Announcements 2019

Update regarding the acquisition of R293 million of Zambezi preference shares

Northam shareholders (“shareholders”) are referred to the announcement dated 2 September 2019 (“previous announcement”), pertaining to the acquisition by Northam of preference shares in Zambezi Platinum (RF) Limited (“Zambezi preference shares”), from Coronation Asset Management Proprietary Limited, acting as an investment manager on behalf of its clients, for a total cash consideration of approximately R292.6 million (“acquisition”).


Northam shareholders (“shareholders”) are referred to the announcement dated 2 September 2019 (“previous announcement”), pertaining to the acquisition by Northam of preference shares in Zambezi Platinum (RF) Limited (“Zambezi preference shares”), from Coronation Asset Management Proprietary Limited, acting as an investment manager on behalf of its clients, for a total cash consideration of approximately R292.6 million (“acquisition”).

As stated in the previous announcement, the acquisition is not subject to shareholder approval, provided an independent professional expert confirms that the terms of the acquisition are fair to shareholders (“fairness opinion”). Northam has appointed BDO Corporate Finance Proprietary Limited (“BDO”) as the independent professional expert for purposes of providing the fairness opinion.

Northam is pleased to announce that BDO has considered the terms and conditions of the acquisition and is of the opinion that the acquisition is fair to shareholders. Accordingly, the acquisition will be implemented on 30 September 2019.

A copy of the fairness opinion is available for inspection for a period of 28 days from the date of this announcement, at Northam’s registered office being, Building 4, 1st Floor, Maxwell Office Park, Magwa Crescent West, Waterfall City, Jukskei View.

Johannesburg
13 September 2019

Corporate Advisor, Sponsor and Debt Sponsor to Northam
One Capital

Independent Professional Expert to Northam
BDO Corporate Finance Proprietary Limited

Attorneys to Northam
Cliffe Dekker Hofmeyr Inc

Interest payment notification – NHM012

Northam bondholders are advised of the following interest payment due on Friday, 13 September 2019:


Northam bondholders are advised of the following interest payment due on Friday, 13 September 2019:

Bond Code: NHM012
ISIN No: ZAG000160136
Coupon: 10.808%
Interest Period: 13 June 2019 to 12 September 2019
Interest Amount Due: R2 724 208.22
Payment Date: 13 September 2019
Date Convention: Following Business Day

Johannesburg
10 September 2019

Debt Sponsor
One Capital

Media release: Northam places R500 million of domestic medium term notes

Northam is pleased to announce that it has completed a private placement of domestic medium term notes (“Notes”) to the value of R500 million (“New Notes”) under Northam’s R5 billion Domestic Medium Term Note Programme (“Programme”).


Northam is pleased to announce that it has completed a private placement of domestic medium term notes (“Notes”) to the value of R500 million (“New Notes”) under Northam’s R5 billion Domestic Medium Term Note Programme (“Programme”). The New Notes will be issued today on the Interest Rate Market of the JSE Limited and will mature over one year from the date of issue. The New Notes will attract a floating rate coupon of 2.40% per annum above a 3 month ZAR-JIBAR and interest will be payable quarterly.

Following the placement of the New Notes, the total notional value of Notes in issue under the Programme will amount to R2,325 billion.

Johannesburg
9 September 2019

Corporate Advisor, Sponsor and Debt Sponsor to Northam
One Capital

Sole Arranger and Dealer to Northam in respect of the Notes
One Capital

Legal Advisors to Northam, the Arranger and the Dealer in respect of the Notes
Bowman Gilfillan Inc.

SENS: Northam places R500 million of domestic medium term notes

Northam is pleased to advise that it has completed a private placement of domestic medium-term notes to the value of R500 million under Northam’s R5 billion Domestic Medium Term Note Programme.


Johannesburg, Monday 09 September 2019.  Northam is pleased to advise that it has completed a private placement of domestic medium term notes to the value of R500 million under Northam’s R5 billion Domestic Medium Term Note Programme. The New Notes will be issued today on the Interest Rate Market of the JSE Limited and will mature over one year from the date of issue. The New Notes will attract a floating rate coupon of 2.40% per annum above a three-month ZAR-JIBAR and interest will be payable quarterly.

Following the placement of the New Notes, the total notional value of Notes in issue under the Programme will amount to R2,325 billion.  

