- 12 Feb 2008
Northam first half results reflect tough operating conditions
Northam today posted results for the first half of the 2008 financial year, reporting lower earnings per share of 199 cents (F2007 H1: 280 cps) and a reduced dividend for the period at 145 cps.
- Difficult Merensky mining conditions persist
- Drive to push UG2 production continues
- Metals in concentrate produced - 150 755 oz (3PGE + Au)
- Buoyant PGM market conditions continue
- 14% increase in operating costs reflect lower production volumes
- Interim dividend of 145 cps declared
Northam Platinum Limited (Northam) today posted results for the first half of the 2008 financial year, reporting lower earnings per share of 199 cents (F2007 H1: 280 cps) and a reduced dividend for the period at 145 cps.
Results for the half year were adversely affected by the loss of 23 production days owing to safety-related stoppages and intensive retraining programmes for employees.
CEO Glyn Lewis said today, “As expected, the difficulties associated with mining the Merensky reef have persisted. Our emphasis on exploiting the more conformable UG2 reef has borne some success, and has helped us to contain the drop in tonnages mined from both reefs to 17.1%, despite the 24.3% decline in Merensky tonnages.”
As a result of the lower tonnages, and a drop in head grade to 5.0 g/t, (associated mainly with the higher UG2 volumes mined), production of metals in concentrate was lower by 16.5% at 4 689 kg (150 755 oz) compared with H1 in F2007.
Sales revenue at R1.5bn was 17% lower year on year, declining from the R1.8bn level reported in the previous comparable period. Although the average US dollar basket price received for metals rose by 16.3% to US$1 396/oz the relatively strong rand in the period offset the potential gains from the higher prices, and resulted in a ZAR basket price received of R311 369/kg, 11.8% up year on year.
Lewis commented that the innovative metallurgical developments at Northam have facilitated the shift to increase volumes mined from the UG2 reef. Expressed as a ratio, the Merensky/UG2 production stands at 1.4:1. “With the additional external sparger column cell commissioned in August last year, we have made good progress in increasing the proportion of UG2 concentrate in the smelter, largely eliminating the previous problems associated with the build-up of chrome, while at the same time maintaining our PGM recovery rates.
“With the introduction of a high pressure roll crusher in the UG2 circuit within the next couple of months, it may be possible to further increase the throughput of the UG2 concentrator which has a design capacity of 75 000 tonnes per month.”
Reflecting the overall decline in production and general inflationary increases, total operating costs were higher by 14.8%.
Looking ahead, Lewis commented on the ore reserve position, saying there would be a stepped up focus on the deepening project to access the more easily mineable Merensky reef in order to counter the life-of-mine loss in the eastern transition zone of the mine. “We have already established 14 level, with development progressing on 15 level.” Every level opened up below 12, adds some 2.8 years to the mine’s life.
Referring to the situation with regard to power supply, and the possible effect on second half-year results, Lewis noted that production and metal sales should approximate those of H1 if Eskom could continue to supply the company with 90% of its consumption requirements.
On this basis earnings will be determined largely by the average Rand basket price received in the second half, currently at significantly higher levels than the R311 369 per kilogram received in the first half of the 2008 financial year.
Russell and Associates
+27 11 880 3924
- 31 Jan 2008
Booysendal moves ahead
Mvela Resources, and Northam today announced amended terms and key developments marking progress on the various aspects of the ‘Booysendal transaction’ with Anglo Platinum originally announced in September 2007.
Booysendal strike length increased; key ancillary assets, services secured
Mvelaphanda Resources Limited (Mvela Resources), and Northam Platinum Limited (Northam) today announced amended terms and key developments marking progress on the various aspects of the ‘Booysendal transaction’ with Anglo Platinum Limited (Anglo Platinum) originally announced in September 2007.
Mvela Resources, Anglo Platinum and Northam (the parties) have agreed to increase the extent of the Booysendal project area by 1.3 kilometres along strike into the southern part of Anglo Platinum’s Der Brochen project area (the Booysendal Extension) and have reached agreement on Northam’s purchase consideration for 100% of Booysendal (including the Booysendal Extension) from Mvela Resources being reduced to 121 million new Northam shares from 125 million new Northam shares.
The amendments were agreed by the parties following an independent due diligence commissioned by Northam, which defined an inferred resource for Booysendal of 94 million oz 4PGE (4PGE: platinum, palladium, rhodium and gold), compared with the 112 million oz 4PGE on which the original transaction agreement was based. The independent study assumed a higher geological loss in the southern area than before, due to the relatively shallow presence of basement rocks that have affected the structure and mineralization of the Merensky and UG2 reefs, possibly contributing to more challenging mining conditions in certain areas.
The Booysendal Extension contains approximately 9 million oz 4PGE, resulting in a revised total resource for Booysendal of approximately 103 million oz 4PGE.
