Proposed sale of Booysendal mineral rights – financial effects

Announcement relating to the proposed sale of the southern portion of the Booysendal mining right to Aquarius Platinum (South Africa) (Proprietary) Limited, a wholly owned subsidiary of Aquarius Platinum limited for R1.2 billion in cash ("The Transaction") and withdrawal of cautionary annnouncement.

Northam is pleased to advise of significant progress in finalising funding arrangements to bring the Company's Booysendal project into production by early 2013.

Northam shareholders are referred to the announcement published by the Company on 4 May 2011 (“the Announcement”) which set out details of the Transaction and are advised that unaudited pro forma financial effects of the Transaction (“Financial Effects”) on Northam’s basic earnings per share (“EPS”), headline earnings per share (“HEPS”), fully diluted EPS, fully diluted HEPS, net asset value per share (“NAVPS”) and net tangible asset value per share (“NTAVPS”) are set out below.

Financial effects

The Financial Effects have been prepared in terms of the JSE Limited Listing Requirements and the Guide on Pro Forma Financial Information issued by the South African Institute of Chartered Accountants (“SAICA Guide”).

The Financial Effects have been prepared to illustrate the impact of the Transaction on Northam’s published reviewed results for the six months ended 31 December 2010, as published on 23 February 2011 (“Interim Results”), had the Transaction occurred on 1 July 2010 for consolidated statement of comprehensive income purposes, and on 31 December 2010, for consolidated statement of financial position purposes.

It should be noted that the Financial Effects do not take into account the pro forma financial effects of the related party acquisition by Northam of all the issued ordinary shares in Mvelaphanda Resources Limited (“Mvela”), details of which were set out in the circular to Northam shareholders dated 18 February 2011 (“the Mvela Transaction”). The Mvela Transaction was approved by Northam shareholders on 14 March 2011 and will be effected by way of a scheme of arrangement (“the Scheme”). The Scheme will become operative on Monday, 6 June 2011.

The Financial Effects have been prepared using accounting policies that comply with IFRS and are consistent with those applied in the Interim Results.

The Financial Effects are the responsibility of Northam’s directors and have been prepared for illustrative purposes only and, due to their nature, do not fairly present the financial position, results of operation or cash flows of Northam after the Transaction.

  Before the Transaction After the Transaction Change %
EPS (cents) 21.0 25.9 23.3
Fully diluted EPS 20.9 25.8 23.4
HEPS (cents) 21.0 20.9 (0.5)
Fully diluted HEPS 20.9 20.8 (0.5)
NAVPS (cents) 2 461 2 466 0.2
NTAVPS (cents) 893 1 225 37.2
Number of ordinary shares in issue at 31 December 2010 361 258 500 361 258 500 --
Weighted average number of shares in issue  for the period ended 31 December 2010 360 747 809 360 747 809 --
Fully diluted number of shares in issue for the period ended 31 December 2010 362 498 431 362 498 431 --

Notes:

The “Before the Transaction” column information has been extracted, without adjustment, from the Interim Results.

The “After the Transaction” column is based on the “Before the Transaction” column and after the following principal assumptions:

  1. EPS,HEPS, fully diluted EPS and fully diluted HEPS
    1. the Southern portion of Booysendal is sold for an amount of R1.2 billion, net of value added tax and tax charges arising from the disposal.
    2. a gain on the disposal of the Southern portion of Booysendal amounting to R19.7 million is recorded.
    3. no adjustment for interest accruing on the cash consideration of R1.2 billion has been made, in line with the SAICA Guide.
    4. estimated costs relating to the Transaction of R508 000 have been taken into account.
    5. the fully diluted EPS and HEPS are based on the weighted number of shares in issue during the period plus the weighted average number of Northam Share Option Scheme options outstanding during the period.
  2. NAVPS and NTAVPS
    1. accounted for the cash received of R1.2 billion and accounted for a reduction of R1.18 billion in the value of the mining properties and mineral resources and the resultant gain on disposal of the Southern portion of Booysendal, amounting to R19.7 million.
    2. accounted for the estimated costs applicable to the Transaction of R508 000.

Withdrawal of cautionary announcement

Further to the publication of the Financial Effects, the cautionary statement as set out in the Announcement is hereby withdrawn.

6 May 2011
Johannesburg

Sponsor
One Capital