Announcements 2018

Growth strategy begins to deliver

Northam Platinum Limited (Northam) has released its results for the year ended 30 June 2018. Northam chief executive Paul Dunne presented the group’s progress to the investment community today.


Johannesburg, Friday 7 September 2018. Northam Platinum Limited (Northam) has released its results for the year ended 30 June 2018. The following publications are available on the group’s website for further information:

Northam chief executive Paul Dunne presented the group’s progress to the investment community today. 

KEY FEATURES

  • Normalised headline earnings at R421.5 million
  • Metal production 5.2% higher at 549 000oz 6E
  • Record group capital expenditure at R3.8 billion
  • Execution of the growth strategy on track
    • 19% increase in resource base to 238Moz
    • New 20MW furnace successfully commissioned
    • Steady progress at Booysendal South
    • 2 000 permanent jobs created
    • Eland acquisition finalised
    • Significant progress in accessing Zondereinde’s Western extension

MARKETS

The average US$ basket price increased by 13%, owing largely to higher palladium and rhodium prices, which rose by 33% and 101% respectively. The stronger ZAR over the period, however, limited the increase in the rand PGM basket price to just 5.3%. Dunne believes platinum market fundamentals will improve in the medium term, with jewellery stabilising in China following a sharp fall over the last two years and growth is expected to continue in India and the United States. Autocatalyst demand remains resilient. Diesel car sales are declining in Europe but tighter emission controls and growth elsewhere in the world has compensated. The outlook is for stable demand in 2018 while South African mine supply remains under severe economic pressure.

Palladium autocat demand has grown significantly over the past few years largely on the back of the rapid rise in car sales in China. The existing market deficit is expected to persist, keeping prices buoyant.

Dunne believes rhodium will remain strong for the foreseeable future. “Tighter exhaust emission standards are being rolled out in China from this year resulting in higher rhodium loadings on three way catalysts.

“The combination of stronger Chinese demand and a reduction in South African mine supply has tightened the market,” he said.

GROUP PERFORMANCE

Zondereinde has enjoyed relatively stable labour relations over the past few years which has contributed to good operating performances. Wage negotiations are currently in progress after the conclusion of a three-year wage agreement. At Booysendal the transition to owner operator, settled in May this year, has been very successful.

The commissioning of the new furnace at Zondereinde helped to boost total refined metal production to 549 000oz 6E. Purchased metal increased significantly year on year to 105 000oz with two additional long-term customers secured.

The significant increase in third party material in the last quarter of the year deferred the destocking progress to F2019.

Production of chrome concentrate increased by 11% to 650 000 tonnes with improved contributions from both Booysendal and Zondereinde. Copper and nickel production was also significantly higher year on year.

Total revenue per platinum ounce was 4.2% higher than the previous year primarily on the back of a higher PGM basket price and improved base metal contributions. “Full mine to market unit cost increases were contained to 7.8% in line with mining inflation to R21 270 per platinum ounce. We believe this positions Northam favourably on the industry cost curve,” added Dunne.

Year on year the group’s resource base has grown by 19%, demonstrating the benefits of the unfolding growth strategy. The Western extension at Zondereinde has made a considerable contribution. The finalisation of the Eland transaction added a further 19.3Moz to the resource base.

During the year capex absorbed a record R3.8 billion. The main items were:

  • R1.0 billion spent on the purchase of Zondereinde’s Western extension,
  • R1.5 billion spent on the Booysendal South project,
  • R202.7 million spent on the aerial rope conveyor at Booysendal,
  • R175.0 million spent on the acquisition of Eland platinum, and
  • USD10.8 million spent on the acquisition of the US recycling assets.

IN CONCLUSION

“Looking forward, project execution remains key, particularly at Booysendal South. We’ve acquired the assets and allocated the capital and it is important that our expansion plans are delivered within the project parameters in order to take advantage of a rising PGM market.

“We believe we have a solid operational base and maintaining a competitive unit cost position is essential to future profitability. The company protects itself in this difficult market on this parameter above all else.

“Lastly, we are focused on releasing the working capital locked up in our surplus inventory. Our growth strategy remains firmly on track and we can look forward to significant revenue growth the next time we report,” Dunne concluded.

