Johannesburg - Zambezi Platinum, the empowerment consortium which holds a 31.4 percent stake in Northam Platinum, believed its empowerment credentials would withstand falling share prices as the volatile metal price environment was hurting platinum producers.
Lazarus Zim, a South African businessman and chairman of Northam Platinum, told investors in Zambezi’s first annual report released last month that the consortium’s empowerment status would remain unchanged for the coming decade.
“Unlike many black economic empowerment (BEE) investments which have stumbled on falling share prices of their underlying companies, Zambezi’s completely ring-fenced shareholding will protect its own shareholders and those of Northam from the vicissitudes of the market,” said Zim.
No risk
“There is no risk of the shareholding in Northam being sold or compromised for 10 years,” Zim added.
Zambezi Platinum made its debut on the main board of the JSE in May.
It was created as a special purpose empowerment in October 2014 following a R6.6 billion BEE transaction with Northam Platinum.
A total of R4.6bn was raised in the transaction, which involved Northam issuing more than 100 million new shares (22 percent of Northam’s issued share capital), which were supplemented by 47 million shares (9.4 percent of Northam’s issued share capital), by the Public Investment Corporation, a long-standing Northam shareholder to Zambezi.
The empowerment deal has not only improved Northam’s empowerment status, but the investment also provided a cash inflow that substantially added to its financial muscle.
The platinum price has collapsed since the start of this month to trade at $933.18 (R13 366) an ounce on Friday after increasing nearly 5 percent to $1 095 an ounce last month. The price had risen by about 20 percent in the year to date.
“I remain confident that platinum will emerge from its current difficulties over time, particularly as economic growth rates eventually increase around the globe. But we shall need to be patient and remain focused on the longer term rather than on day to-day market movements,” said Zim.
Zim noted that Northam was in a developmental phase, particularly following the acquisition of the Everest property, with its strategic processing plant, adjacent to the Booysendal mine.
Northam is one of the few platinum companies that are on a growth trajectory. The company last week announced that it had acquired a portion of Anglo American Platinum’s Amandelbult mine’s mining right for R1bn.
Access
The purchase gives it access to the higher Merensky Reef and grow production by extending the economic life of its Zonderiende mine by 30 years.
Miningmx reported on Friday that global investment company Goldman Sachs had urged investors to sell their platinum shares, which were starting to correct amid uninspiring fundamentals for the metal’s demand.
“The stocks in our view have outrun fundamentals,” the bank said in a report published on Thursday.
The improvement in shares prices this year was owing to the higher dollar price for platinum and improved sentiment to mining, it said.
Nonetheless, ratings agency Global Credit Rating upgraded its assessment of Northam Platinum to positive from stable, largely owing to its well funded balance sheet and growth plans.
Northam Platinum shares rose by 0.08 percent to R51.04 on Friday.
The platinum price has collapsed since the beginning of this month to trade at $933.18 an ounce.
BUSINESS REPORT