JOHANNESBURG (miningweekly.com) – Emerging platinum junior Atlatsa Resources has lifted its third-quarter platinum-group metal (PGM) production by 23% year-on-year to 47 611 oz, as the company continues to advance the development of its producing Bokoni mine, and the Brakfontein Merensky and Middelpunt Hill (MPH) operations, which remain in ramp-up phase through to 2018.

The third quarter represented a key period for entrenching the new operational strategy at the Limpopo-based Bokoni mine, which formed part of the company’s restructure plan announced in March.

In terms of the plan, Bokoni would place significant focus on its underground mine development by increasing the mining footprint at its key Brakfontein Merensky and MPH upper group two (UG2) operations.

During the ramp-up phase of underground production from these mines, output would be supplemented with ore generated from the Merensky opencast mine to meet installed concentrator processing capacity of 160 000 t/m. 

The triple-listed company reported a “significant” improvement in primary development, which increased by 1 000 m, or 46%, year-on-year, with mining footprints expanded at both the Brakfontein Merensky and MPH UG2 shaft operations.

The Merensky opencast mine achieved a steady-state target of 40 000 t/m in September, while shaft decline development had now extended to 450 m below surface at Brakfontein and 300 m below surface at MPH.

“Operational focus remained on improving Bokoni’s ounces produced and tons milled ratio by ensuring that both the opencast and underground operations delivered on grade targets and maintained concentrator recoveries at targeted levels,” the company said in a results statement on Thursday.

Tonnes milled by the group in the three months ended September 30 increased by 35% year-on-year to 436 785 t, while underground tonnes milled improved by 13%, with the balance of the improvement comprising additional ore production from opencast operations.

Recovered grade decreased to 3.5 g/t as a result of dilution from the lower grade opencast ore, while ore grades from underground operations remained constant over the period.     

FINANCIAL RESULTS

Notwithstanding the production uptick, Atlatsa’s continuing restructuring expenses contributed significantly to the company’s loss for the quarter of $15.5-million, with a basic and diluted loss a share of $0.03.   

Pending final implementation of the restructure plan, the company said it would continue to incur significant finance charges of $15.1-million on its historical debt outstanding to Anglo American Platinum (Amplats).

The Bokoni mine’s earnings before interest, tax, depreciation and amortisation (Ebitda) for the quarter of $10.4-million was a significant improvement in comparison with the negative Ebitda of $3.3-million posted in the third quarter of the prior year. 

“The increase in the company’s revenue to $54.2-million is attributable to much improved production and sales volumes, together with an improved rand PGM revenue basket price on the back of the weakening of the rand,” Atlatsa noted.

At R11 620, Atlatsa achieved a rand PGM basket price for the quarter that was 19.9% higher than the R9 688 achieved in the third quarter of 2012.

In contrast, the dollar PGM basket price decreased by 0.8% year-on-year to $1 163, compared with $1 172 in the prior year’s quarter. 

Unit operating costs remained relatively flat year-on-year, notwithstanding provisions made during the financial quarter for yearly wage increases, a 12% increase in power utility charges and a 25% increase in working cost development charges associated with a 46% year-on-year increase in primary development at Bokoni’s ramp-up operations. 

“Milled costs decreased by 3.5% year-on-year from R1 145/t to R1 105/t as a result of increased throughput from both underground and opencast operations, while PGM ounce unit costs increased by 5.9% to R10 140/oz from R9 577/oz in the comparative 2012 period,” Atlatsa reported.

Total capital expenditure for the quarter decreased from $14.2-million in the third quarter of the prior year to $12.5-million for the period under review.

Meanwhile, the growth-focused junior generated cash from operations of $7.4-million over the three months, compared with cash utilised from operations of $10.8-million in the prior year’s period, which Atlatsa partially attributed to changes in working capital.

“Notwithstanding these working capital changes, cash generated from operations improved to $2-million, reflecting a better operational performance at Bokoni,” the miner said.     

As at September 30, the company had unrestricted cash and equivalents of $20.5-million.

RESTRUCTURING PROGRESSION

Meanwhile, the junior advanced its R3.5-billion restructuring plan over the period, with several conditions for implementation met over the three months.

The Department of Mineral Resources (DMR) approved the subdivision and transfer of mineral properties between Atlatsa and Amplats at the Ga-Phasha project area, while the South African competition authorities granted unconditional approval for implementation of the plan.  

The DMR further granted its consent for the sale and transfer of mineral rights for the Boikgantsho platinum project from Atlatsa to Amplats, while the
Exchange Control division of the South African Reserve Bank granted the necessary approvals for the company to implement the restructuring.

“In addition, the DMR renewed prospecting rights relating to the Boikgantsho platinum project, situated on the northern limb of the Bushveld Igneous Complex, adjacent to Amplats’ Mogalakwena mine operations,” said the company.

First announced in March, the restructuring deal encompassed a restructuring, recapitalisation and refinancing plan for Atlatsa and the Bokoni group of companies, in terms of which Amplats would acquire the eastern section of Atlatsa’s Ga-Phasha and Boikgantsho projects for R1.7-billion, the proceeds of which would be used by Atlatsa to reduce its existing debt owing to Amplats.

In addition, Amplats would subscribe for 125-million new common shares in Atlatsa for an aggregate subscription price of R750-million, the proceeds of which would be used by Atlatsa to further reduce its debt to Amplats.

This would reduce Atlatsa’s debt to Amplats to R830-million.

Under the terms of the deal, Amplats would further provide Atlatsa with an additional debt facility of about R720-million, bringing the total debt facility up to a limit of R1.55-billion, which was repayable between 2018 and 2020.