Issued by
R&A Strategic Communications
Johannesburg
Tel +27 (0)11 880 3924
Marion Brower +27 71 493 0387
Jan Walker +27 71 493 0429

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Another creditable performance from Northam

“The best defence for Northam in this difficult market remains our relative position on the cost curve.” Paul Dunne, CEO


“The best defence for Northam in this difficult market remains our relative position on the cost curve.” Paul Dunne, CEO

Johannesburg, Friday 07 September 2018. Northam Platinum Limited (Northam) has released its results for the year ended 30 June 2018. The following publications are available on the group’s website for further information:

The chief executive’s message to shareholders is reproduced below.

The year under review has been among the busiest in the company’s history as we have progressed our strategy of growing and diversifying our operations. This has been achieved during a period with significant challenges for South Africa’s PGM mining sector. A period of consolidation will follow in F2019 characterised by project execution, operational delivery and stock reduction. Post the commissioning and ramp up of the Booysendal expansion project, the company is expected to become a strong cash generator, enabling Northam to purchase further Zambezi preference shares. The best defence for Northam in this difficult market remains in our relative position on the cost curve, ensuring that all production is cash generative.

PGM MARKETS

In nominal terms, the rand basket price for PGMs is unchanged from its level of a decade ago, a decade in which inflationary cost pressures have continued to erode operating margins. However, while our confidence in the markets for PGMs in the medium to long term remains undiminished, the past 12 months have underscored the fact that short-term challenges persist and that our strategy of managing the business to ensure that Northam is positioned in the bottom half of the industry cost curve is correct.

Immediate challenges were highlighted by the soft price of platinum, the principal contributor to our basket of metals. For most of the financial year, the platinum price fluctuated between USD850/oz and USD1 020/oz. Post year-end the price has fallen below USD800/oz. It is fair to say that the ‘dieselgate’ issue at certain major auto manufacturers combined with the potential future penetration of battery electric vehicles created significant negative sentiment towards platinum during the course of this year.

Average annual prices (USD/oz)
  F2018 F2018 F2017  
Platinum 934 988 5.5%
Palladium 976 731 33.5%
Rhodium 1 618 803 101.5%

In contrast, the spot price of palladium rose steadily from USD838/oz in July to a high of USD1,139/oz in January 2018. That was followed by a period of price consolidation even as there were concerns over the possible effects of US sanctions on Russian deliveries into the global supply chain. The palladium price, which exceeded that of platinum, ended the year at $954/oz, having declined in tandem with the platinum price.

Palladium’s relative price strength, together with that of rhodium which rose 128% over the year, provided Northam with some relief from platinum’s weakness. Palladium’s principal use is as a catalyst for petrol driven motor vehicles where demand growth is likely to persist for several decades even with the advent of battery-driven vehicles. Platinum, on the other hand, finds its automotive use as a catalyst for diesel powered vehicles whose sales have been affected by negative sentiment following the ‘dieselgate’ scandal.

Northam and other PGM producers remain price takers to a large extent, and our continuing success is determined by our ability to contain the cost of production.

HEALTH AND SAFETY

Our commitment to ensuring that our employees enjoy safe and healthy working conditions remains our primary concern.

Sadly, there were two fatal accidents at Zondereinde this year. Mr Feliciano Sebastiao Massingue, a diamond drill operator, lost his life in an underground rail accident in July 2017. Mr Daniel du Plessis, an underground fitter, was fatally injured in an engineering-related accident in June 2018. Management’s thoughts remain with the families and friends of Mr Massingue and Mr du Plessis.

Despite this safety setback, Zondereinde achieved a 22% improvement in its lost time injury incidence rate (LTIIR). The Booysendal mine continues with its world class safety record, achieving an LTIIR of 0.31 per 200 000 hours worked and 3 000 000 fatality free shifts.

STRATEGIC PROGRESS

While our aspirational target of producing 1Moz or more of PGMs remains, we will not chase production for the sake of size alone. All our ounces are and must remain profitable.

