Excellent Production Results from Northam

Northam Platinum today reported output of more than 332,000 ounces of PGM metals in concentrate for the year ended 30 June 2003, its highest to date.

Chairman Tokyo Sexwale said today that the company had made good operational strides in building up to these production levels – 22% above the numbers reported in F2002. “With production now well over the 300,000 oz level, and an increase of 3% in precious metals sold, Northam management has done well in containing the effects of a much stronger Rand, resulting in a decline of only 6% in revenue.”

The drop in revenue from R1 561 million in F2002 to R1 472 million reflects the lower Rand basket price received of R145 273/kg (F2002: R160 367/kg), and the impact of the inventory build-up in the refining pipeline during the scheduled smelter shutdown at the beginning of the calendar year. After-tax profits at R275 million were similarly affected by R39.8 million, equivalent to an effect of 17 cents on headline earnings per share (heps), which amounts to 118.7 cents for the reporting period.

The additional production resulted in unit operating costs remaining constant year-on-year. Unit cash costs were marginally higher by 2%, considerably lower than the prevailing inflation rate.

In line with the higher production total operating costs increased by 25%, while costs incurred in toll refining during the smelter shutdown contributed to the additional refining and realisation costs. Also included in the cost of sales is a charge of R14 million in respect of leased metal to meet contractual requirements during the smelter rebuild.

On the operational side the smelter rebuild was successfully completed on schedule. The solid operational performance is also reflected in a 13% increase in square metres mined to 432 050 square metres, a 14% increase in tonnage milled, while the head grade remained constant at 5.3 g/t. The Merensky ore reserve availability has improved to 20 months, although poor ground conditions accounted for a loss of 2.4km in face length.

Commenting on the company’s expansion prospects, Sexwale said that Northam was actively pursuing a number of opportunities to grow the company, and that some of these had reached an advanced stage. “Our participation in the Pandora JV has now been agreed and the parties are awaiting the granting of a mining licence. We are also actively exploring other growth opportunities to diversify our operational base and to bring us down the cost curve. Discussions around some of these prospects have reached an advanced stage, and we hope to be making some announcements within the next couple of weeks.”

Distributed by: Russell & Associates
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