Wrap Text
Atlatsa Announces Audited Results for the Quarter and Year Ended December 31, 2014
Atlatsa Resources Corporation
(Incorporated in British Columbia, Canada)
(Registration number 10022-2033)
(TSXV/JSE share code: ATL)
(NYSE MKT share code: ATL)
(“Atlatsa” or the “Company”)
(ISIN: CA0494771029)
ATLATSA ANNOUNCES AUDITED RESULTS FOR THE QUARTER AND YEAR
ENDED DECEMBER 31, 2014
Key features for the 2014 financial year:
- Bokoni Mine achieved its highest production volume since 2006
- Sales revenues increased 21.4% year-on-year to $237.4 million
- Total tonnes milled increased 14.3% to 1,743,781
- Increase of 13.9% in 4E PGM* ounces produced to 194,036
- Cash unit cost increase below mining inflation
- Disappointing safety performance with lost-time injury
frequency rate (“LTIFR”) at 0.98 per 200,000 hours worked
March 31, 2015 Atlatsa Resources Corporation (“Atlatsa” or the
“Company”) (TSX: ATL; NYSE MKT: ATL; JSE: ATL) announces its
operating and financial results for the quarter and year ended
December 31, 2014. This release should be read together with
the Company’s audited consolidated financial statements for
the year ended December 31, 2014 (the “Consolidated Financial
Statements”) and the related Management’s Discussion and
Analysis of Financial Condition and Results of Operations (the
“MD&A”) filed on www.sec.gov and www.sedar.com, which are also
available at www.atlatsa.com. Currency values are presented in
South African Rand (ZAR), Canadian Dollars ($) and United
States Dollars (US$).
* 4E PGM means platinum group metals comprising: platinum,
palladium, rhodium and gold.
Bokoni Mine operating and financial performance
Set out below are summaries of the key operating and financial
results for the Bokoni Mine for the quarter and year ended
December 31, 2014.
1
% %
Operating results FY 2014 FY 2013 4Q2014 4Q2013
change change
Tonnes
delivered t 1,745,245 1,524,491 14.5 356,156 404,797 (12.0)
Tonnes
milled t 1,743,781 1,525,945 14.3 454,030 425,125 6.8
g/t
Recovered milled,
grade PGM 3.6 3.6 0.5 3.4 3.3 3.6
PGM oz
produced oz 194,036 170,295 13.9 48,414 43,739 10.7
UG2 milled
to
underground
output % 27.6 32.0 (13.7) 26.3 29.2 (9.8)
Primary
development metres 10,735 11,054 (2.9) 2,448 3,227 (24.1)
Capital
expenditure $m 35.1 51.2 (31.5) 6.1 13.5 (54.9)
Operating
cost/tonne
milled ZAR/t 1,284 1,197 (7.3) 1,246 1,264 1.4
Operating ZAR/PGM
cost/PGM oz oz 11,540 10,728 (7.6) 11,690 12,289 4.9
Lost Time
Injury Per
Frequency 200,000
Rate hours
(LTIFR) worked 0.98 0.90 (8.9) 0.77 0.86 10.5
Financial results
Expressed in
FY % %
Canadian Dollars FY 2014 4Q2014 4Q2013
2013 change change
(000’s)
195,
Revenue 237,391 621 21.4 54,611 47,948 13.9
(195
,911 (64,198
Cash operating costs (227,981) ) (16.4) ) (58,548) (9.7)
Cash operating (290 3,344.
profit 9,410 ) 8 (9,587) (10,600) 9.6
Cash operating (0.2 2,776.
margin (%) 4.0 ) 3 (17.6) (22.1) 20.6
21,5 (10,605
EBITDA** 1,975 58 (90.8) ) (15,319) 30.8
** EBITDA means earnings before net finance costs, income tax, depreciation and amortization.
EBITDA is not a recognized 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 0.98 per 200,000 hours worked compared to 0.90 in 2013, a decrease of 8.9%.
Five Section 54 safety stoppages were imposed by the South African Department of Mineral Resources
(“DMR”) at the operations, resulting in a loss of 1,622 4E PGM ounces. The disappointing safety
performance was largely attributable to employee behaviour of not adhering to safety standards and
procedures. The Bokoni Mine management has intensified safety awareness and training at the operations
and continues to re-iterate the principle of zero harm to all stakeholders.