During the year’s first half we acquired the ground adjacent to Zondereinde’s western boundary from Anglo American Platinum. This western block, acquired for a cash consideration of R1 billion, provides Zondereinde with additional Merensky and UG2 resources that can be developed cost-effectively by leveraging Zondereinde’s existing underground and surface infrastructure. As a consequence, Zondereinde’s life expectancy has been extended to more than 30 years.

A further strategic development was the acquisition of the mothballed Eland mining assets from Glencore at a price of R175 million. It is not envisaged that full-scale mining will be resumed at Eland until the global PGM market recovers or until we anticipate a sustainable recovery. However, in a move to take advantage of the synergy that our new acquisition makes possible, we have initiated the restoration of concentrator operations following an agreement to process PGM-bearing material from Jubilee Metals, beginning February 2019. The concentrator’s production will be processed further at Zondereinde’s smelter, where a second furnace was brought into operation in February this year. The Eland tailings dam will be reprocessed for chrome and PGMs and Kukama shaft will be recommissioned for trial mining on 1 level west.

The commissioning of the second furnace was a vital development in our longer-term strategy of positioning Northam as a major integrated mine-to-market player. The R1.0 billion smelter expansion and furnace were built with the help of a €20 million contribution by our long-term refining partner, Heraeus Deutschland GmbH & Co. KG (Heraeus), a partnership that has successfully endured for the past 30 years. Significant de-stocking of excess concentrate is expected during the course of F2019.

Full technical details of our operations at our Zondereinde and Booysendal mines are provided elsewhere in this report. In summary, however, Zondereinde has had a very solid year. Merensky grades of over 6g/t were instrumental in boosting production to 349 000 6E oz.

At Booysendal, a few teething problems with the startup of the dense media separation plant were mastered and overcome in the second half of the year. Work was completed on deepening the existing UG2 North mine while, simultaneously, developing the Booysendal Merensky North and Booysendal South operations. The aerial rope conveyor system which will link Booysendal Central mine to the Booysendal South Concentrator is scheduled to be commissioned by April 2019 and may come in ahead of schedule.

In addition, Booysendal has successfully transitioned to full owner-operator status. Since its inception in 2013, Booysendal’s mining operations were carried out on a contract basis by Murray & Roberts Cementation (MRC). As that contract approached its conclusion, however, it was decided that the mine’s management and operation should revert to Northam. The process included the permanent employment of the contractor workforce by Northam. No jobs were lost and our new employees now enjoy the full benefits of permanent employment. Our contractual arrangement with Minopex South Africa also ended in December, and the concentrator moved to an owner-operator model.

While maintaining our focus on mining, we recognised and acted upon a low-risk opportunity to diversify into recycling. In July, we entered into an agreement with the liquidators of A-1 Specialised Services to acquire that company’s mothballed autocatalyst recycling assets and property in Pennsylvania, USA for a cash purchase price of USD10.8 million. The acquisition has given us a low-cost entrée into the recycling sector and is underpinned to a high degree by the value of the building and land. The first trial shipments of recycled material landed in South Africa in April this year for processing at our Zondereinde smelter. Development of this segment within Northam will be done slowly and carefully over time.

During the course of the year we disposed of our 7.5% participation interest in the Pandora joint venture on 1 December 2017, which we considered to be non-core.

INDUSTRIAL RELATIONS

We are conducting wage negotiations at our Zondereinde mine after the financial year end. We expect negotiations to be tough but to be completed with mutual understanding and respect.

Negotiations at Booysendal are scheduled for June 2019. Despite the unprotected work stoppage that was carried out by the former MRC employees in late March to early April, which did impact production somewhat, Booysendal has had a satisfactory year.

THE FUTURE

With regard to the draft Mining Charter of 2018, Northam’s position remains aligned with that of the Minerals Council South Africa, of which Northam is a member. The Mining Charter 2018 is a material improvement on the 2017 Mining Charter draft. However, more work needs to be done to create a Charter that promotes competitiveness, investment, growth and transformation in South Africa. Northam remains well positioned with respect to ownership credentials through the Zambezi Platinum participation.

