Manica - Pro Forma Financial Effects Statement

Pan African Resources PLC (Incorporated and registered in England and Wales under Companies Act 1985 with registered number 3937466 on 25 February 2000) AIM Code: PAF JSE Code: PAN ISIN: GB0004300496 ISIN for Nil Paid Rights: GB00B85FJG40 (JSE Code: PANN) ISIN for Fully Paid Rights: GB00B8RCBP62 ("Pan African" or the "Company")

UPDATE REGARDING THE DISPOSAL OF THE MANICA GOLD PROJECT ("MANICA") TO AUROCH

MINERALS NL ("AUROCH") AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

1. INTRODUCTION

Pan African shareholders ("Shareholders") are referred to the announcementpublished by the Company on 29 August 2012 ("Announcement") regarding thedisposal of 100% of Manica to Auroch Minerals Mozambique (Pty) Ltd, a whollyowned subsidiary of Auroch (Auroch was previously named Terranova Minerals NL)("Transaction"). Certain terms of the Transaction have now been amended asdetailed below and the unaudited pro forma financial effects of the Transaction("Financial Effects") are set out below.

Jan Nelson, CEO of Pan African commented:

"The board of Pan African believes that the management team at Auroch will addsignificant value to this project and that Pan African shareholders willrealise value from this transaction in time."

2. AMENDMENT TO THE TRANSACTION TERMS

Pan African and Auroch have agreed to amend the terms and conditions of theTransaction as follows:

* Pan African was to receive the first portion of the Purchase Consideration

comprising AUD2 million ("Initial Cash Consideration") and 25 million shares in Auroch ("Consideration Shares") upon the fulfilment or, where possible, waiver of the conditions precedent to the Transaction (" Completion"). However, payment of the cash portion of the Initial Cash

Consideration has now been deferred for a period of up to 18 months from

Completion and the issue of 4,100,000 of the Consideration Shares shall

only be issued to Pan African upon the receipt by Auroch of the requisite

approval by its shareholders to issue such shares ("Shareholder Approvals

"). Auroch has undertaken to obtain the Shareholder Approvals by the end of

February 2013; and * the total purchase consideration payable by Auroch in terms of the Transaction ("Purchase Consideration") to Pan African in cash and new shares in Auroch ("AOU Shares"), shall be limited to a maximum of

AUD80 million. The value of the Purchase Consideration shall be calculated

with reference to the aggregate value of the cash paid and the value of the

AOU Shares (calculated with reference to the closing price of such shares

the day before their issue) issued to Pan African as payment of the

Purchase Consideration. Any adjustment required shall only be made through

a reduction in the number of AOU Shares issued to Pan African i.e. the cash

portion of the Purchase Consideration shall remain unchanged and only the

number of AOU Shares to be issued in terms of the Transaction may be

adjusted.

The adjustments to the Transaction terms described above were agreed so as toallow Auroch to comply fully with its obligations in terms of the Transactionagreements whilst obtaining further certainty with respect to the extent thatits shareholders would be diluted through the future issue of AOU Shares forpurposes of settling the Purchase Consideration.

