JOHANNESBURG, March 29, 2018 /CNW/ - Atlatsa Resources
Corporation ("Atlatsa" or the "Company") (TSX: ATL;
JSE: ATL) announces its operating and financial results for the
quarter and year ended December 31,
2017. This release should be read together with the
Company's audited consolidated financial statements for the year
ended December 31, 2017 (the
"Consolidated Financial Statements"), the related Management's
Discussion and Analysis of Financial Condition and Results of
Operations (the "MD&A") and the Annual Information Form 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 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 $30.5
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 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 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 $52.9 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.
The Atlatsa Group's total liabilities as at December 31, 2017 were equal to $443.5 million
(ZAR4,369 million), including
drawdowns on the Care and Maintenance 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.
Operational and Financial Results – fiscal year ("FY")
2017
Impairment of assets
Due to impairment indicators that existed at June 30, 2017, September
30, 2017 and the Bokoni Mine being placed on care and
maintenance, the Company assessed the carrying value of its assets
for impairment and recognized an impairment loss of $180.9 million with respect to property, plant
and equipment and capital work in progress for FY 2017.
Bokoni Mine operating and financial performance
Set out below are summaries of the key operating and financial
results for Bokoni Mine for the year ended December 31, 2017.
Operating
results
|
FY
2017
|
FY
2016
|
%
change
|
Tonnes
delivered
|
T
|
867,470
|
1,294,503
|
(33.0%)
|
Tonnes
milled
|
T
|
868,284
|
1,317,668
|
(34.1%)
|
Recovered
grade
|
g/t milled,
PGM
|
3.7
|
3.8
|
(2.6%)
|
PGM oz
produced
|
Oz
|
104,084
|
159,241
|
(34.6%)
|
Primary
development
|
metres
|
4,709
|
5,686
|
(17.2%)
|
Re-development
|
metres
|
5,871
|
7,767
|
(24.4%)
|
Capital
expenditure
|
$m
|
40.3
|
25.2
|
(59.9%)
|
Operating cost/tonne
milled
|
ZAR/t
|
1,847
|
1,488
|
(24.1%)
|
Operating cost/PGM
oz
|
ZAR/PGM oz
|
15,370
|
12,311
|
(24.8%)
|
Lost-time injury
frequency
rate ("LTIFR")
|
Per 200,000
hours worked
|
0.93
|
1.05
|
11.4%
|
Bokoni Mine was placed on care and maintenance on
October 1, 2017, and no production
occurred in Q4 2017 and therefore it is not shown in the table
above.
Expressed in Canadian
Dollars (000's)
|
FY
2017
|
FY
2016
|
%
change
|
Q4
2017
|
Q4
2016
|
%
change
|
Revenue
|
116,529
|
162,699
|
(28.4%)
|
162
|
37,531
|
(99.6%)
|
Cash operating
costs
|
(156,695)
|
(178,289)
|
12.1%
|
(13,461)
|
(50,426)
|
(73.3%)
|
Cash operating
loss
|
(40,166)
|
(15,590)
|
(157.6%)
|
(13,299)
|
(12,895)
|
(3.1%)
|
Cash operating margin
(%)
|
(34.0%)
|
(9.6%)
|
(96.5%)
|
nm
|
(34.4%)
|
nm
|
Earnings/Loss before
interest, taxation, depreciation and amortisation ("EBITDA")
*
|
(248,530)
|
(15,114)
|
nm
|
(39,034)
|
(6,683)
|
nm
|
* EBITDA means earnings before net finance costs, income tax,
depreciation and amortisation. EBITDA is not a recognized 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 FY 2017 of 0.93 per 200,000 hours worked
was an 11.4% improvement over the FY 2016 LTIFR of 1.05. In Q1
2017, Bokoni Mine experienced an unfortunate fatality due to a fall
of ground incident that occurred on February
7, 2017. Seven Section 54 stoppages were imposed by the
Department of Mineral Resources during FY 2017, compared to nine
stoppages in FY 2016.
Operational results
As a result of the Bokoni Mine being placed on care and
maintenance on October 1, 2017 the
tonnes milled at Bokoni Mine decreased by 34.1% to 868,284 tonnes
and the PGM ounces produced decreased to 104,084 4E PGM ounces
compared to 159,241 4E PGM ounces produced during FY 2016.
Primary development decreased by 17.2% year-on-year to 4,709
metres and re-development by 24.4% to 5,871 metres.
In the nine months that Bokoni Mine was operational during FY
2017, recoveries at the concentrator increased by 0.4% to 89.9% for
the Merensky concentrate and decreased by 0.1% to 86.7% for the UG2
concentrate.