In the second half of the year, management concluded that it would be prudent to increase available funding going forward mainly as insurance against cash flow requirements for Northam’s business during this period of low rand basket prices. And so, with effect from 17 May, the domestic medium term note programme was increased by R1 billion. Northam also secured a new R1 billion two-year revolving credit facility, increasing total revolving credit facilities to R3 billion until April 2020. The additional R2 billion funding flexibility strengthens Northam’s balance sheet capability in support of the group’s key strategic initiatives, including the development of the Booysendal expansion. Together with existing cash reserves, the new facility provides Northam with increased financial flexibility, ensuring that the group’s growth initiatives remain fully funded in the medium term.

Our focus remains to keep our operations lean and well positioned to take full advantage of a recovery in metal prices, while ensuring we are profitable and cash-flow positive after sustaining capital expenditure.

APPRECIATION

It would be remiss of me not to mention the role which our former chairman Lazarus Zim played in Northam’s development. His wise counsel was invaluable over his 10-year tenure. Lazarus retired in November and was succeeded by Brian Mosehla, the chairman of our BEE partner Zambezi Platinum.

The proposed appointments of Mr Mcebisi Jonas and Mr Jean Nel at our AGM in November will further strengthen an already diverse and very experienced board.

The past year has been a period in which unstinting teamwork was essential, and I must commend my colleagues throughout the company for their efforts, which are so essential to our success. My thanks and appreciation go to all of them.

Issued by
R&A Strategic Communications
Johannesburg
Tel +27 (0)11 880 3924
Marion Brower +27 71 493 0387
Jan Walker +27 71 493 0429

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Interest payment notification

Northam bondholders are advised of the following interest payment due on Monday,
10 September 2018.


Northam bondholders are advised of the following interest payment due on Monday, 10 September 2018:

Bond Code: NHM003
ISIN No: ZAG000129032
Coupon: 10.817%
Interest Period: 11 June to 9 September 2018
Interest Amount Due: R6 742 102.74
Payment Date: 10 September 2018
Date Convention: Modified Following Business Day

5 September 2018

Debt Sponsor
One Capital

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Appointment of independent non-executive directors

In compliance with paragraph 3.59(a) of the JSE Limited Listings Requirements, Northam shareholders are advised that Mr MH (Mcebisi) Jonas and Mr JJ (Jean) Nel have been appointed as independent non-executive directors to the board of Northam (“board”), with effect from 6 November 2018.


In compliance with paragraph 3.59(a) of the JSE Limited Listings Requirements, Northam shareholders are advised that Mr MH (Mcebisi) Jonas and Mr JJ (Jean) Nel have been appointed as independent non-executive directors to the board of Northam (“board”), with effect from 6 November 2018. The appointments are subject to shareholder approval at the Northam annual general meeting, to be held on Tuesday, 6 November 2018 (further details of which will be published on SENS in due course).

Mr Mcebisi Jonas served as Deputy Finance Minister in the Government of the Republic of South Africa from 2014 to 2017 and was a member of the National Assembly until April 2017. Mr Jonas is an independent non-executive director of MTN Group Limited and is one of four independent presidential investment envoys, appointed by President Cyril Ramaphosa to attract investors to South Africa. He is also a former chairperson and non-executive director of the Public Investment Corporation.

Mr Jean Nel is a non-executive director of Mimosa Holdings (Pvt) Limited and Mimosa Investments Limited, which entities own and manage the Mimosa Platinum mine in Zimbabwe. Mr Nel has more than 18 years’ experience in mining and mining finance, including having served as the CEO of Aquarius Platinum from 2012 to 2016, at which time he led the successful disposal of Aquarius Platinum to Sibanye Gold Limited (now Sibanye-Stillwater Limited). He is a Chartered Accountant (South Africa) and a CFA charterholder.

Mr Brian Mosehla, chairman of the board, commented, “Northam is pleased to welcome Messrs Mcebisi Jonas and Jean Nel to the board. They bring extensive additional experience and expertise to Northam, which will further strengthen the board’s diversity and independence. We look forward to their meaningful contribution to the group’s future growth and development.

Johannesburg
3 September 2018

Sponsor and Debt Sponsor
One Capital

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Voluntary operational and trading update

Northam is pleased to provide an update on the group’s operations and growth strategy for the year ended 30 June 2018.


Operational update

Northam is pleased to provide an update on the group’s operations and growth strategy for the year ended 30 June 2018.

