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ATLATSA RESOURCES CORPORATION - Atlatsa announces financial results for the quarter ended March 31, 2019

Release Date: 15/05/2019 12:45
Code(s): ATL     PDF:  
 
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Atlatsa announces financial results for the quarter ended March 31, 2019

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, 2019

May 15, 2019 Atlatsa Resources Corporation (“Atlatsa” or the “Company”) (TSX: ATL; JSE: ATL)
announces its operating and financial results for the quarter ended March 31, 2019. This release should
be read together with the Company’s unaudited condensed consolidated interim financial statements
for the three months ended March 31, 2019 (the “Q1 2019 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 http://www.atlatsaresources.co.za/investors-and-
media/financial-results-mdas. Currency values are presented in South African Rand (ZAR) and
Canadian Dollars ($).

The Restructuring Plan and Composite Transaction

On July 21, 2017, the Company announced (“July Announcement”) that it had entered into an
agreement (“Letter Agreement”) with Anglo American Platinum Limited (“AAP”) outlining key terms
agreed in relation to a two-phased restructuring plan (the “Restructuring Plan”). Phase 1 of the
Restructuring Plan was completed by placing the Company’s operating mine (“Bokoni Mine”) on care
and maintenance on October 1, 2017.

On December 12, 2018, Atlatsa announced (“December Announcement”) a comprehensive
restructuring and going private transaction, representing phase 2 of the Restructuring Plan, whereby it
had entered into a suite of transaction agreements dated December 11, 2018 with, inter alia,
Rustenburg Platinum Mines Limited (“RPM”), a significant shareholder of Atlatsa and a wholly-owned
subsidiary of AAP, as well as Atlatsa Holdings Proprietary Limited (“ATH”), Atlatsa’s majority
shareholder, outlining the terms and conditions of a Composite Transaction (as defined below) to be
implemented by way of a Canadian court-approved plan of arrangement (“Plan of Arrangement”)
under section 288 of the Business Corporations Act (British Columbia) (the “Arrangement”).

Shareholders of the Company (the “Shareholders”) are referred to the July Announcement and the
December Announcement for further background information on, and the rationale for, the
Restructuring Plan.

The Letter Agreement
Debt Standstill

Atlatsa and AAP agreed to a debt standstill arrangement, pursuant to which the repayment of all
debt facilities owing by Atlatsa and its subsidiaries (the “Group”) to RPM have been suspended
until December 31, 2019.         The debt standstill applies to current and future (prior to
December 31, 2019) drawdowns under these facilities. As at March 31, 2019, the total value of
loans owing by the Group to RPM and subject to the debt standstill amounted to $4 32.7 million
(ZAR4,678.0 million).

Care and Maintenance Term Loan Facility

Pursuant to the Letter Agreement, on October 12, 2017, the Group and RPM entered into a Care and
Maintenance Term Loan Facility, totalling $48.2 million (ZAR521 million), to enable the Group to fund
its share of all costs associated with the care and maintenance process referred to above. As at
March 31, 2019, $43.5 million (ZAR469.8 million) had been drawn against the facility, the majority of
which was used to fund the section 189A retrenchment costs in terms of the South African Labour
Relations Act, No. 66 of 1995. The Care and Maintenance Term Loan Facility is included in the debt
standstill arrangement.

Transaction Costs Term Loan Facility

Pursuant to the Letter Agreement, on April 16, 2018, the Group and RPM entered into a
Transaction Costs Term Loan Facility, totalling $4.6 million (ZAR50.0 million), to enable the Group
to fund transaction costs relating to implementation of the Composite Transaction. As at
March 31, 2019, $3.1 million (ZAR33.3 million) had been drawn against this facility. Repayments
relating to value added tax (VAT) refunds on the transaction costs of $0.3 million (ZAR2.8 million)
have been made in terms of the Transaction Costs Term Loan Facility as at March 31, 2019. The
Transaction Costs Term Loan Facility is included in the debt standstill arrangement.


The Composite Transaction

Atlatsa is seeking to implement the following inter-conditional transactions (collectively, the “Composite
Transaction”) by way of a Plan of Arrangement:

• the Prospecting Rights Disposition: the acquisition by RPM, and the inclusion by RPM into its
  adjacent Northern Limb mining rights, of the resources specified in the Group’s Kwanda North and
  Central Block prospecting rights, for a cash consideration of $27.7 million (ZAR 300 million)
  (“Prospecting Rights Disposition”);
• the Buy-Back: the privatisation of Atlatsa through a compulsory repurchase by Atlatsa, for
  cancellation, of all Atlatsa’s common shares (“Common Shares”) held by: (a) the Company’s
  minority shareholders, being all of the Shareholders excluding ATH, RPM, the Anooraq Community
  Participation Trust (“Community Trust”) and the Bokoni Platinum Mine ESOP Trust (collectively,
  the “Minority Shareholders”), for a cash consideration of $0.09 (ZAR1.00) per Common Share
  (“Share Cash-Out Consideration”); and (b) RPM, for an aggregate nominal cash consideration of
  $0.09 (ZAR1.00) (collectively, the “Buy-Back”);

