Atlatsa Resources, the South African platinum mining BEE company, saw order restored to its Bokoni mine on Thursday last week following unrest from community members a few days earlier.
On May 11, 2015, operations at Bokoni mine were interrupted by unrest when some members of communities surrounding Bokoni blocked the main road leading to the mine with burning tyres and rocks. The unrest prevented employees from reporting to work which resulted in three days of lost production.
Announcing this in its Q3 results to March 2015, the company failed to mention what actions were followed to resolve the situation. It does however say that “stakeholder engagement is a key pillar of Atlatsa’s business ethos. Atlatsa invests in the area through community-based projects and continually encourages community members to utilise existing legitimate structures to engage with the mine.”
Flat financial results
The quarter was characterised largely by disappointing results which included a 4.4% drop in total tonnes milled to 372 896 t and flat ounce production at 42 875 oz.
Harold Motaung, CEO of Atlatsa, says, “The first quarter of 2015 was characterised by Section 54 safety stoppages and a disappointing safety performance at the mine. Production was also impacted by challenges associated with the opencast operation as a result of community unrest in the fourth quarter of 2014. The safety and health of our employees remains one of our key focus areas and we continue to encourage our employees and contractors to work safely at all times.”
“The company was able to generate cash from its operations as well as maintain Bokoni mine’s ramp-up profile at its two key underground development shafts. Capital discipline, cost containment and efficiency improvements remain key focus areas for Atlatsa.”
Revenue decreased 2.8% quarter-on-quarter to US$52.3 million as a result of the 6.5% decrease in the average Rand PGM basket price for the quarter (R11 57 compared to R12 37).
Total cash operating costs increase of 8.4% is largely attributable to:
- 8% increase in labour costs as a result of annual wage increases and an increase in production bonus payments during the period due to the increase in underground production;
- Marginal 3.8% increase in stores costs;
- 6% increase in utility costs as a result of increased underground production and a 12.7% rate increase in the power tariff by South Africa’s national utility, Eskom; and
- 1% increase in sundries due to a 9% increase in belt maintenance contract payments as well as payment of previously deferred service level agreement costs.
Total capital expenditure for Q1 2015 was $3.8 million (compared to $11.2 million for Q1 2014), comprising 23% sustaining capital and 77% project expansion capital associated with the two key ramp-up shaft operations.
The decrease in capital expenditure is as a result of a strategic decision by management to reduce costs without compromising Bokoni Mine’s development plan.
The company continued to improve its cash generating ability, with operating activities generating cash of $0.9 million in the first quarter of 2015, compared to $27.1 million utilised by operations in the first quarter of 2014. As at March 31, 2015, Atlatsa had a cash balance of $4.6 million, excluding restricted cash.
Mine management continues to focus on various initiatives to improve operational efficiencies, disciplined capital allocation and cost management, without comprising Bokoni mine’s existing ramp-up plan.