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Atlatsa announces a financial restructure plan for Atlatsa Group
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 A FINANCIAL RESTRUCTURE PLAN FOR ATLATSA GROUP, A
CONDITIONAL DISPOSAL OF MINERAL RIGHTS TO ANGLO AMERICAN PLATINUM AND A
CARE AND MAINTENANCE STRATEGY FOR BOKONI MINE
July 21, 2017 Atlatsa Resources Corporation (“Atlatsa” or the “Company”) (TSX: ATL; JSE:
ATL) announces that it has entered into a letter agreement dated 21 July 2017 (“Letter
Agreement”) with Anglo American Platinum Limited (“Anglo American Platinum”) outlining
key terms agreed in relation to a two-phased transaction in terms of which Atlatsa will
implement:
- a care and maintenance strategy for Bokoni Mine (“Phase 1”); and
- a financial restructure plan for Atlatsa and its subsidiaries (“Atlatsa Group”) conditional
upon Anglo American Platinum acquiring and including into its adjacent mining rights the
resources specified in the Central Block and Kwanda North prospecting rights
(“Phase 2”),
(collectively, the “2017 Restructure Plan”).
The salient terms of the Letter Agreement are as follows:-
Phase 1:
• Atlatsa to place the Bokoni Mine on care and maintenance
• Anglo American Platinum to fund all costs associated with the care and
maintenance process up until 31 December 2019
• Anglo American Platinum to suspend servicing and repayment of all current and
future debt owing by Atlatsa Group until 31 December 2019 (“Debt Standstill”)
Phase 2:
• Anglo American Platinum acquiring and including into its adjacent mining rights
the resources specified in the Kwanda North and Central Block prospecting
rights for a cash consideration of ZAR 300 million (C$ 29 million) (“Asset
Disposal”)
• Subject to the implementation of the Asset Disposal, Anglo American Platinum
to capitalise and/or write off all debt owing by Atlatsa Group and Bokoni
Platinum Mines Proprietary Limited (“Bokoni”) to Anglo American Platinum,
currently amounting to ZAR 4.2 billion (C$ 401 million), including such further
debt incurred during the care and maintenance period until 31 December 2019
(“Debt Write Off”)
• Atlatsa and Anglo American Platinum to retain their 51% and 49% respective
shareholdings in the Bokoni joint venture (“Bokoni JV”)
Background to and rationale for the 2017 Restructure Plan
Notwithstanding various attempts since 2014 to restructure the Bokoni Mine through, inter alia,
shaft closures and other measures in order to achieve profitability, Bokoni Mine’s operations
remain cash negative after capital expenditure. The mine has incurred negative cash flow of
approximately ZAR 500 million (C$ 49 million) for the first 6 months of 2017.
In recent months Atlatsa and Anglo American Platinum (“Bokoni JV Partners”), together with
mine management, have continued to investigate a range of further mine re-configuration
options. All of the options assessed demonstrate significant cash outflows in the short to
medium term with material execution risk. The immediate to medium term outlook for Bokoni
Mine remains negative, given the current weak PGM [1] pricing environment which is expected
to remain under pressure for the foreseeable future.
[1] PGM means Platinum Group Metals, including Platinum, Palladium, Rhodium and Gold
In addition to investigating the various mine re-configuration options, the Bokoni JV Partners
have also actively investigated various potential funding and corporate ownership alternatives,
including seeking to introduce new funding partners and/or a disposal of Bokoni Mine.
However, given Bokoni’s current operational challenges, continued operational losses and
negative cash generation, the depressed PGM environment, the negative medium term PGM
pricing outlook and Atlatsa Group’s significant debt levels, attempts to implement such
alternatives have proven unsuccessful.
In the circumstances, the Bokoni JV Partners are no longer able to continue funding losses at
the mine with no reasonable short to medium term turnaround prospects. The Bokoni JV
Partners have therefore agreed to implement the 2017 Restructure Plan as the most
appropriate strategy, having regard to long term asset value preservation and potential future
sustainability of Bokoni Mine.
Phase 1: Bokoni Mine care and maintenance and Debt Standstill
Atlatsa will place the Bokoni Mine operations on care and maintenance as soon as reasonably
possible. Anglo American Platinum has agreed to fund, via a loan account to Bokoni Mine, all
once-off costs associated with placing the mine on care and maintenance, as well as ongoing
care and maintenance costs, up until 31 December 2019.
