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Pan African Resources Plc - Update on Operations

Pan African Resources PLC

(Incorporated and registered in and under Companies Act 1985 with registered number 3937466 on )EnglandWales25 February 2000

Share code on AIM: PAF

Share code on JSE: PAN

ISIN: GB0004300496

("" or "the Company" or "the Group")Pan African Resources

UPDATE ON OPERATIONS AMID COVID-19 NATIONAL LOCKDOWN REGULATIONS, NEW FY2020 PRODUCTION GUIDANCE AND UPDATE ON GROUP DEBT REDUCTION

Update on Group Operations and COVID-19 National Lockdown Regulations

As previously communicated to shareholders, on , the South African government announced an extension of the National Lockdown period (“Lockdown Extension”), enacted in terms of the South African Disaster Management Act (“the Regulations”) from to , in an ongoing effort to curtail the spread of the COVID-19 (coronavirus) pandemic.9 April 202016 April 202030 April 2020

The Regulations pertaining to the Lockdown Extension provided for a phased ramp-up of mining capacity to 50% of normalised production during the lockdown period, provided that all the preventative and mitigating controls were in place to curtail the spread of the COVID-19 virus. In response to these amendments, the Group implemented plans to recall 50% of its employees at the Company’s Barberton Mines and surface and underground operations (“Group Operations”).Evander Mines

On , the South African government announced that the country would be entering a period of phased lifting of the lockdown restrictions from , resulting in the previous Level-five hard lockdown, that commenced on , being reduced to a Level-four lockdown. Level-four lockdown restrictions require a risk-based and gradual approach to recalling employees. It enables open cast mines and surface operations to operate at up to 100% of normal capacity, and all other mines at 50% capacity.23 April 20201 May 202027 March 2020

In response to this announcement, the Group commenced the recall of permitted employees for the phased recommencing of Group Operations in compliance with legal requirements, with all the required safety protocols and procedures in place.

The recall of employees at the Group’s Operations in terms of these Level-four lockdown regulations is now well advanced, with the surface operations at the Elikhulu Tailings Retreatment Plant and the Barberton Tailings Retreatment Plant producing at close to full capacity from early .May 2020

Revised FY2020 Production Guidance

As announced on , the Group suspended its original FY2020 production guidance of 185,000oz as a result of the anticipated COVID-19 impact on the Group’s mining operations.30 March 2020

As expected, production at the Group's operations was severely affected during the lockdown months of March and . The Group was however able to mitigate some of the impact through continued mining activities at its surface operations, which was staffed by a materially reduced employee complement, and also with limited high-grade underground mining at Barberton Mines.April 2020

The Group is now in a position to advise shareholders that it expects the revised gold production for the 2020 financial year to be approximately 176,000oz, including capitalised production from the #8 Shaft Pillar operation.

The revised production guidance is a decrease of only 5% from the previous guided  production of 185,000oz, due to the Group’s ability to increase output from surface toll treatment and low grade  surface stockpile processing initiatives, in substitution of underground production. The substituted production was however at a reduced margin, when compared to normal margins earned on ounces  produced from underground.

The revised production guidance is based , , on the assumptions that the Group can continue surface operations at close to maximum capacity for the remainder of the 2020 financial year and underground operations continuing at 50% of personnel capacity, consistent with current Level-four restrictions.  inter-alia

The approximate split of expected full year gold production between operations is as follows:

Statement of Financial Position

The Group remained cashflow positive during the lockdown period. Assuming that the prevailing ZAR gold price of approximately /kg (approximately /oz) can be sustained for the remainder of the 2020 financial year, the Group is expected to reduce its senior interest-bearing debt (including the outstanding gold loan balance), net of projected available cash, to approximately () assuming an exchange rate of ZAR/USD:18.50 from () at . This represents a reduction in senior interest-bearing debt of 23% and 28% relative to the debt levels at and , respectively.ZAR1 millionUSD1,680ZAR1.3 billionUSD70 millionZAR1.8 billionUSD129 million30 June 201931 December 201930 June 2019