The group produced 571 843 oz of equivalent refined 6E (F2017: 546 984 oz), an increase of 4.5% from the comparative prior period. This follows a strong operational performance from the Zondereinde mine which increased production by 7.0% year-on-year to 348 888 oz 6E of equivalent refined metal (F2017: 325 981 oz 6E).

Booysendal mine’s output was adversely affected by a work stoppage in May 2018 when it changed from a contract mining model to an owner mining model, achieving metal in concentrate production of 229 275 oz 6E (F2017: 239 643 oz 6E), a decline of 4.3% from the comparative prior period.

Owing to the group’s mining capacity exceeding its processing capacity before and during the current financial period, there has been an inventory build-up. The bulk of the excess inventory, which is estimated at 170 000 oz, is expected to be processed through the expanded smelter complex in F2019. The value of excess inventory at year-end amounted to R2.1 billion, with an estimated sales value of R2.5 billion.

The group’s growth, diversification and optimisation strategy is on track with good progress being made in the development of the Booysendal South mine and at Zondereinde, the successful commissioning of the second 20MW furnace, which is performing well. This, together with the acquisition of growth assets such as the Western block resource adjacent to Zonderiende for R1.0 billion, Eland mine for R175.0 million as well as the US based recycling assets, contributed to record capital expenditure of R3.8 billion.

Trading update

The US Dollar basket price improved by 13.5% to US$910 oz 6E (F2017: US$802 oz 6E), and the average ZAR/USD exchange rate strengthed 5.9% to ZAR12.82/USD (F2017: R13.63/USD). Total revenue per platinum oz sold is expected to be R26 103 (F2017: R25 050) with unit cash costs per platinum oz at approximately R21 270 (F2017: R19 736).

Both Zondereinde and Booysendal recorded healthy cash margins despite difficult market conditions and higher operating costs. Earnings before interest, taxation, depreciation and armortisation (EBITDA) is expected to increase to approximately R1.1 billion (F2017: R967.2 million) for the year ended 30 June 2018.

The group expects normalised headline earnings, defined as the group’s headline earnings adjusted for the impact of Northam’s black economic empowerment transaction, which is the group’s main measure of performance, to be maintained at approximately R420.0 million (F2017: R398.3 million).

The loss and headline loss per share is expected to be between 185.9 cents and 216.0 cents compared with the loss per share of 181.8 cents and headline loss per share of 181.9 cents reported in F2017. The anticipated loss and headline loss per share is attributable to the Zambezi Platinum (RF) Limited’s non-cash preference share dividends, which are consolidated into Northam’s results in terms of International Financial Reporting Standards.

The number of shares in issue remains at 509 781 212 (F2017: 509 781 212) which the group uses to determine the normalised headline earnings per share. The weighted average number of shares in issue for the year ended 30 June 2018 is unchanged at 349 875 759 (F2017: 349 875 759 shares).

The financial information contained in this announcement has not been reviewed or reported on by Northam’s auditors. The financial results for the year ended 30 June 2018 are expected to be published on or about 7 September 2018.

Johannesburg
27 August 2018

Sponsor and Debt Sponsor
One Capital

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Dealings in securities

In compliance with paragraphs 3.63 to 3.66 of the JSE Limited Listings Requirements (“Listings Requirements”), Northam advises its shareholders of the following dealings by an associate of a director of a major subsidiary of the company.


In compliance with paragraphs 3.63 to 3.66 of the JSE Limited Listings Requirements (“Listings Requirements”), Northam advises its shareholders of the following dealings by an associate of a director of a major subsidiary of the company:

Name of director of major subsidiary Mr L C van Schalkwyk
Name of associate Mrs C van Schalkwyk
Relationship with director Wife of Mr van Schalkwyk
Name of major subsidiary Booysendal Platinum Proprietary Limited
Nature and extent of director’s interest Indirect beneficial purchase of shares
Class of shares Ordinary shares
Date of transaction 29 June 2018
Transactions completed on market  Yes
Clearance obtained in terms of paragraph 3.66 of the Listing Requirements  Yes
Price per ordinary share Various different trades with the following price information:
  • volume weighted average price of R35.9685;
  • highest price of R36.00; and
  • lowest price of R35.86
Total number of ordinary shares 16 550
Value of transaction R595 279.26

