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Atlatsa announces financial results for the three and nine months ended September 30, 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 FINANCIAL RESULTS FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2016
Key features for the third quarter of 2016:
- Restructure and right sizing plan at Bokoni Mine completed
- Improved safety performance achieved at Bokoni Mine
- Improved operational efficiencies achieved at Bokoni Mine
- Re-arrangement of term loan facilities with Anglo Platinum
- Cash operating profit at Bokoni Mine achieved for the quarter, whilst basic loss per share
for the Company reduced quarter-on-quarter
November 14, 2016 Atlatsa Resources Corporation (“Atlatsa” or the “Company”) (TSX: ATL; JSE: ATL)
announces its operating and financial results for the three and nine months ended September 30, 2016.
This release should be read together with the Company’s unaudited condensed consolidated interim
financial statements for the three and nine months ended September 30, 2016 (the “Consolidated
Financial Statements”) and the related Management’s Discussion and Analysis of Financial Condition
and Results of Operations filed on www.sedar.com, which are also available at
www.atlatsaresources.co.za. Currency values are presented in South African Rands (ZAR), Canadian
Dollars ($) and United States Dollars (US$).
Harold Motaung, Chief Executive Officer of Atlatsa, commented, “We are pleased to have completed
the major phase of our restructure and right sizing plan at Bokoni Mine without any significant
disruptions at our operations. All stakeholders should be complimented as to the manner and approach
adopted during this challenging period. We have begun to see certain operational and safety
performance improvements stemming from the Restructure Plan, and the emphasis at the mine will
continue to focus on costs, efficiencies and overall operational improvements going forward, whilst
seeking to maintain momentum in development at our two remaining Middelpunt Hill UG2 and
Brakfontein Merensky underground development shafts, which remain in their ramp-up phases through
to 2018 and 2020 respectively.”
Bokoni Mine’s operational and financial results, when compared on a quarterly basis, should be viewed
having regard to the significant change in the nature and scope of the operations resulting from the
implementation of an operational and financial restructure plan (“Restructure Plan”) during the past 12
months through to September 30, 2016.
Bokoni Mine operating and financial performance
Set out below are summaries of the key operating and financial results for Bokoni Mine for the three
months ended September 30, 2016.
Operating results Q3 2016 Q3 2015 % change
Tonnes milled t 363 320 482 150 (24.6)
Tonnes delivered t 368 266 506 034 (27.2)
Recovered grade g/t milled, PGM* 3.8 3.6 5.6
PGM* oz produced oz 44 463 55 491 (19.9)
Primary development metres 1 508 2 362 (36.2)
Capital expenditure $m 8.9 8.3 (7.2)
Operating cost/tonne milled ZAR/t 1 449 1 236 (17.2)
Operating cost/PGM* oz ZAR/PGM* oz 11 839 10 741 (10.2)
Lost-time injury frequency per 200,000 hours 0.99 1.56 36.5
rate (“LTIFR”) worked
* PGM means platinum group metals (“4E”), comprising platinum, palladium, rhodium and gold.
Financial summary
Expressed in Canadian Dollars (000’s)
Q3 2016 Q3 2015 % change
Revenue 48 877 57 208 (14.6)
Cash operating costs 48 178 59 415 18.9
Cash operating profit /(loss) 699 (2 207) 131.7
Cash operating margin 1.4% (3.9%) 135.9
Earnings before interest, taxation, depreciation and (2 475) (26 607) 90.7
amortisation (“EBITDA”)*
(Loss) for the period (11 396) (37 376) 69.5
(Loss) attributable to Atlatsa shareholders (7 186) (21 452) 66.5
Basic and diluted loss per share – cents (1) (4) 75.0
*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).
Expressed in Canadian Dollars (000’s) Q3 2016 Q3 2015 % change
Revenue 48 877 57 208 (14.6)
Cost of sales (54 002) (65 037) 17.0
Gross loss (5 125) (7 829) 34.5
General, administrative and other expenses (3 277) (24 255) 86.5
Fair value adjustments on loans 104 (145) 171.7
Operating loss (8 299) (32 229) 74.2
Net finance costs (7 954) (6 143) (29.5)
Income tax 4 857 996 (387.7)
Profit / (loss) for the period (11 396) (37 376) 69.5
Profit / (loss) attributable to Atlatsa shareholders (7 186) (21 452) 66.5
Basic loss per share - cents (1) (4) 75.0
Safety and health
Bokoni Mine’s LTIFR was 0.99 per 200,000 hours worked during the quarter compared to 1.56 in Q3
2015, an improvement of 36.5%. There was one Section 54 safety stoppage imposed by the South
African Department of Mineral Resources at the operations during the quarter, resulting in the loss of
two days production and 202 platinum ounces at the operation.
Operational and financial restructure plan at Bokoni Mine
To ensure the future sustainability of Bokoni Mine, the Company announced on September 16, 2015
the implementation of the Restructure Plan at its Bokoni Mine. The primary objective of the Restructure
Plan was to enable Bokoni Mine to endure a prolonged period of depressed PGM commodity prices, by
right sizing the operation, placing loss making operations on care and maintenance, reducing its
existing cost base, increasing production volumes of higher grade ore from underground operations and
improving operational efficiencies.
