VANCOUVER,
Aug. 15, 2011 /PRNewswire/ - Anooraq
Resources Corporation ("Anooraq" or the "Company" or, together with
its subsidiaries, the "Group") (TSXV: ARQ; NYSE Amex: ANO; JSE:
ARQ) announces its operational and financial results for the three
months ended June 30, 2011 ("Q2
2011"). This release should be read with the Company's unaudited
interim financial statements for the three and six months ended
June 30, 2011 and related Management
Discussion & Analysis, available at www.anooraqresources.com
and filed on SEDAR at www.sedar.com. Currency values are presented
in South African rand ("ZAR"), Canadian dollars ("C$") and
United States dollars ("US$").
Key highlights for the quarter
- Safety improvements and significant reduction in safety
stoppages
- Brakfontein Merensky and Middelpunt Hill UG2 ramp up projects
show improved performance
- Production volume increases quarter-on-quarter
- Significant increase in re-development and sub-development
("re- and sub-development") in order to create greater mining
flexibility
- Chairlift installation at Brakfontein Merensky ramp up project
successfully commissioned
- Cost challenges, primarily as a result of increased development
initiatives and once off charges
- Grade impacted negatively by increased re- and sub-development,
as well as challenges at processing plant
- Strategic review of Bokoni Group assets completed
- Wage negotiations commence with unions
Harold Motaung, CEO of Anooraq,
commented, "The second quarter of 2011 saw the Company continue to
drive initiatives at mine level, so that the correct fundamentals
are put in place to ensure that a foundation for continued
improvements in operational and financial performance are achieved
going forward.
"We are extremely pleased with improvements in
our safety record during the quarter as we continue to drive
towards achieving our "zero harm" target at the operations.
"Bokoni Mines is a four shaft operation, with
our two older shafts (Vertical and UM2 Merensky shafts), which
currently represent 40% of Bokoni's production, nearing the end of
their operational lives, with three to four years of operating life
remaining at each shaft.
"The remaining two shafts (Brakfontein Merensky
and Middelpunt UG2 shafts) remain in their ramp up phase, with
Brakfontein shaft sinking on the main decline now progressed down
to 6 level (450m below surface), with stoping operations continuing
down to 4 level, currently achieving 30 thousand tonnes per month
("ktpm"). Ultimately, the Brakfontein 120ktpm project requires that
the main decline shaft continues down to 9 level (650m below
surface).
"The Middelpunt Hill UG2 ramp up project has now
successfully transformed from a four adit mining operation to an
underground ramp up project, with the main decline shaft sinking
having reached 2 level (150m below surface), with stoping taking
place on 0 and 1 levels. The immediate goal at the Middelpunt Hill
ramp up project is to achieve consistent stoping targets of 45ktpm
(currently 30ktpm), while the ultimate scope of this project has
the potential to mirror that of the Brakfontein Merensky project,
with the main decline continuing down to 9 level (650m below
surface) with a targeted steady state stoping rate of 125ktpm.
Studies in respect of the ultimate scoping for the Middelpunt Hill
UG2 operations are currently under review as part of the Company's
broader restructuring, refinancing and recapitalisation initiatives
with Anglo Platinum Limited ("Anglo Platinum").
"Given that the Bokoni Mine is, essentially, a
ramp up operation with two decline shaft systems under
construction, our major focus at Bokoni remains ensuring that our
two key ramp up projects are established on a proper foundation,
with primary development within the capital footprint, being
adequately supplemented by secondary development in order to ensure
that sufficient mining flexibility is created for stoping crews on
operating levels.
"In order to achieve our development goals, an
active decision was taken in the first quarter to engage the
services of various contractors on a six month programme in order
to accelerate certain development initiatives, particularly re- and
sub-development, identified as essential to meet short- to
medium-term project ramp up and mining flexibility targets. This
has resulted in a significant increase in contractor costs during
the period under review, coupled with a significant increase in own
employee overtime charges at the operations. These additional
expenses will be phased out of the operations by Q4 2011, as we
achieve our improved development targets and replace contractors
with own employees, as part of our right sizing initiatives at
Bokoni.
