| Mon 15 Aug 2011, 14:01 | | ARQ - Anooraq Resources Corporation - Anooraq announces results for the |
|
ARQ
ARQ
ARQ - Anooraq Resources Corporation - Anooraq announces results for the
periods ended June 30, 2011
Anooraq Resources Corporation
(Incorporated in British Columbia, Canada)
(Registration number 10022-2033)
TSXV/JSE share code: ARQ
AMEX share code: ANO
ISIN: CA03633E1088
("Anooraq")
ANOORAQ ANNOUNCES RESULTS FOR THE PERIODS ENDED JUNE 30, 2011
August 15, 2011. Anooraq Resources Corporation ("Anooraq" or the "Company"
or, together with its subsidiaries, the "Group") announces its operational
and financial results for the three months ended June 30, 2011 ("Q2 2011").
This release should be read with the Company`s unaudited interim financial
statements for the three and six months ended June 30, 2011 and related
Management Discussion & Analysis, available at www.anooraqresources.com and
filed on SEDAR at www.sedar.com. Currency values are presented in South
African rand ("ZAR"), Canadian dollars ("C$") and United States dollars
("US$").
Key highlights for the quarter
- Safety improvements and significant reduction in safety stoppages
- Brakfontein Merensky and Middelpunt Hill UG2 ramp up projects show
improved performance
- Production volume increases quarter-on-quarter
- Significant increase in re-development and sub-development ("re- and sub-
development") in order to create greater mining flexibility
- Chairlift installation at Brakfontein Merensky ramp up project
successfully commissioned
- Cost challenges, primarily as a result of increased development
initiatives and once off charges
- Grade impacted negatively by increased re- and sub-development, as well
as challenges at processing plant
- Strategic review of Bokoni Group assets completed
- Wage negotiations commence with unions
Harold Motaung, CEO of Anooraq, commented, "The second quarter of 2011 saw
the Company continue to drive initiatives at mine level, so that the
correct fundamentals are put in place to ensure that a foundation for
continued improvements in operational and financial performance are
achieved going forward.
"We are extremely pleased with improvements in our safety record during the
quarter as we continue to drive towards achieving our "zero harm" target at
the operations.
"Bokoni Mines is a four shaft operation, with our two older shafts
(Vertical and UM2 Merensky shafts), which currently represent 40% of
Bokoni`s production, nearing the end of their operational lives, with three
to four years of operating life remaining at each shaft.
"The remaining two shafts (Brakfontein Merensky and Middelpunt UG2 shafts)
remain in their ramp up phase, with Brakfontein shaft sinking on the main
decline now progressed down to 6 level (450m below surface), with stoping
operations continuing down to 4 level, currently achieving 30 thousand
tonnes per month ("ktpm"). Ultimately, the Brakfontein 120ktpm project
requires that the main decline shaft continues down to 9 level (650m below
surface).
"The Middelpunt Hill UG2 ramp up project has now successfully transformed
from a four adit mining operation to an underground ramp up project, with
the main decline shaft sinking having reached 2 level (150m below surface),
with stoping taking place on 0 and 1 levels. The immediate goal at the
Middelpunt Hill ramp up project is to achieve consistent stoping targets of
45ktpm (currently 30ktpm), while the ultimate scope of this project has the
potential to mirror that of the Brakfontein Merensky project, with the main
decline continuing down to 9 level (650m below surface) with a targeted
steady state stoping rate of 125ktpm. Studies in respect of the ultimate
scoping for the Middelpunt Hill UG2 operations are currently under review
as part of the Company`s broader restructuring, refinancing and
recapitalisation initiatives with Anglo Platinum Limited ("Anglo
Platinum").
"Given that the Bokoni Mine is, essentially, a ramp up operation with two
decline shaft systems under construction, our major focus at Bokoni remains
ensuring that our two key ramp up projects are established on a proper
foundation, with primary development within the capital footprint, being
adequately supplemented by secondary development in order to ensure that
sufficient mining flexibility is created for stoping crews on operating
levels.
