Key features for the second quarter of 2016:
- Cost per tonne milled decreased 17%
quarter-on-quarter from $145 to
$120
- Cost per 4E ounce decreased 20% quarter-on-quarter from
$1,238 to $991
- Total tonnes milled decreased 12%
quarter-on-quarter to 344,895
- 4E PGM* ounces produced decreased 9%
quarter-on-quarter to 41,698
- Revenue decreased 21% quarter-on-quarter to $40.7 million
- Average ZAR 4E PGM* basket price realised for the quarter
was ZAR11,256
- Lost-time injury frequency rate ("LTIFR") at 0.81 per
200,000 hours worked – a meaningful
improvement
* PGM means platinum group metals ("4E"), comprising
platinum, palladium, rhodium and gold.
JOHANNESBURG, Aug. 15, 2016 /CNW/ - Atlatsa Resources
Corporation ("Atlatsa" or the "Company") (TSX: ATL; JSE: ATL)
announces its operating and financial results for the three and six
months ended June 30, 2016. This
release should be read with the Company's unaudited condensed
consolidated interim financial statements for the three and six
months ended June 30, 2016 and the
related Management's Discussion and Analysis of Financial Condition
and Results of Operations filed on www.sedar.com, which are also
available at www.atlatsa.com. Currency values are presented in
South African Rand (ZAR), Canadian Dollars ($) and United States
Dollars (US$).
Harold Motaung, Chief Executive Officer of Atlatsa, commented,
"Bokoni Mine remains an operation in development with its key
Brakfontein Merensky and Middelpunt Hill UG2 underground
development shafts in their ramp-up phase. The effects of our
Restructure Plan are starting to yield positive results with a much
improved cost performance at the operation, coupled with an
improved safety performance. The implementation of the Restructure
Plan remains a work in progress, resulting in certain operational
challenges that include skills mix and re-training requirements
amongst our labour force, all of which has had a negative impact on
planned development at our ramp-up projects. Given a number of
challenges experienced at our Klipfontein Merensky opencast
operation, a decision has been taken to terminate the opencast
operation by the end of 2016.
Minimising cash losses and containing costs remains a key
performance area for the Company. An effective operational cost
management as part of the Restructure Plan has resulted in a 13%
average reduction in operational costs per month since the start of
the restructuring process. As a Company, we continue to focus on
various initiatives to improve operational efficiencies,
disciplined capital allocation and cost management, without
compromising Bokoni Mine's existing ramp-up plan of underground
development shafts."
BOKONI MINE OPERATING AND FINANCIAL
PERFORMANCE
Set out below are summaries of the key operating and financial
results for Bokoni Mine for the three and six months ended
June 30, 2016.
Operating
results
|
Q2
2016
|
Q2
2015
|
%
change
|
H1
2016
|
H1
2015
|
%
change
|
Tonnes
milled
|
t
|
344 895
|
391 363
|
(11.9)
|
664 100
|
764 259
|
(13.1)
|
Tonnes
delivered
|
t
|
340 758
|
406 205
|
(16.1)
|
647 241
|
778 866
|
(16.9)
|
Recovered
grade
|
g/t milled,
PGM
|
3.8
|
3.6
|
5.6
|
3.7
|
3.6
|
2.8
|
PGM oz
produced
|
oz
|
41 698
|
45 675
|
(8.7)
|
78 307
|
88 550
|
(11.6)
|
UG2 milled to
underground output
|
%
|
41.3
|
30.3
|
36.3
|
42.7
|
30.2
|
41.4
|
Primary
development
|
metres
|
1 258
|
1 862
|
(32.4)
|
2 468
|
4 057
|
(39.2)
|
Capital
expenditure
|
$m
|
4.5
|
4.4
|
2.3
|
8.0
|
8.2
|
(2.4)
|
Operating cost/tonne
milled
|
ZAR/t
|
1 386
|
1 394
|
0.6
|
1 387
|
1 387
|
0
|
Operating cost/PGM
oz
|
ZAR/PGM oz
|
11 467
|
11 942
|
4.0
|
11 766
|
11 973
|
1.7
|
LTIFR
|
per 200,000 hours
worked
|
0.81
|
0.80
|
(1.3)
|
1.07
|
0.92
|
(16.3)
|
Financial
summary
|
|
|
|
|
|
|
Expressed in
Canadian Dollars (000's)
|
Q2
2016
|
Q2
2015
|
%
change
|
H1
2016
|
H1
2015
|
%
change
|
Revenue
|
40 702
|
51 661
|
(21.2)
|
76 291
|
103 972
|
(26.6)
|
Cash operating
costs
|
41 717
|
54 705
|
(23.7)
|
79 684
|
109 012
|
(26.9)
|
Cash operating
loss
|
(1 015)
|
(3 044)
|
66.7
|
(3 393)
|
(5 040)
|
32.7
|
Cash operating
margin
|
(2.5%)
|
(5.9%)
|
57.6
|
(4.4%)
|
(4.8%)
|
8.3
|
Earnings before
interest, taxation, depreciation and amortisation
("EBITDA")*
|
(13 462)
|
(343 202)
|
96.1
|
491
|
(347 528)
|
100.1
|
Profit / (loss) for
the period
|
(24 051)
|
(297 111)
|
91.9
|
(23 486)
|
(313 901)
|
92.5
|
Profit / (loss)
attributable to Atlatsa shareholders
|
(19 700)
|
(127 553)
|
84.6
|
(17 719)
|
(136 421)
|
87.0
|
Basic and diluted
loss per share – cents
|
(4)
|
(23)
|
82.6
|
(3)
|
(25)
|
88.0
|
|
*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).
