Re-dissemination of the March 27,
2013 news release
JOHANNESBURG,
April 9, 2013 /CNW/ - Atlatsa
Resources Corporation ("Atlatsa") (TSXV: ATL; NYSE MKT: ATL; JSE:
ATL) reports the following announcement referenced in its
March 27, 2013 news release.
1. Introduction
The boards of directors of Anglo American
Platinum, a 79.9% held subsidiary of Anglo
American plc, Atlatsa and Atlatsa Holdings (Proprietary) Ltd
(formerly known as Pelawan Investments, the controlling Black
Economic Empowerment ("BEE") shareholder of Atlatsa) ("Atlatsa
Holdings") (collectively "the Parties") are pleased to announce
that they have concluded binding definitive agreements for the
revised restructure, recapitalisation and refinancing of Atlatsa
and the Bokoni group of companies ("Bokoni Group") (the "Revised
Restructure Plan").
2. Background
On 2 February
2012, the Parties announced that they had entered into a
binding term sheet for the initial phase of the Restructure Plan
(the "Initial Restructure Plan").
In February 2012,
the Parties also appointed a new management team at the Bokoni
Platinum Mine ("Bokoni Mine").
During 2012 the new management team at Bokoni
Mine, together with the Parties, undertook a detailed strategic
review of all technical, operational and financing assumptions
informing the existing mine extraction and financing strategy at
Bokoni Mine, having regard to both macro and micro economic factors
affecting both the Bokoni Mine, as well as the PGM industry and its
outlook in general (the "2012 Strategic Review").
Based on the results of the 2012 Strategic
Review the Parties undertook to implement the Revised Restructure
Plan, comprising a lower-risk operating and financing plan for
Atlatsa and the Bokoni Mine going forward.
On implementation of the Revised Restructure
Plan (as outlined below), Atlatsa and the Bokoni Group will be well
positioned to implement their business strategy on a more
conservative, lower risk and sustainable basis.
The Revised Restructure Plan retains most of the
elements agreed between the Parties in the Initial Restructure Plan
and improves upon the Initial Restructure Plan as follows:
- A new and more conservative operating and financing plan for
Bokoni Mine through to 2020.
- A simplification to the equity capital structure (as set out in
paragraph 4.2 below) of Atlatsa which results in:
-
- an equity capital injection into Atlatsa of ZAR 750 million (US$ 88.35
million) by Anglo American Platinum subscribing for 125
million new common shares in Atlatsa at ZAR
6.00 per share (US$0,71 cpc),
the proceeds of which will be used to further reduce Atlatsa's
outstanding debt;
- the unwinding of the historical "B" preference share
arrangement, such that Atlatsa will have one class of common shares
going forward; and
- an increase in the BEE shareholding in Atlatsa from 51% to 62%
(fully diluted), facilitated by Anglo American Platinum selling
115.8 million Atlatsa common shares, arising from the unwind of the
"B" preference shares, to Atlatsa Holdings for ZAR 463 million (US$ 54.54
million) on a vendor financed basis.
- An amendment to the debt capital structure and financing terms
of Atlatsa, which results in the following revisions to the
existing debt facility between Atlatsa and Anglo American
Platinum:
-
- a 75% reduction in Atlatsa's debt from ZAR 3.28 billion (US$
386.38 million) to approximately ZAR 833 million (US$
98.13 million), as at 31 December
2012 (see paragraph 4.2 below);
- an increase in the existing debt facility by ZAR 700 million (US$ 82.46
million) made available to Atlatsa to finance its 51% pro
rata share of the planned expansion at Bokoni Mine through to 2020,
with a maximum facility limit of ZAR1.55
billion (US$182.54 million);
and
- a reduction in Atlatsa's estimated effective cost of borrowing
from 13% to 2% over the debt term period between 2013 to 2020 (see
paragraph 4.2 below).
