Announcements 2020

Northam rewards shareholders as growth strategy matures

Northam Platinum released its results for the first half-year of the 2020 financial year today, Friday 28 February 2020. 


First meaningful cash flow generated

Johannesburg, 28 February 2020. Northam Platinum released its results for the first half-year of the 2020 financial year today, Friday 28 February 2020. 

Highlights for the reporting period:

  • 19.6% increase in production from own operations to 306 738oz 4E
  • Basket price climbs by 42.4% to USD1 443/oz 4E
  • Record H1 operating profit at R3 billion
  • Profit after tax R1.1 billion
  • R695 million free cash flow after capex
  • Shareholders benefit from purchase of ZPLP shares to the value of R2.4 billion
  • Five-year wage settlement at Booysendal
  • 37.8% cash profit margin (H1 2019: 20.0%)

Higher production contributions from both Zondereinde and Booysendal, along with new output from Eland boosted equivalent refined metal production by 19.6% to 306 738oz 4E. Group unit cash costs increased by 12.6% to R24 780/Pt oz.

At a presentation in Johannesburg today, CEO Paul Dunne reiterated that Northam had reached the final phase of its strategic journey. “The way Zambezi is structured gives us a very obvious and powerful way to return value to shareholders through the purchase of the Zambezi preference shares. This process has started and we’ll continue doing this by applying free cash over and above our targeted net debt position.”

Since 2015 Northam has spent R1.8 billion on acquisitions, which have added 48.8Moz 4E of additional resources, two concentrator plants with a combined milling capacity of 500 000 tonnes per month and other infrastructure. The cumulative expenditure to date on developing these projects is R8.3 billion, and capital forecast for the full financial year is estimated at R2.7 billion.

“Shareholders are always the last in line to gain from a company’s success via returns on capital employed. Our shareholders have been patient and loyal over a number of years while we have developed and executed our growth strategy, significantly benefitting our broader stakeholder base. That strategy is starting to bear fruit and it’s time to reward our shareholders’ patience,” commented Dunne.

Referring to the operating environment, Dunne said, “Policy uncertainty remains a serious impediment to growth in the South African mining industry. Government’s role in this respect is to provide enabling legislation which will encourage investment. The mining industry has the potential to create businesses with a strong economic multiplier effect and thousands of sustainable jobs with growth and development opportunities for individuals and communities alike.

“Business is doing all it can to keep the economy afloat but it cannot do it alone. The state is also part of the economy and needs to play its role in competently managing strategic assets such as Eskom, developing enabling legislation, and ensuring the safety of all citizens and business enterprises.”

Zondereinde

Production of equivalent refined metal at Zondereinde increased by 5.4% to 162 380oz 4Edespite a fire early in the reporting period. The higher volumes were largely attributable to a stockpile buildup and a combination of higher milled tonnages, an increase in head grade and concentrator recoveries.

Stoping volumes are building up in the Western Extension and further progress has been made on the deepening project. Good progress has been made in planning for additional access to the Western Extension. The enhanced metallurgical facilities continue to operate smoothly while plans to increase the capacity of the base metal removal plant are well advanced.

Total operating costs at Zondereinde were 30.4% higher, reflecting the effects of an increased employee complement, higher power costs and volumes, translating into a 9.6% increase in unit cash costs per equivalent refined platinum ounce, to R25 890/Pt oz (H1 F2019: R23 614/Pt oz).

Booysendal

The combined milled tonnages from the North and Central mines increased by 27.4% to 1 738 054 tonnes (H1 F2019: 1 363 924 tonnes), translating into a total of 132 529oz 4E of metal in concentrate produced.  The dense media separation plant at the North concentrator is continuing to operate well within design parameters.

Total operating costs at Booysendal amounted to R1.7 billion (H1 F2019: R1.1 billion), a 50.4% increase. Volume increases, together with stores and power costs led to this rise. Higher production volumes resulted in the unit cash costs increasing by 11.6% to R18 714/Pt oz. The commissioning of the South mine, together with the full operation of the South concentrator (with low volumes) explains, to a large degree, the unit cost increase.

