ATLATSA RESOURCES CORPORATION - Atlatsa announces financial results for the quarter ended March 31, 2018

Release Date: 15/05/2018 16:03
Code(s): ATL
 
Wrap Text
Atlatsa announces financial results for the quarter ended March 31, 2018

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 QUARTER ENDED MARCH 31, 2018


May 15, 2018 Atlatsa Resources Corporation (“Atlatsa” or the “Company”) (TSX: ATL; JSE: ATL)
announces its operating and financial results for the quarter ended March 31, 2018. This release should
be read together with the Company’s unaudited condensed consolidated interim financial statements
for the three months ended March 31, 2018 (the “Consolidated Financial Statements”) and the
related Management’s Discussion and Analysis of Financial Condition and Results of Operations 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 the Agreement are as follows:

Bokoni Mine care and maintenance:

   •   Atlatsa was to place the Bokoni Mine on care and maintenance;
   •   RPM will 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 will 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 the Atlatsa Group:

   •   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 $32.6 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

The Bokoni Mine was placed on care and maintenance on October 1, 2017. The process entailed the
following:

   •   ceasing all production related activities;
   •   completion of a Section 189A retrenchment process at the Bokoni Mine; and
   •   appointment of a care and maintenance team to execute the care and maintenance strategy at
       Bokoni Mine.

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 funded all once-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
has restructured 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 (“Care and Maintenance Facility”) 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 $56.7 million (ZAR521 million) for the duration of the Care and Maintenance Period to enable 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.

Transaction Costs Facility

On April 16, 2018 Atlatsa Group entered into a Transaction Cost Facility Agreement with RPM
(“Transaction Costs Facility”) 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 $5.4 million (ZAR50 million)
for Atlatsa Group to fund transaction costs associated with the implementation of the 2017 Restructure
Plan. To date an amount of $1.04 million (ZAR9.6 million) has been advanced by RPM to the Atlatsa
Group in terms of this agreement.


The Atlatsa Group’s total liabilities as at March 31, 2018 were equal to $412.0 million
(ZAR3,786 million), including drawdowns on the Care and Maintenance Facility and Transaction Costs
Facility.

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. 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.

Update on 2017 Restructure Plan

During 2018, RPM and Atlatsa will continue to work towards implementation of the 2017 Restructure
Plan by fulfilling the terms and conditions as contemplated in the Agreement.

Financial Results – Quarter ended March 31, 2018 (“Q1”) 2018

Set out below are summaries of key financial results for the Atlatsa Group for the quarter ended March
31, 2018.

                                                      Financial results – Atlatsa

Expressed in Canadian Dollars (000’s)                              Q1 2018                 Q1 2017                % change

Revenue                                                              4,032                  38,360                   -89%

Cost of sales                                                       (4,019)                (54,058)                  -93%

Gross profit (loss)                                                    13                  (15,698)                  -99%

General, administrative and other expenses                          (2,063)                 (5,626)                  -63%

Care and maintenance costs                                          (16,594)                    -                     n/a

Other income                                                            2                       3                    -33%

Operating loss                                                      (18,642)               (21,321)                  -13%

Net finance costs                                                   (17,905)                (6,795)                  164%

Income tax                                                               -                     427                  -100%

Loss for the period                                                 (36,547)               (27,689)                   32%

Loss attributable to Atlatsa shareholders                           (26,237)               (17,505)                   50%

Basic loss per share – cents                                           (5)                     (3)                    67%

Headline loss per share – cents*                                       (5)                     (3)                    67%

* 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).


Financial results

In November 2017, Bokoni Mine started treating ore for RPM from its Mototolo joint venture operations,
based on a limited six-month ore sale agreement. This agreement generated revenue of $4.0 million
(ZAR38.1 million) for Bokoni Mine during Q1 2018.


Care and maintenance costs for Q1 2018 were $16.6 million (ZAR156.9 million). Care and maintenance
costs include shafts and plant maintenance costs, pumping to prevent flooding of working areas, safety
inspections as well as general and administrative expenses necessary to safeguard the Bokoni Mine
assets.

Loss per share

The basic and diluted loss per share was $0.05 for Q1 2018 compared to $0.03 in Q1 2017. The basic
and diluted loss per share is based on the loss attributable to the shareholders of the Company of $26.2
million compared to the loss attributable to the shareholders of the Company of $17.5 million in
Q1 2017.

Reconciliation of headline loss attributable to Atlatsa shareholders

Expressed in Canadian Dollars (000’s)                               Q1 2018              Q1 2017
                                                                    (26,237)             (17,505)
Loss attributable to Atlatsa shareholders

Adjustments:
                                                                        -                    -
Impairment loss
                                                                        -                  109
Loss on disposal of property, plant and equipment
                                                                        -                  (30)
Total tax effects of adjustments
                                                                        -                    -
Total non-controlling interest effects of adjustments
                                                                    (26,237)             (17,426)
Headline loss attributable to Atlatsa shareholders


The basic and diluted headline loss per share was $0.05 for Q1 2018 compared to $0.03 in Q1 2017.
The basic and diluted headline loss per share based on the headline loss attributable to the
shareholders of the Company for Q1 2018 is $26.2 million, compared to a headline loss of $17.4 million
for Q1 2017.

Issued share capital

As at March 31, 2018 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

JSE Sponsor:
One Capital Sponsor Services Proprietary Limited
Taryn Carter
Office: +27 11 550 5000
Email: sponsor@onecapital.co.za


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 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 terms of 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
of 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 unaudited condensed
consolidated interim financial statements for quarter ended March 31, 2018. 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 2017, 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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