Announcements 2016

In compliance with paragraph 3.63 of the JSE Limited Listings Requirements (“JSE Listings Requirements”), the dealings in securities by a director of the company and a director of a major subsidiary are as follows:

Johannesburg
23 December 2016

Sponsor and Debt Sponsor
One Capital

Northam shareholders (“shareholders”) are advised that the company has made awards in accordance with the terms of the Northam Share Incentive Plan (“SIP”). These include the award of conditional shares relating to Northam’s BEE transaction (“BEE SIP Awards”), which awards were specifically approved by shareholders at the annual general meeting held on 9 November 2016. The BEE SIP Awards have been carved out of the existing total SIP allocation limit previously approved by shareholders on 5 November 2014, therefore the total SIP allocation limit has not been increased as a result of the BEE SIP Awards.

In compliance with paragraph 3.63 of the JSE Limited Listings Requirements (“JSE Listings Requirements”), the dealings by directors of the company, directors of major subsidiaries and the company secretary are as follows:

Johannesburg

22 November 2016

<>Sponsor and Debt Sponsor - One Capital

In compliance with paragraph 3.59(a) of the JSE Limited Listings Requirements, Northam shareholders are advised that Mr J G (John) Smithies has been appointed as an independent non-executive director to the board of Northam (“board”), with effect from 1 January 2017.

Mr Smithies is a mining engineer and has spent the majority of his career at Impala Platinum Holdings Limited (“Implats”), where he held a number of senior management positions including that of director of operations and chief executive officer, before retiring from Implats.

Mr Lazarus Zim, chairman of the board, commented, “Northam is pleased to welcome John to the board and we look forward to benefit from his extensive technical and hands-on mining experience in the platinum sector, which will further strengthen the company.”

Johannesburg
10 November 2016

Sponsor and Debt Sponsor
One Capital

Johannesburg, 1 November 2016. Northam hereby advises shareholders of the acquisition of 4 043 018 preference shares (preference shares) in Zambezi Platinum (RF) Limited (Zambezi) from Coronation Asset Management Proprietary Limited acting as investment manager on behalf of its clients (Coronation), (acquisition). 

The acquisition was effected on 31 October 2016 at R49.468 per preference share, for a total cash value of R200 million, and constitutes approximately 2.5% of the total preference shares in issue.

The preference shares were issued by Zambezi in 2015 in terms of Northam’s black economic empowerment transaction (Northam BEE transaction), which raised Northam’s empowerment equity levels to 31.4%.

Northam chief executive Paul Dunne said today:

“The preference shares offer an attractive yield whilst acting as a partial hedge against any potential financial liability which could arise in respect of the guarantee that Northam provided to the holders of preference shares in terms of the Northam BEE transaction.”

RATIONALE

Northam considers the preference shares to be a high-yield instrument with a credit risk profile that matches that of Northam. Accordingly, an investment in the preference shares provides the following benefits:

• the preference shares generate a high return without the introduction of significant additional third party risk for Northam;
• Northam may access future liquidity through the disposal of the preference shares in the future;
• should Zambezi elect to redeem the preference shares using Northam ordinary shares, Northam will benefit from the discount that shall be applied to the Northam ordinary shares for purposes of the redemption calculations;
• the acquisition partially hedges Northam against the potential future liability which could become payable pursuant to the guarantee provided by Northam to preference shareholders in respect of the preference shares (guarantee); and
• the net finance charges and liability included in Northam’s consolidated financial statements in relation to the preference shares will be reduced when setting off these preference shares held as an asset.

PURCHASE CONSIDERATION

The price paid of R49.468 per preference share was calculated as the redemption value of a preference share as at 31 October 2016, being an amount equal to the issue price of R41.00 plus the accrued dividends at that date. The aggregate value of the acquisition was R200 million and was funded from Northam’s cash reserves.

DETAILS OF ZAMBEZI AND THE PREFERENCE SHARES

Zambezi was incorporated as a special purpose vehicle for purposes of facilitating the Northam BEE transaction, the primary purpose of which is to (i) hold the Northam ordinary shares it acquired as part of the Northam BEE transaction (BEE shares) for the benefit of historically disadvantaged South African participants and (ii) issue the preference shares. Zambezi is a ring-fenced entity and does not conduct any operational business activities, with its only investment being the BEE shares.

