Pan African Resources PLC

Good morning to all of you and a warm welcome to our 2023. Mining for a future is not just an empty mantra. It's the foundation we build our business on. We keep our eyes firmly fixed on the horizon and it's filled with opportunity. Let's take a look. Mining is a complex endeavor and never without challenges. And this year was no exception. Nevertheless, it still saw a robust financial performance from the group, with exciting near-term projects and opportunities looming. Construction has begun at Mintels, with commissioning scheduled for the fourth quarter of 2024. This project will significantly increase group production, adding about 25% or 50,000 ounces per year to Pan African's production over the next 20 years or more. while contributing to the environmental rehabilitation of the site. Evanda 8 shaft remains one of the lowest cost underground operations in Southern Africa, and the development of levels 24, 25 and 26 will ensure sustainable production from this operation well into the future. The implementation of continuous operations at Barberton Mines over the last half year has resulted in an increase in production, with further optimization expected into the future. Finally, Pan African continues to lead the way in terms of rapidly expanding our renewable energy footprint and reducing our dependency on the South African grid, a strategy we believe will greatly benefit all of our stakeholders in the coming years. and of course these highlights are all part of our vision of a smarter more agile and future focused approach to mining pan african resources mining for a future good morning to all of you and a warm welcome to our 2023 financial year-end results presentation thank you very much for taking time out of your schedules to join us today

Now, we always knew that the last year would not be easy, having produced some record results in 2022. In addition to the constraints faced at our Barberton Underground, grades normalised at our Evander H shaft operation, also impacting production. We further had to contend with electricity supply issues and some quite severe cost inflation, specifically on inputs such as reagents and ESCOM tariffs. With war breaking out in the Sudan, we had to evacuate our expat staff and safeguard our assets. It would be fair to say that all of these challenges, and of course also the fatal accident we suffered at Evanda in March of this year, has kept our management team very busy and engaged. Pan-African's strategy is to position ourselves as a safe and sustainable, high-margin, long-life gold producer. 2023 presented some difficulties, but it also again demonstrated Pan-African's resilience, our ability to adapt, reconfigure our business, to move forward on a strong footing and grow in a responsible and value-accretive manner. I'm very excited about the year ahead and look forward to sharing some thoughts on our prospects in the following slides. We will keep the presentation fairly brief with an opportunity for questions afterwards. Joining me in presenting today will be Dion Lowe, our Financial Director. You are welcome to refer to our SENs, RNs announcements and to the supplementary information available on the Pan African website. should you require detail not dealt with in today's presentation. Please note the disclaimers and info on forward-looking statements on slides two and three. On slide four, an overview of the presentation. We will start with Pan African's health and safety performance and then provide an overview of the group and of our operating environment. some key features from the year past and detail on asset performance, as well as our cost and capital outlook. We will then spend a couple of minutes on ESG before allowing Dionne the opportunity to highlight elements of the group's financial performance for FOI 2023. The presentation will then conclude with an update on our Sudanese exploration venture and by detailing key focus areas for the next 12 months. If we then proceed to slide number six, our safety performance and our journey to zero harm. A key standout is obviously the fatality at Evander during the year, made even more difficult by the fact that the operation achieved 1 million fatality free shifts just before the accident. We continue to focus on safety initiatives and interventions and on maintaining an industry leading record. we can also celebrate a number of safety milestones achieved during the past year. In addition to safety, wellness of our staff is enjoying a lot of attention, specifically a focus on reducing the impact of the so-called lifestyle diseases. Slide number eight, a high level representation of our unique portfolio of surface remining and underground assets. The addition of mintails means that we now have three large mining complexes in South Africa. Surface operations reduce unit costs and turn legacy liabilities into profits. Whilst the underground provides long life of mines, solid returns on investment as a result of a large sunk capital base and also attractive optionality, which we are bringing to account in a circumspect manner, as demonstrated by our progress on the Evanda Underground. If there's one takeaway from this slide, it is that we are growing profitable production very materially in the years ahead. We expect to be well north of 200,000 ounces of annual production in 2025 with Mintels coming online and also then with the Evanda Underground expansion at the same time. Importantly, all of this growth is funded either with banking facilities or with cash generated from operations. Slide nine, the coming two