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Anooraq announces results for the period ended March 31, 2011

13 May 2011

Challenging first quarter for Anooraq: Bokoni group initiates strategic review of assets, as well as restructuring and refinancing

May 13, 2011. Anooraq Resources Corporation (“Anooraq” or the “Company” or, together with its subsidiaries, the “Group”) (TSXV: ARQ; NYSE Amex: ANO; JSE: ARQ) announces its operational and financial results for the three months ended March 31, 2011 (“Q1 2011”). This release should be read with the Company’s unaudited interim financial statements for the three months ended March 31, 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

  • Group restructuring and refinancing initiatives under way
  • Management changes:
    • Harold Motaung appointed as Chief Executive Officer ("CEO"), effective as of April 1, 2011
    • new senior and technical appointments at Bokoni operations in progress
  • Safety performance improves
    • no fatalities
    • lost time injury frequency rate ("LTIFR") and serious injury frequency rate ("SIFR") improve
    • seven shifts lost as a result of safety-related stoppages (10% of production shifts)
  • Production of 22,173 4E ounces for Q1 2011, down by 28% from the previous quarter, largely as a result of safety stoppages, the impact of the slow start-up after the Christmas break, and continued lack of mining flexibility
  • ZAR/US$ exchange rate weakened by 2%, while US$ PGM basket price increased by 4%
  • Revenues declined by 29% quarter-on-quarter

Harold Motaung, President and CEO of Anooraq, commented, "Bokoni has faced both challenges and opportunities in the first quarter which have respectively impacted on our short-term performance, and, in the medium to longer term, should bring their own rewards."

“Anooraq and Anglo Platinum Limited (“APL”) are currently in discussions relating to a strategic review by the Parties of the Bokoni Group assets, capital and financing structures of Bokoni Platinum Holdings (Pty) Limited (“Bokoni” or the “Bokoni Group”), with a view to effecting a restructuring and refinancing transaction. This marks a meaningful step forward in solidifying our partnership with APL and accelerating our refinancing initiatives announced at the time of implementing the Bokoni acquisition in July 2009 when we established the Bokoni Group.

“Whilst corporate restructuring and refinancing initiatives remain important to the Group, our key focus remains addressing the current operational challenges which we face at our mine. To that end additional focus at operational level has been introduced at the Bokoni operations, with an immediate target to achieve the required production levels of safe ounces and to generate net free cash. This will require a multi-faceted approach towards addressing technical or other current challenges, with a strong emphasis on ensuring that all stakeholders at Bokoni are motivated for that purpose.

“The issue of safety and safety-related stoppages has been a focus point and priority during Q1 2011. While the safety-related stoppages that have been imposed by the South African Department of Mineral Resources (“DMR”) have had a negative impact on production – effectively reducing our production shifts for the quarter by 10% – we understand and support the need for a zero tolerance approach to safety risks. A number of interventions have been put in place at Bokoni to address issues of non-compliance with health and safety regulations and to further improve our safety performance. An internal safety auditing programme has been put in place: any transgressions result in an immediate internally-imposed stoppage, and all transgressions must be rectified before mining may continue. Further, all mining personnel are currently receiving retraining on mine standards and safe working procedures.

“Clearly though, the most significant issues facing the Bokoni operations right now are low operating efficiencies and the consequent lack of volume throughput. Critical to this is the much-needed development to create mining flexibility, the lack of which continues to hamper our production output. In addition, we need to improve mining discipline in order to ensure that stoping systems, controls and practices are implemented to the required standards. Bokoni infrastructure and staffing is currently geared for a 120,000 tonnes per month (“tpm”) operation and we need to focus on reaching that consistent level of output in the near future in order to generate positive cash flows and to achieve the required returns from our quality asset base.

“Our plan remains to reach a production rate of 160,000tpm (17,600 4E PGM ounces per month) by 2014. Given the current Group strategic review and our recently reinforced partnership with APL, attention will be focused on optimising our extensive asset base and extracting maximum value for all of our stakeholders.”

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