On October 8, 2014, Bokoni suspended operations at its Klipfontein opencast mine as a result of a fatal
injury to a community member from the Mosotsi community village. Investigations into the incident
are still under way to determine whether the fatality was as a result of mining operations. Operations at the
western section of the Klipfontein opencast mine resumed on November 3, 2014, while operations at the eastern
section, which is in close proximity to the Mosotsi Village, remain suspended. The DMR has scheduled an inquiry
into the incident for the end of April 2015.
Atlatsa is pleased with the 70% increase in voluntary enrolment for HIV/Aids counselling and testing as well
as a 12% decrease in reportable tuberculosis cases as a result of various heightened awareness campaigns on
health and wellness.
Operational results
The Bokoni Mine increased tonnes milled by 14.3% to 1,743,781 tonnes, resulting in an increased production
of 194,036 4E PGM ounces in fiscal 2014 compared to 170,295 4E PGM ounces during the 2013 financial year.
This increase is attributable to better operating efficiencies, improved mining flexibility and improved grade
control.
Development decreased by 2.9% year-on-year to 10,735 metres as planned, following a strategic decision to
reduce development to a level sufficient to meet the Bokoni Mine’s stoping flexibility requirements. More
emphasis is being placed on pothole management with a focus on secondary development to improve face length
available for mining.
Recoveries at the concentrator plant decreased by 0.2% to 89.6% and 1.3% to 85.6% for the Merensky and UG2
concentrate, respectively, as a result of an increase in throughput and processing of lower grade ore from
the opencast operation.
The Brakfontein Merensky and Middelpunt Hill UG2 development shafts remain in their ramp-up phase as per
the mine plan and are on target to achieve steady state production levels of 100,000tpm and 60,000tpm,
respectively, by 2018. The mill gap between installed processing capacity (160,000tpm) and current
underground ore production (140,000tpm) will continue to be filled by ore generated from the opencast
operation, which will be managed on a flexible volume basis to produce sufficient material for this purpose.
Financial results
Revenue increased 21.4% year-on-year to $237.4 million as a result of the 13.9% increase in total 4E PGM
ounces produced (194,036 compared to 170,295), and was boosted by a 12.4% weakening of the average ZAR
against the US$ over the period, from ZAR9.65/US$ in 2013 to ZAR10.85/US$ in 2014. The average US$ price
realised during the current period declined marginally by 0.5% from US$1,112 per 4E PGM ounce to US$1,107
per 4E PGM ounce. Total cash operating costs were 16.4% higher reflecting the higher volumes sold. In addition
to increased production, the cost increase is largely attributable to:
- 10.8% increase in labour costs as a result of annual wage increases and an increase in production bonus
payments during the year;
- 42.2% increase in contractor costs as a result of increased tonnes delivered at the Klipfontein opencast
mine;
- 13.9% increase in stores costs due to an increase in square metres mined and increased working cost
development;
- 10.0% increase in utility costs as a result of increased production and an 8% rate increase in the
power tariff by Eskom Holdings Limited; and
- 24.0% increase in sundries due to a 40.0% increase in the cost of spare parts and maintenance related to
drilling equipment mainly used at the Brakfontein shaft.
Total Bokoni Mine capital expenditure for the year ended December 31, 2014 was $35.1 million, compared to
$51.2 million for 2013, comprising 29% sustaining capital and 71% project expansion capital associated with
the two key ramp-up shaft operations. The 31.5% decrease in capital expenditure is as a result of a strategic
decision by management to employ a “just in time” approach to capital development at the operations in an effort
to reduce cash flow expenditure through improved capital discipline, without compromising Bokoni mine’s
development plan.
Financial results – Atlatsa
Expressed in
Canadian
Dollars
(000’s)
FY 2014 FY 2013 % Q4 2014 Q4 2013 %
change change
Revenue 237,391 195,621 21.4 54,611 47,948 13.9
Cost of
sales (264,758) (233,776) (13.3) (71,365) (67,202) (6.2)
Gross
loss (27,367) (38,155) 28.3 (16,754) (19,255) 13.0
General,
administr
ative and
other
expenses (12,742) 197,940 (106.4) (4,764) 176,024 (102.7)
Operating
(loss) /
profit (40,110) 159,785 (125.1) (21,518) 156,769 (113.7)
Net
finance
costs (15,973) (56,062) 71.5 (4,659) (12,268) 62.0
Income
tax 6,532 (3,853) 269.5 1,967 (11,297) (117.4)
(Loss) /
profit
for the
period (49,550) 99,869 (149.6) (24,210) 133,204 (118.2)
(Loss) /
profit
attributa
ble to
Atlatsa
sharehold
ers (24,609) 199,492 (112.3) (12,240) 227,828 (105.4)
Basic
(loss) /
profit
per share
– cents (5) 47 (110.6) (2) (3) 33.3
Headline
loss per (4) (10) 60 (2) (3) 33.3
share –
cents***
*** Headline loss per share is not a recognized 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 2/2013 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).
