Pan African Resources Plc · LSE:PAF
Pan African Resources — FY2019 Earnings Presentation
38 slides from Pan African Resources's earnings presentation, Sep 18, 2019
Slide 1: Results Presentation for the year ended 30 June 2019
RESULTS PRESENTATION for the year ended 30 June 2019 PROFITABLE • SUSTAINABLE • STAKEHOLDERS • GROWTH
Slide 2: Disclaimer
DISCLAIMER The name 'Presenter' refers to Pan African Resources PLC and its advisors, subsidiaries or affiliated companies. This presentation has not been filed, lodged, registered or approved in any jurisdiction and recipients of this document should keep themselves informed of and comply with and
Slide 3: Forward Looking Statements
FORWARD LOOKING STATEMENTS Statements in this report that address 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 sta
Slide 4: Overview of Presentation
OVERVIEW OF PRESENTATION • Gold – safe haven status has returned • Mining gold in South Africa • Pan African Resources – safe, low cost and sustainable › FY19 at a glance › Group Safety › Environmental, Social and Governance (‘ESG’) › Production and costs • Our operations • Overview – FY2019 financi
Slide 5: Gold – Safe Haven Status Has Returned
GOLD – SAFE HAVEN STATUS HAS RETURNED S&P500 vs. USD gold price vs. Bitcoin – 2 year history PAR share price performance relative to USD and 230 ZAR gold price – 2 year history 200 210 190 180 170 160 150 130 140 110 120 90 100 70 50 80 Aug 18 Oct 18 Nov 18 Jan 19 Mar 19 Apr 19 Jun 19 Jul 19 S&P 500
Slide 6: Mining Gold in South Africa
MINING GOLD IN SOUTH AFRICA • 130 year gold mining legacy • Well established infrastructure and technical support • New government is investment friendly and targeting growth • Depreciating ZAR – provides further leverage to USD gold price • Sophisticated finance sector • World-class constitution an
Slide 7: Mining Gold in South Africa – Risks and Mitigation
MINING GOLD IN SOUTH AFRICA Not unique in its challenges Risks Mitigation / Management Low economic growth and Regular engagement with local communities and stakeholders, new projects to create unemployment threatens social fabric employment and making a real difference in our communities through CS
Slide 8: Pan African Resources – Safe, Low-Cost and Sustainable
PAN AFRICAN RESOURCES – SAFE, LOW-COST AND SUSTAINABLE
Slide 9: FY2019 at a glance
PAN AFRICAN RESOURCES – SAFE, LOW-COST AND SUSTAINABLE FY2019 at a glance Safety ESG Improved safety performance across all Increased focus on ESG – number of safety metrics successes during financial year Growth Production Successfully commissioned Elikhulu, Increased gold production from all first
Slide 10: Group safety
PAN AFRICAN RESOURCES – SAFE, LOW-COST AND SUSTAINABLE Group safety “Notwithstanding the fact that injury rates are well below industry average, we continuously strive to 6 improve our safety performance and achieve our aim of zero harm to our employees” – Cobus Loots, CEO 5 Rates per million man ho
Slide 11: Environmental, Social and Governance compliance (ESG)
“I wanted the gold, and I sought it; I scrabbled and PAN AFRICAN RESOURCES – mucked like a slave. Was it famine or scurvy – I fought it; I hurled my youth into a grave. SAFE, LOW-COST AND SUSTAINABLE I wanted the gold, and I got it – Came out with a fortune last fall, Yet somehow life’s not what I t
Slide 12: Annual group production and costs
OUR OPERATIONS – PRODUCTION AND COSTS Annual group production – solid performance and increased FY20 guidance • Gold sold increased to171,706oz (2018: 160,444oz) Group gold production (oz) • AISC of ZAR450,564/kg (2018: R561,468/kg), or USD988/oz Operation FY18 FY19 FY20 f/cast (2018: USD1,358/oz) B
Slide 13: Pan African Resources vs SA and global producers