Northam CEO, Glyn Lewis, said today, “The inclusion of the Booysendal Extension into the project area adds some 1.3km of strike to the project area, taking the total strike length to 14.5km. Having completed detailed work on the orebody, we now have an increased level of confidence in our planning for the project.”
Agreement in principle has also been reached on key assets and services which add further certainty to the sustainability of the project, comprising:
- Electrical power;
- Sites for slimes dams; and
- Access to Booysendal;
Commenting on the developments made Mvela Resources CEO Pine Pienaar said today, “Securing the ancillary assets and services; power, water, access and slimes dam sites, was crucial for the sustainability and economic viability of Booysendal. Having agreed on these essential items, we will be able to move steadily towards concluding the transaction and bringing Booysendal to account.”
In respect of electrical power, Anglo Platinum has supported an arrangement in terms of which Booysendal will have temporary use of 16MVA of excess transformer capacity from transformers at the Mototolo platinum mine (a joint venture between Anglo Platinum and Xstrata), until the commissioning of Booyendal’s own transformers or the first quarter of 2011, whichever is the earlier.
Seven megalitres of water a day from the existing Lebalelo water scheme have been allocated to Booysendal – sufficient until after commissioning and initial production, after which water supplies will be augmented from the De Hoop dam, due for completion in 2013. The Lebalelo pipeline, which currently ends at Motololo, will be extended to Booysendal.
Studies to identify suitable sites for tailings dams will be commissioned over the Booysendal and Der Brochen areas. Anglo Platinum will grant traversing rights over Der Brochen to Booysendal.
Commenting on today’s announcement and the progress made with the transaction, Northam and Mvela Resources chairman Lazarus Zim said today, “In negotiating this transaction we said from the outset that our goal was a win-win outcome for all parties. When we initially announced the transaction we had a certain level of knowledge at our disposal and, having now further evaluated the Booysendal property and having undertaken the appropriate due diligence steps that are necessary to create greater certainty, sustainability and success, we have further refined this transaction. We are now at a stage where we can move on to the next step – closure of the transaction and the feasibility study – so that we can fast-track this project into production. Give the current circumstances in the market and the continued PGM supply shortfalls, Northam is fully committed to delivering this project as expeditiously as possible.”
For Mvela Resources
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+27 83 453 4014
For Northam Platinum
+27 11 880 3924
+27 82 895 0698
- 25 Jan 2008
Interruptions to mining and processing operations
Northam advises that mining operations at the company’s Northam mine in Limpopo Province have been adversely affected by power outages over the past two weeks, and were suspended this afternoon, Friday, 25 January 2008 owing to insufficient power to safely continue normal operations.
Johannesburg, 25 January 2008. Northam Platinum Limited (Northam) advises that mining operations at the company’s Northam mine in Limpopo Province have been adversely affected by power outages over the past two weeks, and were suspended this afternoon, Friday, 25 January 2008 owing to insufficient power to safely continue normal operations. This action follows on some limited underground activities during the morning.
Northam has been advised by Eskom that its ability to maintain 40% of the normal base-load of power has been severely compromised by a number of factors. Although Northam understands from Eskom that it is committed to normalizing the situation, Northam has not been informed as to when the supply of the normal base-load will be restored. Northam is therefore unable to indicate with any certainty when operations will resume.
Russell & Associates
25 January 2008
- 24 Jan 2008
Shareholders are advised that the company’s earnings per share and headline earnings per share for the six month period ended 31 December 2007 are expected to be between 190 and 210 cents.
Shareholders are advised that the company’s earnings per share and headline earnings per share for the six month period ended 31 December 2007 are expected to be between 190 and 210 cents. This compares with the earnings of 280 cents per share reported for the previous comparable period ended 31 December 2006. The expected decrease in earnings results primarily from lower sales volumes as a consequence of lower production following unplanned safety related stoppages and an increase in inventory.
The financial results on which this trading update has been based have not been reviewed or reported on by the company’s auditors.
It is anticipated that the interim results for the six months ended 31 December 2007 will be released on or about 13 February 2008.
Barnard Jacobs Mellet Corporate Finance (Pty) Limited
- 10 Jan 2008
Company announcement: Resignation of Mr Matthews Nzimande
The board of directors of Northam advises the resignation of Mr Matthews Nzimande, general manager of the company’s Northam mine in the Limpopo province.
The board of directors of Northam advises the resignation of Mr Matthews Nzimande, general manager of the company’s Northam mine in the Limpopo province, effective 6 February 2008.
Speaking on behalf of the board, management and employees, Northam CEO Glyn Lewis said today, “We would like to extend our thanks to Matthews for his contribution to the company over the past three years and we wish him well as he continues to develop his career”.
He was appointed general manager at Northam in 2005. Mr Danny Gonsalves will be relieving as general manager until a successor is appointed.
Northam remains committed to creating career opportunities for previously disadvantaged South Africans.
Russell & Associates
Tel: +27 11 880 3924