Johannesburg
9 September 2019

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

Edith Leeson +27 79 527 6882

Listing of new financial instrument – NHM013

The JSE Limited has granted approval for the listing of NHM013 Senior Unsecured Floating Rate Notes, under the Northam Platinum Limited ZAR5 000 000 000 Domestic Medium Term Note Programme dated 3 August 2012, as amended and/or supplemented from time to time, as guaranteed by Booysendal Platinum Proprietary Limited, with effect from 9 September 2019.


The JSE Limited (“JSE”) has granted approval for the listing of NHM013 Senior Unsecured Floating Rate Notes (“Notes”), under the Northam Platinum Limited ZAR5 000 000 000 Domestic Medium Term Note Programme dated 3 August 2012, as amended and/or supplemented from time to time (“Programme”), as guaranteed by Booysendal Platinum Proprietary Limited, with effect from 9 September 2019.

The details pertaining to NHM013 are as follows:

Instrument Type: Senior Unsecured Floating Rate Notes
Total Notes in Issue: ZAR2 325 000 000.00 including this issue
Instrument Code NHM013
Nominal Amount: ZAR500 000 000.00
Issue Price: 100%
Interest Rate: 3 Month ZAR-JIBAR plus 240 bps, being 9.208% on the first Interest Rate Determination Date (3 Month ZAR-JIBAR as at 5 September 2019 of 6.808% plus 240 bps)
Interest Rate Determination Date(s):       5 September 2019, 9 December 2019, 9 March 2020 and 9 June 2020 (or the first Business Day of each Interest Period)
Coupon Rate Indicator: Floating
Issue Date: 9 September 2019
Interest Commencement Date: 9 September 2019
Maturity Date: 9 September 2020
Final Redemption Amount: 100% of Nominal Amount
Last Day to Register: By 17h00 on 28 November 2019, 27 February 2020, 29 May 2020 and 29 August 2020 or if such day is not a Business Day, the Business Day before each Books Closed Period
Books Closed Period: From 29 November 2019 to 8 December 2019, 28 February 2020 to 8 March 2020, 30 May 2020 to 8 June 2020 and 30 August 2020 to 8 September 2020 (all dates inclusive)
Interest Payment Date(s): 9 December 2019, 9 March 2020, 9 June 2020 and 9 September 2020
ISIN No: ZAG000162181
Business Day Convention: Following Business Day
Other: The applicable pricing supplement (“APS”) contains additional terms and conditions to the terms and conditions as contained in the Programme Memorandum, dated 3 August 2012, (“Terms and Conditions”)
Summary of additional terms and conditions: The additional terms and conditions pertain to the applicable guarantee and the amendment of Condition 16.1 (Senior Notes) by including additional Events of Default in terms of Condition 16.1.1.9 (Other) of the Terms and Conditions. Investors should refer to Appendix “A” of the APS for full details of the additional terms and conditions, available on Northam’s website: https://www.northam.co.za/downloads/send/96-files/1269-applicable-pricing-supplement-06092019

The Notes will be immobilised in the Central Securities Depository (CSD) and settlement will take place electronically in terms of JSE Rules.

Johannesburg
6 September 2019

Sole Arranger, Dealer and Debt Sponsor to Northam in respect of the Notes
One Capital

Attorneys to Northam in respect of the Notes
Bowman Gilfillan Inc.

Acquisition of R293 million of Zambezi preference shares

Northam shareholders (“shareholders”) are referred to the announcement dated 30 August 2019 (“previous announcement”) pertaining to the acquisition by Northam of preference shares in Zambezi Platinum (RF) Limited (“Zambezi”), (“Zambezi preference shares”).


ACQUISITION OF R293 MILLION OF ZAMBEZI PREFERENCE SHARES

  1. INTRODUCTION

    Northam shareholders (“shareholders”) are referred to the announcement dated 30 August 2019 (“previous announcement”) pertaining to the acquisition by Northam of preference shares in Zambezi Platinum (RF) Limited (“Zambezi”), (“Zambezi preference shares”).

    Northam is pleased to announce that, since the date of the previous announcement, Northam has reached an agreement to acquire additional Zambezi preference shares, as detailed in paragraph 3 below (“acquisition”). Following the acquisition, Northam will hold 23 388 840 Zambezi preference shares, representing approximately 14.6% of all Zambezi preference shares in issue.

