JOHANNESBURG (miningweekly.com) – Triple-listed Atlatsa Resources said on Thursday that its Bokoni mine, in the North West, continues to demonstrate a “positive trend” in operating performance, despite its production being negatively impacted by safety stoppages and unseasonal rainfall in the quarter to March 31, 2014.

Heavy rainfall also had a negative impact on the platinum-group metal (PGM) producer’s nearby Klipfontein opencast mine, which managed to produce only 50% of its planned production volumes. 

The company said in a results statement on Thursday that, notwithstanding external challenges, tonnes milled for the first quarter improved by 29% year-on-year to 390 009 t, while PGM production improved by 19% year-on-year to 42 820 oz. 

Primary development increased by 37% year-on-year to 2 686 m, with emphasis remaining on building out lateral development and shaft sinking at Bokoni’s two new-generation shaft complexes at the Middelpunt Hill and Brakfontein ramp-up projects. 

“Notwithstanding the challenges associated with the yearly start up after the December holiday break and operational challenges resulting from the heaviest rainfalls registered at Bokoni mine in the past 20 years, the company achieved a credible operating and financial performance in what is traditionally the most challenging quarter in our calendar year,” commented Atlatsa CCO Joel Kesler.

“Most importantly, Bokoni continues to show a positive upward trend in operating performance, with all key operating metrics showing significant year-on-year improvements.”

BUILD-OUT

Meanwhile, increased development rates continued to have a negative impact on Bokoni’s unit costs and recovered grade, as the company accelerated the build-out of its new generation underground shaft systems to steady state.

The company had adopted an expansionary approach in an effort to position Bokoni as a 160 000 t/m steady-state producer from its two new-generation shaft complexes over the next three years.

Bokoni’s two older and higher-cost shaft complexes would be phased out during the same period. 

“Bokoni management is encouraged by results achieved at its Klipfontein Merensky opencast mine, with an ever improving understanding of grade control and concentrator processing dynamics positioning the opencast operation to become a meaningful contributor at Bokoni over the next three years,” the company said in a results statement.

Recovered grade at the Bokoni mine decreased 8% year-on-year as a result of the introduction of opencast mining activity, as well as increased development rates at the operation. 

On completion of the current ramp-up phase, Atlatsa believed the mine would be better positioned from both a unit-cost and cash-flow perspective, as it would operate from two shaft complexes as opposed to the current four-shaft system and reduce its aggregate operating costs by moving from older, higher-cost shaft operations to lower-cost, new-generation shaft operations.

The next phase would also see the mine accessing higher-grade Merensky mining areas, reducing overall sustaining capital expenditure at its new-generation shaft complexes and significantly reducing its project capital expenditure.

FINANCIALS

Looking to Atlatsa’s financial showing, revenue increased by 19% year-on-year to C$53.8-million for the first quarter as a result of increased production volumes, coupled with the positive impact of a depreciating rand against the dollar.

This resulted in an 11% increase in the average PGM basket price achieved to R12 373/oz compared with the R11 108/oz achieved in the first quarter of the prior year. 

Absolute cash operating costs increased 15% over the period to C$50.8-million, largely owing to increased production volumes, yearly wage increases as well as increased contractor and stores costs associated with the accelerated underground development programme and opencast mining. 

“Notwithstanding external operational challenges experienced during the quarter, the company continued to improve its cash generating ability, achieving a cash operating profit of around C$3-million during the period.

“Cash used before working capital changes improved significantly year-on-year to $140.3-million when compared with the $2.6-billion in the first quarter of 2013,” the company stated.

Atlatsa’s basic and diluted loss a share remained flat at 1c.

BALANCE SHEET RESTRUCTURE

Meanwhile, during the quarter the company completed its financial restructure plan, resulting in a 73% reduction in its debt and a reduction in its cost of borrowing to 4.73%. 

On completion of its restructuring, Atlatsa agreed to revised payment terms with Anglo American Platinum relating to its purchase of concentrate from Bokoni mine.

If required, the mine may access up to R475-million from a working capital facility as an advance on concentrate sales.