- Lebowa Technical Review completed - Revised Production Scheduling
and Cost Estimates - Revised Lebowa Life of Mine plan (100%)
Indicates Positive Net Present Value VANCOUVER, May 14
/PRNewswire-FirstCall/ -- Anooraq Resources Corporation ("Anooraq"
or the "Company") (TSXV: ARQ; NYSE Amex: ANO; JSE: ARQ) announces
that, together with Anglo Platinum Limited ("Anglo Platinum")
(referred to collectively as "the parties"), it has completed the
technical review of Lebowa Platinum Mine ("Lebowa") reported in the
November 14, 2008 news release. The technical review was undertaken
as a joint initiative between the parties resulting from the
material decline in global economic conditions and commodity
markets during the second half of 2008. The primary purpose of the
joint technical review was to determine and adopt an optimal mine
plan, production schedule and capital expenditure program at Lebowa
in terms of current and estimated future market conditions ("the
revised plan"). Pursuant to definitive transaction agreements
entered into between the parties in March 2008, Anglo Platinum will
sell to Anooraq an effective 51% of Lebowa (currently 100% owned by
Anglo Platinum), and an additional 1% interest in each of the
Ga-Phasha Platinum Group Metals ("PGM") Project ("Ga-Phasha"),
Boikgantsho PGM Project ("Boikgantsho") and Kwanda PGM Project
("Kwanda"). Anooraq currently holds interests in Ga-Phasha,
Boikgantsho, and Kwanda by way of 50/50 joint ventures with Anglo
Platinum and will increase its interests in each of these projects
from 50% to 51% on completion of the transaction ("Lebowa
transaction"). All of these projects are located in the Bushveld
Complex of South Africa. Upon completion of the Lebowa transaction,
Anooraq will control the third largest PGM resource base in South
Africa. Revised Lebowa Operations & Growth Plan - Lebowa is an
operating mine located on the North-Eastern limb of the Bushveld
Complex, north of and adjacent to the Ga-Phasha property. - Lebowa
consists of a vertical shaft and a number of decline shaft systems
to access the underground development on the Merensky and UG2
Reefs, as well as two concentrator plants. - Production at Lebowa
in 2008(1) was approximately 147,600 refined ounces of platinum,
palladium, rhodium and gold ("4E") from 1.1 million tonnes ("Mt")
of ore milled. - In terms of the revised plan, the parties have
determined to implement an initial plan at Lebowa by: - extending
current Merensky production at the Vertical shaft and UM2 incline
shaft. At the same time the Merensky production profile at the new
Brakfontein decline shaft system will ramp up to steady state
production of approximately 120,000 tonnes per month ("tpm"). Once
Brakfontein Merensky production is at steady state, production from
the Vertical and UM2 shafts will be phased out; and - retaining the
existing UG2 production levels at Middelpunt Hill (approximately
45,000 tpm) and deferring the Middelpunt Hill Delta 80 expansion
project ("MPH Delta 80 project"). - Once the initial plan has been
executed, the parties intend to increase the existing UG2
production profile to approximately 125,000 tpm at steady state
through commissioning of the MPH Delta 80 project commencing in
2016, and thereby increasing Lebowa production to approximately
245,000 tpm at steady state by 2019. - The revised plan will be
reviewed by the parties on a regular basis in terms of current and
estimated future market conditions.
-------------------------------- (1) Anglo Platinum Annual Report,
31 December 2008 Pursuant to the completion of the revised plan,
Anooraq engaged Deloitte Mining Advisory Services ("Deloitte") to
update the technical review of Lebowa completed in 2008 (see April
14, 2008 news release). The technical review confirmed the
following Mineral Reserves and Resources, published by Anglo
Platinum in their 2008 annual report, subject to certain
qualifications as detailed in the TR. December 2008 Mineral
Reserves
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4E 4E Tonnage grade contained Category (Mt) (g/t) metal (Moz)
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Merensky Reef Proven 21.71 4.34 3.03 Probable 5.43 4.16 0.73 Total
Reserve 27.14 4.31 3.76
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UG2 Reef Proven 32.10 5.43 5.60 Probable 9.10 5.17 1.50 Total
Reserve 41.20 5.37 7.10
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Notes: The Mineral Reserves stated are for 100% of Lebowa.
