Northam Platinum Holdings announced that it had resumed declaring its dividend after a ten-year halt, a R6 per share amounting to R2.4 billion from the disposal of its stake in Royal Bafokeng Platinum (RBPlat).
In its financial results for the year ended June 30, 2023, the platinum group metals (PGM) miner said it had also established a dividend policy of a minimum of 25% of headline earnings and would buy back R1 billion of its own shares.
“The sale of Northam's investment in Royal Bafokeng Platinum Limited subsequent to June 30, 2023, has presented an opportunity for Northam to significantly strengthen the group’s balance sheet and liquidity position, which in turn has enabled the group to declare its first dividend in over ten years. This dividend constitutes a maiden dividend for Northam Holdings,” the group said.
Northam was in the running to own RBPlat which was subsequently bought by Implats. Northam sold its shares to Impala Platinum (Implats).
Northam CEO Paul Dunne said: “Accepting the Implats Mandatory offer was considered to be a prudent response to a potentially protracted downturn in PGM fundamentals.”
Northam chief financial officer Alet Coetzee said the current prevailing PGM market conditions and the material decline in the basket price could signal a potentially protracted cyclical downturn.
“The scale, operational and revenue diversity, as well as our improved liquidity position, will be our best defence against these headwinds,” Coetzee said.
The group reported that operating profit increased by 3.8% to R15.4 billion while revenue increased by 16.1% to R39.5bn.
“The revenue increase resulted from a 20% increase in sales volumes, which, along with a 16% weakening of the rand against the dollar, helped to offset the lower dollar 4E basket price.
“Further weakening of metal prices post-year-end will place further pressure on revenue. The focus in the coming year will be on cost containment. Adverse market conditions have added renewed significance to liquidity, a key consideration in the sale for cash of the RBPlat holding,” she said.
Northam said the availability, reliability and cost of electrical power remained one of the group’s highest risks.
“Load curtailment persisted over the year, with 73 curtailment events, with an average duration of 14 hours. Load curtailment is managed proactively at the operations, in order to ensure a safe working environment, whilst minimising the impact on production.
“This is achieved through a combination of switching-off of non-critical machinery, and the use of on-site generators,” it said.
According to Northam, in order to secure the operations against level 4 curtailment, the diesel generator fleet is being expanded to 57 megawatts (MW).
“Together with our renewable energy initiatives, we hope to ensure provision of power, whilst managing costs, carbon emissions, and a safe underground working environment,” said Dunne.
Looking ahead, the group said in line with the company’s growth profile and taking cognisance of the ongoing Eskom challenges, the guidance for the 2024 financial year for PGM production from its own operations was to be in the range of 850 000 to 880 000 4E ounces. Group unit costs are between R40 000 and R42 000 per platinum ounce. Sales will be higher than production, in the range of 950 000 to 990 000 ounces.
“Growth from Booysendal and Zondereinde over the next few years, together with the progressive ramp-up of Eland, will deliver into the medium-term production target of 1 million 4E ounces,” the group said.
Northam’s share price rose 1.73% on Friday to close at R130.17.
BUSINESS REPORT