Solid year for Northam Platinum
Booysendal mine successfully commissioned
Johannesburg, Thursday 15 August 2013. Northam Platinum Limited (Northam) posted results for the year ended 30 June 2013 to shareholders today.
Key features for the year:
- Operational recovery at Zondereinde sustained
- Sales revenues increase by 20% to R4.4 billion
- Operating and unit cash cost increases well contained
- Operating margin 13.7%
- Booysendal mine successfully commissioned
- Earnings per share 62.6% higher
Northam posted improved results year on year on the back of higher sales volumes combined with the weakness of the rand which contributed to a 20.0% increase in sales revenues to R4.4 billion (F2012: R3.7 billion).
Metal sales were up by 7.3% to 10 704kg (F2012: 9 980kg) and over the reporting year the rand had weakened by 13.5% against the US dollar to an average of R8.82/US$. At the same time the average US dollar price realised during the period declined by 5.1% from US$1 345 per ounce to US$1 276 per ounce (3PGE+Au).
Cost of sales increased by 14.0% to R3.8 billion, driven by higher volumes sold and higher operating costs. Operating costs were up by 7.3%, reflecting the sustained impact of higher labour and power costs - the most significant components contributing to mining inflation in South Africa. The cost of sales was also adversely impacted by a 60.6% increase in refining costs owing to a weaker ZAR/Euro exchange rate and the outsourcing of smelter services.
Investment revenues were 38.0% lower at R33.4 million (F2012: R54.0 million) owing to the depletion of cash reserves which were used for the construction of the Booysendal mine. After taking account of finance charges incurred, and increases in sundry income, the operating profit increased by 70% to R607.7 million.
Operations – Zondereinde mine
The safety performance at the Zondereinde mine was improved year on year, with some notable achievements in reducing both fatalities and injury rates.
Tonnages milled at Zondereinde mine were 9.4% up at 2 115 712 tonnes, yet the head grade was lower at 4.9g/t (F2012: 5.1g/t) – attributable largely to the lower average UG2 grade, reflecting some poor grade control. Chief executive Glyn Lewis explained that this would be a key focus area for management in the year ahead. In spite of the lower head grade, metal output from underground operations was 5.4% higher.
Production was badly impacted by a three-week strike by rock drill operators (RDOs) in April this year. Their dispute was centred on the payment methodology of production related bonuses. These differences have since been resolved. Wage negotiations for F2014 have begun at Zondereinde.
Operations – Booysendal mine
The group’s new Booysendal mine on the eastern limb was commissioned in the second half of the F2013 financial year. At 30 June 2013 the labour force numbered 1 915 people. Booysendal recorded a million fatality free shifts on 9 March 2013, a commendable achievement in start-up phase.
A total of 242 602 tonnes were milled in F2013, to produce 473kg of metal in concentrate which has been processed. To counter certain delays in the construction of conveyors and other services underground, management has taken on additional contractors in a temporary capacity to mitigate delays to the production ramp-up.
With the permanent power supply having been commissioned in early March this year, the cold and hot commissioning of the concentrator continued until the year end. During this phase, a number of issues have been identified for rectification. These have largely been remedied.
Lewis concluded today that the platinum industry in South Africa remains dominated by social and economic uncertainty, which is manifested in certain uncontrollable factors such the exchange rate between the US dollar and the South African rand, as well as the strong possibility of labour disruptions during F2014. “Northam’s performance will depend largely on a combination of market circumstances and international metal prices, a peaceful and productive labour force, and regular underground mining conditions.”
Russell & Associates
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