3. Transaction Rationale
The Parties' original intention for the creation of
the Bokoni Group, first announced in 2007 and later modified in
2009, sought to transform the South African PGM mining landscape by
Anglo American Platinum facilitating the transformation of Atlatsa
and the Bokoni Group into a sustainable, historically disadvantaged
South African ("HDSA") controlled PGM producer.
Based on the outcome of the 2012 Strategic
Review, the Parties agreed that in order to meet the original
objectives for the empowerment transaction, it was necessary to
implement the Revised Restructure Plan in order to place both
Atlatsa and the Bokoni Group on a firmer footing.
4. Revised Restructure Plan
The key features of the Revised Restructure Plan
include, inter alia:
4.1 New
Operating Plan
The 2012 Strategic Review determined to scale
the Bokoni Mine as a 160,000 tpm operation through to 2020,
relative to its existing installed concentrator plant processing
capacity. Accordingly, material capital expenditure associated with
the proposed UG2 expansion plan at Bokoni Mine, estimated at
ZAR 2.3 billion (US$ 270.94 million) has been deferred beyond
2020.
In an effort to further reduce unit operating
costs, the 2012 Strategic Review identified certain potential
Merensky open cast project opportunities which, subject to final
regulatory approvals, will be exploited from 2013 onwards. This
will allow the Bokoni Mine to meet its installed processing
capacity in the near term with ore from both open cast and
underground mining operations, whilst its underground mining
operations build up from 100,000 tpm (current) to 160,000 tpm over
the next five years.
On successful implementation of the new
operating plan the Bokoni Mine will double its production profile
from its existing base of approximately 115,000 PGM ounces per
annum to 250,000 PGM ounces per annum between 2013 and 2016.
The new operating plan will result in Bokoni
Mine becoming a predominantly Merensky Reef producer, accounting
for approximately 70% of its total estimated production in the
medium-term.
The capital cost estimate for the new expansion
plan at Bokoni Mine is ZAR 1.1
billion (US$ 129.58 million)
in 2012 money terms. This estimate includes capital required for
the completion of the Brakfontein Merensky project and the revised
Middelpunt Hill UG2 project.
Atlatsa will finance its 51% pro rata share of
expansion plans at Bokoni Mine (estimated at ZAR 561 million (US$ 66.09
million) from internal cash flows generated at Bokoni Mine,
together with its available credit facilities of ZAR 700 million (US$ 82.46
million) to the extent required - refer to 4.2
below.
The new operating plan at Bokoni Mine is
considered a lower-risk, less capital intensive and more
conservative plan from both an operational and financing
perspective.
4.2 Debt and Equity Capital
Restructure
Atlatsa will sell its attributable interest in
the Eastern section of the Ga-Phasha project and
the
entire Boikgantsho project (comprising an estimated total of 31.4
million PGM undeveloped Resource ounces) to Anglo American Platinum
for a purchase consideration of ZAR 1.7
billion (US$ 200.26 million)
("the Asset Sale"). All the proceeds received from the Asset Sale
will be utilised by Atlatsa to reduce existing debt owing to Anglo
American Platinum.
Anglo American Platinum will subscribe for 125
million new common shares in Atlatsa at ZAR
6.00 per share ($0.71), all
the proceeds of which will be used to further reduce existing debt
owing to Anglo American
Platinum.
The net effect of the Revised Restructure Plan
for Atlatsa is a 75% reduction in the Company's debt as at
31 December, 2012 through a series of
transactions, summarised as follows:
Description |
ZAR |
US$ |
Atlatsa debt balance as at 31 December 2012 |
3.28 billion |
386.70 million |
Atlatsa sale of mineral assets,
comprising the Eastern section of
Ga-Phasha and the Boikgantsho assets to Anglo American
Platinum |
(1.7 billion) |
(200.26 million) |
Anglo American Platinum subscribes
for 125 million new common
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) |
(88.35 million) |
Reduced Atlatsa debt balance as at 31 December
2012 |
0.83 billion |
98.13 million |
As per the table above, the reduced Atlatsa debt
balance owing to Anglo American Platinum in terms of the existing
debt facility will be approximately ZAR 833
million (US$ 98.13 million) at
31 December 2012. Anglo American
Platinum will make available additional credit of approximately
ZAR 700 million (US$ 82.46 million) up to a facility limit of
ZAR 1.55 billion under the existing
facility for Atlatsa to finance its 51% pro rata share of expansion
plans at Bokoni Mine (the "Debt Facility").