Financial results
Revenue decreased by 28.4% year-on-year to $116.5 million, as a result of a decrease of
34.6% in PGM ounces produced and a 3.3% decrease in the average US$
platinum price per ounce from US$987
in FY 2016 to US$954 in FY 2017,
together with a slightly lower ZAR PGM basket price (ZAR11,306 in FY 2016 compared to ZAR11,241 in FY 2017); partially offset by a
10.3% strengthening in the average realized ZAR/US$ exchange
rate.
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 $2.3
million (ZAR23.0 million) for
Bokoni Mine during Fiscal 2017.
Total cash operating costs were 12.1% lower than in FY 2016,
reflecting the decrease in tonnes milled.
Cost per tonne milled for FY 2017 increased by 34.3% to
$180 (ZAR1,847) compared to $134 (ZAR1,488) in
FY 2016, with costs per 4E ounce increasing to $1,501 (ZAR15,370)
compared to $1,113 (ZAR12,311) in FY 2016.
Total capital expenditure for FY 2017 was $40.3 million (compared to $25.2 million for FY 2016), comprising 37%
sustaining capital and 63% project expansion capital.
Expressed in Canadian
Dollars (000's)
|
FY
2017
|
FY
2016
|
%
change
|
Q4
2017
|
Q4
2016
|
%
change
|
Revenue
|
116,529
|
162,699
|
(28.4%)
|
162
|
37,531
|
(99.6%)
|
Cost of
sales
|
(180,332)
|
(200,490)
|
10.1%
|
(18,359)
|
(56,233)
|
67.4%
|
Gross loss
|
(63,803)
|
(37,791)
|
(68.8%)
|
(18,196)
|
(18,702)
|
2.7%
|
General,
administrative and other expenses
|
(1,231)
|
(10,810)
|
88.6%
|
12,267
|
(5,325)
|
330.4%
|
Impairment
|
(180,918)
|
-
|
Nm
|
-
|
-
|
-
|
Restructuring
costs
|
(33,859)
|
6,656
|
(608.7%)
|
(488)
|
472
|
(203.3%)
|
Other
income
|
219
|
3,208
|
93.2%
|
209
|
3,197
|
93.5%
|
Operating
(loss)
|
(279,593)
|
(38,736)
|
(621.8%)
|
(6,208)
|
(20,358)
|
69.5%
|
Net finance
costs
|
(42,653)
|
(28,404)
|
(50.2%)
|
(15,372)
|
(6,690)
|
(129.8%)
|
Income tax
|
7,726
|
859
|
(799.4%)
|
(322)
|
(4,351)
|
92.6%
|
(Loss) for the
period
|
(314,520)
|
(66,281)
|
(374.5%)
|
(21,902)
|
(31,399)
|
30.2%
|
(Loss) attributable
to Atlatsa shareholders
|
(198,630)
|
(46,469)
|
(327.4%)
|
(17,021)
|
(21,564)
|
21.1%
|
Basic (loss) per
share – cents
|
(36)
|
(8)
|
(350.0%)
|
(3)
|
(4)
|
25%
|
Headline loss per
share – cents*
|
(16)
|
(8)
|
(100%)
|
(3)
|
(4)
|
25%
|
* 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 per share
The basic and diluted loss per share was $0.36 for FY 2017 compared to $0.08 in FY 2016. The basic and diluted loss per
share is based on the loss attributable to the shareholders of the
Company of $198.6 million compared to
the loss attributable to the shareholders of the Company of
$46.5 million in FY 2016.
Reconciliation of headline (loss) / profit attributable to
Atlatsa shareholders
Expressed in Canadian
Dollars (000's)
|
FY
2017
|
FY
2016
|
(Loss) / profit
attributable to Atlatsa shareholders
|
(198,630)
|
(46,469)
|
Adjustments:
|
|
|
Impairment
loss
|
180,918
|
-
|
Loss on disposal of
property, plant and equipment
|
7
|
45
|
Total tax effects of
adjustments
|
(7,184)
|
(13)
|
Total non-controlling
interest effects of adjustments
|
(65,642)
|
-
|
Headline loss
attributable to Atlatsa shareholders
|
(90,531)
|
(46,436)
|
The basic and diluted headline loss per share was $0.16 for FY 2017 compared to $0.08 in FY 2016. The basic and diluted headline
loss per share is based on the headline loss attributable to the
shareholders of the Company of $90.5
million compared to a headline loss of $46.4 million for FY 2016.
Issued share capital
As at December 31, 2017 Atlatsa
had 554,421,806 issued and outstanding common shares.
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 audited consolidated financial statements
for year ended December 31, 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 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.
SOURCE Atlatsa Resources Corporation