|
Safety and health
Bokoni Mine's LTIFR was 0.81 per 200,000 hours worked during the
quarter compared to 0.80 in Q2 2015, a deterioration of 1.3%. There
were no Section 54 safety stoppages imposed by the South African
Department of Mineral Resources ("DMR") at the operations during
the quarter; however, ten days of production were lost due to
community unrest. This resulted in a loss of 2,748 platinum ounces,
compared to four Section 54 safety stoppages in Q2 2015 that
resulted in 1,741 platinum ounces lost. The continued focus on
safety is beginning to yield some meaningful improvements.
Operational and financial restructure plan at Bokoni
Mine
To ensure the future sustainability of Bokoni Mine, on
September 16, 2015 the Company
announced implementation of an operational and financial
restructure plan ("Restructure Plan") at its Bokoni Mine. The
primary objective of the Restructure Plan is to enable Bokoni Mine
to endure a prolonged period of depressed PGM commodity prices by
reducing its existing cost structure and increasing production
volumes of higher grade ore from underground operations.
Bokoni Mine had issued a Section 189 (3) notice to relevant
parties pursuant to Section 189A of the South African Labour
Relations Act, No 66 of 1995 and a retrenchment agreement was
signed by all recognised labour unions on February 8, 2016. Bokoni Mine labour complement
was reduced by 35.8% from 6,342 as at June
30, 2015 to 4,074 as at June 30,
2016. The reduction is made up of a 57.6% decrease in
contractors and an 18.6% decrease in own mine employees.
To date, on a base cost calculated from August 2015, operational costs have reduced by
13% on average per month, which was achieved by a significant
reduction in the labour force.
The older, high cost UM2 and Vertical Merensky shaft operations
were placed on care and maintenance in August and December 2015, respectively. Although overall
tonnes delivered and 4E ounces produced at Bokoni Mine decreased,
underground tonnes delivered and 4E ounces produced increased by
20% and 24%, respectively. This highlights the positive trajectory
from the two remaining new generation shafts that are still in
development.
