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ATLATSA RESOURCES CORPORATION - Financial results for the half year ended June 30, 2017 & update on the implementation of the 2017 Restructure Plan

Release Date: 16/10/2017 16:00
Code(s): ATL     PDF:  
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Financial results for the half year ended June 30, 2017 & update on the implementation of the 2017 Restructure Plan

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 HALF YEAR ENDED JUNE 30, 2017 &
PROVIDES AN UPDATE ON THE IMPLEMENTATION OF THE 2017 RESTRUCTURE PLAN

October 16, 2017, Atlatsa Resources Corporation (“Atlatsa” or the “Company”) (TSX: ATL; JSE: ATL)
announces its operating and financial results for the three and six months ended June 30, 2017. This
release should be read together with the Company’s unaudited condensed consolidated interim financial
statements for the three and six months ended June 30, 2017 (the “Consolidated Financial
Statements”) and the related Management’s Discussion and Analysis of Financial Condition and Results
of Operations (the “MD&A”) filed on http:///www.sedar.com, which are also available at www.atlatsa.com.
Currency values are presented in South African Rand (ZAR), Canadian Dollars ($) and United States
Dollars (US$).

The 2017 Restructure Plan

On July 21, 2017 the Company announced that it had entered into an agreement (“Agreement”) with
Rustenburg Platinum Mines Limited (“RPM”), a subsidiary of Anglo American Platinum Limited, outlining
key terms agreed in relation to a two-phased restructure plan (collectively, the “2017 Restructure Plan”),
comprising:

 -   a care and maintenance strategy for Bokoni Mine; and
 -   a financial restructure plan for Atlatsa and its subsidiaries (“Atlatsa Group”).

The salient terms of this Agreement are as follows:

Bokoni Mine care and maintenance:
 -   Atlatsa was to place the Bokoni Mine on care and maintenance;
 -   RPM to fund all costs associated with the care and maintenance process (“Care and
     Maintenance Funding”) from August 1, 2017 up until December 31, 2019 (“Care and
     Maintenance Period”); and
 -   RPM to suspend the servicing and repayment of all the current and future debt owing by Atlatsa
     Group to RPM until December 31, 2019 (“Debt Standstill”).

Financial restructure of Atlatsa:
 -   RPM will acquire and include into its adjacent Northern Limb mining rights the resources specified
     in Atlatsa’s Kwanda North and Central Block prospecting rights, for a cash consideration of $29.8
     million (ZAR300 million) (“Asset Disposal”).
 -   Subject to implementation of the Asset Disposal, RPM will write off all debt owing by Atlatsa
     Group to RPM, including debt incurred during the Care and Maintenance Period (“Debt Write
     Off”).
 -   Atlatsa and RPM will retain their 51% and 49% respective shareholdings in the Bokoni joint
     venture.

Implementation of the 2017 Restructure Plan

Bokoni Mine care and maintenance

During September 2017 Bokoni Mine, together with the registered trade unions, NUM, TAWUSA and
UASA, concluded a facilitated consultation process in terms of section 189A of the South African Labour
Relations Act, No. 66 of 1995. The Bokoni Mine operations were placed on care and maintenance with
effect from October 1, 2017. All exit medical examinations have been completed and severance packages
were paid to retrenched employees on October 13, 2017.

During the Care and Maintenance Period Atlatsa and RPM will review various alternatives in respect of
Bokoni Mine’s future sustainability and, depending on future circumstances, reconsider its care and
maintenance status.

Care and Maintenance Funding and Debt Standstill
RPM has agreed to fund, via a loan account to Bokoni Mine, all one-off costs associated with placing
Bokoni Mine on care and maintenance, as well as ongoing care and maintenance costs, up until
December 31, 2019. As a consequence, Atlatsa will also restructure itself to reduce its corporate head
office and associated overhead costs. (“Atlatsa Corporate Restructure”).

On October 12, 2017, the Atlatsa Group entered into a Care and Maintenance Term Loan Facility
Agreement with RPM in terms of which RPM has, subject to an agreed budget and approval process,
made available to the Atlatsa Group a loan facility in an amount of $51.8 million (ZAR521 million) for the
duration of the Care and Maintenance Period for the Atlatsa Group to fund its pro rata (51%) share of
care and maintenance costs at Bokoni Mine and the Atlatsa Corporate Restructure costs.

RPM has agreed to suspend servicing and repayment of all current and future debt incurred by the Atlatsa
Group and owing to RPM and its related entities until December 31, 2019 (“Debt Standstill Period”).
Upon implementation of the Asset Disposal all debt incurred during the Debt Standstill Period will be
written off, in accordance with the Debt Write Off.

Debt Write Off conditional on Asset Disposal

Atlatsa does not have short term plans to develop the resources at its Central Block and Kwanda North
prospecting rights prior to their expiry in 2019. These prospecting rights border the north of RPM’s
Northern Limb operations. The incorporation of these prospecting rights into RPM’s operations will
increase the probability of their development, which could lead to potential future mining and employment
opportunities, contributing to the regional and national South African economy.

