Pan African Resources Plc · LSE:PAF
Pan African Resources — Non-Deal Roadshow (March 2016)
47 slides from Pan African Resources's roadshow presentation, March 2016
Slide 1: Pan African Resources Roadshow
PAN AFRICAN RESOURCES ROADSHOW MIAMI / LONDON - FEBRUARY / MARCH 2016
Slide 2: Disclaimer
DISCLAIMER This presentation is provided on a confidential basis. 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
Slide 3: Content of Presentation
CONTENT OF PRESENTATION • Company Overview • 2016 Interim Key Features • Barberton Mines • Evander Mines • Phoenix Platinum • Why Pan African Resources? 3
Slide 4: Company Overview
COMPANY OVERVIEW THE AFRICAN FOCUSED PRECIOUS METALS PRODUCER
Slide 5: Company Overview
COMPANY OVERVIEW • South African mid-tier gold miner › Gold assets producing approximately 200,000oz of Au per annum › Focused on maintaining and increasing profitable production ounces • Dual listed on London’s AIM market at the JSE in Johannesburg › Market capitalisation of ~US$330m › Diversified
Slide 6: Summary of Investment Case
SUMMARY OF INVESTMENT CASE • Long life quality gold mining operations › Barberton Mines – 20 years life of mine › Evander Mines – 16 years life of mine • Significant production improvement in last 6 months › Evander Mines gold sold increased by 34.4% to 45,350oz › Barberton Mines gold sold increased
Slide 7: Recent Company History
RECENT COMPANY HISTORY Exploration Acquired the remaining 26% of Commissioned Phase Barberton Mines from Barberton Tailings Shanduka in exchange of Retreatment Plant 295.7mil shares in the company Acquired 74% of Commissioned Barberton Mines Evander Tailings Admitted to from Metorex Retreatment Plan
Slide 8: Underground Resources and Reserves
UNDERGROUND RESOURCES AND RESERVES Resources and reserves(1) Moz Barberton Mines Evander Mines Phoenix Platinum Total Measured 0.9 1.2 0.1 2.2 Indicated 1.9 18.6 0.4 20.9 Inferred 1.3 8.0 0.1 9.4 Total Resources by 4.1 27.8 0.6 32.5 mines Proved 0.4 0.5 0.1 1.0 Probable 1.7 7.8 0.4 9.9 Total Reserve
Slide 9: Reserves and Resources
RESERVES AND RESOURCES Bubble size represents enterprise value (‘EV’) in relation to reserves and resources 450x EV/reserve 400x Regis Randgold 350x 300x 250x Goldcorp 200x Barrick Gold Evolution Newmont Yamana 150x Newcrest AngloGoldCentamin 100x Kinross EndeavourBeadell Acacia 50x Pan African Harm
Slide 10: Gold Production Graph
GOLD PRODUCTION GRAPH oz 200,000 188,179 175,857 160,000 130,493 120,000 101,797 94,449 80,000 40,000 0 2012 2013 2014 2015 H1-2016 10
Slide 11: 2016 Interim Key Features
2016 INTERIM KEY FEATURES
Slide 12: 2016 Interim Key Features
2016 INTERIM KEY FEATURES ✔ • Financial highlights: › Profit increased by 129.4% to ZAR227.6 million (USD16.7 million) › EBITDA increased by 81.6% to ZAR418.7 million (USD30.8 million) › Dividend paid – ZAR210 million (USD13.5 million), historical dividend yield of 4.2% • Operational highlights: ✔ ›
Slide 13: Barberton Mines
BARBERTON MINES BACK TO PREVIOUS DEPENDABILITY
Slide 14: Overview of Barberton Mines
