Key events for the first quarter of 2017:
- Production results at Bokoni Platinum Mines (Proprietary)
Limited ("Bokoni") negatively impacted by a workplace fatality and
Section 54 safety stoppages
- Focus remains on development at Bokoni ramp-up shaft
projects
- Completion of the second labour restructure
- Amendment to the term loan facility agreement entered into
with Anglo American Platinum Limited ("Anglo Platinum")
- Bokoni joint venture ("Bokoni JV") parties assessing
establishment of a UG2 Chrome Recovery Plant
- Atlatsa's non-core project assets earmarked for disposal to
Anglo Platinum
- On-going discussions with stakeholders regarding Anglo
Platinum's exit from Bokoni JV
JOHANNESBURG, May 15, 2017 /CNW/ - Atlatsa Resources
Corporation ("Atlatsa" or the "Company") (TSX: ATL; JSE: ATL)
announces its operating and financial results for the three months
ended March 31, 2017. This release
should be read together with the Company's unaudited condensed
consolidated interim financial statements for the three months
ended March 31, 2017 (the
"Consolidated Financial Statements") and the related Management's
Discussion and Analysis of Financial Condition and Results of
Operations (the "MD&A") filed on http:///www.sedar.com, which
are also available at www.atlatsa.com. Currency values are
presented in South African Rand (ZAR), Canadian Dollars ($) and
United States Dollars (US$).
New operational plan
Resource extraction strategy
Bokoni holds one of the largest undeveloped PGM* resources on
the Bushveld Complex. In addition to its existing ramp-up
operations, it has a number of brownfield opportunities to expand
mining operations.
The Bokoni mine has well-established infrastructure and ore is
processed on site at the concentrator plant with an installed
design capacity of 160 kilo tonnes per month ("ktpm").
The initial phase of the new operational plan at Bokoni is
targeting a steady state operation of approximately 145 ktpm
throughput being achieved by Q2 2019.
Production
Bokoni operates two underground shafts, both of which remain in
ramp-up phases towards becoming steady state operations.
The Middelpunt Hill UG2 shaft is currently operating at 80% of
its targeted steady state volumes of 60 ktpm and it is estimated
that it will achieve its steady state by Q2 2018.
The Brakfontein Merensky shaft is currently operating at 50% of
its targeted steady state volumes of 90 ktpm and it is estimated
that it will achieve its steady state by Q2 2019.
Management is currently implementing a comprehensive development
plan to ensure sufficient stoping face length is made available to
achieve the planned production ramp up. This is being achieved by
improving waste handling infrastructure and upgrading trackless
mining equipment required for development. Management is in the
process of appointing a contract miner to develop critical ends to
ensure that development targets are met.
As part of the new operational plan a second labour restructure
has been completed at Bokoni in accordance with Section 189A of the
South African Labour Relations Act. As at March 31, 2017, Bokoni's labour force comprised
2,685 own employees and 1,082 contractors.
Chrome Recovery Plant
In addition to PGM mineralisation, the UG2 Ore at Bokoni
contains between 25-30% Cr2O3 (chromite)
minerals.
Bokoni is in the process of finalising a feasibility study to
assess the viability of extracting chrome from its UG2 tailings.
Preliminary studies indicate that approximately 10-12 ktpm of UG2
chrome concentrate could be produced on a monthly basis from
Bokoni's current UG2 production levels.
* PGM means platinum group metals ("4E"), comprising
platinum, palladium, rhodium and gold.
New term loan facilities and operational funding
A term loan facility agreement ("Term Loan") was originally
entered into between Anglo Platinum and Atlatsa1 on
December 9, 2015 and provided for a
ZAR 334 million ($33.1 million) facility to enable Atlatsa to
advance certain shareholder loans to fund its 51% share of
operational and capital expenditure cash calls at Bokoni.
Although the Term Loan does not bear interest, if any amount
which is due and payable is unpaid, such unpaid amount shall accrue
interest at the South African prime rate plus 2% from the due date
to the actual date of payment.
On August 15, 2016, an amendment
was entered into which increased the size of the facility by
ZAR 193 million ($19.2 million), available in two tranches, to
ZAR 527.0 million ($52.3 million).
On March 9, 2017, a second
amendment was entered into which increased the size of the facility
by an additional ZAR 214.2 million
($21.3 million), available in one
tranche, to ZAR 741.2 million
($73.6 million).