Anooraq's interest would be 51% of the above Mineral Reserves once
the transaction is completed. Mineral Reserves are exclusive of
Mineral Resources. Tonnes and ounces have been rounded and this may
have resulted in minor discrepancies. The 4E elements are the sum
of platinum (Pt), palladium (Pd), rhodium (Rh) and gold (Au). Only
Measured and Indicated Resources have been converted to Mineral
Reserves. Mineral Reserve grade is based on the hoisted ore grade.
The Mine Call Factors used in the estimations of Proven and
Probable Reserves are 97% and 98%, respectively. December 2008
Mineral Resources
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4E con- Ton- 4E tained Pt Pd Rh Au Category nage grade metal grade
grade grade grade (Mt) (g/t) (Moz) (g/t) (g/t) (g/t) (g/t)
-------------------------------------------------------------------------
Measured 25.92 5.64 4.71 3.63 1.5 0.21 0.30 Indicated 27.39 5.51
4.85 3.46 1.52 0.20 0.33 Merensky Measured and Indicated 53.31 5.58
9.56 3.54 1.51 0.20 0.32 Inferred 102.9 5.30 17.53 3.34 1.45 0.20
0.31
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Measured 108.5 6.60 23.03 2.70 3.23 0.55 0.12 Indicated 71.91 6.56
15.18 2.70 3.20 0.53 0.13 UG2 Measured and Indicated 180.38 6.58
38.21 2.70 3.22 0.54 0.12 Inferred 145.00 6.61 30.82 2.72 3.23 0.53
0.13
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Notes: The Mineral Resources stated are for 100% of Lebowa.
Anooraq's interest would be 51% of the above Mineral Resources once
the transaction is completed. Mineral Resources are exclusive of
Mineral Reserves. Tonnes and ounces have been rounded and this may
have resulted in minor discrepancies. The 4E elements are platinum
(Pt), palladium (Pd), rhodium (Rh) and gold (Au). The UG2 Resources
include areas of bifurcated UG2 reef. Approach to the technical
review and report The technical report ("TR"), written in
compliance with National Instrument 43-101 and the Canadian
Institute and Mining and Metallurgy ("CIM") Definition Standards,
describes the Lebowa mineral exploration, development and mining
production. The TR is based on Deloitte's detailed technical review
of work performed by others. The TR was completed by the following
independent qualified persons, who have reviewed the contents of
this release: J. Schweitzer, Pr.Sci.Nat., FSAIMM and S. de Waal,
Pr.Sci.Nat., (geology, mineralization and mineral resources), G.
Guler, PrEng, FSAIMM, MAusIMM (mineral reserves and mine planning),
T. Naidoo, Pr.Sci.Nat. (exploration, drilling, sampling and data
verification), and P. Kramers, PrEng., FSAIMM (mineral processing
and metallurgical testing). Both the 2007 and 2008 Mineral Resource
and Reserve estimates were compiled by Anglo Platinum personnel,
who have stated that the estimates are in accordance with the
Australasian Code for the Reporting of Mineral Resources and
Mineral Reserves ("JORC 2004") and with the South African Code for
Reporting of Mineral Resources and Mineral Reserves ("SAMREC
2007"). In the opinion of Deloitte, there would not be a material
difference in the estimations if done under CIM 2005. Deloitte has
accepted Anglo Platinum's Mineral Resource and Reserve estimates,
subject to certain qualifications as detailed in the TR. In the
qualified persons' opinions, these qualifications will not have a
material effect on future mineral resource estimates, as indicated
in the TR. Results of the technical review - Economic analysis The
economic analysis undertaken for the technical review used South
African Rand ("ZAR") as the base currency and takes into
consideration relevant taxes and royalties. The technical review
used projected metal prices based on analyst consensus estimates to
2012 resulting in the following average price forecast over the
next five years:
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Trend Metal Prices 2009 2010 2011 2012 (Real 2008)
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Platinum (US$/oz) Nominal 1052 1237 1369 1398 1339
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Palladium (US$/oz) Nominal 235 293 349 363 378
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Rhodium (US$/oz) Nominal 2831 3421 4049 4436 3700
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Nickel (US$/lb) Nominal 5.6 6.7 7.5 7.9 7.2
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Copper (US$/lb) Nominal 1.9 2.3 2.7 2.6 1.9
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Following is the weighted unit revenue for the 4E basket of metals
for the first four years of production.
