Key features for the third quarter of 2016:
- Restructure and right sizing plan at Bokoni Mine
completed
- Improved safety performance achieved at Bokoni
Mine
- Improved operational efficiencies achieved at Bokoni
Mine
- Re-arrangement of term loan facilities with Anglo
Platinum
- Cash operating profit at Bokoni Mine achieved for the
quarter, whilst basic loss per share for the Company reduced
quarter-on-quarter
JOHANNESBURG, Nov. 14, 2016 /CNW/ - Atlatsa Resources
Corporation ("Atlatsa" or the "Company") (TSX: ATL; JSE: ATL)
announces its operating and financial results for the three and
nine months ended September 30, 2016.
This release should be read together with the Company's unaudited
condensed consolidated interim financial statements for the three
and nine months ended September 30,
2016 (the "Consolidated Financial Statements") and the
related Management's Discussion and Analysis of Financial Condition
and Results of Operations filed on www.sedar.com, which are also
available at www.atlatsaresources.co.za. Currency values are
presented in South African Rands (ZAR), Canadian Dollars ($) and
United States Dollars (US$).
Harold Motaung, Chief Executive Officer of Atlatsa, commented,
"We are pleased to have completed the major phase of our
restructure and right sizing plan at Bokoni Mine without any
significant disruptions at our operations. All stakeholders should
be complimented as to the manner and approach adopted during this
challenging period. We have begun to see certain operational and
safety performance improvements stemming from the Restructure Plan,
and the emphasis at the mine will continue to focus on costs,
efficiencies and overall operational improvements going forward,
whilst seeking to maintain momentum in development at our two
remaining Middelpunt Hill UG2 and Brakfontein Merensky underground
development shafts, which remain in their ramp-up phases through to
2018 and 2020 respectively."
Bokoni Mine's operational and financial results, when compared
on a quarterly basis, should be viewed having regard to the
significant change in the nature and scope of the operations
resulting from the implementation of an operational and financial
restructure plan ("Restructure Plan") during the past 12 months
through to September 30, 2016.
Bokoni Mine operating and financial
performance
Set out below are summaries of the key operating and financial
results for Bokoni Mine for the three months ended September 30, 2016.
Operating
results
|
Q3
2016
|
Q3
2015
|
%
change
|
Tonnes
milled
|
t
|
363 320
|
482 150
|
(24.6)
|
Tonnes
delivered
|
t
|
368 266
|
506 034
|
(27.2)
|
Recovered
grade
|
g/t milled,
PGM*
|
3.8
|
3.6
|
5.6
|
PGM* oz
produced
|
oz
|
44 463
|
55 491
|
(19.9)
|
Primary
development
|
metres
|
1 508
|
2 362
|
(36.2)
|
Capital
expenditure
|
$m
|
8.9
|
8.3
|
(7.2)
|
Operating cost/tonne
milled
|
ZAR/t
|
1 449
|
1 236
|
(17.2)
|
Operating cost/PGM*
oz
|
ZAR/PGM*
oz
|
11 839
|
10 741
|
(10.2)
|
Lost-time injury
frequency rate ("LTIFR")
|
per 200,000 hours
worked
|
0.99
|
1.56
|
36.5
|
* PGM means
platinum group metals ("4E"), comprising platinum, palladium,
rhodium and gold.
|
Financial
summary
|
|
|
|
Expressed in
Canadian Dollars (000's)
|
Q3
2016
|
Q3
2015
|
%
change
|
Revenue
|
48 877
|
57 208
|
(14.6)
|
Cash operating
costs
|
48 178
|
59 415
|
18.9
|
Cash operating profit
/(loss)
|
699
|
(2 207)
|
131.7
|
Cash operating
margin
|
1.4%
|
(3.9%)
|
135.9
|
Earnings before
interest, taxation, depreciation and amortisation
("EBITDA")*
|
(2 475)
|
(26 607)
|
90.7
|
(Loss) for the
period
|
(11 396)
|
(37 376)
|
69.5
|
(Loss) attributable
to Atlatsa shareholders
|
(7 186)
|
(21 452)
|
66.5
|
Basic and diluted
loss per share – cents
|
(1)
|
(4)
|
75.0
|
*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).
