Announcements 2022

Strategically, the period under review has been significant for Northam.

Key features:

    Reviewed 6 months ended 31 December 2021 Reviewed 6 months
ended 31 December 2020
Variance %
Normalised headline earnings R000 3 867 300 3 270 084 18.3 
Normalised headline earnings per share cents 975.1 641.5 52.0 
Sales revenue R000 13 881 445 11 884 898 16.8 
Operating profit R000 5 851 165 5 191 659 12.7 
Operating profit margin % 42.2 43.7 (3.4)
Profit after tax for the period R000 3 503 439 2 099 031 66.9 
Total comprehensive income for the period R000 3 513 166 2 083 307 68.6 
Headline earnings per share cents 961.5 599.9 60.3 
Earnings per share cents 965.0 599.9 60.9 
Cash generated from operating activities R000 2 911 944 3 144 590 (7.4)
EBITDA* R000 6 444 638 5 411 578 19.1 
Capital expenditure R000 2 298 033 1 298 511 77.0 
Total number of shares in issue   396 615 878 509 781 212 (22.2)

* Profit before Zambezi preference share dividends adding back interest and depreciation

Strategically, the period under review has been significant for Northam.

Firstly, the maturity of the broad-based black economic empowerment transaction with Zambezi Platinum (RF) Limited (“Zambezi”), (“Zambezi BEE transaction”) was accelerated as part of the Composite Transaction (as contemplated in the circular to shareholders dated 31 May 2021), which was approved by 99.9% of shareholders on 30 June 2021. The implementation of the Composite Transaction will enable Northam to achieve a number of strategic outcomes that will position the group for the next phase in its development. The Composite Transaction also resulted in the introduction of Northam Holdings as the new listed entity which was achieved by way of a share exchange implemented on a one-for-one basis in terms of which Northam shareholders exchanged their Northam shares for Northam Holdings shares. The introduction of Northam Holdings optimises the group structure for compliance with the historically disadvantaged persons ownership requirements as set out in the Mining Charter.

Secondly, the acquisition of a 34.68% shareholding in Royal Bafokeng Platinum Limited (“RBPlat”) aligns with Northam’s long-term growth, sustainability and operational diversification strategy. The consequent introduction of Royal Bafokeng Investment Holding Company Proprietary Limited as a significant shareholder in Northam Holdings further strengthens the group’s empowerment credentials.

Northam believes that this acquisition holds the potential for substantial long-term value creation. It further provides inherent optionality. The complementary metals mix of RBPlat, with a higher relative platinum contribution, fits well within the broader Northam metals basket. The RBPlat assets are young, shallow and well capitalised and occupy a strategically important position in the western limb of the Bushveld Complex. Northam recognises the Royal Bafokeng Nation’s important contribution and ongoing legacy in respect of RBPlat and is cognisant of Northam’s responsibility in respect of the long-term sustainability of RBPlat’s operations and its impact on the broader communities and the Royal Bafokeng Nation as a whole.

Financial results

Sales revenue for the six months ended 31 December 2021 was R13.9 billion, an increase of 16.8% compared to the sales revenue of R11.9 billion reported in the six months ended 31 December 2020 (“H1 F2021”). The increase in sales revenue was as a result of higher USD basket prices which was offset by a decrease in sales volumes on a 4E basis and a stronger ZAR/USD exchange rate, compared to H1 F2021. 4E sales volumes were impacted by the planned rebuild and upgrade of smelter furnace 1 at the Zondereinde metallurgical complex (“furnace 1”), which commenced during May 2021 and was successfully completed at the end of October 2021.

Despite the operational and inflationary challenges experienced, operating profit increased by 12.7%. Operating profit was impacted by the 16.8% increase in sales revenue which was partially offset by a corresponding 20.0% increase in cost of sales, resulting in an operating profit of R5.9 billion for the period under review (H1 F2021: R5.2 billion). This translates to an operating profit margin of 42.2% (H1 F2021: 43.7%).

EBITDA increased by 19.1% to R6.4 billion (H1 F2021: R5.4 billion).