The preference shares, which were issued at R41.00 per share, are cumulative, redeemable preference shares which accrue dividends daily at an effective rate equal to the prime interest rate plus 3.5% compounded annually and are redeemable on 18 May 2025. The preference shares are secured by the BEE shares held by Zambezi and payments to their holders are guaranteed by Northam.

The preference shares may be redeemed, at Zambezi’s election, in cash and / or through the distribution of the BEE shares held by Zambezi in Northam. In the event that the preference shares are redeemed through the distribution of the BEE shares, the settlement value of the BEE shares shall be calculated at the 30 day volume weighted average price of a Northam ordinary share, as at the date preceding the settlement date, less 10%.

If payment under the guarantee is required, Northam may, at its election, settle the associated liability using cash and / or new Northam ordinary shares.

SMALL RELATED PARTY TRANSACTION AND FAIRNESS OPINION

Coronation is deemed to be a material shareholder of Northam in that it is able to exercise voting control on behalf of its clients over shares constituting an approximate 29.68% interest in Northam, and is therefore considered a related party in terms of paragraph 10.1(b)(i) of the JSE Limited Listings Requirements (Listings Requirements). Accordingly, the acquisition is classified as a small related party transaction in terms of paragraph 10.7 of the Listings Requirements.

The acquisition is not subject to shareholder approval, provided an independent professional expert has confirmed that the terms of the acquisition are fair as far as Northam’s shareholders are concerned. Northam appointed KPMG Services Proprietary Limited as an independent expert to provide an opinion on the fairness of the acquisition

In accordance with paragraph 10.7(b) of the Listings Requirements, and the fairness opinion, the board hereby confirms its opinion on the fairness of the acquisition for Northam shareholders. A copy of the fairness opinion is available for inspection at Northam’s registered office, being Building 4, 1st Floor, Maxwell Office Park, Magwa Crescent West, Waterfall City, Jukskei View, for a period of 28 days from the date of this announcement.

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Russell & Associates
Johannesburg
Tel +27 (0)11 880 3924

Marion Brower +27 71 493 0387
Jan Walker +27 71 493 0429
Janet Whitaker: +27 11 880 3924

1. INTRODUCTION

   Northam is pleased to announce that it has entered into agreements with Rustenburg Platinum Mines Limited (“RPM”), a wholly owned subsidiary of Anglo American Platinum Limited, on 10 October 2016, whereby Northam will:

   • acquire a portion of the Amandelbult mining right contiguous with the north western boundary of Northam’s Zondereinde mine, including all of RPM’s rights and obligations thereto (“Acquired Resource”), for a cash consideration of R1 billion;
   • acquire a portion of the Elandsfontein 386 KQ farm overlying part of the Acquired Resource, in exchange for a portion of the Zondereinde mining right, located on the north western corner of the Zondereinde mining right including all of Northam’s rights and obligations thereto (“Sold Resource”), (collectively the “Transaction”).

   Paul Dunne, Northam’s Chief Executive Officer, said “the Transaction adds flexibility and optionality to the mining operations at Zondereinde. The Acquired Resource is of high quality, is well understood by Northam and allows us to better leverage the existing Zondereinde infrastructure. The additional resource also enables Northam to continue mining higher grade Merensky ore for a longer period, with relatively low incremental capital expenditure. Northam is confident that the Transaction will add sustainable shareholder value, unlocking a large resource in a capital efficient manner. The Transaction positions Zondereinde on a similar long-term footing as our Booysendal operation.”

2. BACKGROUND INFORMATION

   Acquired Resource

   The Acquired Resource is contiguous with the north western boundary of Zondereinde. Its resource characteristics and properties are similar to those of the Zondereinde orebody lying to the west of Zondereinde mine shaft. A short lead time and limited capital expenditure is required to access the Acquired Resource from Zondereinde’s existing infrastructure.

   It extends on dip from approximately 1 400 metres below surface, corresponding to the Zondereinde 3 level, to the deepest extent of planned mining on 18 level. Laterally, it extends for approximately 3.6 kilometres.

   Sold Resource

   The Sold Resource is located in the north western corner of the Zondereinde mining right. This area has never been mined and did not form part of the Zondereinde life of mine (LOM) plan, as it is above the minimum depth required for effective use of hydro-powered mining equipment.