"In order to achieve our development goals, an active decision was taken in
the first quarter to engage the services of various contractors on a six
month programme in order to accelerate certain development initiatives,
particularly re- and sub-development, identified as essential to meet short-
to medium-term project ramp up and mining flexibility targets. This has
resulted in a significant increase in contractor costs during the period
under review, coupled with a significant increase in own employee overtime
charges at the operations. These additional expenses will be phased out of
the operations by Q4 2011, as we achieve our improved development targets
and replace contractors with own employees, as part of our right sizing
initiatives at Bokoni.
"While we are beginning to see volume trend improvements at the operations
in stoping and development, there is a need to decrease operating costs,
especially in light of current wage trends in the mining industry and
continued inflationary pressures associated with key input costs at the
operations.
"Our immediate target remains for the Bokoni operations to achieve positive
free cash flow after all capital expenditure at the operations. At the
current Rand platinum group metals ("PGM") revenue basket price, this
requires an improved effort on operating efficiencies and an active effort
on cost management from current levels.
"Turning to corporate matters, we, together with our partner, Anglo
Platinum, have now completed our strategic review of the Bokoni Group asset
base and are in negotiations in respect of the restructuring,
recapitalisation and refinancing of the Bokoni Group and Anooraq, having
regard to the results of the strategic review."
Review of operational and financial performance in Q2 2011
Safety
Anooraq`s safety performance saw significant improvements during the
quarter. Once again, Bokoni`s lost time injury frequency rate ("LTIFR")
improved by 25% quarter-on-quarter to 1.47 per 200,000 hours worked with no
fatalities. The serious injury frequency rate ("SIFR") also improved by 26%
quarter-on-quarter to 0.80 per 200,000 hours worked. By mid-July, Bokoni
had achieved one million fatality-free shifts.
During the quarter, the operations lost two shifts at the Brakfontein
operations due to a Section 54 safety stoppage, which represents a
significant improvement on the first quarter, when the operations suffered
the loss of nine operating shifts lost as a result of safety stoppages.
Production
Production during the quarter increased by 27% quarter-on-quarter to a
total of 28,119 ounces, a 9% decrease on the equivalent period in 2010. The
mine concentrator milled 266,866 tonnes, 21% higher than Q1 2011, and 6%
lower than Q2 2010.
Development
Total primary development metres improved 11% quarter-on-quarter, with re-
and sub-development metres improving 54% quarter-on-quarter and 434% when
compared to the comparative period in 2010. The major push on re- and sub-
development is being implemented in an effort to expedite much needed
mining flexibility required to improve operating efficiencies at Bokoni.
Grade
The operations achieved a recovered grade of 3.27g/t (4E) for the quarter,
a 4.5% increase quarter-on-quarter but a 19% decrease when compared to Q2
2010. Key challenges surrounding grade remain, with delivered grade being
negatively impacted by increased re- and sub-development being conducted at
the operations and recovered grades being negatively impacted by challenges
at the concentrator plant, including a number of unplanned mill stoppages
during the quarter.
The key production and development parameters for Bokoni in Q2 2011 are:
Q1 2011 Q2 2011 Variance Q2 2010 Variance
Q-on-Q Q2 11 vs
Q2 10
Tonnes Tonnes 201,851 258,882 28% 270,796 (4%)
delivered
Total Metres 2,302 2,549 11% 2,502 2%
primary
developmen
t
Total re- Metres 1,846 2,850 54% 656 434%
and sub-
developmen
t
Head grade g/t, 4E* 4.25 4.05 (5%) 4.09 (1%)
(delivered
)
Tonnes Tonnes 219,991 266,866 21% 283,637 (6%)
milled
Recovered g/t 3.13 3.27 4.5% 4.04 (19%)
grade milled,
4E*
4E ounces Ounces 22,173 28,119 27% 31,004 (9%)
produced*
* 4E consists of platinum, palladium, rhodium and gold
Metal production was as follows:
Metal Q1 2011 Q2 2011 Variance Q2 2010 Variance
Q-on-Q Q2 11 vs
Q2 10
Platinum Ounces 12,136 15,499 28% 16,670 (7%)
Palladium Ounces 7,987 10,027 26% 11,442 (12%)
Rhodium Ounces 1,295 1,593 23% 1,833 (13%)
Gold Ounces 755 1,000 32% 1,059 (6%)
Nickel Tonnes 94 236 51% 232 2%
Copper Tonnes 153 143 (7%) 137 4%
Revenue
Revenue for Q2 2011 was C$35.9 million (ZAR252.4 million), representing a
17% increase quarter-on-quarter and a 6% decrease when compared to the
corresponding period in 2010. The gross average US$ PGM basket price
achieved for the quarter decreased by 2% quarter-on-quarter to US$1,430 and
the ZAR PGM basket price decreased by 5% to R9,726, compared to
Q1 2011. Gross PGM revenue basket prices achieved for Q2 2011 increased by
13% (US$) and 1% (ZAR) when compared to Q2 2010.
