Announcements 2020

Media release: Northam publishes trading statement and update

Northam has published a trading statement and update today, Wednesday 12 August 2020 in anticipation of its annual results to be published on 28 August 2020. The announcement is published in full on the company’s website, www.northam.co.za


….record operating profit underpinned by solid operational performance

Johannesburg, Wednesday 12 August 2020. Northam has published a trading statement and update today, Wednesday 12 August 2020 in anticipation of its annual results to be published on 28 August 2020. The announcement is published in full on the company’s website, www.northam.co.za

Northam expects to achieve a record operating profit for the year ended 30 June 2020. This result is underpinned by a solid performance at all operations and higher prices realised for the basket of metals, and has been achieved in spite of significant production losses associated with the COVID-19 pandemic. Northam’s annual results for the 2020 financial year will be published on 28 August 2020.

Key metrics

  • Production from own operations < 0.9% at 515 370 4E oz
  • Purchased material > 212.9% to 72 443 4E oz
  • Sales volumes amounted to 582 686 4E oz.
  • Total revenue per Pt oz sold up by 78.8% to R53 009/Pt oz
  • Cash margin per platinum ounce > 40%.
Key financial indicators
 F2020F2019
Basic earnings per share562.78 – 622.02 cents17.2 cents
Headline earnings per share562.40 – 621.60 cents15.8 cents
Normalised headline earnings per share624.53- 690.27 cents270.1 cents
Number of shares in issue including treasury shares509 781 212509 781 212
Weighted average number of shares*349 875 759349 875 759
Operational progress

All growth projects progressed well during F2020. Booysendal South has advanced into production ramp-up, Zondereinde Western extension is ahead of schedule and on reef development of Eland mine continued whilst simultaneously increasing mineable reserve.

CEO Paul Dunne paid tribute to management’s positive response to the COVID disruptions, which contributed to containing production losses: “My appreciation goes out to management and our employees for restarting operations safely and effectively, while making a concerted effort to achieve normalised production.

“Surface ore sources at Eland mine, together with streamlined operations at the mechanised Booysendal mine, enabled a swift restart. By financial year end, Booysendal mine and Eland mine were again operating at full complement, with Zondereinde mine at 80% capacity. Normalised production is expected to resume at Zondereinde by the second half of the current financial year,” said Dunne.

Northam’s response to COVID-19

The health and wellness of our employees and our host communities were given priority in our response to COVID-19. Our program for restarting operations drew on many years of experience in managing significant health threats such as HIV and tuberculosis. We followed the prescripts of the National Institute for Communicable Diseases and the amended regulations pertaining to the Disaster Management Act No. 57 of 2002, working in collaboration with the various government departments and the Minerals Council. Our program encompassed screening and identification for early diagnosis and treatment, as well as health promotion through a variety of educational initiatives.

Preserving liquidity

In view of the threats presented by COVID-19, the group proactively implemented a multi-pronged action plan to preserve liquidity. This entailed a restructuring of the company’s domestic medium-term note programme in order to:

  • extend the maturity dates of notes in issue
  • to raise additional debt funding
  • smooth the maturity profile of the various note series

In addition, our revolving credit and general banking facilities were refinanced on more favourable terms, extending the maturity date whilst reducing the cost of debt. Both facilities were undrawn at financial year end.

Total group capital expenditure reduced year on year to R2.4 billion, associated mainly with completing large capex projects at Booysendal. R2.0 billion was incurred on expansionary capital expenditure and R382.2 million on sustaining capital expenditure.

Stategy of developing low-cost, long-life assets remains in place

The group remains committed to its strategy of developing low-cost, long-life assets in order to position itself at the lower end of the industry cost curve. The development of our project pipeline, which builds on our existing asset base, is bearing fruit and will continue to deliver a strong and sustainable financial performance in the coming years. We expect that future production growth, together with favourable rand denominated metal prices, should support and enhance free cash flow generation over the medium term.

