JOHANNESBURG,
Oct. 16, 2017 /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,
2017. This release should be read together with the
Company's unaudited condensed consolidated interim financial
statements for the three and six months ended June 30, 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 ($) and United States
Dollars (US$).
The 2017 Restructure Plan
On July 21, 2017 the Company
announced that it had entered into an agreement
("Agreement") with Rustenburg Platinum Mines Limited
("RPM"), a subsidiary of Anglo American Platinum Limited,
outlining key terms agreed in relation to a two-phased restructure
plan (collectively, the "2017 Restructure Plan"),
comprising:
- a care and maintenance strategy for Bokoni Mine; and
- a financial restructure plan for Atlatsa and its subsidiaries
("Atlatsa Group").
The salient terms of this Agreement are as follows:
Bokoni Mine care and maintenance:
- Atlatsa was to place the Bokoni Mine on care and
maintenance;
- RPM to fund all costs associated with the care and maintenance
process ("Care and Maintenance Funding") from August 1, 2017 up until December 31, 2019 ("Care and Maintenance
Period"); and
- RPM to suspend the servicing and repayment of all the current
and future debt owing by Atlatsa Group to RPM until December 31, 2019 ("Debt
Standstill").
Financial restructure of Atlatsa:
- RPM will acquire and include into its adjacent Northern Limb
mining rights the resources specified in Atlatsa's Kwanda North and Central Block prospecting
rights, for a cash consideration of $29.8
million (ZAR300 million)
("Asset Disposal").
- Subject to implementation of the Asset Disposal, RPM will write
off all debt owing by Atlatsa Group to RPM, including debt incurred
during the Care and Maintenance Period ("Debt Write
Off").
- Atlatsa and RPM will retain their 51% and 49% respective
shareholdings in the Bokoni joint venture.
Implementation of the 2017 Restructure Plan
Bokoni Mine care and maintenance
During September 2017 Bokoni Mine,
together with the registered trade unions, NUM, TAWUSA and UASA,
concluded a facilitated consultation process in terms of section
189A of the South African Labour Relations Act, No. 66 of 1995. The
Bokoni Mine operations were placed on care and maintenance with
effect from October 1, 2017. All exit
medical examinations have been completed and severance packages
were paid to retrenched employees on October
13, 2017.
During the Care and Maintenance Period Atlatsa and RPM will
review various alternatives in respect of Bokoni Mine's future
sustainability and, depending on future circumstances, reconsider
its care and maintenance status.
Care and Maintenance Funding and Debt Standstill
RPM has agreed to fund, via a loan account to Bokoni Mine, all
one-off costs associated with placing Bokoni Mine on care and
maintenance, as well as ongoing care and maintenance costs, up
until December 31, 2019. As a
consequence, Atlatsa will also restructure itself to reduce its
corporate head office and associated overhead costs.
("Atlatsa Corporate Restructure").
On October 12, 2017, the Atlatsa
Group entered into a Care and Maintenance Term Loan Facility
Agreement with RPM in terms of which RPM has, subject to an agreed
budget and approval process, made available to the Atlatsa Group a
loan facility in an amount of $51.8
million (ZAR521 million) for
the duration of the Care and Maintenance Period for the Atlatsa
Group to fund its pro rata (51%) share of care and
maintenance costs at Bokoni Mine and the Atlatsa Corporate
Restructure costs.
RPM has agreed to suspend servicing and repayment of all current
and future debt incurred by the Atlatsa Group and owing to RPM and
its related entities until December 31,
2019 ("Debt Standstill Period"). Upon implementation
of the Asset Disposal all debt incurred during the Debt Standstill
Period will be written off, in accordance with the Debt Write
Off.
Debt Write Off conditional on Asset Disposal
Atlatsa does not have short term plans to develop the resources
at its Central Block and Kwanda
North prospecting rights prior to their expiry in 2019.
These prospecting rights border the north of RPM's Northern Limb
operations. The incorporation of these prospecting rights into
RPM's operations will increase the probability of their
development, which could lead to potential future mining and
employment opportunities, contributing to the regional and national
South African economy.
As stated above the Agreement provides for both the Asset
Disposal and the Debt Write Off. Atlatsa and RPM continue to work
towards this. Implementation of such transactions remain subject to
completion of definitive transaction agreements, all required
regulatory approvals and all required corporate approvals,
including the approval of Atlatsa shareholders.
Should the Asset Disposal be implemented RPM will, inter
alia, implement the Debt Write Off, which will reduce the
Atlatsa Group's debt owing to RPM to zero.
Operational and Financial Results for Q2 2017
Management Cease Trade Order
Pursuant to entering into the Agreement and on request by
Atlatsa on August 15, 2017 the
British Columbia Securities Commission ("BCSC") issued a
Management Cease Trade Order ("MCTO") against certain
management of the Company, as it was unable to file its unaudited
interim financial statements for the three and six months ended
June 30, 2017, the related
management's discussion and analysis, and the related CEO and CFO
certificates by the filing deadline. The Company expects the BCSC
to remove the MCTO upon filing its 2017 interim results.