The group’s financial results were affected by the challenging operational performance which impacted sales volumes, and in turn impacted operating profit, and the resultant cash position of the group. The cash position was further impacted by the acceleration of the maturity of the Zambezi BEE transaction, as well as the acquisition of the RBPlat shares.

During the period under review the group generated cash flow from operations amounting to R2.9 billion (H1 F2021: R3.1 billion). Cash generated was impacted by marginally lower sales volumes and higher than inflation cost increases. Sales volumes were impacted by higher inventory levels arising from the planned rebuild and upgrade of furnace 1 during the period under review, together with the increased pipeline as a result of the introduction of a second precious metal refiner. As at 31 December 2021, inventory on hand amounted to 379 874 oz 4E. Applying the average basket price realised during the period under review, inventory on hand is valued at c. R18.7 billion as at 31 December 2021.

Cash generated was applied towards both the Composite Transaction, resulting in an outflow of cash in excess of R6.6 billion, and the acquisition of the investment in RBPlat amounting to an outflow of R4.1 billion during the period under review. This resulted in net debt increasing to R14.3 billion, excluding the deferred portion of the purchase consideration relating to the acquisition of the RBPlat shares (“deferred acquisition consideration”) of R5.7 billion. 

As previously communicated to shareholders, Northam is comfortable with a self-imposed long-term net debt to EBITDA ratio of 1 to 1 (“net debt ratio”) in the pursuance of the group’s growth strategy. Excluding the deferred acquisition consideration, which relates to a corresponding cash generative underlying asset with no net debt, the net debt ratio as at 31 December 2021 (expressed on a rolling twelve month basis) amounted to 0.81. Inclusive of the deferred acquisition consideration, the net debt ratio was 1.13. The ongoing release of metal built up ahead of the smelter following the recommissioning of furnace 1, as well as a normalisation of the metal pipeline following the introduction of a second precious metal refiner, combined with the strong current metal price environment and the receipt by Northam of the dividend declared by RBPlat subsequent to the period end, will contribute to normalising the net debt ratio (post settlement of the deferred acquisition consideration) by 31 December 2022.

Group operational review and capital expenditure

The period under review has been extremely challenging, but Northam’s growth aspirations remain on track.

A key feature has been the difficult operational environments at the Zondereinde and Booysendal mines. Tragically, Zondereinde suffered two mining related fatalities, together with elevated medical absences relating to the ongoing COVID-19 pandemic. Furthermore, regional community unrest in the eastern region of the Bushveld Complex resulted in lost production days at Booysendal. This has negatively impacted the group’s metal production and unit cash costs. Despite this, Northam’s expansionary projects remain on track. Development of the Western extension at Zondereinde has progressed well. Booysendal has made good progress on South mine whilst recording seven million fatality-free shifts and remaining fatality free since inception. Eland mine continues to ramp-up and the addition of the recently acquired Maroelabult section adds considerable benefits.

The group’s equivalent refined metal from own operations decreased marginally to 351 359 oz 4E (H1 F2021: 352 741 oz 4E). The health, safety and community issues mentioned above resulted in lower production at Zondereinde and only marginal growth at Booysendal.

Group chrome concentrate production decreased by 17.3% to 430 697 tonnes (H1 F2021: 521 086 tonnes), as a result of a commensurate lower UG2 concentrator throughput.

Group unit cash costs per equivalent refined platinum ounce increased by 18.6% to R32 814/Pt oz (H1 F2021: R27 660/Pt oz) as a result of cost increases at all of the operations. Zondereinde cash costs increased by 21.3% to R34 544/Pt oz (H1 F2021: R28 473/Pt oz), with a corresponding increase of 19.1% at Booysendal to R24 158/Pt oz (H1 F2021: R20 288/Pt oz), and Eland recording an increase of 7.9% to R42 583/Pt oz (H1 F2021: R39 476/Pt oz).