In light of the Group’s elevated senior debt levels at inception of the 2020 financial year, a number of short-term zero-cost collar hedges were entered into during the course of the 2020 financial year to underpin the Group’s cashflows and its ability to redeem its senior debt.  The remaining hedges for the 2020 and 2021 financial year are detailed hereunder:

Importantly, the Group is unhedged post .31 December 2020

COVID-19 Programme of Relief and Assistance (CPR)

As previously communicated, the Group initiated a CPR programme to assist with alleviating the adverse impact of the COVID-19 pandemic in its host communites and for its employees. The programme commenced at the end of with the distribution of food and hygiene hampers to its employees, contractors and vulnerable families in communities in close proximity to the Group’s operations. The programme’s rollout will continue during and approximately 5,400 hampers will be provided with a total value of almost R5 million during the current phase of the programme. April 2020May 2020

In the light of the ongoing pandemic, the Group will continue its initiatives to assist some of its most vulnerable stakeholders in the months ahead.

"It is crucial for the country’s economy to be restarted and the phased approach adopted by the government to achieve this is practical in fighting the pandemic and enabling businesses and communities to survive during this tumultuous period. We have implemented preventative and precautionary measures at our operations to ensure the health and well-being of employees as they return to work, and we look forward to working with all stakeholders in the operational ramp-up.  We expect that we still have a long battle ahead against COVID-19, however, I wish to commend all of our employees for the manner in which they have worked together during this period. The strategic repositioning of our Group some years ago, as a safe and high-margin producer with multiple operations and the flexibility to withstand short-term external shocks, should continue to serve all stakeholders well.” commented , CEO of .Cobus LootsPan African Resources

will continue to provide shareholders with updates on progress at its  operations as further information becomes available.Pan African Resources

Rosebank

11 May 2020

For further information on , please visit the Company's website atPan African Resources

www.panafricanresources.com

Full Year

Production ounce profile:

Barberton Mines – Underground:            64,000

Barberton Tailings Retreatment Plant:     21,000

 – Underground and tolling:  31,000

Elikhulu:                                 59,000

Total ounces produced:                    175,000Evander Mines
2 Months                  6 Months

                            1 May 2020 – 30 June 2020 1 July 2020 – 31 Dec 2020

Ounces hedged:                       21,820                    50,000

Average floor price – R/Kg:          683,226                   708,000

Average ceiling price –              847,109                   925,829
R/Kg:
Contact information

Corporate Office                       Registered Office
               Suite 31
2nd Floor, Office 204                  Second Floor
Cnr. Cradock and Biermann Avenues      107 Cheapside
Rosebank,                  
                           EC2V 6DN
Office: + 27 (0)11 243 2900            United Kingdom
                         Office: + 44 (0)20 7796 8644

                            
              
Chief Executive Officer                Financial Director
Office: + 27 (0)11 243 2900            Office: + 27 (0)11 243 2900

/                
St James's   
Company Secretary                      Nominated Adviser and Joint Broker
Office: + 44 (0)20 7796 8644           Office: +44 (0)20 7260 1000

                         /
                                Joint Broker
                            Office: +44 (0)20 7418 8900
Office: + 27 (0)11 011 9200

Hethen Hira                            /
              
Head : Investor Relations              Joint Broker
Tel: + 27 (0)11 243 2900               Office: +44 (0)20 7236 1010
E-mail: 

Website:The Firs Office BuildingJohannesburgLondonSouth Africa[email protected][email protected]www.panafricanresources.comCobus LootsDeon LouwPhil DexterJane KirtonJohn PriorCiska KloppersRoss AllisterDavid McKeownJSE SponsorThomas RiderNeil ElliotPan African Resources PLCPan African Resources PLCCorporate Services LimitedNumis Securities LimitedQuestco Corporate Advisory Proprietary Peel Hunt LLP
LimitedPan African Resources PLCBMO Capital Markets Limited

Quick facts: Pan African Resources plc

Price: 18.425

Market: AIM
Market Cap: £355.29 m
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