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Eastern Platinum Limited Reports Third Quarter 2016 Financial Results And Updates On Other Developments
EASTERN PLATINUM LIMITED
(Incorporated in Canada)
(Canadian Registration number BC0722783)
(South African Registration number 2007/006318/10)
Share Code TSX: ELR ISIN: CA2768555096
Share Code JSE: EPS ISIN: CA2768555096
(“Eastplats” or the “Company” or “the Group”)
Trading Symbol: ELR (TSX); EPS (JSE)
Unless otherwise noted, all amounts are expressed in US dollars.
NEWS RELEASE
EASTERN PLATINUM LIMITED REPORTS THIRD QUARTER 2016 FINANCIAL
RESULTS AND UPDATES ON OTHER DEVELOPMENTS
Third Quarter Financial Results
November 14, 2016, Vancouver, British Columbia – Eastern Platinum Limited
(“Eastplats” or the “Company”) is pleased to provide the following summary of its third
quarter ended September 30, 2016 (“Q3 2016”) financial results:
Summary and Financial Highlights
- The Company reported a net loss of $3.99 million ($0.04 per share) for Q3 2016
compared to a net loss of $0.5 million ($0.00 per share) in the same quarter of
2015.
- The increased losses were primarily due to $1.2 million in one-time termination
payments made to the former management of the Company.
- In addition to the above mentioned termination payments, general and
administrative expenses in Q3 2016 were significantly higher than in the same
quarter of 2015 due to approximately $1.0 million in legal and other investigation
costs.
- The losses in Q3 2016 were partially offset by a reduction in the care and
maintenance costs at the Company’s South African operations when compared to
those incurred in the same quarter of 2015. The Company is looking at ways to
continue to control its care and maintenance costs at its South African operations.
- At the end of Q3 2016, the Company had cash and short term investments totalling
$29.2 million and net working capital of $48.2 million.
- During Q3 2016, the Company appointed Diana Hu as the President and Chief
Executive Officer, David Li as the Interim Chief Financial Officer, Andrea Zhang as
the Interim Chief Operating Officer and Anton Lubbe as the Vice President of South
African Operations.
The summary above is qualified in its entirety by the more detailed disclosures provided
in the Company’s condensed interim consolidated financial statements for the three and
nine months ended September 30, 2016 (unaudited) and the management’s discussion
and analysis of financial conditions and results of operations for the three and nine months
ended September 30, 2016 (“Q3 MD&A”) which are available under Company’s profile
on SEDAR at www.sedar.com.
Operating Highlights and Outlook
The Company is in the process of actively reviewing its strategic plan, however, the
Company believes that, given the continued stagnation of the global economy and the
European car market (which consumes approximately 50% of South Africa’s platinum
production) the industry will be contending with a continuation of stagnant platinum group
metals (“PGM”) prices which are hovering near 10-year lows. At the same time, the South
African PGM industry continues to experience a number of adverse economic factors,
particularly ongoing labour unrest, operating cost inflation, and concerns with respect to
reliable power delivery. Ongoing cost pressures and decreasing productivity in South
Africa may continue to significantly reduce free cash flow for the industry.
Subject to adequate funding being available, development of the Company’s Mareesburg
open pit mine which was suspended in mid-2012, may be restarted once market and
operating conditions support such activities.
Diana Hu, President and Chief Executive Officer, stated, “Overall, Eastplats is continuing
its commitment in developing and advancing its PGM projects in South Africa. Subject to
resolving certain of the issues inherited from former management, under the leadership
of new management and the new board of directors, the Company believes it is in a strong
position to enter a new development stage.”
Other Developments
CRM Purchase Agreement
On June 28, 2016, prior to the election of the new board of directors (“Board”) at the
Company’s Annual General Meeting held on July 5, 2016 (the “AGM”), former
management of the Company entered into a share purchase agreement (the “CRM
Purchase Agreement”) with Hebei Zhongheng Tianda Platinum Co. Limited (“HZT”), a
company incorporated in the People’s Republic of China, whereby HZT would acquire a
100% equity interest in Barplats Mines Limited and associated intercorporate investments
and loans for total consideration of $50 million (the “CRM Transaction”). Further details
on the terms and conditions of the CRM Purchase Agreement are contained in the
Company’s Q3 MD&A and the CRM Purchase Agreement has also been filed under the
Company’s profile on SEDAR at www.sedar.com.
Completion of the CRM Transaction is subject to a number of conditions. The CRM
Transaction was put forward to the Company’s shareholders for approval at special
meeting of shareholders held on October 12, 2016. The information circular disseminated
in connection with that meeting included further disclosure of the terms and conditions of
the CRM Purchase Agreement. At that meeting, 85.8% of the shareholders represented
at the meeting voted against the CRM Transaction.
The new management of the Company is continuing its review and investigation of the
Company’s rights and obligations and attending to satisfaction of its covenants under the
CRM Purchase Agreement. At the present time, the CRM Transaction has not been
completed or formally terminated. It is uncertain whether the conditions for completion
under the CRM Purchase Agreement will be satisfied, or the CRM Purchase Agreement
terminated or otherwise resolved.