Returning value to shareholders

Our strategy of returning value to shareholders remains unchanged and has continued with Northam’s acquisition of Zambezi preference shares. In this way the we are effectively reducing the preference share dividend expense and liability as well as Northam’s potential financial exposure under the guarantee provided to holders of Zambezi preference shares.

Furthermore, in the event that Zambezi elects to redeem the Zambezi preference shares through a distribution of Northam ordinary shares held by Zambezi, 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.

To this end, Northam has continued to purchase Zambezi preference shares. Northam currently holds ~40.7% of all Zambezi preference shares in issue. Despite these purchases, the group achieved a net debt position of R3.3 billion with a net debt to EBITDA ratio well below 1:1.

Conclusion

The group’s balance sheet strength and the relatively quick recovery to production capacity, combined with the positive impact on medium term liquidity arising from the Note Switch, collectively position the group well to continue to proactively and aggressively return value to shareholders.

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

SENS: Trading statement and trading update

In terms of paragraph 3.4(b) of the JSE Limited Listings Requirements, companies are required to publish a trading statement as soon as they are satisfied, with a reasonable degree of certainty, that the financial results for the current reporting period will differ by at least 20% from the financial results of the previous corresponding period.


In terms of paragraph 3.4(b) of the JSE Limited Listings Requirements, companies are required to publish a trading statement as soon as they are satisfied, with a reasonable degree of certainty, that the financial results for the current reporting period will differ by at least 20% from the financial results of the previous corresponding period.

Northam expects to achieve a record operating profit for the year ended 30 June 2020 (“F2020”), underpinned by a solid performance at all operations and higher prices realised for our basket of metals. This is despite significant production losses associated with the national lockdown (“Lockdown”) and phased restart of mining activities following the onset of the COVID-19 pandemic in South Africa.

The group achieved production from own operations of 515 370 4E oz, representing a marginal 0.9% decrease from the year ended 30 June 2019 (“F2019”) (F2019: 519 954 4E oz). Purchased material increased by 212.9% to 72 443 4E oz (F2019: 23 154 4E oz). Sales volumes amounted to 582 686 4E oz, which included ore sales (F2019: 583 069 4E oz.), whilst total revenue per platinum ounce sold increased by 78.8% to R53 009/Pt oz (F2019: R29 640/Pt oz), resulting in a cash margin per platinum ounce in excess of 40%.

The group achieved record sales revenue, record operating profit and record earnings before interest, tax, depreciation and amortisation (“EBITDA”) for the year. These record outcomes were achieved notwithstanding the impact of mine and production stoppages which occurred as a result of the COVID-19 induced Lockdown. Prior and up to the commencement of the Lockdown period, the group was on track to achieve record production from own operations during F2020.

F2020 Financial Highlights

F2020F2019
Basic earnings per share562.78 – 622.02 cents17.2 cents
Headline earnings per share562.40 – 621.60 cents15.8 cents
Normalised headline earnings per share624.53- 690.27 cents270.1 cents
Number of shares in issue including treasury shares509 781 212509 781 212
Weighted average number of shares*349 875 759349 875 759

* Used to determine the basic and headline earnings per share, calculated as 509 781 212 shares in issue less 159 905 453 shares held by Zambezi Platinum (RF) Limited (“Zambezi”). Zambezi is Northam’s major empowerment shareholder and Zambezi’s financial results are consolidated into the group’s financial results.

However, the Lockdown resulting from COVID-19 and consequential production stoppages have been disruptive, and Northam’s proactive and positive response measures minimised the impact on production to an equivalent estimated loss of 108 685 4E oz. Northam would like to extend its sincere appreciation to management and our employees, in restarting the operations in a safe and effective manner and making a concerted effort to achieve normalised production. Surface ore sources at Eland mine, together with streamlined operations at the mechanised Booysendal mine, enabled a swift restart. By financial year end, Booysendal mine and Eland mine were again operating at full complement, whilst Zondereinde mine was operating at 80% capacity. Normalised production is expected to resume at Zondereinde by the second half of the current financial year ending 30 June 2021 (“F2021”) with a corresponding reduction to our F2021 production estimate.