The Debt Facility will be available to Atlatsa
for seven years terminating on 31 December
2020 and will attract a variable interest rate, with a
reduced interest charge during the initial debt profile term
between 2013 - 2015 (comprising the capital intensive phase of the
growth operations at Bokoni Mine) and escalating at an increased
rate depending on the amount owing by Atlatsa under the Debt
Facility over the funding period as set out in the interest rate
table below:
Debt balance |
2013
(%) |
2014
(%) |
2015
(%) |
2016
(%) |
2017
(%) |
2018
(%) |
2019
(%) |
2020
(%) |
(up to ZAR1 billion) |
zero
interest |
zero
interest |
JIBAR
minus
5.14 |
JIBAR
minus
3.11 |
JIBAR
minus
0.96 |
JIBAR
plus
1.30 |
JIBAR
plus
6.19 |
JIBAR
plus
6.23 |
(ZAR1 billion to ZAR1.55
billion) |
JIBAR
minus
1.25 |
JIBAR
plus
3.02 |
JIBAR
plus
2.36 |
JIBAR
plus
4.39 |
JIBAR
plus
6.54 |
JIBAR
plus
6.30 |
JIBAR
plus
11.19 |
JIBAR
plus
11.23 |
The weighted average effective interest rate of
the Debt Facility is estimated to be 2% per annum, thereby reducing
Atlatsa's expected cost of debt by 85% from approximately 13% to
approximately 2% through to 2020.
There will be no fixed repayment terms for the
Debt Facility through to 31 December
2018. However, Atlatsa will be required to fully repay the
Debt Facility to Anglo American Platinum by 31 December, 2020. There will be no penalty for
early repayment. Atlatsa will be required to reduce the Debt
Facility owing to Anglo American Platinum to an outstanding balance
(including capitalised interest) of:
I. no more than
ZAR 1 billion (US$ 117.8 million) as at 31 December 2018;
II. no more than
ZAR 500 million (US$ 58.90 million) as at 31 December 2019; and
III. zero as at
31 December 2020.
Atlatsa will be obliged to utilise 90% of its
attributable share of free cash flows generated from Bokoni Mine
operations to service the Debt Facility and 10% of such free cash
flow will be available as a "trickle dividend" in favour of
Atlatsa. Atlatsa will not be required to effect any mandatory
refinancing of the Debt Facility during the debt term through to
2020.
4.3 Unwinding the "B"
preference share structure
The parties will unwind the "B" preference share
structure in Atlatsa, such that Atlatsa will have only one class of
common shares going forward.
Anglo American Platinum will subsequently sell
its 115.8 million common shares in Atlatsa, arising from the unwind
of the "B" preference shares, to Atlatsa Holdings for ZAR 463 million (US$ 54.54
million) through a vendor finance loan (the "Vendor Finance
Facility"). Pursuant to such sale, Atlatsa Holdings will increase
its shareholding in Atlatsa from 51% (current) to 62%, thereby
creating additional equity financing flexibility for Atlatsa to
raise additional financing through equity issuances and still
maintain a 51% BEE majority shareholding in the company if
required.