3. FINANCIAL EFFECTS OF THE TRANSACTION

The table below sets out the Financial Effects. The Financial Effects have beenprepared for illustrative purposes only, in order to provide information abouthow the Transaction might have affected Shareholders had the Transaction beenimplemented on the dates indicated in the notes below.Due to their nature, the Financial Effects may not fairly present the financialposition or the effect on earnings of Pan African after the Transaction. Thepreparation of the Financial Effects is the responsibility of Pan African'sdirectors.The Financial Effects have been prepared using accounting policies that complywith International Financial Reporting Standards ("IFRS") and that areconsistent with those applied in the published audited results of Pan Africanfor the year ended 30 June 2012.The figures included in the "Before the Transaction" column of the FinancialEffects have been extracted from the "After the Transaction and Rights Offer"column of the pro forma financial effects pertaining to the acquisition ofEvander Gold Mines Limited and the related rights offer ("Acquisition andRights Offer") by the Company as contained in the announcement published by theCompany on 7 November 2012 ("Evander Announcement"). The Financial Effects aretherefore presented after accounting for the pro forma financial effects of theAcquisition and Rights Offer.In order to comply with the requirements of the JSE Limited ListingsRequirements, the Financial Effects have been prepared on the assumption thatall the milestones (as more fully described in the Announcement), in terms ofwhich the deferred portions of the Purchase Consideration shall be paid to PanAfrican, are met. The Financial Effects therefore account for the entirePurchase Consideration, comprising AOU Shares and cash, being received by PanAfrican on 1 July 2011 for purposes of the Statement of Comprehensive Incomeand 30 June 2012 for purposes of the Statement of Financial Position. Thisresults in Auroch being consolidated as a subsidiary of Pan African inaccordance with IFRS for purposes of the Financial Effects. The resultanteffect is that any profit on the sale of Manica is not accounted for in theFinancial Effects. Pan African therefore emphasises that it is highly unlikelythat Auroch will become a subsidiary of Pan African in the near future and assuch, the Financial Effects presented below may not truly reflect the actualoutcome of the Transaction. Before the After the Change Transaction Transaction % Earnings per share (pence) 5.32 5.23 (1.69) Diluted earnings per share 5.30 5.21 (1.70)(pence) Headline earnings per 2.37 2.28 (3.80)share (pence) Diluted headline earnings 2.36 2.27 (3.81)per share (pence) Net asset value per share 10.02 9.93 (0.90)(pence) Tangible net asset value 8.14 7.91 (2.83)per share (pence) Number of shares in issue 1 818 334 263 1 818 334 263 - Weighted average number of 1 815 274 388 1 815 274 388 -shares in issue Diluted number of shares 1 823 359 844 1 823 359 844 -in issue Notes:

1. The "Before the Transaction" column has been extracted from the "After the

Transaction and Rights Offer" column contained in the Evander Announcement.

2. The Financial Effects have been prepared on the assumption that the

Transaction was concluded and all the deferred payments were paid in full

on 1 July 2011 for purposes of the Statement of Comprehensive Income and by

30 June 2012 for purposes of the Statement of Financial Position.

3. The Financial Effects are prepared on the assumption that Pan African

received 96 666 668 AOU Shares at an average price of AUD0.29 (GBP0.19) per

share (being the closing price for an AOU Share the day before the

Announcement) and cash in the amount of AUD6 000 000 (GBP3 900 000) as full

payment of the Purchase Consideration. The Financial Effects have therefore

been prepared on the assumption that the total value of the Purchase

Consideration amounts to AUD34 033 334 (GBP22 121 667).

4. The Financial Effects have been prepared on the assumption that Pan African

controls Auroch following the issue of AOU Shares to the Company as part

payment of the Purchase Consideration. Auroch has therefore been

consolidated by Pan African in accordance with IFRS.

5. For purposes of this announcement and the Financial Effects, Australian

Dollars have been converted to British Pounds using an exchange rate of

AUD1.54:GBP1.00.

4. CATEGORISATION AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

The Transaction has been categorised as a category 2 transaction in accordancewith the JSE Limited Listings Requirements.

Holders of Pan African securities are referred to the cautionary announcementpublished by the Company on 7 November 2012 and are advised that caution is nolonger required to be exercised when dealing in the Company's securities.Johannesburg14 December 2012SponsorOne CapitalEnquiries South Africa UK Pan African Resources Canaccord Genuity Limited - Nomad and Joint Broker Jan Nelson, Chief Executive Rob Collins / Peter Stewart / Officer Sebastian Jones / Joe Weaving +27 (0) 11 243 2900 +44 (0) 20 7523 8350 One Capital finnCap Limited - Joint Broker Sholto Simpson / Megan Young Elizabeth Johnson / Joanna Weaving +27 (0) 11 550 5000 +44 (0) 20 7220 0500 Vestor Investor Relations St James's Corporate Services LimitedLouise Brugman Phil Dexter +27 (0) 11 787 3015 +44 (0) 20 7499 3916 +27 83 504 1186 Gable Communications Justine James +44 (0) 20 7193 7463 / +44 (0) 7525 324431

For further information on Pan African, please visit the website at www.panafricanresources.com