The major phase of the Restructure Plan was completed during the quarter, with key results as follows:
- The loss making Vertical and UM2 Merensky shafts underground operations were placed on
care and maintenance (in August and December 2015 respectively);
- Owing to numerous operational and community related challenges a decision was taken to
discontinue the Klipfontein Merensky open cast operations with effect from January 2017;
- Going forward Bokoni Mine has retained its two underground shaft operations at its Middelpunt
Hill UG2 and Brakfontein Merensky development shaft complexes, where operations continue to
ramp up towards achieving steady state production rates of 60,000 tonnes per month (“tpm”)
and 100,000 tpm by 2018 and 2020 respectively;
- The labour force at Bokoni Mine has been reduced by 29.6% from 5,657 personnel as at
September 30, 2015 to 3,985 as at September 30, 2016. This reduction comprises a 47.3%
decrease in contract labour and a 18.6% decrease in own mine employees. Post
implementation of the Restructure Plan there remained an over complement of mine personnel
over various departments at Bokoni Mine which has necessitated the issue of a further Section
189(3) notice to relevant parties pursuant to Section 189A of the South African Labour Relations
Act, 66 of 1995, for the commencement of a consultation process on contemplated
retrenchments of employees based on operational requirements;
- Bokoni Mine’s cash operating costs have been reduced by 12% from Q3 2015 to Q3 2016, the
majority of which is related to the substantial reduction in Bokoni Mine’s labour force; and
- The Restructure Plan is beginning to achieve improved operational efficiencies with stoping
crew efficiencies improving by 7% quarter–on–quarter to an average of 348 square meters per
crew.
Operational results
Bokoni Mine tonnes delivered to the concentrator plant for Q3 2016 decreased by 27.2% to 368,266
with tonnes milled decreasing by 24.6% to 363,320 tonnes, resulting in production of 44,463 4E PGM
ounces compared to 55,491 4E PGM ounces produced during Q3 2015.
Primary development decreased by 36.2% quarter-on-quarter to 1,508 metres. A negative impact
resulting from the Restructure Plan has been a backlog in development at the operations during the first
nine months of 2016 relative to the intended mine development plan. As a result, the planned
production ramp up at Brakfontein Merensky and Middelpunt Hill UG2 development shaft complexes
has been delayed by six to twelve months, respectively.
Recoveries at the concentrator plant increased by 1.3% to 90.2% for the Merensky concentrate and by
1.9% to 87.1% for the UG2 concentrate. The opencast concentrate recoveries increased by 10.7% to
72.5% for Q2 2016.
Financial results
Revenue decreased by 14.6% quarter-on-quarter to $48.9 million as a result of the 19.9% decrease in
4E PGM ounces produced. The ZAR PGM basket price increased by 16.8% from ZAR10,214 in Q3
2015 to ZAR11,927 in Q3 2016, whilst the average US$ platinum price increased by 8.8% from US$998
in Q3 2015 to US$1,086 in Q3 2016. The average realised ZAR/US$ exchange rate for Q3 2016 was
ZAR14.07 compared to the average exchange rate of ZAR13.00 realised in Q3 2015.
Total cash operating costs at Bokoni Mine were 19.3% lower, reflecting the decrease in tonnes milled
and cost saving measures achieved by management. The change in Bokoni Mine’s cost profile is
attributable to:
- 24.1% decrease in labour costs due to the Restructure Plan with a number of employees taking
voluntary severance packages in Q4 2015 and continued retrenchments in fiscal year 2016;
- 42.3% decrease in contract labour costs due to the Restructure Plan which led to the
retrenchment of a significant number of contractor personnel and the 55.1% decrease in
opencast tonnes delivered as the opencast contractor is paid on a per tonne delivered basis;
- 23.5% decrease in utility costs due to the UM2 and Vertical shaft operations being placed on
care and maintenance; and
- 9.6% increase in sundries largely due to an increase in the maintenance and refurbishment
costs associated with additional equipment purchased for underground operations.
Cost per tonne milled for Q3 2016 was $128 (ZAR1,449) compared to $127 (ZAR1,236) in Q3 2015
with cost per 4E ounce at $1,048 (ZAR11,839) compared to $1,103 (ZAR10,741) in Q3 2015.
Total capital expenditure for the three months ended September 30, 2016 was $8.9 million, compared
to $8.3 million for Q3 2015, comprising 50% sustaining capital and 50% project expansion capital
associated with the two key ramp-up shaft operations.
Bokoni Mine achieved a modest cash operating profit for the quarter.
The Company’s basic and diluted loss per share improved 75% quarter-on-quarter to a loss of 1 cent
per share.
Re-arrangement of term loan facilities with Anglo American Platinum and recognition of fair
value gain
The Company’s primary source of financing remains its term loan arrangements with Anglo American
Platinum Ltd (“Anglo Platinum”).
