and Mineral
Reserve (the SAMREC Code, 2007 edition) and
forms part of Pan African Resources’ Integrated
Annual Report
including the annual financial
statements for the year ended 30 June 2015. The
other major document in this suite of reports is
the Sustainable Development Report 2015. The
entire suite of documents will be available in full
on
www.panafricanresources.com in due course,
following publication of Pan African Resources’
annual financial statements including a full MR&MR.
The mineral resource is inclusive of the mineral
reserve component, unless otherwise
stated.
Information is presented either by operation, mine
or project, as indicated. The tables and graphs used
to illustrate developments across the operations of
Pan African Resources in FY15 include:
Mineral resources tables by group and commodity
•
• Mineral reserves modifying factors
• Mineral reserves tables by group and commodity
•
Development sampling results and ore reserve
projects
• Appointed competent persons.
Matters on which detail is provided in this
abridged version include regional geology, location,
exploration drilling and organic ore reserve projects.
Note, rounding of numbers in this document may
result in minor computational discrepancies.
REPORTING CODE
The guiding principle in the MR&MR is to ensure
integrity, transparency and materiality in informing
all stakeholders on the status of the group’s
mineral asset base. 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, developed by the South African Institute
of Mining and Metallurgy as the recommended
guideline for reserve and resource reporting for
JSE-listed companies. Distinct effort has also been
made to comply with AIM Rules for Mining and Oil
and Gas Companies of the London Stock Exchange.
GOLD
Relationship between exploration results, mineral resources and mineral reserves showing Pan African
Resources attributable resources and reserves as at 30 June 2015.
EXPLORATION RESULTS
RESOURCES
Total 31.9Moz Au
Inferred
9.2Moz Au
Indicated
20.5Moz Au
Measured
2.2Moz Au
RESERVES
Total 10.4Moz Au
Probable
9.4Moz Au
Proved
0.9Moz Au
PGEs
Relationship between exploration results, mineral resources and mineral reserves showing Pan African
Resources’ attributable resources and reserves as at 30 June 2015.
EXPLORATION RESULTS
RESOURCES
Total 0.6Moz PGEs
Inferred
0.1Moz PGEs
Indicated
0.4Moz PGEs
Measured
0.1Moz PGEs
RESERVES
Total 0.5Moz PGEs
Probable
0.4Moz PGEs
Proved
0.1Moz PGEs
Pan African Resources
Integrated Annual Report 2015
67
S
S
E
N
S
U
B
I
PAN AFRICAN RESOURCES’
REPORTING IN COMPLIANCE
WITH THE SAMREC CODE
To meet the requirement 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.
In determining the mineral resource cut-off grade,
Pan African Resources uses a gold price of
R500,000/kg. At our underground mines, the
optimal cut-off is defined 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 resources optimiser
tool that was accordingly developed in-house was
applied to the mineral resource inventory.
The optimiser programme requires the following
inputs to convert the mineral resources to the
mineral reserves:
•
The database inventory of all mineral resource
blocks
• An assumed gold price – ZAR400,000/kg
• Planned production rates for each mine
• Mine call factor (MCF)
• Plant recovery factors
•
Planned cash operating costs and other
efficiency factors, which are calculated using
historical achievements as a baseline.
The mineral reserves represent that portion of
the Measured and Indicated Mineral Resources
above cut-off in the life of mine plan, and have been
estimated after consideration of the modifying
factors affecting extraction. A range of disciplines
has been involved at each mine in the life of mine
including geology, surveying,
planning process
planning, mining engineering, rock engineering,
metallurgy, financial management, human resources
management and environmental management.
The competent person for Pan African Resources,
Mr Barry Naicker, the group mineral resource
manager, signs off the MR&MR for the group. He is a
member of the South African Council for Scientific
Professions (400234/10). Mr Naicker has 14 years
of experience in economic geology and mineral
resource management. He is based at 1st Floor,
The Firs, cnr. Cradock and Biermann Avenues,
Rosebank 2196, Gauteng.
The guiding principle in the
MR&MR is to ensure integrity,
transparency and materiality in
informing all stakeholders on the
status of the group’s mineral
asset base.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
68 Pan African Resources
Integrated Annual Report 2015
ABRIDGED MINERAL RESOURCES AND MINERAL RESERVES REPORT continued
The mineral resources and mineral reserves underpin the enterprise value of Pan African Resources, and the
group’s position on the mineral resources and mineral reserves is presented below.
GOLD
Group Mineral Resources
The total mineral resources for the group decreased from 33.5 million ounces (Moz) in June 2014 to 31.9Moz
in June 2015 – a gross annual decrease of 1.6Moz, or 4.8%. Of this variance, a decrease of 1.9Moz can be
attributed to Evander Mines and an increase of 0.3Moz to Barberton Mines.
As at 30 June 2015
Category
Mineral Resources
Measured
Indicated
Inferred
Pan African Resources Total
Contained gold
Tonnes
(million)
6.5
273.7
38.6
318.8
Grade
(g/t)
10.35
2.33
7.43
3.11
kg
67,471
637,457
286,990
991,918
Moz
2.2
20.5
9.2
31.9
The 0.3Moz positive variance in contained gold at Barberton Mines was a result of adding new mineral
resources from the extension of the MRC orebody on Fairview Mine.
The total decrease in mineral resources can be attributed to a lower gold price and inflationary cost drivers
in the reporting of the 2015 mineral resources.
Group Mineral Reserves
Pan African Resources’ mineral reserves increased from 10.1Moz in June 2014 to 10.4Moz in June 2015 – a
gross annual increase of 0.3Moz, or 3.0%.The 0.3Moz increase can be attributed to Barberton Mines.
As at 30 June 2015
Category
Mineral Reserves
Proved
Probable
Pan African Resources Total
Contained gold
Tonnes
(million)
3.9
81.0
84.9
Grade
(g/t)
7.27
3.62
3.79
kg
28,474
293,478
321,952
Moz
1.0
9.4
10.4
The total increase in the mineral reserves can be attributed to the conversion of mineral resources at
Barberton Mines, the extension of MRC orebody at Fairview Mine.
GROUP – GOLD 2015
(4.8%)
M
I
N
E
R
A
L RESOU R C E
S
3.0%
M
I
N
E
R
A
L RESER V E S
PGEs
Group Mineral Resources
The group’s total mineral resource PGEs did not change materially for the year under review.
As at 30 June 2015
Category
Tonnes
(million)
Grade
(g/t)
Mineral Resources
Measured
Indicated
Inferred
Pan African Resources Total
Group Mineral Reserves
1.6
3.2
1.2
6.0
2.46
3.66
2.90
3.14
Contained PGEs
kg
3,937
11,574
3,446
18,957
Moz
0.1
0.4
0.1
0.6
Pan African Resources’ mineral reserves PGEs decreased from 0.52Moz in June 2014 to 0.50Moz in June 2015
– a gross annual decrease of 20,000oz PGEs or 3.9 %. This was attributed to the re-mining of the Buffelsfontein
tailings dam.
As at 30 June 2015
Category
Mineral Reserves
Proved
Probable
Pan African Resources Total
Tonnes
(million)
1.6
3.2
4.8
Grade
(g/t)
2.46
3.56
3.20
Contained PGEs
kg
3,937
11,574
15,511
Moz
0.1
0.4
0.5
GROUP – PGEs 2015
0%
M
I
N
E
R
A
L RESOU R C E
S
(3.9%)
M
I
N
E
R
A
L RESER V E S
Pan African Resources
Integrated Annual Report 2015
69
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
70 Pan African Resources
Integrated Annual Report 2015
ABRIDGED MINERAL RESOURCES AND MINERAL RESERVES REPORT continued
MINERAL RESOURCE/MINERAL RESERVE OUNCES OF PAN AFRICAN RESOURCES’ OPERATIONS
Total Mineral Resources: 4.0Moz Total Mineral Reserves 2.1Moz
New
Consort
Slimes Dam
New Consort Mine
0.2Moz
0.1Moz
Clutha Mine
R
38
0.3Moz
0.7Moz
Sheba Mine
Royal Sheba Mine
2.1Moz
1.0Moz
Fairview Mine
Sheba Slimes
Dams
Eagles Nest Mine
Mineral
Resource
Mineral
Reserve
Range Gold
Moz
0.00 – 1.00
1.01 – 2.00
2.01 – 3.00
3.01 – 4.00
4.01 – 5.00
>5.00
Fairview Slimes
Dam
BTRP
0.8Moz
0.6Moz
R
40
Barberton
Poplar
4.9Moz
Leandra
Poplar
Ext.
0
2.5km
Scale
Total Mineral Resources: 27.8Moz Total Mineral Reserves 8.3Moz
Kinross
Rolspruit
8.8Moz
6.5Moz
E8
1.4Moz
Evander
South Ext.
5.0Moz
E7
Evander Mines
Evander
Evander South
4.9Moz
0
Scale
4km
Evander
South Ext.
Rustenburg
Samancor Millsell Mine
AQPSA
Xstrata Kroondal Mine
Kroondal Dump
0.02Moz
0.02Moz
Olifantsnek dam
N4
Buffelspoort Dam
2.2Moz
Elikhulu
0.4Moz
1.9Moz
eMbalenhle
Secunda
Total Mineral Resources: 0.61Moz Total Mineral Reserves 0.50Moz
Total Mineral Reserves 0.50Moz
Middelkraal Dam
Elandskraal Dumps and Pits
0.1Moz
0.1Moz
Buffelsfontein Dams
0.08Moz
0.02Moz
IFM
Bapong
Hartbeespoort Dam
Mooinooi
Protected
Natural Environment
Buffelsfontein Current Arisings
0.4Moz
0.36Moz
0
5km
SUSTAINABILITY
REVIEW
Our commitment
to people and safety
remains at the heart
of our culture and is
evident in the way we
operate and manage
the group.
Cobus Loots, chief executive officer
Pan African Resources
Pan African Resources
Integrated Annual Report 2015
Integrated Annual Report 2015
71
71
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
72 Pan African Resources
Integrated Annual Report 2015
EMPLOYEE REVIEW
•
HIGHLIGHTS
Implemented a broad-based
employee share ownership
programme for Barberton
Mines and Evander Mines
•
Transformation targets on
track with Mining Charter
•
•
•
CHALLENGES
Ongoing wage negotiations
Managing union rivalry
between NUM and AMCU
Aligning all employees with
the group’s operational
objectives in order to create
employee ownership
THE SLP COVERS
• Employment equity
•
•
•
•
•
•
Human resources
development
Local economic
development
Preferential
procurement
Downscaling/ retrenchments
Housing and living conditions
Nutrition and health
• Adult education
EMPLOYEE STATISTICS
Units
2015
2014
Number of
employees
(Number)
– Permanent
(Number)
– Contractors
(Number)
5,421
4,326
1,095
5,773
4,450
1,323
Employee
turnover
Training and
development
expenditure
(%)
7.0
6.8
(ZAR
million)
13.2
14.0
OVERVIEW
Our people are one of the three enablers that
assist the group in executing its strategy. As such,
we recognise our employees as fundamental to
the sustainability of the business and appreciate
that we also have a responsibility beyond our own
employees, in the wider employment context.
Accordingly, wherever possible we employ from
and upskill the communities which surround our
operations.
Our operations are controlled by mining rights and
each operation has developed a SLP, which has
been submitted to the DMR. The elements covered
in the SLP are shown alongside.
At year-end the group had a permanent staff
complement totalling 4,326 (2014: 4,450). Phoenix
Platinum employs three individuals and operations
at the processing plant are outsourced to a
specialist metallurgical company, Metanza, which is
responsible for employment at the operation.
The group’s average turnover rate was 7.0% (2014:
6.8%) and the average age of the majority of the
group workforce is between 40 to 50 years.
EMPLOYEE RELATIONS
Pan African Resources has a unionised workforce
and it complies with all applicable legislation
and bargaining arrangements. In addition, each
operation has a strategic, proactive and consultative
engagement process with unions and employees.
Notwithstanding the continued volatile labour
situation in the South African mining sector, the
group did not experience unprotected industrial
action at any operation, which we attribute to the
success of the above.
SKILLS DEVELOPMENT AND
TRAINING
Pan African Resources is committed to skills
development and spent ZAR13.2 million on
training for the period under review (2014:
ZAR14.0 million). Barberton Mines and Evander
Mines have on-site accredited training centres
offering a range of occupational skills training
programmes, while Phoenix Platinum provides on-
site training or outsources this where applicable.
Learnership programmes are also in place at the
operations.
PERFORMANCE MANAGEMENT
Pan African Resources recognises that managing
and reviewing employee performance and fostering
employee development are critical factors in
achieving strategic priorities and overall success.
All group employees from the head of department
and above, to chief executive level have defined key
performance indicators (KPIs), which are aligned
with the group’s strategic objectives. These KPIs
include both production and personal-related KPIs,
the weighting of which depends on the employees’
role and position. Assessments take place on an
annual basis with the employees’ line manager and
remuneration is linked to the score achieved by the
employee. Annual performance assessments are
conducted for senior management.
Barberton Mines
Evander Mines
Phoenix Platinum
2015
2014
2015
2014
2015
2014
Representation of HDSA
Senior management
Middle management
Junior management
(%)
(%)
(%)
Representation of women
Women employed at mine
Women in mining
(core business)
Percentage of women in mining (%)
37.5
55.2
41.0
126
126
6.7
28.5
41.3
41.1
83
39
4.4
50.0
41.0
76.0
263
81
9.0
22.2
53.1
77.0
302
65
11.8
100.0
50.0
100.0
–
–
–
100.0
50.0
100.0
1
1
25
is
TALENT MANAGEMENT
Talent management
to attract,
imperative
develop, motivate and retain productive, engaged
talent management
its
employees. Through
approach, Pan African Resources aims to create
a high-performance, sustainable organisation that
meets its strategic and operational goals and
objectives.
To ensure adequate succession planning, key
individuals who perform critical roles within the
group have been earmarked as part of the group’s
retention and performance plan over a three-
year lock-in period from 2016 to 2018. Regular
engagements are conducted with these individuals
to ensure that development requirements needed
for them to fulfil their position are proactively
addressed.
for
individuals
DISABLED EMPLOYEES
The group is committed to providing equal
opportunity
in all aspects of
employment. The group gives every consideration
to applications
for employment by disabled
persons where the requirements of the job may
be adequately filled by a disabled person. Where
existing employees become disabled, it is the group’s
policy, wherever practicable, to provide continuing
employment under similar terms and conditions
and to provide training, career development and
promotion wherever appropriate.
REMUNERATION
Pan African Resources ensures that its employees
are fairly remunerated for their roles within the
organisation. Remuneration is dependent on the
individual job grading and the group undertakes
relevant research to ensure that its remuneration
is market related. Remuneration for employees
consists of a basic salary and benefits including
medical aid and pension. In addition, short-term
incentive rewards are paid monthly, quarterly and
annually, depending on the level of the employee.
All remuneration and incentives are measured
objectively against the individual’s KPIs.
In addition, the group’s equity share option and
share appreciation bonus plans are in place to
appropriately
incentivise select employees at
managerial level within the group. This ensures
retention of key skills required for the group’s
sustainable performance, and to align management
interests with those of its shareholders.
The group has also implemented its employee
share ownership programme, which seeks to align
the objectives of Pan African Resources’ employees
at its operations (Barberton Mines and Evander
Mines) with that of management and shareholders.
page 85 provides
The remuneration review on
remuneration
further detail on
philosophy as well as detail on executive and non-
executive directors’ remuneration.
the group’s
genuine
acknowledges
TRANSFORMATION
that
Pan African Resources
integrating
transformation, which
permeates the group, is critical for the sustainability
of its business in South Africa. It fully embraces
the Mining Charter, which aims to promote
equitable access to the nation’s mineral and
petroleum resources, especially among historically
disadvantaged South Africans. The group does not
currently manage and rank its B-BBEE contribution
at group level. Barberton Mines and Evander Mines
achieved a score of 48.10 points and were rated as
a level six B-BBEE contributor. Further details on
transformation progress are included in Pan African
Resources’ sustainable development report at
www.panafricanresources.com. Oversight of
progress against transformation targets is monitored
by the SHEQC committee.
LOOKING AHEAD
In the year ahead, key focus areas will include:
• Maintaining a stable workforce and low turnover
rate
•
Integrating the group’s new employees, acquired
through the acquisition of the Uitkomst Colliery
• Aligning employees with the objectives of the
approved business plans by creating a sense of
belonging through the revised incentive and
employee share ownership programmes
•
Implementing an effective and efficient
communication strategy.
Pan African Resources
Integrated Annual Report 2015
73
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
74 Pan African Resources
Integrated Annual Report 2015
SAFETY, HEALTH AND ENVIRONMENT
REVIEW
SAFETY, HEALTH AND ENVIRONMENTAL STATISTICS
•
•
•
•
HIGHLIGHTS
Improvement in the
group’s LTIFR
Improvement in the
group’s RIFR
Reduction in noise-induced
hearing loss, TB cases and
lifestyle diseases at mining
operations
Significant decline in
sporotrichosis cases at
Barberton Mines
•
Zero environmental fines
at operations
•
•
CHALLENGES
One fatality at Barberton’s
Fairview Mine, despite
stringent safety measures
Improving the implementation
of safety standards to reduce
the occurrence of DMR
section 54 safety stoppage
instructions
•
Improving security measures
to address the increase in
illegal miners
Safety
TRIFR
LTIFR
RIFR
Fatal injuries
Health
Certified cases of silicosis
Noise induced hearing loss certified cases
Environment
Total water consumption
Total electricity consumption
Total GHG emissions
Environmental fines and penalties
OVERVIEW
A safe and healthy mining culture, with minimal
impact on the environment, is a business imperative
that underpins the group’s four key strategic pillars
– Stakeholders. Profitable. Growth. Sustainable.
Pan African Resources expends considerable effort
in promoting a safe and healthy work environment.
The group’s SHEQC objectives aim to achieve
a sustained SHEQC management culture by
promoting safety performance through zero harm
to our employees, and minimal impact on the
environment. The group has an enabling culture
where employees at all levels are encouraged to
engage freely around SHEQC matters, as well
as adhering to policies and procedures that are
conducive to achieving this objective.
SHEQC GOVERNANCE AND
COMPLIANCE
The board assumes ultimate responsibility for the
group’s SHEQC performance. The group’s SHEQC
committee is the sub-committee responsible for the
oversight and management of SHEQC and keeping
the board apprised of SHEQC matters relating
to compliance, discipline and action plans around
incidents and accidents. The general managers at
the mines’ operations remain ultimately accountable
for SHEQC on their operations. Meetings are held
as deemed appropriate but no fewer than four
are held annually. Membership, responsibilities and
attendance of the SHEQC committee meetings are
shown on
page 83.
Pan African Resources is committed to conducting
its mining operations in strict compliance with the
mining licence conditions set by the DMR, the Mine
Units
2015
2014
(Rate/million man hours)
(Rate/million man hours)
(Rate/million man hours)
(Number)
(Number)
(Number)
11.14
2.29
1.11
1
19
8
9.75
2.97
1.52
4
8
24
(000m3)
12,249
14,485
(Gj)
(tCO2e/t milled)
(Number)
1,376,815
1,374,206
0.1
–
0.3
–
Health and Safety Act 29 of 1993, as amended from
time to time and other relevant legal requirements
page 13 of the sustainable
as detailed on
development report. Guidance and advice is
provided by the group SHEQC manager, together
with the safety, health and environmental officials at
the group’s operations, within the group philosophy
of continuous improvement. Legal requirements are
treated as minimum requirements. Regular internal
audits are performed by the operations safety,
health and environmental officials. Furthermore,
monthly SHEQC performance reviews are carried
out to ensure compliance with SHEQC standards
and procedures.
The group’s SHEQC policy extends to safety,
health, environment, quality and communities and
contains specific guidelines. These guidelines are
included in the sustainable development report at
www.panafricanresources.com.
A total of seven DMR section 54 safety stoppage
instructions were issued in the year under review
(2014: four), causing stoppages to the mines,
which further exacerbated lower production and
also impacted negatively on employee morale.
Subsequent to these stoppages, improved operating
procedures and administrative processes were
implemented and the orders were set aside. The
group continues to embed its culture of safety and
discipline to reduce further stoppages.
SAFETY
The group has an excellent safety record in terms
of LTIFR and RIFR rates, as shown in the graphs
page 5. However, regrettably, one fatality
on
occurred at our Fairview Mine in Barberton
on 23 April 2015, where Mr Cyprein Solomon
Mkhatshwa, a 26 year old diesel mechanic, was
fatally injured while on duty. Subsequently, the
reviewed
risk assessments were
issue-based
and precautionary measures were put in place
to prevent a reoccurrence of this nature. These
measures were communicated to employees and
retraining of relevant employees was carried out.
It was pleasing to note the significant decrease in
the cases of sporotrichosis, noise-induced hearing
loss, TB cases and lifestyle diseases. During the year
under review 47.5% of the gold mining operations’
workforce was tested for HIV/Aids and the re-
testing programme is well supported. Campaigns
are conducted regularly on HIV/Aids and TB
prevention initiatives.
The board and management extend their deepest
condolences to the family, friends and colleagues of
Mr CS Mkhatshwa.
During the year under review, the TRIFR regressed
to 11.14 (2014: 9.75). The LTIFR and RIFR were
below the target set for the year under review.
The FIFR has improved to 0.07 (2014: 0.30). While
there is significant improvement in our overall
safety record, the fatality remains a concern and we
will continue the drive towards zero harm.
The DMR released its 2014 milestones to achieve
zero harm by December 2020. These milestones
were developed collaboratively between all the
stakeholders,
including employers, employee
representatives, organised labour and the DMR.
The objective of the milestones is to further
accelerate the journey to zero harm. Pan African
Resources has developed and
implemented
a monthly tracking system to ensure that the
milestones are achieved by December 2020.
Safety improvement plans have been implemented
at operations, which will assist in the drive towards
zero harm.
Each mining operation has its unique in-house
training programmes, which are all aligned to the
group’s strategic objective of zero harm. Safety,
health and environmental training is included in
induction for new employees as well as in refresher
courses for employees, when returning from leave.
This training also includes job-specific training.
The illegal miners at our gold mine operations are
posing an increased safety risk to employees. To
combat this risk, the group has stepped up security
measures around these operations.
HEALTH
The group provides a work environment that
minimises health risks by ensuring adequate
surveillance of workplaces and employees. This
promotes work practices that are conducive to
the long-term wellbeing of employees. The group
also provides appropriate and adequate healthcare
facilities and resources.
Management of the major diseases at our mining
operations remains a top priority for the group.
Employees diagnosed with lifestyle-related diseases
such as hypertension and diabetes are regularly
monitored and educational programmes are
provided. Testing for hypertension and diabetes
now forms part of the medical surveillance
programme, in an attempt to combat these diseases
at an early stage.
The occupational hygiene stressors are monitored
by a qualified occupational hygienist and quarterly
reports are submitted to the DMR. Each employee
has an individual health risk profile. All operations’
occupational exposure limits were below the
legislative requirement of 0.05mg/m3 for the year
under review.
ENVIRONMENT
Pan African Resources is committed to responsible
stewardship of natural resources and the ecological
environment and accordingly to eliminating or
minimising the negative impacts of our operations.
Environmental management is integrated into
management practices throughout our operations.
The group is steadfast in its commitment to
enhancing its approach to reducing its impact on
the environment and its environmental objectives
include:
• Achieving zero penalties for environmental
breaches
• Achieving the internal environmental targets
established for reducing the group’s carbon
footprint
• Ensuring compliance with water use licences
and eliminating illegal discharge overflows.
WATER
Water quality in the areas surrounding operations
is vigilantly monitored and managed. Surrounding
is monitored to
surface and ground water
prevent polluted water being discharged into
the environment. The discharge of water by our
operations through controlled releases into the
environment is predetermined through regulatory
requirements and is in line with our water use
licences.
Pan African Resources
Integrated Annual Report 2015
75
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
76 Pan African Resources
Integrated Annual Report 2015
SAFETY, HEALTH AND ENVIRONMENT REVIEW continue
ENVIRONMENTAL TARGETS
The group acknowledges that with the pending introduction of a national carbon tax, environmental monitoring
must be enhanced and developed for the determination of complete and accurate emissions. The group’s
environmental targets and progress during the year under review are shown in the table below.
Target:
Short-term
(per annum)
Target:
Long-term
(three years)
Progress
in 2015
Baseline
Reduction of energy consumption (direct and
indirect)
2013
2.6%
8.0%
Water management
Increase in re-use of water
Reduce portable water consumption
Reduce greenhouse gases per tonne milled
Environmental legal compliance (fines and
levies)
Reduce significant environmental incidents,
particularly water discharge and incidental
overflow
2013
2013
2013
2013
2.6%
2.6%
zero
8.0%
8.0%
zero
zero
overflow
zero
overflow
¼
√
√
√
2/3
√ Substantially achieved.
2/3 Good progress.
½ Moderate progress. ¼ Limited progress.
ENVIRONMENTAL LEGAL COMPLIANCE
page 13 of
Mining operations are subject to various environmental legislative requirements, as detailed on
the sustainable development report. The group ensures adherence to these various requirements by ongoing
monitoring through its robust SHEQC governance framework. Environmental aspects and impact assessments
have been conducted at all our operations. The aspects and impact registers are available for each operation.
The operations review their risk registers on a quarterly basis.
LAND REHABILITATION
Land rehabilitation aims to minimise and mitigate the environmental effects of mining. Rehabilitation
management at the group’s operations is an ongoing process. The rehabilitation trust fund had a balance
of ZAR312.3 million (2014: ZAR278.4 million) at year-end, which increased by ZAR33.9 million as a result
of growth in investments. The rehabilitation trust fund’s amount is invested in interest-bearing short-term
investments and medium-term equity linked notes issued by commercial banks.
Barberton Mines
Evander Mines
Total
2015
(ZAR
millions)
2014
(ZAR
millions)
2015
(ZAR
millions)
2014
(ZAR
millions)
2015
(ZAR
millions)
2014
(ZAR
millions)
Rehabilitation trust funds
43.2
37.9
269.1
240.5
312.3
278.4
LOOKING AHEAD
The group is committed to continually improving safety and health standards and performance, while
constantly striving to reduce its impact on the environment. Some of the key aspects by which this will be
achieved include:
• Establishing cross-operations safety, health and environmental audit teams and conducting internal audits
bi-annually
• Establishing a central electronic safety, health and environment dashboard for improved management
control
• Establishing formal Fatal Risk Standards that will incorporate elements such as: fall of ground, gassing,
trackless mobile machinery, rail-bound equipment and underground fires
• Monitoring resource consumption in line with established targets
• Adhering to all legislative compliance in order to avoid significant environmental incidents and fines.
Pan African Resources
Integrated Annual Report 2015
77
S
S
E
N
S
U
B
I
COMMUNITY REVIEW
•
•
HIGHLIGHTS
Group spend on
corporate social
investment and
social and economic
development
initiatives amounted to
ZAR20.8 million
ZAR5.6 million savings
through strategic
sourcing of goods and
services for the gold
operations
•
CHALLENGES
Finding local suppliers to
assist with community
projects
its operations. A group procurement policy is in
place and relevant employees at each operation
are trained in these procurement procedures
and practices. The tender process is governed by
a tender committee at each operation, to ensure
that Pan African Resources complies fully with all
relevant regulation, including the UK Bribery Act.
Monthly procurement and inventory reports are
sent to the corporate office.
CENTRALISED CONTRACTS
The group has implemented a procurement plan
for its high-value commodities, with the intent
of meeting the group’s procurement objectives
mentioned above. The top ten commodities were
identified in the initial phase, resulting in savings
of R5.6 million over a twelve-month period.
Negotiations are underway with the next top 20
commodities.
TRANSFORMATION TRUSTS
Wherever possible, the group promotes responsible
and ethical management of its supply chain by
encouraging suppliers to support local economic
development. Transformation trusts for Barberton
and Evander generate additional funds to invest
back into the community, through encouraging its
suppliers to contribute 1% of their contract value
to these trusts. The objective of these trusts is to
improve the quality of life of the local community,
to create jobs and to promote socio-economic
development. A total of ZAR1.3 million was
collected on behalf of these trusts.
LOOKING AHEAD
Pan African Resources is committed to continually
uplifting the communities within which it operates,
through its projects and initiatives and proactive
strategic sourcing.
strives
OVERVIEW
Pan African Resources
to minimise
potentially negative social impacts, while promoting
opportunities for the local communities in its areas
of operation. We endeavour to monitor, measure
and manage the social and economic impacts
created by our operations, in line with our approved
SLPs. The group reports annually to the DMR on
its project plans – including an assessment of the
potential impact and action plans where deviations
are identified.
Each of the group’s operations engages in a range
of development and community relations activities,
which aim to ensure the self-sustainable welfare of
communities. Management at the mines is proactive
in building and maintaining stakeholder relationships
with the local communities and has forged close
working relationships with ward councillors and
local leaders.
The group is committed to upholding and promoting
the human rights of its employees and contractors,
suppliers and the communities in which it operates.
Pan African Resources abides by the South African
Constitution, including the Bill of Rights. As such,
we recognise people’s rights to culture, heritage
and tradition through identifying, recording and
supporting indigenous cultural heritage.
GROUP CORPORATE
SOCIAL INVESTMENT (CSI)
AND SOCIO-ECONOMIC
DEVELOPMENT SPEND
The group spend on CSI and social and economic
development initiatives was ZAR20.8 million (2014:
ZAR19.0 million). Details on Pan African Resources’
CSI initiatives can be found on the group’s website
www.panafricanresources.com.
SUPPLY CHAIN MANAGEMENT
Pan African Resources’ primary procurement
objective is to control costs, initiate savings and
manage inventory across its operations through
centralised strategic sourcing. In addition, the group
is committed to increasing spend from black-
owned and black women-owned businesses. The
group targets a level four B-BBEE rating. A new BEE
monitoring system was procured to initiate and
control this process going forward.
