Lower-risk operating plan, less capital intensive and
sustainable financing plan for Atlatsa
JOHANNESBURG,
March 27, 2013 /CNW/ - Atlatsa
Resources Corporation (Atlatsa or the Company) (TSXV: ATL; NYSE
MKT: ATL; JSE: ATL) is pleased to announce that, together with
Anglo American Platinum (Anglo Platinum), the parties have entered
into definitive agreements to implement a revised restructure,
recapitalization and refinancing plan for Atlatsa and the Bokoni
group of companies ("the revised restructure plan").
The revised restructure plan follows a detailed
strategic review that was undertaken in 2012 by the new management
team at Bokoni Mine, in conjunction with Anglo Platinum and
Atlatsa. The review included all technical, operational and
financing assumptions informing the existing mine extraction and
financing strategy, having regard to the general outlook for the
platinum group metals (PGMs) industry.
Harold Motaung, Chief Executive Officer of
Atlatsa, added "on implementation of the revised plan, Atlatsa will
be well positioned to implement our business strategy on a more
conservative, low-risk and sustainable basis. Importantly, the plan
will create a Company that is well-funded, with strong BEE
ownership."
Joel Kesler,
Chief Commercial Officer commented further: "The new operating plan
includes lower-cost, open cast project opportunities, which will
enable Bokoni Mine to fill its installed processing capacity in the
near term, while underground mining operations build up to
160,000tpm, again in a low-risk and less capital-intensive manner.
Capital expenditure of some ZAR2.3
billion associated with UG2 expansions at Bokoni Mine has
been deferred, thereby reducing the anticipated debt burden for
Atlatsa through to 2020. As a result, an estimated 70% of the total
production will come from the Merensky reef. Our focus now is on
ensuring Bokoni Mine operates safely and profitably for the benefit
of all our stakeholders."
Key highlights of the revised restructure plan
include:
- a new, more conservative operating and financing plan at Bokoni
Mine;
- a simplified capital structure, by unwinding all preference
share structures allowing for one class of Atlatsa common shares
going forward;
- a 75% reduction in Atlatsa's overall attributable debt from
ZAR3.28 billion (US$386.38 million) to ZAR833 million
(US$98.13 million) as at 31 December 2012;
- an equity capital injection of ZAR750
million (US$88.35 million) by
Anglo Platinum subscribing for 125 million new Atlatsa common
shares at ZAR6.00 per share
(US$0.71);
- an increase in Atlatsa's BEE shareholding from 51% to 62%
allowing for equity financing flexibility into the future;
- ZAR700 million (US$82.46 million) credit facility available to
finance the new operating plan at Bokoni Mine; and
- reduced cost of borrowing by 85% from 13% to 2% over the debt
term period between 2013 and 2020.
A full terms announcement, containing a detailed
description of the revised restructure plan, was released today,
27 March 2013, and is available on
the Company website at www.atlatsaresources.co.za and under the
Company's profile on SEDAR. The reader is also referred to the news
releases dated 2 February 2012,
27 September 2012 and 2 October 2012 concerning the completion of the
interim implementation arrangements relating to the consolidation
of the Bokoni Group debt and consequent reduction in its cost of
borrowing.
A new Bokoni Mine operating
plan
The Bokoni Mine operating plan to 2020 has been
aligned with installed processing capacity and will be scaled at
160,000 tonnes per month (tpm). Accordingly, material capital
expenditure associated with the proposed UG2 expansion plans at
Bokoni Mine (estimated at ZAR2.3
billion (US$270.94 million))
has been deferred beyond 2020. In an effort to reduce unit
operating costs, open cast project opportunities at Bokoni Mine
have been identified and, subject to final regulatory approvals,
will be exploited from 2013 onwards. This will allow Bokoni Mine to
meet its processing capacity in the near term, while underground
mining operations build up from the current 100,000tpm to
160,000tpm over the next five years. The plan is considered both
low risk and less capital intensive. On achieving the new plan,
Bokoni Mine will increase its annual production from its current
base of approximately 115,000 PGM ounces per annum to approximately
250,000 PGM ounces per annum over the next five years.
The operating plan will result in Bokoni Mine
becoming a predominantly Merensky reef producer, accounting for 70%
of its total estimated production.
Recapitalization and
refinancing
The revised restructure plan includes a series
of debt and equity restructuring and refinancing transactions,
which results in a significant reduction in the Company's debt, a
simplified capital structure and sufficient flexibility to raise
additional equity financing in the future without diluting its BEE
shareholding below a 51% threshold.
Asset sales
The revised restructure plan will result in the
sale by Atlatsa of certain mineral assets, representing an
estimated undeveloped 31.4 million PGM ounces to Anglo Platinum,
comprising the eastern section of the Ga-Phasha project and the
entire Boikgantsho project for a purchase consideration of
ZAR1.7 billion (US$200.26 million). These funds will be applied
by Atlatsa to reduce its group debt.
