NORTHAM Platinum posted a sharp return to interim profit, despite a six-week stoppage at its flagship Zondereinde mine that started in July.
Northam reported a profit of R354m for the six months to end-December, the first half of its financial year, compared with a R93m loss in the same period a year earlier in a strike-hit period.
The six-week stop at Zondereinde resulted in a loss of 615kg of metal worth R255m but an insurance claim of R150m has offset this loss.
Northam posted earnings per share of 89.4c compared with a 25c loss before.
It had cash of R234m by the end of December, down from the R666m at the end of June.
Northam has offered R450m to Aquarius Platinum to buy that company’s Everest mine and concentrator, which neighbour the Booysendal mine.
The new, highly mechanised Booysendal mine is ramping up to steady state production by October this year and in the interim period output was up 16% to 65,630oz of platinum group metals. It reported an operating cost of R310,998/kg compared with a realised sales price of R419,531/kg.
The Zondereinde mine increased output by 20% to 134,345oz of platinum group metals despite the six-week shutdown to repair damage caused by a counterweight dropping down the shaft.
“Nevertheless, Zondereinde management did well to mitigate the losses from this interruption and the business unit put in a commendable performance for the half year,” CEO Paul Dunne said.
Shareholders will meet on March 19 to vote on a fresh R6.6bn black economic empowerment transaction that will inject R4bn of cash into Northam, giving it a powerful position to participate in asset purchases and expansion.
“Northam will continue to assess opportunities which may arise from restructuring in the sector and which fits its objective of growing down the industry cost curve,” Mr Dunne said.
Anglo American Platinum has put its Union and Rustenburg mines up for sale as well as its minority stake in the Bokoni joint venture with Atlatsa Resources. The Pandora joint venture stake up for sale is likely to be sold to Lonmin, which is the partner in the venture.
Northam has to renegotiate a two-year wage deal with the current agreement expiring in June this year. The National Union of Mineworkers (NUM) represents 70% of the workforce and its fierce rival, the Association of Mineworkers and Construction Union (Amcu), has gained enough support to be recognised at Zondereinde.
“Metal prices are likely to remain subdued in the near term. We remain concerned about the unstable electricity supply in SA, along with an unsettled labour climate,” Mr Dunne said.
“The financial strength of the group is therefore dependent on stable labour relations and achieving production targets as well as realising metal prices which comfortably exceed the cost of production,” he said.