PROCUREMENT GOVERNANCE
Pan African Resources’ procurement governance
process ensures maximum efficiency and ethical
conduct when procuring goods and services within
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
78
78 Pan African Resources
Pan African Resources
Integrated Annual Report 2015
Integrated Annual Report 2015
TRANSPARENCY
AND ACCOUNTABILITY
The board acknowledges
that applying good
corporate governance
principles is a dynamic
responsibility, in line with
developments in the
UK, South Africa and
internationally.
Keith Spencer, chairman
Pan African Resources
Pan African Resources
Integrated Annual Report 2015
Integrated Annual Report 2015
79
79
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
T
I
L
I
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
80 Pan African Resources
Integrated Annual Report 2015
CORPORATE GOVERNANCE REVIEW
GOVERNANCE FRAMEWORK
as at 30 June 2015
Chairman: Keith Spencer
Members
Hester Hickey
Thabo Mosololi
Phuthi Mahanyele1
Rowan Smith
Cobus Loots
Deon Louw
Invitees
EXCO and OPSCO
for ad-hoc presentations to the board
1 Phuthi Mahanyele resigned effective 30 June 2015.
Chairperson: Hester Hickey
Members
Thabo Mosololi
Keith Spencer
Invitees
Cobus Loots, chief executive officer
Deon Louw, financial director
External auditors
Internal auditors
Financial executives
BOA R D
A
U
DIT CO M M I T
T EE
R
E
M
U
N
E
R
ATION C O M
S
H
E
Q
C CO M M I
Chairman: Rowan Smith
Members
Phuthi Mahanyele2
Thabo Mosololi
Invitees
Cobus Loots, chief executive officer
Deon Louw, financial director
André van den Bergh, group human
resources executive
E
E
T
MIT
Chairman: Keith Spencer
Members
Hester Hickey
Cobus Loots
Anaki Karigani
Mandla Ndlozi
André van den Bergh
Sozabile Nkuna1
T EE
T
2 Phuti Mahanyele resigned effective 30 June 2015.
Invitees
General managers – Barberton Mines,
Evander Mines and Phoenix Platinum
1 Sozabile Nkuna is a representative from Shanduka.
Pan African Resources
Integrated Annual Report 2015
81
S
S
E
N
S
U
B
I
Pan African Resources’ board is committed to responsibility,
accountability, fairness and transparency in accordance with King III,
the UK Code and applicable laws, reflecting integrity in all business
dealings. The board aims to integrate this responsible corporate
citizenship into the group’s business strategy, audits and assessments
and to embed sound corporate governance practices into daily
operations and processes throughout the group.
The standards of disclosure relating to corporate governance at the
group are regulated by the UK Companies Act, the South African
Companies Act 71, AIM Rules, the JSE Listings Requirements and
King III. In addition, the board has considered the principles of
corporate governance contained in the UK Code and the guidance
published by the Institute of Chartered Accountants in England and
Wales concerning the internal control requirements of the Combined
Code.
ETHICAL LEADERSHIP
The board strives to ensure that the group conducts its business
with integrity, leading by example. This commitment is formalised in
a Code of Conduct which applies beyond the board and includes all
employees of the group.
The Code of Conduct sets out the group’s values and practices
over and above requirements of formal governance codes and legal
requirements mentioned above. It is designed to provide guidance as
to ethical conduct in all areas and across all activities.
To supplement the efficacy of the Code of Conduct, directors,
executive management and operational management receive ongoing
training in regulations and separately in ethical leadership. Further,
Pan African Resources has a zero-tolerance approach to bribery and
corruption. A separate bribery and corruption policy is in place, which
is communicated to all employees as well as to mine contractors, all of
whom are expected to comply fully.
In the event of a breach by an employee of the Code of Conduct,
policies or practices above, the group human resources disciplinary
procedures are followed. No breaches were reported during the year.
KING III COMPLIANCE
In line with King III’s ‘apply or explain’ approach, the directors will continue
to state the extent to which the company applies good corporate
governance principles to create and sustain value for stakeholders over
the short, medium and long term.
To optimally manage its application of King III, the company has
adopted the IoDSA Governance Assessment Instrument, allowing for
the maintenance of a register recording its progress in applying the
principles of King III as well as the JSE Listings Requirements.
Principle 2.25 (paragraph 153) recommends that non-executive
directors’ fees should comprise a base fee, which may vary according
to factors including the level of expertise of each director, as well as an
attendance fee per meeting. The group remunerates its non-executive
directors based on a fixed fee, as the board’s input extends beyond
the attendance at meetings.
The group’s King III checklist can be found on the group’s website on
www.panafricanresources.com.
THE BOARD
The board is responsible and accountable for the performance and
affairs of the group and has full control over all subsidiaries and
operations. It acts as the focal point for and custodian of our
corporate governance. In doing so, it ensures the group remains a
responsible corporate citizen, cognisant of the impact our operations
may have on the environment and society in which we operate,
while acting in accordance with our own Code of Conduct.
At report date, our unitary board comprised seven directors. The
chairman, Keith Spencer, is an independent non-executive director.
Executive directors include the chief executive officer and the financial
director. A brief CV of all directors is provided on
pages 28 and 29.
The board performs the function of the nominations committee.
The following changes took place during the year under review:
Appointments
• Mr R Smith was appointed as an independent non-executive
director effective from 8 September 2014
• Mr C Loots was appointed the chief executive officer effective
1 March 2015
• Mr D Louw was appointed financial director effective 1 March
2015.
Resignations
• Mr R Still resigned as a non-executive director effective 1 July 2014
• Ms P Mahanyele resigned as a director and deputy chairperson
effective 30 June 2015
• Mr R Holding resigned as chief executive officer effective 1 March
2015. To ensure that Mr R Holding’s experience and knowledge
is retained by the group, an exclusive consulting agreement was
concluded with him, effective 1 March 2015. This arrangement will
be for a minimum period of one year.
Our board reflects a balance of executive and non-executive directors,
the majority of whom are independent. More importantly, the board
reflects significant experience in mining and related activities and
collectively has a wealth of industry knowledge, adding depth to
board discussions.
The responsibilities of the independent non-executive chairman
and the chief executive officer and the remaining non-executive
and executive directors are strictly separated to ensure proficient
decision-making. No single director is positioned to exercise
unfettered decision-making, which protects against the influence
of possible personal interests and ensures that the interests of all
stakeholders are represented and taken into account.
The chairman provides independent board leadership and guidance
and facilitates suitable deliberation on all matters requiring the
board’s attention. He further ensures the board operates efficiently
and collectively. The chief executive officer and financial director,
supported by the executive committee, are accountable for strategy
implementation and the day-to-day operational decisions and
business activities. Non-executive directors are not involved in the
daily operations of the company.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
T
I
L
I
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
82 Pan African Resources
Integrated Annual Report 2015
CORPORATE GOVERNANCE REVIEW continued
‘closed periods’, as defined by the AIM and JSE Listings Requirements,
or while the company is trading under a cautionary announcement.
An appropriate communication is sent to all such employees alerting
them that the company is entering a closed period. Should any of
the relevant employees wish to trade Pan African Resources shares,
written permission must be obtained from either the chief executive
officer or financial director and confirmed with the South African and
UK based corporate advisers prior to the trade taking place. There
were no contraventions of this policy during the year.
Succession planning
The board, assisted by the nominations committee, is responsible
for succession planning for the board of directors and executive and
senior management. The nominations committee regularly reviews
the group’s succession strategy. Succession plans are in place for
the incumbent key executives, with an informal ‘on-the-job’ mentor
programme for identified successors supporting this process.
New appointments
The nominations committee identifies, interviews and proposes
potential candidates to the board. The board evaluates each individual
in the context of the board as a whole. The objective remains having a
board that can best perpetuate our success and represent shareholder
interests through the exercise of sound judgement, using its diversity
of experience.
The group ensures all new directors are informed of the AIM and
JSE rules with the assistance of the UK Nomad and JSE sponsor, given
that all appointees are accomplished board directors and familiar with
the fiduciary duties expected of them. New appointees are provided
with the latest annual and interim results, integrated annual report
and minutes of previous board meetings. It is intended that a formal
induction programme will be introduced in the near future.
Ongoing development
All directors receive ongoing training on relevant matters and, in
addition, directors who are chartered accountants comply with
SAICA continued professional development requirements. The UK-
based Nomad ensures that the directors remain up to date with AIM
regulations, while the South African sponsor ensures the same regarding
the JSE Listings Requirements. The company secretary and chairman
of the audit committee are further responsible for keeping the board
abreast of new legislation, recommendations and best practice.
BOARD COMMITTEES
Pan African Resources has an audit committee, remuneration committee,
nominations committee and a SHEQC committee, to assist the board
in discharging its collective responsibility of corporate governance. The
SHEQC committee serves as a social and ethics committee in terms of
the South African Companies Act requirements.
All committees have satisfied their responsibilities during the year in
compliance with their formal charters. All charters were reviewed,
revised and adopted during the year under review. A copy of these
charters is available from the group company secretary on request.
A formal board charter is in place to regulate the parameters
within which the board operates and to ensure the application of
good corporate governance in compliance with the group’s Code
of Conduct. The charter was reviewed during September 2014 in
the prior financial year and adopted in the current financial year.
A copy of the board charter is available from the group company
secretary on request.
Rotation and re-election of directors
In terms of King III and the group’s constitutional documents, one-
third of the directors, excluding any director appointed since the
previous AGM, must retire from office at each annual general meeting
on a rotation basis. The directors to retire are those who have been
longest in office since their last election. Retiring directors may make
themselves available for re-election provided that they remain eligible
as required by the constitutional documents and in compliance
with the AIM Rules and JSE Listings Requirements. Accordingly,
Keith Spencer and Cobus Loots will retire by rotation at the upcoming
AGM and, being eligible, will offer themselves for re-election.
In addition, in accordance with the group’s constitutional documents, any
director appointed since the conclusion of the previous AGM must retire
at the next AGM and may make himself available for re-election, provided
he remains eligible as required by the constitutional documents and in
compliance with the AIM Rules and JSE Listings Requirements.
Accordingly, Deon Louw will retire at the upcoming AGM and, being
eligible, will offer himself for re-election.
A brief CV of each director standing for re-election at the AGM is
contained on
pages 28 and 29.
Board evaluation
An annual effectiveness self-evaluation is undertaken in respect of the
board and the audit committee.
Share dealings
All group employees above Paterson Grading D (which includes
operational management, executive and operational management)
with access to financial and any other price-sensitive information
are prohibited from dealing in Pan African Resources’ shares during
Pan African Resources
Integrated Annual Report 2015
83
S
S
E
N
S
U
B
I
3
3
3
E
C
N
A
M
R
O
F
R
E
P
Board and committee meetings’ attendance
The board meets quarterly with additional meetings as and when necessary. Attendance at board and committee meetings is set out below. In
addition to these meetings, ad hoc meetings and calls are held on a regular basis. Not all of these are recorded in the table below.
Keith
Spencer
Phuthi
Mahanyele
Hester
Hickey
Ron
Holding
Cobus
Loots
Thabo
Mosololi
Rowan
Smith
Deon
Louw
3
3
3
3
3
PAR board meeting
9 September 2014
10 December 2014
23 March 2015
22 June 2015
Audit committee meeting
9 September 2014
23 February 2015
10 July 2015
3
3
3
3
3
3
3
Remuneration committee meeting
31 July 2014
22 January 2015
SHEQC committee meeting
28 October 2014
3
19 March 2015
16 April 2015
18 June 2015
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
1 P Mahanyele resigned as a director effective 30 June 2015.
2 C Loots appointed as chief executive officer effective 1 March 2015.
3 D Louw appointed as financial director effective 1 March 2015.
4 R Holding resigned as chief executive officer effective 1 March 2015.
5 R Smith appointed as an independent non-executive director effective 8 September 2014.
INDEPENDENT ADVICE
All independent non-executive directors have unrestricted access
to management and the group’s external auditor. Furthermore, all
directors are entitled to seek independent professional advice on any
matters pertaining to the group as they deem necessary and at the
group’s expense.
COMPANY SECRETARY
Pan African Resources outsources the company secretarial function
to St James’s Corporate Services Limited. The company secretary
advises the board of any relevant regulatory changes and/or updates.
The company secretary keeps records of shareholder registers, meeting
attendance registers, meeting minutes, resolutions, directors’ declarations
of personal interest(s), all notices and circulars issued by the company,
guidance on directors’ duties and good governance. The company
secretary is well versed in all relevant updates to current legislation and
regulation and is responsible for advising the board in this regard.
Furthermore, the company secretary reviews the rules and procedures
applicable to the conduct of the board. Wherever necessary the
sponsor, Nomad and other relevant experts are involved in ensuring
that the directors have adequate information to sufficiently discharge
their responsibilities in the best interests of the company.
The appointment and removal of the company secretary is a
matter for the board as a whole. The audit committee reviews the
company secretary’s qualifications and competence and provides
recommendations to the board.
The board is comfortable that the company secretary, St James’s
Corporate Services Limited, maintains an arm’s length relationship
with the board at all times and is sufficiently qualified and skilled to
act in accordance with and update directors in terms of the UK and
international regulations and legislation.
ADVISERS
One Capital is the company’s appointed sponsor in accordance
with the JSE Listings Requirements. One Capital is responsible for
ensuring that the company is at all times guided and advised as to the
application of the JSE Listings Requirements.
The group’s Nomad and joint broker in the UK is Numis Securities
Limited. Peel Hunt LLP acted as joint broker during the reporting
period.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
T
I
L
I
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
84 Pan African Resources
Integrated Annual Report 2015
RISK GOVERNANCE
RISK GOVERNANCE
The board is ultimately responsible for the management of risk and a formal risk governance process is in place to ensure the board adequately
discharges its responsibility, as described below. The board regularly reviews the risk reports from the operations, ensuring that the appropriate risk
management programmes and monitoring of progress against key risk indicators are being effectively implemented.
The group’s key risks are set out on
page 20.
Board of directors
Executive
management
Executive management
implements operational
controls to ensure
the validity, accuracy
and completeness of
financial information.
They demand that each
employee assumes
responsibility for
conducting him/herself
in accordance with
established policies
and procedures, to
minimise the potential
occurrence of any risk
event and constantly to
seek opportunities to
improve performance
and efficiencies.
Internal
audit
function
The internal
audit function is
outsourced to BDO,
which evaluates the
effectiveness and
general compliance
of controls aimed at
addressing risks within
the group.
External
audit
function
External audit reports
on the fair presentation
of financial information
on a statutory reporting
level in compliance with
IFRS as adopted by the
EU and Article 4 of
the IAS Regulation, UK
Companies Act 2006
and the Companies
Act. The board,
assisted by the audit
committee, evaluates
the effectiveness and
independence of the
external auditors – the
South African and UK
firm of Deloitte &
Touche.
Operations
Initiatives to mitigate
risks at operational level
are designed to ensure
continuous, safe and
responsible production
of gold and PGEs.
Risks are identified at
risk workshops and in
strategy session.
Each of the group’s
operations maintains
a risk register,
which includes risk
identification, risk
mitigating factors and
responsibilities.
Audit
committee
This committee
reports directly to the
board and has several
responsibilities including
internal control, internal
audit, risk management
and assurance.
The committee meets
at least three times a
year (attendance
is outlined on
page 83) and makes
recommendations to
the board, which retains
ultimate responsibility,
with regard to risk
tolerance levels. It also
works closely with the
internal audit function
and approves and
reviews the internal
audit plan and its
execution.
IT GOVERNANCE
The board is responsible for IT governance. During the period under review, the group established an IT governance framework, which is governed
by an IT charter. The framework consists of an IT steering committee which includes the financial director, the chief information officer and human
resources executive. This steering committee is responsible for directing, controlling and measuring the IT activities and processes of the group.
It also keeps the board apprised of the group’s IT performance on a regular basis.
Each operation has formal business continuity and disaster management plans in place, which are the responsibility of the respective general
managers.
COMPLIANCE
The group complies with all applicable legal acts and regulations. A list of these legal acts and regulations can be found in the group’s sustainable
development report on the group’s website
www.panafricanresources.com.
REMUNERATION REVIEW
Message from the chairman of the
remuneration committee
The past year has been very challenging for the
group, with our Evander Mine in the midst of a low
grade cycle and other underground production
related issues being experienced at the same
operation. In certain respects we also experienced
difficulties in instilling our culture at the mine but this
has been rectified and the on-mine management
structure strengthened.
Barberton Mines’ performance was satisfactory
but not on par with prior years or with our
expectations, with the BIOX® plant contamination
and regulatory stoppages imposed on the mine,
affecting production.
Phoenix Platinum performed in line with our
expectations, with the management team delivering
a good set of results.
Notwithstanding current weak precious metals
prices, and
the general difficult operating
environment being experienced within the industry,
the group remained profitable and cash flow positive
which is commendable under the circumstances
and enabled the directors to propose an attractive
dividend to shareholders.
In light of the exacting environment, the executive
directors have declined an annual salary increase
for the 2016 financial year.
As certain of the qualifying criteria for the cash
bonuses were fulfilled, these bonuses were paid
to the executive and management teams, albeit
generally at a much lower level than in the prior year.
The executive directors have entered
into
three-year contracts commencing 1 March 2015.
The variable remuneration component of these
contracts incentivises the executives to deliver,
inter alia cash flow, earnings and capital appreciation
in the share price over the medium to long term.
The remuneration committee is also contemplating
initiatives to retain key senior staff members for a
fixed term in support of the group’s sustainability
objectives.
The remuneration committee has reviewed the
compensation levels and incentive schemes to
ensure that they remain market related and fulfil
their purpose as an incentive to align the interest of
the group’s employees to that of the stakeholders.
In this regard the remuneration committee draws
on PricewaterhouseCoopers Remchannel’s survey
to ensure compliance to best practice in executive
compensation.
We have taken cognisance of the aspirations of our
stakeholders for improved disclosure relating to
executive remuneration and we are committed to
compliance in this regard.
Providing motivational and shareholder aligned
remuneration structures in a demanding operating
environment will always be a challenge, however
we believe that we have found a balance in our
approach to this sensitive matter.
We do, however, remain receptive to feedback from
our stakeholders on our remuneration philosophy
or any matter related thereto.
Yours faithfully
Rowan Smith
Chairman, remuneration committee
16 September 2015
Pan African Resources
Integrated Annual Report 2015
85
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
86 Pan African Resources
Integrated Annual Report 2015
REMUNERATION REVIEW continued
REMUNERATION FRAMEWORK
Employment at
the group
Criteria for
eligibility
Remuneration
Key features
Basic salary and benefits
Short-term incentives
Long-term incentives
• Reviewed annually against
• Paid annually at corporate level
• The Equity Share Option Plan
competitive market data and
PWC Remchannel
• Paid annually at operations
• Pan African Resources’ group
Measured objectively against the
group’s performance or personal
contribution
Executive directors:
Collective KPIs account for 40%
(from 1 July 2015: 60%) of assessment
based on:
• Group’s gold and PGMs
sold (ounces)
• Costs of production
•
Safety targets (objective
measurement based on group’s
actual achievements against set
business plans for the financial year)
Individual KPIs account for 60%
(from 1 July 2015: 40%) of assessment and
are specific to the employee concerned
Share Appreciation Bonus Plan
• Employee ownership
programme (Barberton and
Evander Mines)
• Specific other schemes for
executive directors
The main objective of the group
Equity Share Option Plan and Share
Appreciation Bonus Plan is to:
• Appropriately incentivise select
employees who are employed
at a managerial level within the
group
• Ensure retention of key skills
required for the group’s ongoing
profitable performance and
growth
• Align management interests with
those of shareholders.
Executive and operational management committees:
Collective KPIs account for 50% (from 1 July 2015: 60%) of assessment
based on:
• Group’s gold sold (ounces)
• Costs of production
• Safety targets (objective measurement based on group’s actual achievements
against set business plans for the financial year)
Individual KPIs account for 50% (from 1 July 2015: 40%) of assessment and are
specific to the employee concerned
Operational management:
Collective KPIs account for 80% of assessment based on:
• Group’s gold sold (ounces)
• Costs of production
•
Safety targets (objective measurement based on group’s actual achievements
against set business plans for the financial year)
Individual KPIs account for 20% of assessment and are specific to the employee
concerned
REMUNERATION PHILOSOPHY
Pan African Resources’ remuneration philosophy
seeks to reward executive directors and other senior
management for individual and group performance.
It recognises that these individuals have the ability
to significantly impact the performance of the
group, in both the short and long terms. Executive
directors and other senior management carry
significant responsibility, legal and otherwise, and
appropriate skills are difficult to attract and retain
in what is increasingly a challenging environment. It
is therefore critical that remuneration is aligned to
the contribution and performance of the business,
teams and individuals. The group’s key remuneration
objectives include:
• Facilitating the delivery of superior long-term
results for the business and shareholders and
promote sound risk management principles
• Supporting the corporate values and desired
culture
• Supporting the attraction, retention, motivation
and alignment of the talent we need to achieve
our business goals
• Reinforcing leadership, accountability, teamwork
and innovation.
to achieve
these objectives,
In order
the
remuneration committee (remco), in consultation
with and with oversight from the board, retains
flexibility in terms of how it incentivises and rewards
performance.
The group’s remuneration policy provides a
framework for remuneration to attract, retain
and motivate employees to achieve the strategic
objectives of the organisation, within its risk appetite
and risk management framework.
The remuneration
following principles:
framework recognises the
• Objectivity in short-term incentives – comprising
an annual bonus which rewards management
for matters under their control or influence,
but not matters outside of their control such as
commodity prices and exchange rates
• Objectivity in long-term incentives – the purpose
with this component of the remuneration
framework is to align the long-term interest of
the group’s employees with that of the group’s
shareholders through incentives which are
directly linked to the increase in the PAR’s share
price. These awards vest over periods of three
to four years
• Alignment to shareholders – we believe that
the combination of these incentives will achieve
the objectives set out in the above philosophy,
by aligning the interests of employees with the
shareholder’ aspirations.
REMUNERATION
GOVERNANCE
Remco assists the board in ensuring that group
remuneration and recruitment are aligned with the
overall business strategy, with the aim of enabling
Pan African Resources to attract, incentivise and
retain personnel who will create long-term value
for all stakeholders.
The committee comprises non-executive directors
and as of 1 July 2015, comprises only independent
non-executive directors, which monitors and
strengthens the credibility of the group’s executive
remuneration system. It reviews the performance
of the chief executive officer, executives and senior
management and sets the scale, structure and
basis of their remuneration and the terms of their
service agreements. The committee also considers
and makes recommendations to the board on
remuneration packages and policies in this regard.
The remco chairman, Ms Phuthi Mahanyele,
resigned on 30 June 2015. The new chairman is
Mr Rowan Smith. The membership and attendance
of remco is shown on
page 83.
Remco meetings are attended by the chief
executive officer, financial director and the human
resources executive. No individual is present when
their remuneration is discussed.
ACCESS TO INFORMATION
AND ADVISERS
Remco has unrestricted access to the company’s
records, facilities and any other resources necessary
responsibilities.
its duties and
to discharge
against
reviewed
is
Remuneration
competitive market data and analysis from the
PricewaterhouseCoopers Remchannel
Survey.
The board approves remuneration proposals
from remco and submits them to shareholders for
endorsement at the annual general meeting.
annually
Pan African Resources
Integrated Annual Report 2015
87
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
88 Pan African Resources
Integrated Annual Report 2015
REMUNERATION REVIEW continued
EMPLOYEE REMUNERATION COMPONENTS
Fixed remuneration
Element
Key features
Purpose
Guaranteed pay
Cost to company
Executives, senior managers
and heads of department
• Pensionable salary
• Leave
• Pension/provident fund contributions
• Medical contributions
• Travel allowance
All of the above adds to the total cost to company of an
employee
Collective bargaining
employees
• Pensionable salary
• Leave
• Medical contributions
• Overtime/housing or living out allowance
• Other fixed allowances – underground allowances, rock
drill operator allowances and meal allowances
Variable
Short-term incentives
• Paid annually at corporate level
• Paid monthly, quarterly or annually at operations
depending on the level of employee
• Measured objectively against the group’s performance or
personal contribution
Long-term incentives
• Alignment to shareholders’ investment horizon and
aspirations
• Equity linked
• Measured objectively against the group’s performance or
personal contribution
Equity participation for employees
who do not participate in long-term
incentives
• Alignment of the aspirations of Pan African Resources’
employees at its operations with that of management and
shareholders
Attraction and
retention
Pan African Resources
Integrated Annual Report 2015
89
S
S
E
N
S
U
B
I
EMPLOYEE REMUNERATION COMPONENTS
Component
Purpose
Eligibility
Factors considered
FIXED
Guaranteed remuneration Aligned to the value the individual
provides to the group, including:
• Skills and competencies
required to generate results
• Sustained contribution to the
group
• The value of the role and
contribution of the individual to
the group
Executives, managers and heads of
department – paid annually
• Group performance
• Outlook for the next financial
year
•
Individual performance
Collective bargaining
• All relevant factors in the
industry such as annual wage
agreements
VARIABLE
Short-term incentive
Designed to drive and reward
medium-term results, reflecting
the level and time horizon of risk.
This includes financial and non-
financial results and metrics at an
organisation, division and individual
(and team) level
Executive committee, management
committee, heads of department
– paid annually or quarterly
(quarterly only for mining
production staff such as mine
overseers)
• Group financial and strategic
performance
• Business unit (team) financial
and strategic performance
•
•
Individual contribution to team
performance
Individual performance, including
alignment with corporate values
and meeting performance
objectives
• Contribution to meeting risk
and compliance requirements
at group, team and individual
level, risk and compliance
requirements also comprise a
gateway to whether a payment
is made and the size of the
payment. Notwithstanding
financial performance and the
individual contribution and
performance, if the individual,
team or group does not meet
or only partially meets risk and
compliance requirements, no
award or a reduced award may
be made
Collective bargaining
• Eligibility to participate in the
scheme
• The maximum variable
remuneration as a percentage
of total cost to company of an
individual
• The parameters for production
targets to be achieved
• The personal KPIs for each
participant
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
T
I
L
I
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
90 Pan African Resources
Integrated Annual Report 2015
REMUNERATION REVIEW continued
Component
Purpose
Eligibility
Factors considered
VARIABLE continued
Long-term incentives –
Appreciation Bonus Plan
Long-term incentives –
Equity participation plans
Discretionary remuneration
designed to drive and reward
long-term growth and sustained
company value and align the
interests of shareholders and
participants. These may or may
not be share options, share
appreciation retention schemes or
the like. It should be the intention
to structure any form of long-term
incentive in such a way as to retain
and attract the necessary skills for
the group and to ensure that it is
market related
To align the interests of employees
with shareholders through
providing direct participation in
the benefits of future company
performance
Executives and others approved by
the board
• Seniority and level of
responsibility
Collective bargaining employees
• Seniority and level of
responsibility
Special remuneration
benefits – sign on,
retention and termination
benefits
Designed to retain and attract
certain scarce skills, especially at the
heads-of-department and senior
management levels
Heads of department and senior
managers
• Experience and relevant
qualifications
The detailed remuneration of the group’s independent non-executive directors, executive directors and prescribed officers is disclosed in the
financial statements on
pages 158 to 161.
RISK MANAGEMENT AND REMUNERATION
Pan African Resources recognises the need to fairly remunerate
employees in order to attract and retain talent. However, it is
cognisant of the need to ensure that effective risk management is
part of its remuneration consideration, in order to drive the correct
behaviour. As such, all employees’ KPIs include specific elements that
are aligned to the group’s long-term goals, including zero harm. Safety
is imperative to the mines’ operations and the group’s remuneration
philosophy reinforces the need for the delivery of superior long-term
results, while promoting sound risk management principles.
NON-EXECUTIVE REMUNERATION
Remco advises the board on fees for non-executive directors.
In determining the annual fees, remco considers the directors’
responsibilities throughout the year, scarcity of skills, the group’s
performance, market-related conditions and local and international
comparative remuneration.
King III recommends that fees should comprise a base fee and an
attendance fee per meeting. The board agreed that a fixed fee for
directors’ services on the board and sub-committees was more
appropriate, as the board’s input extends beyond the attendance at
meetings. Non-executive fees are paid on a quarterly basis. There are
no contractual arrangements for compensation for loss of office.
Regulatory requirements taken into account when determining
non-executive directors’ remuneration include the Companies
Act, JSE Listings Requirements, King III and the UK Code.
EXCO, OPSCO AND MINE MANAGEMENT
REMUNERATION
Remco is responsible for making recommendations to the board on
the remuneration of the chief executive officer, those who report
directly to him and select other senior staff.
Remuneration is reviewed on an annual basis and takes into account
the group’s and operations’ financial and strategic performance,
individual contribution to the group’s and operations’ performance,
alignment with group values and the contribution in meeting risk and
compliance requirements. Where the individual, team or group does
not meet or partially meets requirements, no award or a reduced
award may be made.
