Wrap Text
Atlatsa announces audited results for the quarter and year ended December 31, 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 AUDITED RESULTS FOR THE QUARTER AND YEAR ENDED DECEMBER
31, 2015
Key features for the 2015 financial year:
- Implementation of operational and financial restructure plan at Bokoni Mine
- Term loan facility agreement entered into with Anglo American Platinum Limited
- Impairment loss of $337 million recognised in FY2015
- New mine management team overseeing the operational and financial restructure plan
- Revenue decreased 13% to $205.7 million
- Total tonnes milled decreased 4% to 1,676,694
- 4E PGM ounces produced relatively flat at 190,740
- Disappointing safety performance with lost-time injury frequency rate (“LTIFR”) at 1.10 from 0.98
March 30, 2016 Atlatsa Resources Corporation (“Atlatsa” or the “Company”) (TSX: ATL; JSE: ATL)
announces its operating and financial results for the quarter and year ended December 31, 2015. This release
should be read together with the Company’s audited consolidated financial statements for the year ended
December 31, 2015 (the “Consolidated Financial Statements”) and the related Management’s Discussion and
Analysis of Financial Condition and Results of Operations (the “MD&A”) filed on www.sec.gov and
www.sedar.com, which are also available at www.atlatsa.com. Currency values are presented in South African
Rand (ZAR), Canadian Dollars ($) and United States Dollars (US$).
* PGM means platinum group metals (“4E”), 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, 2015.
% %
Operating results FY 2015 FY 2014 Q4 2015 Q4 2014
change change
Tonnes delivered t 1,681,656 1,745,245 (3.6) 396,756 356,156 11.4
Tonnes milled t 1,676,694 1,743,781 (3.8) 430,285 454,030 (5.2)
Recovered grade g/t milled, PGM 3.5 3.6 (2.8) 3.4 3.4 -
PGM oz produced oz 190,740 194,036 (1.7) 46,698 48,414 (3.5)
UG2 milled to
underground output % 30.0 27.6 8.7 31.4 26.3 19.4
Primary
development metres 7,778 10,735 (27.5) 1,359 2,448 (44.5)
Capital expenditure $m 25.7 31.1 (17.4) 9.2 6.1 (50.8)
Operating
cost/tonne milled ZAR/t 1,323 1,284 (3.0) 1,288 1,246 (3.4)
Operating cost/PGM
oz ZAR/PGM oz 11,630 11,540 (0.8) 11,866 11,690 (1.5)
Per 200,000
LTIFR hours worked 1.10 0.98 (12.2) 0.93 0.77 (20.8)
Financial results
% %
Expressed in Canadian Dollars (000’s) FY 2015 FY 2014 Q4 2015 Q4 2014
change change
Revenue 205,691 237,391 (13.4) 44,511 54,611 (18.5)
Cash operating costs (222,559) (227,981) 2.4 (54,128) (64,198) 15.7
Cash operating profit (16,868) 9,410 (279.3) (9,617) (9,587) (0.3)
Cash operating margin (%) (8.2) 4.0 (305.0) (21.6) (17.6) (22.7)
Earnings before interest, taxation,
depreciation and amortisation (390,248)
(“EBITDA”)* 1,975 nm 4,471.2 (10,605) nm
Loss for the period (368,982) (49,550) (644.7) (17,705) (24,210) 26.9
Loss attributable to Atlatsa shareholders (167,069) (24,609) (578.9) (9,195) (12,240) 24.9
Basic and diluted loss per share – cents 30 5 (500.0) 2 2 0.0
*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: not meaningful
Safety and health
Bokoni Mine’s LTIFR was 1.10 per 200,000 hours worked compared to 0.98 in 2014, a decrease of 12.2%. 19
Section 54 safety stoppages were imposed by the South African Department of Mineral Resources (“DMR”) at
the operations, resulting in a loss of 3,280 4E PGM ounces compared to 16 stoppages in 2014 that had resulted
in 1,622 4E PGM ounces lost.
The safety and health of our employees continues to be a major focus at the Company’s operations as
management 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.
In reviewing the overhead structures of the Company, Atlatsa has reduced its aggregate monthly corporate
office operating costs by at least ZAR1.0 million ($0.1 million) per month on a sustainable basis. The monthly
management fee payable by Bokoni Mine to Atlatsa has also been reduced by 11%.
