Anooraq announces operational and financial results for the third quarter, 2011
VANCOUVER, Nov. 15, 2011 /CNW/ - 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 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:
___________________________________________________________________
| | | | |Variance| |Variance|
| | |Q2 2011|Q3 2011| Q-on-Q |Q3 2010|Q3 11 vs|
| | | | | | | Q3 10 |
|________________|________|_______|_______|________|_______|________|
|Tonnes delivered| Tonnes |258,882|301,208| 22%|282,173| 7%|
|________________|________|_______|_______|________|_______|________|
|Total primary | | | | | | |
|development | Metres | 2,549| 2,600| 2%| 2,618| -|
|________________|________|_______|_______|________|_______|________|
|Head grade | | | | | | |
|(delivered) |g/t, 4E*| 4.05| 3.94| (3%)| 4.08| (3%)|
|________________|________|_______|_______|________|_______|________|
|Tonnes milled | Tonnes |266,866|302,923| 14%|252,861| 20%|
|________________|________|_______|_______|________|_______|________|
|4E ounces | | | | | | |
|produced* | Ounces | 28,119| 33,358| 19%| 30,877| 8%|
|________________|________|_______|_______|________|_______|________|
* 4E consists of platinum, palladium, rhodium and gold
Metal production was as follows:
__________________________________________________________
| | | | |Variance| |Variance|
| Metal | |Q2 2011|Q3 2011| Q-on-Q |Q3 2010|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.
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:
o mine expansions, environmental protection and associated compliance
costs arising from exploration, mine development, mine operations
and mine closures;
o expected effective future tax rates in jurisdictions in which our
operations are located;
o the protection of the health and safety of mine workers; and
o 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.
Anooraq Resources Corporation
CONTACT: Queries:
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 (Pty) Ltd
Melanie de Nysschen / Annerie Britz / Yvette Labuschagne
Office: 27 11 583 2000