An annual benchmarking exercise, through the PricewaterhouseCoopers
Remchannel survey, is utilised to determine a fair market-related
remuneration. Individual KPIs are agreed upon annually and contain
page 91. Remuneration comprises
various elements, as shown on
fixed and variable (short and long-term incentives) remuneration. Short-
page 89, to ensure
term incentives have certain parameters, shown on
a performance-based culture. The board and executive committee retain
discretion to determine which parameters apply and their weighting to
reflect immediate priorities. There will be times when it is appropriate,
and in shareholders’ best interest, to attach more significant weight to
(for example) one or more of production, financial or transformation
imperatives as circumstances dictate. The following maximum variable
remuneration percentages applied to 28 February 2015:
Pan African Resources
Integrated Annual Report 2015
91
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Position
Maximum variable remuneration
(as a % of total remuneration)
Chief executive officer and
financial director
Executive committee
Up to 55%
Up to 50%
Senior managers and other
approved by the board
Up to 50%
With the appointment of the new executive management team on
1 March 2015, the maximum variable remuneration percentages were
adjusted as follows:
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Position
Maximum variable remuneration
(as a % of total remuneration)
Qualification criteria at 100% achievement
Chief executive officer
Up to 90%
60% based on the following production parameters:
E
C
N
A
M
R
O
F
R
E
P
• Total group gold and PGMs sold – weight 50%
• Total group cost per kilogram – weight 30%
• Group safety – weight 20%
40% based on personal KPIs determined by the remco. KPIs relate
to pre-determined, definitive outcomes which add tangible value
to the group. During the last year, KPIs included compliance to
employment equity targets and specific objectives with regard to
profitability/growth
Executive committee
Up to 60%
60% based on the following production parameters:
• Total group gold and PGMs sold – weight 50%
• Total group cost per kilogram – weight 30%
• Group safety – weight 20%
40% based on personal KPIs are determined by the chief executive
officer in consultation with the remco. KPIs relate to specific pre-
determined outcomes
Senior managers at corporate
level approved by remco
Up to 50%
60% based on the following production parameters:
• Total group gold and PGMs sold – weight 50%
• Total group cost per kilogram – weight 30%
• Group safety – weight 20%
40% based on personal KPIs which relate to specific pre-determined
outcomes set by the chief executive officer
Senior managers at operational
level approved by remco
Up to 50%
80% based on the following production parameters per individual
operation:
• Total gold or PGMs sold – weight 50%
• Total cost per kilogram – weight 30%
• Operational safety – weight 20%
20% based on personal KPIs which relate to specific pre-determined
outcomes set by the chief operating officer and general manager
Regulatory requirements taken into account when determining non-executive directors’ remuneration include the Companies Act, JSE Listings
Requirements, King III and the UK Code.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
92 Pan African Resources
Integrated Annual Report 2015
REMUNERATION REVIEW continued
All executive directors have entered into three-year employment
contracts with the group and are remunerated for services performed.
In terms of these contracts no amounts are payable at inception or
termination at the end of the contract term. There is no limitation
on the number of times an executive director may stand for board
re-election.
Given the challenging economic and operating environment
experienced during the period under review, Pan African Resources’
executive directors have resolved that they will forfeit their annual
salary increase in the forthcoming financial year.
PRESCRIBED OFFICERS
The group’s prescribed officers are those individuals who exercise
general executive control over and manage a significant portion of
the group’s business activities or regularly participate, to a material
degree, in the exercise of general executive control over a significant
portion of the group’s business activities. In accordance with these
requirements, Pan African Resources’ prescribed officers include:
• Anaki Karigani, chief operating officer
• André van den Bergh, human resources executive
• Casper Strydom, general manager, Barberton Mines
• Band Malunga, general manager, Evander Mines
• Bertin Mcleod, plant manager, Phoenix Platinum
The prescribed officers’ remuneration is disclosed on
page 159.
SHORT AND LONG-TERM INCENTIVES
Pan African Resources provides both short and long-term incentives
to executives, senior management and other persons approved by
the board. The short-term incentives are largely used to incentivise
eligible employees, based on operational outcomes that are mainly
under management control. The long-term incentive is used to drive
performance over the longer term (three to five years) to ensure
improved alignment with the group’s strategic objectives and long-
term sustainability.
Share Appreciation Bonus Plan
The main objective of the Share Appreciation Bonus Plan (Bonus
Plan) is to provide appropriate incentives to select employees who
are employed at a senior managerial level within the group. This
ensures retention of key skills required for the ongoing profitable
performance and growth of Pan African Resources and to align
management interests with those of shareholders.
In terms of the Bonus Plan, select executives and employees
(participants) of the group will be allocated notional shares in Pan
African Resources. These notional shares will confer the conditional
right on the participant to be paid a cash bonus equal to the
appreciation in the Pan African Resources share price, from the date
of allocation to the date of surrender or deemed surrender of his/her
notional shares (share appreciation bonus).
However, the participant can elect, subject to approval by remco, to
surrender his/her notional shares and receive the bonus at a date
prior to the sixth anniversary date.
The bonus will be regarded as remuneration for income tax purposes
and will be subject to the deduction of PAYE and all other taxes and
contributions.
As of February 2015, the chief executive officer no longer participated
in further issues under this scheme.
Salary multiples and total
The total bonus scheme exposure and ceiling levels of eligible
employees’ participation in the Bonus Plan is proposed by remco
and approved by the board. The multiples agreed to are shown on
page 91 and remco is required to monitor Pan African Resources’
exposure to the Bonus Plan in a consistent manner.
Other medium and long-term incentives for executive
directors
The other medium and long-term incentive schemes currently in
place for executive directors are the following:
Outperformance of the JSE/FTSE Gold Index
the period
A cash/equity-settled share-based payment. For
1 September 2013 to 28 February 2015, executive directors were
entitled to receive a cash/equity-settled (at the election of remco)
payment, in the event that Pan African’s share price significantly
outperformed the FTSE/JSE gold index. Further detail of these
payments are included in note 28 to the financial statements as cash-
settled equity options. For this incentive to vest, outperformance of
the index by 10% or more was required.
Cash/equity-settled share-based payment to chief
executive officer
To incentivise the chief executive officer and align the interests of the
chief executive officer with that of the group, and to ensure retention
during the three-year contract term, the following long-term incentive
was put in place on 28 February 2015:
• Cash/equity-settled payment of 4,000,000 Pan African Resources
shares, issued for no consideration and vesting only at the end of
the chief executive officer’s three year contract term
• Cash/equity-settled payment of a maximum number of a further
4,000,000 Pan African shares, issued for no consideration but
vesting only at the end of the chief executive officer’s three-year
contract term. These shares will only be issued upon meeting
certain pre-defined remco criteria, which are determined annually.
The chief executive officer will therefore be eligible for a minimum
number of 4,000,000 Pan African shares and maximum number of
8,000,000 Pan African Resources shares at the end of his contract
term.
The share appreciation bonus will lapse no later than the sixth
anniversary of the date that any of the notional shares were allocated.
The chief executive officer no longer participates in the Share
Appreciation Bonus scheme.
Pan African Resources
Integrated Annual Report 2015
93
S
S
E
N
S
U
B
I
Position
Multiples applied in determining the number of options to be issued
Financial director
3.5 times annual cost-to-company
Executive committee
3.5 times annual cost-to-company
Operations committee
3.0 times annual cost-to-company
Management committee
2.0 times annual cost-to-company
Employee share ownership programme
On 1 June 2015, Barberton Mines implemented an
employee share ownership programme. A newly
established employee trust (the Trust) will effectively
own 5% of the issued share capital of Barberton
Mines. The transaction was financed by Barberton
Mines on a notional basis with preference share
funding attracting a real return of 2% per annum
and without any dilution to Pan African Resources.
A portion of dividends issued is retained to repay
the notional financing. The portion retained ranges
from 50% to 80% over the period of the scheme.
In July 2015, a similar scheme was implemented at
Evander Mines’ with the same terms and conditions
as Barberton Mines’ programme.
The employee share ownership programme seeks
to align the aspirations of Pan African Resources’
employees at its operations (Barberton and Evander
Mines) with that of management and shareholders.
Value will be created for beneficiaries based on
the profitability of each operation’s performance.
Assuming that regular dividends are declared by
these operations, beneficiaries will receive benefit
from the scheme from year one. In addition,
beneficiaries will receive an annual distribution from
the BEE Trusts and any capital appreciation will be
distributed to the beneficiaries upon winding up of
the programme after a minimum of ten years.
Qualification criteria
for annual dividend
distributions
• Permanent employee of
operation
• Employed in a non-
managerial position
• Employed by entity prior
to the commencement
of the financial year in
respect of which the
dividend distribution is
made
• Remained employed by
operation on last day of
financial year in respect
of which the dividend
distribution is made.
Allocation of benefit
• Each qualifying beneficiary
receives an equal benefit
• Good leavers during a
period receive a pro-rata
dividend distribution for
that period.
Structure of employee share ownership programme
BEE Co
BEE Trust
5%
Owners
100%
Employee
95%
95%
BARBERTON
MINES
EVANDER
MINES
Share capital
Dividend
Preference share
5%
Owners
100%
BEE Co
BEE Trust
Employee
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
T
I
L
I
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
94 Pan African Resources
Integrated Annual Report 2015
AUDIT AND RISK COMMITTEE REPORT
INTRODUCTION
The committee was appointed at the AGM on 21 November
2014. All the directors are considered by the board to have an
independent and objective mindset. In terms of the King code there
are three independent directors. The audit committee comprises two
independent directors and an independent chairman of the board
is the third member. In terms of the JSE guidelines the chairman is
entitled to be a member of the committee as long as the committee is
chaired by an independent board director. This situation has arisen as
the company has a small number of directors. In terms of the UK code
the audit committee requires a majority of independent members
for AIM listed companies. Under the UK codes, the chairman is not
independent as he has held historical share options over a long
period. These share options were subsequently redeemed during the
2015 financial year.
The committee has reporting responsibilities to the shareholders and
the board of directors of Pan African Resources and is accountable
to them. It operates in line with a documented charter and complies
with all relevant legislation, regulation and governance codes and
executes its duties in terms of the requirements of the governance
codes in the UK and South Africa. These codes include the combined
code of the UK and King III code.
The performance of the audit committee is evaluated against the
charter on an annual basis and a self evaluation of the committee’s
effectiveness is performed by the members and reviewed by the
board.
The independent non-executive directors of the Audit Committee
are:
• HH Hickey (chairperson)
• T Mosololi
• K Spencer (board chairman)
AUDIT COMMITTEE RESPONSIBILITIES
AND DUTIES
The audit and risk committee fulfils its responsibilities and duties as
set out in its charter.
The functions of the audit and risk committee include:
• Review the interim and year-end financial statements and
integrated report culminating with a recommendation to the
board
• Review the external audit reports, after audit of the interim and
year-end financial statements
• Assess the external auditors’ independence and performance
• Authorise the audit fees in respect of both the interim and year-
end audits
• Specify guidelines and authorise the award of non-audit services
to the external auditors
• Review the internal audit and risk management reports with, when
relevant, recommendations being made to the board
• Ensure that a coordinated approach to all assurance activities is
in place
• Evaluate the appropriateness and effectiveness of risk management,
internal controls and the governance processes
• Deal with concerns relating to accounting practices, internal audit,
the audit or content of annual financial statements and internal
financial controls.
FINANCIAL STATEMENTS
The committee has evaluated the consolidated and separate
financial statements for the year ended 30 June 2015 and, based
on the information provided to the committee, considers that the
consolidated and separate financial statements comply, in all material
respects, with the requirements of the UK Companies Act 2006 and
International Financial Reporting Standards (IFRS). The requirements
from King III are continuously being assessed and improved on with
significant issues resolved.
RISK MANAGEMENT
The committee is responsible for ensuring that a risk management
process is in place. The board focuses on risk management during the
strategy and business planning phase. The audit committee considers
the risks when the interim results and final results are produced. The
business units produce and evaluate their risks on a quarterly basis.
Continued effort to improve the risk management process is ongoing.
The key risks (amongst others) reviewed by the audit committee
during this audit were:
• Revenue recognition and management override risks that are
considered to be generic risks that need continuous focus
• Going concern is another key focus area and is extremely important
when the economic climate is difficult and impairment of assets
needs due consideration. In addition the environment is one of
increasing costs that put strain on our businesses and there is a great
deal of uncertainty in relation to the current labour environment.
The audit committee reviewed management’s assumptions and
considered the group’s disclosure on going concern. The auditors’
report on the matter was carefully considered and the committee
concluded that the business is a going concern and made this
recommendation to the board
• The committee reviewed the annual financial statements and
the non-financial information in the integrated report and web-
based information and concluded that the key risks have been
appropriately reported on.
SUBSIDIARY COMPANIES
The functions of the audit committee are also performed for each
subsidiary company of the Pan African Resources group that has not
appointed an audit committee.
Pan African Resources
Integrated Annual Report 2015
95
S
S
E
N
S
U
B
I
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
Audit committee chairperson
16 September 2015
EXTERNAL AUDITOR
The committee nominated Deloitte LLP as the statutory auditor and
Deloitte & Touche SA for JSE reporting requirement purposes, for
reappointment as external auditors of Pan African Resources.
The committee satisfied itself through enquiry that the external
auditors are independent as defined by the UK Companies Act 2006
and 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 2015 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
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 Deon Louw 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 auditors
are invited to attend each audit committee meeting.
The focus for the year under review has been on obtaining assurance
on the following:
• The implementation of the group information technology platform
at Evander was managed appropriately
• Alignment of the group internal control policies and procedures
have been implemented at Evander
• Review of key risk areas within the control environment and
investigations where this was necessary.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
T
I
L
I
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
96 Pan African Resources
Integrated Annual Report 2015
DIRECTORS’ STATEMENT OF RESPONSIBILITY
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the group’s transactions,
disclose with reasonable accuracy at any time the financial position of
the group, and ensure that the financial statements comply with the
UK Companies Act 2006. They are also responsible for safeguarding
the assets of the company and therefore 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.
The directors are responsible for preparing the integrated 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 in accordance with IFRS as adopted
by the EU and Article 4 of the IAS Regulation. The directors 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 and of the profit or loss of the
group for that period. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from legislation
in other jurisdictions.
In preparing these financial statements, the IAS requires that directors:
• Properly select and apply accounting policies
• Present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information
• 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 or conditions
on the entity’s financial position and financial performance
• Make an assessment of the group’s ability to continue as a going
concern.
Pan African Resources
Integrated Annual Report 2015
97
S
S
E
N
S
U
B
I
CERTIFICATE OF THE COMPANY SECRETARY
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I hereby certify that Pan African Resources has lodged with the Registrar of Companies all such returns as are required of a public company in
terms of the UK Companies Act 2006. All such returns are true, correct and up to date.
Y
G
E
T
A
R
T
S
St James’s Corporate Services Limited
Company secretary
16 September 2015
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
T
I
L
I
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
98 Pan African Resources
Integrated Annual Report 2015
DIRECTORS’ REPORT
The directors present their annual report and the audited financial
statements for the year ended 30 June 2015.
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 CEO’s report that accompanies these
financial statements, with financial and non-financial key performance
indicators shown on
page 30.
RESULTS AND DIVIDENDS
The results for the year are disclosed in the consolidated statement
page 105.
of profit or loss and other comprehensive income on
The salient features of these results can be found on
page 3.
The group paid a final dividend of ZAR258 million or GBP14.9 million
(2013: ZAR240.3 million or GBP14.7 million) during December
2014 relating to the 2014 financial year, equating to ZAR0.1410 or
0.82 pence (2013: ZAR0.1314 or 0.80 pence) per share.
Proposed final dividend for approval at the AGM
In light of market uncertainties, the board has proposed a
reduced dividend of ZAR210 million or GBP9.9 million (2014:
ZAR258 million or GBP14.9 million), equating to ZAR0.11466 or
0.53958pence (2014: ZAR0.1410 or 0.82pence) per share. This
proposed final dividend is subject to approval at the AGM which
will take place on 27 November 2015. The reduced dividend is
however not a departure from the group’s progressive dividend
policy and the board will consider an interim dividend in the
2016 financial year.
Note: The GBP proposed dividend was calculated based on an
exchange rate of ZAR21.25:1. 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
0.53958 pence per share.
The proposed final dividend is calculated on 1,831.5 million issued
shares currently outstanding and is to be approved by shareholders at
the forthcoming AGM of the company.
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 from statement date.
RISK MANAGEMENT
The key business risks for the group have been considered on
page 20.
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 and other board members have the capability 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 and environmental, as
well as unforeseen natural disasters.
The board believes that the current processes of identifying and
dealing with risks are effective.
Further details of the group’s approach to risk management are given
in note 30 to the financial statements on
page 151.
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:
• Review of monthly financial reports and monitoring performance
• Review of internal audit reports and follow-up action of
weaknesses identified by these reports
• Review of competency and experience of senior management
staff
• Prior approval of all significant expenditure, including all major
investment decisions
• 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 a
ZAR800 million revolving credit facility (RCF) from a consortium of
South African banks (and a two year accordion option subject to
the banks’ credit approval of an additional ZAR300 million facility),
and access to general banking facilities (GBF) of ZAR100 million. At
30 June 2015 the group had capacity on the RCF and GBF facilities of
ZAR555 million and ZAR100 million, respectively, and cash on hand
of ZAR64.2 million to assist in funding working capital requirements.
Management is not aware of any material uncertainties which 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 expenditure activities to conserve cash.
Pan African Resources
Integrated Annual Report 2015
99
S
S
E
N
S
U
B
I
EVENTS AFTER THE REPORTING PERIOD
Evander Mines employee share ownership programme
In the 2016 financial year, Evander Mines implemented an employee
share ownership programme which is identical to the scheme
implemented at Barberton Mines in June 2015. A newly established
employee trust will effectively own 5% of the issued share capital of
Evander Mines. The transaction was financed by Evander Mines with
preference share funding attracting a real return of 2% per annum
and with limited dilution to Pan African Resources’ shareholders.
A portion of dividends declared is retained to repay the notional
financing. The portion retained ranges from 50% to 80%, over the
10 year vesting period of the scheme.
IFL announcement regarding business rescue
Pan African Resources’ shareholders are referred to the regulatory
announcement published on 26 August 2015 by IFL, whereby IFL
announced that as a result of deteriorating business conditions, its
South African subsidiary IFMSA, has entered into business rescue.
Business rescue is a statutory means of enabling a financially distressed
company to continue business, under the supervision of a business
rescue practitioner, protected from its creditors.
Phoenix Platinum is situated on the IFMSA property, and a portion
of the feedstock for the Phoenix Platinum operation (currently
approximately 20%) is obtained from tailings arising from IFMSA’s
current processing activities. Phoenix Platinum is not solely reliant
on material from IFMSA, and has alternative sources of feedstock.
Phoenix Platinum sources electricity, water and certain other services
from IFMSA.
At this stage, Phoenix Platinum is not in a position to fully assess
the impact of the business rescue proceedings on the operation.
Phoenix Platinum and Pan African Resources will work closely with
the IFMSA business rescue practitioner to ensure that the operations
and interests of Phoenix Platinum are safeguarded, which includes the
services currently provided by IFMSA. All stakeholders will be kept
informed as these discussions progress.
ACQUISITION OF UITKOMST COLLIERY
The group entered into agreements to acquire the Uitkomst Colliery
during February and June 2015. Once all the conditions precedent
to the agreement are met, the colliery will be acquired from Oakleaf
and Shanduka Resources for a cash consideration of ZAR200 million.
The acquisition will be funded from an existing RCF and internally
generated cash flows. The acquisition still remains subject to approval
by the DMR in terms of section 11 of the MPRDA.
DIRECTORS
The following were directors during the year under review:
KC Spencer (chairman)1
P Mahanyele (resigned effective 30 June 2015)
JAJ Loots (appointed chief executive officer effective 1 March 2015)
G Louw (appointed financial director effective 1 March 2015)
H Hickey1
T Mosololi1
R Smith (appointed 8 September 2014)1
RA Holding (resigned 1 March 2015)
1 Independent non-executive director.
AUDITORS
Deloitte LLP has been appointed as the statutory auditor and
Deloitte & Touche SA has been appointed as auditor for JSE reporting
requirements 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:
• As far as the directors are aware, all relevant information has been
provided to the group’s auditors
• The directors have taken all the steps that they ought to have taken
as directors in order to make themselves aware of any relevant
audit information and to establish that the group’s auditors are
aware of that information.
This confirmation is given and should be interpreted in accordance
with S418 of the UK Companies Act.
Deloitte SA and UK has expressed its willingness to continue in office
as auditors, and a resolution to reappoint it will be proposed at the
forthcoming AGM.
Approval of financial statements
The board of directors therefore approves the integrated report and
associated financial statements.
By order of the board
Cobus Loots
Chief executive officer
16 September 2015
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
T
I
L
I
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
100 Pan African Resources
100 Pan African Resources
Integrated Annual Report 2015
Integrated Annual Report 2015
CONSOLIDATED ANNUAL
FINANCIAL STATEMENTS
Our strong statement
of financial position and
well-established cash-
generative operations
are key differentiators
from our peers.
Cobus Loots, chief executive officer
CONTENTS
Independent auditor’s report (United Kingdom)
Independent auditor’s report (South Africa)
Consolidated and separate
statement of financial position
Consolidated and separate
statement of profit or loss and
other comprehensive income
Consolidated and company
statement of changes in equity
Consolidated and separate
statements of cash flows
Notes to the consolidated and
separate annual financial statements
102
103
104
105
106
108
109
Pan African Resources
Pan African Resources
Integrated Annual Report 2015
Integrated Annual Report 2015
101
101
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
S
T
T
N
N
E
E
M
M
E
E
T
T
A
A
T
T
S
S
I
I
L
L
A
A
C
C
N
N
A
A
N
N
I
I
F
F
L
L
A
A
U
U
N
N
N
N
A
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
102 Pan African Resources
Integrated Annual Report 2015
INDEPENDENT AUDITOR’S REPORT
UNITED KINGDOM
To the members of Pan African Resources
We have audited the financial statements of Pan African Resources
for the year ended 30 June 2015 which comprise the Consolidated
and Separate Statement of Profit or Loss and Other Comprehensive
Income, the Consolidated and Separate Statement of Financial
Position, the Consolidated and Separate Statement of Cash Flows,
the Consolidated and Separate 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’ Statement of Responsibilities,
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
and to identify any information that is apparently materially incorrect
based on, or materially inconsistent with, the knowledge acquired by
us in the course of performing the audit. 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 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 2015 and of the group’s and
the parent company’s profit for the year then ended
• Have been properly prepared in accordance with IFRSs as adopted
by the European Union
• 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 Strategic Report and
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:
• 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
• The parent company financial statements are not in agreement
with the accounting records and returns
• Certain disclosures of directors’ remuneration specified by law are
not made
• We have not received all the information and explanations we
require for our audit.
Timothy Biggs FCA
Senior statutory auditor
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
16 September 2015
Pan African Resources
Integrated Annual Report 2015
103
S
S
E
N
S
U
B
I
INDEPENDENT AUDITOR’S REPORT
SOUTH AFRICA
To the members of Pan African Resources
We have audited the consolidated and separate financial statements
pages 104 to 171, which
of Pan African Resources set out on
comprise the statements of financial position as at 30 June 2015, and
the statements of profit or loss and other 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 AND SEPARATE
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 consolidated and separate
financial statements. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement
of the consolidated and separate 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 consolidated and separate 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 consolidated and separate 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 as at 30 June 2015, 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 Tshabahala
Partner
16 September 2015
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
104 Pan African Resources
Integrated Annual Report 2015
CONSOLIDATED AND SEPARATE
STATEMENT OF FINANCIAL POSITION
as at 30 June 2015
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 earnings
Realisation of equity reserve
Merger reserve
Other reserves
Equity attributable to owners of the parent
Total equity
Non-current liabilities
Long-term provisions
Long-term liabilities
Deferred taxation
Current liabilities
Trade and other payables
Short-term liabilities – interest bearing
Current portion of long-term liabilities
Payable to other group companies
Current tax liability
Total equity and liabilities
CONSOLIDATED
SEPARATE
Audited
30 June 2015
£
Audited
30 June 2014
£
Audited
30 June 2015
£
Audited
30 June 2014
£
Notes
16
17
29
18
19
19
20
21
35
26
22
23
36
24
27
28
29
25
28
35
26
181,532,780
202,488
327,748
21,000,714
904,818
–
16,181,925
220,150,473
185,375,968
214,330
366,567
21,000,714
–
1,009,545
15,458,291
223,425,415
–
–
–
–
122,911,964
–
–
122,911,964
70,950
23,108
366,567
–
122,007,254
1,009,429
–
123,477,308
3,502,569
5,341,128
–
–
–
–
31,369,774
22,455,618
827,298
854,568
9,559,010
11,696,380
3,328,850
5,618,323
141,574
41,531
888,498
147,911
60,426
1,803,545
17,217,727
23,510,399
32,441,377
24,467,500
–
–
237,368,200
246,935,814
–
155,353,341
–
24,467,500
18,314,947
94,846,046
(56,402,515)
1,035,888
110,850,201
(10,701,093)
(10,705,308)
(70,679)
147,167,487
147,167,487
18,299,947
94,792,516
(47,545,320)
1,154,891
114,106,005
(10,701,093)
(10,705,308)
(5,529)
159,396,109
159,396,109
18,314,947
94,846,046
(7,382,888)
897,658
39,760,855
–
1,560,000
(70,679)
147,925,939
147,925,939
18,299,947
94,792,516
(5,682,886)
1,016,661
1,116,204
–
1,560,000
–
111,102,442
111,102,442
12,249,367
16,312,982
39,288,059
67,850,408
12,033,167
8,141,317
43,353,577
63,528,061
–
–
–
–
–
153,721
–
153,721
16,799,043
–
5,047,478
–
503,784
22,350,305
237,368,200
17,219,749
–
4,754,803
–
2,037,092
24,011,644
246,935,814
213,861
–
–
7,213,541
–
7,427,402
155,353,341
803,607
–
560,882
35,324,156
–
36,688,645
147,944,808
CONSOLIDATED AND SEPARATE
STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Pan African Resources
Integrated Annual Report 2015
105
S
S
E
N
S
U
B
I
CONSOLIDATED
SEPARATE
Audited
30 June 2015
£
Audited
30 June 2014
£
Audited
30 June 2015
£
Audited
30 June 2014
£
Y
G
E
T
A
R
T
S
for the year ended 30 June 2015
Revenue
Gold sales
Platinum sales
Realisation costs
On-mine revenue
Gold cost of production
Platinum cost of production
Mining depreciation and amortisation
Mining profit
Other income/(expenses)
Loss in associate
Loss on disposal of asset held for sale
Loss on disposal of associate
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 (net of taxes):
Items that may be reclassified subsequently to profit
and loss
Fair value movement on available for sale investment
Other movements
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
Notes
4
4
5
5
16,17
8
19
36
19
19
9
9
10
13
19
135,611,436
5,465,447
(690,538)
140,386,345
(106,644,655)
(3,768,530)
(10,337,211)
19,635,949
249,776
(127,950)
–
(139,970)
(58,424)
(1,647,297)
17,912,084
348,959
(2,458,287)
15,802,756
(4,132,789)
11,669,967
150,288,898
4,262,160
(349,454)
154,201,604
(103,099,110)
(3,294,975)
(10,023,361)
37,784,158
(1,449,853)
(173,177)
(11,848)
–
–
(2,019,066)
34,130,214
687,185
(878,064)
33,939,335
(7,154,742)
26,784,593
–
–
–
–
–
–
–
–
53,880,947
–
–
(127,950)
(139,970)
(58,424)
53,554,603
53,290
(13,165)
53,594,728
(24,306)
53,570,422
–
–
–
–
–
–
–
(565,499)
–
–
(173,177)
–
–
(738,676)
168,877
(31)
(569,830)
145,372
(424,458)
(70,679)
5,529
(8,857,195)
2,747,622
–
(5,529)
(25,378,975)
1,400,089
(70,679)
–
(1,700,002)
51,799,741
–
–
1,071,988
647,530
11,669,967
11,669,967
26,784,593
26,784,593
53,570,422
53,570,422
(424,458)
(424,458)
2,747,622
2,747,622
1,400,089
1,400,089
51,799,741
51,799,741
647,530
647,530
Earnings per share
Diluted earnings per share
14
14
0.64
0.64
1.47
1.46
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
106 Pan African Resources
Integrated Annual Report 2015
CONSOLIDATED AND SEPARATE
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2015
CONSOLIDATED
Balance at 30 June 2013
Issue of shares
Total comprehensive income
Dividends paid
Share-based payment – charge for the year
Balance at 30 June 2014
Issue of shares
Total comprehensive income
Dividends paid
Share-based payment – charge for the year
Balance at 30 June 2015
SEPARATE
Balance at 30 June 2013
Issue of shares
Total comprehensive income
Dividends paid
Share-based payment – charge for the year
Balance at 30 June 2014
Issue of shares
Total comprehensive income
Dividends paid
Share-based payment – charge for the year
Balance at 30 June 2015
Share
capital
£
Share
premium
£
Translation
reserve
£
Share option
reserve
£
18,228,342
71,605
–
–
–
18,299,947
15,000
–
–
–
18,314,947
18,228,342
71,605
–
–
–
18,299,947
15,000
–
–
–
18,314,947
94,515,562
276,954
–
–
–
94,792,516
53,530
–
–
–
94,846,046
94,515,562
276,954
–
–
–
94,792,516
53,530
–
–
–
94,846,046
(22,166,345)
–
(25,378,975)
–
–
(47,545,320)
–
(8,857,195)
–
–
(56,402,515)
(6,754,874)
–
1,071,988
–
–
(5,682,886)
–
(1,700,002)
–
–
(7,382,888)
1,031,955
–
–
–
122,936
1,154,891
–
–
–
(119,003)
1,035,888
897,658
–
–
–
119,003
1,016,661
–
–
–
(119,003)
897,658
Realisation
of equity
reserve
Retained
earnings
£
Merger
reserve
£
Other
reserves
Total
£
102,005,124
(10,701,093)
(10,705,308)
114,106,005
(10,701,093)
(10,705,308)
(5,529)
159,396,109
110,850,201
(10,701,093)
(10,705,308)
(70,679)
147,167,487
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(5,529)
172,208,237
348,559
1,400,089
(14,683,712)
122,936
68,530
(65,150)
2,747,622
(14,925,771)
–
(119,003)
124,671,062
348,559
647,530
(14,683,712)
119,003
111,102,442
68,530
(14,925,771)
(119,003)
(70,679)
51,799,741
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
26,784,593
(14,683,712)
11,669,967
(14,925,771)
(424,458)
(14,683,712)
53,570,422
(14,925,771)
–
–
–
–
–
–
–
–
16,224,374
1,560,000
1,116,204
1,560,000
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
39,760,855
1,560,000
(70,679)
147,925,939
Share-based payment – charge for the year
CONSOLIDATED
Balance at 30 June 2013
Issue of shares
Total comprehensive income
Dividends paid
Balance at 30 June 2014
Issue of shares
Total comprehensive income
Dividends paid
SEPARATE
Balance at 30 June 2013
Issue of shares
Total comprehensive income
Dividends paid
Balance at 30 June 2014
Issue of shares
Total comprehensive income
Dividends paid
Share-based payment – charge for the year
Share
capital
£
Share
premium
£
Translation
Share option
reserve
£
reserve
£
18,228,342
94,515,562
(22,166,345)
1,031,955
71,605
276,954
(25,378,975)
18,299,947
94,792,516
(47,545,320)
1,154,891
15,000
53,530
(8,857,195)
18,228,342
94,515,562
(6,754,874)
897,658
71,605
276,954
1,071,988
18,299,947
94,792,516
(5,682,886)
1,016,661
15,000
53,530
(1,700,002)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
122,936
(119,003)
1,035,888
119,003
(119,003)
897,658
Share-based payment – charge for the year
Balance at 30 June 2015
18,314,947
94,846,046
(7,382,888)
Share-based payment – charge for the year
Balance at 30 June 2015
18,314,947
94,846,046
(56,402,515)
Retained
earnings
£
Realisation
of equity
reserve
£
Merger
reserve
£
Other
reserves
£
Total
£
102,005,124
–
26,784,593
(14,683,712)
–
114,106,005
–
11,669,967
(14,925,771)
–
110,850,201
16,224,374
–
(424,458)
(14,683,712)
–
1,116,204
–
53,570,422
(14,925,771)
–
39,760,855
(10,701,093)
–
–
–
–
(10,701,093)
–
–
–
–
(10,701,093)
(10,705,308)
–
–
–
–
(10,705,308)
–
–
–
–
(10,705,308)
–
–
–
–
–
–
–
–
–
–
–
1,560,000
–
–
–
–
1,560,000
–
–
–
–
1,560,000
–
–
(5,529)
–
–
(5,529)
–
(65,150)
–
(70,679)
–
–
–
–
–
–
–
(70,679)
–
–
(70,679)
172,208,237
348,559
1,400,089
(14,683,712)
122,936
159,396,109
68,530
2,747,622
(14,925,771)
(119,003)
147,167,487
124,671,062
348,559
647,530
(14,683,712)
119,003
111,102,442
68,530
51,799,741
(14,925,771)
(119,003)
147,925,939
Pan African Resources
Integrated Annual Report 2015
107
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
108 Pan African Resources
Integrated Annual Report 2015
CONSOLIDATED AND SEPARATE
STATEMENTS OF CASH FLOWS
for the year ended 30 June 2015
CONSOLIDATED
SEPARATE
Audited
30 June 2015
£
Audited
30 June 2014
£
Audited
30 June 2015
£
Audited
30 June 2014
£
Notes
Net cash generated from/(used in) operating activities
38
5,364,480
22,170,353
39,723,238
(14,345,011)
Investing activities
Additions to property, plant and equipment and mineral
rights
Net cash outflows from the acquisition of Evander Mines
Additions to other intangible assets
Investments acquired
Loans to subsidiaries
Proceeds on disposals of associate
Sale of assets and liabilities to PAR Management Services
Net cash used in investing activities
Financing activities
Proceeds from borrowings
Borrowings repaid
Settlement of equity share option costs
Loans from subsidiaries
Shares issued
Share issue costs
Net cash from/(used in) financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of foreign exchange rate changes
Cash and cash equivalents at the end of the year
16
17
19
28
28
34
24
23
(19,528,616)
–
(25,740)
(1,037,677)
–
277,732
–
(20,314,301)
27,898,927
(14,728,154)
(303,067)
–
68,530
–
12,936,236
(2,013,585)
5,618,323
(275,888)
3,328,850
(21,461,839)
–
(38,617)
–
–
145,366
–
(21,355,090)
22,955,725
(22,431,453)
–
–
348,559
–
872,831
1,688,094
4,768,916
(838,687)
5,618,323
–
–
–
(1,037,677)
(8,914,156)
277,732
(951,449)
(10,625,550)
–
(112,476)
–
(28,110,615)
68,530
–
(28,154,561)
943,127
1,803,545
(1,858,174)
888,498
(37,748)
–
(25,359)
–
(9,930,678)
1,120
–
(9,992,665)
–
(233,386)
–
21,551,160
348,559
–
21,666,333
(2,671,343)
3,304,949
1,169,939
1,803,545
Pan African Resources
Integrated Annual Report 2015
109
S
S
E
N
S
U
B
I
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS
for the year ended 30 June 2015
1. GENERAL INFORMATION
Pan African Resources is a company incorporated in England and
Wales under the Companies Act 2006. The company has a dual
primary listing on the AIM of the LSE and 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 are expressed in
pounds sterling. The financial statements have been prepared on the
going concern basis.
