Pan African Resources PLC (PAF) Earnings Call Transcript

Good morning or afternoon as the case might be, and thank you to everybody who's taken the time to join us today. So yes, it's a good time for us, an exciting time. It's been a hard month of work, but happy to share this presentation. So what we'll do is run through the presentation and then open for questions afterwards. That's okay. Joining me in presenting today will be Marileen, our Financial Director; Hendrik, who's our Head of Technical Services; and then also Peter, who runs the Australian business. Welcome again, and let's get into the presentation, which is also available on our website. So we just proceed to the first slide. Thank you, Transaction highlights. I think before we speak about highlights, I'm going to ask Peter to come in here and just give us a couple of minutes of background as to the PanAfrican/TCMG and Emmerson joint venture, how it came into being and just the history. Peter, over to you.

Thanks, Cobus. Good morning and afternoon, wherever you are, evening, where I am. Look, just I -- some of you will already know a bit about the history, but I'll start with the history and then go into the joint venture. I mean the history of this region is typically, it was held for those who've been around for a while by Normandy Mining. It was consolidated as one really. There was a couple of groups, but one major miner and 1 or 2, there was 2 or 3 smaller processing plants, but it was a hub-and-spoke model then given the types of ore body. But mining stopped in about 1986 around that time, the majors all left. And since then, it's obviously been in the hands of what I would call small scalers or junior miners. And obviously, gold has been a bit of a lull. And in about 2019, we had -- I've been watching this for a number of years. We saw the opportunity. Gold, obviously, when they left was about USD 500 an ounce. 2019 was significantly different. We saw the opportunity that the only way for this field to get up and moving was to consolidate it. And I guess in '18, '19 didn't have a reserve resource base, had to redo everything, obviously, had a lot of history. But what we said about doing was looking at scenarios to acquire the field. And I stress the word, which is really important, we've acquired a field here that we own. And that was done in the way we purchased 100% of the 3 biggest producing historical assets, which was Warrego, Juno and Nobles. And then we entered into a joint venture with Emmerson Resources. And I guess that's when things evolve. So touching on the joint venture and a little bit of history about the joint venture. There was 2 regions, the Northern and Southern. The earn-in was to earn into 75% and that was done by a $10.5 million spend over 5 years. We completed that late last year or third quarter, fourth quarter last year. And obviously, that meant that PAR went to a 75% ownership with Emmerson 25%. But the significance, obviously, of why we wanted to further consolidate and Cobus and Hendrik and the team will go through it, but was due to the fact that there was -- you had a small mines joint venture, which was a 6% royalty that had to be paid on any assets that went into that joint venture. And clearly, the major mine, which everyone has been talking about, the White Devil project is the first one to come into that. That's a 40%, 60%. So it made -- obviously and without stealing Cobus' thunder, it made a lot of sense further undertake a consolidation because of the cost of running that joint venture and all those associated factors. So that's a little bit of, I guess, a quick history. Cobus, if you like, I'll hand over to you.