|
Impact of placing
the Vertical and UM2 shafts (both on the Merensky reef) on care and
maintenance
|
|
Q2
2016
|
Q2
2015
|
%
change
|
H1
2016
|
H1
2015
|
%
change
|
Tonnes
delivered
|
340
758
|
406
205
|
(16%)
|
647
241
|
770
165
|
(16%)
|
Underground
tonnes
|
310 347
|
257 665
|
20%
|
566 803
|
489 159
|
16%
|
|
Brakfontein
Merensky
|
167
741
|
139
807
|
20%
|
290
894
|
254
104
|
14%
|
|
Middelpunt Hill
UG2
|
142
606
|
117
858
|
21%
|
275
908
|
235
055
|
17%
|
Under care and
Maintenance
|
-
|
106 774
|
(100%)
|
-
|
197 667
|
(100%)
|
Klipfontein
Opencast
|
30 411
|
41 766
|
(27%)
|
80 438
|
83 339
|
(3%)
|
Tonnes
milled
|
344
895
|
391
363
|
(12%)
|
664
100
|
757
808
|
(12%)
|
Underground
tonnes
|
311 342
|
253 816
|
23%
|
573 386
|
480 357
|
19%
|
|
Brakfontein
Merensky
|
168
826
|
135
312
|
25%
|
289
896
|
249
579
|
16%
|
|
Middelpunt Hill
UG2
|
142
516
|
118
504
|
20%
|
283
490
|
230
778
|
23%
|
Under care and
Maintenance
|
-
|
105 812
|
(100%)
|
-
|
194 112
|
(100%)
|
Klipfontein
Opencast
|
33 553
|
31 735
|
6%
|
90 714
|
83 339
|
9%
|
|
Impact of placing
the Vertical and UM2 shafts (both on the Merensky reef) on care and
maintenance
|
|
Q2
2016
|
Q2
2015
|
%
change
|
H1
2016
|
H1
2015
|
%
change
|
4E Ounces
(ounces)
|
41
698
|
45
675
|
(9%)
|
78
307
|
87
784
|
(11%)
|
Underground
tonnes
|
39 334
|
31 642
|
24%
|
72 026
|
59 435
|
21%
|
|
Brakfontein
Merensky
|
18
554
|
15
581
|
19%
|
31
027
|
28
372
|
9%
|
|
Middelpunt Hill
UG2
|
20
780
|
16
061
|
29%
|
40
999
|
31
063
|
32%
|
Under care and
Maintenance
|
-
|
11 896
|
(100%)
|
-
|
22 143
|
(100%)
|
Klipfontein
Opencast
|
2 363
|
2 137
|
11%
|
6 281
|
6 206
|
1%
|
Termination of the Klipfontein opencast
operation
The Klipfontein Merensky opencast operation has been affected by
a number of challenges including delays in obtaining a water use
licence, stoppages at the eastern pit due to community disruptions
and intersection of a large number of potholes on the western
portion of the pit. These challenges have impacted the operation's
ability to deliver sufficient volumes to generate a profit. Due to
these issues preventing the opencast operation from reaching
planned production levels, a review of the operation was undertaken
during H1 2016. The result of this review was that on June 28, 2016 a decision was made to terminate
the Klipfontein Merensky opencast operation by the end of 2016.
Delays in ramp-up of expansion projects
Delays in re-training of own mine employees and challenges
associated with skills mix within our labour force after
implementation of the first phase of the Restructure Plan has had a
negative impact on planned development and resulted in a delay in
primary development during H1 2016 relative to plan at Bokoni Mine.
As a result thereof, planned production ramp up at Brakfontein
Merensky and Middelpunt Hill UG2 shaft operations will be delayed
by six to twelve months. Management will, in the course of
the next six months, investigate alternatives to minimise any
further delays in capital projects build up at the operations.
Operational results
Bokoni Mine tonnes delivered to the concentrator for Q2 2016
decreased by 16.1% to 340,758 with tonnes milled decreasing by
11.9% to 344,895 tonnes, resulting in production of 41,698 4E PGM
ounces compared to 45,675 4E PGM ounces produced during Q2
2015.
Primary development decreased by 32.4% quarter-on-quarter to
1,258 metres as a result of the Restructure Plan. More emphasis has
been placed on secondary development to increase face length
available for mining. Primary development at Bokoni Mine is
expected to be sufficient to meet the requirements of the approved
Restructure Plan.
Recoveries at the concentrator plant remained relatively flat at
87.5% for the Merensky concentrate and 86.3% for the UG2
concentrate. The opencast concentrate recoveries increased by 7.6%
to 70.5% for Q2 2016.
Financial results
Revenue decreased by 21.2% quarter-on-quarter to $40.7 million as a result of the 8.7% decrease in
4E PGM ounces production. The ZAR PGM basket price increased by
1.3% from ZAR11,116 in Q2 2015 to
ZAR11,256 in Q2 2016; whilst the
average US$ platinum price decreased by 10.9% from US$1,127 in Q2 2015 to US$1,004 in Q2 2016. The average realised
ZAR/US$ exchange rate for Q2 2016 was ZAR15.01 compared to the average exchange rate of
ZAR12.09 realised in Q2 2015.
Total cash operating costs were 23.7% lower, reflecting the
decrease in tonnes milled and cost saving measures put in place by
management. Although overall tonnes milled decreased, underground
tonnes from the two remaining shafts were up by 22.7%, which
offsets the decrease in cash operation costs. The cost profile is
attributable to:
- 33.9% 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 H1 2016;
- 50.6% decrease in contractor costs due to the Restructure Plan,
which led to the exiting of a significant number of contractor
employees and the 27.2% decrease in opencast tonnes delivered as
the opencast contractor is paid per tonne delivered;
- 28.0% decrease in utility costs mainly due to the UM2 &
Vertical shaft operations being placed on care and maintenance;
and
- 8.4% decrease in sundries due to foreign currency translation
offset by an increase in costs to third party suppliers associated
with the transfer of tonnes to the concentrator and waste areas,
in-line with a corresponding increase in underground
production.