  2. RATIONALE FOR THE ACQUISITION

    As stated in the previous announcement, Northam’s acquisition of Zambezi preference shares will reduce the preference share dividend expense and liability included in Northam’s consolidated financial statements, as well as Northam’s potential financial exposure under the guarantee it provided to holders of Zambezi preference shares, should the guarantee be called upon. Furthermore, should Zambezi elect to redeem the Zambezi preference shares through a distribution of ordinary shares in Northam (“Northam shares”) held by Zambezi, then the redemption of the Zambezi preference shares held by Northam at such time will result in a distribution of Northam shares to Northam, thereby reducing the number of Northam shares in issue.

  3. SMALL RELATED PARTY TRANSACTION

    Northam has reached agreement with Coronation Asset Management Proprietary Limited, acting as an investment manager on behalf of its clients (“Coronation”), pursuant to which Northam will acquire Coronation’s entire remaining shareholding of Zambezi preference shares, being 3 980 382 Zambezi preference shares, at a price of R73.50 per Zambezi preference share, for a total cash consideration of approximately R292.6 million. The acquisition will be funded from Northam’s cash reserves.

    The acquisition will be implemented on 30 September 2019, provided Northam obtains a fairness opinion confirming that the transaction is fair to shareholders, as further detailed below. 

    Coronation is a material shareholder of Northam, in that it is able to exercise voting control, on behalf of its clients, in excess of 10% of all Northam shares in issue. Accordingly, Coronation is a related party to Northam as contemplated in paragraph 10.1(b)(i) of the JSE Limited Listings Requirements (“Listings Requirements”) and the acquisition is categorised as a “small related party transaction” in terms of paragraph 10.7 of the Listings Requirements.

    The acquisition is not subject to shareholder approval, provided an independent professional expert confirms that the terms of the acquisition are fair to shareholders (“fairness opinion”). Further information regarding the fairness opinion will be published on SENS in due course.

  4. DETAILS OF THE ZAMBEZI PREFERENCE SHARES

    The Zambezi preference shares are cumulative, non-participating redeemable preference shares which accrue dividends at a nominal rate equal to the South African prime interest rate plus 3.5%, calculated on a daily basis, based on a 365-day year, compounded annually. The Zambezi preference shares were listed on the securities exchange operated by the JSE Limited on 11 May 2015.

    Subject to certain exceptions, the Zambezi preference shares are redeemable on 17 May 2025 and will be redeemed, at Zambezi’s election, in cash and / or through the distribution of Northam shares held by Zambezi. The redemption of the Zambezi preference shares is secured through a guarantee provided by Northam in favour of the holders of Zambezi preference shares. If the guarantee is exercised, Northam will, at its election, settle the associated liability using cash and / or through the issue of new Northam shares.
    As reported in the annual financial statements of Northam for the year ended 30 June 2019, the Zambezi preference share liability amounted to approximately R10.8 billion and the accumulated preference share dividends for the period amounted to approximately R1.3 billion. The acquisition by Northam of Zambezi preference shares will reduce the Zambezi preference share liability and accumulated preference share dividends recognised in Northam’s consolidated financial statements. The accounting policies adopted by Northam in the preparation of its annual financial statements are in accordance with the International Financial Reporting Standards.

    Johannesburg
    2 September 2019

    Corporate Advisor, Sponsor and Debt Sponsor to Northam
    One Capital

    Attorneys to Northam
    Cliffe Dekker Hofmeyr Inc.

Northam adds to its Zambezi pref shares

Northam is pleased to announce the acquisition of 13 700 000 Zambezi preference shares, bringing its holding of preference shares to 19 408 458, representing 12.1% of all Zambezi preference shares in issue.  Northam has acquired these Zambezi preference shares from the PIC for a cash amount of R1.007 billion. The acquisition will be funded by Northam’s cash reserves.


Johannesburg, 30 August 2019. Northam is pleased to announce the acquisition of 13 700 000 Zambezi preference shares, bringing its holding of preference shares to 19 408 458, representing 12.1% of all Zambezi preference shares in issue.  Northam has acquired these Zambezi preference shares from the PIC for a cash amount of R1.007 billion. The acquisition will be funded by Northam’s cash reserves.