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LOM 2009 2010 2011 2012 (34 years)
-------------------------------------------------------------------------
4E basket US$/oz nominal 753 888 999 1035 real 753 868 950 956 967
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Ex- change ZAR/US$ nominal 9.67 9.42 9.43 9.81 rate real 9.67 9.21
9.02 9.17 9.60
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4E basket ZAR/kg nominal 234,238 268,718 302,764 326,336 real
234,238 256,901 275,404 281,904 297,371
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SA CPI 0.0% 4.6% 5.1% 5.3%
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US CPI 0.0% 2.3% 2.8% 2.9%
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Tax The current South African Income Tax regime for companies
applies to Lebowa and the Discounted Cash Flow ("DCF") model
therefore includes the following tax regime: - Company income tax
rate of 28 % on taxable income. - Secondary tax on companies, a tax
on dividends declared, of 10 %. - A withholding tax of 10 % for
dividends payable to non-residents. The South African mining sector
enjoys immediate tax relief on capital expenditure i.e. capital
expenditure can be off-set against gross profit in the year it is
incurred (or can be carried forward to create a tax shield) i.e.
capital expenditure is not depreciated or amortised for tax
purposes. Royalty The South Africa Royalty Act, which has been
deferred for a year, was used as a basis for calculating estimated
Royalties. The DCF uses the third and final draft average rate to
calculate royalties payable to the State, which is based on gross
sales less allowable beneficiation related expenses and transport
expenses between the seller and buyer of the final product. The
effective royalty rate over the Lebowa Life of Mine ("LOM") is
5.6%. Financial indicators The table below shows the real term
financial indicators of the revised plan over the expected first 34
years of the LOM at Lebowa.
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Units Total Units Total
-------------------------------------------------------------------------
Material Treated Tonnes 92,740,000 Tonnes 92,740,000 Grade (4E head
grade) 4E g/t 5.06 4E g/t 5.06 PGM produced 4E oz 13,684,167 4E oz
13,684,167 Revenue ZAR millions 126,749 CAD millions 17,507 Gross
revenue ZAR millions 134,226 CAD millions 18,540 Royalties ZAR
millions -7,477 CAD millions -1,033 Operating cost ZAR millions
64,067 CAD millions 8,849 Unit operating cost ZAR/t 703.34 CAD/t
97.15 Gross profit ZAR millions 62,682 CAD millions 8,658 Capital
Cost (CAPEX) ZAR millions 12,468 CAD millions 1,722 Real term tax
ZAR millions 14,937 CAD millions 2,063 Effective tax rate % 22.00 %
22.00 Working CAPEX ZAR millions 1,303 CAD millions 180 Net profit
(after working CAPEX) ZAR millions 33,974 CAD millions 4,693 Margin
% 24.70 % 24.70
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Certain additional mineral resources, that had been the subject of
prefeasibility-level studies and hence could be considered mineral
reserves but not included in "approved mine plans" by Anglo
Platinum, have been used for the economic analysis. This includes
25.7 million tonnes at an average 4E grade of 5.39 g/t from the
Brakfontein UG2 Project. Cashflow & NPV Based on the
assumptions stipulated above, the DCF analysis at Lebowa for the
first 34 years of mine plan, yields Net Present Values ("NPV") at
different discount rates as follows:
------------------------------------------ NPV Discount Rate ZAR
millions ------------------------------------------ 5.0% 14,001
------------------------------------------ 7.5% 9,290
------------------------------------------ 10.0% 6,440
------------------------------------------ DCF sensitivity analysis
Sensitivities have been calculated in the DCF model for revenue,
operating costs and working costs. The valuation is most sensitive