The health and wellness of our employees and our host communities were given priority in our response to COVID-19. Our program for restarting operations drew on our many years of experience in managing significant health threats such as HIV and tuberculosis. We followed the prescripts of the National Institute for Communicable Diseases and the amended regulations pertaining to the Disaster Management Act No. 57 of 2002, working in collaboration with the various government departments and the Minerals Council. Our program encompassed screening and identification for early diagnosis and treatment, as well as health promotion through a variety of educational initiatives.

All growth projects progressed well during F2020. Booysendal South has advanced into production ramp-up, Zondereinde Western extension is ahead of schedule and on reef development of Eland mine continued whilst simultaneously increasing mineable reserve.

Despite significant logistical hurdles associated with COVID-19, including border closures that made the distribution of refined metal challenging, the group maintained robust refined metal sales of 560 238 4E oz. This highlights the strong relationships that we have developed and maintained with our industrial customer base over many years.

Group unit costs were negatively impacted by lower production levels, as operating costs continued close to pre-Lockdown levels. This was largely attributable to our decision to maintain payment of salaries and ancillary benefits to all of our employees during the Lockdown period and phased restart, notwithstanding the lost production and the phased restart’s negative impact on productivity.

In light of this, and as part of our COVID-19 response measures, the group proactively implemented a multi-pronged action plan to preserve liquidity. This entailed a restructuring of the company’s domestic medium-term note programme to significantly extend maturity dates of notes in issue, to raise some additional debt funding and to generally smooth the maturity profile of the various note series (“Note Switch”). In addition, our revolving credit and general banking facilities were refinanced on more favourable terms, extending the maturity date whilst reducing the cost of debt. Both facilities were undrawn at financial year end.

In addition to direct production and revenue losses associated with COVID-19, the group incurred once-off costs directly related to the COVID-19 pandemic and the Lockdown period of R977.2 million (the bulk of which relates to employee costs).

Total group capital expenditure reduced year on year to R2.4 billion as a result of capital intensive programs at Booysendal mine either having been completed or nearing completion and thus tapering down in terms of total annual expenditure. R2.0 billion was incurred on expansionary capital expenditure and R382.2 million on sustaining capital expenditure. A decision to temporarily scale back on specific growth projects in the interest of liquidity preservation was made after the onset of COVID-19 and the concomitant Lockdown period. However, the group remains committed to its strategy of developing low-cost, long-life assets in order to position itself at the lower end of the industry cost curve and the group envisages no lasting effects in this regard.

The development of our project pipeline, which builds on our existing asset base, is bearing fruit and will continue to deliver a strong and sustainable financial performance in the coming years. Despite the effect of the COVID-19 pandemic, Northam achieved record financial results for the year and generated significant free cash. Our forecasted production growth, together with favourable rand denominated metal prices, are expected to further support and enhance free cash flow generation over the medium-term.

Our strategy of returning value to shareholders remains unchanged and can be implemented through the payment of dividends, a share buyback or a purchase of Zambezi preference shares. We believe that, to date, the most efficient mechanism to return value to Northam’s shareholders has been through the purchase of Zambezi preference shares.

The acquisition of the Zambezi preference shares reduces the preference share dividend expense and liability included in the consolidated financial statements, as well as Northam’s potential financial exposure under the guarantee provided to holders of Zambezi preference shares, should the guarantee be called upon. Furthermore, in the event that Zambezi elects to redeem the Zambezi preference shares through a distribution of Northam ordinary 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.