Thank you, Peter. Yes. So transaction highlights, obviously, once the scheme is effective, assuming that it is approved, which we believe it will be, Pan Africa secured 100% of the joint venture, ensuring full alignment of interest. It just will be a lot easier for us to move. We have a very good relationship with Emmerson in terms of the joint venture, but we believe this certainly will streamline things and certainly also make it easier to explain. I guess the joint venture terms are incredibly comprehensive, but also quite complicated. It accelerates value creation at Tennant Creek by leveraging our operational expertise and balance sheet in terms of resource delineation and exploration, certainly enhance project economics by eliminating costs. Importantly, also royalty payments that are due to Emmerson on small mines and then recouping or eliminating penalty payments to Emmerson. The background there is that as part of the initial joint venture, there was an agreement on production between TCMG and Emmerson and to the extent that production fell short, there was to be penalty payments based on the gold price and the formula to Emmerson. Now again, important to emphasize these penalty payments were factored into Pan African's valuation of TCMG when we acquired control. But what we do now, we obviously are eliminating those payments to Emmerson. It expands Pan African's existing resource position and dominant landowner in Tennant Creek margin support production growth to more than 100,000 ounces per annum. And you will recall that as part of our interim results presentation, we outlined our pathway to 100,000 ounces from Tennant in the next 3 years. And then the transaction structure [ liquidated ] shares preserves our very strong balance sheet. We are net cash and obviously, in this gold price and given the production profile of the group, we are generating a lot of cash. I think it's important to note here that from an Emmerson perspective, a key requirement from their side was that this was to be a share deal. And that demonstrates also their confidence in, #1, Pan African in our portfolio, but also in the upside that Pan African can realize in terms of developing the Tennant Creek gold field. And that's why most Emmerson shareholders would like to retain exposure to the enlarged group and hence the share structure or the transaction structure, which is all shares. The transaction summary, which I'll go through very briefly, we will acquire 100% of Emmerson's issued and to be issued share capital via an Australian Board approved scheme of arrangement for a certain short Shareholders in Emmerson will receive new Pan African shares, which will simultaneously be listed on the Australian Stock Exchange. These are CDIs and [indiscernible] a little bit later will just talk to the listing process in Australia. Now importantly, the Emmerson Board has unanimously recommended this transaction. And we also have support from 2 large Emmerson shareholders being Noontide and TransAsia with a number of other Emmerson shareholders having we understand have expressed their support for the transaction and for the Pan African strategy in terms of developing Tennant Creek. Obviously, the scheme is still conditional on shareholders' vote and the detailed time line in that respect. We'll be very pleased subject to normal due diligence and all of the JSE LSE requirements to welcome Mark Connolly to the Pan African Board once the transaction becomes unconditional. And we've worked very closely with Mark in terms of concluding this transaction. He's a very well-known and well-respected director in the Australian space. And given Pan African's ambitions to further grow in Australia, we believe he will be a very valuable addition to our Board. And then we spoke about the Australian listing, and Marileen will give a bit more color there in terms of our plans and what it means for Pan African. Very briefly, a group snapshot of operations. You'll all be aware of all the assets we own in South Africa and then also in Australia, currently about a run rate of about 50,000 ounces out of principally treating the Crown pillar stockpile now into the open pits at Tennant and then obviously, very importantly, the White Devil deposit that we own jointly with Emmerson that really is key for us in terms of supporting the production and growing our gold production out of Tennant in the next year. The life of mine currently, when we acquired these assets, the life of mine was circa 8 years with a number of the reserves being quite small body. I think the fact that in such a short space of time that jointly Pan African and Emmerson have managed to discover White Devil, which really is a quality long-life and high-grade deposit demonstrates the prospectivity of the field, and Hendrik will give a little bit more color as far as that's concerned. I'll ask Peter just to briefly touch on the Tennant Creek overview and the prospectivity of the field. Thanks, Peter.

Thanks, Cobus. Basically, as Cobus has mentioned, obviously, the Tennant Creek project and the field that we have at the moment is further enhanced by completing this transaction and certainly from a cleaner -- sorry, it's a cleaner from an operational perspective, cleaner and easy project to take forward. But if we look at the history, and some of you know this already, it's a major historical province, pretty much unloved. It was at its time, it was the highest grade gold province in the region. It's a Tier 1 jurisdiction located in Northern Territory, and it is well established and certainly a lot of infrastructure that has been in place for a long, long time. Production for us commenced in mid last year. Early last year, we commissioned the project, and it's ramping up. It was ahead of budget, ahead of schedule, on time basically. So from that perspective, that's gone fairly well. We've got a dominant land position, and I think Hendrik will touch on this a little bit more, 1,700 square kilometers through the 100% assets and the joint venture with Emmerson, which is now to be 100% par. A long mine life, that mine life, sorry, in there is Nobles. Obviously, if you bring White Devil into that, that takes that from 8 years to circa 14 years and maybe beyond. We think there's a lot of upside in that and certainly in White Devil and a lot of the other assets, and Hendrik will touch on the opportunities there. Attractive economics lower operating costs, and we're still bringing our operating costs down, supporting strong margins and obviously free cash flow. The region is -- this is what attracted us when we put this together originally. The region is significantly underexplored. As you can see there, less than 8% of historical drilling below 150 meters. And we've got an experienced in-country team that is growing rapidly that will obviously take the projects and the business to a new level. Thank you. I'll hand over on that note to Hendrik.