The financial statements have also been prepared in accordance with
the IFRS adopted by the EU 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 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 30 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 IFRS not yet adopted
The group applies all applicable IFRS in preparation of the financial
statements. Consequently, all IFRS statements adopted by the EU that
were effective at 30 June 2015 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 2015.
Standard
Amendment
IAS 16: Property, Plant and
Equipment
Amendments resulting from Annual Improvements 2010 – 2012 Cycle
(proportionate restatement of accumulated depreciation on revaluation)
IAS 19: Employee Benefits
The narrow scope amendments apply to contributions from employees or third
parties to defined benefit plans. The objective of the amendments is to simplify
the accounting for contributions that are independent of the number of years
of employee service, for example, employee contributions that are calculated
according to a fixed percentage of salary.
IAS 27: Separate Financial
Statements
Amendments for investment entities
IAS 24: Related Party
Disclosures
Amendments resulting from Annual Improvements 2010 – 2012 Cycle
(management entities)
Effective date
Annual periods beginning
on or after 1 July 2014
Annual periods beginning
on or after 1 July 2014
Annual periods beginning
on or after 1 January 2014
Annual periods beginning
on or after 1 July 2014
IAS 32: Financial Instruments:
Presentation
Amendments to application guidance on the offsetting of financial assets and
financial liabilities
Annual periods beginning
on or after 1 January 2014
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
110 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
Standard
Amendment
IAS 36: Impairment of Assets Amendments resulting from recoverable amount disclosures
IAS 38: Intangible Assets
Amendments resulting from Annual Improvements 2010 – 2012 Cycle
(proportionate restatement of accumulated depreciation on revaluation)
IAS 39: Financial Instruments:
Recognition and
Measurement
Amendments for novations of derivatives
IFRS 2: Share-based Payment Amendments resulting from Annual Improvements 2010 – 2012 Cycle
(definition of ‘vesting condition’)
IFRS 3: Business
Combinations
IFRS 3: Business
Combinations
Amendments resulting from Annual Improvements 2010 – 2012 Cycle
(accounting for contingent consideration)
Amendments resulting from Annual Improvements 2011 – 2013 Cycle
(scope exception for joint ventures)
IFRS 8: Operating Segments
Amendments resulting from Annual Improvements 2010 – 2012 Cycle
(aggregation of segments, reconciliation of segment assets)
IFRS 10: Consolidated
Financial Statements
IFRS 12: Disclosure of
Interests in Other Entities
Amendments to introduce investment entities exceptions to consolidation
Amendments to introduce investment entities exceptions to consolidation
IFRS 13: Fair Value
Measurement
Amendments resulting from Annual Improvements 2011 – 2013 Cycle
(scope of the portfolio exception in paragraph 52)
Effective date
Annual periods beginning
on or after 1 January 2014
Annual periods beginning
on or after 1 July 2014
Annual periods beginning
on or after 1 January 2014
Annual periods beginning
on or after 1 July 2014
Annual periods beginning
on or after 1 July 2014
Annual periods beginning
on or after 1 July 2014
Annual periods beginning
on or after 1 July 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 July 2014
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 and not yet effective as at 30 June 2015.
Standard
Amendment
IFRS 1: First-time Adoption
of International Financial
Reporting Standards
IFRS 5: Non-current
Assets Held for Sale and
Discontinued Operations
Amendments resulting from 2012 – 2014 Annual Improvements Cycle
Amendments resulting from 2012 – 2014 Annual Improvements Cycle
Effective date
Annual periods beginning
on or after 1 January 2016
Annual periods beginning
on or after 1 January 2016
IFRS 7: Financial Instruments:
Disclosures
Deferral of mandatory effective date of IFRS 9 and amendments to transition
disclosures
Annual periods beginning
on or after 1 January 2015
IFRS 7: Financial Instruments:
Disclosures
Amendments resulting from September 2014 Annual Improvements to IFRSs
IFRS 9: Financial Instruments
Reissue of a complete standard with all the chapters incorporated
IFRS 10: Consolidated
Financial Statements
IFRS 10: Consolidated
Financial Statements
IFRS 11: Joint Arrangements
IFRS 12: Disclosure of
Interests in Other Entities
Amendments on sale or contribution of assets between an investor and its
associate or joint venture
Amendments related to the application of the investment entities exceptions
Amendment requiring the acquirer of an interest in a joint operation in which
the activity constitutes a business, as defined in IFRS 3: Business Combinations, to
apply all of the principles on business combinations accounting in IFRS 3
Amendments related to the application of the investment entities exceptions
Annual periods beginning
on or after 1 January 2016
Annual periods beginning
on or after 1 January 2018
Annual periods beginning
on or after 1 January 2016
Annual periods beginning
on or after 1 January 2016
Annual periods beginning
on or after 1 January 2016
Annual periods beginning
on or after 1 January 2016
Pan African Resources
Integrated Annual Report 2015
111
S
S
E
N
S
U
B
I
Standard
IFRS 14: Regulatory Deferral
Accounts
IFRS 15: Revenue from
Contracts with Customers
IAS 1: Presentation of
Financial Statements
Amendment
Original issue
Original issue
Amendments arising under the Disclosure Initiative
Effective date
Annual periods beginning
on or after 1 January 2016
Annual periods beginning
on or after 1 January 2017
Annual periods beginning
on or after 1 January 2016
IAS 16: Property, Plant and
Equipment
Amendments resulting from clarification of acceptable methods of depreciation
and amortisation (Amendments to IAS 16 and IAS 38)
Annual periods beginning
on or after 1 January 2016
IAS 16: Property, Plant and
Equipment
Amendments to include ‘bearer plants’ within the scope of IAS 16 rather than
IAS 41
Annual periods beginning
on or after 1 January 2016
IAS 19: Employee Benefits
Amendments resulting from 2012 – 2014 Annual Improvements Cycle
IAS 27: Separate Financial
Statements
IAS 28: Investments in
Associates and Joint
Ventures
IAS 28: Investments in
Associates and Joint
Ventures
IAS 34: Interim Financial
Reporting
IAS 38: Intangible Assets
Amendments relating to equity method in separate financial statements
Amendments on sale or contribution of assets between an investor and its
associate or joint venture
Amendments related to the application of the investment entities exceptions
Amendments resulting from 2012 – 2014 Annual Improvements Cycle
Amendments resulting from clarification of acceptable methods of depreciation
and amortisation (Amendments to IAS 16 and IAS 38)
Annual periods beginning
on or after 1 July 2016
Annual periods beginning
on or after 1 January 2016
Annual periods beginning
on or after 1 January 2016
Annual periods beginning
on or after 1 January 2016
Annual periods beginning
on or after 1 January 2016
Annual periods beginning
on or after 1 January 2016
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 profit or loss and
other 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. 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.
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.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
112 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
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 orebodies,
to define mineralisation in existing orebodies, 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 IAS 16.
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 based, on
estimated proven and probable ore reserves.
Other mining plant and equipment is depreciated on the straight-line
basis over the shorter of the life of mine or their estimated useful lives.
Depreciation of non-mining assets
Buildings and other non-mining assets are recorded at cost and
depreciated on the straight-line basis over their expected useful lives,
which vary between 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:
• Evaluates as being technically or commercially feasible
• Has sufficient resources to complete development
• Can demonstrate will generate future economic benefits.
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
profit or loss and other 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. CGUs 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.
Pan African Resources
Integrated Annual Report 2015
113
S
S
E
N
S
U
B
I
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 profit or loss and other 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 is 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.
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 profit or loss
and other 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, PGE concentrate, gold or
PGE in process and consumable stores.
Bullion on hand and PGE 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.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
114 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
Gold or PGE in process inventories represent materials that are
currently in the process of being converted to a saleable gold or PGE
product. The gold or PGE in process inventories are valued only if they
are reliably measurable and are valued at the lower of the average
cost of the material fed to process plus the in-process conversion
costs and net realisable value.
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
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 profit or loss and other 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 profit or loss and other 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 profit or loss and other 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 statement of financial position 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
for decommissioning costs other
The group provides
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:
•
•
•
It is probable that delivery will be made
The item is on hand, identified and ready for delivery to the buyer
at the time the sale is recognised
The buyer specifically acknowledges the deferred delivery
instructions
•
The usual payment terms apply.
Pan African Resources
Integrated Annual Report 2015
115
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Financial assets
Derecognition of financial assets
The group classifies financial assets into the following categories:
• At fair value through profit or loss (FVTPL)
• Loans and receivables
• Held-to-maturity (HTM)
• Available for sale (AFS).
The classification of the financial assets is dependent on the purpose
and characteristics of the particular financial assets and is determined
at the date of initial recognition. Management reassesses the
classification of financial assets on an annual basis.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets are classified as at FVTPL when the asset is either
held-for-trading or is a derivative that does not satisfy the criteria for
hedge accounting or is designated at FVTPL.
Held-to-maturity (HTM)
Non-derivative financial assets with fixed or determinable payments
and fixed maturities that the group has an intention and ability to hold
to maturity are classified as held-to-maturity.
These financial assets are measured at amortised cost using the
effective interest method. Any subsequent impairment, where the
carrying amount falls below the recoverable amount, is included in
the determination of other net income/expenditure.
The group held no HTM instruments during the period or at year-end.
Available for sale (AFS)
Other non-derivative financial assets are classified as AFS which are
initially recognised at fair value. Any subsequent gains or losses are
recognised directly in other comprehensive income, unless there
is objective evidence and the fair value has declined below cost,
less accumulated impairments. On disposal or impairment of the
financial asset, all cumulative unrecognised gains or losses, which were
previously reflected in equity, are included in profit or loss for the
period.
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
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.
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 ownership
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:
•
•
It has been incurred principally for the purpose of repurchasing in
the near future
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
•
It is a derivative that is not designated and effective as a hedging
instrument.
A financial liability other than a financial liability held-for-trading may
be designated as at FVTPL upon initial recognition if:
• Such designation eliminates or significantly reduces a measurement
or recognition inconsistency that would otherwise arise
• 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
•
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.
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
116 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
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.
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 remeasured to their
fair value at each statement of financial position date. The resulting
gain or loss is recognised in the statement of profit or loss and
other comprehensive income immediately unless the derivative
is designated and effective as a hedging instrument, in which event
the timing of the recognition in the statement of profit or loss and
other 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
profit or loss and other 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 is 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 profit or loss and other 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.
Fair value measurement
The assessment of fair value is principally used in accounting for
business combinations, impairment testing and the valuation of
certain financial assets and liabilities. Fair value is determined based on
observable market data (in the case of listed investments, the market
share price at 30 June of the respective investments is utilised) or
discounted cash flow models (and other valuation techniques) using
assumptions considered to be reasonable and consistent with those
that would be applied by a market participant. Where discounted cash
flows are used, the resulting fair value measurements are considered to
be at level 3 in the fair value hierarchy as defined in IFRS 13: Fair Value
Measurement as they depend to a significant extent on unobservable
valuation inputs. The determination of assumptions used in assessing
the fair value of identifiable assets and liabilities is subjective and the
use of different valuation assumptions could have a significant impact
on financial results. In particular, expected future cash flows, which are
used in discounted cash flow models, are inherently uncertain and
could materially change over time. They are significantly affected by a
number of factors including Ore Reserves and Resources, together with
economic factors such as commodity prices, exchange rates, discount
rates and estimates of production costs and future capital expenditure.
Pan African Resources
Integrated Annual Report 2015
117
S
S
E
N
S
U
B
I
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:
• Estimates made in determining the present obligation of
and
environmental provisions
rehabilitation (this includes the scope and timing of work required,
the related costs and the discount rate used)
including decommissioning
• 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)
• 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
reserves and a portion of the mineral resources
– 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
• Estimates of the recoverability of goodwill and intangible assets
• Estimates of the fair value of assets at acquisition are made in
accordance with IFRS and take into account the replacement value
of assets
• Estimates involved in feasibility studies related to exploration and
growth projects and hence the recoverability of any related capital
expenditure.
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.
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 asset 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 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 PGEs.
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.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
118 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
4. REVENUE
Gold sales
Platinum sales
Realisation costs
On-mine revenue
Finance income
5. COST OF PRODUCTION
Gold cost of production
Salaries and wages
Mining
Processing
Engineering and technical services
Electricity
Security
Administration and other
Inventory valuation adjustment
Platinum cost of production
Salaries and wages
Processing
Other plant operation costs
Electricity
Refining costs
CONSOLIDATED
SEPARATE
Year ended
30 June 2015
£
Year ended
30 June 2014
£
Year ended
30 June 2015
£
Year ended
30 June 2014
£
135,611,436
150,288,898
5,465,447
4,262,160
(690,538)
(349,454)
140,386,345
154,201,604
348,959
687,185
140,735,304
154,888,789
–
–
–
–
–
–
–
–
53,290
53,290
168,877
168,877
CONSOLIDATED
SEPARATE
Year ended
30 June 2015
£
Year ended
30 June 2014
£
Year ended
30 June 2015
£
Year ended
30 June 2014
£
(47,785,708)
(48,504,902)
(12,676,638)
(11,303,131)
(14,349,345)
(11,468,725)
(7,595,857)
(8,921,246)
(15,089,408)
(14,817,185)
(2,154,974)
(2,339,247)
(5,706,416)
(5,386,383)
(1,286,309)
(358,291)
(106,644,655)
(103,099,110)
(1,089,427)
(1,046,378)
(1,005,258)
(1,000,589)
(49,598)
(208,303)
(1,415,944)
(63,459)
(210,709)
(973,840)
(3,768,530)
(3,294,975)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Pan African Resources
Integrated Annual Report 2015
119
S
S
E
N
S
U
B
I
6.
SEGMENTAL ANALYSIS
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 risks and rewards that are different to those of other segments. The group’s business activities were conducted
through five business segments:
•
•
•
•
Barberton Mines Proprietary Limited (Barberton Mines), located in Barberton, South Africa, derives revenue from the sale of gold to
South African financial institutions
Evander Gold Mining Proprietary Limited and Evander Gold Mines Limited (collectively known as Evander Mines), located in Evander
South Africa, derive revenue from the sale of gold to South African financial institutions
Phoenix Platinum Mining Proprietary Limited (Phoenix Platinum), located in the North West province in South Africa, derives revenue
from the sale of platinum group elements (PGE) concentrate to Western Platinum Limited (a subsidiary of Lonmin PLC)
Corporate office and growth projects, which included Auroch Minerals NL investments in the prior year, derives revenue from
management fees resulting from providing management and administration services to other group companies. Management fee
income is disclosed in other expenses (refer to note 8)
•
Pan African Resources Funding Company Proprietary Limited (Funding Company) provides treasury function activities for the group.
The executive committee reviews the operations in accordance with the disclosures presented below.
Year ended 30 June 2015
Barberton
Mines
£
Evander
Mines
£
Phoenix
Platinum
£
Corporate
office and
growth
projects
£
–
–
–
–
–
–
–
(3,676,779)
(127,950)
–
–
–
(139,970)
(58,424)
–
–
5,465,447
–
5,465,447
(3,768,530)
(364,992)
1,331,925
(163,390)
–
Funding
Company3
£
Consolidated
£
–
–
–
–
–
–
–
(933)
–
135,611,436
5,465,447
(690,538)
140,386,345
(110,413,185)
(10,337,211)
19,635,949
249,776
(127,950)
–
–
–
(139,970)
(58,424)
(1,647,297)
1,168,535
11,186
(1,136)
1,178,585
(336,438)
(4,003,123)
53,290
(13,164)
(3,962,997)
(89,033)
(933)
7,922
(1,278,970)
(1,271,981)
(20,503)
17,912,084
348,959
(2,458,287)
15,802,756
(4,132,789)
81,609,692
–
(534,421)
81,075,271
(50,434,360)
(4,008,467)
26,632,444
(966,703)
–
–
–
(1,595,802)
24,069,939
109,514
(246,094)
23,933,359
(5,956,861)
54,001,744
–
(156,117)
53,845,627
(56,210,295)
(5,963,752)
(8,328,420)
5,057,581
–
–
–
(51,495)
(3,322,334)
167,047
(918,923)
(4,074,210)
2,270,046
Revenue
Gold sales1
Platinum sales
Realisation costs
On-mine revenue
Cost of production
Depreciation
Mining profit
Other expenses2
Loss from associate
Loss on disposal of associate/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
Profit/(loss) after taxation before
inter-company charges
Inter-company transactions
Management fees
Inter-company interest charges
Profit/(loss) after taxation after
Inter-company charges
17,976,498
(1,804,164)
842,147
(4,052,030)
(1,292,484)
11,669,967
(1,666,667)
(57,776)
(1,248,661)
(1,230,251)
(152,777)
(4,605)
3,068,105
(16,450)
–
1,309,082
–
–
16,252,055
(4,283,076)
684,765
(1,000,375)
16,598
11,669,967
1 All gold sales were made in the Republic of South Africa and the majority of revenue (more than 90%) was generated from, Rand Refinery. Towards the end of the financial year,
the group started selling gold to South African financial institutions through its Funding Company.
2 Other expenses exclude inter-company management fees and dividends.
3 The Funding Company was established during the 2013 financial year with effect from 1 March 2013.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
120 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
6.
SEGMENTAL ANALYSIS continued
Year ended 30 June 2014
Barberton
Mines
£
Evander
Mines
£
Phoenix
Platinum
£
Corporate
office and
growth
projects
£
Funding
Company3
£
Consolidated
£
Revenue
Gold sales1
Platinum sales
Realisation costs
On-mine revenue
Cost of production
Depreciation
Mining profit
Other expenses2
Loss from associate
Loss on disposal of associate/asset
held for sale
Impairment costs
Royalty costs
Net income/(loss) before finance
income and finance costs
Finance income
Finance costs
89,520,058
60,768,840
–
–
–
4,262,160
(269,403)
(80,051)
–
89,250,655
60,688,789
4,262,160
(48,989,722)
(54,109,388)
(3,294,975)
(3,905,925)
(5,558,837)
(558,599)
36,355,008
1,020,564
(1,704,438)
857,879
408,586
(20,576)
–
(11,848)
–
–
–
–
(2,185,136)
166,070
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
150,288,898
4,262,160
(349,454)
154,201,604
(106,394,085)
(10,023,361)
37,784,158
(566,710)
(173,177)
–
–
–
(16,008)
(1,449,853)
–
–
–
–
(173,177)
(11,848)
–
(2,019,066)
32,453,586
2,044,513
388,010
(739,887)
(16,008)
34,130,214
173,405
(35,333)
344,903
(7,743)
–
–
168,877
–
687,185
(31)
(834,957)
(878,064)
Profit/(loss) before taxation
32,591,658
2,381,673
388,010
(571,041)
(850,965)
33,939,335
Taxation
(8,969,604)
1,828,847
(172,379)
145,372
13,022
(7,154,742)
Profit/(loss) after taxation before
inter-company charges
Inter-company transactions
Management fees
Inter-company interest charges
Profit after taxation after
inter-company charges
23,622,054
4,210,520
215,631
(425,669)
(837,943)
26,784,593
(509,479)
(337,678)
(29,620)
876,777
–
(863,345)
–
863,345
–
–
23,112,575
3,009,497
186,011
451,108
25,402
26,784,593
1 All gold sales were made in the Republic of South Africa and the majority of revenue (more than 90%) was generated from, Rand Refinery. Towards the end of the financial year,
the group started selling gold to South African financial institutions through its Funding Company.
2 Other expenses exclude inter-company management fees and dividends.
3 The Funding Company was established during the 2013 financial year with effect from 1 March 2013.
Pan African Resources
Integrated Annual Report 2015
121
S
S
E
N
S
U
B
I
6.
SEGMENTAL ANALYSIS continued
Barberton
Mines
£
Evander
Mines
£
Phoenix
Platinum
£
Corporate
office and
growth
projects
£
Funding
Company3
£
Consolidated
£
Segmental assets
Year ended 30 June 2015
Total assets excluding goodwill
55,423,588
146,705,365
10,850,893
2,454,933
932,707
216,367,486
Segmental liabilities
21,528,152
52,987,201
933,751
1,973,835
12,777,774
90,200,713
Goodwill
21,000,714
–
–
–
–
21,000,714
Net assets (excluding goodwill)
33,895,436
93,718,164
9,917,142
481,098
(11,845,067)
126,166,773
Capital expenditure
6,258,248
13,231,962
31,355
32,791
–
19,554,356
Year ended 30 June 2014
Total assets excluding goodwill
57,519,959
152,476,424
12,427,761
3,482,325
28,631
225,935,100
Segmental liabilities
23,135,981
62,144,046
622,536
1,519,598
117,544
87,539,705
Goodwill
21,000,714
–
–
–
–
21,000,714
Net assets (excluding goodwill)
34,383,978
90,332,378
11,805,225
1,962,727
(88,913)
138,395,395
Capital expenditure
8,944,360
12,468,962
24,027
63,107
–
21,500,456
All assets are held within South Africa, with the exception of Auroch Minerals NL in the prior year, which is a company listed on the
Australian Securities Exchange (ASX), with assets held in Mozambique. The segmental assets and liabilities above, exclude inter-company
balances.
Capital expenditure comprises additions to property plant and equipment and mineral rights and intangible assets (refer to notes 16
and 17).
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
122 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
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:
CONSOLIDATED
SEPARATE
Year ended
30 June 2015
£
Year ended
30 June 2014
£
Year ended
30 June 2015
£
Year ended
30 June 2014
£
195,374
536,793
732,167
144,090
101,713
245,803
–
–
–
62,432
–
62,432
100,947
105,768
82,639
85,535
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.
Majority of the group’s lease arrangements relate to the copier machines leased at the mining operations. The only material operating lease
relates to the corporate office. During the current year the existing lease agreement for the corporate office was renewed under a separate
group entity and has the following terms as at 30 June 2015:
Duration of lease
Commencement of lease
Remaining lease term
Escalation rate
Tenant
Landlord
5 years
1 April 2015
57
8%
Pan African Resources Management Services Company Proprietary Limited
Investec Property Fund Limited
Monthly lease payments
£10,286
Pan African Resources
Integrated Annual Report 2015
123
S
S
E
N
S
U
B
I
8. OTHER INCOME/(EXPENSES)
CONSOLIDATED
SEPARATE
Year ended
30 June 2015
£
Year ended
30 June 2014
£
Year ended
30 June 2015
£
Year ended
30 June 2014
£
Dividends received – subsidiary
Dividends received – other investments
Management fees
Foreign exchange (loss)/gain
Operating leases
Non-mining depreciation
Non-executive directors’ emoluments
Executive directors’ emoluments
Equity-settled share options expense (refer to note 34)
–
34,969
–
(41,266)
(100,947)
(49,094)
(139,508)
(1,042,762)
(184,064)
–
–
–
71,678
(105,768)
(37,342)
(146,004)
(615,085)
(122,936)
Cash-settled share options expense (refer to note 28)
(294,627)
(1,607,709)
54,709,384
34,969
–
(2,282)
(82,639)
–
(139,508)
–
–
–
Auditors’ fees
Salaries corporate office
Investor and public relations
New business
Legal fees
Community projects
Profits arising from realised financial instruments
(refer to note 30)
(Loss)/profit on disposal of assets
Rehabilitation provision adjustment
Rehabilitation trust fund fair value adjustments
Other net income/(expense)
(164,003)
(148,870)
(61,024)
(683,902)
(1,180,277)
–
(1,180,277)
(162,945)
(278,418)
(104,582)
(126,899)
(246,000)
(28,917)
(39,768)
(165,541)
(57,565)
(1,154,892)
(1,125,628)
2,486,608
2,310,426
(149)
–
1,827,253
302,105
249,776
20,497
340,530
923,188
375,263
–
–
–
–
–
(315,079)
(1,449,853)
53,880,947
–
–
876,777
2,958
(85,535)
(37,342)
(146,004)
(615,085)
(119,003)
(648,426)
(69,226)
(126,899)
(246,000)
(14,094)
–
2,310,426
–
–
–
(467,769)
(565,499)
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
124 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
9.
FINANCE INCOME/(COSTS)
Interest income – bank
Interest income – other
Interest income – rehabilitation trust fund
Interest expense – bank
Interest expense – SARS
Interest expense – rehabilitation provision
Interest expense – other
Net finance (expense)/income
10. PROFIT BEFORE TAXATION
Profit before taxation has been arrived at after charging:
Management fee expense/(income)
– Shanduka Resources Services Proprietary Limited
(Shanduka) (refer to note 35)
– Barberton Mines1
– Phoenix Platinum1
– Evander Mines1
Equity-settled share option expense (refer to note 34)
Cash-settled share option expense (refer to note 28)
Mining depreciation
Impairment costs
Staff costs
Royalty costs
New business
Operating leases
CONSOLIDATED
SEPARATE
Year ended
30 June 2015
£
Year ended
30 June 2014
£
Year ended
30 June 2015
£
Year ended
30 June 2014
£
205,249
272,388
53,290
168,877
87,222
56,488
348,959
(1,278,970)
(34,748)
(1,094,191)
(50,378)
(2,458,287)
(2,109,328)
–
414,797
687,185
(834,957)
(32,933)
–
(10,174)
(878,064)
(190,879)
–
53,290
(13,165)
–
–
–
–
–
168,877
(31)
–
–
–
(13,165)
40,125
(31)
168,846
CONSOLIDATED
SEPARATE
Year ended
30 June 2015
£
Year ended
30 June 2014
£
Year ended
30 June 2015
£
Year ended
30 June 2014
£
240,480
63,084
–
–
–
–
–
–
184,064
294,627
122,936
1,607,709
10,337,211
10,023,361
–
–
–
–
–
–
–
58,424
–
58,424
50,601,799
50,509,231
1,647,297
2,019,066
–
–
278,418
100,947
246,000
105,768
165,541
82,639
–
(509,479)
(29,621)
(337,678)
119,003
648,426
–
–
1,180,277
–
246,000
85,535
1 Management agreements between the mining operations and company were ceded to Pan African Management Services Company Proprietary Limited, during the year.