This announcement follows on the previous advisory to shareholders dated 6 August 2019 and will be beneficial to Northam shareholders:

  • the transaction will reduce the preference share dividend expense and liability included in Northam’s consolidated financial statements;
  • it will also reduce Northam’s potential financial exposure under the guarantee it provided to holders of Zambezi preference shares, should the guarantee be called upon; and
  • should Zambezi elect to redeem the Zambezi preference shares through a distribution of ordinary shares in Northam held by Zambezi, then the redemption of the Zambezi preference shares held by Northam will result in reducing the number of Northam shares in issue.

Northam CEO Paul Dunne said today, “Zambezi’s structure presents a very compelling and powerful way for Northam to return value to shareholders through the purchase of the Zambezi preference shares.”

Issued by R&A Strategic Communications
Tel 011 880 3924
Marion Brower 071 493 0387

Acquisition of R1 billion of Zambezi preference shares

Northam shareholders are referred to the announcement dated 6 August 2019 pertaining to the acquisition by Northam of preference shares in Zambezi Platinum (RF) Limited.


1. Introduction

Northam shareholders (“shareholders”) are referred to the announcement dated 6 August 2019 (“previous announcement”) pertaining to the acquisition by Northam of preference shares in Zambezi Platinum (RF) Limited (“Zambezi”), (“Zambezi preference shares”).

Northam is pleased to announce that, since the date of the previous announcement, Northam has reached an agreement to acquire additional Zambezi preference shares, as detailed in paragraph 3 below (“acquisition”). Following the acquisition, Northam will hold 19 408 458 Zambezi preference shares, representing approximately 12.1% of all Zambezi preference shares in issue.

2. Rationale for the acquisition

As stated in the previous announcement, Northam’s acquisition of Zambezi preference shares will reduce the preference share dividend expense and liability included in Northam’s consolidated financial statements, as well as Northam’s potential financial exposure under the guarantee it provided to holders of Zambezi preference shares, should the guarantee be called upon. Furthermore, should Zambezi elect to redeem the Zambezi preference shares through a distribution of ordinary shares in Northam (“Northam shares”) held by Zambezi, then the redemption of the Zambezi preference shares held by Northam at such time will result in a distribution of Northam shares to Northam, thereby reducing the number of Northam shares in issue.

3. Small related party transaction and fairness opinion

Northam has reached agreement with the Public Investment Corporation SOC Limited (“PIC”), pursuant to which Northam will acquire 13 700 000 Zambezi preference shares from the PIC today (Friday, 30 August 2019) at a price of R73.50 per Zambezi preference share, for a total cash consideration of approximately R1.007 billion .

The acquisition is not subject to any conditions precedent and will be funded from Northam’s cash reserves.

The PIC is a material shareholder of Northam, in that within the preceding 12 months, it has been able to exercise voting control in excess of 10% of all Northam shares in issue. Accordingly, the PIC is a related party to Northam as contemplated in paragraph 10.1(b)(i) of the JSE Limited Listings Requirements (“Listings Requirements”) and the acquisition is categorised as a “small related party transaction” in terms of paragraph 10.7 of the Listings Requirements.

The acquisition is not subject to shareholder approval, provided an independent professional expert confirms that the terms of the acquisition are fair to shareholders. Northam has appointed BDO Corporate Finance Proprietary Limited (“BDO”) as the independent expert for purposes of providing an opinion in respect of the fairness of the acquisition (“fairness opinion”).

BDO has considered the terms and conditions of the acquisition and is of the opinion that the acquisition is fair to shareholders. A copy of the fairness opinion is available for inspection for a period of 28 days from the date of this announcement, at Northam’s registered office being, Building 4, 1st Floor, Maxwell Office Park, Magwa Crescent West, Waterfall City, Jukskei View.

4. Details of the Zambezi preference shares

The Zambezi preference shares are cumulative, non-participating redeemable preference shares which accrue dividends at a nominal rate equal to the South African prime interest rate plus 3.5%, calculated on a daily basis, based on a 365-day year, compounded annually. The Zambezi preference shares were listed on the securities exchange operated by the JSE Limited on 11 May 2015.

