JOHANNESBURG (miningweekly.com) – An improved operating performance at the Bokoni platinum mine, together with the material financial impact of the group’s restructuring plan has strengthened Atlatsa’s year-on-year financial performance, lifting revenue generated for the 2013 fiscal period to $195.6-million compared with $117.6-million for 2012.

This improvement was attributable to improved production volumes, relatively flat metal prices in dollar terms and a positive impact from the 14% rand currency depreciation during the period. 

Consolidated cash operating costs of $194-million for 2013 reflected the increase in production volumes and development achieved during the year, with costs impacted by an increase in the number of contractors at the operations carrying out more development and the establishment of the new opencast mine, together with increases in labour costs and yearly increases in power utility charges above that of the South African inflation rate. 

Depreciation charges included in cost of sales for 2013 were $39.4-million, while capital expenditure at the Bokoni mine, on the eastern limb of the Bushveld Complex, was higher than previous years, with total expenditure of $51-million reflecting the increased amount of development at the operations, together with increased sustaining capital cost to equip the ramp-up projects. 

On implementation of the restructuring plan, the company achieved a profit of $171-million on the sale of an estimated 31.6-million ounces of platinum group metals (PGM) mineral resources that had not been incorporated into Bokoni’s 25-year mine plan.

This sale had a material positive impact on the company’s 2013 financial performance and resulted in earnings before interest, tax, depreciation and amortisation of $199.6-million, profit after tax of $99.8-million and basic earnings a share of $0.47.

The group also generated $9.1-million cash from its operations, representing a marked improvement on previous yearly performances of cash used from its operations.

TSX-, NYSE- and JSE-listed Atlatsa’s improved financial performance came a month after the miner finalised a new corporate and capital structure on February 1 and announced the conclusion of its previously announced restructure plan with mining major Anglo American Platinum (Amplats).

OPTIMISATION PLAN

The plan enabled the repayment of various historical debt instruments, which resulted in the consolidated company debt being reduced by 75% from $587-million to $150-million.

Similarly, the cost of debt to the company on a yearly basis had been reduced from 12.7% to 4.4%.    

Moreover, the company’s black economic-empowerment (BEE) majority shareholder Atlatsa Holdings increased its shareholding in the company to 62% by acquiring 115.8-million shares for $43-million from Amplats, giving Atlatsa additional BEE headroom in its capital structure.

Further, Amplats acquired 22.5% of the outstanding shares of the company for $75-million by subscribing for 125-million new shares.  

Atlatsa retained ownership of four northern limb exploration properties, together with an option to acquire an ownership interest in the Polokwane smelter complex, for future growth opportunities.

After the restructuring plan was completed, Atlatsa had an outstanding share capital of 554-million common shares and all classes of convertible securities had been eliminated.

OPERATIONAL ADVANCEMENTS

Atlatsa continued to develop the Bokoni mine towards its optimal production levels and mining mix, despite a challenging PGM environment, which had persisted for the past five years. 

Bokoni’s underground operations would remain in the ramp-up phase through to 2017, with its two new underground shaft complexes at the Brakfontein Merensky and Middelpunt Hill upper group two (UG2) development projects currently operating between 40% and 50% of their planned steady-state production rates of 100 000 t/m and 60 000 t/m respectively.

“Though the two new shaft complexes remain in the ramp-up phase, management continues to fill installed processing capacity of 160 000 t/m by operating the older, high-cost Merensky underground operations at its Vertical and UG2 shaft complexes, which will be phased out by 2016, and filling any mill gap capacity with Merensky ore from the new opencast mine, commissioned in June 2013,” the company said in a statement.

Atlatsa believed that, on completion of the ramp-up phase in 2017, Bokoni 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, thereby reducing the need for a number of support services.        

The mine would further reduce its aggregate operating costs by moving from older, higher-cost shaft operations to lower-cost, new generation, more efficient shaft operations and access higher-grade Merensky mining areas at its new generation Brakfontein shaft complex.

“Bokoni will also reduce overall sustaining capital expenditure at its new generation shaft complexes, significantly reduce its project capital expenditure from 2017 onwards and maintain a relatively constant number of total employees and contractors, despite increasing the planned production volumes by 47% from 170 000 oz to 250 000 oz in 2017,” the group noted.

Meanwhile, several operational improvement initiatives introduced at Bokoni in 2012 began to yield results in 2013, with tons milled increasing by 77% from the previous year to 1.5-million tons, including 213 314 t from the new Merensky opencast operations.

Bokoni produced 170 295 oz, representing a 66% year-on-year improvement, including 13 717 oz generated from the new Merensky opencast operations.   

Total development metres increased by 50% from the previous year to 23 481 m, including 13 627 redevelopment metres associated with pothole management and establishing new face length for mining crews.

“Development remains a key area of focus at the Bokoni mine as it continues to sink declines and progress with lateral development at its two new underground shaft complexes, together with establishing spare panel face length to combat the negative impact of potholing,” said Atlatsa.

Recovered grade declined year-on-year from 3.82 g/t to 3.56 g/t as a result of the “significant” increase in the amount of development at the operations, as well as lower-grade material delivered and recoveries achieved from the new opencast operations.

However, Atlatsa said recoveries at its concentrator complex remained one of the best in the PGM industry, with a 2013 average yield of 89.8% for the Merensky and 86.7% for the UG2 concentrate streams.   

Further, the realised PGM basket price for 2013 was 15% higher at R11 478/oz compared with R9 978/oz for 2012, while unit costs in 2013 improved to R10 728/oz compared with R12 902/oz in 2012.

Unit costs were largely impacted by the 50% increase in total development metres achieved at the operations, together with above South African inflation rate increases in labour costs, together with increases in power utility charges.