Bokoni Mine had 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). Management is pleased to announce that a
retrenchment agreement was signed by all recognised labour unions on February 8, 2016. Bokoni Mine’s labour
complement reduced by 8.0% from 6,101 as at December 31, 2014 to 5,613 as at December 31, 2015. The
reduction is made up of a 13.4% decrease in contractors and a 4.3% decrease in own-mine employees. Mine
management is currently engaged in a redeployment process post signature of the retrenchment agreement, after
which, retrenchment of certain employees who cannot be redeployed could take place. The Restructure Plan
targets a total labour complement of approximately 3,500 employees for Bokoni Mine.
As at December 31, 2015, the Restructure Plan was underway and is anticipated to be fully completed by Q2
2016. To date, on base cost calculated from August 2015, operational costs have reduced by 15% on average
per month, which was achieved by a substantial reduction in the labour force.
On completion of the Restructure Plan and the current ramp-up phase, 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.
Operational results
During FY 2015, Bokoni Mine tonnes milled decreased by 3.8% to 1,676,694 tonnes, resulting in a relatively
flat production of 190,740 4E PGM ounces compared to 194,036 4E PGM ounces produced during FY 2014.
Primary development decreased by 27.5% year-on-year to 7,778 metres as planned, following a strategic
decision to reduce development to a level sufficient to meet the Bokoni Mine’s stoping flexibility requirements.
Greater emphasis is being placed on secondary development to increase face length available for mining.
Recoveries at the concentrator plant decreased by 1.3% to 88.7% and 4.4% to 85.9% 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.
Financial results
Revenue decreased by 13.4% year-on-year to $205.7 million as a result of the 10.6% decrease in the ZAR PGM
basket price (ZAR10,730 in FY 2015 compared to ZAR12,006 in FY 2014) and a 23.9% decrease in average
US$ platinum price from US$1,385 in FY 2014 to US$1,054 in FY 2015. The 17.6% weakening of the
exchange rate over the period, from ZAR10.85/US$ in 2014 to ZAR12.76/US$ in 2015 was not sufficient to
offset the negative impact resulting from a continued decline in US$ PGM prices.
Total cash operating costs were 2.4% lower reflecting the decrease in tonnes milled. Although overall tonnes
milled decreased, the underground tonnes from the two remaining shafts were up by 12% which offsets the
decrease in cash operation costs. The cost profile is attributable to:
- 3.7% increase in labour costs as a result of annual wage increases during the year offset by voluntary
severance packages taken;
- 17.6% decrease in contractor costs mainly as a result of decreased tonnes delivered at the Klipfontein
opencast mine as well the implementation of the Restructure Plan;
- 2.7% decrease in stores costs due to a decrease in square metres mined and working cost development;
- 3.0% increase in utility costs as a result of increased production and 12.7% rate increase in the power
tariff by Eskom Holdings Limited; and
- 4.5% increase in sundries mainly due to an increase in costs to third party suppliers associated with the
transfer of tonnes to the concentrator and waste areas, in-line with a corresponding increase in
underground production.
Cost per tonne milled for FY 2015 was $133 (ZAR1,323) compared to $131 (ZAR1,284) in FY 2014 with cost
per 4E ounce remaining relatively flat at $1,169 (ZAR11,630) compared to $1,176 (ZAR11,540) in FY 2014.
Total capital expenditure for the year ended December 31, 2015 was $25.7 million, compared to $31.1 million
for the year ended December 31, 2014, comprising 35% sustaining capital and 65% project expansion capital
associated with the two key ramp-up shaft operations. The decrease in capital expenditure is due to cash
preservation strategies employed by management without compromising Bokoni Mine’s development plans.
