Trading Symbol: ELR (TSX); EPS (JSE)
Unless otherwise noted, all amounts are expressed in US
dollars.
Third Quarter Financial Results
VANCOUVER, Nov. 14, 2016 /CNW/ - Eastern Platinum Limited
("Eastplats" or the "Company") is pleased to provide the following
summary of its third quarter ended September
30, 2016 ("Q3 2016") financial results:
Summary and Financial Highlights
- The Company reported a net loss of $3.99
million ($0.04 per share) for
Q3 2016 compared to a net loss of $0.5
million ($0.00 per share) in
the same quarter of 2015.
- The increased losses were primarily due to $1.2 million in one-time termination payments
made to the former management of the Company.
- In addition to the above mentioned termination payments,
general and administrative expenses in Q3 2016 were significantly
higher than in the same quarter of 2015 due to approximately
$1.0 million in legal and other
investigation costs.
- The losses in Q3 2016 were partially offset by a reduction in
the care and maintenance costs at the Company's South African
operations when compared to those incurred in the same quarter of
2015. The Company is looking at ways to continue to control its
care and maintenance costs at its South African operations.
- At the end of Q3 2016, the Company had cash and short term
investments totalling $29.2 million
and net working capital of $48.2
million.
- During Q3 2016, the Company appointed Diana Hu as the President and Chief Executive
Officer, David Li as the Interim
Chief Financial Officer, Andrea
Zhang as the Interim Chief Operating Officer and
Anton Lubbe as the Vice President of
South African Operations.
The summary above is qualified in its entirety by the more
detailed disclosures provided in the Company's condensed interim
consolidated financial statements for the three and nine months
ended September 30, 2016 (unaudited)
and the management's discussion and analysis of financial
conditions and results of operations for the three and nine months
ended September 30, 2016 ("Q3
MD&A") which are available under the Company's profile on SEDAR
at www.sedar.com.
Operating Highlights and Outlook
The Company is in the process of actively reviewing its
strategic plan, however, the Company believes that, given the
continued stagnation of the global economy and the European car
market (which consumes approximately 50% of South Africa's platinum production) the
industry will be contending with a continuation of stagnant
platinum group metals ("PGM") prices which are hovering near
10-year lows. At the same time, the South African PGM
industry continues to experience a number of adverse economic
factors, particularly ongoing labour unrest, operating cost
inflation, and concerns with respect to reliable power
delivery. Ongoing cost pressures and decreasing productivity
in South Africa may continue to
significantly reduce free cash flow for the industry.
Subject to adequate funding being available, development of the
Company's Mareesburg open pit mine which was suspended in mid-2012,
may be restarted once market and operating conditions support such
activities.
Diana Hu, President and Chief
Executive Officer, stated, "Overall, Eastplats is continuing its
commitment in developing and advancing its PGM projects in South
Africa. Subject to resolving certain of the issues inherited
from former management, under the leadership of new management and
the new board of directors, the Company believes it is in a strong
position to enter a new development stage."
Other Developments
CRM Purchase Agreement
On June 28, 2016, prior to the
election of the new board of directors ("Board") at the Company's
Annual General Meeting held on July 5,
2016 (the "AGM"), former management of the Company entered
into a share purchase agreement (the "CRM Purchase Agreement") with
Hebei Zhongheng Tianda Platinum Co. Limited ("HZT"), a company
incorporated in the People's Republic of
China, whereby HZT would acquire a 100% equity interest in
Barplats Mines Limited and associated intercorporate investments
and loans for total consideration of $50
million (the "CRM Transaction"). Further details on
the terms and conditions of the CRM Purchase Agreement are
contained in the Company's Q3 MD&A and the CRM Purchase
Agreement has also been filed under the Company's profile on SEDAR
at www.sedar.com.
Completion of the CRM Transaction is subject to a number of
conditions. The CRM Transaction was put forward to the
Company's shareholders for approval at special meeting of
shareholders held on October 12,
2016. The information circular disseminated in connection
with that meeting included further disclosure of the terms and
conditions of the CRM Purchase Agreement. At that meeting,
85.8% of the shareholders represented at the meeting voted against
the CRM Transaction.
The new management of the Company is continuing its review and
investigation of the Company's rights and obligations and attending
to satisfaction of its covenants under the CRM Purchase
Agreement. At the present time, the CRM Transaction has not
been completed or formally terminated. It is uncertain
whether the conditions for completion under the CRM Purchase
Agreement will be satisfied, or the CRM Purchase Agreement
terminated or otherwise resolved.
BEE Buy-Out Agreements
On June 30, 2016, prior to the
election of the Board at the AGM, former management of the Company
entered into share purchase agreements (the "BEE Buyout
Agreements") to acquire certain minority interests from the
Company's black economic empowerment partners' in the Company's
South African projects, for a total of $13,366,609. Details on the terms and
conditions of the BEE Buy-Out Agreements are contained in the
Company's Q3 MD&A.
