Northam generates robust half-year profit, but withholds dividend
NORTHAM Platinum Holdings yesterday flagged a more than two-thirds increase in half-year profit that was boosted by strong platinum group metal (PGM) prices.
Northam, South Africa's fourth-largest platinum producer, said its profit jumped by 60 percent as firm PGM prices helped prevent a drop in production that was caused by Covid-19 absenteeism and work stoppages.
The company released its six months results to end-December yesterday.
Northam said two fatalities and Covid-related absences at its Zondereinde operations led to refined metal output dipping by 0.4 percent, while community unrest in the eastern Bushveld region led to production interruptions at Booysendal.
According to the group its headline earnings per share came in at R96.15 ($6.62), compared with R59.99 the previous year.
The company said while production decreased to 351 359 ounces, group revenue rose 16.8 percent to R13.9 billion, helped by a 22.5 percent increase in the dollar prices of the four metals it mines.
The group did not declare a dividend as Northam needed to look at its growth prospects.
Paul Dunne, chief executive, said: “There is a systemic global primary supply problem and it is the scarcity of new mining projects to replace the depleting profiles of operating, mature mines.”
Northam's net debt to equity was at R14.28bn. It said it had also temporarily scaled back expansionary projects, which included the Central Merensky and BS4 modules at Booysendal mine; aspects of the Western Extension No 3 shaft project at Zondereinde mine; and the stoping build-up at Eland mine.
Group profit rose 66.8 percent to R3.5bn, with the new stake in Royal Bafokeng Platinum (RBPlat) contributing R128.4 million in earnings, while its share of RBPlat's dividend amounted to R536.2m, with this being declared after the period end.
In November, Northam announced that it made a strategic investment by acquiring a significant shareholding in RBPlat. It acquired a 34.65 percent stake and a bidding war ensued with Impala Platinum, which owns 35.31 percent in RBPlat.
“Our investment in RBPlat is driven by our beliefs and is aligned with our strategy. Our experience and expertise enable us to unlock the inherent and synergistic value of RBPlat.”
The Takeover Regulation Panel this week ruled Northam's acquisition of RBPlat shares did not trigger a mandatory offer to be extended to all shareholders.
This after the regulatory body investigated Northam if it had possibly triggered a mandatory offer. The independent board of RBPlat requested the probe.