• the Tender Option: Atlatsa will make a tender offer to purchase, for cancellation, any or all of the
  Common Shares held by the Community Trust in exchange for the Share Cash-Out Consideration
  for each Common Share so tendered (“Tender Option”);

• the RPM Debt Write-Off: RPM will capitalise and/or write-off all debt owing by Group, directly or
  indirectly, to RPM, including any current and further debt that may be incurred during the care and
  maintenance period at Bokoni Mine until December 31, 2019 (“RPM Debt Write-Off”); and
• the ATH Debt Write-Off: RPM will write-off all debt owing by ATH to it in exchange for ATH remaining
  as Atlatsa’s controlling Shareholder immediately after implementation of the Composite Transaction
  (“ATH Debt Write-Off”).

Subject to and following completion of the Composite Transaction, and in view of the costs and onerous
administration of maintaining a listing on two international exchanges, the Company intends to apply to
the applicable securities authorities to have its Common Shares delisted from the Toronto Stock
Exchange and the Johannesburg Stock Exchange and also apply to cease to be a reporting issuer in
each of the provinces of Canada in which it is currently a reporting issuer. Following completion of the
Arrangement, Atlatsa will become a private company with ATH continuing to hold a controlling interest
in Atlatsa. The Buy-Back provides Minority Shareholders with a liquidity event and an opportunity to
realise value for their Common Shares.

Conditions Precedent to the Effectiveness of the Arrangement

On December 12, 2018, the Department of Mineral Resources of South Africa granted approval and
consent for the Prospecting Rights Disposition in terms of sections 11 and 102 of the South African
Mineral and Petroleum Resources Development Act, No. 28 of 2002.

The effectiveness of the Arrangement will be conditional upon the fulfilment, satisfaction or waiver (to
the extent permitted by the Plan of Arrangement) of, inter alia, the following conditions:

• approval of the exchange control authorities of the South African Reserve Bank for the transactions
  contemplated in the Plan of Arrangement, either unconditionally or subject to such conditions as
  Atlatsa confirms to RPM in writing to be acceptable to Atlatsa;
• the required Shareholder approvals being obtained;
• the Supreme Court of British Columbia granting a final order, and in the event of an appeal or
  application for leave to appeal, final determination shall have been made by the applicable appellate
  court; and
• other conditions to effectiveness typical for a transaction of this nature.

Atlatsa and AAP are proactively pursuing the fulfilment of the remaining conditions precedent which
have not yet been fulfilled as at the date of approval of the Q1 2019 Financial Statements.

Financial Results – Quarter ended March 31, 2019 (“Q1 2019”) and Quarter ended March 31, 2018
(“Q1 2018”)

Set out below are summaries of key financial results for the Group for the quarter ended March 31,
2019.

                                                                       Q1 2019           Q1 2018
                                                                    $ thousands       $ thousands

 Revenue **                                                                -              4,032

 Cost of sales                                                             -             (4,019)

 Gross profit (loss)                                                       -                13

 General, administrative and other expenses                            (1,307)           (2,063)

 Care and maintenance costs                                            (3,690)           (16,594)

 Other Income                                                            745                2

 Operating loss                                                        (4,252)           (18,642)

 Net finance costs                                                     (16,858)          (17,905)

 Income tax                                                                -                -

 Loss for the period                                                   (21,110)          (36,547)

 Loss attributable to Atlatsa shareholders                             (16,834)          (26,237)

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

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

* Headline loss per share is not a recognised measure under International Financial Reporting
Standards (“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).

** The Statement of Comprehensive Income is translated at the average year to date exchange rate,
except for revenue which is translated at the date of the transaction.

*** Percentage variances have not been shown as the variances are not meaningful due to Bokoni Mine
being placed on care and maintenance.

Financial results

Total care and maintenance costs for Q1 2019 were $3.7 million (ZAR38.8 million) compared to $16.6
million (ZAR156.9 million) in Q1 2018. 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 $0.03 for Q1 2019 compared to $0.05 in Q1 2018. The basic
and diluted loss per share is based on the loss attributable to the Shareholders of $16.8 million in
Q1 2019 compared to the loss attributable to the Shareholders of $26.2 million in Q1 2018.

Headline loss per share

The basic and diluted headline loss per share was $0.03 for Q1 2019 compared to $0.05 in Q1 2018.
The basic and diluted headline loss per share is based on the headline loss attributable to the
Shareholders of $16.8 million in Q1 2019, compared to a headline loss attributable to the Shareholders
of $26.2 million in Q1 2018.

Issued share capital

As at March 31, 2019 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

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 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 arrangement as contemplated in the Restructuring Plan; and
meeting the conditions precedent of the Restructuring Plan and the Arrangement.

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 Restructuring Plan and the Arrangement; uncertainties related to meeting the
conditions precedent of the Restructuring Plan and the Arrangement; 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 the quarter
ended March 31, 2019. 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 2018, 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 which are available on SEDAR at
www.sedar.com.

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