The total contractual amount outstanding on this facility as at
March 31, 2017 was ZAR 607.8 million ($60.3
million). As at the date hereof, this facility has been
fully drawn.
In addition to the Term Loan, Atlatsa and Anglo Platinum have
agreed that Bokoni's operational funding requirements going forward
may be financed by utilising a Purchase Of Concentrate facility
("POC"). The POC facility amount is equal to the lower of 95% of an
advance on revenue for the preceding two months of concentrate
sales at Bokoni or the actual cash funding requirements for the
month in which the financing is required.
The Term Loan and the POC continue to bear no interest and the
rate of payment for overdue amounts remains unchanged.
Anglo Platinum remains committed to fund its 49% share of cash
calls at Bokoni.
Northern Limb Project Assets1
As part of the terms and conditions of the Term Loan facility,
Atlatsa has agreed to co-operate with Anglo Platinum in relation
to, inter alia, its intended acquisition of Atlatsa's
non-core Northern Limb project assets, comprising (i) the
prospecting right held by Kwanda Platinum Mines Proprietary Limited
and (ii) the prospecting rights in respect of Central Block mineral
properties held by Atlatsa (through its South African subsidiary,
Plateau).
Discussions with Anglo Platinum
Discussions continue between Anglo Platinum, Atlatsa and
relevant stakeholders surrounding an appropriate exit for Anglo
Platinum from the Bokoni JV.
These discussions recognise that execution of the new
operational plan at Bokoni is critical to ensure the future
sustainability of the Bokoni operations, having regard to any
potential future corporate activity surrounding Bokoni going
forward.
1 Through their subsidiaries,
Rustenburg Platinum Mines Ltd ("RPM") and Plateau Resources (Pty)
Ltd ("Plateau") respectively.
Bokoni operating and financial performance
Set out below are summaries of the key operating and financial
results for Bokoni for the quarter ended March 31, 2017.
Operating
results
|
Q1
2017
|
Q1
2016
|
%
change
|
Tonnes
delivered
|
t
|
313,856
|
306,483
|
2.4%
|
Tonnes
milled
|
t
|
296,366
|
319,205
|
(7.2%)
|
Recovered
grade
|
g/t milled,
PGM
|
3.7
|
3.6
|
2.8%
|
PGM oz
produced
|
oz
|
35,338
|
36,609
|
(3.5%)
|
Primary
development
|
metres
|
1,239
|
1,210
|
2.4%
|
Re-development
|
metres
|
1,636
|
1,622
|
0.9%
|
Capital
expenditure
|
$m
|
11.6
|
3.5
|
(231.4%)
|
Operating cost/tonne
milled
|
ZAR/t
|
1,620
|
1,389
|
(16.6%)
|
Operating cost/PGM
oz
|
ZAR/PGM oz
|
13,587
|
12,107
|
(12.2%)
|
Lost-time injury
frequency rate ("LTIFR")
|
Per 200,000 hours
worked
|
0.79
|
1.43
|
44.8%
|
Financial results
– Bokoni
|
Expressed in Canadian
Dollars (000's)
|
Q1
2017
|
Q1
2016
|
%
change
|
Revenue
|
33,424
|
35,589
|
(6.1%)
|
Cash operating
costs
|
(48,145)
|
(37,968)
|
(26.8%)
|
Cash operating
loss
|
(14,721)
|
(2,379)
|
(518.8%)
|
Cash operating margin
(%)
|
(44.0%)
|
(6.7%)
|
(556.7%)
|
Earnings/Loss before
interest, taxation, depreciation and amortisation
("EBITDA")*
|
(20,136)
|
4,017
|
(601.3%)
|
Loss for the
period
|
(25,457)
|
(1,988)
|
(1,180%)
|
* EBITDA means earnings before net finance costs, income tax,
depreciation and amortisation. EBITDA is not a recognised
measure under International Financial Reporting Standards
("IFRS") and should not be construed as an alternative to net
earnings or loss determined in accordance with IFRS as an indicator
of the financial performance of Atlatsa or as a measure of
Atlatsa's liquidity and cash flows. While EBITDA is a useful
supplemental measure of cash flow prior to debt service, changes in
working capital, capital expenditures and taxes, Atlatsa's method
of calculating EBITDA may differ from other issuers and,
accordingly, EBITDA may not be comparable to similar measures
presented by other issuers. See the section entitled "Segment
Information" of the Consolidated Financial Statements for a
reconciliation of EBITDA to net income / (loss).