3. RATIONALE

   The acquisition of the Acquired Resource provides Northam with numerous benefits, such as it:

   • Extends the Zondereinde economic LOM to beyond 30 years.
   • Provides extensive mining flexibility associated with a high quality resource that is well understood by Northam.
   • Provides early access to additional higher grade Merensky and UG2 reef on 10 and ultimately 16 mining levels.
   • Reduces the overall average mining depth of the Zondereinde mine, with associated potential savings.
   • Provides long-term optionality and reduces Zondereinde’s operational risk profile.

4. CONDITIONS PRECEDENT

   The Transaction is subject to, inter alia, the consent by the Minister of Mineral Resources in terms of section 102 of the Mineral and Petroleum Resources Development Act, No. 28 of 2002.

5. CATEGORISATION

   The Transaction falls below the threshold for categorisation in terms of the JSE Limited Listings Requirements and is provided for information purposes only.

Johannesburg
11 October 2016

Corporate Advisor, Sponsor and Debt Sponsor
One Capital

Attorneys
Cliffe Dekker Hofmeyr Inc.

The annual general meeting of Northam shareholders will be held at Glenhove Conferencing, 52 Glenhove Road, Melrose Estate, Johannesburg, South Africa on Wednesday, 9 November 2016 at 10:00 to transact the business as stated in the notice of annual general meeting, forming part of the abridged annual report 2016 (“notice and abridged report 2016”).

No change statement

Shareholders are advised that the summarised audited financial statements for the 12 months ended 30 June 2016 as contained in the notice and abridged report 2016, will be distributed electronically to shareholders today, 30 September 2016, whilst the physical mailing process of the notice and abridged report 2016 is expected to be completed by no later than Wednesday, 5 October 2016. The audited annual financial statements 2016 contain no material modifications to the reviewed preliminary results, which were published on SENS on 26 August 2016.

The annual integrated report 2016, containing the full audited annual financial statements, and the notice and abridged report 2016, are available at www.northam.co.za or can be obtained from the company’s registered office on request.

The salient dates of the annual general meeting are as follows:

Johannesburg
30 September 2016

Sponsor and Debt Sponsor
One Capital

Revenues hit by lower metal basket prices

Johannesburg, Friday 26 August 2016. Northam Platinum has released its preliminary annual results for the year ended 30 June 2016. The statement which follows captures the key features for the year, and an overview of the group’s operational performance.

KEY FEATURES

• Exemplary group safety performance
• PGM production up 15.7% to 436 960 ounces
• Group capital investment reaches the R1.2 billion mark
• Healthy year-end cash balance of R3.1 billion
• Normalised headline earnings of 87.1cps
• US$ basket price 25% lower year on year
• Booysendal South expansion approved

INTRODUCTION

The Northam group’s PGM production from own operations of 436 960oz (equivalent refined metal) was 15.7% higher year on year, following a solid operating performance at Zondereinde, and the Booysendal UG2 North mine reaching steady-state production in the first half of the financial year.

Financial results were negatively impacted by lower ZAR basket prices.

In line with the group strategy to diversify into shallow mechanisable operations the board approved the development of the initial phase of the Booysendal South project in June 2016.

This project includes the development of two UG2 mining modules and a Merensky mining module which will contribute an additional 240 000oz per annum of PGMs to the group’s production profile.

The construction of the new 20MW furnace at the Zondereinde mining complex is progressing well. In addition to adding smelter capacity, it will also reduce operational risk. The total cost of the project is anticipated to be R750.0 million, with commissioning by the end of the 2017 calendar year.

The expansion work follows on the extension of Northam’s strategic partnership with Heraeus Deutschland GmbH & Co. KG (Heraeus) and Heraeus South Africa Proprietary Limited in terms of which Heraeus has agreed to contribute €20.0 million to the construction of the furnace. The first €10.0 million was received in June 2016. The agreement also provides for the renewal of the current refining arrangements and guarantees a supply of refined metal to Heraeus.

Operations: Zondereinde

Zondereinde recorded five million fatality free shifts during the year, a commendable performance by both employees and management particularly at a deep-level mine.

With a focus on husbanding the Merensky reef at Zondereinde, modifications to the processing plant will allow for higher proportions of UG2 reef to be mined and processed and therefore the targeted UG2 : Merensky mining ratio has successfully been adjusted to 60 : 40.