There are no fixed repayment terms for the
Vendor Finance Facility through to 31
December, 2018. However, Atlatsa Holdings will be required
to fully repay the Vendor Finance Facility to Anglo American Platinum by 31 December, 2020. There will be no penalty for
early repayment. Atlatsa Holdings will be required to reduce the
Vendor Finance Facility owing to Anglo American Platinum to an
outstanding balance (including capitalised interest) of:
I. no more than
ZAR 232 million (US$ 27.33 million) as at 31 December 2018;
II. no more than
ZAR 116 million (US$ 13.66 million) as at 31 December 2019; and
III. zero as at
31 December 2020.
Atlatsa Holdings will provide security to Anglo
American Platinum in relation to the Vendor Finance Facility by way
of a pledge and cession of its entire shareholding in Atlatsa,
which shares remain subject to a lock-in arrangement through to
2020. Should Atlatsa Holdings be unable to meet its minimum
repayment commitments in terms of the Vendor Finance Facility
repayment obligations between 2018 to 2020, Atlatsa will have a
discretionary right, with no obligation, to step in and remedy such
obligation in order to protect its BEE shareholding status, subject
to commercial terms being agreed between Atlatsa Holdings and
Atlatsa for that purpose.
Subsequent to the implementation of the Revised
Restructure Plan Atlatsa's fully diluted shares in issue will
increase to 555 million shares outstanding, with the following
resultant shareholding:
Shareholder |
# of shares |
% of share
capital |
Atlatsa Holdings (BEE) to be
nominally
held in the name of the Pelawan Trust |
343 million |
61.9% |
Anglo American Platinum |
125 million |
22.6% |
Employee, Community Trusts and
Public |
87 million |
15.5% |
Total |
555 million |
100% |
4.4 Other
agreements
The Bokoni Group will extend its existing
concentrate purchase agreement with Anglo American Platinum on the
same terms and conditions for a period of seven years, terminating
on 31 December 2020.
Atlatsa will retain its existing option to
acquire an ownership interest in Anglo American Platinum's
Polokwane smelter complex on terms agreed between Rustenburg
Platinum Mine and Atlatsa.
5. Conditions precedent
The implementation of the Revised Restructure
Plan will be subject, inter alia, to the fulfillment or,
where appropriate, waiver of the following conditions
precedent:
- Approval by the shareholders of Atlatsa;
- All of the agreements constituting the Revised Restructuring
Plan becoming unconditional;
- To the extent required, unconditional approval by the
Competition Authorities of South
Africa;
- To the extent required, unconditional approval by the South
African Reserve Bank; and
- Approval of the Revised Restructure Plan by the relevant
regulatory authorities including the TSX Venture Exchange, JSE
Limited, NYSE-MKT, the South African Department of Mineral
Resources and ministerial approval of the transfer of mineral
rights.
6. Effective date of the Revised Restructure
Plan
The Effective Date of the Revised Restructure
Plan is subject to the fulfilment of the conditions precedent as
set out above. Further information will be provided once the
conditions have been fulfilled.
7. Pro forma Financial
effects relating to the Revised Restructure Plan and renewal of
cautionary announcement
Shareholders are advised that the financial
effects of the Revised Restructure Plan are still being determined
and may have a material effect on the price of Atlatsa securities.
Accordingly, shareholders are advised to continue exercising
caution when dealing in Atlatsa securities until a further
announcement is made. A further announcement will be released on
the Securities Exchange News Service, filed on SEDAR and published
in the South African press as soon as the financial effects have
been finalised.
8. Categorisation in terms of JSE
Listings Requirements
The Asset Sale constitutes a category 1 disposal
to a related party under the provisions of section 9.5(b) read with
section 10 of the Listings Requirements of the JSE and the
subscription of shares by Anglo American Platinum constitutes a
specific issue of shares for cash under the provisions of section 5
of the Listings Requirements of the JSE.
9. Information circular to
shareholders
An information circular containing full details
of the Revised Restructure Plan and relevant agreements and
incorporating a notice of general meeting of Atlatsa shareholders,
will be posted to Atlatsa shareholders, in due course.
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 Amex has neither approved nor disapproved
the contents of this press release.
SOURCE Atlatsa Resources Corporation