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Announces unaudited financial results for the quarter ended March 31, 2016
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 UNAUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED MARCH 31, 2016
Key features for the first quarter of 2016:
- Ramp-up of two key expansion projects remains on track
- Cost per tonne milled decreased 18% quarter-on-quarter from $146 to $119
- $8.7 million operating profit generated in the quarter as a result of accounting adjustments
- Total tonnes milled decreased 14% quarter-on-quarter to 319,205
- 4E PGM* ounces produced decreased 15% quarter-on-quarter to 36,609
- Revenue decreased 32% quarter-on-quarter to $35.6 million
- Average ZAR 4E PGM* basket price realised for the quarter was ZAR11,305
- Lost-time injury frequency rate (“LTIFR”) at 1.43 per 200,000 hours worked
May 16, 2016 Atlatsa Resources Corporation (“Atlatsa” or the “Company”) (TSX: ATL; JSE: ATL) announces
its operating and financial results for the three months ended March 31, 2016. This release should be read
together with the Company’s unaudited condensed consolidated interim financial statements for the three
months ended March 31, 2016 (the “Consolidated Financial Statements”) and the related Management’s
Discussion and Analysis of Financial Condition and Results of Operations filed on www.sec.gov and
www.sedar.com, which are also available at www.atlatsa.com. Currency values are presented in South African
Rand (ZAR), Canadian Dollars ($) and United States Dollars (US$).
* PGM means platinum group metals (“4E”), comprising platinum, palladium, rhodium and gold.
Harold Motaung, Chief Executive Officer of Atlatsa, said, “The first quarter of 2016 was regrettably
characterised by the deaths of two employees, Mr Kganki Nicholas Kupa and Ms Ramadimetja Degrecia
Phaladi in January and February, respectively. The Atlatsa board of directors and management extend their
condolences to the families and friends of the deceased.
Two of our shaft operations were placed on care and maintenance in the latter part of the 2015 financial year
and were not in production in Q1 2016, this resulted in a 14% decline in tonnes milled. A retrenchment
agreement was signed with our recognised labour unions in February 2016, and the Company is currently
finalising the restructuring process, which is anticipated to be completed by
Q2 2016. I would like to thank all our stakeholders; in particular, Bokoni Mine’s recognised labour unions for
the constructive engagement during the restructuring process.”
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
ended March 31, 2016.
Operating results Q1 2016 Q1 2015 % change
Tonnes delivered t 306,483 372,661 (17.8)
Tonnes milled t 319,205 372,896 (14.4)
Recovered grade g/t milled, PGM 3.6 3.6 -
PGM oz produced oz 36,609 42,875 (14.6)
UG2 milled to underground output % 44.2 30.1 46.8
Primary development metres 1,210 2,195 (44.9)
Capital expenditure $m 3.5 3.8 (7.9)
Operating cost/tonne milled ZAR/t 1,389 1,381 (0.6)
Operating cost/PGM oz ZAR/PGM oz 12,107 12,013 (0.8)
LTIFR Per 200,000 hours worked 1.43 1.04 (37.5)
Financial results
Expressed in Canadian Dollars (000’s) Q1 2016 Q1 2015 % change
Revenue 35,589 52,311 (32.0)
Cash operating costs (37,968) (55,125) 31.1
Cash operating profit (2,379) (2,814) 15.5
Cash operating margin (%) (6.7%) (5.4%) (24.1)
Earnings before interest, taxation, depreciation and amortisation
(“EBITDA”)* 13,953 (3,419) 508.1
Loss for the period 565 (16,790) 103.4
Loss attributable to Atlatsa shareholders 1,981 (8,869) 122.3
Basic and diluted loss per share – cents 0.00 (2.00) 100.0
*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).
Safety and health
Bokoni Mine’s LTIFR was 1.43 per 200,000 hours worked during the quarter compared to 1.04 in
Q1 2015, a decrease of 37.5%. Four Section 54 safety stoppages were imposed by the South African
Department of Mineral Resources (“DMR”) at the operations during the quarter, resulting in a loss of 1,175
platinum ounces, compared to eight stoppages in Q1 2015 that had resulted in 1,325 platinum ounces lost.
