Wrap Text
ARQ - Anooraq Resources Corporation - Anooraq announces results for the quarter
and year ended December 31, 2011; provides update on its restructure plan and
strategic approach at Bokoni
Anooraq Resources Corporation
(Incorporated in British Columbia, Canada)
(Registration number 10022-2033)
TSXV/JSE share code: ARQ
NYSE AMEX share code: ANO
ISIN: CA03633E1088
("Anooraq" or the "Company")
ANOORAQ ANNOUNCES RESULTS FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2011;
PROVIDES UPDATE ON ITS RESTRUCTURE PLAN AND STRATEGIC APPROACH AT BOKONI
Anooraq announces its operating and financial results for the three and twelve
months ended December 31, 2011. This release should be read together with the
Company`s Financial Statements and Management Discussion & Analysis available at
www.anooraqresources.com and filed on www.sedar.com. Currency values are
presented in South African Rand (ZAR), Canadian Dollars ($) and United States
Dollars (US$).
The 2011 financial year was operationally challenging at Bokoni Platinum Mines
("Bokoni"), however, the year ended on a positive note with the Company able to:
- negotiate a US$600 million restructure, recapitalization and refinancing
plan for the Company and the Bokoni Group, as detailed in the Company`s
news release and joint news release with Anglo American Platinum Limited
("Amplats") dated 2 February, 2012 ("the restructure plan");
- agree with Amplats a new and enhanced Bokoni extraction strategy and
recapitalization plan which will focus Bokoni as a mine in development
through to 2017, whilst phasing out higher cost marginal shaft operations
and increasing annual steady state production from its current base to more
than 300,000 PGM (1) ounces; and
- secure and appoint a new experienced management team at Bokoni to implement
the new extraction strategy, effective from February 2012 onwards.
(1) PGM refers to platinum group metals; namely platinum, palladium, rhodium,
iridium, ruthenium and gold.
Operating and financial performance
Set out below are summaries of the key operating and financial results for
Bokoni and the Company for the periods under review.
Operating results Q4 2011 Q4 2010 % 2011 2010 %
Change Change
T 257,621 278,242 (7) 1,047,401 1,044,084 -
Tonnes milled
g/t 4.08 4.17 (2) 3.86 4.12 (6)
Recovered milled,4E
grade
Oz 29,316 30,776 (5) 113,625 116,164 (2)
4E oz produced
% 36.4 27.7 24 32.6 32.2 1
UG2 mined to
total output
M 2,875 2,308 25 10,549 10,292 3
Primary
development
Capital $m 4.8 10.8 (56) 28.7 28.2 2
expenditure
Operating ZAR/t 1,285 1,058 (21) 1,194 989 (21)
cost/tonne
milled
ZAR/4E oz 11,292 9,566 (18) 11,009 8,888 (24)
Operating
cost/4E oz
Lost-time Per 2.41 2.32 (4) 1.87 2.11 11
injury 200,000
frequency rate hours
("LTIFR") worked
Total Number 3,498 3,426 2 3,498 3,426 2
permanent
labor
(mine
operations)
Total Number 1,826 1,690 8 1,826 1,690 8
contractors
(mine
operations)
Consolidated statement of comprehensive income summary
Expressed in Canadian Dollars Q4 2011 Q4 2010 FY 2011 FY 2010
(000`s)
Revenue 32,514 43,244 144,407 148,287
Cash operating costs 41,722 42,285 167,997 141,880
Cash operating (loss)/profit* (9,208) 959 (23,590) 6,407
Operating margin (28%) 2.2% (16%) 4.3%
EBITDA (12,834) (6,263) (46,008) (12,963)
Loss after tax (35,519) (32,401) (147,865) (93,659)
Non-controlling interest (15,997) (14,004) (65,936) (41,938)
Loss attributable to Anooraq (19,522) (18,397) (81,929) (51,721)
shareholders
Basic and diluted loss per share 4 4 19 12
- cents
*Cash operating profit/(loss) before depreciation and amortization
Safety
It is with deep regret that one fatal accident occurred at Bokoni during 2011,
in which Miss Hilda Mokgobedi Raganya was fatally injured in a trackless mobile
machinery accident on 18 November 2011. Management continues to focus on taking
appropriate measures to ensure a safer working environment to prevent the
reoccurrence of such an accident. As a result of the fatality and other Section
54 stoppages imposed by the Department of Mineral Resources, a total of 14
operating shifts were lost during Q4 2011. A total of 42 operating shifts were
lost at Bokoni during FY 2011 as a result of Section 54 safety stoppages.