Earnings
The basic and diluted loss deteriorated by 110.6% to 5 cents per share and 110.9% to 5 cents per share,
respectively, compared to basic and diluted profit of 47 and 46 cents per share, respectively, in 2013.
For comparative purposes, adjusting for $243.6 million net profit on disposal of mineral properties generated
in 2013, the loss per share improved by 60% to 4 cents per share compared to 10 cents per share in 2013.
The calculation of headline loss per share for the year ended December 31, 2014 is based on headline loss of
$23.6 million (2013: $43.8 million). The following adjustments to profit/(loss) attributable to owners of the
Company were taken into account in the calculation:
Headline earnings
Expressed in Canadian Dollars
FY 2014 FY 2013
(000’s)
Profit/(Loss) attributable to
shareholders of the Company (24,609) 199,492
Profit on disposal of mineral
property - (171,113)
Minority interest in disposal of
mineral property - (72,339)
(Gain) / loss on disposal of
property, plant and equipment (4) 36
Write down of assets 1,050 -
Tax effect - 141
Headline loss attributable to
owners of the company (23,563) (43,784)
Issued share capital
As at December 31, 2014 Atlatsa had 554,288,473 issued and
outstanding common shares.
Other matters
On November 10, 2014, Anglo American Platinum Limited (“Anglo Platinum”) agreed in principle to provide
additional financial support to the Company up to a maximum of $41.8 million (ZAR422 million) to March 31,
2016. This support will be required by Atlatsa in the event of unforeseen circumstances not within the
Company's control that may result in Bokoni Mine not meeting its planned cash forecasts, and subject to
certain terms and conditions being met, as described in greater detail in Section 1.11 "Liquidity" of the
MD&A and under "Going Concern" in note 2 to the Consolidated Financial Statements. The parties are currently
in advanced negotiations regarding the definitive terms associated with these financial arrangements, which
will be more fully described once definitive agreements are completed.
Atlatsa continues to engage with Anglo Platinum and the DMR surrounding Anglo Platinum’s announcement on
its potential exit from the Bokoni joint venture.
Outlook
The Bokoni Mine remains an operation in development with its key Brakfontein Merensky and Middelpunt Hill UG2
development shafts remaining in their ramp-up phase and on target to achieve planned steady state production
by 2018. In a challenging economic environment for South African PGM producers, mine management continues to
focus on various initiatives to improve operational efficiencies, disciplined capital allocation and cost
management, without comprising Bokoni Mine’s existing ramp up plan. Safety remains a focus area for the mine
as the safety of all employees and contractors across underground and opencast mining operations as well as
that of our community members, remains of paramount importance to our operations.
Queries:
On behalf of Atlatsa
Prudence Lebina
Head of Investor Relations
Office: +27 11 779 6800
Email: PrudenceL@atlatsa.com
JSE Sponsor:
The Standard Bank of South Africa Limited
Natalie Di-Sante
Office: +27 11 721 6125
Russell and Associates
Pam McLeod
Office: +27 11 880 3924
Email: pam@rair.co.za
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 anticipated financial or operational
performance. Generally, these forward-looking statements can
be identified by the use of forward-looking terminology such
10
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 Bokoni Mine will maintain production levels in
accordance with mine operating plan; the Bokoni Mine operating
plan will continue to be implemented as expected and will
achieve improvements in production and operational
efficiencies as anticipated; the Company will be able to
satisfy the terms and conditions of its letter of support from
Anglo Platinum, dated November 10, 2014, as described in
Section 1.11 “Liquidity” in the MD&A and under “Going Concern”
in note 2 of the Consolidated Financial Statements; the
Platreef Projects will continue to be positive; contracted
parties provide goods and/or services on the agreedtimeframes;
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 the Company’s ability to satisfy
the terms and conditions of its letter of support from
Anglo Platinum, dated November 10, 2014, as described in
Section 1.11 “Liquidity” in the MD&A and under “Going
Concern” in note 2 of the Consolidated Financial
Statements;
- 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 the cash and total costs of production
and milling;
- uncertainties related continued availability of capital
and financing;
- uncertainties related to the ability to obtain necessary
licenses, permits, electricity, surface rights and title
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:
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;
- 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
whic we operate mines, our 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, 2014 and other disclosure documents available at
www.sedar.com and with the United States Securities and
Exchange Commission, available at www.sec.gov.
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