Wrap Text
Atlatsa announces results for the quarters ended June 30, 2015 and September 30, 2015
Atlatsa Resources Corporation
(Incorporated in British Columbia, Canada)
(Registration number 10022-2033)
TSX/JSE share code: ATL
ISIN: CA0494771029
(“Atlatsa” or the “Company”)
ATLATSA ANNOUNCES RESULTS FOR THE QUARTERS ENDED JUNE 30, 2015 AND SEPTEMBER
30, 2015
Third Quarter 2015 Key Features:
- Implementation of operational and financial restructure plan at Bokoni Mine initiated
- New facility agreement entered into with Anglo American Platinum Limited
- Ramp up of underground development projects remain on track
- Revenue decreased 19% to $57.2 million
- Total tonnes milled increased 1% to 482,150
- Cash flow generated from operations improved to $10.7 million
- 4E PGM ounces produced relatively flat at 55,491
- PGM unit cash costs reduced by 2% following cost saving initiatives
- Disappointing safety performance with lost-time injury frequency rate (“LTIFR”) at 1.56 from 0.80
Second Quarter 2015 Key Features:
- Impairment loss of $337 million recognised
- Revenue decreased 12% to $51.7 million
- Total tonnes milled decreased 7% to 391,363
- 4E PGM ounces produced decreased 2% to 45,675
- PGM unit cash cost containment remained a challenge
- Safety improvement continued with LTIFR at 0.80 from 1.16
*PGM means platinum group metals (4E), comprising platinum, palladium, rhodium and gold.
December 11, 2015 Atlatsa Resources Corporation (“Atlatsa” or the “Company”) (TSX: ATL; JSE: ATL)
announced today that it has entered into a term loan facility agreement with Anglo American Platinum Limited
(“Anglo American Platinum”) and has released its operating and financial results for the three months and nine
months ended September 30, 2015 and for three months and six months ended June 30, 2015. This release
should be read together with the Company’s Financial Statements and Management Discussion & Analysis
document for such periods filed on www.sec.gov and www.sedar.com and also available at
www.atlatsaresources.co.za. Currency values are presented in South African Rand (ZAR), Canadian Dollars ($)
and United States Dollars (US$).
Harold Motaung, Chief Executive Officer of Atlatsa, said, “We are pleased to have reached an agreement with
our joint venture partner, Anglo American Platinum, regarding additional funding for Bokoni Mine, and for
Atlatsa to now be in a position to file these operating and financial results.”
“The continuing climate of lower Rand PGM metal prices remains a challenge for Atlatsa and the Company has
had to implement an operational and financial restructure plan at Bokoni Mine to ensure the future sustainability
of the operations. This plan entails the closure of our two older, high costs shafts; implementation of various
cost containment measures across the Company; and a review of our capital deployment strategy.”
Motaung continued, “A technical evaluation done in collaboration with our joint venture partner, Anglo
American Platinum, for the purposes of reviewing Bokoni Mine’s extraction strategy and developing a path
towards a sustainable and optimised mine operation has now been concluded. This evaluation, together with
implementation of the operational and financial restructure plan will assist in ensuring Bokoni Mine survives
through the current low price environment.”
New Facility Agreement with Anglo American Platinum Limited
On December 9, 2015, a Term Loan Facility Agreement (“the Term Loan Facility”) was entered into with
Anglo American Platinum, providing a $34.3 million (ZAR334.0 million) facility to enable Atlatsa to advance
its share of shareholder loans to Bokoni Holdings (Proprietary) Limited for the sole purpose of enabling Bokoni
Mine to fund capital expenditure, working capital expenditure and operating expenses in the event that these
costs cannot be funded from internal resources. Anglo American Platinum has committed to fund its 49% pro
rata share in accordance with the joint venture shareholders’ agreement between the parties.
