Share price: R42,40 JSE code: NHM
HOLD NORTHAM PLATINUM HAS A LARGE war chest of more than R4bn, which CEO Paul Dunne wants to put to work growing the company into a million ounces a year producer of platinum group metals (PGM).
This will make Northam one of the serious players and give it much needed diversity, which has already started with the construction and bringing into production of the Booysendal mechanised, shallow mine. It is a welcome addition to the Northam stable that had comprised just Zondereinde, the deepest platinum mine in SA and one with difficult geology and labour issues.
From its existing suite of assets, including the mothballed Everest South mine and a concentrator recently bought from Aquarius Platinum, Northam can easily reach 800,000oz a year of PGM within five years, Dunne says.
It plans to use the Aquarius assets to expand its footprint in Booysendal. This will give the company relatively low-cost growth when others are selling assets in a buyers’ market.
It has played down speculation that it is in the running for Anglo American Platinum’s deep level and labour intensive assets at Union and Rustenburg (and in need of a large capital injection to extend their lives) or the Marula mine put up for sale by Impala Platinum.
Northam may not be a major consolidator of assets, given its internal growth options. But it will be a very selective buyer of mines — and considering its cash pile and all round mining savvy Northam can become an increasingly important player in the PGM sector.