As stated above the Agreement provides for both the Asset Disposal and the Debt Write Off. Atlatsa and
RPM continue to work towards this. Implementation of such transactions remain subject to completion of
definitive transaction agreements, all required regulatory approvals and all required corporate approvals,
including the approval of Atlatsa shareholders.

Should the Asset Disposal be implemented RPM will, inter alia, implement the Debt Write Off, which will
reduce the Atlatsa Group’s debt owing to RPM to zero.

Operational and Financial Results for Q2 2017

Management Cease Trade Order

Pursuant to entering into the Agreement and on request by Atlatsa on August 15, 2017 the British
Columbia Securities Commission (“BCSC”) issued a Management Cease Trade Order (“MCTO”) against
certain management of the Company, as it was unable to file its unaudited interim financial statements
for the three and six months ended June 30, 2017, the related management’s discussion and analysis,
and the related CEO and CFO certificates by the filing deadline. The Company expects the BCSC to
remove the MCTO upon filing its 2017 interim results.

Impairment of assets

Due to impairment indicators that existed at June 30, 2017 and Bokoni Mine being placed on care and
maintenance subsequent to the reporting date, the Company assessed the carrying value of its assets
for impairment and recognised an impairment loss of $176.2 million with respect to property, plant and
equipment and capital work in progress.

Bokoni Mine operating and financial performance

Set out below are summaries of the key operating and financial results for Bokoni Mine for the three and
six months ended June 30, 2017.

                                                                %          H1         H1            %
Operating results                    Q2 2017    Q2 2016      change       2017       2016        change
                                                                    
Tonnes delivered     t               300,500    340,758     (11.8%)     614,356    647,241      (5.1%)

Tonnes milled        t               308,181    344,895     (10.6%)     604,547    664,100      (9.0%)

Recovered grade      g/t milled,       3.8         3.8        0.0%         3.8        3.7        2.7%
                     PGM
PGM oz produced      oz               37,594     41,698      (9.8%)      72,932     78,307      (6.9%)

Primary                               2,068      1,258       64.4%       3,307       2,468      34.0%
development          metres
                                      2,205      1,711       28.9%       3,841       3,333      15.2%
Re-development       metres

Capital                                18.0        4.5      300.0%        29.6        8.0       270.0%
expenditure          $m

Operating                             1,660      1,386      (19.8%)      1,640       1,387      (18.2%)
cost/tonne milled    ZAR/t
 
Operating                             13,605     11,467     (18.6%)      13,597     11,766      (15.6%)
cost/PGM oz          ZAR/PGM oz
 
Lost-time injury
frequency rate       Per 200,000       1.31       0.81      (61.7%)       1.04       1.07        2.8%
(“LTIFR”)            hours worked
 
Financial results – Bokoni Mine
 
Expressed in Canadian                                        %                                  %
Dollars (000's)                Q2 2017       Q2 2016      change       H1 2017     H1 2016    change
                                                                                          
Revenue                         45,824        40,702       12.6%        84,184      76,291     10.3%

Cash operating costs            51,556        41,717      (23.6%)       99,702      79,684    (25.1%)

Cash operating loss             (5,732)       (1,015)     (464.7%)     (15,517)     (3,393)   (357.3%)

Cash operating margin (%)       (12.5%)        (2.5%)     (400.3%)      (18.4%)      (4.4%)   (318.9%)

Earnings/Loss before
interest, taxation,            (142,022)      (2,888)         nm       (157,222)      1,129      nm
depreciation and
amortisation (“EBITDA”) *

Loss for the period            (192,662)      (24,051)    (701.1%)      (220,351)   (23,486)  (838.2%)
  
* 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” means non-meaningful

Safety and health

Bokoni Mine’s LTIFR in Q2 2017 of 1.31 declined by 61.7% compared to Q2 2016 LTIFR of 0.81. During
Q2 2017 two Section 54 stoppages were imposed by the Department Mineral Resources in terms of the
Mine Health and Safety Act No. 29 of 1996, compared to zero stoppages in Q2 2016 and 20 days of
production was lost due to these stoppages (compared to zero days in Q2 2016).

Operational results

Tonnes delivered at Bokoni Mine decreased by 11.8% quarter-on-quarter to 300,500 tonnes and PGM
ounces produced decreased to 37,594 4E PGM ounces compared to 41,698 4E PGM ounces produced
during Q2 2016.

Primary development increased by 64.4% quarter-on-quarter to 2,068 metres and re-development by
28.9% to 2,205 metres.

Recoveries at the concentrator plant increased by 1.8% to 89.1% for the Merensky concentrate and by
0.7% for the UG2 concentrate respectively.

