Pan African Resources Plc · LSE:PAF
Pan African Resources — H1 FY2020 Earnings Presentation
40 slides from Pan African Resources's earnings presentation, February 2020
Slide 1: Interim Results
INTERIM RESULTS RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31 DECEMBER 2019
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 • Overview of our operations • H1 FY20 – Highlights > Operational and financial performance > Group safety > Environmental, Social and Governance (ESG) • Key focus areas • H1 FY20 cash flow generation and debt redemption • Investing in our future • Near-term organic growth p
Slide 5: CEO quote on strategy
“Our strategy for Pan African is simple but powerful: Position ourselves as a sustainable, safe, high-margin and long-life gold producer. We are proud to say the first six months of the year has us taking significant steps towards realising this strategy” COBUS LOOTS Chief executive officer 5
Slide 6: Overview of our operations
PAN AFRICAN@ RESOURCES eo) Overview of our operations
Slide 7: Overview of our operations
OVERVIEW OF OUR OPERATIONS Pan African’s business represents a unique combination of underground mining and surface remining 7
Slide 8: Overview of our operations: Group Summary
OVERVIEW OF OUR OPERATIONS Group Summary BARBERTON MINES BTRP ELIKHULU EVANDER 8 SHAFT PILLAR • The birthplace of BIOX® • Designed to treat 100,000 • The Big One’ in Zulu • Maximising the value of our and our cornerstone tonnes per month • Elikhulu was built within own asset portfolio - the 8 operat
Slide 9: H1 FY20 – Highlights
PAN AFRICAN RESOURCES Se) H1 FY20 - Highlights
Slide 10: H1 FY20 – Highlights: Operational and financial performance
H1 FY20 – HIGHLIGHTS Operational and financial performance Production • Gold produced by the Group increased by 14.7% to 92,941oz (2018: 81,014oz) • Elikhulu production increased by 91.6% to 29,301oz (2018: 15,292oz) • Evander 8 Shaft Pillar project on track to achieve steady-state production during
Slide 11: Adjusted EBITDA generation
OUR OPERATIONS Adjusted EBITDA generation 700 50 649.4 600 40 500 400 30 USD’ million 333.1 342.4 ZAR’ million 300 20 205.1 200 137.2 145.1 87.6 97.9 100 82.7 10 64.9 11.1 0 Evander surface Evander U/G BTRP Barberton U/G Elikhulu Corporate and other Group Total sources* 0 -47.4 -62.8 -62.7 -100 -200
Slide 12: Group safety
H1 FY20 – HIGHLIGHTS Group safety “Notwithstanding the fact that injury rates are well below industry average, we continuously strive to improve our safety performance and achieve our aim of zero harm to our employees” – Cobus Loots, CEO 6 -------------- Rates per million man hours -------------- 5.
Slide 13: Environmental, Social and Governance compliance (ESG)
H1 FY20 – HIGHLIGHTS Environmental, Social and Governance compliance (ESG) Pan African Resources is committed to doing business, as prescribed by the group’s values and code of ethics. We recognise that we are an integral part of the societies in which we operate, and are therefore obligated morally
Slide 14: H1 FY20 – Highlights: community investment
H1 FY20 – HIGHLIGHTS Highlights in the current reporting period include: STARTED CONSTRUCTION OF DONATED 4 MOBILE CATHYVILLE CLINIC AT LIBRARIES TO SCHOOLS EMJINDINI EXTENSION SURROUNDING 13 WITHIN THE EVANDER MINES BARBERTON MINES COMMUNITY INVESTED USD0.8 MILLION IN SKILLS AND INVESTED USD0.04 DEV
Slide 15: H1 FY20 – Highlights: rehabilitation
H1 FY20 – HIGHLIGHTS Highlights in the current reporting period include: TOTAL SPENT USD0.9 MILLION REHABILITATION ON REHABILITATION TRUST FUND OF OLD SHAFTS AND USD25.6 MILLION, INFRASTRUCTURE CLOSURE LIABILITIES FULLY FUNDED 15
Slide 16: Key focus areas
PAN AFRICA RESOU Se) Key focus areas
Slide 17: Key focus areas
KEY FOCUS AREAS • Delivering into group production guidance • Reducing all-in sustaining cost across all operations > Evander 8 Shaft Pillar project > Consort Mine > Sheba Mine • Continue to operate successfully in South Africa • Reduce debt levels and increase dividends 17
Slide 18: Group production – solid performance and on track to meet guidance
KEY FOCUS AREAS Group production – solid performance and on track to meet guidance • Gold sold increased by 13.6% to 90,602oz (2018: 79,765oz) • Group AISC of ZAR526,150/kg (2018: ZAR444,946/kg), or USD1,113/oz (2018: USD975/oz) • Low risk, high-margin tailings business has increased to 49.3% of gro
Slide 19: Reducing group all-in sustaining cost
KEY FOCUS AREAS Reducing group all-in sustaining cost Total operations Group excl. Consort Total underground Total Tailings/ surface Group Total and Evander U/G All-in sustaining cost per (ZAR/kg) 684,342 363,352 526,150 460,924 All-in sustaining cost ( USD/oz) 1,448 769 1,113 975 Low cost operation
Slide 20: Evander Shaft Pillar project