OVERVIEW OF BARBERTON MINES • Barberton Mines is located c.370km east of Johannesburg and 47km south-east of Nelspruit, South Africa • Barberton Mines comprises of the following assets: › Fairview Mine: Total mining area of 3,034Ha › New Consort Mine: Total mining area of 2,521Ha › Sheba Mine: Total
Slide 15: Barberton Mines
BARBERTON MINES BARBERTON MINES • Gold sold increased to 56,447oz (2014: 52,942oz) • Underground and surface tonnage increased to 139,430t (2014: 126,713t) • Barberton remains a low cash cost producer at ZAR297,877/kg (2014: ZAR312,502/kg) • USD cash cost at USD681/oz (2014: USD885/oz) BARBERTON TAI
Slide 16: Barberton Mines Interim Highlights
BARBERTON MINES INTERIM HIGHLIGHTS FAIRVIEW MINE – 10 HIGHEST GRADE UNDERGROUND GOLD OPERATIONS Au grade Ore Reserves, Contained Au, Mine Country Major owner g/t 000’ tonnes* 000’ ozt Fire Creek United States Klondex Mines 44.1 170 172 MRC South Africa Pan African Resources 32.0 848 871 Macassa (Sou
Slide 17: Barberton Mines Underground Resource Update
BARBERTON MINES UNDERGROUND RESOURCE UPDATE 2015 2014 3.10Moz (9.0Mt @ 10.71g/t) 2.9Moz (8.9Mt @ 10.00g/t) 30% 30% 29% 39% 40% 32% Measured Indicated Inferred 17
Slide 18: Barberton Mines Underground Reserve Update
BARBERTON MINES UNDERGROUND RESERVE UPDATE 2015 2014 1.4Moz (4.3Mt @ 10.11g/t) 1.2Moz (3.9Mt @ 9.31g/t) 29% 33% 71% 67% Proved Probable 18
Slide 19: Barberton Mines Production
BARBERTON MINES PRODUCTION PRODUCTION STATISTICS UNDERGROUND AND SURFACE HEAD GRADE Tonnes (EXCLUDING BTRP) g/t 180,000 12.0 150,000 10.0 120,000 8.0 90,000 6.0 60,000 4.0 30,000 2.0 0 0.0 2011 2012 2013 2014 2015 Fairview 60,405 54,986 53,623 48,488 55,421 Sheba 55,650 55,340 53,559 45,386 47,549 C
Slide 20: BIOX Recoveries
BIOX® RECOVERIES BIOX® RECOVERIES % 100 80 60 40 20 97 96 92 89 84 91 97 95 96 94 96 96 97 96 96 97 98 98 98 99 98 98 0 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014 2015 20
Slide 21: Evander Mines
EVANDER MINES MUCH IMPROVED PERFORMANCE
Slide 22: Overview of Evander Mines
OVERVIEW OF EVANDER MINES • Evander was first developed in 1955 by The Union Corporation and consisted of 8 independent shafts • Currently only No. 7 Shaft and No. 8 Shaft are operational, with the rest on care and maintenance • Located approximately 120km south-east of Johannesburg in Mpumalanga •
Slide 23: Evander Mines Interim Highlights
EVANDER MINES INTERIM HIGHLIGHTS EVANDER MINES • Increase in gold sold to 45,350oz (2013: 33,733oz) • 8 Shaft mining cycle now in higher grade areas • Head grade improved to 5.8g/t (2014: 2.9g/t) • Cash cost improved by 15.1% to ZAR394,730/kg (2014: ZAR464,955/kg) • USD cash cost improved by 24.5% t
Slide 24: Evander Mines Underground Resource Update
EVANDER MINES UNDERGROUND RESOURCE UPDATE 2015 2014 25.9Moz (83.5Mt @ 9.66g/t) 27.9Moz (91.3Mt @ 10.00g/t) 5% 5% 31% 34% 64% 61% Measured Indicated Inferred 24
Slide 25: Evander Mines Underground Reserve Update
EVANDER MINES UNDERGROUND RESERVE UPDATE 2015 2014 7.9Moz (28.8Mt @ 8.52g/t) 7.8Moz (29.0Mt @ 8.41g/t) 6% 6% 94% 94% Proved Probable 25
Slide 26: Evander Underground Grade Profile