Capital expenditure increased to R2.3 billion (H1 F2021: R1.3 billion). This is the result of the restart of capital projects that had been curtailed following the onset of the COVID-19 pandemic, partially offset by capital projects having either been completed, or being near completion at Booysendal mine. R1.5 billion (H1 F2021: R918.1 million) was spent on expansionary capital expenditure and R776.9 million (H1 F2021: R380.5 million) on sustaining capital expenditure.

The significant increase in sustaining capital expenditure was as a result of the planned rebuild and upgrade of furnace 1, together with a number of extensions to strike belts at Zondereinde mine and the first significant fleet replacements at Booysendal.

Expansionary projects that had been temporarily scaled back included: the Central Merensky and BS4 modules at Booysendal mine; aspects of the Western extension number 3 shaft project at Zondereinde mine; and the stoping build-up at Eland mine. Following improved market certainty during the previous corresponding period, all curtailed growth projects were re-initiated and the majority of workflow impacts resulting from the stoppage were clawed back. As such, the overall impact on the group’s growth strategy has been minimal. Group capital expenditure for the full financial year is forecasted to amount to R4.6 billion. The potential for further disruption to operations and the metal markets as a result of the COVID-19 pandemic remains. In addition, there is a continued risk of regional community unrest on the eastern limb of the Bushveld Complex. We continue to monitor the market and the societal landscape and will amend our capital programme when and where prudent. 

At Zondereinde mine, stoping is ramping-up within the Western extension section and further progress has been made on the deepening project. Reaming of number 3 shaft is progressing on track. At the metallurgical facilities, upgrades to the material handling infrastructure together with the planned rebuild of furnace 1 were completed as stated above. Capacity upgrades at the base metal removal plant have commenced, in order to align with our growth profile.

The development of Booysendal South is progressing well despite work stoppages due to community unrest in the region. Construction of surface infrastructure has been completed and underground development and stoping ramp-up at the Central UG2 modules is progressing. Decline development at the South Merensky module is on track. Underground stoping has commenced at the BS4 UG2 module and will ramp-up over the coming twelve months. The North aerial rope conveyor was commissioned in December 2021 and is operating within design parameters.

At Eland mine, processing of surface sources continues. Development of the Kukama decline system has progressed well, as has strike development to connect with the Maroelabult mine which was purchased from Eastern Platinum Limited. Underground stoping ramp-up is in progress. In addition, open-pit mining of UG2 commenced in the eastern portion of the mining right during the first quarter of the 2022 financial year. First ore was delivered to the concentrator during the second quarter.

Returning meaningful value to our shareholders

There are a number of ways that value can be returned to shareholders. This includes cash dividends, but also includes share buy-backs and, previously, the purchase of Zambezi preference shares.
The group has returned significant value to shareholders over the last two years through the acquisition of Zambezi preference shares and the early maturity of the Zambezi BEE transaction, which resulted in a reduction in the group’s issued share capital of 28.9%. 

The company considers an interim and final dividend at each reporting period. At its discretion, the board of directors of the company (“board”) may consider a special dividend where appropriate and dependent on the perceived need to retain funds for expansion or operating purposes. The quantum of any dividend would be determined by also taking into account expected future metal prices and exchange rates, together with capital commitments at the time of consideration by the board.

The company is currently at a critical juncture in respect of its growth trajectory, with various potential outcomes which remain to be determined. These outcomes will contribute to and inform our approach to dividends.

Accordingly, the board has resolved to not declare an interim dividend for the six months ended 31 December 2021 (H1 F2021: R Nil per share).

About this announcement

This short-form announcement is the responsibility of the board and is only a summary of the information in the group’s published condensed reviewed interim financial results for the six months ended 31 December 2021 and does not contain full or complete details.

Any investment decisions by investors and/or shareholders should be based on the published condensed reviewed interim financial results accessible via the JSE link at and on the company’s website at:

The condensed reviewed interim financial results are also available for inspection at no charge at the company’s registered office (Building 4, 1st Floor, Maxwell Office Park, Magwa Crescent West, Waterfall City, Jukskei View) and the offices of its sponsor, One Capital Sponsor Services Proprietary Limited (17 Fricker Road, Illovo), during normal business hours.

31 March 2022