Impairment of assets
Due to impairment indicators that existed at June 30, 2017 and Bokoni Mine being placed on
care and maintenance subsequent to the reporting date, the Company
assessed the carrying value of its assets for impairment and
recognised an impairment loss of $176.2
million with respect to property, plant and equipment and
capital work in progress.
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, 2017.
Operating
results
|
Q2
2017
|
Q2
2016
|
%
change
|
H1
2017
|
H1
2016
|
%
change
|
Tonnes
delivered
|
t
|
300,500
|
340,758
|
(11.8%)
|
614,356
|
647,241
|
(5.1%)
|
Tonnes
milled
|
t
|
308,181
|
344,895
|
(10.6%)
|
604,547
|
664,100
|
(9.0%)
|
Recovered
grade
|
g/t milled,
PGM
|
3.8
|
3.8
|
0.0%
|
3.8
|
3.7
|
2.7%
|
PGM oz
produced
|
oz
|
37,594
|
41,698
|
(9.8%)
|
72,932
|
78,307
|
(6.9%)
|
Primary
development
|
metres
|
2,068
|
1,258
|
64.4%
|
3,307
|
2,468
|
34.0%
|
Re-development
|
metres
|
2,205
|
1,711
|
28.9%
|
3,841
|
3,333
|
15.2%
|
Capital
expenditure
|
$m
|
18.0
|
4.5
|
300.0%
|
29.6
|
8.0
|
270.0%
|
Operating cost/tonne
milled
|
ZAR/t
|
1,660
|
1,386
|
(19.8%)
|
1,640
|
1,387
|
(18.2%)
|
Operating cost/PGM
oz
|
ZAR/PGM oz
|
13,605
|
11,467
|
(18.6%)
|
13,597
|
11,766
|
(15.6%)
|
Lost-time injury
frequency rate ("LTIFR")
|
Per 200,000 hours
worked
|
1.31
|
0.81
|
(61.7%)
|
1.04
|
1.07
|
2.8%
|
Financial results
– Bokoni Mine
|
Expressed in Canadian
Dollars (000's)
|
Q2
2017
|
Q2
2016
|
%
change
|
H1
2017
|
H1
2016
|
%
change
|
Revenue
|
45,824
|
40,702
|
12.6%
|
84,184
|
76,291
|
10.3%
|
Cash operating
costs
|
51,556
|
41,717
|
(23.6%)
|
99,702
|
79,684
|
(25.1%)
|
Cash operating
loss
|
(5,732)
|
(1,015)
|
(464.7%)
|
(15,517)
|
(3,393)
|
(357.3%)
|
Cash operating margin
(%)
|
(12.5%)
|
(2.5%)
|
(400.3%)
|
(18.4%)
|
(4.4%)
|
(318.9%)
|
Earnings/Loss before
interest, taxation, depreciation and amortisation ("EBITDA")
*
|
(142,022)
|
(2,888)
|
nm
|
(157,222)
|
1,129
|
nm
|
Loss for the
period
|
(192,662)
|
(24,051)
|
(701.1%)
|
(220,351)
|
(23,486)
|
(838.2%)
|
* 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).
"nm" means non-meaningful
Safety and health
Bokoni Mine's LTIFR in Q2 2017 of 1.31 declined by 61.7%
compared to Q2 2016 LTIFR of 0.81. During Q2 2017 two Section 54
stoppages were imposed by the Department Mineral Resources in terms
of the Mine Health and Safety Act No. 29 of 1996, compared to zero
stoppages in Q2 2016 and 20 days of production was lost due to
these stoppages (compared to zero days in Q2 2016).
Operational results
Tonnes delivered at Bokoni Mine decreased by 11.8%
quarter-on-quarter to 300,500 tonnes and PGM ounces produced
decreased to 37,594 4E PGM ounces compared to 41,698 4E PGM ounces
produced during Q2 2016.
Primary development increased by 64.4% quarter-on-quarter to
2,068 metres and re-development by 28.9% to 2,205 metres.
Recoveries at the concentrator plant increased by 1.8% to 89.1%
for the Merensky concentrate and by 0.7% for the UG2 concentrate
respectively.
Financial results
Revenue increased by 12.6% quarter-on-quarter to $45.8 million due to a 6.3% increase in the ZAR
PGM basket price (ZAR11,968 in Q2
2017 compared to ZAR11,256 in Q2
2016) as well as a 13.1% strengthening in the ZAR/US$ exchange
rate.
Total cash operating costs were 25.2% higher than in Q2 2016.
This increase is primarily attributable to an increase in
environmental rehabilitation costs incurred following the closure
of the opencast mining operations and due to poor production and
required maintenance of property, plant and equipment.
