| Tue 17 Nov 2009, 7:05 | | ARQ - Anooraq Resources Corporation - Announces results for the periods ended |
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ARQ
ARQ
ARQ - Anooraq Resources Corporation - Announces results for the periods ended
September 30, 2009
Anooraq Resources Corporation
Incorporated in British Columbia, Canada
Registration number 10022-2033
TSXV/JSE share code: ARQ
AMEX share code: ANO
ISIN: CA03633E1088
("Anooraq" or the "Company")
ANOORAQ ANNOUNCES RESULTS FOR THE PERIODS ENDED SEPTEMBER 30, 2009
Positive first quarter at Bokoni
Growth projects on track to deliver 270,000 PGM (4E) ounces by 2014
Anooraq announces its production and financial results for the three months and
nine months ended 30 September 2009. This release should be read with the
Company`s Financial Statements and Management Discussion & Analysis, available
at www.anooraqresources.com and filed on www.sedar.com.
Highlights for the quarter:
* Completed Lebowa Platinum Mines (now called Bokoni Mines) acquisition
* New management team in place and early "wins" from operations
* Good safety performance
* Tonnes mined and milled up by 15%
* Produced 30,835 platinum, palladium, rhodium and gold ("PGM (4E)") ounces
* Unit operating cost (in South African rand (ZAR) per tonne) decreased by
13%
* Excellent PGM (4E) recoveries - Merensky: 92% UG2: 89%
* Narrowed operating loss
* Completed capital expenditure review and revised budgets
The past quarter saw the most significant development in the company`s history
- the implementation of the Lebowa transaction on 1 July 2009. This
transaction included the acquisition of an effective 51% holding in the Bokoni
Platinum Mines (formerly Lebowa Platinum Mines) referred to as "Bokoni" or
"Bokoni Mines") and a further 1% controlling interest in the Boikgantsho,
Ga-Phasha and Kwanda projects for a purchase consideration of CAD$385 million
(ZAR2.6 billion). As a result, Anooraq has emerged as a PGM-producing company
controlling the third largest PGM resource base in South Africa.
Philip Kotze, President and CEO of Anooraq Resources, commented:
"This is our first report on the performance of Bokoni Platinum Mines, and we
are pleased to be able to indicate a positive trend for both production and
costs.
Our focus at Bokoni is on both optimizing the existing mine operations and
developing new mines at Brakfontein and Middelpunt Hill, ensuring that Bokoni
becomes a new-generation PGM producer with significant growth prospects. The
size and scale of the Bokoni orebody, together with its attractive grades and
well-developed mine and support infrastructure, provides us with a number of
opportunities to increase production at shallow mining depths. The new
Brakfontein mine on the Merensky Reef at Bokoni represents a significant
ramp-up operation and will play a key role in achieving our phase 1 growth
milestone of 270,000 PGM (4E) ounces by 2014.
Another key part of our initial work at Bokoni has been to effect a cultural
turn-around at the operation. A new management team has been appointed which
has developed a production ramp-up plan, implemented disciplined operating
cost controls and completed a review of capital costs. We are encouraged by
the early gains achieved at the operations, which have resulted in a real
decrease in unit costs, rationalization of capital expenditures and
identification of potential new sources of lower-cost ounces, such as those
presented by the vamping opportunities at the Vertical and Middelpunt Hill
shafts (vamping is a mining operation for the removal of previously broken
tonnage left underground during mining operations).
Although much work remains to be done to fully embed our new culture of
delivery, accountability and empowerment at Bokoni, we have made a good start
in our first operating quarter."
Review of operational and financial performance
The results for the quarter ended 30 September 2009 reflect the performance of
Bokoni for the first full quarter under Anooraq management.
Safety
Bokoni continued to report good safety performance. There were no fatal
injuries during the quarter and by November 2, 2009 the mine achieved one
million fatality-free shifts. The lost time injury frequency rate ("LTIFR")
of 0.7 (per 200,000 hours worked) for the quarter will continue to receive
focused attention as part of the change management program at the operations.
Production
Mill production at 254,399 tonnes was 15% higher when compared to the average
quarterly performance for the first half year, mainly because of a 15% increase
in tonnes broken. This increase was largely due to a more disciplined approach
to the mining effort through new mine management initiatives. A PGM (4E) head
grade of 4.19 g/t was achieved for the quarter. Grade control is a key area of
focus going forward. Concentrator plant recoveries PGM (4E), at 92% for
Merensky and 89% for UG2, remain among the highest in the PGM industry.
As tonnes mined and milled increased metal production, when compared to the
first half year, gained momentum.