Operating costs
Unit operating costs increased by 2% quarter-on-quarter, to US$1,699/4E
ounce, largely as a result of an increased spending on contractors and own
employee overtime, stemming from accelerated development initiatives and
one-off charges, such as the annual "platinum bonus" paid to employees. A
number of these costs will be phased out by Q4 2011 as improved development
targets are achieved and contractors are replaced with internal employees,
as part of Bokoni`s right sizing initiatives at the operations.
Profitability
The operations incurred an operating loss of C$9.8 million (ZAR69 million)
for the quarter, largely attributable to increased operating cost spend,
primarily surrounding the accelerated development programme at the
operations.
The Company incurred a net loss after tax of C$44.3 million (ZAR311.6
million) or C$0.06 (ZAR0.42) per share (basic and diluted) for Q2 2011, a
large portion of which is associated with financing charges resulting from
debt obligations owing to Anglo Platinum, forming the subject matter of
refinancing initiatives currently under negotiation.
Capital expenditure
Capital expenditure in Q2 2011 was ZAR57.3 million, in line with Q1 2011
expenditure.
Wage negotiations
The Company is currently engaged in wage negotiations with three
representative unions at Bokoni. These wage negotiations are taking place
on an independent basis and not part of Anglo Platinum`s wage negotiation
process. To date, interactions with unions have been constructive and the
Company hopes to finalise these negotiations during Q3 2011.
Ramp up projects
Brakfontein Merensky Project
Shaft sinking of the main decline has now progressed to 6 level (43m below
surface) with strike development currently taking place at 5 level (360m
below surface), while ledging and stoping continues on 3 and 4 levels
(between 200m and 300m below surface).
During the quarter, a chairlift was installed and successfully commissioned
at the project which should result in improved operating efficiencies as a
result of increased face time by stoping teams and less travelling time to
and from working faces.
Current stoping rates of 30ktpm are being achieved at Brakfontein, while
the project ramps up towards a steady state production rate of 120ktpm.
Middelpunt Hill UG2 Project
Middelpunt Hill UG2 adit mining is nearing completion, while the
underground development operation continues to ramp up. This ramp up
operation is designed on the same basis as the Brakfontein Merensky
project, utilising a hybrid mining method with conventional in stope
operations and mechanised tramming systems utilising strike and main
decline conveyer belts.
The main decline shaft sinking at this project has now reached 2 level
(150m below surface) with stoping taking place on 0 and 1 levels at a
current rate of 30ktpm.
The immediate goal at the Middelpunt Hill ramp up project is to achieve
consistent stoping rates of 45ktpm, while the ultimate scope of this
project has the potential to mirror that of the Brakfontein Merensky
project, with the main decline continuing down to 9 level (650m below
surface) with a targeted steady state stoping rate of 125ktpm. Studies in
respect of the ultimate scoping for the Middelpunt Hill UG2 operations are
currently under review, as part of the company`s broader restructuring,
refinancing and recapitalisation initiatives with Anglo Platinum.
Outlook
Future guidance on the Company`s production forecasts, as well as operating
and capital expenditure, will be provided once the current discussions with
Anglo Platinum have been completed and the results of the strategic asset
review of the Bokoni Group have been published.
Future communication
Given that Anooraq remains under cautionary, pursuant to the rules of the
JSE relating to the ongoing restructuring and refinancing discussions with
Anglo Platinum, it is unable to undertake a conference call with investors
at this time. The Company undertakes to update investors regarding these
discussions as soon as it is in a position to do so.
Johannesburg
15 August 2011
Financial adviser and JSE Sponsor
Macquarie First South Capital (Pty) Limited
Issued on behalf of Anooraq Resources Corporation
For further information contact:
Russell and Associates
Charmane Russell / Cassidy Parker
Office: +27 11 880 3924
Mobile: +27 82 372 5816 / +27 72 347
2342
Macquarie First South Capital
Annerie Britz/ Yvette Labuschagne/
Melanie de Nysschen
Office: +27 11 583 2000
Neither the TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release. The NYSE Amex
has neither approved nor disapproved the contents of this press release.