Subject to certain exceptions, the Zambezi preference shares are redeemable on 17 May 2025 and will be redeemed, at Zambezi’s election, in cash and / or through the distribution of Northam shares held by Zambezi. The redemption of the Zambezi preference shares is secured through a guarantee provided by Northam in favour of the holders of Zambezi preference shares. If the guarantee is exercised, Northam will, at its election, settle the associated liability using cash and / or through the issue of new Northam shares.
As reported in the annual financial statements of Northam for the year ended 30 June 2019, the Zambezi preference share liability amounted to approximately R10.8 billion and the accumulated preference share dividends for the period amounted to approximately R1.3 billion. The acquisition by Northam of Zambezi preference shares will reduce the Zambezi preference share liability and accumulated preference share dividends recognised in Northam’s consolidated financial statements. The accounting policies adopted by Northam in the preparation of its annual financial statements are in accordance with the International Financial Reporting Standards.

Corporate Advisor, Sponsor and Debt Sponsor to Northam
One Capital

Independent Expert to Northam
BDO Corporate Finance Proprietary Limited

Attorneys to Northam
Cliffe Dekker Hofmeyr Inc.

Northam posts solid results for the year

Northam Platinum has issued its annual results for the year ended 30 June 2019.


focus on project execution, sustainable cost control and creating long-term value for all stakeholders

Johannesburg, 23 August 2019. Northam Platinum has issued its annual results for the year ended 30 June 2019. The following documents, making up the suite of 2019 published reports, are available on the Northam website at www.northam.co.za for review. The suite of reports includes:

Reporting suite 2019

KEY FEATURES FOR THE YEAR

  • Record operating profit of R2.4 billion
  • Normalised headline earnings up 226.7% to R1.4 billion
  • Production grows by 7.4% to 519 954 oz 4E
  • Net debt of R3.0 billion
  • Capex reduced to R2.9 billion as capital investment programme starts to taper
  • Focus on returning value to shareholders with purchase of Zambezi pref shares

Performance overview

The group’s equivalent refined metal production rose by 7.4% to 519 954 oz 4E with increased contributions from both Booysendal and Zondereinde. Chrome output was higher by 17.6% at 764 528 tonnes, reflecting the growth at Booysendal and Zondereinde, along with a maiden contribution from Eland.

Revenues hit a record R10.6 billion in the year, attributable to the effect of the higher PGM volumes combined with a higher US dollar basket (4E) price, and, in addition, a weaker South African currency, lower by 10.6% against the US dollar.

The average US dollar sales prices achieved during the year improved for most metals, except platinum which continued its downward trend to USD824/oz (F2018: USD934/oz). Palladium and rhodium both performed well, higher by 25.7% and 60.8% respectively. Given, however, that platinum makes up roughly 60% of the precious metals basket, the increase in the 4E basket price in US dollar terms was held to a modest 8.8%.

Booysendal’s growing contribution to the group’s improving cost profile is evidenced by the increase in group unit cash costs/equivalent Pt oz being held to a commendable 7.4% at R22 847/Pt oz.

The cost of sales was 22.4% higher at R8.2 billion, and was driven mainly by some significant operating input cost increases, including:

  • 13.4% higher mining costs, attributable to the higher employee complement and labour cost increases;
  • concentrating costs were 25.4% higher, reflecting higher group throughput and the costs associated with the commissioning of the Booysendal South concentrator; and
  • smelter and base metal removal plant costs which were impacted by costs associated with the additional power required by the second furnace.

Group capex peaked last year at R3.8 billion mainly on expenditure at Booysendal South, the completion and commissioning of the second furnace at Zondereinde and the purchase of the western extension. This year total capex was significantly lower at R2.9 billion and is likely to taper further next year as key project milestones are completed.

Normalised headline earnings (our main measure of performance), have been calculated taking into account the headline earnings per share adjusted for non-cash items relating to the BEE transaction. When stripping out these non-cash items normalised headline earnings of R1.4 billion resulted, a 226.7% increase year on year, equating to normalised headline earnings per share of 270.1 cps. Earnings per share increased to 17.2 cents, and headline earnings per share to 15.8 cents per share.

Zondereinde

Production of equivalent refined metal from own operations increased by 3.1% to 308 466oz 4E. Merensky milled tonnages grew by 10.2%, underlining the positive impact of reserve build-up in both the deepening and Western extension sections of the mine. UG2 ore exceeded concentrator milling capacity by 129 383 tonnes.

Further good progress was made on the Zondereinde expansion projects in order to improve Merensky ore reserve availability:

  • the conveyor decline at the deepening project is reaching 18 level and lateral development has progressed well on 17 level. Stoping is continuing on 16 level and is being serviced by both the material and chairlift declines, which are equipped and commissioned.
  • At the Western extension development has progressed well on 3 to 12 levels, with footwall strike drives advancing significantly and stoping having started. This project will add some 50 000 oz to Zondereinde’s production profile.

