Northam Delivers Solid Performance and Forecasts Improvements for the Year Ahead

Northam Platinum Limited today reported solid results for its financial year ended June 2002 with production at 8 458 kg of metals in concentrate (3PGE+Au), and earnings of R398 million. This result was achieved despite a significant drop in metal prices over the year.

The company declared a final dividend of 175 cps. Added to the interim dividend posted at the half-year stage, the total return to shareholders amounts to 245 cps, an increase of 4.2% over the total dividend of F2001 (235 cps).

MD Ian Watson said, "A huge operational effort contributed to this creditable performance. As a result tons milled continued to exceed the 1.9Mt mark, and square metres mined were only marginally down from 382 024m2 to 381 394m2. Particularly notable was the fact that the effects of the strike early in the financial year were contained in terms of both operational and safety performance. Shortly after production resumed in September last year, the mine achieved a million fatality-free shifts later the same month. And this was repeated in April this year when it received this award for the second time in the same financial year."

Watson acknowledged the strike's effect on production, which was marginally lower at 8458 kg, representing a 3% decline from 8725 kg in the previous year. "There's no doubt that we were affected by the strike which reduced potential output by about 1200 kg. Nevertheless, despite the loss of 32 production days, metal sales were higher by 7.7% at 287 546 ounces and progress on the establishment of Merensky ore reserves continued apace, up 50% and increasing ore reserve availability from 11 to 17 months. At the same time production from the UG2 reef horizon met the planned production targets.

In US dollar terms metal prices over the reporting period were substantially lower, but were partially offset by the weaker rand. The basket price for metals was 7.2% lower at R160 367/kg (F2001: R172 733/kg). Nevertheless, revenues were maintained at R1.6 billion, largely owing to the sale of metals from inventory. Unit cash costs were affected by lost production and the overheads associated with the strike, resulting in an increase of 13%.

Looking forward, Watson said that the accelerated development on the Merensky Reef is targeted at establishing 24 months of available ore reserves, which should be reached by November 2003. The UG2 ore reserve currently amounts to 36 months. The continually improving ore reserve position will add significantly to mining flexibility. In turn this should certainly result in higher metal production in the new financial year, while costs will continue to be more rigorously controlled.

Earnings for the first half of F2003 are likely to improve provided that US dollar metal prices remain at their current levels, and also taking into account the current exchange rate of the Rand against the US dollar.