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Atlatsa announces results for the quarter ended March 31, 2014
Atlatsa Resources Corporation
(previously Anooraq Resources Corporation)
(Incorporated in British Columbia, Canada)
(Registration number 10022-2033)
TSX/JSE share code: ATL
NYSE MKT share code: ATL
ISIN: CA0494771029
(”Atlatsa” or the “Company”)
ATLATSA ANNOUNCES RESULTS FOR THE QUARTER ENDED MARCH 31, 2014
First quarter highlights:
- Safety statistics improve by 61% year-on-year.
- PGM production volumes improve by 19% year-on-year, despite challenges associated
with unseasonal rain fall, safety stoppages and post year end start up.
- Development improves by 37% year-on-year as Bokoni Mine continues to develop two
new mining operations and positions itself for the PGM market recovery.
- Cash margins improve.
- Balance sheet restructure completed, resulting in significant reduction in Company debt
and cost of borrowing.
- Purchase of concentrate terms agreed with Anglo American Platinum.
May 15, 2014 Atlatsa Resources Corporation (Atlatsa or the Company) (TSX: ATL; NYSE MKT: ATL;
JSE: ATL) announces its operating and financial results for the three months ended March 31, 2014.
This release should be read together with the Company’s Financial Statements and Management
Discussion & Analysis for the period filed on www.sec.gov and www.sedar.com and available at
www.atlatsaresources.co.za. Currency values are presented in South African Rand (ZAR), Canadian
Dollars ($) and United States Dollars (US$).
*PGM means platinum group metals (4E), comprising platinum, palladium, rhodium and gold.
The NYSE MKT has neither approved nor disapproved the contents of this press release.
Chief Executive Officer, Harold Motaung, says, “Notwithstanding the challenges associated with the
annual start up after the December holiday break and operational challenges resulting from the
heaviest rain falls registered at Bokoni Mine in the past twenty years, the Company achieved a credible
operating and financial performance in what is traditionally the most challenging quarter in our calendar
year. Most importantly, Bokoni Mine continues to show a positive upward trend in operating
performance, with all key operating metrics showing significant year-on-year improvements. Through
the efforts of our employees, Bokoni Mine continues to develop through these challenging times in the
PGM sector and is well positioned to continue on its growth trajectory, as demonstrated over the past
two years”.
Operating and financial performance
Set out below are summaries of the key operating and financial results for Bokoni Mine and the
Company for the quarter ended March 31, 2014.
%
Operating results Q1 2014 Q1 2013
Change
Tonnes milled T 390,009 302,964 29
Recovered grade g/t milled, PGM 3.53 3.82 (8)
PGM oz produced Oz 42,820 36,043 19
UG2 mined to total output % 32.10 34.36 (7)
Primary development Metres 2,686 1,956 37
Capital expenditure $m 11.2 12.0 (7)
Operating cost/tonne milled ZAR/t 1,308 1,283 (2)
Operating cost/PGM oz ZAR/PGM oz 11,920 10,786 (11)
Lost-time injury frequency rate (LTIFR) Per 200,000 hours worked 0.38 0.97 61
Financial summary
%
Expressed in Canadian Dollars (000’s) Q1 2014 Q1 2013
Change
Revenue 53,831 45,081 19
Cash operating costs 50,859 44,037 (15)
Cash operating profit/(loss) 2,972 1,044 185
Operating margin 5.5% 2% 175
EBITDA* 8 17,976 (100)
Loss attributable to Atlatsa shareholders (4,877) (6,165) 21
Basic and diluted loss per share – cents 1 1 -
Cash utilized by operations $140, 329 $2,611,486 95
* The Company recognised a fair value gain of $0.4 million during Q1 2014, compared to a fair value gain of $20.6 million for
Q1 2013.
Safety
Bokoni Mine’s LTIFR improved by 61% year-on-year to 0.38 per 200,000 hours worked. The improved
safety performance at Bokoni Mine is largely attributable to management adopting a more proactive
approach to behavioural safety standards and adherence to safety protocols at the operations.
Notwithstanding these improved safety statistics, Bokoni Mine suffered from a number of safety
stoppages imposed by the Department of Mineral Resources (DMR), resulting in 14 lost production
shifts across various shaft complexes during the quarter.
Operational results
Bokoni Mine continues to demonstrate a positive trend in operating performance, with all key operating
metrics showing significant improvements.
Production was negatively impacted by the safety stoppages imposed by the DMR, as well as
unseasonal rainfall across the northern part of South Africa during the quarter. The heaviest rainfall in
the past twenty years was recorded at Bokoni Mine. These conditions had a negative impact on the
Klipfontein open cast mine, which managed to produce only 50% of its planned production volumes.
Notwithstanding external challenges, tonnes milled for Q1 2014 improved by 29% year-on-year, whilst
PGM production ounces improved by 19% year-on-year.
Primary development increased by 37% year-on-year to 2,686 metres. Emphasis remained on building
out lateral development and shaft sinking at Bokoni’s two new generation shaft complexes at the
Middelpunt Hill (UG2) and Brakfontein (Merensky) ramp up projects.
Increased development rates continued to have a negative impact on Bokoni Mine’s unit costs and
recovered grade, as the Company accelerates the build out of its new generation underground shaft
systems to steady state. The Company has adopted an expansionary approach in an effort to position
Bokoni Mine as a 160,000 tpm steady state producer from its two new generation shaft complexes over
the next three years. Bokoni Mine’s two older and higher cost shaft complexes will be phased out
during the same period.