Atlatsa will also, as a consequence, restructure its corporate head office and associated
overhead costs in order to right size for a business which will hold a single asset on care and
maintenance, including reviewing the sustainability of its listings on various stock exchanges.
Anglo American Platinum has agreed to suspend servicing and repayment of all current
(approximately ZAR 4.2 billion (C$ 401 million)) and future debt incurred by Atlatsa Group and
owing to Anglo American Platinum and its related entities until 31 December 2019 (“Debt
Standstill Period”). Upon implementation of Phase 2, all debt incurred during the Debt
Standstill Period will also be capitalised and/or written off, in accordance with the Debt Write
Off.
The Bokoni JV Partners have embarked on a comprehensive stakeholder engagement
strategy associated with the care and maintenance plan.
During the care and maintenance period the Bokoni JV Partners will continue to review various
alternatives in respect of the mine’s future sustainability and revisit its care and maintenance
status, depending on future circumstances.
Phase 2: Conditional sale of Kwanda North and Central Block prospecting rights and
Debt Write Off
Atlatsa has accepted a conditional offer from Anglo American Platinum to acquire the Central
Block and Kwanda North prospecting rights for a cash purchase consideration of ZAR 300
million (C$ 29 million) subject to, inter alia, the following conditions precedent:
• conclusion of definitive transaction agreements; and
• relevant regulatory approvals for a transaction of this nature, including those required
by the Mineral and Petroleum Resources Development Act, 28 of 2002 and registration
by the Mineral and Petroleum Titles Registration Office to complete Anglo American
Platinum acquiring and including into its adjacent mining rights the resources specified
in the Central Block and Kwanda North prospecting rights.
Should the Asset Disposal be implemented, Anglo American Platinum has undertaken to, inter
alia, implement the Debt Write Off which will reduce Atlatsa Group’s debt levels to ZAR nil.
Possible future position following implementation of the 2017 Restructure Plan
Subsequent to implementation of the 2017 Restructure Plan and on the basis that the
transactions set out above, including the Asset Disposal and the Debt Write Off, have been
successfully implemented:-
• Atlatsa and Anglo American Platinum will retain their 51% and 49% respective
shareholdings in the Bokoni Mine;
• Atlatsa Group and Bokoni Mine will be debt free; and
• Atlatsa will receive ZAR 300 million (C$ 29 million) in cash as consideration for the
Asset Disposal.
Both Anglo American Platinum and Atlatsa will continue to investigate opportunities for either
or both parties to divest of their interests in the Bokoni JV.
Lifting of trading halt on the exchange operated by the JSE Limited (“JSE”)
Shareholders are referred to the announcement published on the Stock Exchange News
Service of the JSE earlier today, whereby shareholders were advised that trading in the
Company’s securities on the JSE was halted. Shareholders are further advised that trade in
the Company’s securities on the JSE will resume at 14:00 (South African Standard Time)
today. For the avoidance of doubt, trading in the Company’s securities on the Toronto Stock
Exchange remains unaffected.
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
Taryn Carter
Office: +27 11 550 5000
Cautionary note regarding forward-looking information
This document contains “forward-looking statements” within the meaning of the 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: maintaining production levels
at Bokoni in accordance with mine operating plan; anticipated financial and operational
improvements expected as a result of the 2017 Restructure Plan; the Company’s ability to
refinance its debts as and when due; the provision of goods and/or services by contracted
parties on the agreed timeframes; availability of equipment available as scheduled; absence
of material labour slowdowns, strikes or community unrest; proper functioning of plant and
equipment functions; absence of mine plan changes resulting from a change in geological or
financial parameters; 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 2017 Restructure Plan;
uncertainties related to the continued implementation of the Bokoni operating plan;
uncertainties related to the termination and rehabilitation of the Klipfontein Merensky
Opencast Mine operation; uncertainties related to the timing of the implementation of the
Bokoni deferred expansion plans which includes the accelerated development of the
Brakfontein and Middelpunt Hill shafts; 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 loans and borrowings, MD&A – Section 2 –
“Liquidity”, a copy of which can be found on SEDAR at www.sedar.com and under “Going
Concern” in note 2 of the condensed consolidated interim financial statements. 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 “Risk Factors” in Atlatsa’s Annual
Information Form for Fiscal 2016, which is available on SEDAR at www.sedar.com.
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.
Date: 21/07/2017 01:55:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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