The new furnace and drying plant at the Zondereinde metallurgical complex are producing and material handling work and logistical infrastructure is being upgraded to deal with the increase in concentrate.

Capital expenditure during the current year fell to R674.0 million (F2018: R1.5 billion). Expansionary project expenditure accounted for R605.6 million, while sustaining expenditure was R68.4 million. This is the result of last year’s once-off payment for the acquisition of the Western extension. Zondereinde capex in 2020 is likely to be about R595 million.

Higher labour and power costs, along with ore reserve development of more than 11 kilometres, contributed to unit operating costs increasing by 9.2% to R24 124/Pt oz.

Booysendal

The good safety performance at Booysendal continues, with the mine exceeding 4.5 million fatality free shifts during the year and improving the LTIIR to 0.18.

Production from Booysendal North UG2 mine improved 2.8% year-on-year to 2 243 924 tonnes primarily owing to improved mining productivity following the bedding down of the owner mining model and the application of an amended shift regime. The Merensky North mine increased its contribution by 18.3% to 386 476 tonnes, following the addition of a third stoping crew in the latter part of the year.

First production was achieved from the Booysendal Central UG2 mine, adding 181 853 tonnes to the existing stockpile of 71 000 tonnes.

Total tonnes milled increased by 7.5% to 2 868 282 tonnes. Additional tonnes milled essentially came from Booysendal Central UG2 production. The dense media separation plant at the North concentrator is operating well within design parameters. The total operating costs at Booysendal were R2.5 billion, a 20.7% increase. Volume increases, together with stores and power costs, led to this increase. Higher production volumes resulted in a cash cost per platinum ounce in concentrate produced increasing by 4.8% to R17 904/Pt oz.

North mine capital expenditure of R341.8 million (F2018: R462.3 million), included R188.5 million expansionary and R153.3 million sustaining capital. This year-on-year reduction reflects the close out of the phase 1 Merensky North and UG2 North deepening projects. South mine capital expenditure totalled R1.5 billion (F2018: R1.5 million) and reflects surface infrastructure construction ahead of schedule, together with North aerial rope conveyor pre-payments which partially de-risk the overall project work and cash flows.

The F2020 capital expenditure for North mine will be entirely sustaining and is estimated at R220.0 million. The South mine capital expenditure is estimated at R1.0 billion. Main workflows comprise ongoing surface infrastructure construction and underground mining and equipping at the Central UG2 complex, completion of the Central Merensky box cut, together with the start of underground development, and the construction of the North aerial rope conveyor system.

Negotiations for a new wage agreement have started with the majority union, AMCU at Booysendal.

Eland

Eland’s existing infrastructure comprises a 250 000 tonne per month capacity concentrator with both PGM and chrome circuits, a large TSF and surface infrastructure. Two decline systems, Kukama and Nyala, have been pre-developed to lengths of 1 300 metres and 850 metres from surface access. These are equipped with underground dip and strike conveyors for ore transport, chairlifts for people transport, as well as electricity and water reticulation systems.

The decline systems comprise two on-reef barrels and one approximately 25 metres below reef housing the dip conveyors. The mine has been on care and maintenance since 2015. Hydro-mining and reprocessing of tailings from the TSF has commenced. Underground mining will restart in F2020.

Work at Eland during the year focused on recommissioning the chrome spirals and secondary PGM circuit in the concentrator to receive feedstock from the tailings dam for re-processing. A total of 12 676 tonnes of chrome concentrate was produced and sold. This operation will continue in the new financial year, together with the processing of purchased material to recover PGMs.

In parallel with the processing operations, a feasibility study to restart underground mining was completed, together with the refurbishment and recommissioning of fixed and mobile underground equipment in anticipation of the restart. Development of a revised mining layout will start at the Kukama shaft in F2020. In addition, preparation for a mobile tunnel borer (MTB) trial, to test its suitability for advancing the decline system, was undertaken. This, together with pre-production costs resulted in capital expenditure for the year of R371.2 million. Capital expenditure is expected to reach R400 million in F2020.