EVANDER UNDERGROUND GRADE PROFILE EVANDER 8 SHAFT PRODUCTION - GRADE g/t 20 15 10 5 0 Jan Feb Jan Feb Jan Feb Dec Dec Dec Jun Oct Jun Oct Jun Oct Jul Nov Jul Nov Jul Nov Mar Apr Aug Sep Mar Apr Aug Sep Mar Apr Aug Sep May May May 2013 2014 2015 Head grade Face grade 1. Face grade - the mineralised r
Slide 27: Evander Underground Tonnage Profile
EVANDER UNDERGROUND TONNAGE PROFILE EVANDER 8 SHAFT PRODUCTION Tonnes 50,000 40,000 30,000 20,000 10,000 0 Jan Feb Jan Feb Jan Feb Dec Dec Dec Jun Oct Jun Oct Jun Oct Jul Nov Jul Nov Jul Nov Mar Apr Aug Sep Mar Apr Aug Sep Mar Apr Aug Sep May May May 2013 2014 2015 27
Slide 28: Evander Mines Production Improvements & Targets
EVANDER MINES PRODUCTION IMPROVEMENTS & TARGETS H1 2015 H1 2016 Target MCF * (%) 59 65 73 Accumulations (t) 5,858 3,523 4,000 Sweepings (%) 94 98 100 Face advance (m) 7.9 8.4 12 Stoping width (cm) 131 127 125 Waste – development ratio (%) 24 28 23 Surface sources (t) 24,196 16,605 15,000 Toll treatm
Slide 29: Phoenix Platinum
PHOENIX PLATINUM REMAINS STRATEGIC ENTRY POINT INTO PLATINUM
Slide 30: Overview of Phoenix Platinum
OVERVIEW OF PHOENIX PLATINUM • Located in the North West province of South Africa • Commodities being mined: Platinum (61.14%), palladium (18.74%), rhodium (7.34%) and gold (0.28%), ruthenium (8.59%), iridium (3.91%) (PGE) • Sustainable capital per annum is ZAR1million (USD0.07 million) • LOM is 28
Slide 31: Phoenix Platinum Interim Highlights
PHOENIX PLATINUM INTERIM HIGHLIGHTS • Adversely impacted by IFM Business Rescue proceedings • PGE production decreased by 4.6% to 4,493oz (2014: 4,711oz) • Revenue decreased by 15.2% to ZAR39.2 million (2014: ZAR46.2 million) [USD2.9 million vs. USD4.2 million] • Cash cost per ounce increased by 12.
Slide 32: Why Pan African Resources?
WHY PAN AFRICAN RESOURCES?
Slide 33: Gold Price
GOLD PRICE USD vs ZAR GOLD PRICE vs ZAR/USD EXCHANGE RATE: 5 YEARS ENDED 31 DECEMBER 2015 Relative performance rebased to 100 200 17 150 14 100 11 50 8 0 5 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 USD Gold price ZAR Gold price ZAR / USD Exchange rate Source: Bloomberg & INET BFA 33
Slide 34: Group Costs
GROUP COSTS GROUP CAPITAL SPENDING ON MAINTAINING PRODUCTION AND GROWTH THROUGH THE CYCLE ZAR millions 250 ZAR214.6m (USD19.5m) 200 ZAR160.8m Once off ETRP (USD16.0m) capex of ZAR88.3m ZAR128.9m 150 (USD8.0m) (USD9.5m) 100 50 0 H1 2014 H1 2015 H1 2016 Evander Mines Barberton Mines ETRP Phoenix Plati
Slide 35: ZAR Depreciation
ZAR DEPRECIATION ILLUSTRATIVE EFFECTS OF ZAR DEPRECIATION ON INTERIM EARNINGS EARNINGS EARNINGS ZAR millions USD millions 600 50 ~ZAR486.5m 40 ~ZAR379.8m 400 113.8% ~USD28.9m 30 66.9% ZAR227.6m 200 ~USD24.6m 20 USD16.7m 73.1% 47.3% 0 10 Current results @ ZAR485,215/kg Relative earnings @ ZAR550,000/
Slide 36: Share Price Performance - Gold
SHARE PRICE PERFORMANCE - GOLD PAN SHARE PRICE RELATIVE TO MARKET: 5 YEARS ENDED 17 FEBRUARY 2016 EXCHANGE RATE Relative performance rebased to 100 ZAR/USD 300 19 17 250 15 200 13 150 11 100 9 50 7 0 5 Feb 11 Feb 12 Feb 13 Feb 14 Feb 15 Feb 16 Pan African Resources FTSE / JSE Gold price index ZAR/US
Slide 37: Dividends