BEE Buy-Out Agreements
On June 30, 2016, prior to the election of the Board at the AGM, former management of
the Company entered into share purchase agreements (the “BEE Buyout Agreements”)
to acquire certain minority interests from the Company’s black economic empowerment
partners’ in the Company’s South African projects, for a total of $13,366,609. Details on
the terms and conditions of the BEE Buy-Out Agreements are contained in the
Company’s Q3 MD&A.
Pursuant to the terms of the BEE Buyout Agreements, former management of the
Company placed 100% of the purchase consideration with an escrow agent and
thereafter provided certain documents sufficient to permit the escrow agent to release the
funds to the vendors upon the change of the board of directors of the Company at its
AGM.
New management has been actively investigating the Company’s rights and obligations
under the BEE Buyout Agreements and the related transactions between the parties (the
“BEE Buy-Out Transaction”). The Company’s ability to complete its review has been
impeded by the difficulty in accessing underlying documents and agreements, the co-
operation of various parties and the review of the implications of the BEE Buyout
Agreements under the Company’s mining rights and provisions of applicable South
African mining laws. As at September 30, 2016, consideration in the amount of
$13,366,609 paid to the vendors had been recorded as a prepayment in the Company’s
consolidated statement of financial position.
At the present time, the BEE Buy-Out Transaction has not been completed or formally
terminated.
Private Placement
On October 27, 2016, the Company announced that, subject to regulatory approval, it
intends to complete a private placement of 18,435,360 Eastplats’ common shares
(representing 19.9% of the currently outstanding shares and 16.6% post-completion) at
a price of Cdn$0.56 per share for aggregate proceeds of approximately Cdn$10,323,802.
The Company intends to use the net proceeds from the private placement for general
working capital purposes, including capital costs to advance the Company’s mining
assets, which may include prospect work and mine construction. The Company is
continuing to negotiate and settle further terms and conditions of the private placement
and seeking regulatory approval thereof.
Cautionary Statement on Forward-Looking Information
This press release contains certain “forward-looking statements” or “forward-looking information” (collectively referred
to herein as “forward-looking statements”) within the meaning of applicable securities legislation. Such forward-looking
statements include, without limitation, forecasts, estimates, expectations and objectives for future operations that are
subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company.
Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by
the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “potential” and similar
expressions, or are events or conditions that “will”, “would”, “may”, “could” or “should” occur or be achieved. This press
release contains forward-looking statements, pertaining to, among other things, the following: the future funding of the
Company’s projects, including the negotiation of the further terms and conditions and regulatory approval of the
proposed private placement and the use of proceeds therefrom; the future development and funding of the Company’s
projects; the Company’s plans for its properties; the review of the CRM Purchase Agreement, the BEE Buy-Out
Agreements and all related transactions and determinations arising therefrom; the adoption of a new strategy based
on the outcome of this review; the Company’s belief that the platinum production industry will have to face a continuation
of stagnant PGM prices; the continuing impact of adverse economic factors on the South African PGM industry; the
assertion that ongoing cost pressure and decreasing productivity in South Africa will continue to reduce free cash flow
for the PGM industry; the potential restarts of the CRM if there is a sustained strengthening of PGM prices and a marked
improvement in the South African operating environment; commitment to developing PGM in South Africa; and the
resolution of certain issues inherited from former management.
With respect to forward-looking statements contained in this press release, assumptions have been made regarding,
among other things: the Company’s ability to complete or otherwise to resolve the CRM Transaction and the BEE Buy-
Out Agreements; the resolution of the black economic empowerment requirements; the price of PGMs; fluctuations in
currency markets; inflation; the regulatory framework in the jurisdictions that the Company conducts its business;
operating costs; and the Company’s ability to obtain financing on acceptable terms and litigation outcome.
Forward-looking statements are subject to all of the risks and uncertainties normally incident in the mining and
development of PGMs that may cause actual results or events to differ materially from those anticipated in such forward-
looking statements. These risks include, but are not limited to: the risk of fluctuations in the assumed exchange rates
of currencies that directly impact the Company, such as the Canadian dollar, Rand and U.S. dollar; the risk of
fluctuations in the assumed prices of PGM and other commodities; the risk of changes in government legislation,
taxation, controls, regulations and political or economic developments in Canada, the United States, South Africa,
Barbados or other countries in which the Company carries, or may carry on business in the future; risks associated
with mining or development activities; the speculative nature of exploration and development, including the risk of
obtaining necessary licences and permits; assumed quantities or grades of reserves and certain other known and
unknown risks detailed from time to time in the Company’s public disclosure documents, copies of which are available
on the Company’s SEDAR profile at www.sedar.com.
Although the Company believes that the material factors, expectations and assumptions expressed in such forward-
looking statements are reasonable based on information available to it on the date such statements were made, no
assurances can be given as to future results, levels of activity and achievements and such statements are not
guarantees of future performance. The Company’s actual results may differ materially from those expressed or
implied in forward-looking statements and readers should not place undue importance or reliance on the forward-
looking statements. Statements including forward-looking statements are made as of the date they are given and,
except as required by applicable securities laws, the Company disclaims any intention or obligation to publicly update
or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The
forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
For further information, please contact:
EASTERN PLATINUM LIMITED
Diana Hu, President and Chief Executive Officer
dhu@eastplats.com (email)
(604) 800-8200 (phone)
No stock exchange, securities commission or other regulatory authority has
approved or disapproved the information contained herein.
JSE Sponsor: PSG Capital Proprietary Limited
Date: 15/11/2016 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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