Looking to the future chief executive Paul Dunne commented that project execution remains key to the company’s unfolding strategy. “A lot of the hard work has been done,” he said, “reducing the execution risk. This gives us increased confidence that we’ll be able to deliver our projects within the designed parameters to take advantage of a rising PGM market.

“Now that we’re over the peak funding requirements for our project pipeline, we’re turning our attention to returning value to shareholders, either by repurchasing our own ordinary shares or the Zambezi preference shares or a combination of the two. Any free cash over and above our targeted net debt level will be used for this purpose.

“Our operations are performing well and we expect to deliver further production growth in the new year. We’ll continue to focus on costs in order to grow our margins and maintain our relative cost position,” Dunne concluded.


Issued by R&A Strategic Communications,
Johannesburg,
Tel +27 (0)11 880 3924;
Marion Brower +27 71 493 0387;
Edith Leeson 079 527 6882

Abridged audited group annual results for the year ended 30 June 2019 and notice of annual general meeting

Northam achieved a record operating profit of R2.4 billion for the financial year ended 30 June 2019 (F2018: R823.3 million), representing a 192.7% increase from the previous corresponding period, underpinned by a solid operating performance at both operations, well contained unit cash costs and a higher basket price received. This translates to an operating profit margin of 22.6% (F2018: 10.9%).


Key features:

  • Record operating profit of R2.4 billion
  • Record production from own operations of 519 954 oz 4E
  • Normalised headline earnings of 270.1 cents per share, up 226.6%
  • Execution of growth strategy remains firmly in place, with R2.6 billion spent on its execution during the period under review
  • Net debt of R3 billion
  • Commendable safety performance LTIIR of 0.93

Financial results

Northam achieved a record operating profit of R2.4 billion for the financial year ended 30 June 2019 (F2018: R823.3 million), representing a 192.7% increase from the previous corresponding period, underpinned by a solid operating performance at both operations, well contained unit cash costs and a higher basket price received. This translates to an operating profit margin of 22.6% (F2018: 10.9%).

The group achieved a record production from own operations amounting to 519 954 oz 4E (F2018: 483 941 oz 4E), representing a 7.4% increase from the previous corresponding period, with increased contributions from both Booysendal and Zondereinde. Group chrome concentrate production increased by 17.6% to 764 528 tonnes on the back of growth at Booysendal and Zondereinde, as well as first production from Eland (F2018: 650 091 tonnes).

The total comprehensive income for the period was R71.4 million (F2018: loss of R705.4 million). Included in the income for the period is the impact of the black economic empowerment ("BEE") transaction relating to the Zambezi Platinum (RF) Limited preference shares, which are consolidated into the group results and accrued a cumulative variable dividend (accrued dividends) amounting to R1.3 billion (F2018: R1.1 billion). This negatively impacted the consolidated group results for the period under review. Shareholders are reminded that this is a non-cash item.

Normalised headline earnings per share for the period were 226.6% higher at 270.1 cents (F2018: 82.7 cents) per share. Normalised headline earnings, which is Northam's main measure of performance, has been calculated taking into account the headline earnings/loss per share adjusted for non-cash items relating to the BEE transaction. These include the preference share dividends associated with the BEE transaction, as detailed above.

Total group capital expenditure reduced year on year to R2.9 billion as major project milestones were completed. R2.6 billion was spent on expansionary capex and R221.8 million on sustaining capex.

Despite the difficult economic circumstances prevailing during the period under review, both of Northam's mining operations posted an operating profit. Zondereinde achieved an operating profit of R1.3 billion (F2018: R355.4 million) and Booysendal achieved an operating profit of R985.7 million (F2018: R525.4 million).

The group continues to deliver on its strategy of developing low-cost, long-life assets in order to position itself at the lower end of the industry cost curve.

Highlights

 30 June 2019 30 June 2018 Variance
    %
Sales revenueR10.6 billion R7.6 billion 41.0
Operating profit R2.4 billionR823.3 million192.7
Operating profit margin 22.6% 10.9% 107.3
Normalised headline earnings R1.4 billion R421.5 million 226.7
Earnings/(loss) per share 17.2 cents (201.5 cents)
Headline earnings/(loss) per share 15.8 cents (200.5 cents)
Normalised headline earnings per share 270.1 cents 82.7 cents 226.6
EBITDA R2.6 billion R1.1 billion 138.2
EBITDA margin 24.8% 14.7% 68.7
Cash generated from operating activities R2.7 billion R1.1 billion 140.7
Capital expenditure R2.9 billion R3.8 billion (24.3)

Dividends

Given the company's current capital structure, project commitments and economic operating environment, the Northam board of directors (the "board") are of the view that the most efficient way to return value to investors precludes the payment of a cash dividend. The board has therefore resolved not to declare a dividend for the financial year ended 30 June 2019 (F2018: R Nil).

