ATLATSA RESOURCES CORPORATION - Atlatsa announces financial results for the quarter ended June 30, 2018

Release Date: 14/08/2018 12:45
Code(s): ATL
 
Wrap Text
Atlatsa announces financial results for the quarter ended June 30, 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 JUNE 30, 2018


August 14, 2018 Atlatsa Resources Corporation (“Atlatsa” or the “Company”) (TSX: ATL; JSE: ATL)
announces its operating and financial results for the quarter ended June 30, 2018. 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, 2018 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   http://www.atlatsaresources.co.za/investors-and-media/financial-results-mdas
Currency values are presented in South African Rand (ZAR) and Canadian Dollars ($).


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 $28.7 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

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 $49.9 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 Cost 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 $4.8 million (ZAR50.3
million) for Atlatsa Group to fund transaction costs associated with the implementation of the 2017
Restructure Plan. On June 25, 2018 an amendment to this facility was signed increasing the budget
and facility to $5.0 million (ZAR52.3 million).

The Atlatsa Group’s total liabilities as at June 30, 2018 amounted to $380.5 million
(ZAR3,973.5 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 continue to work towards implementation of the 2017 Restructure Plan
by fulfilling the terms and conditions as contemplated in the Agreement. RPM and Atlatsa continue to
progress the various workstreams required to be completed in terms of the Agreement, whilst seeking
the necessary regulatory approvals required for implementation purposes. At this stage, RPM and
Atlatsa anticipate that closing of the 2017 Restructure Plan will be completed during Q4 2018.

Financial Results – Quarter ended June 30, 2018 (“Q2”) 2018

Set out below are summaries of key financial results for the Atlatsa Group for the quarter ended June
30, 2018.
                                                Three Months     Three Months       Six Months       Six Months
                                                ended June 30,   ended June 30,   ended June 30,   ended June 30,
                                                     2018            2017               2018             2017
                                                   $ million       $ million        $ million        $ million

 Revenue                                             1.5             45.8              5.5             84.2

 Cost of sales                                      (5.5)           (57.8)            (9.6)           (111.8)

 Gross loss                                         (4.0)           (12.0)            (4.1)           (27.6)

 General, administrative and other expenses         (0.8)            (4.5)            (2.8)           (10.2)

 Impairment loss                                      -             (176.2)             -             (176.2)

 Care and maintenance costs                        (11.0)              -             (27.6)              -

 Operating loss profit                             (15.8)           (192.7)          (34.5)           (214.0)

 Net finance costs                                 (17.8)            (7.7)           (35.6)           (14.5)

 Income tax                                           -               7.7               -               8.1

 Loss profit for the period                        (33.6)           (192.7)          (70.1)           (220.4)

 Loss attributable to Atlatsa shareholders         (23.4)           (121.4)          (49.6)           (138.9)

 Basic and diluted loss per share – cents            (4)             (22)              (9)             (25)

 Headline and diluted headline loss per share        (4)             (22)              (9)             (25)
 – cents*

* 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 $1.0 million
(ZAR10.4 million) for Bokoni Mine for Q2 2018, with the balance of revenue generated from the last
remaining ore sales from Bokoni Mine to RPM.
Care and maintenance costs for Q2 2018 amounted to $11.0 million (ZAR105.8 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 $0.04 for Q2 2018 compared to $0.22 in Q2 2017. The basic
and diluted loss per share is based on the loss attributable to the shareholders of the Company of $23.4
million compared to the loss attributable to the shareholders of the Company of $121.4 million in
Q2 2017.

Reconciliation of headline loss attributable to Atlatsa shareholders

                                                     Three Months        Three Months           Six Months          Six Months
                                                     ended June 30,      ended June 30,       ended June 30,      ended June 30,
                                                          2018               2017                   2018                2017
                                                        $ million           $ million           $ million           $ million

 Loss attributable to Atlatsa sharehold                  (23.4)              (121.4)              (49.6)              (138.9)
 
 Adjustments:
                                                            -                 0.05                   -                  0.1
 Impairment loss

 Loss on disposal of property, plant and                    -                 176.2                  -                176.2
 equipment
                                                            -                 (7.4)                  -                 (7.4)
 Total tax effects of adjustments

 Total non-controlling interest effects of                  -                 (63.3)                 -                (63.3)
 adjustments

 Headline loss attributable to Atlatsa                   (23.4)               (15.9)              (49.6)              (33.4)
 shareholders


The basic and diluted headline loss per share was $0.04 for Q2 2018 compared to $0.03 in Q2 2017.
The basic and diluted headline loss per share based on the headline loss attributable to the
shareholders of the Company for Q2 2018 is $23.4 million, compared to a headline loss of $15.9 million
for Q2 2017.

Issued share capital

As at June 30, 2018 Atlatsa had 554,421,806 issued and outstanding common shares.


Queries:

On behalf of Atlatsa
Joel Kesler
Chief Commercial Officer
Office: +27 10 286 1166
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 June 30, 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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