The development of Booysendal South is on track. At the Central UG2 mine, surface infrastructure construction is almost complete and underground development is progressing satisfactorily. The South aerial rope conveyor and the PGM circuit of the South concentrator are operating well. Construction of the Central Merensky boxcut is almost complete and underground development will start before the end of the financial year. In addition, earthworks and civil construction have started for the North aerial rope conveyor. This installation will allow transport of Merensky ore from the North and Central mines to the South concentrator and is scheduled to coincide with the respective stoping ramp up profiles.

Eland

At Eland, surface material continues to be treated through the chrome spirals and secondary PGM circuit, and underground development has resumed. Development of the Kukama decline system is ahead of schedule, employing mechanised drilling and blasting together with a Mobile Tunnel Borer (MTB) following a successful trial. Primary development will be the focus during the next 18 months, but an early mining demonstration, to optimise stoping methodologies is also in progress.

In parallel with the processing operations, development of the declines at the Kukama shaft started, together with refurbishment and recommissioning of underground equipment. The MTB trial was completed, yielding positive results, and will be applied to develop the Kukama belt decline barrel. A total of 528 metres were developed, ahead of plan, on the three-barrel decline system. In addition, an on-reef raise connection was holed in the West 1 section of the mine in order to trial and optimise planned stoping methodologies.

Looking to the future, Dunne pointed to focus areas which would be key to the group’s performance:

  • The management of an unreliable energy supply
  • Operational delivery and effective cost control
  • Effective project execution
  • Appropriate levels of capital allocation and returning value to shareholders

“Our operations are performing well and are expected to deliver a solid performance for the full financial year. Project execution is on track and is well positioned to benefit from the stronger PGM prices,” Dunne concluded.

Issued by R&A Strategic Communications, Johannesburg, Tel +27 (0)11 880 3924;
Marion Brower +27 71 493 0387
Memory Johnstone: +27 82 719 3081

Condensed reviewed interim financial results for the six months ended 31 December 2019

Key features


Key features

    Reviewed 6 months ended
31 December 2019
Reviewed 6 months ended
31 December 2018
Variance %
Normalised headline earnings R000 1 883 912 553 312 240.5
Normalised headline earnings per share cents 369.6 108.5 240.6
Sales revenue R000 7 824 901 4 982 761 57.0
Operating profit R000 2 959 543 1 030 780 187.1
Operating profit margin % 37.8 20.7 82.6
Profit/(loss) for the period R000 1 147 600 (63 837) N/A*
Total comprehensive income for the period R000 1 147 636 (55 626) N/A*
Headline earnings/(loss) per share cents 328.3 (19.0) N/A*
Earnings/(loss) per share cents 328.0 (18.2) N/A*
Cash generated from operating activities R000 2 033 332 1 297 758 56.7
EBITDA R000 3 192 549 1 124 540 183.9
Capital expenditure R000 1 352 238 1 544 087 (12.4)

* N/A indicates a percentage change from a negative to a positive balance.

Financial results

Normalised headline earnings have been calculated taking into account the headline earnings adjusted for items relating to the 2015 Zambezi Platinum (RF) Limited black economic empowerment transaction (“BEE transaction”); these include the preference share dividends associated with the BEE financing structure as well as the loss on derecognition of the preference share liability. Stripping out the impact of the BEE transaction resulted in normalised headline earnings increasing to R1.9 billion (H1 F2019: R553.3 million), which equates to normalised earnings per share, based on the total number of 509 781 212 issued shares, of 369.6 cents (H1 F2019: 108.5 cents), being an increase of 240.6%.

Sales revenue increased by 57.0% from R5.0 billion in H1 F2019 to R7.8 billion in the period under review. The increase is attributable to an 11.9% increase in the volume of PGMs sold to 329 760 oz 4E (H1 F2019: 294 823 oz 4E), a 42.4% increase in the 4E basket price to USD1 443/oz (H1 F2019: USD1 013/oz) and a 3.7% weaker average ZAR/USD exchange rate realised of R14.72 (H1 F2019: R14.19).   