Cost per tonne milled for Q2 2016 was $120 (ZAR1,386)
compared to $145 (ZAR1,394) in Q2 2015 with cost per 4E ounce at
$991 (ZAR11,467) compared to $1,238 (ZAR11,942)
in Q2 2015.
Total capital expenditure for the three months ended
June 30, 2016 was $4.5 million, compared to $4.4 million for Q2 2015, comprising 36%
sustaining capital and 64% project expansion capital associated
with the two key ramp-up shaft operations.
Financial summary
for Atlatsa
|
Expressed in Canadian
Dollars (000's)
|
Q2
2016
|
Q2
2015
|
%
change
|
H1
2016
|
H1
2015
|
%
change
|
Revenue
|
40 702
|
51 661
|
(21.2)
|
76 291
|
103 972
|
(26.6)
|
Cost of
sales
|
(47 010)
|
(66 076)
|
28.9
|
(90 255)
|
(129 444)
|
30.3
|
Gross loss
|
(6 308)
|
(14 414)
|
56.2
|
(13 964)
|
(25 472)
|
45.2
|
General,
administrative and other expenses
|
(2 809)
|
(340 109)
|
99.2
|
2 974
|
(342 741)
|
100.9
|
Fair value
adjustments on loans
|
(9 939)
|
(49)
|
nm
|
910
|
253
|
259.8
|
Operating
loss
|
(18 756)
|
(354 573)
|
94.7
|
(10 080)
|
(367 960)
|
97.3
|
Net finance
costs
|
(7 052)
|
(6 000)
|
(17.5)
|
(13 761)
|
(10 862)
|
(26.7)
|
Income tax
|
1 758
|
63 462
|
(97.2)
|
354
|
64 922
|
(99.5)
|
Profit / (loss) for
the period
|
(24 051)
|
(297 111)
|
91.9
|
(23 486)
|
(313 901)
|
92.5
|
Profit / (loss)
attributable to Atlatsa shareholders
|
(19 700)
|
(127 553)
|
84.6
|
(17 719)
|
(136 421)
|
87.0
|
Basic (loss) per
share – cents
|
(4)
|
(23)
|
82.6
|
(3)
|
(25)
|
87.5
|
Amendment to Term Loan Facility Agreement with Anglo
American Platinum Limited
On August 15, 2016, the Term Loan
Facility Agreement (the "Term Loan Facility") entered into with
Anglo American Platinum Limited ("Anglo Platinum") on December 9, 2015 was amended and restated to
allow Anglo Platinum to advance an additional $17.0 million (ZAR193.0
million) to Atlatsa to enable the Company to fund its share
of operating expenses, working capital expenditure and capital
expenditure costs at the mine in the event that these costs cannot
be funded from Bokoni Mine cash flows.
The terms and conditions to utilisation of the additional
$17.0 million (ZAR193.0 million) Term Loan Facility include
Atlatsa co-operating with Anglo Platinum in relation to Anglo
Platinum's acquisition of
(i) the prospecting rights held by Kwanda Platinum Mines
(Proprietary) Limited and (ii) the prospecting rights in respect of
the Central Block mineral properties held by Plateau Resources
(Proprietary) Limited, and renewal applications applicable to the
prospecting rights being granted by the DMR.
The Term Loan Facility is repayable at the earlier of an event
of default and December 31, 2018.
There will be a mandatory repayment by Atlatsa upon the occurrence
of a change of control in the Company or a sale of all or
substantially all the assets of Bokoni Mine whether in a single
transaction or a series of related transactions.
Outlook
Bokoni Mine's focus areas remain the ramping-up of the
Brakfontein Merensky and Middelpunt Hill UG2 underground
development shafts; instilling the principle of zero harm to all
employees at the mine; maintaining a disciplined operational and
capital cost management; enhancing stakeholder relations to limit
community disruptions at the mine; and constructive engagement with
organised labour unions during wage negotiations.
