- Published on 22 February 2013
Northam earnings impacted by tax and finance charges
Johannesburg, Friday 22 February 2013. Northam Platinum has issued its half-year results for the period ended 31 December 2012 today, Friday 22 February 2013.
Key features from the results:
- Sustained operational recovery at Zondereinde
- Production 6.5% higher at 157 1830z
- Metal sales 4.4% higher at 177 655oz
- 4% drop in operating cost to R1 339/tonne milled
- Cash cost increases contained to 5.7% at R289 156/kg
- 21% increase in operating profit
- R1.25 billion successfully raised in domestic capital markets
- Power supply being installed at Booysendal
- Commissioning on track
- Earnings impacted by tax and finance charges
Results for the six months ended 31 December 2012 (PDF - 275KB)
A solid operational performance at the Zondereinde mine resulted in a 6.5% rise in the production of metals in concentrate to 4 889kg (157 183oz). Metal sales were higher also at 5 526kg (177 655oz). The higher sales volumes, combined with a marginal uptick in the rand basket price (3.7% higher year on year at R354 385) contributed to the sales revenues of R2.2 billion, 12% higher year on year.
Higher operating and refining costs drove the cost of sales higher. Total operating costs at R1.4 billion reflect the higher volumes and the effects of mining inflation, impacted particularly by labour and power costs. Overall costs were well contained, and the increase in unit cash costs was kept to a creditable 5.7% at R289 516/kg.
The overall improvement in performance resulted in an operating profit of R266 million, 20.6% higher year on year. Earnings however, declined to 35.6 cents per share (H1 F2012: 51.8 cents), reflecting the impact of increased tax on the one hand, a decline in investment revenues emanating from the drawdown of cash to fund the intensive capex programme ahead of the Booysendal commissioning, and the finance charges associated with the credit facilities secured.
For the first time in Northam’s life it is carrying debt on the balance sheet, a function of the company’s expansion. The total debt facilities available to the company amount to R2.25 billion. At the end of the reporting period Northam’s net debt position was R631.1 million.
Given the cash requirements of the continued development at Booysendal, along with the uncertainty prevailing in the mining sector, the interim dividend has been passed.
Zondereinde – a sustained recovery
The key to Zondereinde’s improved performance lies in the absence of mine-wide safety stoppages during the period which allowed mining crews to achieve better than average face advances. Tonnes milled on the Merensky reef improved by 19%, and overall milled tonnages were 15.1% higher at 1.2 million tonnes. Grades were largely unchanged and production of metal in concentrates was 6.5% higher at 4 889kg (157 183oz).
After a run-out at the furnace in May 2012, the smelter was shut down for a rebuild, and was recommissioned by the end of September 2012.
Mining conditions are likely to continue to be impacted by poor ground conditions, particularly on the Merensky reef in the north-west quadrant of the mine. Steady progress continues to be made with the deepening project, with decline infrastructure being installed and stoping from 15 level expected to start in the latter half of F2013.
Booysendal – solid progress
The construction of the plant at Booysendal has been completed, and there has also been partial cold commissioning of smaller equipment in the plant using the limited power available from Mototolo. Good progress has also been made with the tailings dam. However, key to completing the cold and then hot commissioning of the plant, anticipated by then end of Q4, is the availability of a permanent power supply.
By the end of December 2012 the stockpile had grown to 320 000 tonnes containing approximately 25 000 oz, 6 500 metres of development had been completed and a total of 14 000m2 had been stoped.
The platinum industry is likely to be dominated by continued uncertainty in the foreseeable future. In the absence of disruptions to operations in the second half of the year the company hopes to deliver an improved operational performance compared to F2012. In turn the financial results will be informed by the operational performance, along with the impact of metal prices and inflation.
Russell & Associates
Tel +27 11 880 3924