DURBAN – Northam Platinum, a primary producer of platinum group metals (PGMs), posted record earnings for the year to the end of June as a result of a surge in PGM prices and a weaker rand, despite losing almost a month of production because of Covid-19.
Its normalised headline earnings increased by 150.4 percent to R3.4 billion, and normalised headline earnings per share also increased by 150.4 percent to 676.3 cents a share.
Northam – which operates the Zondereinde, Booysendal and Elands mines – said on Friday that the suspension of normal operations, together with the phased restart has had a significant negative impact on production volumes, had lost 108 685 ounces of metals during the period.
Chief executive Paul Dunne said Covid-19 had dominated the second half of the year, affecting employees and the group’s production and financial performance.
“Despite this difficult operating environment, our growth strategy remains on track. In addition, this has been a record year for Northam, both financially and in terms of returns to shareholders. To date, we have achieved this through the purchase of 46.7 percent Zambezi Platinum preference shares, which has returned R5.6billion of value,” Dunne said.
Northam acquired 49.36 million Zambezi preference shares for R3.7bn during the year, and an additional 21.13 million preference shares were acquired for R1.7bn subsequent to the year end.
Northam decided not to declare a dividend for the year after purchasing Zambezi preference shares.
Revenue increased by 67.3 percent to R17.8bn, which Northam attributed to a 60.8 percent rise in the PGM basket price to $1 764 an ounce and a 10.9 percent weaker rand to the dollar.
The group said the average dollar sales prices achieved during the year improved for most metals, and palladium and rhodium both performed well, increasing by 52.4 percent and 169.8 percent, respectively.
Metals producers are benefiting from the strong PGM prices. In August, Sibyane-Stillwater, the JSE-listed precious metals producer, said it expected its earnings to surge by 3 780 percent in the first half of 2020, boosted by record-high precious metal prices, while Amplats shares have soared by 56.08 percent in the past year as a result of strong metal prices.
Northam said its record earnings outcome was achieved despite the effect of mine and production stoppages due to Covid-19.
“Prior and up to the commencement of the lockdown period, the group was on track to achieve record production from own operations during the year,” the group said.
Northam had a net debt of R3.3bn at the end of the period.
The group said that due to the impact and medium-term uncertainty surrounding Covid-19, it was delaying some of its growth projects and had reduced its financial year 2021 production targets.
“This position will be reassessed as greater market clarity becomes available,” Northam said.
Northam shares closed at R162 on Friday. The share has gained nearly 40 percent in the past six months and has risen by 305.28 percent over the past five years.
BUSINESS REPORT