A 23.1% increase in cost of sales and corresponding 57.0% increase in revenue resulted in operating profit increasing to R3.0 billion (H1 F2019: R1.0 billion), an all-time high for the group. This translates to an operating profit margin of 37.8%.

It is the first time since 2015 that the group has generated meaningful free cash flow after funding capital expenditure. This amounted to R695.8 million (H1 F2019: utilisation of R185.6 million).

It is expected that the group’s ability to generate free cash flow in the foreseeable future will be positively impacted by production growth and the continuing increase in Platinum Group Metal prices.

The board of directors of Northam (“board”) has resolved not to declare an interim dividend for the 2020 financial year (H1 F2019: R Nil per share).  The board is currently of the view that the most efficient way to return value to shareholders is by way of the purchase of Zambezi Platinum (RF) Limited preference shares. 

About this announcement

This short-form announcement is the responsibility of the directors of Northam, and is a summary of the information in the group’s full interim reviewed financial results announcement for the period ended 31 December 2019 and does not contain full or complete details. Any investment decisions by investors and/or shareholders should be based on the full interim reviewed financial results accessible via the JSE link at https://senspdf.jse.co.za/documents/2020/JSE/ISSE/NHM/Interim_20.pdf and available on the company’s website at https://www.northam.co.za/investors-and-media/publications/presentations/2020/send/144-2020/1273-interim-financial-results.

The full interim reviewed financial results announcement is also available for inspection at no charge at the company’s registered office and the offices of its sponsor, One Capital Sponsor Services Proprietary Limited (17 Fricker Road, Illovo), during normal business hours.

Johannesburg
28 February 2020

Sponsor and Debt Sponsor
One Capital

Interest payments notification – NHM010 AND NHM011

Northam bondholders are advised of the following interest payments due on Monday, 24 February 2020:


Northam bondholders are advised of the following interest payments due on Monday, 24 February 2020:

Bond Code: NHM010
ISIN No: ZAG000159229
Coupon: 9.20%
Interest Period: 25 November 2019 to 23 February 2020
Interest Amount Due: R1 146 849.32
Payment Date: 24 February 2020
Date Convention: Following Business Day
 
Bond Code: NHM011
ISIN No: ZAG000159237
Coupon: 10.55%
Interest Period: 25 November 2019 to 23 February 2020
Interest Amount Due: R13 151 369.86
Payment Date: 24 February 2020
Date Convention: Following Business Day

Johannesburg
19 February 2020

Debt Sponsor
One Capital

Interest payment notification – NHM014

Northam bondholders are advised of the following interest payment due on Thursday, 20 February 2020:


Northam bondholders are advised of the following interest payment due on Thursday, 20 February 2020:

Bond Code: NHM014
ISIN No: ZAG000163650
Coupon: 9.30%
Interest Period: 20 November 2019 to 19 February 2020
Interest Amount Due: R31 645 479.45
Payment Date: 20 February 2020
Date Convention: Following Business Day

Johannesburg
17 February 2020

Debt Sponsor
One Capital

Media release: Trading statement

Northam has advised shareholders today that it expects to achieve a record operating profit for the six months ended 31 December 2019.  The results are underpinned by a solid operating performance at all the group’s operations, combined with a higher basket price received. The group achieved record production from own operations amounting to 306 738 4E oz, representing a 19.6% increase from H1 F2019. Sales volumes increased by 11.9% to 329 760 4E oz.


Johannesburg, Monday 10 February 2020.  Northam has advised shareholders today that it expects to achieve a record operating profit for the six months ended 31 December 2019.  The results are underpinned by a solid operating performance at all the group’s operations, combined with a higher basket price received. The group achieved record production from own operations amounting to 306 738 4E oz, representing a 19.6% increase from H1 F2019. Sales volumes increased by 11.9% to 329 760 4E oz.

Financial highlights

  H1 F2020 H1 F2019
Revenue R7.7 – R7.9 billion R5.0 billion
Operating profit R2.9 – R3.1 billion R1.0 billion
Basic earnings/(loss) per share 326.18 – 329.82 cents (18.2) cents
Headline earnings/(loss) per share 326.40 – 330.20 cents (19.0) cents
Number of shares in issue 509 781 212 509 781 212
Weighted average number of shares* 349 875 759 349 875 759

* 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.