During the quarter the Company agreed with Anglo Platinum to amend its existing debt facilities, such
that all loan facilities will cease to incur any additional interest with effect from September, 2016 in order
to limit the Company’s debt exposure. As a result of this re-arrangement, the Company has recognized
a significant fair value gain as equity on the balance sheet during the reporting period.
Queries:
On behalf of Atlatsa
Joel Kesler
Chief Commercial Officer
Office: +27 11 779 6800
Email: Joel@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 including without
limitation, statements relating to potential acquisitions and/or disposals, future production, reserve
potential, exploration drilling, exploitation activities and events or developments that Atlatsa expects
such statements appear in a number of different places in this document and can be identified by words
such as “anticipate”, “estimate”, “project”, “expect”, “intend”, “believe”, “plan”, “forecasts”, “predicts”,
“schedule”, “forecast”, “predict”, “will”, “could”, “may”, or their negatives or other comparable words.
Such forward-looking statements involve known and unknown risks, uncertainties and other factors that
may cause Atlatsa’s actual results, performance or achievements to be materially different from any
future results, performance or achievements that may be expressed or implied by such forward-looking
statements.
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; maintaining production levels at Bokoni Mine in accordance
with mine operating plan; anticipated financial and operational improvements expected as a result of
the Restructure Plan; contracted parties provide goods and/or services on the agreed timeframes;
availability of equipment available as scheduled and does not incur unforeseen breakdowns; absence
of material labour slowdowns, strikes or community unrest; proper functioning of plant and equipment
functions; geological or financial parameters do not necessitate future mine plan changes; and absence
of geological or technical problems.
Forward-looking statements, however, are not guarantees of future performance and actual results or
developments may differ materially from those projected in forward-looking statements. Factors that
could cause actual results to differ materially from those in forward looking statements include:
uncertainties related to the achievement of the anticipated financial and operational improvements
expected as a result of the Restructure Plan; uncertainties related to the continued implementation of
the Bokoni Mine operating plan and opencast mining operations; uncertainties related to the termination
of the Klipfontein Merensky Opencast Mine operation; uncertainties related to the timing of the
implementation of the Bokoni Mine deferred expansion plans; fluctuations in market prices, levels of
exploitation and exploration successes; changes in and the effect of government policies with respect to
mining and natural resource exploration and exploitation; continued availability of capital and financing;
general economic, market or business conditions; failure of plant, equipment or processes to operate as
anticipated; accidents, labour disputes, industrial unrest and strikes; political instability; suspension of
operations and damage to mining property as a result of community unrest and safety incidents;
insurrection or war; the effect of HIV/AIDS on labour force availability and turnover; delays in obtaining
government approvals; and the Company’s ability to satisfy the terms and conditions of the Term Loan
Facility and the Senior Facilities Agreement, as described in “Liquidity” and under “Going Concern” in
note 2 of the unaudited condensed consolidated interim financial statements for Q3 2016. These factors
and other risk factors that could cause actual results to differ materially from those in forward-looking
statements are described in further detail under Item 3D “Risk Factors” in Atlatsa’s Annual Report on
Form 20-F for fiscal year 2015, which is available on SEDAR at www.sedar.com and on EDGAR at
www.sec.gov.
Atlatsa advises investors that these cautionary remarks expressly qualify in their entirety all forward-
looking statements attributable to Atlatsa or persons acting on its behalf. Atlatsa assumes no obligation
to update its forward-looking statements to reflect actual results, changes in assumptions or changes in
other factors affecting such statements, except as required by law. Investors should carefully review the
cautionary notes and risk factors contained in this document and other documents that Atlatsa files from
time to time with, or furnishes to; Canadian securities regulators and which are available on SEDAR at
www.sedar.com.
Note to U.S. Investors Regarding U.S. Delisting and Deregistration
On July 20, 2015, the Company filed a Form 25 (Notification of Removal from Listing and/or
Registration under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) with the U.S. Securities and Exchange Commission (the “SEC”) to voluntarily withdraw its shares
from listing on the NYSE MKT. The delisting was effective 10 days following the filing of the Form 25.
On July 8, 2016, the Company filed a Form 15 with the SEC to terminate the registration of its common
shares under Section 12(g) of the Exchange Act, and its reporting obligations under Section 13(a) of
the Exchange Act. The termination of the Company’s registration would become effective 90 days after
the date of filing of the Form 15 with the SEC, or within such shorter period as the SEC may determine.
Upon filing of the Form 15, the Company’s reporting obligations under the Exchange Act were
suspended. While the Company’s prior filings with the SEC, including its Annual Report on Form 20-F,
continue to be available on the SEC’s Electronic Document Gathering and Retrieval System (“EDGAR”)
at www.sec.gov, the Company no longer files information with, or furnishes information to, the SEC.
The Company’s common shares continue to trade on the TSX and the JSE, and the Company will
continue to meet its Canadian and South African continuous disclosure obligations through filings with
the applicable Canadian and South African securities regulators. All of the Company’s filings can be
found on the SEDAR at www.sedar.com and also on www.atlatsaresources.co.za.
Date: 14/11/2016 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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