While Northam Platinum faces a challenging operating environment at both Zondereinde and Booysendal during the year under review, the mining firm said on Friday that its operations collectively achieved a steady increase in production and its growth projects remained on track.
In its results for the year ended June 30, 2022, Northam, South Africa’s fourth-largest platinum producer, said that during the period under review Zondereinde tragically suffered two mining-related fatalities, together with increased medical absences relating to the Covid-19 pandemic. Booysendal was affected by regional community unrest, which impacted the entire eastern Bushveld region, throughout the financial year.
Northam said this resulted in lost production shifts.
“These challenges and external events negatively impacted the group’s metal production and unit cash costs during the financial year,” it said.
The group reported that headline earnings per share decreased by 2.9 percent and earnings before interest, taxation, depreciation, and amortisation (Ebitda) decreased by 1.2 percent at R16.5 billion.
Operating profits fell by 7.6 percent to R14.9bn, and sales revenue rose by 4.4 percent to R34.1bn when unit cash costs increased by 18.9 percent to R34 069 per platinum ounce amid lower 4E metal prices. Net debt increased to R16bn.
Chief executive Paul Dunne said: “A raft of global geopolitical issues hold the potential for further disruption to the metal markets, whilst ongoing regional community unrest in the eastern Bushveld and the lingering effects of Covid-19 on our workforce could lead to operational disruption. We continue to monitor the market and the societal landscape and will amend our capital programme when and where prudent".
The group flagged a 12.8 percent rise in the sale of the basket of four platinum group metals (PGMs) it produces.
Cash flows from operating activities amounted to R11.4bn, and the group invested R8.4bn in the composite transaction and a further R8.4bn in the Royal Bafokeng Platinum (RBPlat) acquisition.
The share of earnings from RBPlat was R777 million, and the holding allowed Northam to gain by a total of R781.7m from two dividends declared by RBPlat.
This acquisition held potential for substantial long-term value creation. It further provided inherent optionality, Dunn said.
“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, well-capitalised and occupy a strategically important position in the Western Bushveld,” he said.
Northam is involved in a takeover battle for RBPlat with Impala Platinum (Implats). Northam owns a major stake in RBPlat and wants to own the miner.
Last week, Implats announced that it had concluded a framework agreement related to the deal with the Department of Trade, Industry and Competition.
Implats and Northam hold 37.83 percent and 34.52 percent in RBPlat, respectively. The government-owned Public Investment Corporation (PIC) has just more than 9 percent in RBPlat.
Dunne said the 34.52 percent stake in RBPlat aligned with its long-term growth, sustainability and operational diversification strategy.
Looking forward, Dunne said the group forecast production in 2023 to range between 770 000 ounces and 810 000 ounces, with group capital expenditure set to rise from R4.6bn in 2022 to R5.4bn in 2023.
Northam shares closed 1.41 percent lower on the JSE on Friday to R172.31. They have fallen by almost 17 percent year to date.
BUSINESS REPORT