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Anooraq announces results for the period ended December 31, 2010

24 March 2011

Anooraaq maintains production levels through challenging quarter, returns mine to operating profit

March 24, 2011. Anooraq Resources Corporation (“Anooraq” or the “Company”) (TSXV: ARQ; NYSE Amex: ANO; JSE: ARQ) announces production from the Bokoni Platinum Mines (“Bokoni”) and its financial results for the three and twelve months ended December 31, 2010. This release should be read with the Company’s Financial Statements and Management Discussion & Analysis, available at www.anooraqresources.com and filed on www.sedar.com. Currency values are presented in South African Rand (ZAR), Canadian dollars (C$) and United States dollars (US$).

Key features for the quarter and financial year:

  • 4E oz produced up by 7% quarter-on-quarter to 30,776 oz1, year-on-year production remained steady at 116,164 oz
  • Tonnes milled up by 10% quarter-on-quarter to 278,242 tonnes, 11% year-on-year increase to 1,044,084 tonnes
  • Operational stability achieved at concentrator, stockpile depleted
    • recovered grade improved 4% in quarter to 4.17 g/t 4E
  • Improved revenues reflect improving PGM market conditions
  • Fatality suffered at Middelpunt Hill shaft

The final quarter of the 2010 financial year maintained the year’s focus on production, in line with the Company’s Phase 1 growth plan.

Philip Kotze, President and Chief Executive Officer (“CEO”) of Anooraq, commented:

“The 2010 year has been one of mixed performance for Anooraq and Bokoni. Many of the managerial and operational changes implemented at Bokoni post the takeover in July 2009 have been successful, and the improved mining performance is testament to the validity of our on-mine strategy. We continue to focus on operational performance, with improved mining flexibility key to our ability to deliver results. The concentrator upgrade took longer than we anticipated but we are starting to see results with higher and more consistent yields. Importantly, we have made enormous strides in transforming our operating culture and in embedding many basic good practices in terms of mining and development, efficiencies, planning and cost control, into the running of the Company.”

Review of operational and financial performance

Safety

The Bokoni lost-time injury frequency rate (“LTIFR”) decreased from 2.46 to 2.32 hours per 200,000 hours worked quarter-on-quarter, a pleasing downward trend. Previous LTIFR statistics have been restated to include serious accidents. We regret to report that there was one fatal accident during the quarter, on 7 November 2010 at Middelpunt Hill shaft. Seven shifts were lost as a result of stoppages in terms of section 54 of the South African Mine Health and Safety Act (Act 29 of 1996) (“Section 54 stoppages”). As a result, Anooraq is focusing on managing safety proactively through an internal safety audit programme and the execution of the Rethusanang training programme.

Production

Mining activities delivered a mixed performance with tonnes produced decreasing by 9% quarter-on-quarter to 258,033 tonnes, mainly as a result of Section 54 stoppages.  Development rates dropped by 22% as a result of infrastructural development around the main stations and the impact of Section 54 stoppages. However, tonnes milled increased by 10% during the quarter to 278,242 tonnes, with head grade and recovered grade rising by 6% to 4.41g/t 4E and 4% to 4.17g/t 4E respectively. Metal production during the quarter increased by 7% to 30,776 4E ounces (Q3 2010: 28,868 4E ounces).The steady production rate across the quarter reflects the operational stability achieved at the concentrator post the automation transition in September 2010. An adjustment was made to the ore stockpile assessment during the quarter, resulting in a write down of CAD$3.8 million (ZAR26 million), which had a negative impact on operating costs and operating profit during the fourth quarter.

A summary of the metal produced at Bokoni for the quarter is as follows:

Metal Q3 2010 production Q4 2010 production Variance
Platinum (oz) 15,742 17,050 8%
Palladium (oz) 10,411 10,905 5%
Rhodium (oz) 1,685 1,679 -
Gold (oz) 1,030 1,142 11%
Nickel (t) 219 264 21%
Copper (t) 131 164 25%

The year-on-year comparison is as follows:

Metal FY 2009 production FY 2010 production Variance
Platinum (oz) 61,807 63,141 2%
Palladium (oz) 43,713 42,180 (4%)
Rhodium (oz) 7,169 6,752 (6%)
Gold (oz) 3,897 4,091 5%
Nickel (t) 838 898 7%
Copper (t) 499 543 9%

Production has remained steady across the financial year, with an 11% increase in tonnes milled to 1,044,085 tonnes (2009: 943,403 tonnes). This was tempered by a 4% decrease in recovered grades as a result of the concentrator automation transition completed during the year and accompanying processing downtime which had a negative impact on recoveries.

