| Tue 15 Nov 2011, 7:09 | | ARQ - Anooraq Resources Corporation - Anooraq announces operational and |
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ARQ
ARQ
ARQ - Anooraq Resources Corporation - Anooraq announces operational and
financial results for the Third Quarter, 2011
Anooraq Resources Corporation
(Incorporated in British Columbia, Canada)
(Registration number 10022-2033)
TSXV/JSE share code: ARQ
NYSE AMEX share code: ANO
ISIN: CA03633E1088
("Anooraq" or the "Company" or the "Group")
Anooraq announces operational and financial results for the third quarter, 2011
Anooraq announces its operational and financial results for the three months
ended September 30, 2011 ("Q3 2011"). This release should be read with the
Company`s unaudited interim financial statements for the three and nine months
ended September 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 features of the quarter
- Disappointing safety performance
- 20% improvement in production volumes quarter-on-quarter
- Development continues to improve mining flexibility
- 14% improvement in unit cost performance quarter-on-quarter
- Two-year wage deal concluded
Harold Motaung, CEO of Anooraq, commented, "During the third quarter, 2011 we
began to see the results of certain on mine initiatives which have improved
mining fundamentals and established a better foundation for operational
improvements at Bokoni.
These improvements have resulted in improved production and development volumes
at Bokoni, together with reduced unit costs quarter-on-quarter, despite wage
inflation increases and other continuing cost pressures.
Key areas of concern remain safety which deteriorated over the quarter, whilst
operating costs continue to come under pressure as a result of the significant
increase in development, wage inflation increases effective July 2011 and other
inflationary pressures, such as increased utility charges.
Our challenge is now to build on the much improved operational foundation at
Bokoni which we have developed during the past two quarters and to ensure that
we continue to show positive trends on operational and financial metrics going
forward."
Review of operational and financial performance in Q3 2011
Safety
Anooraq`s safety performance saw some deterioration quarter-on-quarter. Bokoni`s
lost time injury frequency rate ("LTIFR") deteriorated by 13% quarter-on-quarter
to 1.66 per 200,000 hours worked. Despite the safety trend improving by 33% when
measured against the third quarter of 2010, the decline in our current safety
improvement trend is disappointing, given our "zero harm" target at Bokoni. No
fatalities were recorded for the quarter and on 19 July, 2011 Bokoni achieved
one million fatality-free shifts. The operations lost six operating shifts due
to Section 54 safety stoppages.
Development
Our focus on improved development continues with total primary development
improving 2% quarter-on-quarter. Notably, primary reef development improved 24%
quarter-on-quarter to 1,202 metres, whilst re and sub development increased to
4,570 metres, up 300% when measured against the third quarter of 2010. Creating
the required mining flexibility at Bokoni remains a priority. These improved
development initiatives had a negative impact on the financial performance of
the operations in the short term, but will generate enhanced returns at Bokoni
in the medium term. The required mining flexibility will ensure that all stoping
crews have blast friendly panels available to mine on a continuous basis,
despite incidences of increased potholing, particularly at the Merensky
operations.
Grade
The operations achieved a head (delivered) grade of 3.94 g/t (4E) for the
quarter, a 3% reduction quarter-on-quarter and a 3% decrease when compared to
the third quarter of 2010, primarily due to increased re and sub development
initiatives at the operations.
Recoveries
Concentrator recoveries improved marginally during the period, with Merensky
recoveries improving by 4% to 88% and UG2 recoveries remaining at 81%. Recovered
grade (4E) improved 5% quarter-on-quarter from 3.28 g/t to 3.44 g/t.
Production
Tonnes milled for the quarter were 302,923 tonnes, 20% higher than the third
quarter of 2010. Increased production volumes yielded a total of 33,358 4E
ounces, a 19% improvement quarter-on-quarter and an 8% improvement, when
measured against the third quarter of 2010.
The key production and development parameters for Bokoni in Q3 2011 were:
Q2 2011 Q3 2011 Variance Q3 2010 Variance
Q-on-Q Q3 11 vs
Q3 10
Tonnes Tonnes 258,882 301,208 22% 282,173 7%
delivered
Total Metres 2,549 2,600 2% 2,618 -
primary
development
Head grade g/t, 4E* 4.05 3.94 (3%) 4.08 (3%)
(delivered)
Tonnes Tonnes 266,866 302,923 14% 252,861 20%
milled
4E ounces Ounces 28,119 33,358 19% 30,877 8%
produced*
* 4E consists of platinum, palladium, rhodium and gold
Metal production was as follows:
Metal Q2 2011 Q3 2011 Variance Q3 2010 Variance
Q-on-Q Q3 11 vs
Q3 10
Platinum Ounces 15,499 18,439 19% 16,838 10%
Palladium Ounces 10,027 11,821 18% 11,136 6%
Rhodium Ounces 1,593 1,849 16% 1,802 3%
Gold Ounces 1,000 1,249 25% 1,101 13%
Nickel Tonnes 236 278 18% 219 27%
Copper Tonnes 143 169 18% 131 29%
Revenue and costs
Revenue for Q3 2011 amounted to C$45.3 million (ZAR327.7 million), representing
a 26% increase quarter-on-quarter and a 31% increase when compared to the
corresponding period in 2010.
Higher revenues resulted from increased production volumes, together with a 4%
quarterly increase in the ZAR platinum group metals (PGM) basket price received,
offsetting a 1% decrease in the US$ PGM basket price during the period. PGM
basket prices achieved for Q3 2011 increased to ZAR 10,102/4E Oz (US$1,414/ 4E
Oz), up 18% (US$) and 15% (ZAR) when compared to the third quarter of 2010.
Higher production volumes resulted in a 14% decrease in unit operating costs
quarter-on-quarter, to US$1,375/4E ounce.
Profitability
The Bokoni operations achieved an operating profit of C$1.1 million (ZAR4.4
million) for the quarter, largely attributable to increased production volumes
and a higher PGM basket price.
The Company incurred a basic and diluted loss per share of C$0.04 for Q3 2011,
largely attributable to increased debt financing charges. Anooraq`s current debt
structure is under review, pursuant to an intended refinancing, restructuring
and recapitalization transaction for Bokoni and Anooraq, currently being
negotiated between Anglo American Platinum Limited and Anooraq, as referenced in
the cautionary announcements dated 13 May 2011, 28 June 2011, 10 August 2011, 21
September 2011 and 2 November 2011.
Capital expenditure
Capital expenditure during Q3 2011 amounted to ZAR42.9 million, a reduction of
25% compared to the second quarter of 2011 expenditure.
Wage negotiations
During Q3 2011, Bokoni concluded a two-year wage agreement with the Togetherness
Amalgamated Workers` Union of South Africa ("TAWUSA"), the National Union of
Mineworkers ("NUM") and the United Association of South Africa ("UASA")
providing for increases ranging from 8 to 9% for both years. These increases
are effective from 1 July 2011.
The agreement was negotiated and finalized with no disruption to the Company`s
operations.
Johannesburg
15 November 2011
JSE Sponsor
Macquarie First South Capital (Pty) Limited
Issued on behalf of Anooraq
On behalf of Anooraq
Joel Kesler
Executive: Corporate 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
Macquarie First South Capital
Melanie de Nysschen / Annerie Britz / Yvette Labuschagne
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: 15/11/2011 07:09:38 Produced by the JSE SENS Department.
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