Safety and health
The quarter was marred by a fatality associated with a fall of
ground incident that occurred on February 7,
2017. Bokoni's LTIFR in Q1 2017 of 0.79 improved by 44.8%
compared to the Q1 2016 LTIFR of 1.43. Three Section 54 safety
stoppages were imposed by the South African Department of Mineral
Resources during Q1 2017 compared to four Section 54 safety
stoppages in Q1 2016, resulting in an estimated 933 platinum ounces
that were not extracted as planned in Q1 2017.
Operational results
Tonnes milled at Bokoni decreased by 7.2% quarter-on-quarter to
296,366 tonnes and the PGM ounces produced decreased to 35,338 4E
PGM ounces compared to 36,609 4E PGM ounces produced during Q1
2016.
Primary development increased by 2.4% quarter-on-quarter to
1,239 metres and re-development by 0.9% to 1,636 metres.
Recoveries at the concentrator plant increased by 3.2% to 90.3%
for the Merensky concentrate and 86.3% for the UG2 concentrate,
respectively, primarily as a result of increased ore throughput
from underground operations and processing less lower-grade ore
from the opencast operation.
Financial results
Revenue decreased by 6.1% quarter-on-quarter to $33.4 million as a result of a decrease of 3.5%
in PGM ounces produced and a 1.5% decrease in the ZAR PGM basket
price (ZAR 11,130 in Q1 2017 compared
to ZAR 11,305 in Q1 2016), partially
offset by a 7.3% increase in the average US$ platinum price per
ounce from US$914 in Q1 2016 to
US$981 in Q1 2017.
Total cash operating costs were 26.8% higher than in Q1 2016.
This increase is primarily attributable to an increase in
environmental rehabilitation costs incurred following the closure
of the opencast mining operations, and increased inventory store
costs as a result of additional trackless machinery fleet and
conveyor belt maintenance at the operations.
Cost per tonne milled for Q1 2017 increased to $162 (ZAR 1,620)
compared to $119 (ZAR 1,389) in Q1 2016 with costs per 4E ounce
increasing to $1,361 (ZAR 13,587) compared to $1,041 (ZAR 12,107)
in Q1 2016.
Total capital expenditure for Q1 2017 was $11.6 million, compared to $3.5 million for Q1 2016, comprising 27%
sustaining capital and 73% project expansion capital associated
with the two ramp-up shaft operations.
Financial results
– Atlatsa
|
Expressed in Canadian
Dollars (000's)
|
Q1
2017
|
Q1
2016
|
%
change
|
Revenue
|
33,424
|
35,589
|
(6.1%)
|
Cost of
sales
|
(54,058)
|
(43,244)
|
(25.0%)
|
Gross loss
|
(20,634)
|
(7,656)
|
(169.5%)
|
General,
administrative and other expenses
|
(5,626)
|
(1,968)
|
(185.9%)
|
Other
income
|
3
|
18,300
|
(100.0%)
|
Operating (loss) /
profit
|
(26,257)
|
8,676
|
(402.6%)
|
Net finance
costs
|
(6,795)
|
(6,708)
|
(1.3%)
|
Income tax
|
427
|
(1,403)
|
130.4%
|
(Loss) / profit for
the period
|
(32,625)
|
565
|
(5,874.3%)
|
(Loss) / profit
attributable to Atlatsa shareholders
|
(20,022)
|
1,981
|
(1,110.7%)
|
Basic (loss) / profit
per share – cents
|
(4)
|
(-)
|
(400.0%)
|
Headline loss per
share – cents*
|
(4)
|
(-)
|
(400.0%)
|
* Headline loss per share is not a recognised measure under
IFRS and should not be construed as an alternative to basic
earnings or loss determined in accordance with IFRS as an indicator
of the financial performance of Atlatsa. It is an additional
earnings number used as a way of dividing the IFRS reported profit
between re-measurements that are more closely aligned to the
operating / trading activities of the entity, and the platform used
to create those results. The starting point is basic earnings
excluding "separately identifiable re-measurements" (as defined in
Circular 2/2015 issued by the South African Institute of Chartered
Accountants), net of related tax (both current and deferred) and
related non-controlling interest other than re-measurements
specifically included in headline earnings ("included
re-measurements", as defined). Please refer to the Consolidated
Financial Statements for a detailed reconciliation between the
headline loss per share and the earnings used in the
calculation.