To this end, Northam has continued to purchase Zambezi preference shares and held 53 595 254 preference shares at 30 June 2020, representing c.33.5% of all Zambezi preference shares in issue. Subsequent to the financial year end, Northam acquired an additional 11 498 633 Zambezi preference shares and currently holds 65 093 887 preference shares, representing c. 40.7% of all Zambezi preference shares in issue. Purchases to date have returned R4.8 billion of value to Northam shareholders, R4.6 billion of which was returned post F2019. Despite these purchases, the group achieved a net debt position of R3.3 billion with a net debt to EBITDA ratio well below 1 : 1 as at 30 June 2020. The average premium (expressed as a percentage to face value, being the capital amount and all accrued preference share dividends, calculated until the date of each acquisition) paid on these purchases has been less than 2.2%.

Northam’s purchases of Zambezi preference shares to date has reduced the preference share dividend expense in the consolidated financial statements for F2020 by R299.7 million. The full positive impact on the income statement arising from some of these purchases will only accrue in F2021 and this, combined with the compounding effect of dividends accruing on Zambezi preference shares, is expected to contribute positively towards reducing the preference share dividend expense in future.

The group’s balance sheet strength and the relatively quick recovery to production capacity, combined with the positive impact on medium term liquidity arising from the Note Switch, collectively position the group well to continue to proactively and aggressively return value to shareholders.

In summary, whilst F2020 has been a challenging year in the face of the global COVID-19 pandemic and its wide-ranging knock-on effects, the company has performed well. Northam has efficiently managed the impact of the COVID-19 pandemic and has not wavered from its strategy of pursuing production growth and asset diversification. We have delivered a meaningful return of value to our shareholders and look forward to continuing to do more over the coming year.

The financial information contained in this announcement has not been reviewed or reported on by Northam’s auditors. The audited results for the year ended 30 June 2020 are expected to be published on or about 28 August 2020.

Johannesburg
12 August 2020

Sponsor and Debt Sponsor
One Capital

Interest payment notification – NHM016

Northam bondholders are advised of the following interest payment due on Tuesday, 11 August 2020:


Northam bondholders are advised of the following interest payment due on Tuesday, 11 August 2020:

Bond Code: NHM016
ISIN: ZAG000167750
Coupon: 8.792%
Interest Period: 11 May 2020 to 10 August 2020
Interest Amount Due: R15 069 247,12
Payment Date: 11 August 2020
Date Convention: Following Business Day

Johannesburg
5 August 2020

Debt Sponsor
One Capital

Interest payment notification – NHM009

Northam bondholders are advised of the following interest payment due on Monday, 27 July 2020.


Northam bondholders are advised of the following interest payment due on Monday, 27 July 2020:

Bond Code: NHM009
ISIN No: ZAG000158866
Coupon: 8.342%
Interest Period: 28 April 2020 to 26 July 2020
Interest Amount Due: R2 056 931,51
Payment Date: 27 July 2020
Date Convention: Following Business Day

Johannesburg
22 July 2020

Debt Sponsor
One Capital

Record-breaking pilot hole successfully completed at Zondereinde’s western extension

Northam Platinum Limited (Northam) is pleased to announce the successful completion of the raise-bore pilot hole for the planned Number 3 Shaft at Zondereinde mine’s western extension.


Johannesburg 21 July 2020: Northam Platinum Limited (Northam) is pleased to announce the successful completion of the raise-bore pilot hole for the planned Number 3 Shaft at Zondereinde mine’s western extension. The new shaft system will provide additional access from surface to the underground workings for hoisting of men, material, services and ore.

The western extension was acquired on 6 December 2017 from the neighbouring Amandelbult mine, owned by Anglo American Platinum Limited, for a cash consideration of R1 billion. It comprises a 3.6 km wide mining block containing a PGM resource of over 21 million ounces hosted within high-quality Merensky and UG2 orebodies.

The acquisition of the western extension significantly reduced Zondereinde’s operational risk profile and extends the mine’s life to beyond 30 years. Optimising these benefits required the development of an additional vertical shaft to supplement the existing two shafts at Zondereinde - this is the Number 3 Shaft project which was initiated in May 2019.