The Term Loan Facility bears no interest and replaces the letter of support dated November 10, 2014 received
from Anglo American Platinum. The Term Loan Facility is repayable at the earlier of an event of default and
December 31, 2018. There will be a mandatory repayment by Atlatsa upon the occurrence of a change of
control in the Company or a sale of all or substantially all the assets of Bokoni Mine whether in a single
transaction or a series of related transactions.
In agreeing to the terms and conditions of the Term Loan Facility, Atlatsa has agreed to co-operate with Anglo
American Platinum in relation to Anglo American Platinum’s acquisition of (i) the prospecting rights held by
Kwanda Platinum Mines (Proprietary) Limited and (ii) the prospecting rights in respect of the Central Block
mineral properties held by Plateau Resources (Proprietary) Limited (as previously contemplated in the letter of
support of November 10, 2014), as well as the disposal of all or any part of Anglo American Platinum’s
shareholding in Bokoni Mine.
The Term Loan Facility requires that Atlatsa implements initiatives to reduce operating cash losses and to the
extent possible, the stay-in-business capital expenditure (excluding project capital expenditure) at Bokoni Mine
so that Bokoni Mine does not incur an operating loss.
Operating and financial performance – Q3 2015
Set out below are summaries of the key operating and financial results for Bokoni Mine and the Company for
the quarter ended September 30, 2015 as well as the nine months ended September 30, 2015.
Operating results Q3 2015 Q3 2014 % change 9M 2015 9M 2014 % change
482 150 479 378 0.6 1 246 409 1 289 751 (3.4)
Tonnes milled t
Tonnes 506 034 544 654 (7.1) 1 284 900 1 389 089 (7.5)
delivered t
Recovered g/t milled, 3.6 3.6* - 3.6 3.5 2.9
grade PGM
PGM oz 55 491 56 025 (1.0) 144 041 145 622 (1.1)
produced oz
UG2 milled to 28.4 32.3 (12.1) 29.5 27.1 8.9
total milled %
Primary 2 362 2 654 (11.0) 6 420 8 136 (21.0)
development metres
Capital
8.3 8.0 3.8 16.5 29.0 (43.1)
expenditure $m
Operating
1 236 1 263** 2.1 1 329 1 296 (2.5)
cost/tonne
milled ZAR/t
Operating ZAR/PGM 10 741 10 810** 0.6 11 498 11 479 (0.2)
cost/PGM oz oz
per
200,000
1.56 1.01 (54.5) 1.15 1.04 (10.6)
hours
LTIFR worked
Financial summary
Expressed in $000 Q3 2015 Q3 2014 % change 9M 2015 9M 2014 % change
Revenue 57 208 70 389 (18.7) 161 180 182 780 (11.8)
Cash operating costs 59 415 60 010 1.0 168 427 163 944 (2.7)
Cash operating profit (2 207) 10 379 (121.3) (7 247) 18 836 (138.5)
Cash operating margin (3.9%) 14.7% (126.5) (4.5%) 10.3% (143.6)
Earnings before interest,
taxation, depreciation and
(26 607) 7 524 (453.6) (374 135) 10 862 (3 544.5)
amortisation
(“EBITDA”)***
Loss for the period (37 376) (560) (6 574.3) (351 278) (25 340) (1 286.3)
Loss attributable to Atlatsa
(21 452) (520) (4 025.4) (157 874) (12 369) (1 176.4)
shareholders
Basic and diluted loss per
(4) 0 - (29) (2) (1 350.0)
share – cents
* Prior year’s quarter restated.
** Management started to build up stockpile to the value of $6.8 million during Q3 2014, the cost of which
has previously been excluded from the Q3 2014 costs above. Cash operating costs represents all on-mine
production and processing costs, excluding depreciation charges. Prior year’s quarter has been restated for
comparison purposes.
***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 – Q3 2015
Bokoni Mine’s LTIFR deteriorated to 1.56 per 200,000 hours worked during the third quarter. The South
African Department of Mineral Resources (“DMR”) imposed three Section 54 safety stoppages at the mine,
resulting in a loss of 862 4E ounces. Atlatsa remains committed to the principle of zero harm at all of its
operations.
