[miningmx.com] – ATLATSA Resources showed further signs that its tortuous two-year operating and financial restructuring programme might translate into sustainable profit-making after it registered a slim annual cash operating profit of $1.58m, and free cash flow of $9.1m from its Bokoni Platinum Mine – a $40m year-on-year turnaround.
Including the sale of mineral rights for $171m, basic and diluted share earnings for the 2013 financial year came in at 47 US cents per share which compares to a 4c/share loss in the 2012 financial year.
Taxed profit was just under $100m, a $200m turnaround year-on-year.
Shares in the company were about 3% higher on the Johannesburg Stock Exchange, an improvement that brought the stock a 12-month return of +130%. The improvement is a reflection of a third iteration of financial engineering at the company.
Atlatsa Resources, formerly Anooraq Resources, is a key constituent of Anglo American Platinum’s (Amplats’) black economic empowerment (BEE) strategy. The price at which Atlatsa bought assets from Amplats was been twice revalued since about 2009.
The South African government is due to pick over the BEE credentials of Amplats, and its parent company, Anglo American, later this year as it runs an audit on compliance with the 2004 mining charter. The charter states that mining companies have to agree 26% BEE empowerment by 2014 against which Atlatsa is 62% empowered.
In terms of the restructuring, which was interrupted by the sharp decline in the price of platinum during 2012/13, Atlatsa lowered debt 75% to $150m, sold mineral rights worth $171m back to Amplats, and cut the interest on debt outstanding.
It had also unveiled an operational restructuring at its single operating mine, Bokoni Platinum Mines, which is situated in the northern part of the Bushveld Complex in the North-West province.
The operational restructuring focused on the development of two new shafts – Brakfontein Merensky and Middelpunt Hill UG2 – scheduled to achieve nameplate capacity by 2017, while simultaneously throttling back production from its older sections and supplementing production with ore from an short-term open cast mine.
The company hailed the turnaround although it also owes the performance to the one-off sale of mineral rights, back to Amplats, and a 14% weakening in the rand against the dollar. However, it also absorbed $25m in costs representing the spill-over financial effects of a strike it suffered in the 2012 financial year.
Harold Motaung, CEO of Atlatsa Resources, headed off concerns that the company might be subject to restructuring planned by Amplats.
“We don’t think that the restructuring Amplats is looking at will affect Bokoni. Our relationship with Amplats is workable and practical. We will have the opportunity to engage if there are any changes,” he said.
Motaung added, however, that Atlatsa’s Bokoni Mines had opened wage negotiations with its unions – the National Union of Mineworkers, the United Association of South Africa and the Transport and Allied Workers Union of South Africa.
Said Joel Kesler, commercial director for Atlatsa: “I think you can benchmark close to other settlements. We don’t envisage any double-digit agreements”.