|
Expressed in
Canadian Dollars (000's)
|
Q3
2016
|
Q3
2015
|
%
change
|
Revenue
|
48 877
|
57 208
|
(14.6)
|
Cost of
sales
|
(54 002)
|
(65 037)
|
17.0
|
Gross loss
|
(5 125)
|
(7 829)
|
34.5
|
General,
administrative and other expenses
|
(3 277)
|
(24 255)
|
86.5
|
Fair value
adjustments on loans
|
104
|
(145)
|
171.7
|
Operating
loss
|
(8 299)
|
(32 229)
|
74.2
|
Net finance
costs
|
(7 954)
|
(6 143)
|
(29.5)
|
Income tax
|
4 857
|
996
|
(387.7)
|
Profit / (loss) for
the period
|
(11 396)
|
(37 376)
|
69.5
|
Profit / (loss)
attributable to Atlatsa shareholders
|
(7 186)
|
(21 452)
|
66.5
|
Basic loss per
share - cents
|
(1)
|
(4)
|
75.0
|
Safety and health
Bokoni Mine's LTIFR was 0.99 per 200,000 hours worked during the
quarter compared to 1.56 in Q3 2015, an improvement of 36.5%. There
was one Section 54 safety stoppage imposed by the South African
Department of Mineral Resources at the operations during the
quarter, resulting in the loss of two days production and 202
platinum ounces at the operation.
Operational and financial restructure plan at Bokoni
Mine
To ensure the future sustainability of Bokoni Mine, the Company
announced on September 16, 2015 the
implementation of the Restructure Plan at its Bokoni Mine. The
primary objective of the Restructure Plan was to enable Bokoni Mine
to endure a prolonged period of depressed PGM commodity prices, by
right sizing the operation, placing loss making operations on care
and maintenance, reducing its existing cost base, increasing
production volumes of higher grade ore from underground operations
and improving operational efficiencies.
The major phase of the Restructure Plan was completed during the
quarter, with key results as follows:
- The loss making Vertical and UM2 Merensky shafts underground
operations were placed on care and maintenance (in August and
December 2015 respectively);
- Owing to numerous operational and community related challenges
a decision was taken to discontinue the Klipfontein Merensky open
cast operations with effect from January
2017;
- Going forward Bokoni Mine has retained its two underground
shaft operations at its Middelpunt Hill UG2 and Brakfontein
Merensky development shaft complexes, where operations continue to
ramp up towards achieving steady state production rates of 60,000
tonnes per month ("tpm") and 100,000 tpm by 2018 and 2020
respectively;
- The labour force at Bokoni Mine has been reduced by 29.6% from
5,657 personnel as at September 30,
2015 to 3,985 as at September 30,
2016. This reduction comprises a 47.3% decrease in contract
labour and a 18.6% decrease in own mine employees. Post
implementation of the Restructure Plan there remained an over
complement of mine personnel over various departments at Bokoni
Mine which has necessitated the issue of a further Section 189(3)
notice to relevant parties pursuant to Section 189A of the South
African Labour Relations Act, 66 of 1995, for the commencement of a
consultation process on contemplated retrenchments of employees
based on operational requirements;
- Bokoni Mine's cash operating costs have been reduced by 12%
from Q3 2015 to Q3 2016, the majority of which is related to the
substantial reduction in Bokoni Mine's labour force; and
- The Restructure Plan is beginning to achieve improved
operational efficiencies with stoping crew efficiencies improving
by 7% quarter–on–quarter to an average of 348 square meters per
crew.
Operational results
Bokoni Mine tonnes delivered to the concentrator plant for Q3
2016 decreased by 27.2% to 368,266 with tonnes milled decreasing by
24.6% to 363,320 tonnes, resulting in production of 44,463 4E PGM
ounces compared to 55,491 4E PGM ounces produced during Q3
2015.
Primary development decreased by 36.2% quarter-on-quarter to
1,508 metres. A negative impact resulting from the Restructure Plan
has been a backlog in development at the operations during the
first nine months of 2016 relative to the intended mine development
plan. As a result, the planned production ramp up at Brakfontein
Merensky and Middelpunt Hill UG2 development shaft complexes has
been delayed by six to twelve months, respectively.
Recoveries at the concentrator plant increased by 1.3% to 90.2%
for the Merensky concentrate and by 1.9% to 87.1% for the UG2
concentrate. The opencast concentrate recoveries increased by 10.7%
to 72.5% for Q2 2016.
Financial results
Revenue decreased by 14.6% quarter-on-quarter to $48.9 million as a result of the 19.9% decrease
in 4E PGM ounces produced. The ZAR PGM basket price increased by
16.8% from ZAR10,214 in Q3 2015 to
ZAR11,927 in Q3 2016, whilst the
average US$ platinum price increased by 8.8% from US$998 in Q3 2015 to US$1,086 in Q3 2016. The average realised ZAR/US$
exchange rate for Q3 2016 was ZAR14.07 compared to the average exchange rate of
ZAR13.00 realised in Q3 2015.