A total of 815 167 Merensky reef tonnes (FY2015: 795 885 tonnes) were milled at a head grade of 5.9g/t. The higher UG2 contribution, with a lower grade at 4.2g/t had a predictable effect on the combined head grade, which came in at 4.9g/t.

Overall the Zondereinde mine’s performance was good, in spite of the constrained mining flexibility on the Merensky reef, and production of equivalent refined metal from own operations increased by 10.6% to 282 765oz.

Zondereinde’s total operating costs were R3 464.4 million (FY2015: R3 147.0 million), an increase of 10.1% based on the higher production. This resulted in an overall 1.0% decline in the unit cash cost per equivalent refined 3PGE + Aukg to R374 846/kg, demonstrating the success of tight cost control at the operation.

Capex to the value of R554.1 million was invested at Zondereinde as follows:

• Expansionary capex of R291.6 million on the construction of the new 20MW furnace
• R259.8 million on sustaining capex of which R132.7 was spent on the deepening project

These projects will continue into the next financial year, with expansionary and sustaining capex reaching R379.1 million and R303.6 million respectively in FY2017.

Zondereinde’s total resource estimate has increased to 84.1Moz (FY2015: 81.1Moz) with 11.7Moz (FY2015: 10.6Moz) in the reserve category. The life of mine is now estimated at more than 20 years.

Operations: Booysendal

The Booysendal mine recorded two million fatality free shifts during the year. The LTIIR was 0.44 (FY2015: 0.54).

With the mechanised mining method continuing to prove to be a significant safety differentiator, management believes the growth of the group will be based on shallower, mechanisable operations. During the year the Booysendal North UG2 mine achieved its steady state run rate of 160 000oz per annum. A total of 2 165 603 tonnes were milled at a head grade of 2.7g/t compared to 1 786 375 tonnes at a head grade of 2.6g/t in 2015.

Metals in concentrate produced at Booysendal grew by 31.7% to 161 300oz, resulting in a 29.3% increase in total operating costs. However, the cash cost per equivalent 3PGE + Au kg in concentrate was R298 500/kg, a 1.4% reduction from the prior year’s unit cost of R302 695/kg.

Capital expenditure incurred amounted to R616.4 million (FY2015: R798.8 million). The capex was spent as follows:

• R55.2 million on the acquisition of the Everest mineral resource
• R178.0 million spent on the UG2 phase 1 mine and deepening project
• Employee accommodation of R14.3 million
• R89.1 million on sustaining capital expenditure at the UG2 North mine
• Expansionary capex of R63.5 million on the Booysendal South feasibility study

Management estimates that expansionary and sustaining capital expenditure will be R527.0 million and R86.9 million respectively in FY2017.

PROSPECTS

The global economic outlook remains uncertain, resulting in volatile metal markets and exchange rates. The group’s financial performance will depend on achieving higher metal sales prices and a stable operating performance. Cost saving and productivity improvement initiatives are in place at both Zondereinde and Booysendal. Management is confident that the group’s strong financial position, prudent financial controls and the development of shallow, mechanisable operations at Booysendal will place the group in a position to take advantage of improved market conditions going forward.

Issued by

Russell & Associates
Johannesburg
Tel +27 (0)11 880 3924

Marion Brower +27 71 493 0387
Jan Walker +27 71 493 0429
Memory Johnstone +27 72 439 5430

Johannesburg Thursday 4 August 2016. Northam is pleased to advise shareholders that it has secured a new R1.5 billion five-year revolving credit facility to replace its existing R1.0 billion revolving credit facility which matures in November 2016.

The new facility further strengthens Northam’s balance sheet capability in support of the group’s key strategic initiatives, including the development of the Booysendal expansion projects. Together with existing cash reserves, the new facility provides Northam with increased financial flexibility, ensuring that the group’s growth initiatives remain fully funded in the medium-term.

The salient terms of the new facility are as follows:

• Five-year senior unsecured revolving credit facility.
• Facility limit of R1.0 billion for the first 18 months from inception, whereafter the new facility limit automatically increases to R1.5 billion for the remainder of the five year period.
• Voluntary prepayments and redraws are permitted.
• Other terms, conditions and covenants are typical for a facility of this nature.