"While we are beginning to see volume trend
improvements at the operations in stoping and development, there is
a need to decrease operating costs, especially in light of current
wage trends in the mining industry and continued inflationary
pressures associated with key input costs at the operations.
"Our immediate target remains for the Bokoni
operations to achieve positive free cash flow after all capital
expenditure at the operations. At the current Rand platinum group
metals ("PGM") revenue basket price, this requires an improved
effort on operating efficiencies and an active effort on cost
management from current levels.
"Turning to corporate matters, we, together with
our partner, Anglo Platinum, have now completed our strategic
review of the Bokoni Group asset base and are in negotiations in
respect of the restructuring, recapitalisation and refinancing of
the Bokoni Group and Anooraq, having regard to the results of the
strategic review."
Review of operational and financial
performance in Q2 2011
Safety
Anooraq's safety performance saw significant
improvements during the quarter. Once again, Bokoni's lost time
injury frequency rate ("LTIFR") improved by 25% quarter-on-quarter
to 1.47 per 200,000 hours worked with no fatalities. The serious
injury frequency rate ("SIFR") also improved by 26%
quarter-on-quarter to 0.80 per 200,000 hours worked. By mid-July,
Bokoni had achieved one million fatality-free shifts.
During the quarter, the operations lost two
shifts at the Brakfontein operations due to a Section 54 safety
stoppage, which represents a significant improvement on the first
quarter, when the operations suffered the loss of nine operating
shifts lost as a result of safety stoppages.
Production
Production during the quarter increased by 27%
quarter-on-quarter to a total of 28,119 ounces, a 9% decrease on
the equivalent period in 2010. The mine concentrator milled 266,866
tonnes, 21% higher than Q1 2011, and 6% lower than Q2 2010.
Development
Total primary development metres improved 11%
quarter-on-quarter, with re- and sub-development metres improving
54% quarter-on-quarter and 434% when compared to the comparative
period in 2010. The major push on re- and sub-development is being
implemented in an effort to expedite much needed mining flexibility
required to improve operating efficiencies at Bokoni.
Grade
The operations achieved a recovered grade of
3.27g/t (4E) for the quarter, a 4.5% increase quarter-on-quarter
but a 19% decrease when compared to Q2 2010. Key challenges
surrounding grade remain, with delivered grade being negatively
impacted by increased re- and sub-development being conducted at
the operations and recovered grades being negatively impacted by
challenges at the concentrator plant, including a number of
unplanned mill stoppages during the quarter.
The key production and development parameters
for Bokoni in Q2 2011 are:
|
|
Q1
2011 |
Q2
2011 |
Variance
Q-on-Q |
Q2 2010 |
Variance
Q2 11 vs
Q2 10 |
Tonnes delivered |
Tonnes |
201,851 |
258,882 |
28% |
270,796 |
(4%) |
Total primary development |
Metres |
2,302 |
2,549 |
11% |
2,502 |
2% |
Total re- and sub-development |
Metres |
1,846 |
2,850 |
54% |
656 |
434% |
Head grade (delivered) |
g/t, 4E* |
4.25 |
4.05 |
(5%) |
4.09 |
(1%) |
Tonnes milled |
Tonnes |
219,991 |
266,866 |
21% |
283,637 |
(6%) |
Recovered grade |
g/t milled,
4E* |
3.13 |
3.27 |
4.5% |
4.04 |
(19%) |
4E ounces produced* |
Ounces |
22,173 |
28,119 |
27% |
31,004 |
(9%) |
* 4E consists of platinum, palladium, rhodium and gold
Metal production was as follows:
Metal |
|
Q1 2011 |
Q2 2011 |
Variance
Q-on-Q |
Q2 2010 |
Variance
Q2 11 vs
Q2 10 |
Platinum |
Ounces |
12,136 |
15,499 |
28% |
16,670 |
(7%) |
Palladium |
Ounces |
7,987 |
10,027 |
26% |
11,442 |
(12%) |
Rhodium |
Ounces |
1,295 |
1,593 |
23% |
1,833 |
(13%) |
Gold |
Ounces |
755 |
1,000 |
32% |
1,059 |
(6%) |
Nickel |
Tonnes |
94 |
236 |
51% |
232 |
2% |
Copper |
Tonnes |
153 |
143 |
(7%) |
137 |
4% |
Revenue
Revenue for Q2 2011 was C$35.9 million (ZAR252.4
million), representing a 17% increase quarter-on-quarter and
a 6% decrease when compared to the corresponding period in 2010.
