Northam Platinum reports improved performance
Northam Platinum has issued its half-year results for the period ended 31 December 2011 today, Friday 24 February 2012.
Key developments in the period:
- Improved production at Zondereinde
- Two-year wage deal signed
- Ongoing solid progress at Booysendal
- Financing secured
- Revenues reach R2 billion
- Earnings 161% higher at R198.2 million.
Northam’s improved results for the half-year emerged largely on the back of Zondereinde’s performance. Metals in concentrate produced at the company’s western limb operation were 27% higher at 4 592kg (147 636oz). The higher rand basket price, averaging R341 725/kg (F2011 H1: R308 886/kg) over the period, helped to boost sales revenues to almost R2 billion.
In tandem with the higher volumes, and also reflecting the increases in mining input costs, total operating costs were higher by 24.2%. Inversely, however, unit operating costs declined by 3.3% year on year. As anticipated, the higher volumes also translated into higher refining costs, which were further impacted by the weakening of the rand against the euro by 11.6%.
Headline earnings rose by 161.6% to R198.3 million. The board declared a dividend of 5 cents per share, indicating the requirement to conserve cash to finance the group’s growth ambitions.
The increased momentum in the construction and development activities at the Booysendal mine led to the higher cash flows utilised in investing activities, which rose to R899.3 million in the period. The group’s cash position remains healthy, largely unchanged year-on-year at R972.1 million.
Zondereinde – an improved performance
Total tonnes milled at Zondereinde increased by 44.0% to 998 598 tonnes. The head grade was lower at 5.0g/t, reflecting the higher ratio of UG2 reef volumes mined. Metals in concentrate produced increased by 26.5% to 4 592kg (147 636oz), while metal sales rose to 5 295kg (170 238oz). Northam chief executive Glyn Lewis told the investment community today that mining conditions on the Merensky reef continue to be challenging. “However,” he added, “steady progress is being made in improving mining flexibility on the western side of the mine. In addition, the deepening project, with the aim of reaching more conformable Merenksy reef, is ongoing. Volumes from this area should pick up towards the end of H1 F2013.”
Booysendal – solid progress
Steady progress continues at the group’s new Booysendal mine on the eastern limb of the Bushveld Complex.
“Reef exposure has confirmed our expectations of structure and grade,” says Lewis, “while bulk surface earthworks are now largely complete and the focus is now on mechanical and electrical construction of plant infrastructure and the erection of mine buildings.”
A total of R785.2 million has been spent in the current period for the development of this mine. The estimated capital expenditure for F2012 is expected to be R1.8 billion. During the year Northam concluded an agreement to raise a R1.0 billion revolving credit facility, in line with the group’s previously stated funding strategy.
Lewis pointed to the challenges at Zondereinde, indicating that the pace of the recovery will be largely determined by geological and mining conditions. Production in the second half of the year is likely to be slightly lower than that of H1 owing to more public holidays in the period, while costs are anticipated to be reasonably contained. In the absence of any untoward disruptions to production, and if the rand basket price were to remain at current levels (R335 000/kg) (F2011: R323 899/kg), earnings for the year are anticipated to increase.
Russell & Associates
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