Transformation Trust

Pan African Resources acknowledges that integrating genuine transformation, which permeates the group, is critical for the sustainability of its business in South Africa. We are committed to integrating real transformation throughout the group, under the auspices of the Mining Charter and social and labour plans. The group does not currently rank its B-BBEE contribution at group level but per operation current contributions are rated as per the Mining Charter requirements. Oversight of progress against transformation targets is monitored by the SHEQC committee.

Farmers working in the fields

Recent Mining Charter developments

To further align the mining industry with the B-BBEE Act and the Department of Trade and Industry (DTI) codes, the revised B-BBEE Mining Charter draft, published on 15 April 2016, includes changes to its predecessor, the 2010 Mining Charter. According to the draft, ownership, housing and living conditions, and human resources development elements are ring-fenced, which means 100% compliance will be required at all times and mines have three years to comply with revised targets.

Ownership

Pan African Resource’s strategic BEE partner

In August 2009 Shanduka Gold exchanged its shareholding of 26% in Barberton Mines for a 21% shareholding in Pan African Resources and acquired an additional 5% from Metorex, making the black-owned and managed Shanduka Gold a 26% shareholder in Pan African Resources. Shanduka is a black-owned investment holding company with interests in a diverse portfolio of listed and private companies, primarily in the resources and food and beverage industries. Following limited dilution due to a rights issue, at 30 June 2016, Shanduka Gold (subsequently renamed PAR Gold) held 22.46% of Pan African Resources’ shares. By applying provisions of the MPRDA and Mining Charter to the Pan African Resources share register and discounting shareholders who qualify as organs of state and public entities, we calculate as at 30 June 2016 that this equates to an effective 23.1% BEE ownership at a holding company level for purposes of the MPRDA.

Operational ownership

Barberton Mines
On 1 June 2015, Barberton Mines implemented an employee share ownership programme. A newly established employee trust (the trust) will effectively own 5% of the issued share capital of Barberton Mines. The transaction was fi nanced by Barberton Mines on a notional basis with preference share funding attracting a real return of 2% per annum and without any dilution to Pan African Resources. A portion of dividends issued is retained to repay the notional financing. The portion retained ranges from 50% to 80% over the period of the scheme. Barberton Mines’ total BEE ownership equates to 28.1% by combining the Pan African Resources BEE ownership and the employee share ownership programme.

Evander Mines
In July 2015, a similar scheme was implemented at Evander Mines with the same terms and conditions as the Barberton Mines programme amounting to 5%` ownership. The employee share ownership programme seeks to align the aspirations of Pan African Resources’ employees at its operations with that of management and shareholders. Value will be created for beneficiaries based on the profitability of each operation’s performance. Assuming that regular dividends are declared by these operations, beneficiaries will receive dividends from the scheme from year one. In addition, beneficiaries will receive an annual distribution from the BEE trusts and any capital appreciation will be distributed to the beneficiaries upon winding up of the programme after a minimum of 10 years. Evander Mines’ total BEE ownership equates to 28.1% by combining the Pan African Resources BEE ownership and the employee share ownership programme.

Uitkomst Colliery
The Uitkomst Colliery will be implementing a BEE transaction similar to those currently in place at Barberton and Evander. The BEE transaction will result in an additional 9% historically disadvantaged on-mine ownership in the Uitkomst Colliery. This 9% ownership will be held by broad-based trusts and by a strategic entrepreneur’s trust. The BEE transaction will be financed by the Uitkomst Colliery on a notional basis, with the notional funding accruing interest linked to the prime interest rate. This transaction results in limited dilution to Pan African Resources and 80% of dividends issued to the BEE shareholders will be retained to repay the notional funding over a period of 10 years.