Queries:
On behalf of Atlatsa
Prudence Lebina
Head of Corporate Finance & Investor Relations
Office: +27 11 779 6800
Email: PrudenceL@atlatsa.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 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 will become effective 90
days after the date of filing of Form 15 with the SEC, or within
such shorter period as the SEC may determine. Upon filing of 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 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 Toronto
Stock Exchange and the Johannesburg Stock Exchange, 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 System for Electronic Document Analysis
and Retrieval at www.sedar.com and also on www.atlatsa.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This document contains "forward-looking statements" within the
meaning of applicable 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 such as "may", "will", "outlook",
"anticipate", "project", "target", "believe", "estimate", "expect",
"intend", "should", "plan", "forecasts", "predicts", "schedule",
"forecast" and similar expressions.
Atlatsa believes that such forward-looking statements are based
on material factors and reasonable assumptions, including the
following assumptions: opencast mining and accelerated development
of underground shaft systems at Bokoni Mine will have anticipated
positive impacts on operations and production; Bokoni Mine will
maintain production levels in accordance with the mine operating
plan; the anticipated financial and operational improvements
expected as a result of the Restructure Plan; Bokoni Mine will be
better positioned from both a unit cost and cash flow perspective
by the Restructure Plan; underground development shafts will remain
in their ramp-up phase; the Platreef Projects will continue to be
positive; safety will continue to be a major focus for the Company;
contracted parties provide goods and/or services on the agreed
timeframes; equipment necessary for construction and development is
available as scheduled and does not incur unforeseen breakdowns; no
material labour slowdowns, strikes or community unrest are
incurred; plant and equipment functions as specified; geological or
financial parameters do not necessitate future mine plan changes;
and no geological or technical problems occur.
Forward-looking statements are subject to known and unknown
risks, uncertainties and other factors that may cause the Company's
actual results, level of activity, performance or achievements to
be materially different from those expressed or implied by such
forward-looking statements. These include but are not limited
to:
- uncertainties related to achievement of the financial and
operational improvements expected as a result of the Restructure
Plan;
- uncertainties related to continued implementation of the Bokoni
Mine operating plan and opencast mining;
- uncertainties related to the timing of the implementation of
the Bokoni Mine deferred expansion plans;
- uncertainties related to feasibility studies that provide
estimates of expected or anticipated costs, expenditures and
economic returns from a mining project;
- uncertainties related to expected production rates, timing of
production and cash and total costs of production and milling;
- uncertainties related to continued availability of capital and
financing;
- uncertainties related to the ability to obtain necessary
licences, permits, electricity, surface rights and titles for
development projects;
- uncertainties related to the accuracy of our mineral reserve
and mineral resource estimates and our estimates of future
production and future cash and total costs of production, and the
geotechnical or hydrogeological nature of ore deposits, and
diminishing quantities or grades of mineral reserves;
- uncertainties related to unexpected judicial or regulatory
proceedings;
- changes in, and the effects of, the laws, regulations and
government policies affecting our mining operations, particularly
laws, regulations and policies relating to:
- mine expansions, environmental protection and associated
compliance costs arising from exploration, mine development, mine
operations and mine closures;
- expected effective future tax rates in jurisdictions in which
our operations are located;
- the protection of the health and safety of mine workers;
and
- mineral rights ownership in countries where our mineral
deposits are located, including the effect of the Mineral and
Petroleum Resources Development Act, 2002 (Act No 28 of 2002)
(South Africa);
- changes in general economic conditions, the financial markets
and in the demand and market price for gold, copper and other
minerals and commodities, such as diesel fuel, coal, petroleum
coke, steel, concrete, electricity and other forms of energy,
mining equipment, and fluctuations in exchange rates, particularly
with respect to the value of the U.S. Dollar, Canadian Dollar and
South African Rand;
- unusual or unexpected formations, cave-ins, flooding,
pressures, and precious metals losses (and the risk of inadequate
insurance or inability to obtain insurance to cover these
risks);
- changes in accounting policies and methods used to report the
financial condition, including uncertainties associated with
critical accounting assumptions and estimates; environmental issues
and liabilities associated with mining including processing and
stock piling ore;
- geopolitical uncertainty and political and economic instability
in countries where we operate;
- the effect of HIV/AIDS on labour force availability and
turnover; and
- labour strikes, work stoppages, or other interruptions to, or
difficulties in, the employment of labour in markets in which we
operate mines, or environmental hazards, industrial accidents or
other events or occurrences, including third party interference
that interrupt the production of minerals in our mines.
For further information on Atlatsa, investors should review the
Company's Annual Report on Form 20-F for the year ended
December 31, 2015 and other
disclosure documents available at www.sedar.com and with the SEC,
available at www.sec.gov.
SOURCE Atlatsa Resources Corporation