Johannesburg - Northam Platinum had received a R1 billion injection to help fund the expansion of its projects, the junior platinum producer said on Friday.
It said the funding programme would provide for a portion of its permanent capital requirements as it completes a R4bn capital development programme. The funding would be used for repairs to its faulty smelter at Zondereinde mine, and the completion of the Booysendal mine.
Last year the company reduced the energy intensity at its Zondereinde mine smelter to 8 megawatts from 12MW, while testing for the possible erosion of its refractory bricks.
Northam would allocate R55 million towards rebuilding the smelter at Zondereinde mine and it would toll treat its concentrate as a way to expand its working capital pipeline.
About R530m will fund the balance of the capital expenditure needed to ensure the completion of the Booysendal mine in the 2014 financial year.
Production at Booysendal will be ramped up to design capacity of 150 000 tons milled ore a month during the two financial years to June 30, 2015.
Earnings and cash flow from Booysendal are expected to be negative during the current financial year.
Northam said it had allocated R350m in capital expenditure at Zondereinde for the current financial year.
The JSE-listed company also announced amendments to its existing R1bn credit facility, including a covenant holiday, on Friday.
The company said it had secured a complete special covenant holiday on all existing debt covenants applicable to the revolving credit facility.
The company said it was confident that the covenant holiday appropriately addressed Northam’s borrowing risk profile in the short to medium term.
It said the new R1bn funding programme would be implemented through a R600m clawback offer and a R400m revolving credit facility expiring at the end of March 2015.
In terms of the R600m clawback offer, Northam will offer 15 million new shares to Coronation Asset Management at R40 each – a 2 percent discount to the 30-day volume-weighted average share price.
The R1bn boost comes as the mining industry is grappling with depressed prices and increasing costs.
Northam did not escape labour strife in the mining sector and lost R192m as a result of a three-week strike at its Zondereinde mine in Limpopo.
Northam shares declined by 2.23 percent to close at R41.70 on Friday because of the new shares to be issued.
Last week Ivanhoe Mines, owned by Robert Friedland, announced an R818m bulk sampling shaft to access the underground Flatreef platinum, palladium, nickel, copper, gold and rhodium discovery at its Platreef project in Limpopo. - Business Report