to a change in revenue. A 10.0% decrease in revenue results in a
28% decrease in value in the case of NPV at a discount rate of
7.5%. The valuation is not particularly sensitive to capital
expenditure. An increase in capital of 10 % decreases the value by
just 4.0% in the case of NPV at a discount rate of 7.5%. The
valuation is sensitive to a variance in operating costs. An
increase of 10.0 % decreases the NPV by 14.1% in the case of NPV at
a discount rate of 7.5%. A series of sensitivities for various
changes in combined operating costs and revenue, have been
calculated for a NPV at a discount rate of 7.5% and are included in
the table below. NPV7.5 (ZARm) LOM Real Average Basket Price ZAR
297,371 kg -20% -15% -10% -5% 0% 5%
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-20% 6,710 8,008 9,299 10,598 11,908 13,215 -15% 6,056 7,355 8,652
9,942 11,240 12,550 LOM Real -10% 5,399 6,702 8,000 9,294 10,584
11,882 Average -5% 4,740 6,047 7,347 8,645 9,937 11,227 Operating
0% 4,076 5,388 6,694 7,992 9,290 10,579 Cost 5% 3,399 4,728 6,036
7,339 8,637 9,935 ZAR 690.83 10% 2,714 4,058 5,376 6,684 7,984
9,282 per tone 15% 2,012 3,381 4,715 6,024 7,331 8,629 20% 1,288
2,694 4,040 5,365 6,672 7,976
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NPV7.5 (ZARm) LOM Real Average Basket Price ZAR 297,371 kg 10% 15%
20% ------------------------------------------------ -20% 14,523
15,837 17,154 -15% 13,857 15,164 16,478 LOM Real -10% 13,192 14,498
15,805 Average -5% 12,525 13,833 15,139 Operating 0% 11,869 13,167
14,474 Cost 5% 11,221 12,512 13,809 ZAR 690.83 10% 10,577 11,863
13,154 per tonne 15% 9,927 11,220 12,505 20% 9,274 10,573 11,862
------------------------------------------------ Anooraq's
President and CEO Philip Kotze commented: "This technical review
confirms Anooraq's view of the high quality of the Lebowa ore body,
together with its potential for effective depletion through a
phased approach to operations. Management will be required to adopt
a focused and determined effort to ensure delivery of optimum
production based on the revised plan from the updated technical
review. Anooraq now looks forward to moving ahead with the final
steps for completion of the Lebowa transaction, which will
transform Anooraq into a PGM producer with significant growth
potential." On behalf of the Board of Directors Philip Kotze
President and CEO The TSX Venture Exchange does not accept
responsibility for the adequacy or accuracy of this release. NYSE
Amex has neither approved nor disapproved the contents of this
press release. Cautionary and Forward Looking Information This
release includes certain statements that may be deemed "forward
looking statements". All statements in this release, other than
statements of historical facts, that address, future production,
reserve potential, exploration drilling, exploitation activities
and events or developments that Anooraq expects are forward looking
statements. Anooraq believes that such forward looking statements
are based on reasonable assumptions, including the assumptions
that: the Lebowa acquisition will complete; Lebowa will continue to
have production levels similar to previous years; the planned
Lebowa expansions will be completed and successful; Anooraq will be
able to obtain future debt and equity financing on favourable
terms. Forward-looking statements, however, are not guarantees of
future performance and actual results or developments may differ
materially from those in forward looking statements. Factors that
could cause actual results to differ materially from those in
forward looking statements include market prices, exploitation and
exploration successes, changes in and the effect of government
policies with respect to mining and natural resource exploration
and exploitation and continued availability of capital and
financing, and general economic, market or business conditions.