Debt restructure and refinancing
On implementation of the revised restructure
plan, Atlatsa's attributable debt will reduce by 75% from
ZAR3.28 billion (US$386.38 million) to ZAR833 million
(US$98.13 million) as at 31 December 2012 and Anglo Platinum will extend
to Atlatsa additional credit of ZAR700
million to finance its 51% pro rata share of capital
expenditure associated with the new operating plan at Bokoni Mine
to the extent required. The total debt facility (including
capitalized interest) to be made available by Anglo Platinum to
Atlatsa will be limited to ZAR1.55
billion (US$182.54 million).
Atlatsa's cost of borrowing will be reduced by 85% from an
estimated effective annual interest rate of 13% to 2% over the debt
term between 2013 and 2020.
The net effect of the asset sales and debt
restructure for Atlatsa is a 75% reduction in the Company's
attributable debt as at 31 December
2012 through a series of transactions, summarized as
follows:
Description |
ZAR |
US$ |
Atlatsa debt balance as at 31 December, 2012 |
3.28 billion |
367.2 million |
Atlatsa sale of mineral assets, comprising the
Eastern section of Ga-Phasha and Boikgantsho to Anglo American
Platinum |
(1.7 billion) |
(190.2 million) |
Anglo American Platinum subscribes for 125 million
new shares in the Company for an aggregate subscription price of
ZAR 750 million and subscription proceeds are used by Atlatsa to
further reduce its debt |
(0.75 billion) |
(83.9 million) |
Reduced Atlatsa debt balance as at 31 December
2012 |
0.83 billion |
93.2 million |
Equity restructure
The parties have agreed to unwind the "B"
preference share structure and simplify Atlatsa's capital structure
to one class of common shares. Anglo Platinum will subsequently
sell its 115.8 million common shares in Atlatsa, arising from the
unwinding of the "B" preference shares, to Atlatsa Holdings for
ZAR463 million (US$54.54 million) through a vendor finance loan.
Pursuant to such sale, Atlatsa Holdings will increase its
shareholding in Atlatsa from 51% to 62%, thereby creating
additional equity financing flexibility for Atlatsa, whilst still
maintaining a 51% BEE majority shareholding in the company if
required.
The new capital structure results in an equity
capital injection into Atlatsa of ZAR750
million (US$88.35 million) by
Anglo Platinum subscribing for 125 million new common shares in
Atlatsa at ZAR6.00 per share
(US$0.71), the proceeds of which will
be used to further reduce Atlatsa's outstanding debt.
Subsequent to the implementation of the equity
restructure Atlatsa's fully diluted shares in issue will increase
to 555 million shares outstanding, with its shareholding reflected
as follows:
Shareholder |
# of shares |
% of share capital |
Atlatsa Holdings (BEE) |
343 million |
61.9% |
Anglo American Platinum |
125 million |
22.6% |
Employee, Community Trusts and Public |
87 million |
15.5% |
Total |
555 million |
100% |
The revised restructure plan remains subject to
a number of conditions precedent, including disinterested
shareholder, regulatory and stock exchange approvals as
required.
The revised restructure plan includes related
party transactions for the Company pursuant to Multilateral
Instrument 61-101. Additional information with respect to such
transactions will be included in the Company's material change
report to be filed with respect to such transactions and the
Company's information circular to be delivered to the Company's
shareholders in connection with the shareholder meeting to approve
such transactions.
Johannesburg
27 March 2013
Cautionary and forward-looking
information
This document contains "forward-looking
statements" that were based on Atlatsa's expectations, estimates
and projections as of the dates as of which those statements were
made, including statements relating to the Bokoni Group
revised restructure plan 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.
Atlatsa believes that such forward-looking
statements are based on material factors and reasonable
assumptions, including the following assumptions: the revised
restructure plan completed in a timely manner; the Bokoni Mine will
achieve production levels as set out in the new operating plan;
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 receipt of the necessary
shareholder, stock exchange and regulatory approvals and
satisfaction of other conditions to the completion of the revised
restructure plan in a timely manner, if at all;
- uncertainties related to the completion of the revised
restructure plan transactions in a timely manner;
- uncertainties related to expected production rates, timing of
production and the cash and total costs of production and
milling;
- operating and technical difficulties in connection with mining
development activities;
- 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;
- 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 Atlatsa, investors
should review the Company's annual Form 20-F filing with the United
States Securities and Exchange Commission www.sec.gov and annual
information form for the year ended December
31, 2012 and other disclosure documents that are available
on SEDAR at www.sedar.com.
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 MKT LLC has neither approved nor disapproved
the contents of this press release.
SOURCE Atlatsa Resources Corporation