JOHANNESBURG, Nov. 14, 2017 /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,
2017. 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, 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 $27.7
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.
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 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 $48.1
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 Q3 2017
Impairment of assets
Due to impairment indicators that existed at June 30, 2017, September
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 $180.9 million
with respect to property, plant and equipment and capital work in
progress for fiscal 2017.
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, 2017.
Operating
results
|
Q3
2017
|
Q3
2016
|
%
change
|
Tonnes
delivered
|
t
|
253,115
|
368,266
|
(31.3%)
|
Tonnes
milled
|
t
|
263,737
|
363,320
|
(27.4%)
|
Recovered
grade
|
g/t milled,
PGM
|
3.7
|
3.8
|
(2.6%)
|
PGM oz
produced
|
oz
|
31,427
|
44,463
|
(29.3%)
|
Primary
development
|
metres
|
1,402
|
1,508
|
(7.0%)
|
Re-development
|
metres
|
2,030
|
2,290
|
(11.4%)
|
Capital
expenditure
|
$m
|
9.4
|
8.9
|
(5.6%)
|
Operating cost/tonne
milled
|
ZAR/t
|
1,706
|
1,449
|
(17.7%)
|
Operating cost/PGM
oz
|
ZAR/PGM oz
|
14,318
|
11,839
|
(20.9%)
|
Lost-time injury
frequency
rate ("LTIFR")
|
Per 200,000
hours worked
|
0.75
|
0.99
|
24.2%
|
Expressed in Canadian
Dollars (000's)
|
Q3
2017
|
Q3
2016
|
%
change
|
Revenue
|
32,183
|
48,877
|
(34.2%)
|
Cash operating
costs
|
(42,993)
|
(48,178)
|
10.8%
|
Cash operating
loss
|
(10,810)
|
699
|
nm
|
Cash operating margin
(%)
|
(33.6%)
|
1.40%
|
nm
|
Earnings/Loss before
interest, taxation,
depreciation and amortisation ("EBITDA") *
|
(52,274)
|
(2,475)
|
nm
|
Loss for the
period
|
(72,267)
|
(11,396)
|
(534.1%)
|
* 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 Q3 2017 of 0.75 has improved by 24.2%
compared to the Q3 2016 LTIFR of 0.99. During Q3 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
one stoppage in Q3 2016.
Operational results
Tonnes delivered at Bokoni Mine decreased by 31.3%
quarter-on-quarter to 253,115 tonnes and PGM ounces produced
decreased to 31,427 4E PGM ounces compared to 44,463 4E PGM ounces
produced during Q3 2016.
Primary development decreased by 7.0% quarter-on-quarter to
1,402 metres and re-development by 11.4% to 2,030 metres.
Recoveries at the concentrator plant remained consistent at
90.2% for the Merensky concentrate and decreased by 0.3% to 86.8%
for the UG2 concentrate respectively.
All the Bokoni Mine operations were placed on care and
maintenance with effect from October 1,
2017.
Financial results
Revenue decreased by 34.2% quarter-on-quarter to $32.2 million due to a 8.9% decrease in the ZAR
PGM basket price (ZAR10,869 in Q3
2017 compared to ZAR11,927 in Q3
2016), a decrease of 29.3% in 4E ounces produced well as a 7.0%
strengthening in the ZAR/US$ exchange rate.
Total cash operating costs were 12.3% lower than in Q3 2016.
Costs per tonne milled for Q3 2017 increased to $169 (ZAR1,706)
from $128 (ZAR1,449) in Q3 2016 with costs per 4E ounce
increasing to $1,419 (ZAR14,318) from $1,048 (ZAR11,839)
in Q3 2016.
Total capital expenditure for Q3 2017 was $9.4 million, compared to $8.9 million for Q3 2016, comprising 33%
sustaining capital and 67% project expansion capital.
Expressed in Canadian
Dollars (000's)
|
Q3
2017
|
Q3
2016
|
%
change
|
Revenue
|
32,183
|
48,877
|
(34.2%)
|
Cost of
sales
|
(50,158)
|
(54,002)
|
7.1%
|
Gross loss
|
(17,976)
|
(5,125)
|
(250.8%)
|
General,
administrative and other expenses
|
(3,343)
|
(1,969)
|
(69.8%)
|
Impairment
|
(4,752)
|
-
|
nm
|
Restructuring
costs
|
(33,372)
|
(1,209)
|
nm
|
Other
income
|
3
|
4
|
(25.0%)
|
Operating
(loss)
|
(59,439)
|
(8,299)
|
(616.2%)
|
Net finance
costs
|
(12,762)
|
(7,954)
|
(60.4%)
|
Income tax
|
(65)
|
4,857
|
(101.3%)
|
(Loss) for the
period
|
(72,267)
|
(11,396)
|
(534.1%)
|
(Loss) attributable
to Atlatsa shareholders
|
(42,703)
|
(7,186)
|
(494.3%)
|
Basic (loss) per
share – cents
|
(0.08)
|
(0.01)
|
(700.0%)
|
Headline loss per
share – cents*
|
(0.07)
|
(0.01)
|
(600.0%)
|
* 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.
|
(Loss) / profit per share
The basic and diluted
loss per share was ($0.08) for Q3
2017 compared to ($0.01) in Q3 2016.
The basic and diluted loss per share is based on the loss
attributable to the shareholders of the Company of ($42.7 million) compared to ($7.2 million) in Q3 2016.
The basic and diluted headline loss per share was ($0.07) for Q3 2017 compared to ($0.01) in Q3 2016. The basic and diluted
headline loss per share is based on the headline loss attributable
to the shareholders of the Company of ($40.1
million) compared to ($7.2
million) for Q3 2016.
Issued share capital
As at September 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 Q3 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