Earnings
The basic and diluted loss per share was ($0.04) for Q1 2017 compared to ($0.00) in Q1 2016. The basic and diluted loss
per share is based on the loss attributable to the shareholders of
the Company of $20.0 million compared
to the gain attributable to the shareholders of the Company of
$2.0 million in Q1 2016.
Issued share capital
As at March 31, 2017 Atlatsa had
554,421,806 issued and outstanding common shares.
Queries:
On behalf of Atlatsa
Joel
Kesler
Chief Commercial Officer
Office: +27 11 779 6800
Email: Joel@atlatsa.com
Cautionary note regarding forward-looking information
This document contains "forward-looking statements" within the
meaning of the applicable Canadian securities laws that are based
on Atlatsa's expectations, estimates and projections as of the
dates as of which those statements are made, including statements
relating to anticipated financial or operational performance.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology including without
limitation, statements relating to potential acquisitions and/or
disposals, future production, reserve potential, exploration
drilling, exploitation activities and events or developments that
Atlatsa expects such statements appear in a number of different
places in this document and can be identified by words such as
"anticipate", "estimate", "project", "expect", "intend", "believe",
"plan", "forecasts", "predicts", "schedule", "forecast", "predict",
"will", "could", "may", or their negatives or other comparable
words. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause Atlatsa's
actual results, performance or achievements to be materially
different from any future results, performance or achievements that
may be expressed or implied by such forward-looking statements.
Atlatsa believes that such forward-looking statements are based
on material factors and reasonable assumptions, including the
following assumptions: maintaining production levels at Bokoni in
accordance with mine operating plan; anticipated financial and
operational improvements expected as a result of the Restructure
Plan; the Company's ability to refinance its debts as and when due;
the provision of goods and/or services by contracted parties on the
agreed timeframes; availability of equipment available as
scheduled; absence of material labour slowdowns, strikes or
community unrest; proper functioning of plant and equipment
functions; absence of mine plan changes resulting from a change in
geological or financial parameters; and absence of geological or
technical problems.
Forward-looking statements, however, are not guarantees of
future performance and actual results or developments may differ
materially from those projected in forward-looking statements.
Factors that could cause actual results to differ materially from
those in forward looking statements include: uncertainties related
to the achievement of the anticipated financial and operational
improvements expected as a result of the Restructure Plan;
uncertainties related to the continued implementation of the Bokoni
operating plan; uncertainties related to the termination and
rehabilitation of the Klipfontein Merensky Opencast Mine operation;
uncertainties related to the timing of the implementation of the
Bokoni deferred expansion plans which includes the accelerated
development of the Brakfontein and Middelpunt Hill shafts;
fluctuations in market prices, levels of exploitation and
exploration successes; changes in and the effect of government
policies with respect to mining and natural resource exploration
and exploitation; continued availability of capital and financing;
general economic, market or business conditions; failure of plant,
equipment or processes to operate as anticipated; accidents, labour
disputes, industrial unrest and strikes; political instability;
suspension of operations and damage to mining property as a result
of community unrest and safety incidents; insurrection or war; the
effect of HIV/AIDS on labour force availability and turnover;
delays in obtaining government approvals; and the Company's ability
to satisfy the terms and conditions of the loans and borrowings,
MD&A – Section 2 – "Liquidity", a copy of which can be found on
SEDAR at www.sedar.com and under "Going Concern" in note 2 of the
condensed consolidated interim financial statements. These factors
and other risk factors that could cause actual results to differ
materially from those in forward-looking statements are described
in further detail under Item "Risk Factors" in Atlatsa's Annual
Information Form for Fiscal 2016, which is available on SEDAR at
www.sedar.com.
Atlatsa advises investors that these cautionary remarks
expressly qualify in their entirety all forward-looking statements
attributable to Atlatsa or persons acting on its behalf. Atlatsa
assumes no obligation to update its forward-looking statements to
reflect actual results, changes in assumptions or changes in other
factors affecting such statements, except as required by law.
Investors should carefully review the cautionary notes and risk
factors contained in this document and other documents that Atlatsa
files from time to time with, or furnishes to; Canadian securities
regulators and which are available on SEDAR at www.sedar.com.
SOURCE Atlatsa Resources Corporation