The gross average US$ PGM basket price achieved for the quarter
decreased by 2% quarter-on-quarter to US$1,430 and the ZAR PGM basket price decreased
by 5% to R9,726, compared to Q1 2011. Gross PGM revenue basket
prices achieved for Q2 2011 increased by 13% (US$) and 1% (ZAR)
when compared to Q2 2010.
Operating costs
Unit operating costs increased by 2%
quarter-on-quarter, to US$1,699/4E
ounce, largely as a result of an increased spending on contractors
and own employee overtime, stemming from accelerated development
initiatives and one-off charges, such as the annual "platinum
bonus" paid to employees. A number of these costs will be phased
out by Q4 2011 as improved development targets are achieved and
contractors are replaced with internal employees, as part of
Bokoni's right sizing initiatives at the operations.
Profitability
The operations incurred an operating loss of
C$9.8 million (ZAR69 million) for the quarter, largely
attributable to increased operating cost spend, primarily
surrounding the accelerated development programme at the
operations.
The Company incurred a net loss after tax of
C$44.3 million (ZAR311.6 million) or C$0.06 (ZAR0.42)
per share (basic and diluted) for Q2 2011, a large portion of which
is associated with financing charges resulting from debt
obligations owing to Anglo Platinum, forming the subject matter of
refinancing initiatives currently under negotiation.
Capital expenditure
Capital expenditure in Q2 2011 was ZAR57.3 million, in line with Q1 2011
expenditure.
Wage negotiations
The Company is currently engaged in wage
negotiations with three representative unions at Bokoni. These wage
negotiations are taking place on an independent basis and not part
of Anglo Platinum's wage negotiation process. To date, interactions
with unions have been constructive and the Company hopes to
finalise these negotiations during Q3 2011.
Ramp up projects
Brakfontein Merensky Project
Shaft sinking of the main decline has now
progressed to 6 level (43m below surface) with strike development
currently taking place at 5 level (360m below surface), while
ledging and stoping continues on 3 and 4 levels (between 200m and
300m below surface).
During the quarter, a chairlift was installed
and successfully commissioned at the project which should result in
improved operating efficiencies as a result of increased face time
by stoping teams and less travelling time to and from working
faces.
Current stoping rates of 30ktpm are being
achieved at Brakfontein, while the project ramps up towards a
steady state production rate of 120ktpm.
Middelpunt Hill UG2 Project
Middelpunt Hill UG2 adit mining is nearing
completion, while the underground development operation continues
to ramp up. This ramp up operation is designed on the same basis as
the Brakfontein Merensky project, utilising a hybrid mining method
with conventional in stope operations and mechanised tramming
systems utilising strike and main decline conveyer belts.
The main decline shaft sinking at this project
has now reached 2 level (150m below surface) with stoping taking
place on 0 and 1 levels at a current rate of 30ktpm.
The immediate goal at the Middelpunt Hill ramp
up project is to achieve consistent stoping rates of 45ktpm, while
the ultimate scope of this project has the potential to mirror that
of the Brakfontein Merensky project, with the main decline
continuing down to 9 level (650m below surface) with a targeted
steady state stoping rate of 125ktpm. Studies in respect of the
ultimate scoping for the Middelpunt Hill UG2 operations are
currently under review, as part of the company's broader
restructuring, refinancing and recapitalisation initiatives with
Anglo Platinum.
Outlook
Future guidance on the Company's production
forecasts, as well as operating and capital expenditure, will be
provided once the current discussions with Anglo Platinum have been
completed and the results of the strategic asset review of the
Bokoni Group have been published.
Future communication
Given that Anooraq remains under cautionary,
pursuant to the rules of the JSE relating to the ongoing
restructuring and refinancing discussions with Anglo Platinum, it
is unable to undertake a conference call with investors at this
time. The Company undertakes to update investors regarding these
discussions as soon as it is in a position to do so.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in policies
of the TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this release. The NYSE Amex has neither
approved nor disapproved the contents of this press release.