Paul Dunne, Northam’s Chief Executive Officer, said “the new and increased long-term revolving credit facility, combined with Northam’s DMTN Programme and the equity raised in our empowerment transaction with Zambezi Platinum (RF) Limited, gives the company significant long-term balance sheet certainty and flexibility. Northam is well placed to pursue its strategic growth projects and to implement sound long-term strategies.”

Issued by

Russell & Associates
Johannesburg
Tel +27 (0)11 880 3924

Marion Brower +27 71 493 0387
Jan Walker +27 71 493 0429

Swift return to work in the best interests of all

The management of Northam Platinum has welcomed Minister Zwane’s visit to the company’s Zondereinde mine in Limpopo province today, Tuesday 14 June 2016.

Minister Zwane’s second visit comes as the investigation into the death of Zondereinde employees Messrs Somaxhama and Mhlabeni gains momentum.

Northam management is encouraged by the swift progress made by the SAPS in the investigations and the way they are being dealt with.

Weekend talks between the parties continued yesterday and today. Management has again called on all parties to return to work in the shortest possible time, so that underground operations may be resumed safely and smoothly.

“A swift return to work would be in the best interests of all parties,” concluded Northam chief executive Paul Dunne.

Issued by

Russell & Associates
Johannesburg
Tel +27 (0)11 880 3924

Marion Brower +27 71 493 0387
Jan Walker +27 71 493 0429

The management of Northam Platinum has thanked the minister of mineral resources, Minister Zwane for his visit to the Zondereinde mine today.

Management is appreciative of the efforts of Mr Zwane and his ministry in attempting to resolve the tensions at the Zondereinde mine near Thabazimbi. Tensions were ignited after the death of Mr Mthetheleli Somaxhama in the town of Northam (some 20km from mine property), followed on Monday 6 June by that of another Zondereinde employee, Mr Thembinkosi Mhlabeni, also in the vicinity of the mine.

In thanking Mr Zwane for his support and the leadership efforts of the DMR, Northam chief executive Paul Dunne once again extended his sympathies also to the families and colleagues of Mr Somaxhama and Mr Mhlabeni.

Mr Dunne continued, “We will continue to provide support to the authorities in tracking down the perpetrators and bringing them to justice. We will also continue our plans to support the municipality as we have done over the years with infrastructure, expertise and developments, as we strive to improve the living conditions of our employees.

“We recognized that tensions were high immediately following these tragic deaths, and for this reason temporarily suspended underground operations. But, for all of us, it is time to go back to work. If we do not we run the risk of undermining the viability of operations here at Northam.

In closing I appeal to all employees and their representatives – let us all continue to engage and let the SAPS do their work. Let us help them where we can to bring the criminals that threaten the safety of our employees and their families to book so that justice may prevail. And let us not allow these tragic incidents to bring strife and violence onto our mine. We look forward to a speedy return to work.”

Johannesburg
9 June 2016

Issued by

Russell & Associates
Johannesburg
Tel +27 (0)11 880 3924

Marion Brower +27 71 493 0387
Jan Walker +27 71 493 0429

The management of Northam Platinum advises that talks continue with all parties to resolve the situation at the Zondereinde mine and return employees to work.

A mass meeting to be attended by the NUM, management and the SAPS has been scheduled to be held on the mine this morning.

Operations have been interrupted at the mine for two days since the fatal shooting of an employee on Sunday 5 June in Northam town approximately 20 kilometres from the mine.

Johannesburg
8 June 2016

Issued by

Russell & Associates
Johannesburg
Tel +27 (0)11 880 3924

Marion Brower +27 71 493 0387
Jan Walker +27 71 493 0429

Further to the statement issued this morning, Monday 6 June, Northam management advises that the violent outbreaks at and near the company’s Zondereinde mine have reduced significantly. This follows on the death of an employee at the Northam town yesterday, and the killing of another employee in clashes this morning.

Management, the SAPS and union leadership will be meeting at the Zondereinde mine at 16:00 this afternoon in an attempt to resolve the current impasse and to ensure that operations resume as soon as is practicably possible, and to ensure safe passage for employees.

Management urges both NUM and AMCU to exercise leadership following these tragic incidents, and to ensure that union members act responsibly and peacefully in the interests of safety for all.

