Northam’s peak funding for its projects is over

Turning company’s attention to returning value to shareholders

JSE-LISTED platinum group producer Northam Platinum aims to return value to shareholders now that it is over the peak funding requirements for its projects.

On Friday the firm posted a record R2.4 billion operating profit for the year to end June 2019.

Northam chief executive, Paul Dunne, said on Friday that group capex had been significantly lower this year at R2.9bn and was likely to taper further next year after the company completed key milestones.

Dunne projected for example that capex at the Zondereinde project would likely be R595 million in 2020 from R674m in the current financial year. Capex at the mine was R1.5bn in the 2018 financial year.

He said capex had peaked last year at R3.8bn mainly on expenditure at Booysendal South, the completion of the second furnace at Zondereinde and the purchase of the western extension.

“Now that we’re over the peak funding requirements for our project pipeline, we’re turning our attention to returning value to shareholders either by repurchasing our ordinary shares or the Zambezi preference shares or a combination of the two. Any free cash over and above our targeted debt level will be used for this purpose,” said Dunne. The company resolved not to declare a dividend for the 2019 financial year citing its current capital structure, project commitments and economic operating environment.

“The board is of the view that the most efficient way to return value to investors precludes the payment of a cash dividend,” Dunne said. No dividend was paid in 2018.

Profit was R2.4bn from R800m in 2018, while revenue had hit a record