Northam Platinum said yesterday that it expected its basic earnings to drop by 70% to 80% due to non-cash impairments relating to its investment in Royal Bafokeng Platinum (RBPLat).
In its trading statement for the year ended June 30, 2023, the miner of Platinum Group Metals (PGM) said basic earnings per share were expected to decline between 70%to 80%, primarily as a result of a R4.1 billion non-cash impairment cost relating to Northam's investment in RBPlat.
The group said a R2.7bn non-cash impairment relating to the Eland operation as a result of a substantial deterioration in the pricing of PGM, which would be reversed should market conditions improve in the future, also led to the decrease in earnings.
Northam was in the running to acquire RBPlat and earlier this year lost to Impala Platinum (Implats) It withdrew its bid, citing a decline in PGM prices and announced it would sell its almost 35% stake in RBPlat. to Implats
"The Implats mandatory offer, with a substantial cash, underpin, presented a well-timed opportunity in the prevailing platinum group metals (PGM) market for Northam to secure a very significant cash injection that materially strengthens Northam's balance sheet and liquidity position," Northam said.
The Implats mandatory offer was R90.00 in cash and 0.3 new ordinary shares in Implats. Northam therefore received, in aggregate, R9bn in cash and 30 065 866 Implats shares.
The group reported that headline earnings per share were expected to decrease between 2.5% and 12.5% to between R22.84 and R25.46 from R26.11 in the previous year.
Despite this, the group reported a 13% increase in equivalent refined metal from its own operations to 809 775 ounces, following a strong performance from all mines in the group, including a 21.5% increase in 4E concentrate produced by Booysendal and a 47.5% increase in 4E concentrate produced from own operations and surface sources at Eland.
Northam reported a 16.1% increase in sales revenue to R39.5bn, notwithstanding a 6.9% decrease in the 4E Rand basket price to R37 488 per ounce.
The miner also flagged a 3.8% increase in gross profit to R15.4bn.
Northam said its financial results for the year ended June 30, 2023 were underpinned by a solid performance from all operations within the group.
Looking ahead, the group said the global economic outlook remained uncertain, resulting in volatile metal markets and exchange rates. Prevailing PGM market conditions and the material decline in the ZAR 4E basket price might signal a potentially protracted cyclical downturn.
"The group's financial performance is influenced by the exchange rate and commodity prices together with the stability of Northam's broader operating environment," it said.
BUSINESS REPORT