DIVIDENDS DIVIDEND PAID ZAR/USD millions 300 ZAR258m ZAR240.3m USD22.3m USD23.0m ZAR210m 250 USD13.5m 200 150 ZAR95.6m USD11.9m 100 50 ZAR nil USD nil 0 2011 2012* 2013 2014 2015 * Foregone dividend to fund the acquisition of Evander Gold Mines 37
Slide 38: Market Leading Dividend Yield
MARKET LEADING DIVIDEND YIELD 4.2% 2.6% 1.9% 1.5% 1.3% 0.8% 0.4% Pan African Centamin DRDGOLD Sibanye Acacia Mining Randgold Gold Fields Resources Note: Dividend yield calculated as last annual dividend per share announced by Company and share price as at 16 February 2016 Source: Bloomberg 38
Slide 39: Conservative Gearing / Debt Ratio
CONSERVATIVE GEARING / DEBT RATIO CONSERVATIVE GEARING / DEBT RATIO1,2,3 0.4 Debt ratio Barrick 0.3 Endeavour AngloGold Gold Fields Newmont Newcrest 0.2 0.1 Goldcorp Sibanye Pan African Resources Acacia Mining Randgold DRD Gold 0.0 Centamin 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 Gearing ratio Note (1): Gea
Slide 40: Disciplined Capital Allocation Decisions
DISCIPLINED CAPITAL ALLOCATION DECISIONS Investment capital/ Project purchase price (ZARm) Forecasted payback period Phoenix CTRP 308.9* Forecasting 10 years payback on current PGM basket prices BTRP 325.7 Paid back in 18 months ETRP 174.3 Forecasting less than 4 years payback Uitkomst Colliery 200.
Slide 41: Premium to Net Asset Value per Share
PREMIUM TO NET ASSET VALUE PER SHARE 8,000 120% 113% 7,000 100% 6,000 90% 80% 5,000 ZAR million 4,000 60% 3,000 36% 40% 2,000 23% 20% 1,000 16% 0 0% 2012 2013 2014 2015 19 Feb 2016* Market Capitalisation Net Asset Value Premium to NAV per share * For Illustrative purposes we kept the Net Asset Value
Slide 42: Resource and Reserve Valuation Comparables
RESOURCE AND RESERVE VALUATION COMPARABLES Bubble size represents enterprise value (‘EV’) in relation to reserves and resources 450x EV/reserve 400x Regis Randgold 350x 300x 250x Goldcorp 200x Barrick Gold Evolution Newmont Yamana 150x Newcrest AngloGoldCentamin 100x Kinross EndeavourBeadell Acacia
Slide 43: Standard Bank Transaction
STANDARD BANK TRANSACTION STANDARD BANK TRANSACTION – STRUCTURE AFTER DEAL Mabindu CIC Development New PAR Investment (Jadeite) Trust 49.5% 33.6% 16.9% Shanduka Gold 23.83% PAR 43
Slide 44: Other Assets: Uitkomst Colliery
OTHER ASSETS COAL ASSET – UITKOMST COLLIERY LOCATED CLOSE TO NEWCASTLE S WA Z I L A N D MPUMALANGA F R E E S TAT E Utrecht Newcastle K WA Z U L U - N ATA L 44
Slide 45: Other Assets: Uitkomst Colliery
OTHER ASSETS COAL ASSET – UITKOMST COLLIERY • Average run-of-mine coal mined per month : 50,000 tonnes • Average saleable coal produced per month : 34,000 tonnes • Number of plant employees : 110 • Number of contractors : 300 • Approximate sustaining capital per year : ZAR10m (USD0.6m) • Approximate
Slide 46: Performance vs 2016 Targets
PERFORMANCE VS 2016 TARGETS • Continue all efforts to reducing the severity of accidents at all operations ✔ • Focus delivery on: › Volumes and grades at operations ✔ › Improve cash cost profiles ✔ • Ameliorate the effects of a lower grade mining cycle at Evander: › Establish mining areas on 25 lev
Slide 47: Thank You
A e SY PAN AFRICAN RESOURCES pic THANK YOU ett ane “S he
Pan African Resources — Non-Deal Roadshow (March 2016) on 6ix