KEY FOCUS AREAS – REDUCING COSTS AT OUR OPERATIONS Evander 8 Shaft Pillar project • Pillar access development completed, secondary development and ledging operations ongoing • Build up to 9 stoping crews by Q4 FY 20 • Pillar to be mined at a rate of 11.5ktpm during steady state • Estimated ongoing A
Slide 21: Consort operations – LOM of 6 years
AREAS OF FOCUS – REDUCING COSTS AT OUR OPERATIONS Consort operations – LOM of 6 years Extraction of Prince Consort (‘PC’) Shaft pillar • PC Shaft pillar - Mineral Resource of 48,820t @ 25.54g/t for 40Koz • Development to PC Shaft pillar on track for completion during April 2020 • Forecast production
Slide 22: Sheba operations – LOM of 9 years
AREAS OF FOCUS – REDUCING COSTS AT OUR OPERATIONS Sheba operations – LOM of 9 years (19 years including Royal Sheba) Project Dibanisa • Forecasted to be completed during FY21 • Optimised usage of infrastructure expected to reduce all-in sustaining cost - targeting ~USD1,000/oz • Additional available
Slide 23: Pan African Resources vs SA producers and global producers
AREAS OF FOCUS – REDUCING COSTS AT OUR OPERATIONS Pan African Resources vs SA producers and global producers 1,500 1,400 1,300 1,200 H1 FY20 actual 1,100 2019 Forcasting sub USD1,000/oz Global 1,000 average ~ USD1,000/oz** 900 800 700 600 500 PAR full year Anglogold Sibanye Goldfields DRD Gold PAR H
Slide 24: Continue to operate successfully in South Africa
CONTINUE TO OPERATE SUCCESSFULLY IN SOUTH AFRICA
Slide 25: Continue to operate successfully in South Africa
CONTINUE TO OPERATE SUCCESSFULLY IN SOUTH AFRICA Security • Integrated multifaceted security strategy plan for the group • Increased deployment of both human and technological resources in and around high-risk areas • Enhanced information sharing and cooperation with the local, provincial and nation
Slide 26: H1 FY20 – cash flow generation and debt redemption
H1 FY20 – cash flow generation and debt redemption DEON LOUW Financial Director
Slide 27: Cash flow analysis
H1 FY20 – CASH FLOW GENERATION AND DEBT REDEMPTION Cash flow analysis USD thousand Unaudited Unaudited six months ended six months ended 31 December 2019 31 December 2018 Net cash generated by operations after taxation, royalty and finance costs 13,028.5 21,298.5 Dividends paid (3,399.1) - Reciproca
Slide 28: Movement in net debt
H1 FY20 – CASH FLOW GENERATION AND DEBT REDEMPTION Movement in net debt ZAR' million USD' million Net Debt as at 30 June 2019 1,829,254,809 129,918,665 Repayment of RCF and Elikhulu facility net of additional draw downs (294,047,580) (20,884,061) Repayment of Elikhulu term facility (100,548,664) (7,
Slide 29: Illustrative de-gearing
H1 FY20 – CASH FLOW GENERATION AND DEBT REDEMPTION Illustrative de-gearing – assuming forecast assumptions are achieved 160,000 140,000 120,000 100,000 USD’000 80,000 60,000 40,000 20,000 - Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-2
Slide 30: Hedging summary – zero cost collars
H1 FY20 – CASH FLOW GENERATION AND DEBT REDEMPTION Hedging summary – zero cost collars 950,000 900,000 850,000 800,000 750,000 700,000 650,000 600,000 50,460oz in H2 of FY20 40,000oz in H1 of FY21 550,000 500,000 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Put
Slide 31: Historic dividend yield – dividends reinstated
H1 FY20 – CASH FLOW GENERATION AND DEBT REDEMPTION 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 5.60% 6.30% 5.10% 5.00% 0.00% 1.00% yield * Dividend suspended due to cessation of large-scale deep level undergroun
Slide 32: Investing in our future
PAN AFRICAN@ RESOURCES eo) Investing in our future
Slide 33: Investing in the future of our assets
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 (Mt) Grade (g/t) Gold (t) Gold (Moz) Tonnes (Mt) Grade (g/t) Gold (t) Gold (Moz) Underground combined 110.4 9.35 1 032
Slide 34: Sustaining capital expenditure
INVESTING IN THE FUTURE OF OUR ASSETS Sustaining capital expenditure 16 14 12 10 USD’ million 8 6 4 2 0 2017 2018 2019* H1 FY20 2020 Forecast** Barberton Mines 8.6 8.6 9.9 5.5 15.0 Evander Mines 14.6 13.7 0.0 1.7 4.6 * Cessation of large-scale underground mining at Evander Mines ** Includes ZAR20 mi
Slide 35: Near-term organic growth
PAN AFRICAN@ RESOURCES eo) Near-term organic growth
Slide 36: 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 37: Royal Sheba
NEAR-TERM ORGANIC GROWTH Royal Sheba • Design has been completed for the early extraction of the western block in Phase 1 Phase 1 Mining • Possibility to fill the current plant capacity from this deposit • Marginal grade deposit with 900m strike and up to 30m width • Ore body is open at depth and on
Slide 38: Where to next - FY20 and beyond
Where to next - FY20 and beyond
Slide 39: Where to next - FY20 and beyond
WHERE TO NEXT - FY20 AND BEYOND “We are confident the group is now successfully repositioned and poised to increase returns to shareholders from existing portfolio as opposed to acquisitive growth”. 39
Slide 40: Thank you
THANK YOU
Pan African Resources — H1 FY2020 Earnings Presentation on 6ix