Encouragingly, LTIFR improved from 2.11 to 1.87 in the financial year.
Production and development
Production for Q4 2011 was adversely impacted by the high number of Section 54
safety stoppages, as well as 10 milling shifts lost at the concentrator plant
due to a planned mill shell replacement at the Merensky concentrator. Recovered
grade for Q4 2011 decreased by 2%, whilst concentrator recoveries for Merensky
and UG2 ore deteriorated by 1%, to 87.5%, and improved by 3%, to 83%,
respectively.
Tonnes milled remained flat through the financial year and although the
recovered grade decreased by 6% average concentrator recoveries remained
relatively constant at 84.5%. Total PGM production decreased 2% to 113,625
ounces, largely attributable to a decrease in UG2 recoveries.
Total primary development increased by 25% in Q4 2011 when compared to Q4 2010,
and by 3% year-on-year.
Revenue
Revenue from the sale of concentrate for Q4 2011 was $32.5 million (ZAR257.5
million) compared to revenue of $43.2 million (ZAR296.2 million) for Q4 2010.
This change in revenue was influenced by lower volumes, the weakening of the
average ZAR to $ exchange rate for Q4 2011 by almost 15% to ZAR7.92=$1 (Q4 2010:
ZAR6.82=$1) together with a change in the PGM basket price to US$1,220/oz
(ZAR9,891/oz) (Q4 2010: US$1,357/oz (ZAR9,366/oz)).
Revenue for FY 2011 was $144.4 million (ZAR1,055.6 million) (FY 2010: $148.3
million (ZAR1,052.4 million)).The slight weakening of the average ZAR to $
exchange rate combined with an improved basket price kept revenues relatively
constant over the period. The average PGM basket price achieved for FY 2011 was
US$1,380/oz (ZAR10,028/oz), representing a 10% increase on FY 2010 at
US$1,257/oz (ZAR9,207/oz). The average ZAR to $ exchange rate for FY 2011 was
ZAR7.33=$1 (FY 2010: ZAR7.10=$1).
Cash operating costs
Cash operating costs for Q4 2011 were $41.7 million (ZAR330.3 million) compared
to $42.3 million (ZAR288.5 million) for Q4 2010.
Cash operating costs for FY 2011 were $167.9 million (ZAR1,230.7 million)
compared to $141.8 million (ZAR1,006.8 million) in FY 2010, primarily
attributable to above inflation increases in labour costs, increased stores
charges and annual increases in utility charges.
Finance charges
Total finance charges of $92 million (ZAR672 million) were incurred in FY 2011,
of which $50 million (ZAR364 million) were attributable to Anooraq, contributing
significantly to the Company`s net loss for the period. Finance charges will be
reduced substantially on implementation of the restructure plan (see commentary
on new consolidated debt facility below).
Earnings
The basic and diluted loss per share for Q4 2011 remained the same as Q4 2010 at
4 cps, whilst widening from 12 cps to 19 cps year-on-year.
Outlook for 2012
Restructure, recapitalization and refinancing of the Company and the Bokoni
Group
During 2011 Anooraq and Amplats determined that the current strategic approach
at Bokoni, together with both the Bokoni Group and Company`s historical
financing plan required restructuring, as detailed in the Company`s news release
dated 2 February, 2012. The net result of the restructure plan for the Company
is as follows:
- the Company will transfer 31.4 million of its 107 million attributable
PGM resource ounces to Amplats at its Boikgantsho and Ga-Phasha
development project areas for an effective cash consideration of $214
million (ZAR 1.7 billion);
- the Bokoni lease area will be extended by incorporating the western
section of the Ga-Phasha development project area, thereby increasing
the Bokoni lease area to cover 20km of continuous strike length over
both the Merensky and UG2 reef horizons, together with established
mine and surface infrastructure;
- Amplats and Anooraq will enter into an interest standstill agreement
effective 1 July, 2011 through to 30 April 2012, relating to
historical debt owing by Anooraq and the Bokoni Group to Amplats which
amounted to approximately $378 million (ZAR3 billion) of debt
attributable to Anooraq ($755 million (ZAR6 billion) on a consolidated
group basis) as at 31 December, 2011. This will result in a $38
million (ZAR300 million) interest saving for the Company;
- on implementation of the restructure plan, Anooraq`s attributable debt
owing to Amplats will decrease from $378 million to $126 million (ZAR3
billion to ZAR1 billion). Consolidated group debt will reduce from
$755 million to $126 million (ZAR6 billion to ZAR1 billion)
("historical debt balance");
- a new extraction strategy for Bokoni has been agreed between Amplats
and Anooraq, which will see Bokoni as a mine in development through to
2017, focusing on its Brakfontein Merensky and Middelpunt Hill UG2
expansion projects, whilst phasing out its high-cost marginal shaft
operations during the same period (see below);
- the new extraction strategy at Bokoni will require an estimated
capital expenditure of $327 million (ZAR2.6 billion) and will be
financed by Amplats funding its $164 million (ZAR1.3 billion) share of
expenditure, while providing Anooraq with a new debt facility of $164
million (ZAR1.3 billion) to meet its share of funding requirements;
- the new consolidated debt facility of up to $289 million (ZAR2.3
billion), comprising the $126 million (ZAR1 billion) historical
debt balance together with the new $164 million (ZAR1.3 billion)
facility provided by Amplats, will:
- comprise a single nine-year debt term facility, terminating on
December 31, 2020;
- yield variable interest coupon rates depending on the quantum drawn on
such facility by Anooraq during the debt term, which includes a zero
interest coupon on the $126 million (ZAR1 billion) historical debt
balance for the first three-year period of the debt term;
- result in an estimated average debt interest coupon of 7% per annum
for the Company through to 2020, as compared to the average debt
interest coupon of 16% per annum attached to historical debt
facilities.
