Innovative fund-raising programme to raise R1 billion

Northam Platinum today announced the details of a funding programme to the value of R1 billion which comprises a R600 million fully subscribed claw back rights offer and a R400 million additional revolving credit facility. In addition, certain covenant restrictions have been lifted on the revolving credit facility.

In terms of the claw back rights offer 15 million new Northam ordinary shares will be offered to shareholders at a price of R40 per share, representing a total subscription consideration of R600 million. The claw back offer has been fully subscribed by Coronation Asset Management (Proprietary) Limited. Further details of the claw back offer, the revolving credit facility and covenant holiday are available in an unabridged SENS announcement on the company’s website. (PDF - 62KB)

A challenging economic and operational environment has beset the South African mining industry for an extended period of time, with depressed platinum group metal basket prices, volatile exchange rates, rising costs and a complex industrial relations environment being at the forefront of the industry’s challenges. In addition to these, Northam has had to deal with the following specific circumstances:

  • the effects of a three-week strike at the Zondereinde division which resulted in revenue losses of R192 million;
  • capital outlay of approximately R55 million associated with the rebuild of the smelter at Zondereinde, along with the toll treatment costs and the considerable lengthening of the working capital pipeline and increased cost of production during the toll treatment period ; and
  • funding the balance of the Booysendal capital expenditure programme amounting to approximately R530 million in the 2014 financial year .
  • funding of Zondereinde’s ongoing capital programme

After an extensive board and executive management review of the company’s capital and funding requirements, it was agreed to implement a balanced funding programme, with a view to:

  • strengthen the company’s balance sheet with a moderate equity injection, amounting to less than 4% of the company’s current issued share capital in order to provide for a portion of Northam’s permanent capital requirements, against the backdrop of the R4 billion capex programme at Booysendal, which is now nearing completion;
  • strengthening Northam’s medium-term funding capacity through the introduction of a new revolving credit facility, and
  • pro-actively address Northam’s key short to medium term potential borrowing risks and exposure, by introducing amendments to its revolving credit facility.

A circular with details of the claw back offer will be posted to shareholders on or about 18 November 2013. The claw back offer remains conditional upon, inter alia, approval by the JSE of the listing of the claw back shares and the related circular.

Issued by Russell & Associates
20 September 2013