Northam Platinum led the rally of mining stocks on the JSE on Monday thanks to an upgrade by the global investment bank, Citi, and stronger metal prices. Photo Supplied
JOHANNESBURG – Northam Platinum led the rally of mining stocks on the JSE on Monday thanks to an upgrade by the global investment bank, Citi, and stronger metal prices.

Citi upgraded Northam Platinum, the platinum group metals (PGM) producer, to a buy, giving the stock a 9.06 percent boost to close at R64.50 a share on Monday.

“Northam Platinum is uniquely positioned as a low-cost, capital-efficient, mid-term growth story run by skilled management,” said Citi.

Northam Platinum on Friday posted a record R2.4 billion operating profit and recorded R10.6bn revenue in the year to end June thanks to higher PGM volumes, higher US dollar basket (4E) price and a weaker rand.

The company said it was turning its attention to returning value to shareholders, either by repurchasing its ordinary shares or the Zambezi preference shares or a combination of the two.

It did not pay a dividend in the year to June.

Northam’s peers also made gains yesterday with Impala Platinum rising by 6.19 percent to R80.50 a share; Royal Bafokeng Platinum rose 5.15 percent to R32.06 a share; and Anglo American Platinum was bid at R844.62 a share.

“Gold and platinum prices and rhodium are up strongly,” said Rene Hochreiter, a mining analyst at Noah Capital Markets.

Rhodium, a silver-white metallic element which is highly reflective and resistant to corrosion, has increased by 62.6 percent to $1 540 (R23 450) an ounce since the beginning of 2019, helping PGM producers rake in profits as most of the world’s rhodium comes from South Africa, and specifically from the UG2 ore body.

Palladium has also risen more than 60 percent over the past seven months to trade at $1 356 an ounce.

Gold prices yesterday jumped to a fresh six-year high at $1 544 an ounce, up 1.2 percent on the heightening trade war between China and the US.

DRD Gold rose 8.62 percent to close at R7.06 a share; Gold Fields grew 3.95 percent to R92.90 a share; Harmony Gold was bid at R55.28; and AngloGold Ashanti closed at R346.97 a share.

Gold prices have shot to multi-year highs this year. The gold price breached the $1 400 an ounce in June for the first time since 2013.

South African gold producers are sitting pretty as the average rand gold price has increased 16 percent to R600 601 a kilogram in the six months to June from a year earlier. The average dollar/rand exchange rate weakened by 16 percent from R12.25 for the six months ended June 30, 2018, to R14.22 for the six months ended June 30, 2019.

According to the World Gold Council, factors driving the rally include expectations of lower interest rates and political uncertainty, with further support coming from strong central bank buying.

The gold price has edged up owing to the intensifying trade war between China and the US which has created uncertainty.

BUSINESS REPORT