- the Company will not issue any new equity as a result of the
restructure plan.
Amplats and Anooraq continue to progress the restructure plan and are in the
process of settling definitive transaction agreements between them, whilst
advancing the necessary legal and regulatory approvals required for its
implementation. The completion of the proposed restructure plan is subject to
conditions precedent and is expected to close during July 2012.
New extraction strategy for Bokoni
As part of the restructure plan Amplats and Anooraq have determined that the
historical extraction strategy for Bokoni, as agreed between them in 2009, was
inappropriate and required a new approach, having regard to the vast size of the
Bokoni orebody and multiple potential attacking points over both the Merensky
and UG2 reef horizons, stretching 20km of strike length at the new extended
Bokoni lease area. The key elements of the new Bokoni extraction strategy are as
follows:
- Bokoni will be positioned as a development mine for the next five
years through to 2017, with its major emphasis focused on completion
of the Brakfontein Merensky project and an accelerated development
programme at the Middelpunt Hill UG2 expansion project. During the
same period Bokoni will phase out its high cost and marginal Merensky
operations at its old Vertical and UM2 shafts;
- Middelpunt Hill UG2 operations will be expanded and accelerated
through the Delta 80 project, which had previously been deferred
beyond 2020. This will result in production at the Middelpunt Hill
operations increasing from 35,000 tonnes per month ("tpm") to a steady
state of 125,000tpm;
- the Brakfontein Merensky project, which is currently producing at a
rate of 30,000tpm, will ramp up to a steady state level of 120,000tpm.
This will require three additional ventilation shafts in order to
progress development below the current 6 level down to 9 level (650m
below surface);
- currently, a number of potential opportunities are being investigated
to fill total mill capacity (165,000tpm) at the operations, including
exploiting shallow resources along the 20km Merensky and UG2 strike
length.
New management team for Bokoni
As part of the restructure plan Amplats and Anooraq appointed a new and
experienced management team at Bokoni in order to implement its new extraction
strategy.
The new management team is led by Mr. Dawid Stander who has 33 years of
experience in the mining industry and held the position of General Manager at
Bokoni (formerly Lebowa Platinum Mines) from 2001 to 2005; during which period
the performance of the operations improved significantly.
Announcement of updated technical review for mining projects
In conjunction with the proposed restructure plan, Anooraq has completed an
updated technical review for each of Bokoni, the Ga-Phasha Project and the
Boikgantsho Project. Copies of the technical reports described below, prepared
in accordance with National Instrument 43-101 Disclosure Standards for Mineral
Projects, for each of these projects can be found on SEDAR at www.sedar.com and
with the United States Securities Commission ("SEC") at www.sec.gov, filed as of
March 30, 2012:
- Bokoni: An Independent Qualified Persons` Report on Bokoni Platinum
Mine, Limpopo Province, South Africa, dated March 22, 2012 and
prepared by Minxcon.
- Ga-Phasha Project: Technical Report: The Mineral Resource Estimate for
the Merensky and UG2 Reefs for the Ga-Phasha Project Area, Limpopo
Province, Republic of South Africa dated March 30, 2012 prepared by
ExplorMine Consultants.