Number 3 Shaft is being raise-bored by Master Drilling. Raise-boring is safer, quicker and more cost effective than traditional drill and blast development. Raise-boring comprises two key phases; the drilling of a pilot hole, followed by reaming of this hole to its ultimate diameter. Critical to the success of raise-boring, especially when developing a hoisting shaft, is the accuracy of pilot drilling which becomes increasingly challenging the longer the hole.

The successful completion of the Number 3 Shaft pilot hole, at 1 382 m length, is a world record, the previous record being a 1 070 m shaft, drilled in 2012 at Lonmin’s K4 mine.

Drilling commenced on 25 September 2019 and holed into its receiving chamber underground on schedule on 18 July 2020. Master Drilling used ground-breaking oil-well directional drilling technology to limit lateral deflection on the 400 mm diameter pilot to less than half the hole diameter. Reaming of the hole to its final diameter will now commence and is expected to be completed during the coming year.

In parallel with the piloting of Number 3 Shaft, development of lateral access tunnels underground is progressing ahead of expectations and ore stoping is underway.

Paul Dunne, Northam’s Chief Executive Officer, said “this milestone has put us a significant step closer to realising the potential of the western extension, a high quality block of ground that has already breathed new life into Zondereinde. Our strong culture of technological innovation and rapid implementation is helping to create a mine that will benefit all stakeholders for many years to come. Congratulations to the Zondereinde management team and our partners, Master Drilling, on this record-breaking achievement.”

Johannesburg
21 July 2020

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

Interest payments notification – NHM006 AND NHM007

Northam bondholders are advised of the following interest payments due on Thursday, 16 July 2020:


Northam bondholders are advised of the following interest payments due on Thursday, 16 July 2020:

Bond Code: NHM006
ISIN No: ZAG000158577
Coupon: 7.85%
Interest Period: 16 April 2020 to 15 July 2020
Interest Amount Due: R2 414 953.10
Payment Date: 16 July 2020
Date Convention: Following Business Day
 
Bond Code: NHM007
ISIN No: ZAG000158593
Coupon: 8.35%
Interest Period: 16 April 2020 to 15 July 2020
Interest Amount Due: R2 939 182.99
Payment Date: 16 July 2020
Date Convention: Following Business Day

Johannesburg
13 July 2020

Debt Sponsor
One Capital

Acquisition of R959.7 million of Zambezi preference shares

Northam shareholders are referred to the announcement dated 3 April 2020 (“previous announcement”) pertaining to, inter alia, the acquisition by Northam of preference shares in Zambezi Platinum (RF) Limited (“Zambezi”) (“Zambezi preference shares”).


Northam shareholders are referred to the announcement dated 3 April 2020 (“previous announcement”) pertaining to, inter alia, 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, it has acquired an additional 11 717 037 Zambezi preference shares for a total cash consideration of approximately R959.7 million (“ZPLP acquisition”). Following the ZPLP acquisition, Northam will hold 65 093 887 Zambezi preference shares, representing approximately 40.71% of all Zambezi preference shares in issue.

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 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.

The ZPLP acquisition has been fully funded through Northam’s internal cash resources.

The ZPLP acquisition is not a categorised transaction in terms of the JSE Limited Listings Requirements and information relating thereto is provided for information purposes only.

Paul Dunne, Northam’s Chief Executive Officer said “Northam had set itself an ambitious internal target of acquiring at least 40% of all Zambezi preference shares in issue in order to de-risk the company’s position and to simultaneously return significant value to its shareholders through our unique empowerment transaction. We are delighted to have achieved this target approximately halfway through the 10 year structure. The group’s financial position remains strong amidst very challenging global economic times.

Johannesburg
2 July 2020

Corporate Advisor, JSE Sponsor and Debt Sponsor to Northam
One Capital

Attorneys to Northam
Cliffe Dekker Hofmeyr Inc.