Pan African Resources
Integrated Annual Report 2015
125
S
S
E
N
S
U
B
I
11. AUDITORS’ REMUNERATION
CONSOLIDATED
SEPARATE
Year ended
30 June 2015
£
Year ended
30 June 2014
£
Year ended
30 June 2015
£
Year ended
30 June 2014
£
Fees payable to the company’s auditors for the audit of the
company’s annual financial statements
Audit of the consolidated financial statements
Audit of the company’s subsidiaries pursuant to legislation
Underprovision of audit fee in the prior year
Total audit fees
Other services rendered by the auditors
External auditors
Internal auditors
Total non-audit fees
1,167
45,758
110,122
6,956
164,003
16,689
39,017
55,706
7,911
61,315
79,644
–
148,870
1,167
45,758
–
14,099
61,024
7,911
61,315
–
–
69,226
21,271
16,689
18,434
–
–
–
21,271
16,689
18,434
All audit fees were paid within South Africa with the exception of £42,500 (2014: £42,000) which was paid in the United Kingdom.
12. STAFF COSTS
Their aggregate remuneration comprised:
Salaries and wages
Other retirement costs (refer to note 31)
Operating cost employees were:
Corporate
Evander Mines
Phoenix Platinum
Barberton Mines
Capital employees
Barberton Mines
Evander Mines
CONSOLIDATED
SEPARATE
Year ended
30 June 2015
£
Year ended
30 June 2014
£
Year ended
30 June 2015
£
Year ended
30 June 2014
£
45,098,239
45,761,629
5,503,560
4,747,602
50,601,799
50,509,231
–
–
–
1,067,424
112,853
1,180,277
CONSOLIDATED
Year ended
30 June 2015
Average
Year ended
30 June 2015
Closing
Year ended
30 June 2014
Average
Year ended
30 June 2014
Closing
14
2,247
3
1,675
3,939
192
203
395
14
2,239
3
1,692
3,948
190
188
378
14
2,312
4
1,690
4,020
189
217
406
14
2,324
4
1,702
4,044
197
209
406
Total number of employees
4,334
4,326
4,426
4,450
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
126 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
12. STAFF COSTS continued
Operating cost employees were:
Corporate
Evander Mines
Phoenix Platinum
Barberton Mines
Total number of employees
Capital employees
Barberton Mines
Evander Mines
Total number of employees
13. TAXATION
Income tax expense
South African normal taxation
– current year
– prior year
Deferred taxation
– current year
Total taxation charge
Profit before taxation
(Exempt income)/non-deductible expenses
(Overprovision)/underprovision – prior year
Taxation rate differential
Tax effect of utilisation of tax losses
Taxation expense for the year
Effective taxation rates
South African statutory rate
Taxation rate differential
Non-deductible expenses/(exempt income)
(Overprovision)/underprovision – prior year
Tax effect of utilisation of tax losses
Effective taxation rate
SEPARATE
Year ended
30 June 2015
Average
Year ended
30 June 2015
Closing
Year ended
30 June 2014
Average
Year ended
30 June 2014
Closing
14
–
–
–
14
–
–
–
14
14
–
–
–
14
–
–
–
14
14
–
–
–
14
–
–
–
14
14
–
–
–
14
–
–
–
14
CONSOLIDATED
SEPARATE
Year ended
30 June 2015
£
Year ended
30 June 2014
£
Year ended
30 June 2015
£
Year ended
30 June 2014
£
5,456,327
8,649,810
24,306
(86,758)
423,827
(1,236,780)
(1,918,895)
–
–
4,132,789
7,154,742
24,306
15,802,756
33,939,335
53,594,728
(344,288)
(70,584)
(40,158)
(14,983,971)
21,399
122,889
(2,289,169)
–
(40,344)
4,132,789
7,154,742
%
28.00
0.78
(2.18)
(0.45)
–
26.15
%
28.00
(6.74)
(0.12)
0.06
(0.12)
21.08
–
–
1,753
24,306
%
28.00
–
(27.96)
–
–
0.04
8,064
–
(153,436)
(145,372)
(569,830)
(159,552)
133,113
(109,391)
–
(9,542)
(145,372)
%
28.00
–
(23.36)
19.20
1.67
25.51
Taxation at the domestic taxation rate of 28%
4,424,772
9,503,014
15,006,524
Pan African Resources
Integrated Annual Report 2015
127
S
S
E
N
S
U
B
I
13. TAXATION continued
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 the following unredeemed capital expenditure carried
forward and deductible against future profits, held within Phoenix Platinum and Evander Mines (due to the expenditure on the Evander
Tailings Retreatment Project (ETRP) and other projects).
Phoenix Platinum
Evander Mines
At year-end the group has the following assessed losses carried forward
Evander Mines
Total
14. EARNINGS PER SHARE
Basic and diluted earnings per share
CONSOLIDATED
30 June 2015
£
30 June 2014
£
4,967,775
6,889,777
16,684,726
7,725,719
21,652,501
14,615,496
4,565,108
4,565,108
–
–
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.
Year ended 30 June 2015
Basic earnings per share
Share options
Diluted earnings per share
Year ended 30 June 2014
Basic earnings per share
Share options
Diluted earnings per share
Weighted
average
number
of shares
Earnings
per share
Pence
Net profit
£
11,669,967
1,830,422,160
–
545,106
11,669,967
1,830,967,266
26,784,593
1,827,207,555
–
4,131,619
26,784,593
1,831,339,174
0.64
–
0.64
1.47
(0.01)
1.46
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
128 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
14. EARNINGS PER SHARE continued
Headline earnings per share
Headline earnings per share is based on the group’s headline earnings divided by the weighted average number of shares in issue during
the year.
Reconciliation between earnings and headline earnings from continuing operations:
Year ended 30 June 2015
Earnings as reported
Adjustments1:
Impairment costs
Loss/(profit) on sale of property, plant and equipment and mineral rights
Loss on disposal of associate/asset held for sale
Headline earnings per share2
Share options
Diluted headline earnings per share
Year ended 30 June 2014
Earnings as reported
Adjustments1:
Impairment costs
(Profit)/loss on sale of property, plant and equipment and mineral rights
Loss on disposal of associate/asset held for sale
Headline earnings per share2
Share options
Diluted headline earnings per share
Weighted
average
number
of shares
Earnings
per share
Pence
Net profit
£
11,669,967
1,830,422,160
0.64
58,424
149
139,970
–
–
–
11,868,510
1,830,422,160
–
545,106
11,868,510
1,830,967,266
–
–
0.01
0.65
–
0.65
26,784,593
1,827,207,555
1.47
–
(20,497)
11,848
–
–
–
26,775,944
1,827,207,555
–
4,131,619
26,775,944
1,831,339,174
–
–
–
1.47
(0.01)
1.46
1 The adjustments accounted for, did not have any taxation impact to the group.
2 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 share1
CONSOLIDATED
30 June 2015
Pence
30 June 2014
Pence
8.04
3.56
8.71
3.93
1 Total assets less goodwill, non-current assets held for sale, non-current liabilities, current liabilities and mineral rights and mining property.
Pan African Resources
Integrated Annual Report 2015
129
S
S
E
N
S
U
B
I
15. DIVIDENDS
Historically, the board has recommended an annual dividend to shareholders, for approval at the AGM. The board recognises that
where possible, shareholders require a cash return on their investment. Pan African Resources has revised and further clarified its dividend
policy in the prior year, the company will pay a progressive annual ZAR dividend. Any dividend recommendation and payment, however,
will still be dependent on prevailing gold prices and other external factors, as well as the performance of and outlook for the group.
The group paid a final dividend of ZAR258 million or GBP14.9 million (2013: ZAR240.3 million or GBP14.7 million) during December 2015
relating to the 2014 financial year, equating to ZAR0.1410 or 0.82 pence (2013: ZAR0.1314 or 0.80 pence) per share.
Proposed final dividend for approval at the AGM
In light of market uncertainties, the board has proposed a reduced dividend of ZAR210 million (2014: ZAR258 million) or ZAR0.11466
(ZAR2014: ZAR0.1410) per share, equating to GBP9.9 million (2014: GBP14.9 million) or 0.54 pence (2014: 0.82 pence) per share for the
period ended 30 June 2015. This proposed final dividend is subject to approval at the AGM which will take place on 27 November 2015.
The reduced dividend is not a departure from the group’s progressive dividend policy and the board will consider an interim dividend in
the 2016 financial year.
Assuming the dividend is approved by the shareholders, the following salient dates would apply:
Currency conversion date
Last date to trade on the exchanges
Ex-dividend date on the JSE
Ex-dividend date on the LSE
Record date
Payment date
Friday, 27 November
Friday, 4 December
Monday, 7 December
Thursday, 10 December
Friday, 11 December
Thursday, 24 December
The GBP proposed final dividend was calculated based on an exchange rate of ZAR21.25:1. The UK shareholders are to note that a revised
exchange rate will be communicated prior to final approval at the AGM. Therefore the proposed final dividend is approximately 0.54 pence
per share.
The local dividends tax rate is fifteen percent per ordinary share for shareholders who are liable to pay the dividends tax would receive a
net dividend of ZAR0.097 (0.46 pence) per share. The company’s South African income tax reference number is 9,154,588,173 and it has
1,831,494,763 shares currently in issue.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
130 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
16. PROPERTY, PLANT AND EQUIPMENT AND MINERAL RIGHTS
CONSOLIDATED
Cost
Balance at 30 June 2013
Transfer from assets under construction
Additions
Disposal
Reclassification to surface tailings acquired3
Foreign currency translation reserve
Balance at 30 June 2014
Transfer to intangibles
Transfer from assets under construction
Additions
Disposal
Foreign currency translation reserve
Balance at 30 June 2015
Accumulated depreciation
Balance at 30 June 2013
Charge for the year2
Disposal
Transfers
Foreign currency translation reserve
Balance at 30 June 2014
Charge for the year2
Transfers
Disposal
Foreign currency translation reserve
Balance at 30 June 2015
Carrying amount
At 30 June 2014
At 30 June 2015
Mineral rights
and mining
property4
£
Building
and
infrastructure
£
Land1
£
Plant and
Capital under
Shafts and
machinery
construction
exploration
£
£
£
Surface
tailings5
£
Other
£
Total
£
2,365,181
89,567,167
16,826,517
64,541,612
35,923,887
29,615,833
209,328
239,049,525
–
–
(1,315)
–
–
–
–
(555,247)
11,244,560
4,368,427
–
–
10,202,942
(21,407,327)
(40,175)
6,288,165
7,552,843
3,214,656
–
–
37,748
(1,598)
–
–
–
21,461,839
(2,913)
–
555,247
(393,896)
(14,919,573)
(3,782,467)
(11,725,625)
(5,174,758)
(5,132,407)
(37,137)
(41,165,863)
1,969,970
74,092,347
28,657,037
69,307,094
16,894,645
27,657,907
555,247
208,341
219,342,588
–
–
–
–
–
–
–
–
–
–
1,172,467
–
(131,672)
(4,952,286)
(1,994,393)
1,838,298
69,140,061
27,835,111
–
–
–
–
–
–
–
–
–
–
–
(7,656,686)
(1,129,942)
(1,466,161)
(2,196,230)
–
–
1,367,397
–
395,687
301,190
(7,755,450)
(2,629,295)
(1,248,676)
(1,647,040)
–
–
–
–
602,478
286,682
(8,401,648)
(3,989,653)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(230,176)
(141,946)
23,551,820
(23,588,815)
1,872,635
13,231,962
3,241,897
(1,389)
(6,335,389)
(431,615)
(2,067,003)
88,252,825
6,106,177
28,832,801
(37,112)
518,135
–
(141,946)
36,995
–
9,655
19,528,616
–
(1,389)
(17,068)
(15,966,538)
237,923
222,761,331
(11,019,912)
(17,299)
(9,624,720)
(5,090,610)
(170,136)
(987,036)
(111,289)
(29,559,848)
(37,826)
(9,947,999)
6,262
1,679,674
20,808
5,540,747
(14,110,617)
(181,173)
(9,162,258)
(5,940,068)
(280,229)
(1,065,115)
(127,827)
(33,966,620)
(40,076)
(10,221,204)
480
–
(17,525)
–
480
–
–
602
–
(165,511)
2,165,416
17,525
602
1,342,032
30,985
684,149
(18,690,526)
(430,417)
(9,543,224)
12,345
2,958,671
(173,083)
(41,228,551)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,969,970
66,336,897
26,027,742
55,196,477
16,713,472
18,495,649
555,247
80,514
185,375,968
1,838,298
60,738,413
23,845,458
69,562,299
5,675,760
19,289,577
518,135
64,840
181,532,780
1 Details of land are maintained in a register held at the offices of Barberton Mines, Evander Mines and Phoenix Platinum, 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.
2 A total depreciation and amortisation charge of £10,337,211 has been recognised in the statement of profit or loss (2014: £10,023,361) and includes direct mining
depreciation of £10,185,964 (2014: £9,911,361) as per below.
Depreciation on property, plant and equipment and mineral right
Amortisation on intangible assets
Non-mining depreciation
Total mining depreciation
Non-mining amortisation
Direct mining depreciation
CONSOLIDATED
30 June 2015
£
30 June 2014
£
10,221,204
165,101
(49,094)
10,337,211
(151,247)
10,185,964
9,947,999
112,704
(37,342)
10,023,361
(112,000)
9,911,361
3 In the prior year the group purchased tailings for the BTRP for future , and originally classified the tailings as mineral rights and mineral property. The group has
subsequently re-classified the tailings to surface tailings acquired which more appropriately discloses its nature and purpose.
Pan African Resources
Integrated Annual Report 2015
131
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
16. PROPERTY, PLANT AND EQUIPMENT AND MINERAL RIGHTS
CONSOLIDATED
Cost
Balance at 30 June 2013
Transfer from assets under construction
Reclassification to surface tailings acquired3
Foreign currency translation reserve
Balance at 30 June 2014
Transfer to intangibles
Transfer from assets under construction
Additions
Disposal
Additions
Disposal
Disposal
Transfers
Transfers
Disposal
Foreign currency translation reserve
Balance at 30 June 2015
Accumulated depreciation
Balance at 30 June 2013
Charge for the year2
Foreign currency translation reserve
Balance at 30 June 2014
Charge for the year2
Foreign currency translation reserve
Balance at 30 June 2015
Carrying amount
At 30 June 2014
At 30 June 2015
Mineral rights
and mining
property4
£
Building
and
infrastructure
£
Land1
£
2,365,181
89,567,167
16,826,517
11,244,560
4,368,427
(1,315)
(555,247)
1,172,467
(131,672)
(4,952,286)
(1,994,393)
1,838,298
69,140,061
27,835,111
(7,656,686)
(1,129,942)
(1,466,161)
(2,196,230)
–
395,687
301,190
1,367,397
(7,755,450)
(2,629,295)
(1,248,676)
(1,647,040)
602,478
286,682
(8,401,648)
(3,989,653)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Plant and
machinery
£
Capital under
construction
£
Shafts and
exploration
£
Surface
tailings5
£
Other
£
Total
£
64,541,612
35,923,887
29,615,833
10,202,942
(21,407,327)
(40,175)
6,288,165
7,552,843
3,214,656
–
–
–
–
–
–
–
–
–
–
555,247
209,328
239,049,525
–
37,748
(1,598)
–
–
21,461,839
(2,913)
–
(393,896)
(14,919,573)
(3,782,467)
(11,725,625)
(5,174,758)
(5,132,407)
–
(37,137)
(41,165,863)
1,969,970
74,092,347
28,657,037
69,307,094
16,894,645
27,657,907
555,247
208,341
219,342,588
(141,946)
–
23,551,820
(23,588,815)
–
–
1,872,635
13,231,962
3,241,897
(1,389)
–
–
–
–
–
–
(6,335,389)
(431,615)
(2,067,003)
88,252,825
6,106,177
28,832,801
(37,112)
518,135
(11,019,912)
(17,299)
(9,624,720)
(5,090,610)
(170,136)
(987,036)
–
(165,511)
2,165,416
–
–
–
(230,176)
6,262
1,679,674
(14,110,617)
(181,173)
(9,162,258)
(5,940,068)
(280,229)
(1,065,115)
17,525
602
–
–
–
–
1,342,032
30,985
684,149
(18,690,526)
(430,417)
(9,543,224)
–
–
–
–
–
–
–
–
–
–
–
–
(141,946)
36,995
–
9,655
19,528,616
–
(1,389)
(17,068)
(15,966,538)
237,923
222,761,331
(111,289)
(29,559,848)
(37,826)
(9,947,999)
480
–
480
–
20,808
5,540,747
(127,827)
(33,966,620)
(40,076)
(10,221,204)
(17,525)
–
–
602
12,345
2,958,671
(173,083)
(41,228,551)
1,969,970
66,336,897
26,027,742
55,196,477
16,713,472
18,495,649
555,247
80,514
185,375,968
1,838,298
60,738,413
23,845,458
69,562,299
5,675,760
19,289,577
518,135
64,840
181,532,780
4 Included within this category are exploration assets (Evander South. Rolspruit and Poplar) arising from the acquisition of Evander Mines for
which the technical feasibility and commercial viability of extracting a mineral resource are not yet demonstrable, refer to below.
Opening balance 1 July 2014
Additions
Transfer to mineral right
Depreciation and amortisation
Foreign currency translation reserve
Closing balance 30 June 2015
Exploration
assets
£
32,899,922
–
(6,758,500)
–
(1,743,774)
24,397,648
Mineral rights
and mining
property
£
33,436,975
–
6,758,500
(1,248,676)
(2,606,034)
36,340,765
Total
Mineral rights
and mining
property
£
66,336,897
–
–
(1,248,676)
(4,349,808)
60,738,413
5 Surface tailings relate to long-term inventory tailings upon purchase of the Harper tailing storage facility located at Fairview in Barberton
Mines. The surface tailings will be amortised once remining occurs through the BTRP.
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
132 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
16. PROPERTY, PLANT AND EQUIPMENT AND MINERAL RIGHTS continued
Mineral rights
and mining
property
£
Building
and
infrastructure
£
Land
£
Plant and
Capital under
Shafts and
machinery
construction
exploration
Surface
tailings
£
Other
£
Total
£
COMPANY
Cost
Balance at 30 June 2013
Additions
Disposals
Foreign currency translation reserve
Balance at 30 June 2014
Additions
Sale of assets and liabilities to subsidiary1
Foreign currency translation reserve
Balance at 30 June 2015
Accumulated depreciation
Balance at 30 June 2013
Charge for the year
Disposals
Foreign currency translation reserve
Balance at 30 June 2014
Charge for the year
Sale of assets and liabilities to subsidiary1
Foreign currency translation reserve
Balance at 30 June 2015
Carrying amount
At 30 June 2014
At 30 June 2015
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 At the beginning of the current year the company sold its assets and liabilities at book value to Pan African Resources Management Services Company Proprietary Limited.
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
194,505
37,748
(1,599)
(34,668)
194,505
37,748
(1,599)
(34,668)
195,986
195,986
(195,160)
(195,160)
(826)
–
(826)
–
(109,364)
(36,638)
480
20,486
(109,364)
(36,638)
480
20,486
(125,036)
(125,036)
124,509
124,509
–
527
–
–
527
–
70,950
70,950
–
–
16. PROPERTY, PLANT AND EQUIPMENT AND MINERAL RIGHTS continued
Mineral rights
and mining
Building
and
property
infrastructure
Land
£
Plant and
machinery
£
Capital under
construction
£
Shafts and
exploration
£
Surface
tailings
£
Other
£
Total
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
194,505
37,748
(1,599)
(34,668)
194,505
37,748
(1,599)
(34,668)
195,986
195,986
(195,160)
(195,160)
(826)
–
(826)
–
(109,364)
(36,638)
480
20,486
(109,364)
(36,638)
480
20,486
(125,036)
(125,036)
–
–
124,509
124,509
527
–
527
–
70,950
70,950
–
–
Balance at 30 June 2013
COMPANY
Cost
Additions
Disposals
Foreign currency translation reserve
Balance at 30 June 2014
Additions
Sale of assets and liabilities to subsidiary1
Foreign currency translation reserve
Balance at 30 June 2015
Accumulated depreciation
Balance at 30 June 2013
Charge for the year
Disposals
Foreign currency translation reserve
Balance at 30 June 2014
Charge for the year
Sale of assets and liabilities to subsidiary1
Foreign currency translation reserve
Balance at 30 June 2015
Carrying amount
At 30 June 2014
At 30 June 2015
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 At the beginning of the current year the company sold its assets and liabilities at book value to Pan African Resources Management Services Company Proprietary Limited.
Pan African Resources
Integrated Annual Report 2015
133
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
134 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
17. OTHER INTANGIBLE ASSETS
CONSOLIDATED
SEPARATE
30 June 2015
£
30 June 2014
£
30 June 2015
£
30 June 2014
£
Software costs
Balance at the beginning of the year
214,330
340,484
23,108
Reclassification of software costs from property plant and
equipment and mineral rights (refer to note 16)
Sale of assets and liabilities to subsidiary
Additions
Current year amortisation
Foreign currency translation reserve
Balance at the end of the year
18. GOODWILL
141,946
–
–
–
25,740
38,617
(165,101)
(112,704)
(14,427)
202,488
(52,067)
214,330
–
(23,008)
–
–
(100)
–
–
–
–
25,359
(704)
(1,547)
23,108
Goodwill acquired in a business combination is allocated at acquisition to the cash-generating units (CGUs) that are expected to benefit
from that business combination. All the group’s goodwill has been allocated to Barberton Mines CGU.
CONSOLIDATED
SEPARATE
30 June 2015
£
30 June 2014
£
30 June 2015
£
30 June 2014
£
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 CGUs are determined from value-in-use calculations. The key assumptions for the value-in-use calculations
are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the year. Management
estimates the discount rate using post-tax rate of 7.36% (2014: 9.00%) for Barberton Mines, which reflects 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 ZAR460,000/kg (2014: ZAR440,000/kg over the life of projects. The life of mine was estimated at 20 years (2014:
19 years) for Barberton Mines at the end of the financial year.
Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.
The group prepares cash-flow forecasts derived from the most recent financial budgets approved by management.
Pan African Resources
Integrated Annual Report 2015
135
S
S
E
N
S
U
B
I
19. INVESTMENTS IN SUBSIDIARIES AND INVESTMENTS IN ASSOCIATE
At 30 June 2015 the company and group held the following shares in subsidiaries and associate:
Name of company
Country of
incorporation
Principal
activity
Barberton Mines
Phoenix Platinum
South Africa
South Africa
Mining
Mining
Auroch Minerals NL4
Australia
Exploration
Funding Company1
South Africa
Finance
Emerald Panther
Investments 91 Proprietary
Limited (Emerald Panther)2
South Africa
Holding
company
South Africa
Management
services and
administration
Pan African Resources
Management Services
Company Proprietary
Limited (PAR
Management Services)3
(at ZAR1 investment)
Listed available for sale
investment5
Other investments
CONSOLIDATED
SEPARATE
Proportion
of capital
effectively
held by
company
Carrying
amount
30 June 2015
£
Carrying
amount
30 June 2014
£
Carrying
amount
30 June 2015
£
Carrying
amount
30 June 2014
£
100%
100%
42%
100%
100%
100%
–
–
–
–
–
–
–
–
45,770,663
45,770,663
4,209,696
4,209,696
1,009,429
–
1,009,429
–
–
–
263
263
72,026,632
72,026,632
E
C
N
A
M
R
O
F
R
E
P
–
–
_
–
Canada
Mining
3.4%
904,710
_
904,710
108
116
–
Investment reconciliation
Opening balance
Loss in associate
Impairment of investment in Auroch Minerals NL
Loss on disposal of associate
Proceeds from sale of investment in Auroch Minerals NL
Purchase of shares in the available for sale investment
Fair value adjustment on the available for sale investment
Foreign currency translation reserve
Closing balance
904,818
1,009,545 122,911,964
123,016,683
CONSOLIDATED
SEPARATE
30 June 2015
£
30 June 2014
£
30 June 2015
£
30 June 2014
£
1,009,545
1,199,071 123,016,683
123,189,860
(127,950)
(173,177)
(127,950)
(173,177)
(58,424)
(139,970)
(277,732)
1,037,677
(70,679)
–
–
–
–
(58,424)
(139,970)
(277,732)
1,037,677
(70,679)
(467,649)
(16,349)
(467,641)
–
–
–
–
–
–
904,818
1,009,545 122,911,964
123,016,683
1 Funding Company was established for the purpose of providing funding for the group’s activities. Funding Company also provides treasury functions to the group.
2 Emerald Panther is a company acquired to facilitate the acquisition of Evander Mines from Harmony Gold Mining Company Limited, and therefore holds the investment in
Evander Mines. Emerald Panther holds 100% of Evander Gold Mines Limited and Evander Gold Mining Proprietary Limited, which are both incorporated in South Africa, and
operate in mining.
See footnotes 3, 4 and 5 on next page.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
136 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
19. INVESTMENTS IN SUBSIDIARIES AND INVESTMENTS IN ASSOCIATE continued
3 Pan African Resources Management Services Company Proprietary Limited was acquired within the group. Ordinary shares previously held by Evander Gold Mining Proprietary
Limited were transferred to Pan African Resources. This company was acquired to function as a management and other services provider and administrator to the group.
At the beginning of the current year, Pan African Resources sold its assets and liabilities to PAR Management Services at book value, with the exception of the investments in
subsidiaries, current taxation assets and liabilities, and trade receivables and payables directly for the account of the company as a group holding company. Refer below for
assets and liabilities sold:
Summary of assets and liabilities sold
Property, plant and equipment
Other non-current assets
Deferred tax asset
Current assets
Trade and other receivables
Cash
Non-current liabilities
Long-term liabilities
Current liabilities
Trade and other payables
Net assets sold
ZAR
£
1,693,944
93,659
6,601,879
365,023
400,699
69,147
22,155
3,823
(12,870,005)
(711,592)
(13,034,623)
(17,138,959)
(720,694)
(947,626)
4 Pursuant to a share sale and purchase agreement, dated 27 August 2012, relating to the sale of Manica Gold Projects, certain terms were amended between the contract parties
and as a result the company made a decision to sell its investment in Auroch Minerals (42% shareholding) for a total consideration of AUD2,000,000.
During the current year, Pan African Resources concluded the sale of its investment in Auroch Minerals NL and derecognised the investment from the statement of financial
position by recognising in the statement of profit and loss an impairment of £58,424, a loss in associate of £127,950 and a loss on sale of investment of £139,970. Impairment
arose due to continued challenges experienced within the mining environment and reducing gold prices which led to Auroch’s share price dropping to AUD0.03 at the date of
sale. Proceeds received during the current year and attributable to the sale of investment were as follows.
Proceeds received on 3 July 2014
Proceeds received on 21 November 2014
Opening balance 1 July 2014
Loss in associate
Carrying value before impairment
Impairment
Foreign currency reserve
Carrying value before sale
Proceeds
Loss on disposal of associate
Balance at year-end
CONSOLIDATED AND SEPARATE
AUD
150,000
350,000
500,000
ZAR
1,513,623
3,307,797
4,821,420
CONSOLIDATED AND SEPARATE
ZAR
£
10,556,778
(2,291,239)
8,265,539
(1,014,239)
–
7,251,300
(4,821,420)
(2,429,880)
–
1,009,429
(127,950)
881,479
(58,424)
(405,353)
417,702
(277,732)
(139,970)
–
At year-end the investment is a 3.4% holding and therefore carried at fair value as an available for sale investment.
5 During the year, the company purchased 1,750,850 shares in a listed entity for an amount of ZAR18.9 million. The entity is an exploration, development and gold mining
company focused on Southern Africa..
During the year, the group received dividends from the investment as follows:
10 March 2015
18 March 2015
23 March 2015
09 April 2015
04 May 2015
21 May 2015
CONSOLIDATED AND SEPARATE
ZAR
91,840
92,314
4,492
234,600
113,834
92,368
629,448
£
5,102
5,129
250
13,033
6,323
5,132
34,969
Pan African Resources
Integrated Annual Report 2015
137
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Barberton
Mines
£
Evander
Mines
£
Total
£
Y
G
E
T
A
R
T
S
2,405,162
14,568,551
16,973,713
109,193
–
305,604
923,188
414,797
923,188
(407,489)
(2,445,918)
(2,853,407)
2,106,866
13,351,425
15,458,291
41,770
14,718
56,488
252,537
1,574,716
1,827,253
(160,646)
(999,461)
(1,160,107)
2,240,527
13,941,398
16,181,925
20. REHABILITATION TRUST FUND
Funds held in trust fund (refer to note 27)
Opening balance as at 30 June 2013
Appreciation earned on the rehabilitation fund
Fair value adjustment
Foreign currency translation reserve
Closing balance as at 30 June 2014
Appreciation earned on the rehabilitation fund
Fair value adjustment
Foreign currency translation reserve
Closing balance as at 30 June 2015
The funds available from contributions are held within Pan African Resources Group Rehabilitation Trust.
The amounts are invested in a number of instruments, including interest-bearing short-term deposits, medium-term equity-linked notes
issued by commercial banks, equity share portfolios managed by asset managers.
The Evander Mines rehabilitation trust fund was transferred from Harmony Gold Mining Company Limited (Harmony).
Refer to note 27 for the associated rehabilitation provision disclosure.