years will also see us moving towards an even more balanced portfolio of low cost and stable surface remining and high grade long life underground assets. This acid mix should also reduce our group oil and sustaining cost profile, with both Elekulu and Mintails producing at an oil and sustaining cost of approximately $1,000 per ounce. Slide 11, our operating environment. We continuously seek ways of making our business less susceptible to adverse external impacts in South Africa. Some matters to highlight in terms of our operating environment over the last year include the following. We are reducing our reliance on ESCOM, the South African Electricity Utility. Some more information on this in the next slide. Pan-African's assets have long lives with extended mining rights. The Evander Complex's rights are valid until 2038 and those at Barberton until 2051. The Mintail's new order mining right is currently valid until 2029. We will obviously seek extension in due course. In terms of stakeholder interaction, we invest heavily in our social license to operate. Pan-African mines make a meaningful positive impact in the areas where we operate. We have one year remaining on our Barberton Wage Agreement, And we are also very pleased to report today that the underground contract at Evanda recently entered into a three-year wage agreement with their union, which will provide stability as we grow production from that asset. Finally, from a security perspective, our efforts to safeguard our people and operations and minimize the impact of illegal mining and criminality are ongoing. In the last year, we have definitely seen an improvement in terms of the illegal mining situation at Barberton, which is encouraging. To conclude on this slide, Pan African's track record demonstrates that we can operate and grow in South Africa and do so very successfully. To elaborate further on our renewable energy roadmap on slide number 12, with construction having commenced at our Barberton solar facility, we are set to almost double our behind the meter renewable energy footprint in the next year. We further anticipate first power from our 40 megawatt sturdy energy power purchase agreement in early 2025. You can also expect other announcements on renewables from Pan African in the year ahead. Hopefully we can add even more capacity and also possibly diversify into wind energy. The first 10 megawatt solar plant at Evander is already reducing group oil and sustaining cost by more than $10 an ounce, with this number obviously increasing in coming years as ESCOM tariffs continue to escalate. If we then proceed to key production cost and financial features from the last year on slide 14. From a production perspective, our surface assets performed in line with expectations, and we will demonstrate the progress with Varbiton's underground operations in the next slides. In terms of costs, all in sustaining costs came in line with revised guidance, with US dollar costs increasing by only some 3.3%, despite higher US and South African inflation. Given the production headwinds, the group delivered a very resilient financial performance, with a strong Rand gold price compensating for lower underground gold production. Importantly, we are maintaining what we believe is a very attractive dividend to shareholders, despite the large capital tickets for Mintails and for the Evanda underground expansion. As you may know, in terms of upfront capital investment, Mintails is the largest single capital project we have ever undertaken. We've managed to fund all of this Mintails development capital without any call on shareholders, and we ended the financial year with very manageable net debt. If we then move on to more detail on the performance per operation, starting with Elekulu on slide 16, this really is a flagship asset for the group. Ten years of production remaining, producing at approximately $1,000 per ounce. Despite low recoveries, production was stable, and looking forward, we expect another year of more than 50,000 ounces of production and clearly excellent cash flow generation in the current gold price environment. As we have said before, Elukulu is testament that large mining projects can be successfully constructed in South Africa on budget and on schedule. And we are carrying all of the learnings on building and operating Elukulu over to Mintails as we ramp up activities there. Slide 17, the BTRP. Another sterling performance from our first gold tailings retreatment plant commissioned in 2013. And the lowest cost producer in the group, The BTRP management team also deserves special mention. By working on elution efficiencies and optimizing their process, they managed to reduce total costs despite inflation in cyanide and other reagents. In the coming years, we will substitute the BTRP's feed with run-of-mine material from Royal Sheba and Western Cross. lower grade but bulk ore bodies with both having significant potential to further increase resources and reserves. The latest addition to our tailings retreatment portfolio on slide 18, large scale construction at Mintails is now underway. Despite almost two years having lapsed from when we completed the bankable study and some serious inflation recently, our team believe they can still deliver this project for upfront capital of some 2.5 billion Rand or $135 million. Payback on this investment should be under four years, with a project life of more than 20 years when we include the Soweto resources. Now, South Africa has its issues, but where else can one acquire gold reserves, 2 million ounces on surface for less than $2 per