Operational and financial restructure plan at Bokoni Mine
To ensure the future sustainability of Bokoni Mine, the Company announced on September 16, 2015
implementation of an operational and financial restructure plan (“Restructure Plan”) at its Bokoni Mine. The
primary objective of the Restructure Plan is to enable Bokoni Mine to endure a prolonged period of depressed
PGM commodity prices, by reducing its existing cost structure and increasing production volumes of higher
grade ore from underground operations.
Implementation of the Restructure Plan at Bokoni Mine is anticipated to result in:
- the older, high cost UM2 and Vertical Merensky shaft operations being placed on care and maintenance;
- continued ramp up of the Middelpunt Hill UG2 and Brakfontein Merensky development shafts to steady
state production of 60,000 tonnes per month (“tpm”) by the fourth quarter of 2016 and 100,000 tpm by
2019, respectively;
- continued mining at the Klipfontein Merensky open cast operation as a mill gap filler during ramp up of
the underground operations;
- a significant reduction in labour related overheads; and
- a reduction in Bokoni Mine’s unit cost of production.
Bokoni Mine has issued a Section 189 (3) notice to relevant parties pursuant to Section 189A of the South
African Labour Relations Act, 1995 (Act No 66 of 1995), and is currently in a consultation process with labour
unions on the contemplated retrenchments of some of its employees.
In reviewing the overhead structures of the Company, Atlatsa has undertaken to reduce its aggregate monthly
operating costs by at least ZAR1.0 million per month on a sustainable basis. The monthly management fee
payable by Bokoni Mine to Atlatsa has also been reduced 11%.
Operational results – Q3 2015
During Q3 2015, Bokoni Mine produced 55,491 4E ounces compared to 56,025 4E ounces during Q3 2014.
Tonnes delivered to the concentrator for the quarter decreased by 7% mainly due to a 34% decrease in tonnes
delivered from the Klipfontein opencast operation and the closure of the UM2 shaft operation in August 2015.
Primary development decreased by 11% quarter-on-quarter to 2,362 metres as a result of a strategic decision by
management to reduce development to a level sufficient to meet short term stoping flexibility requirements.
Greater emphasis is being placed on secondary development to increase face length available for mining.
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 costs
associated with logistics and 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; and
- significantly reduce its project capital expenditure.
Financial results – Q3 2015
Revenue decreased by 19% quarter-on-quarter as a result of an 18% decrease in ZAR PGM basket price
(ZAR10,214 in Q3 2015 compared to ZAR12,413 in Q3 2014) and a 31% decrease in US$ platinum price from
US$1,435 in Q3 2014 to US$988 in Q3 2015. The 21% weakening on the ZAR/US$ exchange rate was not
sufficient to offset the negative impact resulting from a continued decline in US$ PGM prices.
Consolidated cash operating costs were 1% lower due to contractor costs decreasing by 18% in line with the
decrease in tonnes delivered from the Klipfontein opencast mine operation. This was offset by an 8% increase
in stores costs as a result of higher working cost development meters mined; and a 4% increase in utility costs
as a result of a 12.7% increase in the power rate payable to Eskom Holdings SOC Limited (“Eskom Holdings”).
Cost per tonne milled for Q3 2015 was $127 compared to $129 in Q3 2014 with cost per 4E ounce remaining
relatively flat at $1,103 compared to $1,104 in Q3 2014.
Total capital expenditure for Q3 2015 was $8.3 million (compared to $8.0 million for Q3 2014), comprising
25% sustaining capital and 75% project expansion capital.
The Company’s ability to generate cash improved over the period, with operating activities generating cash of
$10.7 million in Q3 2015, compared to $10.0 million of cash generated by operations in Q3 2014.
Earnings – Q3 2015
The basic and diluted loss per share was ($0.04) for Q3 2015 compared to ($0.00) in Q3 2014.
Operating and financial performance – Q2 2015
Set out below are summaries of the key operating and financial results for Bokoni Mine and the Company for
the quarter ended June 30, 2015 as well as the six months ended June 30, 2015.