Two separate fatal accidents occurred on January 14, 2016 and February 10, 2016, resulting from unnatural
causes and a trackless mobile machinery accident, respectively.
The re-deployment of employees to different work areas and shafts and low employee morale as a result of the
restructure process has had a negative impact on safety focus and awareness and has resulted in an increase in
accidents. Management continues to focus on the safety and health of employees as one of its core business
pillars and has increased direct communication with employees during this restructure period.
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.
Bokoni Mine had issued a Section 189 (3) notice to relevant parties pursuant to Section 189A of the South
African Labour Relations Act, No 66 of 1995 and a retrenchment agreement was signed by all recognised
labour unions on February 8, 2016. Bokoni Mine labour complement was reduced by 38.3% from 6,348 as at
March 31, 2015 to 3,917 as at March 31, 2016. The reduction is made up of a 62.5% decrease in contractors and
a 19.5% decrease in own mine employees.
As at March 31, 2016, the Restructure Plan was well advanced and is anticipated to be fully completed by Q2 of
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 significant reduction in the labour force.
On completion of the Restructure Plan and the current ramp-up phase of the Brakfontein Merensky and
Middelpunt Hill UG2 shaft operations, 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, inefficient, higher cost operations to new
generation, more efficient and lower cost 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
Bokoni Mine tonnes milled decreased by 14.4% to 319,205 tonnes, resulting in production of 36,609 4E PGM
ounces compared to 42,875 4E PGM ounces produced during Q1 2015.
Primary development decreased by 44.9% quarter-on-quarter to 1,210 metres due to the impact of Section 54
stoppages that were imposed by the DMR as well as the impact of the restructuring. More emphasis has been
placed on secondary development to increase face length available for mining. Primary development at Bokoni
Mine is expected to be sufficient to meet the requirements of the approved Restructure Plan.
Recoveries at the concentrator plant decreased by 1.9% to 87.5% and stayed constant at 86.3% 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 32.0% quarter-on-quarter to $35.6 million as a result of the 14.6% decrease in 4E PGM
ounces production. ZAR PGM basket price decreased by 2.3% from ZAR11,569 in Q1 2015 to ZAR11,305 in
Q1 2016; whilst the average US$ platinum price decreased by 23.5% from US$1,194 in
Q1 2015 to US$914 in Q1 2016.
Total cash operating costs were 31.1% lower, reflecting the decrease in tonnes milled and cost saving measures.
Although overall tonnes milled decreased, underground tonnes from the two remaining shafts were up by 16%
which offsets the decrease in cash operation costs. The cost profile is attributable to:
- 31.8% decrease in labour costs due to the restructuring;
- 51.0% decrease in contractor costs due to the restructuring;
- 19.0% decrease in stores costs due to a decrease in square metres mined and working cost development;
- 24.4% decrease in utility costs mainly due to the 18% decrease in tonnes delivered during the quarter
(UM2 & Vertical shafts placed on care and maintenance); and
- 16.5% decrease 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 Q1 2016 was $119 (ZAR1,389) compared to $146 (ZAR1,381) in Q1 2015 with cost
per 4E ounce at $1,041 (ZAR12,107) compared to $1,270 (ZAR12,013) in Q1 2015.
Total capital expenditure for the three months ended March 31, 2016 was $3.5 million, compared to
$3.8 million for Q1 2015, comprising 44% sustaining capital and 56% project expansion capital associated with
the two key ramp-up shaft operations.
Financial results – Atlatsa
Expressed in Canadian Dollars (000’s) Q1 2016 Q1 2015 % change
Revenue 35,589 52,311 (32.0)
Cost of sales (43,244) (63,368) 31.8
Gross loss (7,656) (11,058) 30.8
General, administrative and other expenses (1,968) (2,633) 25.3
Other income 18,300 304 nm
Operating profit / (loss) 8,676 (13,387) 164.8
Net finance costs (6,708) (4,862) (38.0)
Income tax (1,403) 1,459 196.2
Profit / (loss) for the period 565 (16,790) 103.4
Profit / (loss) attributable to Atlatsa shareholders 1,981 (8,869) 122.3
Basic loss per share – cents 0.00 2.00 100.0
nm: not meaningful
Outlook
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.
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; 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;
- 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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