Pursuant to the terms of the BEE Buyout Agreements, former
management of the Company placed 100% of the purchase consideration
with an escrow agent and thereafter provided certain documents
sufficient to permit the escrow agent to release the funds to the
vendors upon the change of the board of directors of the Company at
its AGM.
New management has been actively investigating the Company's
rights and obligations under the BEE Buyout Agreements and the
related transactions between the parties (the "BEE Buy-Out
Transaction"). The Company's ability to complete its review
has been impeded by the difficulty in accessing underlying
documents and agreements, the co-operation of various parties and
the review of the implications of the BEE Buyout Agreements under
the Company's mining rights and provisions of applicable South
African mining laws. As at September
30, 2016, consideration in the amount of $13,366,609 paid to the vendors had been recorded
as a prepayment in the Company's consolidated statement of
financial position.
At the present time, the BEE Buy-Out Transaction has not been
completed or formally terminated.
Private Placement
On October 27, 2016, the Company
announced that, subject to regulatory approval, it intends to
complete a private placement of 18,435,360 Eastplats' common shares
(representing 19.9% of the currently outstanding shares and 16.6%
post-completion) at a price of Cdn$0.56 per share for aggregate proceeds of
approximately Cdn$10,323,802.
The Company intends to use the net proceeds from the private
placement for general working capital purposes, including capital
costs to advance the Company's mining assets, which may include
prospect work and mine construction. The Company is
continuing to negotiate and settle further terms and conditions of
the private placement and seeking regulatory approval thereof.
Cautionary Statement on Forward-Looking Information
This press release contains certain "forward-looking
statements" or "forward-looking information" (collectively referred
to herein as "forward-looking statements") within the meaning of
applicable securities legislation. Such forward-looking
statements include, without limitation, forecasts, estimates,
expectations and objectives for future operations that are subject
to a number of assumptions, risks and uncertainties, many of which
are beyond the control of the Company. Forward-looking
statements are statements that are not historical facts and are
generally, but not always, identified by the words "expects",
"plans", "anticipates", "believes", "intends", "estimates",
"projects", "potential" and similar expressions, or are events or
conditions that "will", "would", "may", "could" or "should" occur
or be achieved. This press release contains forward-looking
statements, pertaining to, among other things, the following: the
future funding of the Company's projects, including the negotiation
of the further terms and conditions and regulatory approval of the
proposed private placement and the use of proceeds therefrom; the
future development and funding of the Company's projects; the
Company's plans for its properties; the review of the CRM Purchase
Agreement, the BEE Buy-Out Agreements and all related transactions
and determinations arising therefrom; the adoption of a new
strategy based on the outcome of this review; the Company's belief
that the platinum production industry will have to face a
continuation of stagnant PGM prices; the continuing impact of
adverse economic factors on the South African PGM industry; the
assertion that ongoing cost pressure and decreasing productivity in
South Africa will continue to
reduce free cash flow for the PGM industry; the potential restarts
of the CRM if there is a sustained strengthening of PGM prices and
a marked improvement in the South African operating environment;
commitment to developing PGM in South
Africa; and the resolution of certain issues inherited from
former management.
With respect to forward-looking statements contained in this
press release, assumptions have been made regarding, among other
things: the Company's ability to complete or otherwise to resolve
the CRM Transaction and the BEE Buy-Out Agreements; the resolution
of the black economic empowerment requirements; the price of
PGMs; fluctuations in currency markets; inflation; the regulatory
framework in the jurisdictions that the Company conducts its
business; operating costs; and the Company's ability to obtain
financing on acceptable terms and litigation outcome.
Forward-looking statements are subject to all of the risks
and uncertainties normally incident in the mining and development
of PGMs that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements. These risks include, but are not limited to: the
risk of fluctuations in the assumed exchange rates of currencies
that directly impact the Company, such as the Canadian dollar, Rand
and U.S. dollar; the risk of fluctuations in the assumed prices of
PGM and other commodities; the risk of changes in government
legislation, taxation, controls, regulations and political or
economic developments in Canada,
the United States, South Africa, Barbados or other countries in which the
Company carries, or may carry on business in the future; risks
associated with mining or development activities; the speculative
nature of exploration and development, including the risk of
obtaining necessary licences and permits; assumed quantities or
grades of reserves and certain other known and unknown risks
detailed from time to time in the Company's public disclosure
documents, copies of which are available on the Company's SEDAR
profile at www.sedar.com.
Although the Company believes that the material factors,
expectations and assumptions expressed in such forward-looking
statements are reasonable based on information available to it on
the date such statements were made, no assurances can be given as
to future results, levels of activity and achievements and such
statements are not guarantees of future performance. The
Company's actual results may differ materially from those expressed
or implied in forward-looking statements and readers should not
place undue importance or reliance on the forward-looking
statements. Statements including forward-looking statements
are made as of the date they are given and, except as required by
applicable securities laws, the Company disclaims any intention or
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. The forward-looking statements contained in
this press release are expressly qualified by this cautionary
statement.
No stock exchange, securities commission or other
regulatory authority has approved or disapproved the information
contained herein.
SOURCE Eastern Platinum Limited