Metal produced - Q3 2009 Units
Pt (oz) 16,668
Pd (oz) 11,249
Rh (oz) 1,877
Au (oz) 1.040
Ni (t) 214
Cu (t) 126
Opportunities have been identified to add low-cost tonnes from vamping at
Vertical and Middelpunt Hill shafts. It is estimated that production from
vamping could be effected at approximately 30% of current unit operating
costs.
Total development for the quarter was 2,374 metres and on reef development
was 1,253 metres. During the quarter more focus was placed on re-development
and sub-development in order to ensure increased immediately available
reserves for mining.
Costs
Efforts to reduce costs have yielded early positive results. Total
operating costs remained constant at CAD$34.6 million (ZAR257 million) when
compared to the first half year, despite higher production, electricity
tariffs and wage increases during the quarter. The 13% reduction in operating
unit costs to CAD$135 (ZAR1,005)/tonne, when compared to the first half year,
reflects both the increase in production and the initial results of the
Company`s cost-cutting initiatives. PGM (4E) unit costs for the quarter
decreased to US$1,071 (ZAR8,334) per PGM (4E) ounce, when compared to the
first half year. Despite these gains, the operating costs remain at an
unacceptably high level when compared to the industry average and the
Company continues to drive cost reduction initiatives towards achieving
lower unit operating costs.
In early October 2009, Anooraq announced a two-year wage agreement with
its labour unions, the result of which was an effective 10.2% average wage
increase at Bokoni, retroactive to 1 July 2009. A labour restructuring
initiative has commenced and, as a result, 300 contractors have been given
notice of termination. The Company will continue to assess labour needs
until an optimal production to services ratio mix is achieved at the
operation. Improved operating costs from the labour restructuring
initiative should begin in the first quarter of 2010.
Other results from cost reduction and efficiency improvement efforts during
the quarter include a 34% decrease in stores cost, through the implementation
of a disciplined budget initiative, as well as a 13% decrease in concentrator
unit costs and a 9% reduction in power (kw/h) usage.
Revenue
Metal prices remained fairly stable during the quarter, with a price
recovery particularly evident in the US$ PGM prices. The gross US$ PGM basket
(4E) price of US$901/oz achieved for the quarter was offset by the strength
of South African currency, with the average gross ZAR PGM (4E) basket price
settling at ZAR7,003/oz for the quarter. The average exchange rate for the
period was ZAR7.78:US$1.00 (Q2:ZAR8.44:US$1.00), representing an 8%
strengthening quarter on quarter.
Revenues from precious metals were CAD$ 24.1 million (ZAR179.1 million) for
the quarter, increasing on the back of higher dollar prices and increased
production. Base metal revenues (Ni and Cu) contributed CAD$3.7 million
(ZAR27.4 million), bringing total metal revenues for the quarter to CAD$27.8
million (ZAR206.5 million).
Capital expenditure
Bokoni Mines remains in a high capital expenditure growth phase, as its
production rates are being increased by 100% over the next three years through
the ramp up of the new Brakfontein Merensky mine.
Capital expenditure for the quarter was CAD$10.4 million (ZAR77.3 million),
consisting of 23% sustaining capital and 77% project capital. Major project
capital expenditures for the period relate directly to the Brakfontein mine
build-up. The Brakfontein mine decline shaft system continues to be developed
and the mine currently produces at a rate of 11 000 tonnes per month ("tpm"),
building up towards its planned steady state production of 120 000 tpm by 2014.
During the quarter, a thorough review of planned capital expenditures was
undertaken. Budgeted capital expenditures were reduced without compromising
the planned production build-up. Capital expenditure guidance going forward is
as follows:
2010 2011 2012 Total
ZAR252 million ZAR282 million ZAR312 million ZAR846 million
CAD$ 35.8 million CAD$40.1 million CAD$44.4 million CAD$120.3 million
*Expressed in real 2009 money terms and using a CAD$1:ZAR7.03 exchange rate
Profitability
As a result of the implementation of successful cost reduction initiatives
and increased production, the operating loss margin at Bokoni reduced to 24%
(as compared to an operating loss margin of 31% for the first half of the year).
The Bokoni Mines had an operating loss of CAD$6.8 million (ZAR 50.5 million)
for the quarter. The Company looks forward to achieving improved margins from
the operations through the continued implementation of cost savings and
production generating initiatives which commenced during the quarter.
The Company continued to incur losses during its high capital intensive growth
phase. This resulted in a basic and diluted loss of CAD$0.08 per share for the
quarter.