Costs per tonne milled for Q2 2017 increased to $168 (ZAR1,660)
from $120
(ZAR1,386) in Q2 2016 with costs per
4E ounce increasing to $1,375
(ZAR13,605) from $991 (ZAR11,467) in
Q2 2016.
Total capital expenditure for Q2 2017 was $18.0 million, compared to $4.5 million for Q2 2016, comprising 39%
sustaining capital and 61% project expansion capital associated
with the two ramp-up shaft operations.
Atlatsa Group
Financial results
|
Expressed in Canadian
Dollars (000's)
|
Q2
2017
|
Q2
2016
|
%
change
|
H1
2017
|
H1
2016
|
%
change
|
Revenue
|
45,824
|
40,702
|
12.6%
|
84,184
|
76,291
|
10.3%
|
Cost of
sales
|
(57,757)
|
(47,010)
|
(22.9%)
|
(111,815)
|
(90,255)
|
(23.9%)
|
Gross loss
|
(11,932)
|
(6,308)
|
(89.2%)
|
(27,631)
|
(13,964)
|
(97.9%)
|
General,
administrative and other expenses
|
(4,529)
|
(12,453)
|
63.6%
|
(10,155)
|
3,876
|
(362.0%)
|
Impairment
|
(176,166)
|
0
|
nm
|
(176,166)
|
0
|
nm
|
Other
income
|
3
|
5
|
(40.0%)
|
6
|
8
|
(25.0%)
|
Operating (loss) /
profit
|
(192,624)
|
(18,756)
|
(927.0%)
|
(213,946)
|
(10,080)
|
nm
|
Net finance
costs
|
(7,724)
|
(7,052)
|
(9.5%)
|
(14,519)
|
(13,761)
|
(5.5%)
|
Income tax
|
7,686
|
1,758
|
(337.2%)
|
8,113
|
354
|
nm
|
(Loss) / profit for
the period
|
(192,662)
|
(24,051)
|
(701.1%)
|
(220,351)
|
(23,486)
|
(838.2%)
|
(Loss) / profit
attributable to Atlatsa shareholders
|
(121,401)
|
(19,700)
|
(516.2%)
|
(138,905)
|
(17,719)
|
(683.9%)
|
Basic (loss) / profit
per share – cents
|
(22)
|
(4)
|
(450.0%)
|
(25)
|
(3)
|
(733.3%)
|
Headline loss per
share – cents*
|
(3)
|
(4)
|
25.0%
|
(6)
|
(3)
|
(100%)
|
* 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).
(Loss) / profit per share
The basic and diluted
loss per share was ($0.22) for Q2
2017 compared to ($0.04) in Q2 2016.
The basic and diluted loss per share is based on the loss
attributable to the shareholders of the Company of ($121.4 million) compared to ($19.7million) in Q2 2016.
The basic and diluted loss per share was ($0.25) for the six months ended June 30, 2017 compared to ($0.03) for the six months ended June 30, 2016. The basic and diluted loss per
share is based on the loss attributable to the shareholders of the
Company of ($138.9 million) compared
to ($17.7 million) for the six months
ended June 30, 2016.
Reconciliation of headline (loss) / profit attributable to
Atlatsa shareholders
The calculation of headline loss per share for the six months
ended June 30, 2017 of $0.06 (2016: $0.03)
is based on a headline loss of $33.4
million (2016: $17.7
million).
Expressed in Canadian
Dollars (000's)
|
H1
2017
|
H1
2016
|
(Loss) / profit
attributable to Atlatsa shareholders
|
(138,906)
|
(17,719)
|
Adjustments:
|
|
|
Impairment
loss
|
176,166
|
-
|
Loss on disposal of
property, plant and equipment
|
159
|
(4)
|
Total tax effects of
adjustments
|
(7,494)
|
-
|
Total non-controlling
interest effects of adjustments
|
(63,314)
|
-
|
Headline (loss) /
profit attributable to Atlatsa shareholders
|
(33,388)
|
(17,723)
|
Issued share capital
As at June 30, 2017 Atlatsa had
554,421,806 issued and outstanding common shares.
Corporate Advisor and JSE Sponsor to Atlatsa:
One
Capital
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: placing the Bokoni Mine on care and
maintenance; safe guarding of all assets and the maintenance of
major equipment; implementing the Letter Agreement and Debt
Standstill as contemplated in the 2017 Restructure Plan and meeting
the conditions precedent of the 2017 Restructure Plan.
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 placing the Bokoni Mine on care and maintenance; uncertainties
related to the implementation of the 2017 Restructure Plan;
uncertainties related to meeting the conditions precedent in
regards to the 2017 Restructure Plan; 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 maintain the Bokoni Mine on
care and maintenance; 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, as described under "Going
Concern" in Note 2 of the condensed consolidated interim financial
statements for Q2 2017. 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
"Description of Business - 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