- Boikgantsho Project: Technical Report: The Mineral Resource Estimation
For The Platreef for the Boikgantsho Project Limpopo Province Republic
of South Africa dated January 31, 2012 prepared by Kai Batla Minerals
Industry Consultants.
Summaries of the technical information with respect to each of Bokoni, the Ga-
Phasha Project and the Boikgantsho Project based on these updated technical
reports, including updated mineral resource and reserve estimates, as
applicable, can also be found in Anooraq`s annual report on 20-F for the year
ended December 31, 2011 also available on SEDAR at www.sedar.com and filed with
the SEC at www.sec.gov on March 30, 2012.
Non-material accounting adjustments and restatement of interim financial
statements
The Company has filed restated unaudited financial results for the first, second
and third quarters of 2011 in order to address inadvertent accounting
adjustments which led to an understatement of the loss for each of the
respective quarters. Management identified certain non-material accounting
adjustments during the year-end accounting process that impacted the financial
statements previously filed for the first, second and third quarters of 2011.
These accounting adjustments relate to depreciation, recognition of share based
payments and interest on the A preference shares. The restated financial
information as described above has had no impact on Anooraq`s statement of cash
flows in any of the three quarters. Management believes the restatement of the
financial information described above does not materially impact the Company`s
consolidated financial position or financial performance for the relevant
interim periods nor will it have an impact on future periods.
The restated financial statements reflect that there was no change in the basic
and diluted loss per share in Q1 2011, however the basic and diluted loss per
share for Q2 2011 increased $0.01 from $0.10 to $0.11 per share and the basic
and diluted loss per share for Q3 2011 increased by $0.01 from $0.14 to $0.15
per share.
Notwithstanding the non-material nature of these adjustments, management deems
it prudent to amend and restate its interim financial statements for Q1 2011, Q2
2011 and Q3 2011 on a corrected basis.
For further details refer to the Company`s Restated Condensed Consolidated
Interim Financial Statements for the three months ended March 31, 2011, the
three and six months ended June 30, 2011 and three and nine months ended 30
September 2011, available at www.anooraqresources.com and filed on www.sedar.com
on March 30, 2012.
Note on cautionary and no conference call
Anooraq is currently trading under cautionary and will not be holding a
conference call or presentation to accompany these results. Further to
finalization and publication of the financial effects of the restructure plan,
the Company will resume detailed shareholder communications.
Johannesburg
30 March 2012
JSE Sponsor
Macquarie First South Capital (Pty) Limited
Issued on behalf of Anooraq Resources Corporation
Queries:
On behalf of Anooraq
Joel Kesler
Executive: Corporate Development
Office: +27 11 779 6800
Mobile: +27 82 454 5556
Russell and Associates
Charmane Russell / Nicola Taylor
Office: +27 11 880 3924
Mobile: +27 82 372 5816 / +27 82 927 8957
Macquarie First South Capital (Pty) Ltd
Melanie de Nysschen / Annerie Britz / Yvette Labuschagne
Office: +27 11 583 2000
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in policies of the TSX Venture Exchange) accepts responsibility
for the adequacy or accuracy of this release. The NYSE Amex has neither approved
nor disapproved the contents of this press release.
Cautionary and forward-looking information
This document contains "forward-looking statements" that were based on Anooraq`s
expectations, estimates and projections as of the dates as of which those
statements were made, including statements relating to the Bokoni Group
restructure and refinancing and 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" and similar expressions.
Anooraq believes that such forward-looking statements are based on material
factors and reasonable assumptions, including the following assumptions: the
Bokoni Mine will increase or continue to achieve production levels similar to
previous years; the Ga-Phasha, Boikgantsho, Kwanda and Platreef Projects
exploration results will continue to be positive; 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 or strikes 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 the completion of the Bokoni Group restructure and
refinancing;
- uncertainties and costs related to the Company`s exploration and
development activities, such as those associated with determining whether
mineral resources or reserves exist on a property;
- 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 the cash and total costs of production and milling;
- uncertainties related to the ability to obtain necessary licenses, permits,
electricity, surface rights and title for development projects;
- operating and technical difficulties in connection with mining development
activities;
- 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 (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 formation, 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 we use to report our 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 which we operate; 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 Anooraq, investors should review the Company`s Annual
Report O disclosed in the Form 20-F for the year ended December 31, 2011 filed
on SEDAR at www.sedar.com and with the United States Securities and Exchange
Commission www.sec.gov and other disclosure documents that are available on
SEDAR at www.sedar.com.
Date: 30/03/2012 15:01:01 Supplied by www.sharenet.co.za
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