21. INVENTORIES
CONSOLIDATED
SEPARATE
30 June 2015
£
30 June 2014
£
30 June 2015
£
30 June 2014
£
Consumable stores
Mineral stocks
Gold inventory
Provision for obsolete stock
3,102,272
483,044
–
(82,747)
2,590,889
2,066,648
801,828
(118,237)
3,502,569
5,341,128
Inventory recognised as cost of production
14,411,434
15,890,702
–
–
–
–
–
–
–
–
–
–
–
–
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
138 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
22. TRADE AND OTHER RECEIVABLES
Trade receivables
Provision for doubtful debtors
Other receivables and prepayments
VAT receivable
CONSOLIDATED
SEPARATE
30 June 2015
£
30 June 2014
£
30 June 2015
£
30 June 2014
£
5,731,102
8,216,871
(30,504)
(35,578)
1,519,648
2,338,764
1,100,114
2,414,973
9,559,010
11,696,380
–
–
21,557
19,974
41,531
–
–
60,426
–
60,426
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 debtors relating to other receivables, estimated by the group’s management based on the current
economic environment and individual debtor circumstances. The credit risk on liquid funds is limited because the counterparties are
dealt with in accordance with the group’s credit policy. Financial institutions are the major customer that represents more than 5% of the
trade receivables balance for the individual gold mining subsidiaries (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
Trade receivables
Revenue
CONSOLIDATED
30 June 2015
30 June 2014
18.0
22.0
5,731,102
8,216,871
141,076,883
154,551,058
The ageing of trade receivables decreased due to continued improved cash collection initiatives, especially from Evander Mines. Although
Phoenix Platinum holds a lower trade debtors book in relation to Barberton Mines and Evander Mines, the decrease in the debtors days is
also attributable to Phoenix Platinum decrease in trade debtors at year-end to £1.5 million (2014: £2.3 million). This is due to a prior year
five months PGM production build-up from Phoenix Platinum which was delivered to Western Platinum Limited (subsidiary of Lonmin PLC)
at the end of the 2014 financial year; however payment for these deliveries was only realised in the 2015 financial year, as a result of the
platinum sector strike delaying the processing of concentrates by Lonmin.
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 creditworthy customers and large institutions within South Africa.
The fair value of trade receivables is not materially different from the carrying value presented. Receivables have been pledged as security,
in terms of the revolving credit facility.
Pan African Resources
Integrated Annual Report 2015
139
S
S
E
N
S
U
B
I
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
3,328,850
5,618,323
888,498
1,803,545
CONSOLIDATED
SEPARATE
30 June 2015
£
30 June 2014
£
30 June 2015
£
30 June 2014
£
Included in cash and cash equivalent is restricted cash for an
amount of ZAR15.0 million. This amount has been remitted
to the company’s attorneys (Werkmans Attorneys) as a
deposit for the acquisition deal of the Uitkomst Colliery from
Shanduka Resources and Oakleaf for a reported amount of
ZAR200 million. At year-end the deal was not yet finalised for
consolidating into the group.
Credit facilities
The group has the following credit facilities:
Nedbank Limited revolving credit facility1
Rand Merchant Bank revolving credit facility1
ABSA Bank Limited revolving credit facility1
ABSA Bank Limited overdraft facility1
Rand Merchant Bank overdraft facility1
ABSA Bank Limited credit card facilities
Guarantee2
USD trading facility3
13,816,926
16,657,413
13,816,926
13,816,926
2,590,674
2,590,674
77,720
2,794,398
4,922,279
6,940,589
9,716,824
999,445
–
83,287
2,142,250
5,274,847
–
–
–
–
–
–
51,813
55,525
–
–
–
–
54,426,523
41,814,655
51,813
55,525
1 The group has secured a five year revolving credit facility with Nedbank Limited, ABSA Bank Limited and Rand Merchant Bank (refer to note 28). The facility carries an interest
rate of the monthly JIBAR rate plus 2.5% margin, and is secured against Barberton Mines, Evander Mines and Phoenix Platinum’s property, plant and equipment. The revolving
credit facility was utilised during the current year, and at year-end, there was an outstanding amount of £12.7 million (2014: nil) payable in relation to the facility and an unutilised
amount of £29.0 million (2014: £33.3 million). The ABSA Limited and Rand Merchant Bank overdraft facilities remain unsecured and unutilised at year-end. The overdraft facilities
attract interest that is linked to prime in South Africa.
2 The guarantees relate to £1,274,254 (2014: £1,365,525) for Eskom (electricity utility), £724,809 (2014: £776,725) for the Department of Minerals and Resources (DMR) and
other financial guarantees £795,336.
3 The USD trading facility relates to trading facilities held by Barberton Mines for the purposes of trading USD for ZAR on USD gold sales.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
140 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
24. SHARE CAPITAL
Authorised
2,000,000,000 (2014: 2,000,000,000) ordinary shares
of £0.01 each
Issued and fully paid up 1,831,494,763 (2014: 1,829,994,763)
ordinary shares of £0.01 each
The following cash issue of shares were made during the year:
CONSOLIDATED
SEPARATE
30 June 2015
£
30 June 2014
£
30 June 2015
£
30 June 2014
£
20,000,000
20,000,000
20,000,000
20,000,000
18,314,947
18,299,947
18,314,947
18,299,947
On 19 March 2015 1,500,000 shares were issued at 5 pence per share to Mr KC Spencer’s family trust (Strode Trust) upon exercising
historical share options.
During the prior financial year 7,160,500 shares were issued in relation to share options exercised:
• 9 September 2013: 3,000,000 shares issued at 5 pence per share
• 16 October 2013: 2,063,000 shares were issued as follows:
– 1,213,000 shares issued at 5 pence per share
– 850,000 shares issued at 4 pence per share
• 10 February 2014: 282,500 shares were issued at 4 pence per share
• 20 February 2014: 965,000 shares were issued at 4 pence per share
• 5 June 2014: 850,000 shares were issued at 4 pence per share.
Current number of equity-settled share options outstanding at 30 June 2015 is 1,122,000 (2014: 2,622,000), excluding the new issue of
equity options disclosed in note 34.
25. TRADE AND OTHER PAYABLES
Trade and other payables
Accruals and other payables
VAT payable
Other payables
CONSOLIDATED
SEPARATE
30 June 2015
£
30 June 2014
£
30 June 2015
£
30 June 2014
£
8,945,258
7,514,861
338,924
–
9,962,167
7,231,053
26,529
–
–
213,861
–
–
–
777,079
26,528
–
Total trade and other payables
16,799,043
17,219,749
213,861
803,607
The average credit period is:
Number of days
CONSOLIDATED
30 June 2015
30 June 2014
31
37
Creditors days have decreased marginally in line with debtors days indicating improved collection from debtors to settle short-term
obligations.
The fair value of trade payables is not materially different from the carrying value presented.
Pan African Resources
Integrated Annual Report 2015
141
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
26. CURRENT TAX
Current tax asset
Current tax liability
CONSOLIDATED
SEPARATE
30 June 2015
£
30 June 2014
£
30 June 2015
£
30 June 2014
£
827,298
503,784
854,568
141,574
147,911
2,037,092
–
–
Current taxes payable and receivable by the group relate to the South African Revenue Service (SARS).
27. LONG-TERM PROVISIONS
CONSOLIDATED
SEPARATE
Decommis-
sioning
and
rehabilitation
£
Decommis-
sioning
and
rehabilitation
£
Total
£
14,821,152
14,821,152
(340,530)
(340,530)
(2,447,455)
(2,447,455)
12,033,167
12,033,167
1,094,191
1,094,191
(877,991)
(877,991)
12,249,367
12,249,367
–
–
–
–
–
–
–
Total
£
–
–
–
–
–
–
–
Balance at 30 June 2013
Provided during the year
Foreign currency translation reserve
Balance at 30 June 2014
Provided during the year
Foreign currency translation reserve
Balance at 30 June 2015
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 following life of mine and rates:
Barberton Mines
BTRP
Evander Mines
ETRP1
Phoenix
1 ETRP was not commissioned for accounting purposes in the prior year.
30 June 2015
30 June 2014
Life of mine
Years
Risk free rate
%
Life of mine
Years
Risk free rate
%
20
15
16
16
28
8.74
8.67
8.67
8.67
8.61
19
15
17
–
28
8.31
8.31
8.31
–
8.31
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
142 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
28. LONG-TERM LIABILITIES
CONSOLIDATED
SEPARATE
Year ended
30 June 2015
£
Year ended
30 June 2014
£
Year ended
30 June 2015
£
Year ended
30 June 2014
£
Cash-settled share options
Opening balance
1,579,923
879,254
Sale of assets and liabilities to PAR Management Services
–
–
Expense for the year
Payments during the year
Transfer to current portion
294,627
1,607,709
(428,512)
(701,871)
–
–
714,603
(711,592)
–
–
–
Foreign currency translation reserve
(132,317)
(205,169)
(3,011)
Closing balance
Current portion
Long-term portion
Post-retirement benefits
Opening balance
Utilised for the year
Foreign currency translation reserve
Closing balance
Revolving credit facility
Opening balance
Drawdowns
Finance costs incurred1
Repayments of capital
Repayments of finance costs
Transfer to current portion
Foreign currency translation reserve
Closing balance
Current portion
Long-term portion
1,313,721
1,579,923
(933,152)
(1,136,372)
380,569
443,551
90,832
(6,677)
(5,620)
78,535
108,781
184
(18,133)
90,832
–
10,144,925
27,898,927
11,719,076
1,271,063
713,395
(14,299,642)
(21,729,582)
(1,337,774)
(724,899)
–
–
(800,069)
(122,915)
12,732,505
(1,118,559)
11,613,946
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Finance costs incurred exclude £7,907 (2014: nil), relating to a new general banking facility, which is separately disclosable from the RCF.
390,681
–
648,426
(233,386)
–
(91,118)
714,603
(560,882)
153,721
–
–
–
–
–
–
–
–
–
–
–
–
–
Pan African Resources
Integrated Annual Report 2015
143
S
S
E
N
S
U
B
I
28. LONG-TERM LIABILITIES continued
Gold loan
Opening balance
Gold loan receipts
Gold loan repayments
Fair value adjustment
Transfer to current portion
Foreign currency translation reserve
Closing balance
Current portion
Long-term portion
Total
CONSOLIDATED
SEPARATE
Year ended
30 June 2015
£
Year ended
30 June 2014
£
Year ended
30 June 2015
£
Year ended
30 June 2014
£
11,225,365
–
–
11,236,649
(3,396,717)
–
(120,490)
128,484
–
–
(472,459)
(139,768)
7,235,699
11,225,365
(2,995,767)
(3,618,431)
4,239,932
16,312,982
7,606,934
8,141,317
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
153,721
The gold loan has been designated as an instrument to be measured at amortised cost.
Current and non-current portions of long-term liabilities
Current portion
Non-current portion – capital to be paid on maturity
CONSOLIDATED
SEPARATE
Year ended
30 June 2015
£
Year ended
30 June 2014
£
Year ended
30 June 2015
£
Year ended
30 June 2014
£
5,047,478
16,312,982
4,754,803
8,141,317
21,360,460
12,896,120
–
–
–
560,882
153,721
714,603
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
144 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
28. LONG-TERM LIABILITIES continued
Terms of the revolving credit facility
During the year under review the terms of the revolving credit facility were revised to the following:
Facility amount
Accordian option
Lenders
Borrower
Interest rate
Revised terms
ZAR800,000,000
Original terms
ZAR600,000,000
ZAR300,000,000 exercisable with two years at the
inception of the revolving credit facility
Rand Merchant Bank (a division of FirstRand Bank
Limited), ABSA Limited, Nedbank Limited
Rand Merchant Bank (a division of FirstRand Bank
Limited), ABSA Limited, Nedbank Limited
Pan African Resources Funding Company
Proprietary Limited
Pan African Resources Funding Company
Proprietary Limited
JIBAR (quoted at 5.958% at year-end), at a monthly
payment selection period
JIBAR (quoted at 5.73% at year-end – 30 June
2014) at a monthly payment selection period
Interest rate margin
2.5%
2.8%
Commitment fee
35% of the margin per annum, calculated on a
day-to-day basis on the undrawn portion of the
maximum available commitment
35% of the margin per annum, calculated on a
day-to-day basis on the undrawn portion of the
maximum available commitment
Term of loan
Five years from (17 June 2015)
Five years from (7 March 2013)
Repayment period
Full repayment of the outstanding at the end
of five years
Full repayment of the outstanding at the end
of five years.
Final repayment date
17 June 2020
17 March 2018
Financial covenant limits
The ratio of the net debt to equity must be less
than 1:1 (measured on a semi-annual basis)
The ratio of the net debt to equity must be less
than 1:1 (measured on a semi-annual basis)
The interest cover ratio (refer to note 30) must
be greater than four times (measured on a semi-
annual basis)
The interest cover ratio (refer to note 30) must
be greater than four times (measured on a semi-
annual basis)
The ratio of net debt to EBITDA (refer to note 30),
as defined in the agreement, must be less than 2.5:1
(measured on a semi-annual basis)
The ratio of net debt to EBITDA (refer to note 30),
as defined in the agreement, must be less than 2.5:1
(measured on a semi-annual basis)
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 Proprietary Limited
Continuing covering mortgage bond B1740/2013 – Evander Mines/Bowwood and Main No. 40 Proprietary Limited
Special notarial bond BN6785/2013 – Barberton Mines/Bowwood and Main No. 40 Proprietary Limited
Special notarial bond BN6912/2013 – Evander Mines/Bowwood and Main No. 40 Proprietary Limited
General notarial bond BN7075/2013 – Barberton Mines/Bowwood and Main No. 40 Proprietary Limited
General notarial bond BN6592/2013 – Evander Mines/Bowwood and Main No. 40 Proprietary Limited
Ceded rights as security for the revolving credit facility
Bank accounts
Debts1
Insurance2
Insurance proceeds
The above listed rights are ceded whether actual, prospective or contingent, direct or indirect, whether a claim to payment of money or to
the performance of any other obligation, and whether or not the said rights and interest were within the contemplation of the parties at
signature date.
1 All claims which the cedent has or may in future have in respect of agreements entered into or to be entered into by the cedent pursuant to which goods and/or services are
provided (or to be provided) to or by the cedent, including but not limited to book debts against trade debtors from time to time.
2 All contracts and policies of insurance and reinsurance of any kind which are effected and maintained by or on behalf of the cedent.
Pan African Resources
Integrated Annual Report 2015
145
S
S
E
N
S
U
B
I
28. LONG-TERM LIABILITIES continued
Terms of the gold loan
During the prior financial year, in May 2014, a gold loan transaction of ZAR200 million was entered into with ABSA Bank Limited as a
counterparty. The purpose of this gold loan was to provide funds for the ETRP constructed at Evander Mines. The gold loan is repaid
quarterly in gold ounces produced from the Evander Mines operation, with the repayments commencing on July 2014 to end on
October 2017. Refer to terms below.
Effective delivery price per ounce
Effective delivery price per kg
Repayment period
Final repayment date
Financial covenant limits
ZAR12,694
ZAR408,129
3.5 years
31 October 2017
The ratio of the net debt to equity must be less than 1:1 (measured on a semi-annual
basis)
The interest cover ratio (refer to note 30) must be greater than four times (measured
on a semi-annual basis)
The ratio of net debt to EBITDA (refer to note 30), as defined in the agreement, must
be less than 2.5:1 (measured on a semi-annual basis)
Security of gold loan
Security of the gold loan is included in the revolving credit facility security package
Gold loan repayment schedule
Delivery date
31 July 2015
31 October 2015
29 January 2016
29 April 2016
29 July 2016
31 October 2016
31 January 2017
28 April 2017
31 July 2017
31 October 2017
Ounces
delivered
1,160,83
1,143,97
1,131,29
1,118,62
1,105,94
1,093,96
1,081,14
1,067,07
1,055,50
1,042,69
11,001,01
Group cash-settled share options
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 and the remuneration committee 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.
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 company’s 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 pay as you
earn (PAYE) and all other taxes and contributions via the payroll of the company or the relevant subsidiary.
These taxes are for the account of the participant.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
146 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
28. LONG-TERM LIABILITIES continued
Group cash-settled share options continued
No share appreciation rights settlements can be made until after the period, calculated from the date the notional shares were allocated, of:
Initial issue
• Two years has elapsed, in which event not more than 25% of the total number of notional shares allocated can be surrendered
• Three years has elapsed, in which event not more than 50% of the total number of notional shares allocated can be surrendered
• Four years has elapsed, in which event all of the notional shares allocated can be surrendered.
Top up issues
• One year has elapsed, in which event not more than 25% of the total number of notional shares allocated can be surrendered
• Two years has elapsed, in which event not more than 50% of the total number of notional shares allocated can be surrendered
• Three years has elapsed, in which event not more than 75% of the total number of notional shares allocated can be surrendered
• Four years has elapsed, in which event all of the notional shares allocated can be surrendered
• 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:
Group cash-settled share options
30 June 2015
30 June 2014
Weighted
average
exercise
price
ZAR
Number
of
options
1.92
1.18
2.20
2.37
1.61
53,275,980
18,715,657
(10,456,992)
(3,095,555)
58,439,090
Weighted
average
exercise
price
ZAR
1.15
2.24
1.15
2.11
1.92
Number
of
options
52,355,077
12,742,142
(8,195,411)
(3,625,828)
53,275,980
Outstanding at 1 July
Granted during the year
Exercised during the year
Forfeited in the year
Outstanding and exercisable at 30 June
Cash-settled share options are valued annually at fair value.
Pan African Resources
Integrated Annual Report 2015
147
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
28. LONG-TERM LIABILITIES continued
These fair values were calculated using the binomial pricing model. The inputs in the model were as follows:
Weighted average share price
Weighted average exercise/strike price
Expected volatility
Expected life
Risk free rate
Expected dividend yield
30 June 2015
30 June 2014
R2.04
R2.15
30.00%
R2.58
R2.16
30.00%
3 – 6 years
3 – 6 years
6.94 – 7.89%
7.13 – 7.79%
4.00%
4.00%
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Participation in share-based and other long-term incentive schemes is restricted to employees and directors as described above.
The group recognised total income of £340,996 (expense in 2014: £1,738,093) relating to cash-settled share-based payment transactions
during the year, as a result of the share price decreasing. During the year, the group entered into an employee share ownership scheme
transaction at Barberton Mines level. Refer to note 39.
E
C
N
A
M
R
O
F
R
E
P
CEO long-term incentive
To incentivise the CEO and align the interests of the CEO with that of the group, and to ensure retention during the three year contract
term, the following long-term incentive was put in place on 28 February 2015. The CEO no longer participates in the group share
appreciation scheme:
•
Cash or equity-settled payment at the end of the three year contract term of 4,000,000 Pan African Resources shares, issued for no
consideration, vesting only at the end of the CEO’s contract term
• Cash or equity-settled payment of a maximum number of a further 4,000,000 Pan African Resources shares, issued for no consideration,
vesting only at the end of the CEO’s contract term. These shares will only be issued upon meeting certain pre-defined remco criteria,
which are determined annually
• The CEO will therefore be eligible for a minimum number of 4,000,000 Pan African Resources shares and maximum number of 8,000,000 Pan
African Resources shares at the end of his contract term.
At year-end this incentive scheme was treated as a cash-settled share option scheme and a liability of £71,977 was recognised in the
statement of financial position.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
148 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
28. LONG-TERM LIABILITIES continued
Vesting schedule 2015
Description
Grant date
Vesting
period
years
Vesting
period
days
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
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
Tranche 1
Tranche 2
Tranche 3
Tranche 1
Tranche 2
Tranche 3
Tranche 1
Tranche 2
Tranche 3
Tranche 1
11 May 2011
11 May 2011
11 May 2011
1 March 2013
1 March 2013
1 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
1 July 2013
1 July 2013
1 July 2013
1 August 2013
1 August 2013
1 August 2013
27 September 2013
27 September 2013
27 September 2013
13 November 2013
13 November 2013
13 November 2013
1 April 2014
1 April 2014
1 April 2014
27 May 2014
27 May 2014
27 May 2014
1 July 2014
1 July 2014
1 July 2014
1 March 2015
1 March 2015
1 March 2015
28 February 2015
2
3
4
2
3
4
2
3
4
2
3
4
2
3
4
2
3
4
2
3
4
2
3
4
2
3
4
2
3
4
2
3
4
2
3
4
1
2
3
3
Vesting date
10 May 2013
10 May 2014
10 May 2015
1 March 2015
731
1,096
1,461
731
1,096
29 February 2016
1,461
28 February 2017
731
1,096
1,461
731
1,096
1,461
731
1,096
1,461
731
1,096
1,461
731
1,096
1,461
1 April 2015
31 March 2016
31 March 2017
1 May 2015
30 April 2016
30 April 2017
1 June 2015
31 May 2016
31 May 2017
1 July 2015
30 June 2016
30 June 2017
1 August 2015
31 July 2016
31 July 2017
731 27 September 2015
1,096 26 September 2016
1,461 26 September 2017
731 13 November 2015
1,096 12 November 2016
1,461 12 November 2017
731
1,096
1,461
731
1,096
1,461
731
1,096
1,461
366
731
31 March 2016
31 March 2017
31 March 2018
26 May 2016
26 May 2017
26 May 2018
30 June 2016
30 June 2017
30 June 2018
29 February 2016
28 February 2017
1,096
28 February 2018
1,096
28 February 2018
Valuation
ZAR
Options
granted
Options
expected
to vest
3,572,511
3,572,511
7,145,023
859,828
859,828
3,572,511
3,572,511
7,145,023
859,828
859,828
1,719,653
1,719,653
850,121
850,121
850,121
850,121
1,700,241
1,700,241
871,859
871,859
871,859
871,859
1,743,713
1,743,713
563,864
563,864
563,864
563,864
1,127,727
1,127,727
245,455
245,455
490,909
1,500,000
1,500,000
3,000,000
221,515
221,515
443,030
126,845
126,845
253,691
727,612
727,612
245,455
245,455
490,909
1,500,000
1,500,000
3,000,000
221,515
221,515
443,030
126,845
126,845
253,691
727,612
727,612
1,455,224
1,455,224
391,250
391,250
782,500
1,525,170
1,525,170
3,050,339
1,538,173
1,538,173
1,538,634
8,000,000
391,250
391,250
782,500
1,525,170
1,525,170
3,050,339
1,538,173
1,538,173
1,538,634
8,000,000
58,439,090
58,439,090
0,91
0,91
0,91
0,39
0,39
0,39
0,46
0,46
0,46
0,54
0,54
0,54
0,46
0,46
0,46
0,46
0,46
0,46
0,52
0,52
0,52
0,45
0,45
0,45
0,39
0,39
0,39
0,51
0,51
0,51
0,39
0,39
0,39
0,57
0,57
0,57
0,59
0,59
0,59
–
28. LONG-TERM LIABILITIES continued
Vesting schedule 2014
Description
Grant date
Vesting
period
years
Vesting
period
days
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
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
Tranche 1
Tranche 2
Tranche 3
11 May 2011
11 May 2011
11 May 2011
1 March 2013
1 March 2013
1 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
1 July 2013
1 July 2013
1 July 2013
29 August 2013
29 August 2013
29 August 2013
27 September 2013
27 September 2013
27 September 2013
13 November 2013
13 November 2013
13 November 2013
1 April 2014
1 April 2014
1 April 2014
1 May 2014
1 May 2014
1 May 2014
2
3
4
2
3
4
2
3
4
2
3
4
2
3
4
2
3
4
2
3
4
2
3
4
2
3
4
2
3
4
2
3
4
Vesting date
11 May 2013
11 May 2014
11 May 2015
1 March 2015
1 March 2016
1 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
1 July 2015
1 July 2016
1 July 2017
731
1,096
1,461
731
1,096
1,461
731
1,096
1,461
731
1,096
1,461
731
1,096
1,461
731
1,096
1,461
731
29 August 2015
1,096
1,461
29 August 2016
29 August 2017
731 27 September 2015
1,096 27 September 2016
1,461 27 September 2017
731 13 November 2015
1,096 13 November 2016
1,461 13 November 2017
731
1,096
1,461
731
1,096
1,461
1 April 2016
1 April 2017
1 April 2018
1 May 2016
1 May 2017
1 May 2018
Pan African Resources
Integrated Annual Report 2015
149
S
S
E
N
S
U
B
I
Valuation
ZAR
Options
granted
Options
expected
to vest
1,44
1,44
1,44
0,78
0,78
0,78
0,86
0,86
0,86
0,97
0,97
0,97
0,86
0,86
0,86
0,86
0,86
0,86
0,94
0,94
0,94
0,84
0,84
0,84
0,76
0,76
0,76
0,90
0,90
0,90
0,74
0,74
0,74
3,572,511
3,572,511
3,572,511
3,572,511
7,145,022
7,145,022
1,604,717
1,604,717
1,604,717
1,604,717
3,209,434
3,209,434
3,275,055
3,275,055
3,275,055
3,275,055
6,550,110
6,550,110
871,859
871,859
871,859
871,859
1,743,717
1,743,717
563,864
563,864
563,864
563,864
1,127,727
1,127,727
245,455
245,455
490,908
245,455
245,455
490,908
1,500,000
1,500,000
1,500,000
1,500,000
3,000,000
3,000,000
221,515
221,515
443,030
168,909
168,909
337,818
727,612
727,612
221,515
221,515
443,030
168,909
168,909
337,818
727,612
727,612
1,455,220
1,455,220
567,500
567,500
567,500
567,500
1,135,000
1,135,000
53,275,980
53,275,980
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
150 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
29. DEFERRED TAXATION
CONSOLIDATED
SEPARATE
30 June 2015
£
30 June 2014
£
30 June 2015
£
30 June 2014
£
Note
Arising from temporary differences relating to:
Property, plant and equipment
Provisions
Investment in rehabilitation trust
Other
Net deferred tax liabilities
Reconciliation of deferred tax liabilities:
46,253,745
45,125,596
(4,407,102)
(4,272,995)
3,283,461
2,609,133
(5,842,045)
(108,157)
39,288,059
43,353,577
Net deferred liabilities at the beginning of the year
43,353,577
54,049,440
Deferred tax charge for the year
Foreign currency translation reserve
Net deferred liabilities at the end of the year
Arising from temporary differences relating to:
Provisions
Other
Reconciliation of deferred tax assets:
13
(1,252,133)
(1,765,459)
(2,813,385)
(8,930,404)
39,288,059
43,353,577
328,127
(379)
327,748
174,199
192,368
366,567
–
–
–
–
–
–
–
–
–
–
–
–
Net deferred assets at the beginning of the year
366,567
312,798
Sale of assets and liabilities to subsidiary
Deferred tax credit for the year
Foreign currency translation reserve
Net deferred assets at the end of the year
13
–
(15,353)
(23,466)
327,748
–
153,436
(99,667)
366,567
366,567
(365,023)
–
(1,544)
–
–
–
–
–
–
–
–
–
–
174,199
192,368
366,567
267,281
–
153,436
(54,150)
366,567
Unredeemed capex
Phoenix Platinum
Evander Mines
At year-end the group has the following assessed losses carried forward
Evander Mines
Total
CONSOLIDATED
30 June 2015
£
30 June 2014
£
4,967,775
16,684,726
21,652,501
6,889,777
7,725,719
14,615,496
4,565,108
4,565,108
–
–
Pan African Resources
Integrated Annual Report 2015
151
S
S
E
N
S
U
B
I
30. 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.
CONSOLIDATED
SEPARATE
30 June 2015
£
30 June 2014
£
30 June 2015
£
30 June 2014
£
Components of capital and financial covenants:
Cash and cash equivalents
Interest bearing debt/gold loan
(3,328,850)
(5,618,323)
888,498
(1,803,545)
19,968,204
11,225,365
–
–
Net interest bearing liabilities/(assets)
16,639,354
5,607,042
888,498
(1,803,545)
Equity
147,167,487
159,396,109
147,925,939
111,102,442
Net debt to equity ratio (ratio)1
0,11
0,04
Finance costs of the revolving credit facilities
1,271,063
713,395
0,01
–
0,02
–
Earnings before interest and taxation
17,912,084
34,130,214
53,554,603
(738,676)
Interest cover ratio
14
48
–
–
Adjusted EBITDA is represented by earnings before interest,
taxation, depreciation and amortisation, loss on disposal of
associate, impairments and loss on disposal of assets held for
sale.
Net debt to adjusted EBITDA
Financial covenant limits:
The ratio of the net debt to equity must be less than 1:1
(measured semi-annually).
The interest cover ratio must be greater than four times
(measured semi-annually).
The ratio of net debt to adjusted EBITDA must be less than
2.5:1 (measured semi-annually).
Categories of financial instruments:
Financial assets2:
Cash and cash equivalents
Investment in associate
Listed available for sale investment
Rehabilitation trust fund
Receivables
Financial liabilities:
Trade and other payables
Long-term liabilities
Current portion of long-term liabilities
28,447,689
44,165,423
53,752,997
(738,676)
0,58
0,13
0,02
2,44
3,328,850
–
904,710
5,618,323
1,009,545
888,498
–
1,803,545
1,009,429
–
904,710
16,181,925
13,351,425
5,731,102
8,181,293
–
–
–
–
–
16,460,119
17,193,220
213,861
21,360,460
5,047,478
8,141,317
4,754,803
–
–
777,079
153,721
560,882
1 Net debt is calculated on cash and cash equivalents less interest bearing debt.
2 At year-end the group did not have trade receivables that are past overdue and not impaired.
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 any financial derivatives is approved by the board of directors, who also on a continuous basis provide guidance on managing
foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment
of excess liquidity. Exposure limits are reviewed on a continuous basis. The group does not enter into or trade financial instruments, including
derivative financial instruments, for speculative use.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
152 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
30. FINANCIAL INSTRUMENTS continued
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 £30,504 (2014: £35,578) relating to other receivables, estimated by the group’s management
based on the current economic environment and individual debtor circumstances. The credit risk on liquid funds is limited because the
counterparties are dealt with in accordance with the group’s credit policy. Financial institutions are a major customer that represents more
than 5% of the trade receivables balance for the individual gold mining subsidiaries (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%
Financial institutions
Western Platinum Limited (subsidiary of Lonmin PLC)
Market risk
CONSOLIDATED
30 June 2015
£
30 June 2014
£
4,233,646
1,497,456
5,731,102
5,726,230
2,285,276
8,011,506
The group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates, commodity prices and
investments. 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. Investment risk is managed by reviewing the portfolio’s constitution, risk profile and returns on
an annual basis.
