JOHANNESBURG, July 21, 2017 /CNW/ - Atlatsa Resources
Corporation ("Atlatsa" or the "Company") (TSX: ATL;
JSE: ATL) announces that it has entered into a letter agreement
dated 21 July 2017 ("Letter
Agreement") with Anglo American Platinum Limited ("Anglo
American Platinum") outlining key terms agreed in relation to a
two-phased transaction in terms of which Atlatsa will
implement:
- a care and maintenance strategy for Bokoni Mine ("Phase
1"); and
- a financial restructure plan for Atlatsa and its subsidiaries
("Atlatsa Group") conditional upon Anglo American Platinum
acquiring and including into its adjacent mining rights the
resources specified in the Central Block and Kwanda North
prospecting rights ("Phase 2"),
(collectively, the "2017 Restructure Plan").
The salient terms of the Letter Agreement are as follows:-
Phase 1:
- Atlatsa to place the Bokoni Mine on care and maintenance
- Anglo American Platinum to fund all costs associated with
the care and maintenance process up until 31
December 2019
- Anglo American Platinum to suspend servicing and repayment
of all current and future debt owing by Atlatsa Group until
31 December 2019 ("Debt
Standstill")
Phase 2:
- Anglo American Platinum acquiring and including into
its adjacent mining rights the resources specified in the
Kwanda North and Central Block prospecting rights for a cash
consideration of ZAR 300 million
(C$ 29 million) ("Asset
Disposal")
- Subject to the implementation of the Asset Disposal, Anglo
American Platinum to capitalise and/or write off all debt owing by
Atlatsa Group and Bokoni Platinum Mines Proprietary Limited
("Bokoni") to Anglo American Platinum, currently amounting to
ZAR 4.2 billion (C$ 401 million), including such further debt
incurred during the care and maintenance period until 31 December 2019 ("Debt Write Off")
- Atlatsa and Anglo American Platinum to retain their 51% and
49% respective shareholdings in the Bokoni joint venture ("Bokoni
JV")
Background to and rationale for the 2017 Restructure
Plan
Notwithstanding various attempts since 2014 to restructure the
Bokoni Mine through, inter alia, shaft closures and other
measures in order to achieve profitability, Bokoni Mine's
operations remain cash negative after capital expenditure.
The mine has incurred negative cash flow of approximately
ZAR 500 million (C$ 49 million) for the first 6 months of
2017.
In recent months Atlatsa and Anglo American Platinum ("Bokoni
JV Partners"), together with mine management, have continued to
investigate a range of further mine re-configuration options. All
of the options assessed demonstrate significant cash outflows in
the short to medium term with material execution risk. The
immediate to medium term outlook for Bokoni Mine remains negative,
given the current weak PGM 1 pricing environment which
is expected to remain under pressure for the foreseeable
future.
In addition to investigating the various mine re-configuration
options, the Bokoni JV Partners have also actively investigated
various potential funding and corporate ownership alternatives,
including seeking to introduce new funding partners and/or a
disposal of Bokoni Mine. However, given Bokoni's current
operational challenges, continued operational losses and negative
cash generation, the depressed PGM environment, the negative medium
term PGM pricing outlook and Atlatsa Group's significant debt
levels, attempts to implement such alternatives have proven
unsuccessful.
In the circumstances, the Bokoni JV Partners are no longer able
to continue funding losses at the mine with no reasonable short to
medium term turnaround prospects. The Bokoni JV Partners have
therefore agreed to implement the 2017 Restructure Plan as the most
appropriate strategy, having regard to long term asset value
preservation and potential future sustainability of Bokoni
Mine.
Phase 1: Bokoni Mine care and maintenance and Debt
Standstill
Atlatsa will place the Bokoni Mine operations on care and
maintenance as soon as reasonably possible. Anglo American Platinum
has agreed to fund, via a loan account to Bokoni Mine, all
once-off costs associated with placing the mine on care and
maintenance, as well as ongoing care and maintenance costs, up
until 31 December 2019.
Atlatsa will also, as a consequence, restructure its corporate
head office and associated overhead costs in order to right size
for a business which will hold a single asset on care and
maintenance, including reviewing the sustainability of its listings
on various stock exchanges.
Anglo American Platinum has agreed to suspend servicing and
repayment of all current (approximately ZAR 4.2 billion
(C$ 401 million)) and future debt
incurred by Atlatsa Group and owing to Anglo American Platinum and
its related entities until 31 December
2019 ("Debt Standstill Period"). Upon implementation
of Phase 2, all debt incurred during the Debt Standstill Period
will also be capitalised and/or written off, in accordance with the
Debt Write Off.
The Bokoni JV Partners have embarked on a comprehensive
stakeholder engagement strategy associated with the care and
maintenance plan.
During the care and maintenance period the Bokoni JV Partners
will continue to review various alternatives in respect of the
mine's future sustainability and revisit its care and maintenance
status, depending on future circumstances.
Phase 2: Conditional sale of Kwanda North and Central Block
prospecting rights and Debt Write Off
Atlatsa has accepted a conditional offer from Anglo American
Platinum to acquire the Central Block and Kwanda North prospecting
rights for a cash purchase consideration of ZAR 300 million (C$ 29
million) subject to, inter alia, the following
conditions precedent:
- conclusion of definitive transaction agreements; and
- relevant regulatory approvals for a transaction of this nature,
including those required by the Mineral and Petroleum Resources
Development Act, 28 of 2002 and registration by the Mineral and
Petroleum Titles Registration Office to complete Anglo American
Platinum acquiring and including into its adjacent mining rights
the resources specified in the Central Block and Kwanda North
prospecting rights.
Should the Asset Disposal be implemented, Anglo American
Platinum has undertaken to, inter alia, implement the Debt
Write Off which will reduce Atlatsa Group's debt levels to ZAR
nil.
Possible future position following implementation of the 2017
Restructure Plan
Subsequent to implementation of the 2017 Restructure Plan and on
the basis that the transactions set out above, including the Asset
Disposal and the Debt Write Off, have been successfully
implemented:-
- Atlatsa and Anglo American Platinum will retain their 51% and
49% respective shareholdings in the Bokoni Mine;
- Atlatsa Group and Bokoni Mine will be debt free; and
- Atlatsa will receive ZAR 300
million (C$ 29 million) in
cash as consideration for the Asset Disposal.
Both Anglo American Platinum and Atlatsa will continue to
investigate opportunities for either or both parties to divest of
their interests in the Bokoni JV.
Lifting of trading halt on the exchange operated by the JSE
Limited ("JSE")
Shareholders are referred to the announcement published on the
Stock Exchange News Service of the JSE earlier today, whereby
shareholders were advised that trading in the Company's securities
on the JSE was halted. Shareholders are further advised that trade
in the Company's securities on the JSE will resume at 14:00 (South
African Standard Time) today. For the avoidance of doubt, trading
in the Company's securities on the Toronto Stock Exchange remains
unaffected.
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 2017
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 2017 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.
1 PGM means Platinum Group Metals, including
Platinum, Palladium, Rhodium and Gold
SOURCE Atlatsa Resources Corporation