Johannesburg - Northam Platinum rose to a six-year high on Friday after the producer announced that it had secured a new R1.5 billion five-year revolving credit facility to replace its existing R1bn revolving credit facility which matures in November.
Read also: Northam issues R175m of domestic medium-term notes
Northam stocks rose 2.37 percent to R53.94 on the JSE on news that the new facility had further strengthened its balance sheet capability in support of the group’s key strategic initiatives, including the development of the Booysendal expansion projects.
However, it fell 2.66 percent on Friday to close at R51.29.
“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 company said.
The facility included a five-year senior unsecured revolving credit facility and a facility limit of R1bn for the first 18 months from inception, whereafter the new facility limit automatically increases to R1.5bn for the remainder of the five-year period.
Chief executive Paul Dunne said: “The new and increased long-term revolving credit facility, combined with Northam’s domestic medium term note programme and the equity raised in our empowerment transaction with Zambezi Platinum, gives the company significant long-term balance sheet certainty and flexibility.”
Expansion
Growth is high on Northam’s agenda as the company intensifies its expansion programme of the organic brownfields its operates.
It acquired the mothballed Everest mine from Aquarius Platinum, adjacent to the Booysendal mine, for R450 million last year with the hope that the integration of Everest’s processing plant provided a cost-effective opportunity to increase mechanised production from the existing shallow ore on Booysendal.
The Booysendal South project (formerly Everest), which was expected to take four years, is now expected to contribute to lowering costs. Northam’s is also advancing its Booysendal Merensky project.
Northam outlined plans to increase production to 800 000 ounces of platinum group metals by 2020 in February. It completed an economic empowerment transaction in 2015, which was now recognised at 35.4 percent with participants locked in for 10 years.
The transaction included the raising of R4.6bn that would fund future growth and development. In terms of the deal, Northam issued 112.2 million new shares to special-purpose black empowerment vehicle, Zambezi Platinum.
Northam raised term debt through the issue of R175m of five-year senior unsecured fixed-rate domestic medium-term notes in May.
BUSINESS REPORT