Cash and Facilities
The Company held cash on hand at the end of the period of CAD$29 million
(ZAR 208.8 million) and has access to medium term debt facilities of
approximately CAD$127.6 million (ZAR897 million) in order to finance its
share of the three-year high growth plan at Bokoni Mines. Anooraq has access
to a CAD$111 million (ZAR778 million) operating cashflow shortfall facility
(OCSF) from Anglo Platinum Limited, to fund its 51% pro rata share of any
operating expenditure and capital expenditure shortfall funding required at
Bokoni Mines for a period of three years during the mine`s rapid ramp-up phase.
The draw down on the OCSF for the quarter was CAD$15 million (ZAR112 million),
comprising a CAD$8.6 million (ZAR64 million) initial draw down on takeover to
part fund historical cash shortfalls at Bokoni Mines prior to Anooraq assuming
management control and an average monthly draw down for August and September
of CAD$3.2 million (ZAR24 million) to fund its 51% share of operating and
capital cash shortfalls at Bokoni Mines, including its CAD$5.8 million (ZAR43
million) pro rata share of project capital expansion at the new Brakfontein
mine.
The Bokoni Mines four year growth plan to 160,000 tpm steady state production
or 270,000 PGM (4E) ounces per annum remains fully funded without further
recourse to capital markets.
Teleconference call details
Philip Kotze, President & CEO of Anooraq Resources, will host a conference
call to discuss the company`s operational and financial results for the quarter
ended 30 September 2009 at 09:00 Eastern Standard Time ("EST") (16:00 Central
African Time (CAT)) on Tuesday, 17 November 2009. The dial in details for the
call are listed below. A webcast of the call will be available on the Company`s
website at www.anooraqresources.com. A playback will be available for three
days after the call. The presentation to be used during the call will be
available for downloading at 07:00 EST (14:00 (CAT)) on Tuesday,17 November
2009.
Conference call
Johannesburg, South 16:00 (local Toll 011 535 3600
Africa time)
Toll-free 0800 200 648
London, United Kingdom 14:00 (local Toll-free 0800 917 7042
time)
New York, United States 09:00 (local Toll 1 412 858 4600
time)
Toll-free 1 800 860 2442
Toronto, Canada 09:00 (local Toll-free 1866 605 3852
time)
Playback facility
South Africa & Other Code 2159# Toll +27 11 305 2030
United Kingdom Code 2159# Toll-free 0808 234 6771
United States & Code 2159# Toll +1 412 317 0088
Canada
For further information, please contact:
Anooraq Resources Corporation
Philip Kotze
President and Chief Executive
Officer
Office: +27 11 779 6800
Mobile: +27 86 559 8484
Joel Kesler
Executive: Corporate and Business Development
Office: +27 11 779 6800
Mobile: +27 82 454 5556
Russell and Associates
Charmane Russell / Nicola Taylor
Office: +27 11 880 3924
Mobile: +27 82 372 5816 / +27 82 927 8957
Johannesburg
16 November 2009
Macquarie First South Advisers (Pty) Limited
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release. The American Stock Exchange has neither approved
nor disapproved the contents of this press release.
Cautionary and Forward Looking Information
This release includes certain statements that may be deemed "forward
looking statements". All statements in this release, other than
statements of historical facts, that address potential acquisitions, future
production, reserve potential, exploration drilling, exploitation activities
and events or developments that Anooraq expects are forward looking
statements.Anooraq believes that such forward looking statements are based on
reasonable assumptions, including assumptions that: the Lebowa Transaction will
complete; Lebowa will continue to achieve production levels similar to previous
years; the planned Lebowa expansions will be completed and successful; Anooraq
will be able to secure future debt and equity financing on favourable terms;
and the Ga-Phasha and Platreef Project exploration results will continue to be
positive. Forward looking statements however, are not guarantees of future
performance and actual results or developments may differ materially from
those in forward looking statements. Factors that could cause actual results
to differ materially from those in forward looking statements include market
prices, exploitation and exploration successes, changes in and the effect of
government policies with respect to mining and natural resource exploration
and exploitation and continued availability of capital and financing, and
general economic, market or business conditions. Investors are cautioned that
any such statements are not guarantees of future performance and those actual
results or developments may differ materially from those projected in the
forward looking statements. For further information on Anooraq, investors
should review the Company`s annual information form filed on www.sedar.com
or its form 20-F with the United States Securities and Exchange Commission
and its other home jurisdiction filings that are available at www.sedar.com.
Date: 17/11/2009 07:05:02 Produced by the JSE SENS Department.
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