Bokoni Mine management is encouraged by results achieved at its Klipfontein Merensky open cast
mine, with an ever improving understanding of grade control and concentrator processing dynamics,
positioning the open cast operation to become a meaningful contributor at Bokoni over the next three
years, whilst the new generation underground operations ramp up to steady state.
Recovered grade at Bokoni Mine decreased 8% year-on-year as a result of the introduction of open
cast mining activity, as well as increased development rates at the operations.
On completion of the current ramp up phase, the Bokoni Mine will be better positioned from both a unit
cost and cash flow perspective, as it will:
- operate from two shaft complexes as opposed to the current four shaft system, thereby reducing
a number of support services;
- reduce its aggregate operating costs by moving from older, higher cost shaft operations to lower
cost, new generation and more efficient shaft operations;
- access higher grade Merensky mining areas at its new generation Brakfontein shaft complex;
- reduce overall sustaining capital expenditure at its new generation shaft complexes;
- significantly reduce its project capital expenditure; and
- maintain a relatively constant number of total employees and contractors, despite increasing the
planned production volumes by 47% from 170,000 PGM oz (FY2013) to 250,000 PGM oz (FY
2017).
Financial results
Revenue increased by 19% year-on-year as a result of increased production volumes, coupled with the
positive impact of a depreciating ZAR currency against the US$, resulting in an 11% increase in the
average ZAR PGM ounce basket price achieved to ZAR12,373, compared to ZAR11,108 in Q1 2013.
The US$ PGM ounce basket price achieved decreased by 8% year-on-year to $1,139, compared to
US$1,241 in Q1 2013.
Absolute cash operating costs and unit costs were 15% and 11% higher respectively during the quarter,
largely attributable to increased production volumes, annual wage increases, increased contractor and
stores costs associated with the accelerated underground development programme and open cast
mining.
Capital management, allocation and scheduling continues to improve at Bokoni Mine, with Q1 2014
expenditure decreasing by 7% year-on-year, despite a significant improvement in capital development
metres achieved at the operations.
Notwithstanding external operational challenges experienced during the quarter, the Company
continued to improve its cash generating ability, achieving a cash operating profit of approximately $3
million during the period. Cash utilized before working capital changes improved significantly year-on-
year to $140,329, when compared to $2,611,486 in Q1 2013.
Earnings
The basic and diluted loss per share remained at 1 cents per share when compared to Q1 2013.
Balance sheet restructure completed
During the quarter the Company completed its financial restructure plan (as previously discussed in the
Company’s news release, dated February 3, 2014), resulting in a 73% reduction in its debt and a
reduction in its cost of borrowing to 4.73%.
Purchase of concentrate terms agreed with Anglo American Platinum
On completion of its financial restructure plan, the Company agreed to revised payment terms with
Anglo American Platinum Limited relating to its purchase of concentrate from Bokoni Mine. If required,
the mine may access up to ZAR475 million (US$49.9 million) of a working capital facility as an advance
on concentrate sales.
Outlook
With completion of the first quarter, which is traditionally the most challenging operating quarter at
Bokoni Mine, management believes the operations remain well-positioned to achieve its minimum 10%
year-on-year targeted growth rate on PGM ounces produced for FY 2014.
Management anticipates that the benefits associated with an accelerated development programme,
improvements to open cast mining performance and efficiency improvement initiatives, should translate
into overall improved results from Q2 2014 onwards.
The Company continues to assess various strategic alternatives relating to its significant Northern Limb
(Platreef) mineral property package and will make an announcement regarding these opportunities
once a definitive strategic decision has been taken.
Johannesburg
15 May 2014
JSE Sponsor
Macquarie First South Capital Proprietary Limited
Queries:
On behalf of Atlatsa
Joel Kesler
Chief Commercial Officer
Office: +27 11 779 6800
Email: Joel@atlatsa.com
Prudence Lebina
Head of Investor Relations
Office: +27 11 779 6800
Email: PrudenceL@atlatsa.com
Russell and Associates
Charmane Russell / Pam Wolstenholme
Office: +27 11 880 3924
Mobile: +27 82 372 5816 / +27 82 827 6387
Macquarie First South Capital (Pty) Ltd
Annerie Britz
Office: +27 11 583 2000
Cautionary note regarding forward-looking information
This document contains “forward-looking statements” within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995 and 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 the anticipated benefits of the Restructure Plan 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.
Atlatsa believes that such forward-looking statements are based on material factors and reasonable
assumptions, including the following assumptions: open cast mining and accelerated development of
underground shaft systems at Bokoni Mine will have anticipated positive impacts on operations and
production; the 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 realization of anticipated benefits of the Restructure Plan;
- uncertainties related to implementation and realization of operational improvement and expansion
plans, such as open cast mining and underground shaft development at Bokoni Mine;
- 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:
o mine expansions, environmental protection and associated compliance costs arising from
exploration, mine development, mine operations and mine closures;
o expected effective future tax rates in jurisdictions in which our operations are located;
o the protection of the health and safety of mine workers; and
o 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 Atlatsa, investors should review the Company’s Annual Report on Form 20-F
for the year ended December 31, 2013 and other disclosure documents filed at www.sedar.com and
with the United States Securities and Exchange Commission, available at www.sec.gov.
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