Johannesburg
6 June 2016

Issued by

Russell & Associates
Johannesburg
Tel +27 (0)11 880 3924

Marion Brower +27 71 493 0387
Jan Walker +27 71 493 0429

Northam is pleased to announce that the company has successfully raised term debt through an issue of R175 million five year senior unsecured fixed rate domestic medium term notes (“Notes”). The Notes bear a fixed coupon of 13.50% per annum, payable semi-annually, and will be redeemed on 12 May 2021.

The proceeds will further strengthen Northam’s balance sheet and be applied to the development of the company’s project pipeline.

Paul Dunne, Northam’s chief executive officer said:

“The Notes match Northam’s project development requirements and a fixed rate allows for prudent forecasting of the debt cash flows over the term.  We are pleased to have again received support from the market and believe that it reaffirms investor confidence in our growth strategy.”

• Northam applicable pricing supplement - 13 May 2016 (PDF - 122KB)

Johannesburg
13 May 2016

Issued by

Russell & Associates
Johannesburg
Tel +27 (0)11 880 3924

Northam shareholders (“shareholders”) are advised that the company has made awards in accordance with the terms of the Northam Share Incentive Plan (“SIP”). These include the award of conditional shares relating to Northam’s BEE transaction (“BEE SIP Awards”), which awards were specifically approved by shareholders at the annual general meeting held on 9 November 2016. The BEE SIP Awards have been carved out of the existing total SIP allocation limit previously approved by shareholders on 5 November 2014, therefore the total SIP allocation limit has not been increased as a result of the BEE SIP Awards.

In compliance with paragraph 3.63 of the JSE Limited Listings Requirements (“JSE Listings Requirements”), the dealings by directors of the company, directors of major subsidiaries and the company secretary are as follows:

Johannesburg
22 November 2016

Sponsor and Debt Sponsor
One Capital

Zambezi Platinum advises its preference shareholders that the reviewed interim results for the 6 months ended 31 December 2015, is available on the Zambezi Platinum website: www.northam.co.za/zambezi/ and is also available for inspection at the company’s registered office on request.

Reviewed interim results for the six months ended 31 December 2015

Johannesburg
26 February 2016

Northam positioning for an upturn

Johannesburg, 26 February 2016. Northam Platinum Limited (Northam) released its results for the half-year ended 31 December 2015 today, Friday 26 February 2016.

KEY FEATURES

• Steady state production reached at Booysendal
• Solid performance from Zondereinde
• Three-year wage settlement reached
• Costs well contained
• Difficult market conditions persist
• Expansion strategy crystallised
• Strong cash position maintained
• Dividend withheld in line with the group’s cash requirements

FINANCIAL RESULTS

The group reported normalised earnings¹ of R197.4 million for the period under review. This amounted to normalised earnings per share of 38.7 cents per share, based on the 509 781 212 shares in issue.

With a solid performance from Northam’s Zondereinde operation, combined with Booysendal’s steady state production levels, the group posted sales revenues of R3.2 billion, 5.4% higher year on year.

Given the lower US dollar metal basket price, which was only partially offset by a 23.6% weakening of the ZAR value against the dollar, this was a creditable outcome for the half-year.

Costs were well contained, with unit cash costs for the group only 0.3% higher year on year at R340 274/kg or R17 756/Pt oz.  The higher sales volumes however drove the cost of sales higher by 17.8%, in line with the increase of 19.3% in volumes sold. The significant contributors to cost increases were labour, electricity and general mining inflation.  Group operating profit was R93.4 million (H1 F2015: R399.0 million) with Zondereinde and Booysendal recording operating profits of R50.0 million (H1 F2015 R279.4 million) and R43.3 million (H1 F2015: R119.4 million) respectively.

¹Normalised earnings are calculated by eliminating unusual items such as the impairment of non-core assets (R40.0 million) as well as the non-cash preference share dividends (R430.3 million) associated with the BEE structure, represented by Zambezi, from the group’s reported loss for the period of R273.0 million.

OPERATIONS

Zondereinde

The move to increasing the UG2 component in the mining mix at Zondereinde has been progressing successfully. The rebalancing of the Merensky/UG2 mining mix to a 35:65 ratio has resulted in the life of Zondereinde increasing to 21 years.

Production of metals in concentrate was 15.4% higher at 4 823kg (155 063oz). Third party purchases were marginally lower at 609kg.