Total cash operating costs at Bokoni Mine were 19.3% lower,
reflecting the decrease in tonnes milled and cost saving measures
achieved by management. The change in Bokoni Mine's cost profile is
attributable to:
- 24.1% decrease in labour costs due to the Restructure Plan with
a number of employees taking voluntary severance packages in Q4
2015 and continued retrenchments in fiscal year 2016;
- 42.3% decrease in contract labour costs due to the Restructure
Plan which led to the retrenchment of a significant number of
contractor personnel and the 55.1% decrease in opencast tonnes
delivered as the opencast contractor is paid on a per tonne
delivered basis;
- 23.5% decrease in utility costs due to the UM2 and
Vertical shaft operations being placed on care and maintenance;
and
- 9.6% increase in sundries largely due to an increase in the
maintenance and refurbishment costs associated with additional
equipment purchased for underground operations.
Cost per tonne milled for Q3 2016 was $128 (ZAR1,449)
compared to $127 (ZAR1,236) in Q3 2015 with cost per 4E ounce at
$1,048 (ZAR11,839) compared to $1,103 (ZAR10,741)
in Q3 2015.
Total capital expenditure for the three months ended
September 30, 2016 was $8.9 million, compared to $8.3 million for Q3 2015, comprising 50%
sustaining capital and 50% project expansion capital associated
with the two key ramp-up shaft operations.
Bokoni Mine achieved a modest cash operating profit for the
quarter.
The Company's basic and diluted loss per share improved 75%
quarter-on-quarter to a loss of 1
cent per share.
Re-arrangement of term loan facilities with Anglo American
Platinum and recognition of fair value gain
The Company's primary source of financing remains its term loan
arrangements with Anglo American Platinum Ltd ("Anglo
Platinum").
During the quarter the Company agreed with Anglo Platinum to
amend its existing debt facilities, such that all loan facilities
will cease to incur any additional interest with effect from
September, 2016 in order to limit the Company's debt exposure. As a
result of this re-arrangement, the Company has recognized a
significant fair value gain as equity on the balance sheet during
the reporting period.
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 U.S. Private Securities Litigation Reform Act of
1995 and 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: open cast mining and accelerated development
of underground shaft systems at Bokoni Mine; maintaining production
levels at Bokoni Mine in accordance with mine operating plan;
anticipated financial and operational improvements expected as a
result of the Restructure Plan; contracted parties provide goods
and/or services on the agreed timeframes; availability of equipment
available as scheduled and does not incur unforeseen breakdowns;
absence of material labour slowdowns, strikes or community unrest;
proper functioning of plant and equipment functions; geological or
financial parameters do not necessitate future mine plan changes;
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
Mine operating plan and opencast mining operations; uncertainties
related to the termination of the Klipfontein Merensky Opencast
Mine operation; uncertainties related to the timing of the
implementation of the Bokoni Mine deferred expansion plans;
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 Term Loan Facility and
the Senior Facilities Agreement, as described in "Liquidity" and
under "Going Concern" in note 2 of the unaudited condensed
consolidated interim financial statements for Q3 2016. 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 3D "Risk Factors" in
Atlatsa's Annual Report on Form 20-F for fiscal year 2015, which is
available on SEDAR at www.sedar.com and on EDGAR at
www.sec.gov.
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.
Note to U.S. Investors Regarding U.S. Delisting and
Deregistration
On July 20, 2015, the Company
filed a Form 25 (Notification of Removal from Listing and/or
Registration under Section 12(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) with the U.S. Securities and
Exchange Commission (the "SEC") to voluntarily withdraw its shares
from listing on the NYSE MKT. The delisting was effective 10
days following the filing of the Form 25. On July 8, 2016, the Company filed a Form 15 with
the SEC to terminate the registration of its common shares under
Section 12(g) of the Exchange Act, and its reporting obligations
under Section 13(a) of the Exchange Act. The termination of the
Company's registration would become effective 90 days after the
date of filing of the Form 15 with the SEC, or within such shorter
period as the SEC may determine. Upon filing of the Form 15, the
Company's reporting obligations under the Exchange Act were
suspended. While the Company's prior filings with the SEC,
including its Annual Report on Form 20-F, continue to be available
on the SEC's Electronic Document Gathering and Retrieval System
("EDGAR") at www.sec.gov, the Company no longer files information
with, or furnishes information to, the SEC.
The Company's common shares continue to trade on the TSX and the
JSE, and the Company will continue to meet its Canadian and South
African continuous disclosure obligations through filings with the
applicable Canadian and South African securities regulators. All of
the Company's filings can be found on the SEDAR at www.sedar.com
and also on www.atlatsaresources.co.za.
SOURCE Atlatsa Resources Corporation