Thank you very much, Peter and team. If we move over to Slide 8. We can see and as the team has indicated previously, with the exploration joint venture successfully commencing in September '25, the group has had access to more than 1,700 square kilometers of highly prospective tenement packages in Tennant Creek, mainly for gold associated ore bodies for the Nobles plant. Additional to this 1,700 square kilometer package, this transaction also gives the group access to additional tenements in Tennant Creek, where Emmerson has conducted some exploration on Edna Beryl at Jasper Hills in Hermitage, which are copper dominant deposits as well as more than 500 square kilometers of prospective exploration tenements within the Lachlan Fold Belt in Macquarie Ark in New South Wales which we will also detail a bit more on Slide 12 and 13. So looking at the exploration joint venture, as Peter has explained to us, where since September '25, Pan African has had a 75% stake in it. These are large mineral resource deposits that's been added to the mine life of Nobles. We can see in the table below just about 1 million ounces at over 4 grams per tonne, which is high-grade deposits. And all of these deposits are within the top 300 meters from surface. So typically shallow deposits and with less than 8% of historical drilling being conducted to depth greater than 150 meters, we do understand the great prospectivity that we've got for these deposits to extend down [deep] . And we've seen that with the White Devil deposit, which we will detail a bit more on Slide 11. But you can see 616,000 ounces, the largest deposit currently within the Tennant Creek mineral field at 4 grams per tonne, average mine life of about 7 years, producing 64,000 ounces a year. It's an amazing project. And looking at over the past 8 months, the group has spent quite a bit of capital in geophysical surveys, doing it on -- using modern techniques, either aerial and in some places, ground-based for high resolution. And we do see that these new modern exploration techniques has given us the ability to look closer to historical brownfields projects and bringing them online. As Peter has mentioned, some of these deposits hasn't been looked at since the 1980s. But then also on greenfield side, we see that these geophysical techniques now gives us the ability to target previously unknown ore bodies where we've identified more than 10 deposits previously not known just below surface, which we will target for follow-up exploration techniques. Of those 1 million ounces, approximately 200,000 ounces forms part of the current Nobles life of mine plan at a grade of about 5.8 grams per tonne. And importantly, this excludes the 600,000 ounces of White Devil, which we will work within the next couple of months to bring that to fruition.

I think it's important also to note that on a number of these deposits, specifically Golden Forty and Chariot, I mean, we believe that there's huge potential to actually extend and expand the ounces.

No, agreed. And that talks to the historical drilling that hasn't really been conducted to depth greater than 150 meters where we know the Tennant Creek mineral field deposits do continue down.

So consolidation of Tennant Creek platform. This is Slide #9. Strategic benefit, as we've said, it eliminates the joint venture, allows Pan African to now develop Tennant Creek at speed, obviously, all of our abilities and skills. Again, like whereas previously, we had a very good relationship with Emmerson in terms of the joint venture still. Now we would have unrestricted access to all of these tenements and 1,700 square kilometers of exploration ground, very exciting. And district scale exploration upside as we said, like a huge tenement package. It adds to our mineral resource and reserve base with we think a lot more resource and reserves to be proven up in the next years. A lot of opportunities both in copper and gold. And then as we said, Pan African control means expedited exploration and development. I'll ask to come in Slide 10 just on identified deposits, specifically the ability to increase all 4 of these resources deposits that we list here.

Thank you very much, Cobus. Yes, we've mentioned some of these deposits, White Devil being the largest one there, just under 5 million tonnes at 4 grams per tonne. We also have Golden Forty, which is featured in the original life of mine plan as a small mines project of Nobles, accessing 134,000 ounces at just over 4 grams per tonne as well, not too far from the current Nobles treatment facility. But all of these deposits, including Chariot and Eldorado, which has been historically main producers also in the region, they are open at depth. Chariot and Eldorado itself hasn't been mined to depth greater than 150 meters itself. But what this transaction do give Pan African is unencumbered access to schedule and run scenarios on these deposits to optimally fill a life of mine plan targeting 100,000 ounces of production with a target mine life of at least 15 years. We can see all of the tenements on the right-hand side of the slide, the yellow tenements, that's the exploration joint venture tenements and then the red ones to the north of it to the top of the image, that's the copper dominant deposits. And throughout these tenements, it covers basically 75-odd percent of the whole Tennant Creek mineral field. And there are various brownfields and greenfield targets that we will identify and follow up with the geophysics, ultrafine salt geochemistry and drilling in the coming months. If we move to Slide 11, just a quick summary on White Devil. At the end of last year, the exploration joint venture conducted a scoping study over the White Devil deposit. And we see at a gold price of USD 2,600 per ounce, an open pit mine shell optimized open pit mine shell targets about 3.2 million tonnes to access just under 380,000 ounces of gold that can be treated within the already existing Nobles treatment facility. Additional to that by creating an access from the bottom of the open pit, you can see in the schematic on the right-hand side by a decline and a ramp system. We can access a further 1 million tonnes at 3 grams per tonne by underground mining methods, quite specifically long haul open stoping, which is a low-cost underground mining method. This gives us a current model life of mine of about 7 years. Additional ore will be supplied to the Nobles plant as well. So it won't just be reliant on White Devil, but with a 7-year life of mine producing on its own at steady state 64,000 ounces of gold at an all-in sustaining cost of just over USD 1,300 to USD 1,350 per ounce. We can see the immense capability of this ore body. And obviously, if we increase that gold price from $2,600 closer to spot, we look at $4,000, $4,500 per ounce, obviously, the pit economics becomes much better, much more economical. The pit becomes larger. We access more ore bodies or more ounces down dip and on strike of the currently defined mineral resource. And if we move to Slide 12, just looking at sort of the copper tenements. We've seen that recently, Emmerson has released some of the intersections and work they've been doing on some of the copper deposits, which is Edna Beryl, Hermitage and Jasper Hill, which this transaction will give Pan African control over as well. These deposits will be quite instrumental as well in supplementing the current Warrego feasibility that the group is finalizing to look at a copper dominant processing facility and making use of these additional resources. We can see some of the intersections highlighted on the right-hand side of the slide there, 119 meters at 3% or 3.3% copper, 9 meters at 2.6 grams per tonne and 0.2% copper. These are large-scale massive copper gold ore bodies and it just supplements the group's ability to bring these deposits into fruition as well. Thank you. I'll hand back to Peter.