Mining flexibility on the Merensky reef horizon remains constrained. Increased production from the UG2 horizon is expected to compensate for the Merensky constraints until the deepening section is completed.

Zondereinde’s good safety run has continued, with another fatality-free reporting period.  Operational management remains focused on reducing both the number and severity of injuries through interventions involving employees, their representatives and operational structures.

Increased production volumes at Zondereinde have helped reduce unit cash costs to R342 288/kg, an improvement of 4.4% year on year.  The total operating costs for the period were R1.7 billion.

Management has adopted a cautious approach to capital expenditure in order to preserve cash resources.  This is not, however, at the expense of essential and strategic development.  The total capital expenditure for the period was R161.9 million, with a further R570.0 million budgeted for the remainder of the year which will include project expenditure on a new furnace.

PROCESSING AND REFINING

The construction of the new furnace at Zondereinde is in progress, in line with the objective of adding smelting capacity and reducing operational risk. The project is anticipated to come in at a total R750 million in capex and it is expected to be commissioned by December 2017.  This expansion work follows on the extension of Northam’s strategic partnership with Heraeus Deutschland GmbH & Co. KG (Heraeus) and Heraeus South Africa Proprietary Limited in terms of which Heraeus has agreed to contribute €20.0 million to the construction of a new furnace.

The agreement also provides for the renewal of the current toll refining agreements and guarantees supply of material to Heraeus.

BOOYSENDAL

Booysendal’s milled tonnages reached 985 727 tonnes in the period, and the operation also reported an improvement in head grade from 2.6 to 2.7g/t.   Steady state production levels of 160 000oz per annum were reached during the reporting period.

The Merensky project at Booysendal North advanced satisfactorily with the development of the access decline and the extraction of a bulk sample for metallurgical test work. This test work is expected to be completed early in the second half of this financial year.

Booysendal’s good safety record was maintained in the period, with an improvement in the lost time injury rate.

Total operating costs at Booysendal for the period were R667.4 million, attributable mainly to the higher production volumes and mining contract rates. The rand per tonne milled cost for the period was in line with expectations at R661/t.

The unit cash cost of metal in concentrate at R291 772/kg (H1 F2015: R251 914/kg) is now a more realistic reflection of the operating costs at Booysendal following the completion of the ramp-up to steady state levels.

OUTLOOK

The outlook for the PGM industry remains challenging with persistent weak metal prices and poor economic fundamentals in developed economies. The group’s financial performance will depend on achieving higher metal prices and a stable operating performance. Despite the adverse market conditions, Northam’s strong balance sheet and prudent financial controls will enable the company to continue with strategic project development which will position the company for greater benefits from improving market conditions in the future.

The H1 results for F2016 are disclosed in greater detail than has been the case previously, including segmental analyses, breakdown of sales and costs, amongst other metrics. These appear in the results booklet, which is made available on the company’s website at www.northam.co.za.

Issued by

Russell & Associates
Johannesburg
Tel +27 (0)11 880 3924

Marion Brower +27 (0) 71 493 0387
Memory Johnstone +27 (0)82 719 3081

Northam is pleased to announce that it has entered into a subscription agreement (“agreement”) with the Industrial Development Corporation of South Africa Limited (“IDC”) in terms of which the IDC has agreed to subscribe for new domestic medium term notes (“notes”) to be issued by Northam, in an amount of R250 million (“proceeds”).

The proceeds will further strengthen Northam’s balance sheet and will be applied to the development of the company’s Booysendal expansion projects.

Paul Dunne, Northam’s chief executive officer, said:

“Northam is pleased to have the IDC as a funding partner. The confidence shown by the IDC in Northam is appreciated in light of the current adverse market conditions. This is a significant and important source of funding for Northam”.

Completion of the Booysendal projects will result in a significant expansion of Northam’s operating capacity as well as the creation of new employment opportunities.

Pursuant to the agreement, the notes may be issued at Northam’s election until 30 September 2016 and will have a 3 year term and bear a floating rate of 3.9% above the 3 month JIBAR.

Johannesburg

Corporate Advisor, Sponsor and Debt Sponsor to Northam
One Capital

Notes Arranger and Dealer
One Capital

Legal Advisor to Northam on the Notes
Bowman Gifillan Inc.