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 constitutes the group’s main measure of performance, to be in excess of R1.8 billion (H1 F2019: R553.3 million), representing an increase in excess of 240% from H1 F2019.

During the period under review, Northam returned value to shareholders by acquiring 32.5 million Zambezi preference shares (representing 20.3% of all Zambezi preference shares in issue) for R2.4 billion. Northam now holds 22.9% of all Zambezi preference shares in issue, whilst maintaining a net debt to EBITDA ratio of 1 to 1.

The financial information contained in this announcement has not been reviewed or reported on by Northam’s auditors. The condensed reviewed interim results for the six months ended 31 December 2019 are expected to be published on or about 28 February 2020.

Johannesburg
10 February 2020

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

SENS: Trading statement

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 (H1 F2020) will differ by at least 20% from the financial results of the previous corresponding period (H1 F2019).


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 (H1 F2020) will differ by at least 20% from the financial results of the previous corresponding period (H1 F2019).

Northam expects to achieve a record operating profit for the six months ended 31 December 2019, underpinned by a solid operating performance at all operations and a higher basket price received. The group achieved a record production from own operations amounting to 306 738 4E oz, representing a 19.6% increase from H1 F2019. Sales volumes increased by 11.9% to 329 760 4E oz.

Financial highlights

  H1 F2020 H1 F2019
Revenue R7.7 – R7.9 billion R5.0 billion
Operating profit R2.9 – R3.1 billion R1.0 billion
Basic earnings/(loss) per share 326.18 – 329.82 cents (18.2) cents
Headline earnings/(loss) per share 326.40 – 330.20 cents (19.0) cents
Number of shares in issue 509 781 212 509 781 212
Weighted average number of shares* 349 875 759 349 875 759

* 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.

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 constitutes the group’s main measure of performance, to be in excess of R1.8 billion (H1 F2019: R553.3 million), representing an increase in excess of 240% from H1 F2019.

During the period under review, Northam returned value to shareholders by acquiring 32.5 million Zambezi preference shares (representing 20.3% of all Zambezi preference shares in issue) for R2.4 billion. Northam now holds 22.9% of all Zambezi preference shares in issue, whilst maintaining a net debt to EBITDA ratio of 1 to 1.

The financial information contained in this announcement has not been reviewed or reported on by Northam’s auditors. The condensed reviewed interim results for the six months ended 31 December 2019 are expected to be published on or about 28 February 2020.

Johannesburg
10 February 2020

Sponsor and Debt Sponsor
One Capital

Interest payments notification - NHM008 AND NHM009

Northam bondholders are advised of the following interest payments due on Monday, 27 January 2020:


Northam bondholders are advised of the following interest payments due on Monday, 27 January 2020:

Bond Code: NHM008
ISIN No: ZAG000158858
Coupon: 9.183%
Interest Period: 28 October 2019 to 26 January 2020
Interest Amount Due: R4 578 920.55
Payment Date: 27 January 2020
Date Convention:     Following Business Day

Bond Code: NHM009
ISIN No: ZAG000158866
Coupon: 10.533%
Interest Period: 28 October 2019 to 26 January 2020
Interest Amount Due: R6 565 089.04
Payment Date: 27 January 2020
Date Convention:     Following Business Day

Johannesburg
22 January 2020

Debt Sponsor
One Capital

Interest payments notification – NHM006 and NHM007

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


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

Bond Code: NHM006
ISIN No: ZAG000158577
Coupon: 10.025%
Interest Period: 16 October 2019 to 15 January 2020
Interest Amount Due: R6 317 123.29
Payment Date: 16 January 2020
Date Convention:     Following Business Day

 

Bond Code: NHM007
ISIN No: ZAG000158593
Coupon: 10.525%
Interest Period: 16 October 2019 to 15 January 2020
Interest Amount Due: R7 958 630.14
Payment Date: 16 January 2020
Date Convention: Following Business Day

Johannesburg
13 January 2020

Debt Sponsor
One Capital