ATLATSA RESOURCES CORPORATION - Atlatsa announces financial results for the three and nine months ended September 30, 2017

Release Date: 14/11/2017 14:45
Code(s): ATL
 
Wrap Text
Atlatsa announces financial results for the three and nine months ended September 30, 2017

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, 2017

November 14, 2017, 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, 2017. 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, 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 $27.7 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.

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 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 $48.1
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 Q3 2017

Impairment of assets

Due to impairment indicators that existed at June 30, 2017, September 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 $180.9 million with respect to property, plant and equipment and capital work in progress
for fiscal 2017.
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, 2017.

 Operating results                                         Q3 2017              Q3 2016           % change

 Tonnes delivered                  t                       253,115              368,266            (31.3%)

 Tonnes milled                     t                       263,737              363,320            (27.4%)

 Recovered grade                   g/t milled,                 3.7                  3.8             (2.6%)
                                   PGM
 PGM oz produced                   oz                       31,427               44,463            (29.3%)
                                                             1,402                1,508             (7.0%)
 Primary development               metres
                                                             2,030                2,290            (11.4%)
 Re-development                    metres
                                                               9.4                  8.9             (5.6%)
 Capital expenditure               $m
 Operating cost/tonne                                        1,706                1,449            (17.7%)
 milled                            ZAR/t
                                                            14,318               11,839            (20.9%)
 Operating cost/PGM oz             ZAR/PGM oz
                                   Per 200,000                                                           
 Lost-time injury                  hours                      0.75                 0.99              24.2%
 frequency rate (“LTIFR”)          worked


 Expressed in Canadian Dollars (000’s)                    Q3 2017               Q3 2016            % change

 Revenue                                                   32,183                48,877             (34.2%)
 
 Cash operating costs                                     (42,993)             (48,178)               10.8%
 
 Cash operating loss                                      (10,810)                  699                 nm

 Cash operating margin (%)                                 (33.6%)                1.40%                 nm
 
 Earnings/Loss before interest, taxation,
 depreciation and amortisation
 (“EBITDA”)*                                              (52,274)              (2,475)                 nm

 Loss for the period                                      (72,267)             (11,396)            (534.1%)
 
* 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 Q3 2017 of 0.75 has improved by 24.2% compared to the Q3 2016
LTIFR of 0.99. During Q3 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
one stoppage in Q3 2016.

Operational results

Tonnes delivered at Bokoni Mine decreased by 31.3% quarter-on-quarter to 253,115 tonnes
and PGM ounces produced decreased to 31,427 4E PGM ounces compared to 44,463 4E
PGM ounces produced during Q3 2016.

Primary development decreased by 7.0% quarter-on-quarter to 1,402 metres and re-
development by 11.4% to 2,030 metres.

Recoveries at the concentrator plant remained consistent at 90.2% for the Merensky
concentrate and decreased by 0.3% to 86.8% for the UG2 concentrate respectively.
All the Bokoni Mine operations were placed on care and maintenance with effect from October
1, 2017.

Financial results

Revenue decreased by 34.2% quarter-on-quarter to $32.2 million due to a 8.9% decrease in
the ZAR PGM basket price (ZAR10,869 in Q3 2017 compared to ZAR11,927 in Q3 2016), a
decrease of 29.3% in 4E ounces produced well as a 7.0% strengthening in the ZAR/US$
exchange rate.

Total cash operating costs were 12.3% lower than in Q3 2016.

Costs per tonne milled for Q3 2017 increased to $169 (ZAR1,706) from $128
(ZAR1,449) in Q3 2016 with costs per 4E ounce increasing to $1,419 (ZAR14,318) from
$1,048 (ZAR11,839) in Q3 2016.

Total capital expenditure for Q3 2017 was $9.4 million, compared to $8.9 million for Q3 2016,
comprising 33% sustaining capital and 67% project expansion capital.

Expressed in Canadian Dollars (000’s)                        Q3 2017               Q3 2016            % change

Revenue                                                       32,183                48,877             (34.2%)
                                                                                 
Cost of sales                                                (50,158)             (54,002)                7.1%
 
Gross loss                                                   (17,976)              (5,125)            (250.8%)
 
General, administrative and other
expenses                                                      (3,343)              (1,969)             (69.8%)

Impairment                                                    (4,752)                   -                  nm

Restructuring costs                                          (33,372)              (1,209)                 nm

Other income                                                        3                    4             (25.0%)
                                                                                     
Operating (loss)                                             (59,439)              (8,299)            (616.2%)
 
Net finance costs                                            (12,762)              (7,954)             (60.4%)
 
Income tax                                                       (65)                4,857            (101.3%)
                                                                                 
(Loss) for the period                                        (72,267)             (11,396)            (534.1%)

(Loss) attributable to Atlatsa shareholders                  (42,703)              (7,186)            (494.3%)
                                                           
Basic (loss) per share – cents                                 (0.08)               (0.01)            (700.0%)
                                
Headline loss per share – cents*                               (0.07)               (0.01)            (600.0%)
                                    
                                                                    
* 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). Please refer to the Consolidated Financial Statements for a
detailed reconciliation between the headline loss per share and the earnings used in the calculation.

(Loss) / profit per share

The basic and diluted loss per share was ($0.08) for Q3 2017 compared to ($0.01) in Q3 2016.
The basic and diluted loss per share is based on the loss attributable to the shareholders of
the Company of ($42.7 million) compared to ($7.2 million) in Q3 2016.

The basic and diluted headline loss per share was ($0.07) for Q3 2017 compared to ($0.01)
in Q3 2016. The basic and diluted headline loss per share is based on the headline loss
attributable to the shareholders of the Company of ($40.1 million) compared to ($7.2 million)
for Q3 2016.

Issued share capital

As at September 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 Q3
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.

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