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 ensures USD receipts are converted into ZAR as quickly
and economically as possible.
Commodity price and foreign exchange rate risk
The group may enter into forward contracts to hedge its 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.
Pan African Resources
Integrated Annual Report 2015
153
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
30 June 2015
30 June 2014
Closing rate
Average rate
Closing rate
Average rate
19.30
12.28
18.00
11.45
18.01
10.58
16.88
10.35
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
CONSOLIDATED
30 June 2015
30 June 2014
1.212
1,303
E
C
N
A
M
R
O
F
R
E
P
Impact of 10%
currency or
gold price
movement
on profit
£
9,936,378
11,701,311
30. FINANCIAL INSTRUMENTS continued
Currency and commodity price risk
Currency and gold spot price
GBP/ZAR exchange rate
USD/ZAR exchange rate
USD gold spot price (USD/oz) received
Foreign currency/gold price sensitivity
2015
2014
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:
2015
Assets
Liabilities
2014
Assets
Liabilities
Impact of
10% currency
movement on
translation
reserve
£1
17,217,727
15,652,479
22,350,305
20,318,459
23,510,399
21,373,090
24,011,644
21,828,767
1 The functional currency within the group is ZAR therefore the sensitivity details the effect of the GBP/ZAR exchange rate on the foreign currency translation reserve.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
154 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
30. FINANCIAL INSTRUMENTS continued
Commodity zero cost collar
The group entered into three zero cost collar gold transactions during the year, similar to transactions that were undertaken in the prior
year. During the current financial year, the group realised a profit of £2,486,608 upon agreeing to realise the three contracts.
CONSOLIDATED
SEPARATE
30 June 2015
£
30 June 2014
£
30 June 2015
£
30 June 2014
£
Financial instruments (derivatives)
Opening balance
Financial instruments during the year
Fair valuing of financial instruments
–
–
2,486,608
2,310,426
–
–
Financial instruments realised during the year1
(2,486,608)
(2,310,426)
Closing balance
–
–
1 The zero cost collar transactions were traded on behalf of the mining operations in the current financial year.
–
–
–
–
–
–
2,310,426
–
(2,310,426)
–
CONSOLIDATED
30 June 2015
30 June 2014
Cost collar derivative profits
Cash profits realised on the statement of profit or loss and other comprehensive income
2,486,608
2,310,426
Pan African Resources
Integrated Annual Report 2015
155
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
30. FINANCIAL INSTRUMENTS continued
Commodity zero cost collar continued
Terms of the zero cost collar gold transaction:
Y
G
E
T
A
R
T
S
30 June 2015
30 June 2014
Contract one
Contract two
Contract three
Contract one
Contract two
Call option terms:
Trade date
Commodity
Total notional
quantity
Option style
Option type
Commodity option
buyer
Option term
30 September 2014
30 September 2014
1 July 2014
20 August 2013
24 January 2014
Gold
Gold
Gold
Gold
Gold
22,500 ounces
(700 kilograms)
40,000 ounces
(1,244 kilograms)
70,000 ounces
(2,177 kilograms)
78,000 ounces
(2,426 kilograms)
60,000 ounces
(1,866 kilograms)
Asian
Call
Asian
Call
Asian
Call
Asian
Call
Asian
Call
ABSA Bank Limited
FirstRand Bank
Limited
FirstRand Bank
Limited
ABSA Bank Limited ABSA Bank Limited
From and including
1 October 2015, to
and including
30 September 2016
(1 year)
From and including
1 October 2014, to
and including
30 September 2015
(1 year)
From and including
1 July 2014, to
and including
30 June 2016
(2 years)
From and including
1 September 2013,
to and including
31 August 2015
(2 years)
From and including
1 February 2014, to
and including
31 January 2016
(2 years).
Strike price per unit
ZAR435,000 per
kilogram
ZAR484,000 per
kilogram
ZAR529,008 per
kilogram
ZAR502,815 per
kilogram
ZAR 519,237 per
kilogram
Put option terms:
Trade date
Commodity
Total notional
quantity
Option style
Option type
Commodity option
buyer
Option term
30 September 2014
30 September 2014
1 July 2014
20 August 2013
24 January 2014
Gold
Gold
Gold
Gold
Gold
45,000 ounces
(1,400 kilograms)
40,000 ounces
(1,244 kilograms)
70,000 ounces
(2,177 kilograms)
78,000 ounces
(2,426 kilograms)
60,000 ounces
(1,866 kilograms)
Asian
Put
Asian
Put
Asian
Put
Asian
Put
Asian
Put
ABSA Bank Limited
FirstRand Bank
Limited
FirstRand Bank
Limited
30 September 2016
(1 year)
30 September 2015
(1 year)
30 June 2016
(2 years)
ABSA Bank Limited ABSA Bank Limited
31 August 2015
(2 years)
ZAR425,012 per
kilogram
31 January 2016
(2 years)
ZAR430,012 per
kilogram
Strike price per unit
ZAR435,000 per
kilogram
ZAR425,000 per
kilogram
ZAR440,015 per
kilogram
Realised profits1
922,719
966,667
597,222
1,777,251
533,175
1 Redeemed during the year and no cost collar transaction was open at year-end.
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.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
156 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
30. FINANCIAL INSTRUMENTS continued
Interest rate sensitivity
The group has at year-end drawn down from its revolving credit facility, which is quoted on JIBAR rates (refer to note 28). Refer below for
revolving credit facility loan sensitivity on interest rates variations.
Interest variation impact on the revolving credit facility loan
10% decrease
in interest
rates
5% decrease
in interest
rates
Revolving
credit
facility
5% increase
in interest
rates
10% increase
in interest
rates
245,663,614
245,700,482
245,737,349
245,774,216
245,811,084
12,728,685
12,730,595
12,732,505
12,734,415
12,736,326
ZAR
GBP
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. This framework
involves constant weekly monitoring of the group’s cash position, cash flow forecast, and matching maturity profiles of financial assets and
liabilities to enable management of the liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowings facilities.
The group has access to financing facilities at the Funding Company, of which £12,694,301 relating to the revolving credit facility
was drawn down as at 30 June 2015 (30 June 2014: nil). A gold loan of £7,235,699 (30 June 2014: £11,225,364) was outstanding at
year-end (refer to note 28). The group expects to meet its other obligations from operating cash flows and proceeds of maturing financial
assets.
Liquidity risk analysis
The following table indicates the group’s remaining contractual maturity from its financial liabilities:
CONSOLIDATED
2015
Trade and other payables
Long-term liabilities (non-interest bearing)
Long-term liabilities (interest bearing)
Other short-term liabilities
2014
Trade and other payables
Long-term liabilities (non-interest bearing)
Long-term liabilities (interest bearing)
Other short-term liabilities
SEPARATE
2015
Trade and other payables
Long-term liabilities
Other short-term liabilities
2014
Trade and other payables
Long-term liabilities
Other short-term liabilities
Weighted
average
interest
rate
£
Less than
12 months
£
1 – 5 years
£
Total
£
–
–
16,460,119
–
16,460,119
3,928,919
4,699,036
8,627,955
8,46%
1,118,559
11,613,946
12,732,505
–
–
–
8,53%
–
–
–
–
–
–
–
–
–
–
17,193,220
–
17,193,220
4,754,803
8,141,317
12,896,120
–
–
213,861
–
–
777,079
560,882
–
–
–
–
–
153,721
–
–
–
213,861
–
–
777,079
714,603
–
Pan African Resources
Integrated Annual Report 2015
157
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
30. FINANCIAL INSTRUMENTS continued
Fair value of financial instruments
The directors consider that the carrying amounts of financial assets and liabilities recorded approximate their fair values.
Fair value hierarchy
The following is an analysis of the financial instruments that are measured at fair value. They are grouped into levels I to 3 based on the
extent to which fair value is observable.
The levels are classified as follows:
Level 1 – fair value is based on quoted prices in active markets for identical financial assets or liabilities
Level 2 – fair value is determined using inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (i.e. prices) or indirectly (i.e. derived from prices)
Level 3 – fair value is determined on inputs not based on observable market data.
30 June 2015
Financial assets1
Rehabilitation trust fund
30 June 2014
Rehabilitation trust fund
Derivative financial liabilities
Level 1
Level 2
Level 3
Total
904,710
16,181,925
13,351,425
–
–
–
–
11,225,365,00
–
–
–
–
904,710
16,181,925
13,351,425
11,225,365
1 The fair value of the available for sale investment is treated as level 1 of the fair value hierarchy, as its market share price is quoted on a stock exchange.
31. POST-RETIREMENT BENEFIT INFORMATION
Predominantly most 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 Pension 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 profit or loss and other comprehensive income
of £5,503,560 (2014: £4,747,602) at group level and nil (2014: £112,853) at company level represent employer contributions payable to
the schemes by the group and company at rates specified in the rules of the scheme. The calculation of the provision for post-retirement
medical benefits is performed internally by management using the South African Revenue Services life expectancy tables as the benefits
payable are a fixed amount per pensioner. The balance of post-retirement medical benefits was £78,535 (2014: £90,832).
32. COMMITMENTS, CONTINGENT LIABILITIES AND GUARANTEES
Commitments
The group had outstanding open orders contracted for at year-end of £1,182,823 (2014: £4,986,259).
Authorised commitments for the new financial year not yet contracted for totalled £14,046,896 (2014: £19,061,631).
The group has committed £10,362,694 in the financial year to Oakleaf and Shanduka, upon completion of the conditions precedent in the
purchase agreement, relating to the Uitkomst Colliery acquisition.
Contingent liabilities
The group had no contingent liabilities in the current financial year or prior year.
Guarantees
The group had guarantees of £1,274,254 (2014: £1,365,525) in favour of Eskom, £724,809 (2014: £776,725) in favour of the Department
of Mineral Resources and other financial guarantees of £795,336 at year-end.
Company
There were no commitments, contingent liabilities and guarantees for the company for the year ended 30 June 2015 (2014: £nil), except
for the operating lease commitments disclosed in note 7.
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
158 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
33. DIRECTORS’ EMOLUMENTS
The key management personnel for which remuneration has been disclosed below are considered to be the executive directors, non-
executive directors and RA Holding:
CONSOLIDATED
SEPARATE
Year ended
30 June 2015
£
Year ended
30 June 2014
£
Year ended
30 June 2015
£
Year ended
30 June 2014
£
747,100
295,662
615,085
–
1,042,762
615,085
–
–
–
139,508
110,845
250,353
1,293,115
146,004
–
146,004
761,089
139,508
110,845
250,353
250,353
615,085
–
615,085
146,004
–
146,004
761,089
Share
option
taxable
benefit
£
Basic
remune-
ration
£
Retire-
ment
fund
£
Life and
disability
plan
£
Allow-
ances
£
Other
remune-
ration
£
Bonuses
£
Total
30 June
2015
£
Total
30 June
2014
£
Executive directors
Emoluments
Share options exercised
Total
Non-executive directors
Emoluments
Share options exercised
Total
Total remuneration
Individual
Executive
Mr RA Holding2
167,356
160,627
26,168
3,268
9,851
54,826
146,836
568,932
300,021
128,306
136,427
18,167
2,777
12,484
–
–
50,926
–
–
–
–
–
943
–
–
–
–
123,800
421,961
100,096
–
–
51,869
–
–
214,968
295,662
347,980
44,335
6,045
23,278
54,826
270,636 1,042,762
615,085
Mr JAJ Loots3
Mr GP Louw4
Miss YB Sitole
Total
Non-executive
Mr RG Still6
Mrs P Mahanyele1
–
–
Mr KC Spencer
110,845
Mrs HH Hickey
Mr T Mosololi
Mr RM Smith5
Mr JAJ Loots1
–
–
–
–
Total
110,845
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
27,788
41,709
27,676
24,607
17,728
–
139,508
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
26,931
27,788
28,983
152,554
44,885
27,676
24,979
24,607
10,758
17,728
–
–
9,468
250,353
146,004
1 Directors’ fees accruing to these directors are paid by the company to Shanduka Group Proprietary Limited.
2 Mr RA Holding resigned as chief executive officer with effect from 1 March 2015.
3 Mr JAJ Loots was appointed chief executive officer with effect from 1 March 2015.
4 Mr GP Louw was appointed as financial director with effect from 1 March 2015.
5 Mr RM Smith was appointed as a non-executive director from 8 September 2014.
6 Mr RG Still resigned as a non-executive director with effect from 1 July 2014.
Pan African Resources
Integrated Annual Report 2015
159
S
S
E
N
S
U
B
I
33. DIRECTORS’ EMOLUMENTS continued
Share
option
taxable
benefit
£
Basic
remune-
ration
£
Retire-
ment
fund
£
Life and
disability
plan
£
Allow-
ances
£
Other
remune-
ration
£
Bonuses
£
Total
30 June
2015
£
Total
30 June
2014
£
Prescribed officers
Mr A van den Bergh
Mr A Karigani
Mr C Strydom
Mr M da Silva
(resigned on 23 April
2015)
Mr BFM Malunga
Mr B Mcleod
–
–
–
–
–
–
127,885
123,937
110,025
89,407
12,412
71,003
11,157
20,285
11,524
11,176
1,551
–
1,685
–
49,089
189,816
479,817
2,533
5,815
4,515
13,095
170,180
–
–
4,113
–
28,563
154,225
514,765
–
–
1,083
–
–
29,395
129,978
146,720
–
15,046
–
11,569 1,445,000
2,044
3,554,00
12,554
102,169
85,232
The following changes took place during the period under review:
Appointments
• Mr RM Smith was appointed as an independent non-executive director effective from 8 September 2014
• Mr JAJ Loots was appointed the chief executive officer effective 1 March 2015
• Mr GP Louw was appointed financial director effective 1 March 2015.
Resignations
• Mr RG Still resigned as a non-executive director effective 1 July 2014
• Ms P Mahanyele resigned as a non-executive director effective 30 June 2015
•
Mr RA Holding resigned as chief executive officer effective 1 March 2015. To ensure that Mr RA Holding’s experience and knowledge is
retained by the group, an exclusive consulting agreement was concluded with him, effective 1 March 2015. This arrangement will be for
a minimum period of one year.
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:
Mr
KC Spencer
(Chairman)
£
Ms
P Mahanyele
(Deputy
chairperson)
£
35,506
21,999
–
–
5,789
–
41,295
5,789
–
–
–
27,788
Mr
RG Still
£
Mrs
HH Hickey
£
Mr
T Mosololi
£
Mr
RM Smith
£
–
–
–
–
–
17,754
17,754
13,692
–
3,859
3,859
5,789
3,859
–
27,402
3,859
–
–
–
–
–
25,472
17,551
30 June 2015
Board of directors
Remuneration committee (deputy
chairperson as chairperson)
Audit committee (Member 2 as
chairperson)
SHEQC committee
Nominations committee
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
160 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
33. DIRECTORS EMOLUMENTS continued
Mr
KC Spencer
(Chairman)
£
Ms
P Mahanyele
(Deputy
chairperson)
£
Mr
RG Still
£
Mrs
HH Hickey
£
Mr
T Mosololi
£
Mr
JAJ Loots
£
30 June 2014
Board of directors
Remuneration committee (Deputy
chairperson as chairperson)
Audit committee (Member 2
as chairperson)
SHEQC committee
Nominations committee
33,175
19,322
15,222
15,222
8,806
7,536
–
–
5,855
5,855
44,885
5,797
3,903
–
–
–
–
–
3,864
28,983
3,903
–
3,903
26,931
5,855
3,903
–
24,980
1,951
1,932
–
–
–
–
10,757
9,468
Total
options
outstanding
1 July
2014
Grant
date
Strike
price
pence
Options
granted/
(exercised)
during the
period
Grant/
(exercise)
date
Grant/
(exercise)
price
pence
Mr KC Spencer
1,500,000
21 Jul 2008
5,2
(1,500,000)
19 Mar 2015
Mr RA Holding
1,500,000
1 Sept 2013
Mr JAJ Loots
1,150,000
1 Sept 2013
–
–
(1,500,000)
28 Feb 2015
(1,150,000)
28 Feb 2015
4,6
–
–
Trans-
ferred
out
–
–
–
Total
options
30 June
2015
–
–
–
–
4,150,000
Total
options
outstanding
1 July
2013
Grant
date
Mr KC Spencer
1,500,000
21 Jul 2008
Mr RA Holding
Mr JAJ Loots
–
–
Strike
price
pence
5,2
–
–
(4,150,000)
Options
granted/
(exercised)
during the
period
–
Total
1,500,000
2,650,000
Grant/
(exercise)
date
Grant/
(exercise)
price
pence
Trans-
ferred
out
Total
options
30 June
2014
1,500,000
1 Sept 2013
1,150,000
1 Sept 2013
–
–
–
–
–
–
–
1,500,000
1,500,000
1,150,000
4,150,000
Pan African Resources
Integrated Annual Report 2015
161
S
S
E
N
S
U
B
I
33. DIRECTORS EMOLUMENTS continued
Directors’ dealings in shares
Financial year 30 June 2015
On 19 March 2015 1,500,000 shares were issued at 5 pence per share to Mr KC Spencer’s Strode Trust, upon exercising historical share
options.
At 30 June 2015 the Strode Trust held a total of 3,000,000 shares (2014: 1,500,000).
During the year under review Mr T Mosololi participated in the following transactions in the company’s shares:
• On 6 March 2015, purchased 2,000 shares at ZAR2.04 per share
• On 9 March 2015, purchased 28,000 shares at ZAR2.07 per share.
At 30 June 2015 Mr T Mosololi held a total of 30,000 shares (2014: nil).
Financial year 30 June 2014
Mr JAJ Loots had purchased 50,000 shares at ZAR2.23 per share on 17 September 2013. At 30 June 2014 Mr JAJ Loots held a total of
231,575 shares (2013: 181,575).
Mr RG Still is a trustee of a family Trust (The Alexandra Trust). Mr RG Still is therefore deemed to have an indirect, non-beneficial interest
in The Alexandra Trust’s holding in the company.
The Alexandra Trust had the following dealings in shares:
• On 1 October 2013, sold 360,916 shares at ZAR2,70 per share
• On 2 to 6 May 2014, sold 4,312,700 shares at an average price of ZAR2,70 per share.
At 30 June 2014 The Alexandra Trust held a total of 7,000,000 shares (2013: 11,673,616).
Cash-settled options
Total
options
outstanding
1 July
2014
Grant
date
Strike
price
pence
Options
granted/
(exercised)
during the
period
Grant/
(exercise)
date
Grant/
(exercise)
price
pence
Trans-
ferred
out
Total
options
30 June
2015
Listed per
grant/exercise
Mr RA Holding2
5,127,134
9 May 2011
Mr RA Holding2
1,000,000
29 Aug 2013
Mr JAJ Loots
5,000,000
29 Aug 2013
0,11
0,13
0,13
–
–
–
–
–
–
Mr GP Louw
–
–
4,614,979
1 Mar 2015
0,12
Mr C Strydom2
2,325,000
9 May 2011
0,11
Mr A van den
Bergh2
1,812,590
9 May 2011
Mr A Karigani2
2,910,448
1 Apr 2014
Mr P Human2
1,935,000
9 May 2011
20,110,172
2 Highest paid non-directors.
0,11
0,13
0,11
0,10
–
–
–
–
4,614,979
–
–
–
–
–
–
5,127,134
1,000,000
5,000,000
4,614,979
2,325,000
1,812,590
2,910,448
1,935,000
24,725,151
–
–
–
–
–
–
–
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
162 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
34. 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:
• 3.33% of the total number of shares allocated after one year has elapsed from the grant date by the participant of the grant
• Up to 66.67% of the total number of shares allocated after two years has elapsed from the grant date by the participant of the grant
• The balance of the shares allocated after three years has elapsed from the grant date by the participant of the grant
• 25% of the total number of shares allocated after one year has elapsed from the grant date by the participant of the grant
•
Up to 50% of the total number of shares allocated after two years has elapsed from the grant date by the participant of the grant
• Up to 75% of the total number of shares allocated after three years has elapsed from the grant date by the participant of the grant
•
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
twelve 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 expires after a period of six months due to resignation, retirement,
redundancy or disability of the option holder.
During the prior year, an equity-linked incentive was implemented for the then newly appointed executive directors. The terms of the
scheme are as follows:
Total number of potential shares
Grant date
Vesting date
Vesting period
Exercise price
Market conditions to be met
2,650,000
1 September 2013
28 February 2015
18 months
nil
In the event that the 30 day VWAP JSE share price of Pan African Resources has outperformed the JSE gold index by 10% or more during
the 18 month period starting 1 September 2013, 1,750,000 ordinary shares of Pan African Resources will be issued by the vesting date, or
alternatively cash settled.
In the event that the 30 day VWAP JSE share price of Pan African Resources has outperformed the JSE gold index by 25% or more during
the 18 month period starting 1 September 2013, a further 900,000 ordinary shares of Pan African Resources will be issued by the vesting
date, or alternatively cash settled.
The remuneration committee may elect to settle the obligation in cash, should it be unable to issue shares, provided that the beneficiary is
in a net neutral position, after taking account of taxes and other costs.
During the current year, the above mentioned equity linked incentives vested and were redeemed through a cash consideration by the
respective directors.
Pan African Resources
Integrated Annual Report 2015
163
S
S
E
N
S
U
B
I
34. EQUITY-SETTLED SHARE OPTIONS continued
The transaction was treated as an equity-based share option transaction by the group, throughout the vesting period and settled by cash
on exercise date. Refer below:
Opening balance equity reserve 30 June 2013
Equity expense for the year
Closing balance 30 June 2014
Equity expense for the year
Cash settlement on redemption
Closing balance 30 June 2015
The number and weighted average exercise price of share options is as follows:
ZAR
–
2,008,779
2,008,779
3,313,149
(5,321,928)
–
£
–
119,003
119,003
184,064
(303,067)
–
Outstanding at 1 July
Granted during the year
Forfeited
Exercised during the year
Outstanding 30 June
30 June 2015
30 June 2014
Weighted
average
exercise price
Number
of
options
Weighted
average
exercise price
5.3p
–
–
1.7p
1.9p
5,272,000
–
–
(4,150,000)
1,122,000
6.4p
nil
6.4p
4.9p
5.3p
Number
of
options
9,782,600
2,650,000
(100)
(7,160,500)
5,272,000
30 June 2015
30 June 2014
Vested
Unvested
Vested
Unvested
Total number share options at year-end
1,122,000
–
2,622,000
2,650,000
The fair value of services rendered 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 20 March 2010, with the following
inputs:
Share price
Exercise price
Expected volatility
Expected life
FTSE/JSE SA Gold Mining Index at grant date
Risk-free interest rate
Last fair value measurements
30 June 2014
30 June 2010
30 June 2008
2.06
Nil
30%
18 months
1,304,10
6.03%
R0.68
R0,.68
58.61%
3 – 6 years
n/a
8.15%
R0.62
R0.70
72.39%
1 – 3 years
n/a
5.31%
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 one to four 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 except the share options issued during the prior year.
The group recognised total expenses of £184,064 (2014: £122,936) 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.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
164 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
35. RELATED PARTY TRANSACTIONS
The group entered into the following transactions and held year-end balances with related parties:
Statement of profit or loss
and other comprehensive
income transactions
Statement of
financial position transactions
30 June 2015
£
30 June 2014
£
30 June 2015
£
30 June 2014
£
Company
– Dividends received from Barberton Mines
54,709,384
– Fee income from Barberton Mines
– Fee income from Phoenix Platinum
– Fee income from Evander Mines
– Directors’ fees expense to Shanduka
Receivable from other group companies
– Barberton Mines
– Pan African Resources Management Services Company
– Evander Mines
– Phoenix Platinum
Payable to other group companies
– Evander Mines
– Barberton Mines (loan payable)
– Emerald Panther
– Funding Company
Payable to other related parties
– Fee payable to Shanduka
PAR Management Services
– Fee income from Barberton Mines
– Fee income from Phoenix Platinum
– Fee income from Evander Mines
– Fees expense to Shanduka
– Interest expense paid to Funding Company
Receivable from other group companies
– Barberton Mines
– Evander Mines
– Phoenix Platinum
Payable to other group companies
– Payable to company
– Funding Company
Payable to other related parties
Fee payable to Shanduka
–
–
–
(27,788)
–
–
–
–
–
–
–
–
–
1,666,667
152,778
1,248,661
(177,778)
(16,450)
–
–
–
–
–
–
–
509,479
29,621
337,678
(38,451)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,060,195
–
–
–
–
–
–
29
23,107,286
15,238,735
7,202,293
7,216,854
(4,644,085)
(4,976,726)
(2,561,669)
(30,339,085)
(7,606)
(181)
–
–
–
–
–
–
865,285
1,684,974
162,435
(1,060,195)
(243,782)
170,831
(8,151)
(194)
(6,791)
–
–
–
–
–
–
–
–
(29)
–
–
Pan African Resources
Integrated Annual Report 2015
165
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
35. RELATED PARTY TRANSACTIONS continued
Barberton Mines
– Dividends declared to company
– Fees expense to corporate
– Fees expense to Shanduka
– Interest expense paid to Funding Company
Receivable from other group companies
– Receivable from company
Payable to other group companies
– Pan African Resources Management Services Company
– Payable to Funding Company
– Payable to company
Funding Company
– Finance income from Evander Mines
– Finance income from Barberton Mines
– Finance income from Phoenix Platinum
– Finance income from Pan African Resources Management
Services Company
Receivable from other group companies
– Receivable from company
– Evander Mines
– Pan African Resources Management Services Company
– Barberton Mines
Payable to other group companies
– Phoenix Platinum
Phoenix Platinum
– Fees expense to corporate
– Interest expense paid to Funding Company
Receivable from other group companies
– Funding Company
– Evander Mines
Payable to other group companies
– Pan African Resources Management Services Company
– Payable to company
Evander subsidiaries
Receivable from other group companies
– Receivable from Evander Gold Mining Proprietary Limited
Payable to other group companies
– Payable to Evander Gold Mining Proprietary Limited
Statement of profit or loss
and other comprehensive
income transactions
Statement of
financial position transactions
30 June 2015
£
30 June 2014
£
30 June 2015
£
30 June 2014
£
(54,709,384)
(1,666,667)
(62,702)
(57,776)
–
–
–
–
–
(509,479)
(63,084)
–
–
–
–
–
1,230,251
863,345
57,776
4,605
16,450
–
–
–
–
–
(152,778)
(4,605)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(29,621)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,561,669
30,339,085
(865,285)
(699,055)
–
–
–
–
–
–
–
–
–
–
–
–
181
194
11,086,337
101,934
243,782
699,055
(155,440)
–
–
155,440
2,212,476
(162,435)
–
–
–
–
–
–
–
–
(7,202,293)
(7,216,854)
6,596,733
7,068,166
(153,566)
(164,566)
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
166 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
35. RELATED PARTY TRANSACTIONS continued
Statement of profit or loss
and other comprehensive
income transactions
Statement of
financial position transactions
30 June 2015
£
30 June 2014
£
30 June 2015
£
30 June 2014
£
Evander Gold Mines Limited1
– Gold sales invoiced to Evander Gold Mining
Proprietary Limited
– Cost of gold production from Evander Gold Mining
54,916,954
54,563,057
Proprietary Limited
(54,373,221)
(54,022,829)
Receivable from other group companies
– Receivable from company
– Receivable from Evander Gold Mining Proprietary Limited
– Receivable from Evander subsidiaries
Payable to other group companies
– Payable to Evander Gold Mining Proprietary Limited
– Payable to Funding Company
– Payable to Evander subsidiaries
Evander Gold Mining Proprietary Limited1
–
–
–
–
–
–
–
–
–
–
–
–
– Gold purchases from Evander Gold Mines Limited
54,373,221
54,022,829
– Cost of gold production income invoiced to Evander
Gold Mines Limited
– Fees expense to corporate
– Finance costs paid to Funding Company
Receivable from other group companies
– Receivable from Evander Gold Mines Limited
Payable to other group companies
– Funding Company
– Pan African Resources Management Services Company
– Phoenix Platinum
– Evander Gold Mines Limited
– Payable to company
(54,916,954)
(54,563,057)
(1,248,661)
(1,230,251)
–
(863,345)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,644,085
–
–
–
47,820,473
51,245,704
153,566
164,566
–
(5,861)
–
(6,281)
(6,596,733)
(7,068,166)
–
–
–
–
–
–
–
–
–
–
(11,080,476)
(101,934)
(1,684,974)
(2,212,476)
–
–
(47,820,473)
(51,245,704)
(23,107,286)
(15,238,735)
1
Evander Gold Mines Limited and Evander Gold Mining Proprietary Limited are collectively referred to as Evander Mines due to an interim-mining arrangement in place since
1 March 2013.
The group entered into agreements to acquire the Uitkomst Colliery during February and June 2015, from Oakleaf and Shanduka for a cash
consideration of ZAR200 million. Shanduka is a related party to the group. Refer to note 37.
Pan African Resources
Integrated Annual Report 2015
167
S
S
E
N
S
U
B
I
36. NON-CURRENT ASSET HELD FOR SALE
The carrying value of non-current assets held for sale on 30 June 2015 is as follows:
Description
Opening balance
Disposal of the Segalla plant1
Foreign currency translation reserve
CONSOLIDATED
SEPARATE
30 June 2015
£
30 June 2014
£
30 June 2015
£
30 June 2014
£
–
–
–
–
213,191
(177,982)
(35,209)
–
–
–
–
–
–
–
–
–
1 Segalla plant: The decision was taken during the 2012 financial year to sell the Segalla plant. In the prior year the Segalla plant was sold for a total consideration of £166,859.
