PAR Corporate Presentation - April 2010

8/2/2019 PAR Corporate Presentation - April 2010

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Corporate Presentation

The African Focused Gold Mining Company

April 2010


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Strategic Overview

Quoted on AIM (share code PAF) and listed on the JSE (share code PAN)

Market capitalisation of approximately90 million (6 April 2010)

Strategy: continue to build a profitable, African focused gold mining company

Supplement cash flow from gold business with low cost PGM production Achieve growth from internal cash flow (no debt ability to gear)

Production and growth focus remains on:

Low cost base High operating margin Significant growth potential


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Salient Features

Unhedged and debt free (as at 30 March 2010 - 9 million in cash).

Gold sales of53 million and an operating margin of 25% for the year ended 30 June 2009.

Dividend paying.

Operate the low cost Barberton Mines (South Africa) Approximately 100,000oz per annum Cash cost < ZAR160,000/kg

Developing 405,000oz PGM (Platinum Group Metals) surface tailings resource Approximately 15,000oz PGM production per annum commencing in the second half of 2011 Cash cost of


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Geographic Locations


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Project Summary


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Barberton Gold Mines South Africa


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Geographic Location


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Regional Infrastructure

Barberton Mines is situated 25km southeast of the town of Nelspruit, the main business hub of the Mpumalanga province in

South Africa.

The Mpumalanga Province:

Has well developed infrastructure of roads, railways & telecommunications (70% of 2008 budget of US$1.8 billion wasspent on road upgrades)

Accommodates most of South Africas power stations as result of the large coal deposits present in the province which

supplies the national ESKOM power grid

Has a 1,500km pipeline network which delivers natural gas as an alternative source of power from Mozambique delivering

53 million GJ per annum

Completed the Moloto Rail Corridor project improving rail linkage between the province and Gauteng (main financial hubof South Africa) at cost of US$1 billion

Is upgrading the nearby Kruger International airport hub by US$38 million

Has sophisticated commercial & financial business structure complemented by a spectrum of professional service providers

Quality housing, excellent medical, social and cultural facilities

Modern industrial development parks


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Historical Gold Production from an established gold camp


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Production Statistics


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Average Cost vs. Average Gold Price Received (US$/oz)

Note: Adjusted by PPI


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Cash Cost Breakdown (excluding Capex)


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Capital Expenditure (excludes surface programme)


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Resource Growth


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Peer Group Comparison of Cash Costs

Source: Company disclosure, Macquarie research. Cash costs as per last reported date.* Great Basin cash cost excludes milling and haulage charges


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Phoenix PGM Business


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Geographic Location


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Why PGMs from Chrome Tailings?

The concept is simple.

Mining risk is low

Metallurgy is well understood from current operations

Environmentally friendly

Engineering design and cost structure is well understood from current operations

Plant footprint small (50m X 50m)

Compelling economics

Low cost, low risk & high margins


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Phoenix Chrome Tailings Retreatment Plant

Products mined: PGM 4Es (Platinum, Palladium, Rhodium and Gold*)

Production tons per year: 240,000 t

Grade: 3.00g/t

Content: 405,000 ounces (PGM 4Es)

Estimated plant Capex: 9 million

Extraction method: Concentrator/flotation plant.

LOM: 17 years.

* Platinum (56.5%), Palladium (27%), Rhodium (16%) and Gold (0.5%)


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Chrome Seams: In SituPGM Content

Assumed PGM upgrade supported by typical Chrome Tailings Retreatment Plant (CTRP) Operations