ounce? On slide 19, a picture of construction progress on the site with commissions scheduled for December 2024. And you can see that we are nicely on track in terms of project execution timelines. By 20, there is no doubting the benefit of Pan-African developing materials for all legitimate stakeholders. We currently have 200 contractors on site, more than 50% of them from local Mokale communities. Now this number is set to increase to more than 500 staff on site in the months ahead, with even more locals benefiting. When steady state production is achieved, the operation will directly employ almost 400 permanent staff. On slide 21, over the life of Mintails, it will also dramatically improve the environmental and water situation on site, a win-win for all involved. We calculate that the final closure liability will be less than 40% of what was an unfunded liability of more than $20 million when Pan African became involved. To then conclude on our surface assets on slide 22, we are building a world-class tailings retreatment business in the next two years with further scope to grow also. I don't believe the market is currently giving us much credit for Mintel's. But this should change as the project becomes closer to commissioning in 2024. By 2023, the Evanda Underground team is delivered in line with expectations, despite electricity constraints and difficult mining conditions, producing more than 33,000 ounces for the year at an all-in sustaining cost of just over $1,050 per ounce. We are on track with our capital programs at Evander and some highlights from the 12 months include progress with our new underground refrigeration infrastructure with phase two due for commissioning in December of this year. A ramp up in tons from underground by more than 20% in the last year, despite challenging pillar mining conditions. completion of the dewatering of the Egole decline to 19 level with vamping activities set to commence in the coming months on the upper levels of this project. And finally, good progress with the development of our sub-vertical wasting shaft with this project scheduled for completion in quarter one of 2024. I really believe that this shaft with a wasting capacity of 40,000 tons per month will be a game changer for Evander. No more cumbersome conveyors, lower costs with a higher mine core factor. If we then proceed to slide 24, dealing with Fairview at Barberton. Clearly, given the decline in production from Barberton Underground in the last year, a key element of this results presentation is demonstrating progress with our initiatives to increase future production. Even though continuous operations took a bit longer to implement, I believe we still restructured in record time, to be fair. Tons at Fairview are up by almost 8% in the last month, coal production also. Other important initiatives at Fairview is opening up near surface resources for mining and infrastructure improvements we are implementing. Most importantly, the chairlift next to 3D climb. The other critical component at Fairview is increasing drilling on slide 25. reducing production volatility in the years to come. We move on to the smaller underground operations at Barberton on slide 26. At Sheba, continuous operations definitely having an impact, with production tons up almost 40% in the last month. Consort, it took us a bit longer to get the contractor going, but they are now firmly established and our mine plan reconfigured. The headcount has been reduced by more than 30% at this operation and in the last months, tons and gold produced are up. We expect gold production of some 25 kilograms in September, returning consort to a cash flow positive position. Mining of the MMR and the PC ore bodies will give this operation a life of many more years. By 29, the section dealing with oil and sustaining costs, more than 80% of our portfolio produced at an oil and sustaining cost of just over $1,150 per ounce. We expect unit costs at Fairview, Sheba and Consort to reduce in the new financial year, benefiting from the turnaround plans currently being implemented. Flight 30 demonstrates that our cost performance on cooperation continues to be very much in line with averages for the global sector, with most producers having experienced significant cost pressure in the last couple of years. Despite inflation, we should be able to maintain all in sustaining costs at current levels in the coming financial year in US dollar terms. On slide 32, group capital projects, we continue to invest into our assets and into growth with most of Mintel's upfront capex spent in the next year. For Evanda, we expect capital to reduce from 2025 as most of the large capital for 24 to 26 levels would then have been spent. ESG slide 35, very proud of our achievements particularly on progress with renewable energy and water retreatment. I'm happy to report that our Evanda treatment plant for water is fully commissioned. At our Barberton Blueberries project, we are currently employing 300 community members, mostly women, in the second harvest, and also forecasting positive EBITDA for the venture this year. We would love to expand this operation further and create even more employment and opportunity. In terms of other ESG progress, we are issuing our very first TCFD report today. I'm also very pleased to report that this is the first year that we have limited assurance on 10 ESG KPIs, of which five relate to energy management and climate change, and five to important social aspects of our operations. I will now hand over to Dion, who will provide an overview of the financial results for FY23.

