Northam and Heraeus extend strategic co-operation agreement

Heraeus to invest 20 million in expanding Northam’s smelting capacity

Johannesburg, 23 October 2015: Northam Platinum Limited (Northam) is pleased to announce that it has agreed terms to extend its co-operation agreement with Heraeus Deutschland GmbH &Co. KG (Heraeus) and Heraeus South Africa Proprietary Limited (HSA). The agreement will cement the strategic partnership between the companies and support Northam’s expansion plans.

In terms of the agreement Heraeus will contribute €20 million (approximately R300 million at the current exchange rate) to expand the capacity of Northam’s existing smelter, with the construction of a 20MW second furnace at the Zondereinde metallurgical complex. The total cost of the expansion is estimated at R750 million.

Northam chief executive Paul Dunne said today, “the addition of a second furnace at the Zondereinde division is a critical element of Northam’s strategic growth: it supports the expansion programme at Booysendal and the increased UG2 mining at Zondereinde and will immediately raise the group’s processing capacity to more than 1 million PGM ounces.  In addition, it reduces operational risk, while providing headroom for third party concentrate purchases and toll treatment arrangements.”

The agreement also provides for the renewal of the current offtake and toll refining agreements with Heraeus, and a represents a landmark initiative in which both parties will also support product development and optimisation.

Heraeus’ capital contribution will be fixed according to a progress schedule, and paid in tranches.  The furnace is planned to be commissioned by the end of the 2017 calendar year. In return Northam will renew its toll refining agreement with Heraeus and HSA for a period of 20 years at competitive terms.  Northam also undertakes to sell up to 40% of its production to Heraeus or HSA at market prices.

The various elements of the agreement underscore Northam’s plans for growth and expansion, underpinned by a conservative approach to capital expenditure, particularly in the current climate of metal price weakness. 

Dunne concluded that this investment by Heraeus is a clear sign of confidence in platinum group metals, their markets and in Northam. “This development is significant, not only in that it further cements our companies’ already long-standing business partnership, but is an expression of confidence in PGMs and their markets, Northam’s performance to date, and our expansion strategy.”

Note to editors:

Heraeus is a leading international family-owned technology group headquartered in Hanau, Germany. Heraeus’ interests range from components to coordinated material systems which are used in a wide variety of industries, including the steel, electronics, chemical, automotive and telecommunications industries. In the 2014 financial year, Heraeus generated product revenues of €3.4 bn and precious metal revenues of €12.2bn . With around 12,600 employees worldwide in more than 100 subsidiaries in 38 countries, Heraeus holds a leading position in its global markets.

Heraeus South Africa is a 100% subsidiary of Heraeus Precious Metals and operates from two premises in South Africa: a marketing and sales office in Boksburg, near Johannesburg, as well as a precious metal chemical compounds production and refinery site in Port Elizabeth.

Heraeus’ relationship with Northam Platinum has been in place for more than 25 years. Once material has been processed at Northam’s smelter and base metals removal plant , located on the Zondereinde lease area, the product is refined by Heraeus, both in Port Elizabeth and in Hanau, Germany. Northam’s in-house marketing department is responsible for marketing and sales of product both domestically and to the major global markets in Asia, Europe and North America.

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Russell & Associates
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