OUR OPERATIONS – PRODUCTION AND COSTS Pan African Resources vs SA producers and global producers 1,900 1,700 1,500 Rates per million man hours 1,300 1,100 2018 Global 900 average ~ USD908/oz*** 700 500 Anglogold Harmony Sibanye PAR FY19 Goldfields DRD Gold Ashanti Gold Stillwater** AISC (USD/oz) 988
Slide 14: Group gold production and costs – operating costs breakdown
OUR OPERATIONS – GROUP GOLD PRODUCTION AND COSTS Operating costs breakdown per operation Ultra low-cost ounces - high margin gold Underground ounces – highly leveraged to underpins group’s robustness in a low gold price gold price, increases group profitability environment significantly in higher go
Slide 15: Our Operations
OUR OPERATIONS Low-cost, long life tailings retreatment operations
Slide 16: Surface tailings retreatment
OUR OPERATIONS – SURFACE TAILINGS RETREATMENT Total surface source production Group gold production (oz) • Gold Sold: 79,471oz (2018: 38,754oz) Operation FY18 FY19 FY20 f/cast • AISC: R263,633/kg (USD578/oz) (2018: R297,661/kg), (2018: BTRP 17,504 24,007 20,000 USD720/oz) Elikhulu / ETRP 21,250 56,2
Slide 17: Barberton Tailings Retreatment Plant
OUR OPERATIONS – SURFACE TAILINGS RETREATMENT Barberton Tailings Retreatment Plant • Commissioned July 2013, initial capital outlay of R326 mil Group gold production (oz) (~USD37 mil) Operation FY18 FY19 FY20 f/cast • Regrind mill, commissioned in May 2018 - performing according to expectations BTRP
Slide 18: Elikhulu Tailings Retreatment Plant
OUR OPERATIONS – SURFACE TAILINGS RETREATMENT Elikhulu Tailings Retreatment Plant • Commissioned in September 2018, initial capital outlay Group gold production (oz) approximately at R1.74 billion (~USD124 mil) forecast payback Operation FY18 FY19 FY20 f/cast period of 4 years (Excludes original fea
Slide 19: Barberton Mines underground and additional surface sources
OUR OPERATIONS – HIGH QUALITY UNDERGROUND OREBODIES Barberton Mines underground and additional surface sources Barberton Mines – 130 year mining legacy and counting Group gold production (oz) • Average underground head grade: 9.8g/t (2018: 8.7g/t) Operation FY18 FY19 FY20 f/cast • LOM: 20 years BTRP
Slide 20: Phase 1A: Sustain and grow underground high grade production
OUR OPERATIONS – HIGH QUALITY UNDERGROUND OREBODIES Phase 1A: Sustain and grow underground high grade production ZK development Sub-vertical shaft project • Development continuing in FY2020 • Increases the hoisting capacity from MRC 11 Block and enables down dip access to the ZK orebody Infill drill
Slide 21: Phase 1B: Sweat and optimise surface infrastructure
OUR OPERATIONS – HIGH QUALITY UNDERGROUND OREBODIES Phase 1B: Sweat and optimise surface infrastructure Plant feed sources on surface › Low grade stockpiles As at 30 June 2019 Mineral Resources Mineral Reserves › Tailings Mineral Reserves Tonnes Grade Gold Gold Tonnes Grade Gold Gold Source (Mt) (g/
Slide 22: Phase 2: New mining projects
OUR OPERATIONS – HIGH QUALITY UNDERGROUND OREBODIES Phase 2: New mining projects Royal Sheba Phase 1 › Access the orebody with the current adit Royal Sheba Phase 2 › Develop access on 23 Level from Sheba ZK Shaft - 600m of development remaining Phase 1 Mining Royal Sheba orebody and historical worki
Slide 23: Evander – 8 shaft pillar and remnant underground mining
OUR OPERATIONS – HIGH QUALITY UNDERGROUND OREBODIES Evander – 8 shaft pillar and remnant underground mining Evander 8 Shaft Current year performance Diameter 8.3m • Pillar access development completed: February 2019 Sinking commenced December 1973 Production commenced August 1979 • Gold Sold: 16,879
Slide 24: Overview – FY2019 Annual Results
OVERVIEW – FY2019 ANNUAL RESULTS
Slide 25: Summarised consolidated annual results