Investors are cautioned that any such statements are not guarantees
of future performance and those actual results or developments may
differ materially from those projected in the forward looking
statements. For further information on Anooraq, investors should
review the Company's annual Form on 20-F with the United States
Securities and Exchange Commission and its home jurisdiction
filings that are available at http://www.sedar.com/. The following
are the principal risk factors and uncertainties which, in
management's opinion, are likely to most directly affect the
conclusions of the study. Some of the mineralized material at the
classified as a measured and indicated resource has been used in
the cash flow analysis. For US mining standards, a full feasibility
study would be required, which would require more detailed studies.
Additionally all necessary mining permits would be required in
order to classify the project's mineralized material as an
economically exploitable reserve. There can be no assurance that
this mineralized material will become classifiable as a reserve and
there is no assurance as to the amount, if any, that might
ultimately qualify as a reserve or what the grade of such reserve
amounts would be. Data is not complete and cost estimates have been
developed, in part, based on the expertise of the individuals
participating in the preparation of the study and on costs at
projects believed to be comparable, and not based on firm price
quotes. Costs, including design, procurement, construction and
on-going operating costs and metal recoveries could be materially
different from those contained in the study. There can be no
assurance that mining can be conducted at the rates and grades
assumed in the study. There can be no assurance that these
infrastructure facilities can be developed on a timely and
cost-effective basis. Energy risks include the potential for
significant increases in the cost of fuel and electricity, and
fluctuation in the availability of electricity. Projected metal
prices have been used for the study. The prices of these metals are
historically volatile, and the Company has no control of or
influence on the prices, which are determined in international
markets. There can be no assurance that the prices of platinum,
palladium, rhodium, gold, copper and nickel will continue at
current levels or that they will not decline below the prices
assumed in the pre-feasibility study. Prices for these commodities
have been below the price ranges assumed in study at times during
the past ten years, and for extended periods of time. The project
will require major financing, probably a combination of debt and
equity financing. Interest rates are at historically low levels.
There can be no assurance that debt and/or equity financing will be
available on acceptable terms. A significant increase in costs of
capital could materially adversely affect the value and feasibility
of constructing the expansions. Other general risks include those
ordinary to large construction projects, including the general
uncertainties inherent in engineering and construction cost, the
need to comply with generally increasing environmental obligations,
and accommodation of local and community concerns. The economics
are sensitive to the currency exchange rates, which have been
subject to large fluctuations in the last several years.
Information Concerning Estimates of Measured, Indicated and
Inferred Resources This news release also uses the terms "measured
resources", "indicated resources" and ""inferred resources". Anglo
Platinum and Anooraq advise investors that although these terms are
recognized and required by Canadian regulations (under National
Instrument 43-101 Standards of Disclosure for Mineral Projects),
the U.S. Securities and Exchange Commission does not recognize
them. Investors are cautioned not to assume that any part or all of
the mineral deposits in these categories will ever be converted
into reserves. In addition, "inferred resources" have a greater
amount of uncertainty as to their existence, and economic and legal
feasibility. It cannot be assumed that all or any part of an
Inferred Mineral Resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of Inferred Mineral
Resources may not form the basis of feasibility or pre-feasibility
studies, or economic studies except for a Preliminary Assessment as
defined under National Instrument 43-101. Investors are cautioned
not to assume that part or all of an inferred resource exists, or
is economically or legally mineable. DATASOURCE: Anooraq Resources
Corporation CONTACT: Anooraq (South Africa), +27 11 779 6800,
Philip Kotze, CEO, Joel Kesler, Corporate & Business
Development; Anooraq (North America), Investor Relations, (604)
684-6365, Toll free 1-800-667-2114
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