%
Operating results Q2 2015 Q2 2014 H1 2015 H1 2014 % change
change
Tonnes milled t 391 363 420 274 (6.9) 764 259 810 373 (5.7)
Tonnes
delivered t 406 205 448 478 (9.4) 778 866 844 435 (7.8)
g/t milled,
Recovered grade PGM 3.6 3.5* 2.9 3.6 3.4* 5.9
PGM oz
produced oz 45 675 46 777 (2.4) 88 550 89 597 (1.2)
UG2 milled to
total milled % 30.3 28.9 4.8 30.2 30.0 0.7
Primary
development metres 1 862 2 797 (33.4) 4 057 5 482 (26.0)
Capital
expenditure $m 4.4 9.8 (55.1) 8.2 21.0 (61.0)
Operating
cost/tonne
milled ZAR/t 1 394 1 324** (5.3%) 1 387 1 315* (5.5%)
ZAR/PGM 11 942 11 896** (0.4%) 11 973 11 898* (0.6%)
Operating oz
cost/PGM oz
per 200,000
hours
LTIFR worked 0.80 1.16 31.0 0.92 1.06 13.2
Financial summary
%
Expressed in $000 Q2 2015 Q2 2014 H1 2015 H1 2014 % change
change
Revenue 51 661 58 560 (11.8) 103 972 112 391 (7.5)
Cash operating costs 54 705 53 075 (3.1) 109 012 103 934 (4.9)
Cash operating profit (3 044) 5 485 (155.5) (5 040) 8 457 (159.6)
Cash operating margin (5.9%) 9.4% (162.8) (4.8%) 7.5% (164.4)
EBITDA (343 202) 268 (127 960.4) (347 528) 276 (126 015.9)
Loss for the period (297 111) (11 963) (2 383.6) (313 901) (24 779) (1 166.8)
Loss attributable to Atlatsa
(127 553) (6 973) (1 729.2) (136 421) (11 850) (1 051.2)
shareholders
Basic and diluted loss per
(23) (1) (2 200.0) (25) (2) (1 150.0)
share – cents
* Prior year’s quarter restated.
** Management started to build up stockpile to the value of $2.6 million during Q2 2014, the cost of which
has been excluded from the Q2 2014 costs above. Cash operating costs represents all on-mine production
and processing costs, excluding depreciation charges. Prior year’s quarter has been restated for
comparison purposes.
***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 – Q2 2015
Bokoni Mine’s LTIFR improved by 31% to 0.8 per 200,000 hours worked during the second quarter. The DMR
imposed four Section 54 safety stoppages at the mine, resulting in a loss of 1,741 4E ounces.
On May 11, 2015, operations at Bokoni Mine were interrupted by unrest that erupted in the Bokoni Mine area
when some members of communities surrounding Bokoni Mine blocked the main road leading to the mine with
burning tyres and rocks. The unrest prevented employees from reporting to work, which resulted in three days
of lost production. Stability was restored to the area on May 14, 2015 and all employees returned to work
shortly thereafter.
Operational results – Q2 2015
During Q2 2015, Bokoni Mine produced 45,675 4E ounces compared to 46,777 4E ounces for Q2 2014 as a
result of a 9% decrease in tonnes delivered to the concentrator due to safety related stoppages at the mine and
community unrest in the area.
Primary development decreased by 33% quarter-on-quarter to 1,862 metres as a result of management focus on
increasing face length to improve mining flexibility, whilst at the same time moving towards the steady state
targets of 100,000 tpm and 60,000 tpm at Brakfontein and Middelpunt Hill underground operations,
respectively.
Delivered grades were lower as a result of an increase in lower grade opencast material and increased secondary
development at the underground operations.
Financial results – Q2 2015
Revenue decreased by 12% quarter-on-quarter as a result of the decreased ZAR PGM basket price and
relatively flat production volumes. The realised ZAR PGM basket price for Q2 2015 was 8% lower at
ZAR11,116 compared to ZAR12,114 for Q2 2014, whilst the US$ platinum price achieved was US$1,127
compared to US$1,447 in Q2 2014.