Dealings in securities

In compliance with paragraphs 3.63 to 3.74 of the JSE Limited Listings Requirements (“Listings Requirements”), Northam advises its shareholders of the following dealings by a director of the company, on behalf of its associate:


In compliance with paragraphs 3.63 to 3.74 of the JSE Limited Listings Requirements (“Listings Requirements”), Northam advises its shareholders of the following dealings by a director of the company, on behalf of its associate:

Name of director: Dr Noluyolo Yoza Jekwa
Name of associate: Miss Ela Jekwa
Relationship with director: Daughter
Nature of the transaction: Purchase of ordinary shares
Nature and extent of director’s interest Direct beneficial
Class of shares Ordinary shares
Date of transaction 25 June 2020
Price per ordinary share R113.79 per ordinary share
Total number of ordinary shares 175
Value of transaction R19 913.25
Transactions completed On market
Clearance obtained in terms of paragraph 3.66 of the Listings Requirements Yes

Johannesburg
29 June 2020

Sponsor and Debt Sponsor
One Capital

Interest payments notification – NHM012 and NHM015

Northam bondholders are advised of the following interest payments due on Monday, 15 June 2020:


Northam bondholders are advised of the following interest payments due on Monday, 15 June 2020:

Bond Code: NHM012
ISIN: ZAG000160136
Coupon: 10.125%
Interest Period: 13 March 2020 to 14 June 2020
Interest Amount Due: R 794 515.68
Payment Date: 15 June 2020
Date Convention: Following Business Day
 
Bond Code: NHM015
ISIN: ZAG000164922
Coupon: 9.675%
Interest Period: 13 March 2020 to 14 June 2020
Interest Amount Due: R 12 458 219.18
Payment Date: 15 June 2020
Date Convention: Following Business Day

Johannesburg
10 June 2020

Debt Sponsor
One Capital

Partial capital redemption – NHM009 and NHM014

Northam noteholders are hereby advised, in accordance with the Terms and Conditions of the Northam Platinum Limited ZAR10 000 000 000 Domestic Medium Term Note Programme (dated 3 August 2012, as amended and / or supplemented from time to time) (the “Programme”), of the reduction in the nominal amount of notes in bond series NHM009 and NHM014 (the “Notes”), guaranteed by Booysendal Platinum Proprietary Limited, by an aggregate amount of R350 million (the “Purchased Notes”), on 8 June 2020.


Northam noteholders are hereby advised, in accordance with the Terms and Conditions of the Northam Platinum Limited ZAR10 000 000 000 Domestic Medium Term Note Programme (dated 3 August 2012, as amended and / or supplemented from time to time) (the “Programme”), of the reduction in the nominal amount of notes in bond series NHM009 and NHM014 (the “Notes”), guaranteed by Booysendal Platinum Proprietary Limited, by an aggregate amount of R350 million (the “Purchased Notes”), on 8 June 2020.

Bond Code: NHM009
ISIN: ZAG000158866
Reduction in the nominal amount of the relevant Notes: R50 000 000.00
Remaining nominal amount of the relevant Notes in issue: R100 000 000.00
   
Bond Code: NHM014
ISIN: ZAG000163650
Reduction in the nominal amount of the relevant Notes: R300 000 000.00
Remaining nominal amount of the relevant Notes in issue: R1 920 000 000.00

The reduction in the nominal amount of the Notes was effected through the purchase by Northam of the Purchased Notes in the market and the surrender by Northam of the Purchased Notes to the Transfer Agent under the Programme for cancellation thereof on 8 June 2020.

Northam noteholders are referred to the announcement published by the Company on SENS on Monday, 25 May 2020 (the “Announcement”) pertaining to, inter alia, a note switch whereby the maturity dates of certain notes will be extended through a purchase and cancellation of such notes and the simultaneous issue of new notes under the Programme with longer maturity dates, for the same nominal amount, as detailed in the Announcement (the “Note Switch”). The purchase and cancellation of the Purchased Notes pertains to the Note Switch.

Johannesburg
8 June 2020

Corporate Advisor and JSE Sponsor to Northam
One Capital

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

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