Cautionary and forward-looking
information
This document contains "forward-looking
statements" that were based on Anooraq's expectations, estimates
and projections as of the dates as of which those statements were
made, including statements relating to the Bokoni Group restructure
and refinancing and anticipated financial or operational
performance. Generally, these forward-looking statements can be
identified by the use of forward-looking terminology such as "may",
"will", "outlook", "anticipate", "project", "target", "believe",
"estimate", "expect", "intend", "should" and similar
expressions.
Anooraq believes that such forward-looking
statements are based on material factors and reasonable
assumptions, including the following assumptions: the Bokoni Mine
will increase or continue to achieve production levels similar to
previous years; the Ga-Phasha, Boikgantsho, Kwanda and Platreef
Projects exploration results will continue to be positive;
contracted parties provide goods and/or services on the agreed
timeframes; equipment necessary for construction and development is
available as scheduled and does not incur unforeseen breakdowns; no
material labour slowdowns or strikes are incurred; plant and
equipment functions as specified; geological or financial
parameters do not necessitate future mine plan changes; and no
geological or technical problems occur.
Forward-looking statements are subject to known
and unknown risks, uncertainties and other factors that may cause
the Company's actual results, level of activity, performance or
achievements to be materially different from those expressed or
implied by such forward-looking statements. These include but are
not limited to:
- uncertainties related to the completion of the Bokoni Group
restructure and refinancing;
- uncertainties and costs related to the Company's exploration
and development activities, such as those associated with
determining whether mineral resources or reserves exist on a
property;
- uncertainties related to feasibility studies that provide
estimates of expected or anticipated costs, expenditures and
economic returns from a mining project;
- uncertainties related to expected production rates, timing of
production and the cash and total costs of production and
milling;
- uncertainties related to the ability to obtain necessary
licenses, permits, electricity, surface rights and title for
development projects;
- operating and technical difficulties in connection with mining
development activities;
- uncertainties related to the accuracy of our mineral reserve
and mineral resource estimates and our estimates of future
production and future cash and total costs of production, and the
geotechnical or hydrogeological nature of ore deposits, and
diminishing quantities or grades of mineral reserves;
- uncertainties related to unexpected judicial or regulatory
proceedings;
- changes in, and the effects of, the laws, regulations and
government policies affecting our mining operations, particularly
laws, regulations and policies relating to:
-
- mine expansions, environmental protection and associated
compliance costs arising from exploration, mine development, mine
operations and mine closures;
- expected effective future tax rates in jurisdictions in which
our operations are located;
- the protection of the health and safety of mine workers;
and
- mineral rights ownership in countries where our mineral
deposits are located, including the effect of the Mineral and
Petroleum Resources Development Act (South Africa);
- changes in general economic conditions, the financial markets
and in the demand and market price for gold, copper and other
minerals and commodities, such as diesel fuel, coal, petroleum
coke, steel, concrete, electricity and other forms of energy,
mining equipment, and fluctuations in exchange rates, particularly
with respect to the value of the U.S. dollar, Canadian dollar and
South African rand;
- unusual or unexpected formation, cave-ins, flooding, pressures,
and precious metals losses (and the risk of inadequate insurance or
inability to obtain insurance to cover these risks);
- changes in accounting policies and methods we use to report our
financial condition, including uncertainties associated with
critical accounting assumptions and estimates; environmental issues
and liabilities associated with mining including processing and
stock piling ore;
- geopolitical uncertainty and political and economic instability
in countries which we operate; and
- labour strikes, work stoppages, or other interruptions to, or
difficulties in, the employment of labour in markets in which we
operate mines, or environmental hazards, industrial accidents or
other events or occurrences, including third party interference
that interrupt the production of minerals in our mines.
For further information on Anooraq, investors
should review the Company's annual Form 40-F filing with the United
States Securities and Exchange Commission www.sec.gov and annual
information form for the year ended December
31, 2010 and other disclosure documents that are available
on SEDAR at www.sedar.com.
SOURCE Anooraq Resources Corporation