OVERVIEW – FY2019 ANNUAL RESULTS Summarised consolidated annual results5 Salient features Units Year ended 30 June 2019 Year ended 30 June 2018 Movement Continuing operations gold produced1 (Oz) 172,442 111,879 54.1% Revenue (USD million) 217.4 145.8 49.1% Average gold price received (combined) (USD
Slide 26: Margin leverage as result of movement in ZAR gold price
OVERVIEW – FY2019 ANNUAL RESULTS Margin leverage as result of movement in ZAR gold price Operating profit/kg1 700,000 680,000 660,000 21% increase in gold price = 640,000 96% increase in 620,000 operating profit/kg Gold price – R/kg 600,000 580,000 577,573 560,000 540,000 Average gold price received
Slide 27: Illustrative de-gearing
OVERVIEW – FY2019 ANNUAL RESULTS Illustrative de-gearing – assuming forecast assumptions are achieved 2,500,000 2,000,000 1,500,000 1,000,000 500,000 - Forecasted repayment profile* Principle repayment profile Senior debt repayment profile 700,000 600,000 500,000 400,000 R’000 300,000 200,000 100,00
Slide 28: Hedging summary – zero cost collars
OVERVIEW – FY2019 ANNUAL RESULTS Hedging summary – zero cost collars 900,000 850,000 800,000 750,000 Gold price (R/kg) 700,000 650,000 600,000 29,550oz in H1 of FY20 50,400oz in H2 of FY20 550,000 500,000 Jul 19 Aug 19 Sep 19 Oct 19 Nov 19 Dec 19 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Put Call 28
Slide 29: Historic dividend yield – dividends reinstated
OVERVIEW – FY2019 ANNUAL RESULTS Historic dividend yield – dividends reinstated! 7% 6% 5% 4% 3% 2% 1% 0% June 14 June 15 June 16 June 17 June 18* June 19 PAR dividend yield 5.60% 6.30% 5.10% 5.00% 0.00% 1.00% * Dividend suspended due to cessation of large-scale deep level underground mining at Evand
Slide 30: Investing in the Future of Our Assets
INVESTING IN THE FUTURE OF OUR ASSETS
Slide 31: Growth portfolio – strong track record of delivery
INVESTING IN THE FUTURE OF OUR ASSETS Growth portfolio - strong track record of delivery Group Resources Group Reserves 36.0Mz (335.8Mt @ 3.33g/t) 10.9Moz (216.6Mt @ 1.57g/t) Tonnes Grade Gold Gold Tonnes Grade Gold Gold (Mt) (g/t) (t) (Moz) (Mt) (g/t) (t) (Moz) Underground combined 118.2 8.84 1 044
Slide 32: Sustaining capital expenditure
INVESTING IN THE FUTURE OF OUR ASSETS Sustaining capital expenditure 250 200 (R’mil) 150 100 50 0 2017 2018 2019 2020* Barberton Mines 116.5 111.0 140.0 230.0 Evander Mines 198.4 176.1 0.0 15.0 * Includes once-off items such as increased development, LHD replacements, upgraded switchgear and fire su
Slide 33: Near-Term Organic Growth
NEAR-TERM ORGANIC GROWTH
Slide 34: Evander's Egoli project
NEAR-TERM ORGANIC GROWTH Evander’s Egoli project • The Egoli project is an orebody within 3km tramming distance from 7 Shaft › 7 Shaft is currently operational and used to hoist ROM material to the Kinross metallurgical plant • Historical development at 7 Shaft has made ready access to the orebody p
Slide 35: Egoli vs Evander's Shaft before closure
NEAR-TERM ORGANIC GROWTH Egoli vs Evander’s 8 Shaft before closure Key metric Egoli 8 Shaft Depth 1,900m ~2,500m Access Directly from 7 Shaft (twin shaft system) with Vertical access via 8 Shaft, mid-shaft hoisting, cross 1 decline tramming to 7 Shaft via series of declines Tramming/travelling dista
Slide 36: FY2019 Health Check and Deliverables
FY2019 HEALTH CHECK AND DELIVERABLES
Slide 37: FY2019 and Beyond – Deliverables and Health Check
FY2019 AND BEYOND – DELIVERABLES AND HEALTH CHECK Progress Focus FY19 Deliverables FY19 FY20 Sustainability Continued emphasis on improving our safety performance and ESG compliance across operations Continuing Production Delivering into gold production guidance On track Ensuring Elikhulu delive
Slide 38: Thank You
THANK YOU PROFITABLE • SUSTAINABLE • STAKEHOLDERS • GROWTH