Opening balance
Proceeds
Loss on sale of asset held for sale
Foreign currency translation reserve
Net book value
CONSOLIDATED
30 June 2015
£
30 June 2014
£
213,191
(166,859)
(11,848)
(34,484)
–
–
–
–
–
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
168 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
37. EVENTS AFTER THE REPORTING PERIOD
Evander Mines employee share ownership programme
In the 2016 financial year, Evander Mines implemented an employee share ownership programme which is similar to that implemented at
Barberton Mines in June 2015. A newly established employee trust will effectively own 5% of the issued share capital of Evander Mines. The
transaction was financed by Evander Mines with preference share funding attracting a real return of 2% per annum and without any dilution
to Pan African Resources’ shareholders. A portion of dividends declared is retained to repay the notional financing. The portion retained
ranges from 50% to 80%, over the 10 year vesting period of the scheme.
Internal Ferro Metals Limited (IFL) announcement regarding business rescue
Pan African Resources’ shareholders are referred to the regulatory announcement published on 26 August 2015 by IFL, whereby IFL
announced that as a result of deteriorating business conditions, its South African subsidiary, International Ferro Metals (SA) Proprietary
Limited (IFMSA), has entered into business rescue. Business rescue is a statutory means of enabling a financially distressed company to
continue business, under the supervision of a business rescue practitioner, protected from its creditors.
Phoenix Platinum is situated on the IFMSA property, and a portion of the feedstock for the Phoenix Platinum operation (currently
approximately 20%) is obtained from tailings arising from IFMSA’s current processing activities. Phoenix Platinum is not solely reliant on
material from IFMSA, and has alternative sources of feedstock. Phoenix Platinum sources electricity, water and certain other services
from IFMSA.
At this stage, Phoenix Platinum is not in a position to fully assess the impact of the business rescue proceedings referred to above on the
operation. Phoenix Platinum and Pan African Resources will work closely with the IFMSA business rescue practitioner to ensure that the
operations and interests of Phoenix Platinum are safeguarded, which includes the services currently provided by IFMSA. All stakeholders will
be kept informed as these discussions progress.
Acquisition of Uitkomst Colliery
The group entered into agreements to acquire Uitkomst Colliery during February and June 2015. Once all the conditions precedent to
the agreement are met, the Colliery will be acquired from Oakleaf and Shanduka for a cash consideration of ZAR200 million. The Colliery
is an existing operational mine and the acquisition is expected to be earnings and cash flow accretive to Pan African Resources. It contains
a coal mineral resource of 25,7 million tonnes, of which 22,1 million tonnes can be classed as measured or indicated, in accordance with
the SAMREC code. The area also has additional exploration potential. Current operations at the Colliery demonstrate that it can readily
produce yields of high grade coal suitable for export or local metallurgical markets. The Colliery currently sells approximately 400,000
tonnes of coal per annum.
The acquisition still remains subject to approval by the DMR in terms of the MPRDA section 11 mining rights transfer to Pan African
Resources.
Pan African Resources
Integrated Annual Report 2015
169
S
S
E
N
S
U
B
I
38. RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED BY/
(USED IN) OPERATIONS
CONSOLIDATED
SEPARATE
30 June 2015
£
30 June 2014
£
30 June 2015
£
30 June 2014
£
Profit before taxation
Adjusted for:
Impairment
Equity and cash-settled share options costs
Net finance income – bank
Net finance income – rehabilitation trust fund
Net finance income – other
15,802,756
33,939,335
53,594,728
9,765,769
14,887,531
58,424
478,691
1,073,721
(56,488)
(36,844)
–
1,730,645
562,569
(414,797)
10,174
Net finance income – provision for rehabilitation
1,094,191
(340,530)
Net finance income – SARS
Loss/(profit) on disposal of assets
Royalty costs
Loss on disposal of associate/sale of asset held for sale
Loss on associate
Decrease in provision for environmental rehabilitation
Fair value adjustment on gold loan
Fair value adjustment on rehabilitation trust fund
Non-mining depreciation
Mining depreciation
Gold loan amortisation
Other
34,748
149
32,933
(20,497)
1,647,297
2,019,066
139,970
127,950
–
(120,490)
(1,827,253)
49,094
11,848
173,177
–
128,484
923,188
37,342
10,337,211
10,023,361
(3,352,833)
–
118,231
10,568
286,219
58,424
–
(40,125)
–
–
–
–
–
–
139,970
127,950
–
–
–
–
–
–
–
(569,830)
809,102
–
767,429
(168,846)
–
–
–
–
–
–
–
173,177
–
–
–
37,342
–
–
–
Operating cash flows before working capital changes
25,568,525
48,826,866
53,880,947
239,272
Working capital changes
Decrease/(increase) in inventories
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Non-cash items
3,285,395
(2,831,174)
112,308
96,460
1,838,559
2,137,370
1,254,612
2,208,036
(420,706)
(5,982,303)
(269,828)
(311,519)
–
–
(3,260)
1,161,017
130,948
(15,380)
(955,268)
(109,289)
Cash generated by/(utilised in) operations
28,853,920
45,995,692
53,993,255
335,732
Income taxes paid
Royalties paid
Net finance costs/income
Dividends paid
(6,129,666)
(6,966,377)
(26,218)
(165,877)
(1,945,421)
(1,569,574)
–
(1,130,429)
(605,676)
40,125
168,846
(14,283,924)
(14,683,712)
(14,283,924)
(14,683,712)
Net cash from/(used in) operating activities
5,364,480
22,170,353
39,723,238
(14,345,011)
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
170 Pan African Resources
Integrated Annual Report 2015
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS continued
for the year ended 30 June 2015
38. RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED BY/
(USED IN) OPERATIONS continued
CONSOLIDATED
SEPARATE
30 June 2015
£
30 June 2014
£
30 June 2015
£
30 June 2014
£
Taxation paid during the year:
Taxation charge per the statement of profit or loss and
other comprehensive income
Less: deferred taxation
4,132,789
1,236,780
5,369,569
7,154,742
1,918,895
9,073,637
Taxation (receivable)/payable at the beginning of the year
891,435
(1,322,671)
Taxation receivable/(payable) at the end of the year
Foreign currency translation
Taxation paid during the year
Royalty paid during the year:
Royalty costs (receivable)/payable at the beginning of the year
Royalty costs receivable at the end of the year
Royalty costs charge for the year
Foreign currency translation
Royalty paid during the year
(215,072)
83,734
(891,435)
106,846
6,129,666
6,966,377
(291,089)
538,586
1,647,297
50,627
1,945,421
(156,668)
(291,089)
2,019,066
(1,735)
1,569,574
24,306
–
24,306
(147,911)
141,574
8,249
26,218
(145,372)
153,436
8,064
–
147,911
9,902
165,877
Pan African Resources
Integrated Annual Report 2015
171
S
S
E
N
S
U
B
I
39. BARBERTON MINES ESOP TRANSACTION
On 1 June 2015 Barberton Mines entered into an agreement with the Barberton Mines BEE Company Proprietary Limited and Barberton
Mines BEE Trust.
The agreement concluded Barberton Mines would issue 5% of its authorised share capital for ZAR99.5 million to Barberton Mines BEE
Company Proprietary Limited (BEE Co) who are 100% held by the Barberton Mines BEE Trust (BEE Trust).
The beneficiaries of the BEE Trust are all the Barberton Mines employees of a Paterson grading C level and below.
The share issue was vendor financed by Barberton Mines against preference share capital issued by BEE Co for ZAR99.5 million.
Preference share capital funding arrangement terms:
Real interest rate:
Two percent per annum
Vesting period of the BEE scheme:
10 years
The payment terms of the funding arrangement allow for a portion of the dividends issued by Barberton Mines to be retained for
settlement of the funding arrangement.
The retention percentage applied to dividends for repayment is summarised as follows:
Year 1
%
Year 2
%
Year 3
%
Year 4
%
Year 5 to 10
%
Percentage of dividends withheld for payment of funding
arrangement
Percentage of dividends accruing to the BEE trust
Total dividends
50
50
100
50
50
100
60
40
100
70
30
100
80
20
100
The dividends are calculated based on 80% of the mines’ net cash generated during the year subject to compliance with the Companies
Act requirements of liquidity and solvency.
The transaction is classified under IFRS 2 as a cash-settled share option scheme (refer to note 28) and has been summarised as follows:
The ESOP cash-settled share option liability at 30 June 2015 was valued by applying a discount rate of 7.36% to the forecasted dividends
and accruing the pro-rata vesting period of the value outstanding.
Statement of financial position
ESOP cash-settled share options liability
Opening balance
Year 1 dividend accrued
Year 1 dividend paid
IFRS 2 revaluation expense
Closing balance
Statement of profit or loss and other comprehensive income
ESOP IFRS 2 expense
30 June 2015
ZAR
30 June 2014
ZAR
–
6,504,337
(6,504,337)
181,000
181,000
6,685,337
–
–
–
–
–
–
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
172 Pan African Resources
172 Pan African Resources
Integrated Annual Report 2015
Integrated Annual Report 2015
SHAREHOLDERS’
INFORMATION
We remain focused
on creating stakeholder
value through unlocking
the potential of
our organic surface
and brownfields
development projects.
Cobus Loots, chief executive officer
Pan African Resources
Pan African Resources
Integrated Annual Report 2015
Integrated Annual Report 2015
173
173
S
S
E
N
S
U
B
I
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
I
N
N
O
O
T
T
A
A
M
M
R
R
O
O
F
F
N
N
I
I
R
R
E
E
D
D
L
L
O
O
H
H
E
E
R
R
A
A
H
H
S
S
174 Pan African Resources
Integrated Annual Report 2015
SHAREHOLDERS’ ANALYSIS
Register date:
30 June 2015
Issued share capital: 1,831,494,763 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
Directors
Strategic holder (more than 10%)
Public shareholders
Total
Number of
shareholders
494
1,758
1,776
498
194
4,720
Number of
shareholders
28
20
56
30
3,645
27
2
12
114
490
45
185
54
12
4,720
%
10.47
37.25
37.63
10.55
4.11
100.0
Number of
shares
235,009
8,629,787
59,542,015
168,628,982
1,594,458,970
1,831,494,763
%
0.59
0.42
1.19
0.64
77.24
0.57
0.04
0.25
2.42
10.38
0.95
3.92
1.14
–
100.00
Number of
shares
37,559,708
13,993,932
3,255,479
9,494,551
103,361,980
35,819,490
25,775,000
6,773,979
327,312,105
383,822,669
2,919,402
424,197,386
454,021,004
3,188,078
1,831,494,763
Number of
shareholders
Number of
shares
%
4
3
1
4,716
4,720
0.08
439,469,633
0.06
0.02
99.92
100.00
3,261,575
436,358,058
1,391,875,130
1,831,494,763
BENEFICIAL SHAREHOLDERS HOLDING OF 3% OR MORE
Shanduka Gold Proprietary Limited
Public Investment Corporation
Allan Gray Equity Fund
Number of
shareholders
Number of
shares
%
436,358,058
137,669,665
79,791,642
%
0.01
0.47
3.25
9.21
87.06
100.00
%
2.05
0.76
0.18
0.52
5.64
1.96
1.41
0.37
17.87
20.96
0.16
23.16
24.79
–
100.00
%
24.00
0.17
23.83
76.00
100.00
%
23.83
7.52
4.36
NOTICE OF ANNUAL GENERAL MEETING
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Pan African Resources
Integrated Annual Report 2015
175
S
S
E
N
S
U
B
I
NOTICE IS HEREBY GIVEN that the 2015
Annual General Meeting (AGM) of Pan African
Resources will be held at 14:00 on 27 November
2015 at the offices of Numis Securities Limited,
The
Building,
10 Paternoster Square, London, EC4M 7LT* (all
times stated are United Kingdom times unless
otherwise stated) to consider and, if thought fit,
transact the following business:
Exchange
London
Stock
ORDINARY BUSINESS
1.
To receive and adopt the directors’ report, the
Audited Statement of Accounts and Auditors’
report for the year ended 30 June 2015.
2.
3.
4.
5.
6.
7.
8.
9.
To approve the payment of a final dividend
June 2015 of
for the year ended 30
ZAR0.11466 per share.
To re-elect Mrs HH Hickey as a member of
the audit committee.
To re-elect Mr KC Spencer as a member of
the audit committee.
To re-elect Mr T Mosololi as a member of the
audit committee.
To endorse the company’s Remuneration
Policy for the year ended 30 June 2015.
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 Mr JAJ Loots as a director of the
company, who retires by rotation pursuant to
the Articles of Association of the company.
To re-elect Mr GP Louw as a director of the
company, who was appointed since the last
AGM.
10. To re-appoint Deloitte LLP as auditors of the
company and to authorise the directors to
determine their remuneration.
A brief CV of the directors mentioned in resolutions
3 to 5 and 7 to 9 above is contained on
pages 28
and 29 of this integrated annual report.
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 Resolution 12 will be proposed as
a special resolution:
11. THAT the directors be and are hereby
generally and unconditionally authorised
pursuant to section 551 of the UK 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
£6,116,203.54; such authority shall, unless
previously revoked or varied by the company
in general meeting, expire on the conclusion
of the next AGM of the company or on
31 December 2016, 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.
12. That
the company be generally and
unconditionally authorised for the purposes of
section 701 of the UK Companies Act 2006
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:
• the maximum aggregate number of
ordinary shares which may be purchased is
£915,747.38 (representing approximately
5 percent. of the issued share capital of the
company at the date of this notice);
• the minimum price (excluding expenses)
which may be paid for each ordinary share
is 1p;
• 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;
• this authority shall expire at the conclusion
of the next AGM of the company or on
31 December 2016, 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
• 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 JSE Listings Requirements pertaining
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
(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
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
* Please note that as the AGM will be
held at The London Stock Exchange
all attendees will be required to
show ID in order to gain entry.
176 Pan African Resources
Integrated Annual Report 2015
NOTICE OF ANNUAL GENERAL MEETING continued
to the general authority to repurchase securities for cash, which
in summary provide as follows:
– 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;
– The company and its subsidiaries are enabled by their
Articles of Association to acquire such shares;
– 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;
– At any point in time, the company appoints only one agent
to effect any repurchase on the company’s behalf;
– 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 test was performed there have
been no material adverse changes to the financial position
of the group; and
– Such repurchases are not conducted during prohibited
periods as defined by the JSE Listings Requirements, unless
the company has complied with the conditions set out in
paragraph 5.72(h) of the JSE Listings Requirements.
The other general information referred to in paragraph 11.26(b) of
the JSE Listings Requirements regarding the company is contained
elsewhere in this notice of AGM, as follows:
• Major shareholders on
•
Company’s share capital, on
page 174
page 140
DIRECTORS’ RESPONSIBILITY STATEMENT
pages 28
The directors of the company, whose names are given on
and 29 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
JSE 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
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 test
was 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 AGM referred to in this notice:
•
•
•
•
the company and the group would in the ordinary course of
their business be able to pay their debts;
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 2014 audited Annual Financial Statements of
the company and the group;
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; and
the company and the group’s working capital would be adequate
for ordinary business purposes.
Note:
(i)
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.
APPROVALS REQUIRED FOR RESOLUTIONS
The ordinary resolutions contained in this notice of AGM require the
approval of more than fifty percent (50%) of the total votes cast on
the resolution by shareholders present or represented by proxy at
the AGM. The special resolutions contained in this notice of AGM
require the approval of at least seventy five percent (75%) of the
total votes cast on the resolutions by the shareholders present or
represented by proxy at the AGM.
By order of the board
St James’s Corporate Services Limited
Company secretary
15 September 2015
Suite 31, Second Floor
107 Cheapside
London
EC2V 6DN
England
Pan African Resources
Integrated Annual Report 2015
177
S
S
E
N
S
U
B
I
EXPLANATORY NOTES
Entitlement to attend and vote
1.
The company specifies that only those members registered on
the company’s register of members at:
• 18:00 on 25 November 2015; or,
• 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
2.
3.
4.
5.
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
6.
The notes to the proxy form explain how to direct your proxy
how to vote on each resolution or withhold their vote.
To appoint a proxy using the proxy form, the form must be:
• completed and signed; and
• 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 14:00 on 25 November 2015.
In the case of a member which is a company, the proxy form
must be executed under its common seal or signed on its behalf
by an officer of the company or an attorney for the company.
Any power of attorney or any other authority under which the
proxy form is signed (or a duly certified copy of such power or
authority) must be included with the proxy form.
Appointment of proxy by joint members
7.
In the case of joint holders, where more than one of the joint
holders purports to appoint a proxy, only the appointment
submitted by the most senior holder will be accepted. Seniority
is determined by the order in which the names of the joint
holders appear in the company’s register of members in respect
of the joint holding (the first-named being the most senior).
Changing proxy instructions
8.
To change your proxy instructions simply submit a new proxy
appointment using the methods set out above. Note that the
cut-off time for receipt of proxy appointments (see above) also
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
9.
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
14:00 on 25 November 2015. If you attempt to revoke your
proxy appointment but the revocation is received after the time
specified then, subject to the paragraph directly below, your
proxy appointment will remain valid.
Appointment of a proxy does not preclude you from attending
the AGM and voting in person. If you have appointed a proxy
and attend the AGM in person, your proxy appointment will
automatically be terminated.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
178 Pan African Resources
Integrated Annual Report 2015
NOTICE OF ANNUAL GENERAL MEETING continued
Issued shares and total voting rights
10.
As at 18:00 on 14 September 2015, the company’s issued share
capital comprised 1,831,494,763 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 14 September 2015
was 1,831,494,763.
Directors’ interests and documents on display
11.
A statement or summary of transactions of directors (and
their family interests) in the share capital of the company and
copies of their service contracts will be available for inspection
at the company’s registered office during normal business hours
(Saturdays and public holidays excepted) from the date of this
notice until the conclusion of the AGM and will also be available
for inspection at the place of the AGM for at least 15 minutes
prior to and during the meeting.
14.
CREST
12.
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.
13.
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 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 14:00 on 25 November 2015 (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.
Pan African Resources
Integrated Annual Report 2015
179
S
S
E
N
S
U
B
I
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 to be held at the offices of Numis Securities
Limited, The London Stock Exchange Building, 10 Paternoster Square, London, EC4M 7LT at 14:00 on 27 November 2015 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
Voting withheld*
Discretionary**
1. To receive the accounts and the reports of the directors and auditors
thereon
2. To approve the payment of a final dividend for the year ended 30 June 2015
3. To re-elect Mrs HH Hickey as a member of the audit committee
4. To re-elect Mr KC Spencer as a member of the audit committee
5. To re-elect Mr T Mosololi as a member of the audit committee
6. To endorse the company’s Remuneration Policy
7. To re-elect Mr KC Spencer as a director of the company
8. To re-elect Mr JAJ Loots as a director of the company
9. To re-elect Mr GP Louw as a director of the company
10. To re-appoint Deloitte LLP as auditors 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 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:
(BLOCK CAPITALS)
Signature:
Address:
Notes
1.
2.
3.
4.
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.
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) Limited, Ground Floor, 70 Marshall Street, Johannesburg 2001,
South Africa not later than 48 hours before the start of the meeting.
5.
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.
6.
7.
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.
Dated this
day of
2015
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.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
Business Reply Plus
Licence Number
RLUB-TBUX-EGUC
FDFDTTFATDDATADTTDFDFTDATADFAADFTADF
Second fold
PXS 1
34 Beckenham Road
BECKENHAM
BR3 4ZF
Third fold and tuck in flap
l
d
o
f
t
s
r
i
F
Pan African Resources
Integrated Annual Report 2015
181
S
S
E
N
S
U
B
I
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 to be held at the offices of Numis Securities
Limited, The London Stock Exchange Building, 10 Paternoster Square, London, EC4M 7LT at 14:00 on 27 November 2015 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
Voting withheld*
Discretionary**
1. To receive the accounts and the reports of the directors and auditors
thereon
2. To approve the payment of a final dividend for the year ended 30 June 2015
3. To re-elect Mrs HH Hickey as a member of the audit committee
4. To re-elect Mr KC Spencer as a member of the audit committee
5. To re-elect Mr T Mosololi as a member of the audit committee
6. To endorse the company’s Remuneration Policy
7. To re-elect Mr KC Spencer as a director of the company
8. To re-elect Mr JA J Loots as a director of the company
9. To re-elect Mr GP Louw as a director of the company
10. To re-appoint Deloitte LLP as auditors 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 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:
(BLOCK CAPITALS)
Signature:
Address:
Notes
1.
2.
3.
4.
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.
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) Limited, Ground Floor, 70 Marshall Street, Johannesburg 2001,
South Africa not later than 48 hours before the start of the meeting.
5.
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.
6.
7.
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.
Dated this
day of
2015
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.
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
Second Fold
Second fold
POSTAGE WILL
POSTAGE WILL
BE PAID BY THE
BE PAID BY THE
ADDRESSEE
ADDRESSEE
NO POSTAGE
NO POSTAGE
NECESSARY
NECESSARY
IF POSTED IN
IF POSTED IN
SOUTH AFRICA
SOUTH AFRICA
f
d
d
l
l
o
o
F
t
s
r
t
i
F
s
r
i
F
BUSINESS REPLY SERVICE
BUSINESS REPLY SERVICE
LICENCE NO. J 5563
LICENCE NO. J 5563
2107 MARSHALLTOWN
2107 MARSHALLTOWN
Third fold and tuck in flap
Third Fold
and tuck in flap opposite
172
Pan African Resources PLC Integrated Annual Report 2014
Pan African Resources
Integrated Annual Report 2015
183
S
S
E
N
S
U
B
I
GLOSSARY
AGM
Aids
AIM
AMCU
Auroch
B-BBEE
Barberton Mines
BIOX®
Brownfield project
the board
BTRP
Business rescue
CCMA
CEO
CIL
CIP
the Companies Act
COO
CSI
CTRP
the current year
DMR
ETRP
Evander Mines
Earnings accretive acquisition
Eskom
EXCO
FD
g/t
GBF
GRI
Harmony
HDSA
HIV
HR
IAS
IBC
IFL
IFMSA
IFRS
IIRC
IoDSA
ISO
JSE
King III Report or King III
km
koz
KPIs
Load shedding
LTIFR
LSE
MCF
Metanza
Annual general meeting
Acquired Immune Deficiency Syndrome
Alternative Investment Market, the London Stock Exchange’s international market for smaller growing
companies
Association of Mineworkers and Construction Union
Auroch Minerals NL, an Australian-listed company in which Pan African Resources has an investment
Broad-based black economic empowerment
Barberton Mines Proprietary Limited
The Biological Oxidation (BIOX®) gold extraction process was developed at Barberton Mines. It is an
environmentally friendly process of releasing gold from the sulphide that surrounds it by using bacteria
Project based on prior work or rebuilt from a previous one
The board of directors of Pan African Resources, as set out on pages 28 and 29
Barberton Tailings Retreatment Plant, a gold recovery tailing plant owned by Barberton Mines, which
commenced production in FY2014
A process which gives a company in financial distress the opportunity to restructure and reorganise its affairs
under the supervision of a business rescue practitioner
Commission for Conciliation, Mediation and Arbitration
Chief executive officer. Pan African Resources’ CEO is Cobus Loots (appointed 1 March 2015)
Carbon-in-leach
Carbon-in-pulp
South African Companies Act 71 of 2008, as amended
Chief operating officer
Corporate social investment
Chrome tailings retreatment plant
The year ended 30 June 2015
Department of Mineral Resources
Evander Tailings Retreatment Plant, approved during the year for commissioning in October 2015
Evander Gold Mines Limited and Evander Gold Mining Proprietary Limited.
An acquisition which increases earnings per share
Electricity Supply Commission, South African electricity supplier
Executive committee of Pan African Resources
Financial director
Grams/tonne
General banking facilities
Global Reporting Initiatives
Harmony Gold Mining Company Limited
Historically disadvantaged South African
Human Immunodeficiency Virus
Human Resources
International Accounting Standards
Inside back cover (of this integrated annual report)
International Ferro Metals (SA) Proprietary Limited, Phoenix Platinum concluded a formal CTRP agreement
with IFL and operates from its Lesedi Mine
South African subsidiary, International Ferro Metals (SA) Proprietary Limited (IFMSA),
International Financial Reporting Standards
International Integrated Reporting Council
Institute of Directors South Africa
International Standards Organisation
JSE Limited incorporating the Johannesburg Securities Exchange, the main bourse in South Africa
King Report on Corporate Governance for South Africa, 2009
Kilometres
Kilo ounces
Key Performance Indicators – a set of quantifiable measures that a company or industry uses to gauge or
compare performance in terms of meeting their strategic and operational goals
Interruptions to power supply resulting from pressure on the national grid
Lost time injury frequency rate
London Stock Exchange
Mine call factor
Metanza Mineral Processors, a BEE company which operates the CTRP at Phoenix Platinum plant under
contract to Pan African Resources
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
Y
G
E
T
A
R
T
S
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
E
C
N
A
M
R
O
F
R
E
P
:
T
R
O
P
E
R
C
G
E
T
A
R
T
S
I
I
I
Y
T
L
B
A
T
N
U
O
C
C
A
D
N
A
Y
C
N
E
R
A
P
S
N
A
R
T
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
L
A
U
N
N
A
I
N
O
T
A
M
R
O
F
N
I
R
E
D
L
O
H
E
R
A
H
S
184 Pan African Resources
Integrated Annual Report 2015
GLOSSARY continued
MHSA
Mining Charter
MOI
Moz
MR&MR
MRM
MPRDA
Mt
NIHL
NOMAD
NUM
OPSCO
PEA
PGE
Phoenix Platinum
Prescribed officers
RCF
Remchannel
RIFR
Section 54 safety stoppages
SA
SAICA
SAMREC
Shanduka
or Shanduka group
SHEQC
SLP
Sporotrichosis
t
TB
the group or the company or
Pan African Resources
the previous year
The UK Code
the year or the year under
review
TIFR
TMM
UASA
UK
UK Corporate Governance
Code
Financial terms
AUD
CPI
EBITDA
EPS
GBP
JIBAR
FVTPL
HEPS
PPI
ROI
USD
ZAR
Mine Health & Safety Act
Charter to facilitate the sustainable transformation and development of the South African mining industry
Memorandum of incorporation
Million ounces
Mineral Resources and Mineral Reserves Report
Mineral resource management
Mineral and Petroleum Resources Development Act
Million tonnes
Noise-induced hearing loss
Nominated Adviser appointed in accordance with the London Stock Exchange’s AIM Rules for Companies
National Union of Mineworkers
Operations committee
Preliminary economic assessment
Platinum Group Elements, namely platinum, palladium, rhodium and gold
Phoenix Platinum Mining Proprietary Limited, a subsidiary of Pan African Resources
Anyone who fulfils the role of a director but is operating under a different designation
Revolving credit facility
Internet based remuneration survey providing data across a wide variety of industries in South Africa
Reportable Injury Frequency Rate
In terms of section 54 of the Mine Health and Safety Act No 29 of 1996, if an inspector of mines believes that
an occurrence, practice or condition at a mine endangers or may endanger the health or safety of people at the
mine, the inspector may give any instruction necessary to protect the health or safety of people at the mine,
including instructing that operations at the mine or a part of the mine be halted
South Africa
South African Institute of Chartered Accountants
South African Code for Reporting of Mineral Resources and Mineral Reserves
The consumer price index of South Africa, a primary indicator of South Africa’s inflation
Shanduka Group Proprietary Limited. Pan African Resources’ black empowerment partner, which has a 26%
stake in the group
Safety, health, environment, quality and community
Social & Labour Plan
A disease caused by a fungus infection
Tonnes
Tuberculosis
Pan African Resources, listed on the LSE’s AIM and on the JSE in the ‘Gold Mining’ sector
The year ended 30 June 2014
UK Corporate Governance Code
The year ended 30 June 2015
Total injury frequency rate
Trackless mobile machinery
United Association of South Africa
United Kingdom
Sets out standards of good practice in relation to board leadership and effectiveness, remuneration,
accountability and relationships with shareholders
Australian Dollar
The consumer price index of South Africa, a primary indicator of South Africa’s inflation
Earnings before interest, taxes, depreciation and amortisation
Earnings per share
Pounds Sterling
Johannesburg Inter-bank Acceptance Rate
Fair value through profit and loss
Headline earnings per share
Producer price inflation
Return on investment
US Dollars
South African Rand
COMPANY INFORMATION
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
Facsimile: + 27 (0) 11 880 1240
REGISTERED OFFICE
Suite 31
Second Floor
107 Cheapside
London, EC2V 6DN
United Kingdom
Office: + 44 (0) 20 7796 8644
Facsimile: + 44 (0) 20 7796 8645
DIRECTORS
Cobus Loots
Pan African Resources
Chief executive officer
Office: + 27 (0) 11 243 2900
Deon Louw
Pan African Resources
Financial director
Office: + 27 (0) 11 243 2900
COMPANY SECRETARY
Phil Dexter
St James’s Corporate Services Limited
Office: + 44 (0) 20 7796 8644
JSE SPONSOR
Sholto Simpson
One Capital
Office: + 27 (0) 11 550 5009
NOMINATED ADVISER
AND JOINT BROKER
John Prior/Paul Gillam/James Black
Numis Securities Limited
Office: +44 (0) 20 7260 1000
JOINT BROKER
Matthew Armitt/Ross Allister
Peel Hunt LLP
Office: +44 (0) 20 7418 8900
PUBLIC AND INVESTOR
RELATIONS SA
Julian Gwillim
Aprio Strategic Communications
Office: +27 (0)11 880 0037
PUBLIC AND INVESTOR
RELATIONS UK
Daniel Thöle
Bell Pottinger PR
Office: + 44 (0) 20 3772 2500
www.panafricanresources.com
SHAREHOLDERS’ DIARY
Financial year-end
Preliminary annual results announcement
Annual report posted
AGM
30 June 2015
16 September 2015
30 October 2015
27 November 2015
Interim results announcement
TBA
www.panafricanresources.com