Average dollar platinum group metal prices were up significantly year-on-year with the exception of platinum. Photo: Simphiwe Mbokazi/African News Agency (ANA)

JOHANNESBURG – Northam Platinum grew normalised headline earnings by 5.8 percent in the year to June, despite being squeezed by low metal prices and higher costs.

Northam’s normalised headline earnings, the primary measure of performance, reached R421.5 million, up from R398.3m in 2017, the company said. Operating costs, which include mining, concentrating and metallurgical processing, jumped by 11.3 percent to R6.3 billion from R5.7bn. 

The company blamed a combination of higher production volumes and labour and power costs for the surge in operating costs. Operating costs at the Zondereinde mine jumped by 14 percent to R4.21bn from R3.7bn. “Labour costs represent a significant portion of this increase, partly owing to the hiring of new employees required to exploit the Western extension.”

Operating costs at its Booysendal mine increased by 5.8 percent to R2.1bn from R2bn in 2017.

Northam said the capital expenditure on the development of Booysendal South and the completion of the second furnace at the Zondereinde smelter complex reached a record R3.8bn this year.

The development of the projects is in line with Northam's growth strategy to double the size of the company within the next four to five years.

The company continued to put the brakes on declaring a dividend amid the tough environment. “Given the continuing difficult conditions in the platinum-group mining industry, and taking into consideration the cash requirements for the development of the group's project pipeline and acquisition of platinum assets, the board has resolved not to declare a dividend for 2018,” the company said.

No dividend was paid last year.

Group revenue rose by 10 percent to R7.6bn, compared with R6.9bn in 2017, on improved production and sales volumes. The currency, which saw a 13.5 percent higher dollar basket price, rose to $910 (R13 850) from $802 an ounce. Sales volumes jumped 5 percent to 549 508 ounces from 523 170, a reflection of the strong currency.

The rand strengthened 5.9 percent to R12.82 to the dollar from R13.63 in 2017. “Average dollar platinum group metal prices were up significantly year-on-year with the exception of platinum, currently trading around 10-year lows. Copper and nickel prices were also substantially higher year-on-year,” the company said. Northam shares closed 0.10 percent lower on the JSE at R39.59 on Friday.

Follow Business Report on Instagram here