Financial results – Atlatsa
Expressed in Canadian Dollars % %
FY 2015 FY 2014 Q4 2015 Q4 2014
(000’s) change change
Revenue 205,691 237,391 (13.4) 44,511 54,611 (18.5)
Cost of sales (260,574) (264,758) 1.6 (66,093) (71,365) 7.4
Gross loss (54,883) (27,367) (100.5) (21.583) (16,754) (28.8)
General, administrative and other
expenses (9,359) (12,742) 26.5 (1,474) (4,764) 69.1
Restructuring costs (14,926) - nm 7.0 - nm
Impairment loss (337,064) - nm - - nm
Operating (loss) / profit (416,233) (40,110) (937.7) (16,044) (21,518) 25.4
Net finance costs (23,645) (15,973) (48.0) (6,640) (4,659) (42.5)
Income tax 70,896 6,532 985.3 4,979 1,967 153.1
(Loss) / profit for the period (368,982) (49,550) (644.7) (17,705) (24,210) 26.9
(Loss) / profit attributable to
Atlatsa shareholders (167,069) (24,609) (578.9) (9,195) (12,240) 24.9
Basic (loss) / profit per share –
cents (30) (5) (500.0) (2) (2) -
Headline loss per share – cents** (9) (4) (125) (2) (2) -
** 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).
nm: not meaningful
Impairment testing
As a result of 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 (as at June
30, 2015) with respect to property, plant and equipment as well as goodwill.
Earnings
The basic and diluted loss per share was ($0.30) for FY 2015 compared to ($0.05) in FY 2014. The basic and
loss per share is based on the loss attributable to the shareholders of the Company of $167.1 million compared
to the loss attributable to the shareholders of the Company of $24.6 million in
FY 2014.
For comparative purposes, adjusting for $337.1 million (converted as at June 30, 2015) net impairment loss on
carrying value of assets and restructuring costs of $14.9 million recognised in 2014, the loss for the period
would have improved by 65.7% compared to $49.6 million loss in 2014.
Issued share capital
As at December 31, 2015, Atlatsa had 554,421,806 issued and outstanding common shares.
New Facility Agreement with Anglo American Platinum Limited
On December 9, 2015, Plateau Resources (Proprietary) Limited, a subsidiary of the Company, entered into a
Term Loan Facility Agreement (“the Term Loan Facility”) with Anglo American Platinum, providing a $29.9
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), and (iii) 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.
Anglo American Platinum divestment from Atlatsa and Bokoni Mine
Atlatsa remains in discussions with Anglo American Platinum and the Department of Mineral Resources
(“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 previous Managing Director, Mr Dawid Stander’s contract of employment with the Company
lapsed on January 31, 2016. The board announced the appointment of Mr Jose Melembe as General Manager at
Bokoni Mine effective February 1, 2016. Mr Melembe has extensive mining industry experience, and was
previously employed as the production manager at Bokoni Mine’s Brakfontein and Middelpunt Hill shaft
operations.
Outlook
The Bokoni Mine remains an operation in development with its key Brakfontein Merensky and Middelpunt Hill
UG2 underground development shafts remaining in their ramp-up phase and on target to achieve planned steady
state production by Q4 2016 and 2019, respectively.
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.
The principle of zero harm will remain a major focus for the Company with stable labour and stakeholder
relations also remaining a priority.
Queries:
On behalf of Atlatsa
Prudence Lebina
Head of Corporate Finance & Investor Relations
Office: +27 11 779 6800
Email: PrudenceL@atlatsa.com
JSE Sponsor:
One Capital Sponsor Services Proprietary Limited
Kathy Saunders / Taryn Carter
Office: +27 11 550 5000
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 as “may”, “will”, “outlook”, “anticipate”, “project”, “target”,
“believe”, “estimate”, “expect”, “intend”, “should”, “plan”, “forecasts”, “predicts”, “schedule”, “forecast” 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; Bokoni Mine will
maintain production levels in accordance with mine operating plan; the Restructure Plan will continue to be
implemented as planned, and is anticipated to be fully completed on the expected timeframes and will achieve
improvements in production and operational efficiencies as anticipated; Bokoni Mine will be better positioned
from both a unit cost and cash flow perspective by the Restructure Plan; the Company’s ability to meet the
conditions of utilisation of the Term Loan Facility; underground development shafts will remain in their ramp-
up phase and achieve planned steady state production by Q4 2016 and 2019; the Platreef Projects will continue
to be positive; Safety will continue to be a major focus for the Company; 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, 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 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 to continued availability of capital and financing, including the Company’s ability
to satisfy the terms and conditions of Term Loan Facility;
- uncertainties related to the ability to obtain necessary licences, 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, 2002 (Act No 28 of 2002) (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 where 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 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, 2015 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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