Thanks, Hendrik. Look, just obviously, Emmerson has owned these assets for quite a while in New South Wales, but really hasn't focused on it. The center of attention has clearly been the Northern Territory. But from a point of view of this region, and this was not assumed in the valuation that we did. But this is big, for those who are not aware, New South Wales is this region. There's been a lot of studies and a lot of work done and a lot of the majors are in a number of the majors are in there, and you're mainly talking copper gold porphyry systems here. So very expensive exploration spends, more suited to larger companies. And this is one thing that we see as a bit of a sleeper at the moment, but holding 500 square kilometers. the Lachlan Fold Belt has had an excellent history and one that more once we've done our work and completed what we want to do in Tennant Creek, we would look to look at this -- or have a close look at this region from the point of view of spending at least initially some exploration and ramping that up if obviously the various deposits are prospective. But it's in the right street address. Everything presents well here. I think Emmerson have made a good decision here. And I think it was just from a funding perspective and focusing the Northern Territory, whereby they spent most of their money. So it's one that we'll be watching very closely, and we think it's really good to have in the portfolio. I'll hand over to Marileen.

Thanks, Peter. Just in terms of the scheme consideration, as said, the scheme consideration will be settled in the form of Pan African shares, CDIs traded on the Australian Stock Exchange. Pan African will list on the ASX as a foreign exempt listing. So this listing will not affect our primary listings on the London Stock Exchange and the Johannesburg Stock Exchange. And in terms of foreign exempt listing, we will be exempt to comply with most of the ASX listing requirements, but there are some of the listing requirements that we do need to comply with. But the benefits of this far outweigh the incremental compliance with some of those listing rules that we have to comply with. The benefits of the listing includes enhancing our capital markets profile with the ASX being the natural listing given our footprint and our intention to grow our presence in the Australian market. This will also help us to facilitate greater equity research coverage and institutional ownership and then also the additional liquidity and the interest in Pan African shares. It will also give us access to the pools of capital funding from mining-focused investors. We have done a [ non-view ] roadshow previously in July 2025 in Sydney, where we saw over 20 potential investors and shareholders, and it was very positive. So we do believe that there's lots of potential, especially in the capital markets in the Australian environment with also a lot of the superannuation funds being able to invest in ASX shares. And then yes, it gives us greater flexibility to pursue our growth strategy in Australia with corporate investments and potential new transactions.

Thanks, Marileen. As said, the cost of this listing is pretty negligible. So it's also not something to be concerned about. In terms of the timetable, Marileen, just talk us through it.

Yes. So the scheme was announced yesterday. The next step is now that the scheme booklet will have to be issued and launched with the ASIC for review. And then as soon as the ASIC has signed off on the scheme booklet, we will proceed with the court with the first call date. And then once approved by the court, the booklet will then be registered and released on the ASX and dispatched to all Emmerson shareholders where after the scheme meeting will be held where the voting for the scheme will then take place. The second call date will then follow the scheme meeting for final approval of the scheme. And then we expect the effective date to be middle of July, early to mid-July. And then after that, we will determine the scheme record date and implementation date.