Consolidated cash operating costs increased by 3.0% due to the following factors:
- 5% increase in labour costs due to the average annual salary increases in July 2014;
- 19% decrease in contractor costs due to a 42% decrease in Klipfontein opencast tonnes delivered;
- 9% decrease in stores costs due to lower square meters mined; and
- 3% increase in utility costs due to a 13% increase in the power rate payable to Eskom Holdings.
Due to the economic climate and the significant re-rate in forecasted metal prices, the Company tested the
carrying value of its assets for impairment and recognised an impairment loss of $337.1 million with respect to
property, plant and equipment and goodwill.
Cost per tonne milled for Q2 2015 was $145 compared to $136 in Q2 2014 with cost per 4E ounce at $1,238
compared to $1,219 in Q2 2014.
Total capital expenditure for Q2 2015 was $4.4 million (compared to $9.8 million for Q2 2014), comprising
27% sustaining capital and 73% project expansion capital. The decrease in capital expenditure is as a result of a
strategic decision by management to reduce costs at the mine by deferring capital deployment without
compromising on project development.
The Company’s ability to generate cash deteriorated over the period, with operating activities utilising cash of
$3.7 million in Q2 2015 compared to $5.8 million cash generated by operations in Q2 2014.
Earnings – Q2 2015
The basic and diluted loss per share was ($0.23) for Q2 2015 compared to ($0.01) for Q2 2014.
Outlook
Bokoni Mine remains a mine in development with its key Middelpunt Hill UG2 and Brakfontein Merensky
underground operations estimated to achieve steady state production by the fourth quarter of 2016 and by 2019,
respectively, positioning Bokoni Mine for a turnaround in the PGM markets.
Anglo American Platinum divestment from Atlatsa and Bokoni Mine
Atlatsa remains in discussions with Anglo American Platinum and the DMR regarding Anglo American
Platinum’s stated intention to exit from Bokoni Mine and Atlatsa. A central theme surrounding these
discussions remains the future sustainability of Bokoni Mine.
Anglo American Platinum announced on December 8, 2015 that “In light of the difficult market conditions and
negative cash flows incurred by Bokoni, Anglo American Platinum has written off its equity interests in Atlatsa
and Bokoni with a carrying value of R1.4 billion. Atlatsa’s ability to service its debt obligations in the context
of the current market conditions, where Bokoni Mine is its main source of funding, is doubtful at current price
levels. Anglo American Platinum has therefore, for accounting reasons, written off the various loans it has
extended to Atlatsa and Atlatsa Holdings (its Black Economic Empowerment shareholder), and those loans it
expects to extend in December 2015, with an accounting carrying value of R2.0 billion in aggregate.”
Change of senior management at Bokoni Mine
Bokoni Mine’s Managing Director, Mr Dawid Stander’s contract of employment with the Company terminates
on January 31, 2016. The board of Atlatsa wishes to thank Mr Stander for his diligent service during his tenure
as Managing Director of Bokoni Mine and wishes him success for his future endeavours.
The board further announced the appointment of Mr Jose Melembe as Designate General Manager at Bokoni
Mine effective December 8, 2015. Mr Stander will ensure a phased hand-over of accountabilities and
responsibilities to Mr Melembe between December 8, 2015 and January 31, 2016. Mr Melembe, who has
extensive mining industry experience, is currently employed as the production manager at Bokoni Mine’s
Brakfontein and Middelpunt Hill shaft operations.
The Atlatsa board wishes Mr Melembe success as he takes over as Designate General Manager at Bokoni Mine.
On behalf of Atlatsa
Prudence Lebina
Head of Investor Relations
Office: +27 11 779 6800
Email: PrudenceL@atlatsa.com
JSE Sponsor:
One Capital
Kathy Saunders / Taryn Carter
Office: +27 11 550 5000
Date: 11/12/2015 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