    FY2009 FY2010 Variance
Tonnes milled tonnes 943,403 1,044,084 11%
Head grade (grade delivered) g/t, 4E* 4.26 4.18 (2%)
Recovered grade g/t milled, 4E* 4.31 4.12 (4%)
4E oz produced** oz 116,586 116,164 -%

The Company’s primary development focus remains to create mining flexibility, as evidenced through the deployment of dedicated re- and sub-development, and equipping crews. The mine’s improved mining layouts are mostly complete and the new TM3 equipment is now on site which will improve vehicle availability and efficiencies at our trackless operations. This dedicated development focus at the operations, employed during the past year, should yield better operational results for Bokoni moving into the second half of 2011, once the effects of such development efforts to generate additional immediately mineable stopes (IMS) take full effect.

Costs

Total on mine operating costs quarter-on-quarter (including treatment charges) rose 2% to ZAR1,058/tonne, however stripping out the stockpile-associated  cost writeback provides a closer-to-target ZAR964/tonne operating cost figure. The per ounce operating costs rose 4% and 10% respectively to ZAR9,420/4E oz (US$1,365/4E oz), reinforcing ZAR strength through the quarter.

Revenue

Revenue increased by 25% quarter-on-quarter to C$43,244 (22% in ZAR terms to ZAR296,177) in Q4, reflecting the higher basket price despite a stronger rand. The US$/PGM 4E ounce price increased by 16% during the quarter to US$1,395, while the ZAR/US$ exchange rate strengthened by 6%.

Revenue for the 2010 financial year rose to C$148,287, reflecting the 43% increase in the US$/PGM 4E ounce basket price over the period to US$1,257. The ZAR strengthened some 13% against the US dollar over the period, therefore limiting the impact of the rising ZAR basket price.

Profitability

Bokoni mines returned an operating profit in the quarter, however the loss after tax on a consolidated level increased by 15% to C$32,401 (ZAR223,733).The higher loss after tax is due to an increase in interest expenses as a result of additional facility draw downs to fund Bokoni’s capital expansion programme and a prior year deferred tax adjustment on mineral rights.

Capital expenditure, cash and facilities

Bokoni remains in a high capital growth expansion phase through to 2014 with project expansions continuing at the Brakfontein Merensky and Middelpunt Hill UG2 shaft operations.  Capital expenditure for the quarter was C$11 million (ZAR74.5 million), with drawn facilities amounting to C$57.2 million (ZAR378.5 million) and available facilities as at December 31 of C$56.1 million (ZAR371.5 million).

Results presentation: conference call details

Philip Kotze, President and CEO of Anooraq, will host a conference call to discuss the Company’s operational and financial results for the quarter ended December 31, 2010 at 10:00 Eastern Standard Time (“EST”) (16:00 Central African Time (“CAT”)) on Thursday, March 24, 2010. The dial-in details for the conference call are listed below. A playback will be available for three days after the call on this website. The presentation to be used during the call will be available for downloading on the Company’s website at 09:45 EST (15:45 CAT) on Thursday, March 24, 2010.

Conference call

Johannesburg, South Africa 16:00 (local time) Toll +27 11 535 3600
    Toll-free +27 800 200 648
London, United Kingdom 14:00 (local time) Toll-free +44 800 917 7042
New York, United States 10:00 (local time) Toll +1 412 858 4600
    Toll-free +1 800 860 2442
Toronto, Canada 10:00 (local time) Toll-free +1 866 605 3852
SA and other Code 2159# Toll +27 11 305 2030
United Kingdom Code 2159# Toll-free +44 808 234 6771
United States & Canada Code 2159# Toll +1 412 317 0088

Playback facility

SA and other Code 2159# Toll +27 11 305 2030
United Kingdom Code 2159# Toll-free +44 808 234 6771
United States & Canada Code 2159# Toll +1 412 317 0088

For and on behalf of the Board

Philip Kotze, President and Chief Executive Officer
De Wet Schutte: Chief Financial Officer

For further information on Anooraq and its South African properties, please visit our website or call investor services in South Africa on +27 11 883 0831 or in North America on +1 800 667 2114

Anooraq Resources Corporation
Philip Kotze
President and Chief Executive Officer
Office: +27 11 779 6800
Mobile: +27 83 453 0544

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 Advisers
Melanie de Nysschen / Annerie Britz / Yvette Labuschagne
Office: +27 11 583 2000