Johannesburg
2 July 2018

Sponsor and Debt Sponsor
One Capital

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Interest payment notification

Northam bondholders are advised of the following interest payment due on Monday, 11 June 2018:


Northam bondholders are advised of the following interest payment due on Monday, 11 June 2018:

Bond Code: NHM003
ISIN No: ZAG000129032
Coupon: 11.025%
Interest Period: 9 March to 10 June 2018
Interest Amount Due: R7 098 287.67
Payment Date: 11 June 2018
Date Convention: Modified Following Business Day




6 June 2018

Debt Sponsor
One Capital

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Dealings in securities

In compliance with paragraphs 3.63 to 3.66 of the JSE Limited Listings Requirements (“Listings Requirements”), Northam advises its shareholders of the following dealings by an associate of a director of a major subsidiary of the company.


In compliance with paragraphs 3.63 to 3.66 of the JSE Limited Listings Requirements (“Listings Requirements”), Northam advises its shareholders of the following dealings by an associate of a director of a major subsidiary of the company

Name of director of major subsidiary Mr L C van Schalkwyk
Name of associate Mrs C van Schalkwyk
Relationship with director Wife of Mr van Schalkwyk
Name of major subsidiary Booysendal Platinum Proprietary Limited
Nature and extent of director’s interest Indirect beneficial purchase of shares
Class of shares Ordinary shares
Date of transaction 01 June 2018
Transactions completed on market  Yes
   Yes
Price per ordinary share Various different trades with the following price information:
  • volume weighted average price of R34.58;
  • highest price of R34.60; and
  • lowest price of R34.53
Total number of ordinary shares 14 980
Value of transaction R517 962.51

Johannesburg
4 June 2018

Sponsor and Debt Sponsor
One Capital

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Dealings in securities

In compliance with paragraphs 3.63 to 3.66 of the JSE Limited Listings Requirements, Northam advises its shareholders of the following dealings by a director of the company.


In compliance with paragraphs 3.63 to 3.66 of the JSE Limited Listings Requirements (“Listings Requirements”), Northam advises its shareholders of the following dealings by a director of the company:

Name of director Mr P A Dunne
Nature and extent of director’s interest Direct beneficial
Class of shares Ordinary shares
Nature of transaction Direct purchase of shares
Transactions completed on market Yes
Clearance obtained in terms of paragraph 3.66 of the Listing Requirements Yes
   
Transaction 1  
Date of transaction 30 May 2018
Price per ordinary share R32.90
Total number of ordinary shares 329
Value of transaction R10 824.10
   
Transaction 2  
Date of transaction 31 May 2018
Price per ordinary share Various different trades with the following price information:
  • volume weighted average price of R34.64;
  • highest price of R34.81; and
  • lowest price of R33.70
Total number of ordinary shares 14 671
Value of transaction R508 258.31

Johannesburg
1 June 2018

Sponsor and Debt Sponsor
One Capital

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Dealings in securities

In compliance with paragraphs 3.63 to 3.66 of the JSE Limited Listings Requirements (“Listings Requirements”), Northam advises its shareholders of the following dealings in shares by a director of the company.


In compliance with paragraphs 3.63 to 3.66 of the JSE Limited Listings Requirements (“Listings Requirements”), Northam advises its shareholders of the following dealings in shares by a director of the company:

Name of director Mr A Z Khumalo
Nature and extent of director’s interest Direct beneficial
Class of shares Ordinary shares
Nature of transactions Direct purchase of shares
Transactions completed on market Yes
Clearance obtained in terms of paragraph 3.66 of the Listings Requirements Yes
   
Transaction 1  
Date of transaction 24 May 2018
Price per ordinary share Various different trades with the following price information:
- volume weighted average price of R33.89235;
- highest price of R33.94; and
- lowest price of R33.89
Total number of ordinary shares 2 043
Value of transaction R69 242.07
   
Transaction 2  
Date of transaction 25 May 2018
Price per ordinary share R34.34
Total number of ordinary shares 1 237
Value of transaction R42 478.58
   

Johannesburg
29 May 2018

Sponsor and Debt Sponsor
One Capital

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