NOTICE OF ANNUAL GENERAL MEETING

The annual general meeting ("AGM") of Northam shareholders ("shareholders") will be held at Northam, Building 4, 1st Floor, Maxwell Office Park, Magwa Crescent West, Waterfall City, Jukskei View, Midrand, South Africa on Thursday, 7 November 2019 at 12:00 to transact the business as stated in the notice of AGM and abridged annual report 2019 ("notice and abridged annual report 2019").

Shareholders are advised that the notice and abridged annual report 2019, containing the condensed audited financial statements for the year ended 30 June 2019, will be distributed to all shareholders by no later than Friday, 30 August 2019.

The annual integrated report 2019, the complete consolidated audited annual financial statements which incorporates the external auditors' report in which Ernst & Young Inc. expressed an unmodified audit opinion and the notice and abridged annual report 2019 are available on the following link:
https://www.northam.co.za/investors-and-media/publications/annual-reports or can be obtained from the company's registered office on request.

The salient dates for the AGM are as follows:

 2019
Record date to determine which shareholders are entitled to receive the notice and abridged annual report 2019Friday, 23 August
Distribution of the notice and abridged annual report 2019Friday, 30 August
Last day to trade in order to be eligible to attend and vote at the AGMTuesday, 22 October
Record date to determine which shareholders are entitled to attend and vote at the AGMFriday, 25 October
Forms of proxy for the AGM to be lodged by 12:00 onWednesday, 6 November*
AGM to be held onThursday, 7 November
Results of AGM released on SENS onThursday, 7 November

* Any forms of proxy not lodged by this date and time must be delivered to the chairperson of the AGM before the appointed proxy may exercise any rights of the shareholder at the AGM.

This short-form announcement is the responsibility of the directors and is only a summary of the information in the full announcement and does not contain full or complete details.

Any investment decision should be based on the full results announcement accessible via the JSE link at https://senspdf.jse.co.za/documents/2019/JSE/ISSE/NHM/AFS_2019.pdf and the full audited annual financial statements available on our website at https://www.northam.co.za/investors-and-media/publications/annual-reports

The full results announcement and the full audited annual financial statements, incorporating the Ernst & Young Inc. auditors' report, are also available at our registered office and at the office of our sponsor for inspection, at no charge, during office hours.

On behalf of the board at Johannesburg on 20 August 2019.

KB Mosehla PA Dunne
Chairman Chief executive
DIRECTORS
KB Mosehla (non-executive chairman)
R Havenstein (lead independent director)
PA Dunne * (chief executive officer)
AH Coetzee (chief financial officer
DH Brown (independent non-executive director)
CK Chabedi (independent non-executive director)
HH Hickey (independent non-executive director)
NY Jekwa (independent non-executive director)
MH Jonas (independent non-executive director)
TE Kgosi (independent non-executive director)
TI Mvusi (independent non-executive director)
JJ Nel (independent non-executive director)
JG Smithies * (independent non-executive director)

* British

Registered office
Building 4, 1st Floor,
Maxwell Office Park
Magwa Crescent West
Waterfall City
Jukskei View, 2090
South Africa

PO Box 412694
Craighall, 2024
South Africa

Telephone +27 11 759 6000
www.northam.co.za

Company secretary
PB Beale
Building 4, 1st Floor,
Maxwell Office Park
Magwa Crescent West
Waterfall City
Jukskei View, 2090
South Africa

PO Box 412694
Craighall, 2024
South Africa

e-mail: trish.beale@norplats.co.za

Transfer secretaries
Computershare Investor Services Proprietary Limited
Rosebank Towers
15 Biermann Avenue
Rosebank, 2196
South Africa

PO Box 61051
Marshalltown, 2017
South Africa

Sponsor and debt sponsor
One Capital
17 Fricker Road
Illovo, 2196
Johannesburg
South Africa

PO Box 784573
Sandton, 2146
South Africa

Johannesburg
23 August 2019