CTRP Operation BIC AREA Seams In situ Grades Plant Head Grade

AQPSA - RK1 Kroondal LG6, LG5 0.8 g/t 2.7 g/t

Sylvania - Millsell Kroondal LG6, LG6A 0.8 g/t 2.9 g/t

Sylvania - Mooinooi Mooinooi MG1, MG2 1.8 g/t 3.2 g/t

Sylvania - Steelpoort Eastern Limb LG, & MGs 2.5 g/t 5.0 g/t

Sylvania - Lannex Eastern Limb MG1 1.8 g/t 3.2 g/t

Phoenix Mooinooi MG1, MG2 1.8 g/t 3.2 g/t

Chrome recovery by the chrome producer increases the PGM grade in the tailings

Lower Group (LGs) seams contain 50 to 65% chrome

Middle Group (MGs) seams contain 30 to 45% chrome

95% of the PGMs are contained in the


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Apr Aug AugJulJunMay

2010 2011

Process Design Criteria

Process

Freeze

24/04

Start of Upfront

Engineering and Re

Estimate

Site Negotiations

Vendor

Contract

16/05

Upfront Engineering and LSTK Price

Execute

Contract

definition

21/06

Submit

offer

10/7

Fixing Lump Sum &

Finalize ContractFinal

Approval

PHASE 1

Earthworks (start 22/7)

Commissioning

Eng Aug 2011

Order

Placement for

LLIs

Mid Aug

PHASE 3

Execution

Process review

Mar

PHASE 2

Project Schedule


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RK1 Consortium


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Investment Strategy

Increase in attributable PGM ounces of 150Koz

Immediate cash flow / earnings

Leverage to Kroondal dump: Suppliers fee

Strategic treatment capabilities Gain further insight into CTRP Reduced Infrastructure Risk


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Historical Data

Profit before tax for the year ending 30 June 2009 was approximately 243,040.Profit before tax for the year ending 30 June 2008 was approximately 4.5 million.

The reduction in production and profit from 2008 to 2009 was mainly the result of:

Increased capital expenditure and

Lower metal prices

Unstable supply of current tailings streams affecting both tonnages and grade. Chromite producers cutback in capacity as a result of depressed metal prices Enforced supply of lower grade material from tailings dams to the RK1 plant

Production and profit forecasts are envisaged to return to 2008 figures as a result of: Significant planned increase in production from current tailings streams.

Reduction in capital expenditure

Planned increase in recovery due to plant optimisations

Recovery PGM metal prices

Annual Results: Year End June Source: Aquarius Platinum Limited Annual Reports

Year ended Tons treated Head grade Basket price PGM's PGM's Opex Opex Recovery Revenue

(June) (t) (g/t) $/oz Oz (4E) Oz (6E) R/oz (4E) $/oz (4E) % (RM)

2009 246 617 2.34 1 241 6 824 10 013 3 003 332 38 28.0

2008 274 000 4.20 2 224 9 849 15 068 2 666 369 27 155.0

2007 182 000 4.32 1 704 7 408 11 101 2 377 331 31 77.0

2006 162 000 3.21 1 207 6 234 8 851 2 507 394 40 43.02005 56 000 2.71 834 1 058 2 940 2 308 367 42 4.3


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The South African Platinum Industry: Cost

0

2 000

4 000

6 000

8 000

10 000

12 000

CASH OPERATING COSTS (R/oz)

The CTRP has one of the lowest cash operating costs (R/PGM oz) in the platinum industry Data below is correct as at August 2009 (as per Nedsec platinum analyst)


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Effect of Bulking up on high margin PGM cash flows

The PGM business has the potential to increase the Groups revenue within 24 months by 17%.

In this scenario (assuming no growth in gold production to only illustrate the impact of the PGM cash flows)revenue comes at a margin of 4 times that forecast for gold.

Acquisition and capital costs of approximately29 million is paid back within 3 years.

Ability to fund PGM growth via internal cash flows.

Business has LOM greater than 10 years.


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Outlook


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Conclusion

Continued strong operational performance from Barberton gold mines.

Review of Price/Earnings ratio one of the best amongst peer group: clearly showing current value.

Market capitalisation/oz clearly indicates Pan African is remarkably cheap and even more so based onmarket capitalisation per ounce of annual production.

This neither takes into consideration further gold expansion, nor the value of the current platinumbusiness.

The Company is fully leveraged to the gold price and strong cash flows together with low operatingcost base positions the Company well for future growth.


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Contact Details

Corporate Office

21 Cradock HeightsCradock Avenue

RosebankSouth Africa

Telephone: +27 (0) 11 243 2900

Registered Office

6 St Jamess PlaceLondon

SW1A 1NPUnited Kingdom

Telephone: +44 (0) 20 7499 3916

www.panafricanresources.com


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PAR Corporate Presentation - April 2010

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Transcript of PAR Corporate Presentation - April 2010