Financial results

Revenue increased by 12.6% quarter-on-quarter to $45.8 million due to a 6.3% increase in the ZAR PGM
basket price (ZAR11,968 in Q2 2017 compared to ZAR11,256 in Q2 2016) as well as a 13.1%
strengthening in the ZAR/US$ exchange rate.

Total cash operating costs were 25.2% higher than in Q2 2016. This increase is primarily attributable to
an increase in environmental rehabilitation costs incurred following the closure of the opencast mining
operations and due to poor production and required maintenance of property, plant and equipment.

Costs per tonne milled for Q2 2017 increased to $168 (ZAR1,660) from $120
(ZAR1,386) in Q2 2016 with costs per 4E ounce increasing to $1,375 (ZAR13,605) from $991
(ZAR11,467) in Q2 2016.

Total capital expenditure for Q2 2017 was $18.0 million, compared to $4.5 million for Q2 2016, comprising
39% sustaining capital and 61% project expansion capital associated with the two ramp-up shaft
operations.

Atlatsa Group Financial results
Expressed in Canadian                                    %                                   %
Dollars (000’s)             Q2 2017      Q2 2016      change      H1 2017      H1 2016     change
                                                                        
Revenue                      45,824       40,702       12.6%       84,184       76,291      10.3%

Cost of sales               (57,757)     (47,010)     (22.9%)    (111,815)     (90,255)    (23.9%)

Gross loss                  (11,932)      (6,308)      (89.2%)    (27,631)     (13,964)    (97.9%)

General, administrative      (4,529)     (12,453)       63.6%     (10,155)       3,876     (362.0%)
and other expenses

Impairment                  (176,166)        0            nm      (176,166)        0         nm

Other income                   3             5         (40.0%)        6            8        (25.0%)
                                               
Operating (loss) / profit   (192,624)    (18,756)      (927.0%)   (213,946)     (10,080)     nm

Net finance costs            (7,724)      (7,052)       (9.5%)     (14,519)     (13,761)    (5.5%)

Income tax                    7,686        1,758       (337.2%)     8,113         354        nm

(Loss) / profit for the
period                      (192,662)    (24,051)      (701.1%)     (220,351)   (23,486)    (838.2%)

(Loss) / profit
attributable to Atlatsa
shareholders                (121,401)    (19,700)      (516.2%)     (138,905)   (17,719)    (683.9%)

Basic (loss) / profit per
share – cents                  (22)        (4)         (450.0%)        (25)        (3)      (733.3%)

Headline loss per
share – cents*                  (3)        (4)          25.0%           (6)        (3)       (100%)

* Headline loss per share is not a recognised 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 2/2015 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).

(Loss) / profit per share

The basic and diluted loss per share was ($0.22) for Q2 2017 compared to ($0.04) in Q2 2016. The basic
and diluted loss per share is based on the loss attributable to the shareholders of the Company of ($121.4
million) compared to ($19.7million) in Q2 2016.

The basic and diluted loss per share was ($0.25) for the six months ended June 30, 2017 compared to
($0.03) for the six months ended June 30, 2016. The basic and diluted loss per share is based on the
loss attributable to the shareholders of the Company of ($138.9 million) compared to ($17.7 million) for
the six months ended June 30, 2016.

Reconciliation of headline (loss) / profit attributable to Atlatsa shareholders

The calculation of headline loss per share for the six months ended June 30, 2017 of $0.06 (2016: $0.03)
is based on a headline loss of $33.4 million (2016: $17.7 million).

Expressed in Canadian Dollars (000’s)                                   H1 2017             H1 2016
  
(Loss) / profit attributable to Atlatsa shareholders                   (138,906)            (17,719)

Adjustments:

Impairment loss                                                         176,166                 -

Loss on disposal of property, plant and equipment                         159                  (4)

Total tax effects of adjustments                                        (7,494)                 -

Total non-controlling interest effects of adjustments                   (63,314)                -

Headline (loss) / profit attributable to Atlatsa shareholders           (33,388)             (17,723)

Issued share capital

As at June 30, 2017 Atlatsa had 554,421,806 issued and outstanding common shares.

Queries:

On behalf of Atlatsa
Joel Kesler
Chief Commercial Officer
Office: +27 11 779 6800
Email: Joel@atlatsa.com

Corporate Advisor and JSE Sponsor to Atlatsa:
One Capital

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: placing the Bokoni Mine on care and maintenance;
safe guarding of all assets and the maintenance of major equipment; implementing the Letter Agreement
and Debt Standstill as contemplated in the 2017 Restructure Plan and meeting the conditions precedent
of the 2017 Restructure Plan. 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 placing the Bokoni Mine on care and maintenance;
uncertainties related to the implementation of the 2017 Restructure Plan; uncertainties related to meeting
the conditions precedent in regards to the 2017 Restructure Plan; 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 maintain the Bokoni Mine on care and maintenance; 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, as described under “Going Concern” in Note 2 of
the condensed consolidated interim financial statements for Q2 2017. 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 “Description of Business - 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: 16/10/2017 04:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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