Thank you, Kruvis. Slide 37 summarizes the group's results for the 2023 financial year. Contrary to the prior financial year, during which the average RAND gold price declined, this trend reversed in the 2023 financial year, with the average RAND gold price increasing while the increase in the average US dollar gold price during this period was negligible at below 1% to $1,836 per ounce. The impact of the lower turnover was offset by the increase in the RAND gold price of 18%, resulting in a virtually flat year-on-year turnover of 5.7 billion RAND. This leverage to the depreciating RAND is important, as a group's functional currency is the RAND, and our debt is RAND-denominated. RAND cash generation drives our ability to fund our capital programs and redeem our RAND debt. Unfortunately, the flat year-on-year dollar gold price did not provide a similar offset for dollar revenue, which declined by approximately 15%, commensurate with the decline in gold sales. The lower gold production of 175,000 ounces also adversely impacted audience-sustaining cost per ounce, given the large fixed-cost component of our cost base. Fortunately, as virtually all our costs are RAND denominated, the 17% depreciation in the average RAND dollar exchange rate to almost 18 RAND to the US dollar contributed to subsidizing oil and sustaining costs per ounce in dollar terms, which commendably increased by only 3.1% to $1,327 per ounce, and the oil and sustaining costs more often declining by only 1.9% to 28%. The decline in revenue also adversely impacted adjusted EBITDA, which declined by 17% in dollar terms and attributable earnings and earnings per share, which declined by 19% in dollar terms relative to the prior financial year. The disproportionate lower decline in cash flow from operating activities of only 9% to $100 million relative to that of the prior financial year of $110 million is due to the upfront receipt of 400 million Rand or $22 million from the synthetic forward sale of gold, which I'll touch on in the next slide. The financial year's robust cash generation contributed to net debt increasing by $9 million to $22 million only, which is lower than originally anticipated, notwithstanding the capital expenditure on Evander's 24 to 26 level project and Mintel's capital expenditure gaining momentum towards the end of the financial year. Slide 38. demonstrates the extent of the group's available debt facilities and funding approach to the Mintiles project. As we mentioned in the past, our approach to projects of Elekulu and Mintiles scale is to fully fund the project's upfront capital with its debt redemption profile sculptured to its cash flow profile, leaving the rest of the group's cash flows unencumbered for other capital expenditure programs and returning cash to shareholders. The bar chart on the right of the slide shows a composition of the two dedicated debt facilities for Mintel's construction, comprising senior debt of 1.3 billion Rand, approximately $70 million, and the domestic medium-term bond issue of 800 million Rand, approximately $43 million. Together with the 400 million Rand, approximately $22 million upfront receipt from the synthetic forward sale of gold, Mintel's upfront capital of 2.5 billion Rand approximately 135 million dollars is fully funded to reduce the financial risk associated with the forecast increase in debt levels the group entered into a gold price hedge in march 2023 which locks in the rand proceeds on 116 000 ounces and an effective rand gold price of 1 million 135 000 rand per kilogram approximately 1 909 dollars per ounce over the following 24 months. This rolling two-year hedge underpins the RAND proceeds on approximately 32% of the 2024 financial year's production, using the midpoint of 184,000 ounces in the production guidance range as a base. In addition, for the period June to December 23, a further 25,800 ounces were hedged by means of a zero-cost collar with an average floor price of 1,100,000 Rand per kilogram or $1,849 per ounce and an average cap of 1,326,000 Rand per kilogram, $2,230 per ounce, bringing the total hedge answers for the 2024 financial year to 46% of the 184,000 ounce guidance referred to earlier. But it's likely we'll continue to make use of short-term hedges of this nature to lock in cash margins when we see a similar spike in the Rangold price. The bar chart on the left of the slide shows the extent of the group's available bridging and standby facilities should additional liquidity be required, either for operational or capital expenditure purposes. Slide 39 illustrates the individual redemption profiles of the group's facilities referred to in the previous slide and the group's total debt profile as it amortizes over the next five years. Total debt is expected to peak at approximately 3.1 billion rand or approximately 165 million dollars in the third quarter of the 2024 financial year as Mintel's expenditure peaks However, principal debt repayments only commence in the fourth quarter of the 2025 financial year, by which point in time Mintel should be commissioned and in full production. This 18-month window in principal debt repayments enables the group to focus on completing Evander's 24 to 26 level capital expenditure program and Mintel's construction. At forecast peak debt, the total debt to equity ratio is expected to be approximately 56%, of the existing equity base of $295 million. In reality, it would probably be less as the 1 billion Rand RCF facility seldom fully drawn and the group endeavors to hold a minimum cash balance of 200 million Rand, approximately $11 million at any point in time. Slide 40 tracks the group's historical dividend yield and the yield on the proposed dividend of 400 million Rand or approximately $21 million for the 2023 financial year. In Rand terms, a dividend is identical to that of the prior year of 18 South African cents per share, but lower in US dollar and pound terms due to the depreciation of the Rand relative to these currencies and equates to approximately 0.96 US cents per share or 0.75 pence per share. Based on the 30 June 2023 closing share price of R3.03, this represents a dividend yield of 5.9% in grand terms relative to the dividend yield of 4.6% of the prior financial year, which was based on the year-end share price of R3.94 at that time. The proposed dividend falls within the range provided for in the group's dividend policy of 40% to 50% of discretionary cash flow as defined by the dividend policy. Return on equity is a key parameter for measuring the success of our capital allocation decisions and slide 41 shows a dollar return on the group's shareholder funds for the 2023 financial year relative to that of its peer group. The decline in the return on equity to 20.8% relative to the 26% of the 2022 financial year is to be expected given the decline in profitability However, as Evander's 24 to 26 level project and the Mintel mine commences generating returns in the 2025 financial year, we can expect the return on equity to revert to its historical levels of closer to 30% given the profitability of these projects. Thank you.