NORTHAM

Financial Mail - Investors Monthly - - Opening Bell -

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.

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