Cautionary and forward-looking information
This document contains "forward-looking statements" that were based on
Anooraq`s expectations, estimates and projections as of the dates as of
which those statements were made, including statements relating to the
Bokoni Group restructure and refinancing and anticipated financial or
operational performance. Generally, these forward-looking statements can be
identified by the use of forward-looking terminology such as "may", "will",
"outlook", "anticipate", "project", "target", "believe", "estimate",
"expect", "intend", "should" and similar expressions.
Anooraq believes that such forward-looking statements are based on material
factors and reasonable assumptions, including the following assumptions:
the Bokoni Mine will increase or continue to achieve production levels
similar to previous years; the Ga-Phasha, Boikgantsho, Kwanda and Platreef
Projects exploration results will continue to be positive; contracted
parties provide goods and/or services on the agreed timeframes; equipment
necessary for construction and development is available as scheduled and
does not incur unforeseen breakdowns; no material labour slowdowns or
strikes are incurred; plant and equipment functions as specified;
geological or financial parameters do not necessitate future mine plan
changes; and no geological or technical problems occur.
Forward-looking statements are subject to known and unknown risks,
uncertainties and other factors that may cause the Company`s actual
results, level of activity, performance or achievements to be materially
different from those expressed or implied by such forward-looking
statements. These include but are not limited to:
- uncertainties related to the completion of the Bokoni Group restructure
and refinancing;
- uncertainties and costs related to the Company`s exploration and
development activities, such as those associated with determining whether
mineral resources or reserves exist on a property;
- uncertainties related to feasibility studies that provide estimates of
expected or anticipated costs, expenditures and economic returns from a
mining project;
- uncertainties related to expected production rates, timing of production
and the cash and total costs of production and milling;
- uncertainties related to the ability to obtain necessary licenses,
permits, electricity, surface rights and title for development projects;
- operating and technical difficulties in connection with mining
development activities;
- uncertainties related to the accuracy of our mineral reserve and mineral
resource estimates and our estimates of future production and future cash
and total costs of production, and the geotechnical or hydrogeological
nature of ore deposits, and diminishing quantities or grades of mineral
reserves;
- uncertainties related to unexpected judicial or regulatory proceedings;
- changes in, and the effects of, the laws, regulations and government
policies affecting our mining operations, particularly laws, regulations
and policies relating to:
- mine expansions, environmental protection and associated compliance
costs arising from exploration, mine development, mine operations and mine
closures;
- expected effective future tax rates in jurisdictions in which our
operations are located;
- the protection of the health and safety of mine workers; and
- mineral rights ownership in countries where our mineral deposits are
located, including the effect of the Mineral and Petroleum Resources
Development Act (South Africa);
- changes in general economic conditions, the financial markets and in the
demand and market price for gold, copper and other minerals and
commodities, such as diesel fuel, coal, petroleum coke, steel, concrete,
electricity and other forms of energy, mining equipment, and fluctuations
in exchange rates, particularly with respect to the value of the U.S.
dollar, Canadian dollar and South African rand;
- unusual or unexpected formation, cave-ins, flooding, pressures, and
precious metals losses (and the risk of inadequate insurance or inability
to obtain insurance to cover these risks);
- changes in accounting policies and methods we use to report our financial
condition, including uncertainties associated with critical accounting
assumptions and estimates; environmental issues and liabilities associated
with mining including processing and stock piling ore;
- geopolitical uncertainty and political and economic instability in
countries which we operate; and
- labour strikes, work stoppages, or other interruptions to, or
difficulties in, the employment of labour in markets in which we operate
mines, or environmental hazards, industrial accidents or other events or
occurrences, including third party interference that interrupt the
production of minerals in our mines.
For further information on Anooraq, investors should review the Company`s
annual Form 40-F filing with the United States Securities and Exchange
Commission www.sec.gov and annual information form for the year ended
December 31, 2010 and other disclosure documents that are available on
SEDAR at www.sedar.com.
Date: 15/08/2011 14:01:00 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
