Chairman’s statement

The adage that challenges bring out the best in people was adeptly demonstrated by the team at Northam this past year, as weak platinum prices and sluggish demand failed to abate during the entire period, and showed few signs of doing so as our new financial year began.

It is gratifying to have watched the Northam team translate these challenges into fierce determination, pursuing low-cost growth opportunities on the one hand, and implementing cost containment strategies on the other. The result is manifest in Northam’s suite of diversified, low-risk mining assets. I believe it is this disciplined performance, and our expansion prospects which combine to make a compelling investment case for Northam. It appears unlikely that platinum will break free of its present trough in the near term. Until it does, however, Northam will continue to develop with improved operational efficiencies and cost containment.

With our carefully considered asset acquisitions, we are well placed to reach an aspirational number of production ounces. At the same time we have increased diversity and flexibility, reduced costs and risk, and streamlined our asset profile in readiness for a turn in metal demand and prices.

Both the Tumela and Eland acquisitions will be funded in part by the cash injections received from the sale of Northam shares to Zambezi Platinum (RF) Limited (Zambezi Platinum) in F2015. Our ability to make these acquisitions continues to underscore the business advantages of a carefully-structured empowerment transaction from which everyone benefits.

Furthermore, post F2017, we have diversified further operationally and geographically with the USD10.7 million cash acquisition of the PGM recycling assets of A1 Specialized Services in the US state of Pennsylvania. It is an acquisition that takes Northam into a new but important sector of the PGMs industry.

Operations at our mines remain founded on our determination that they should be safe. Sadly, however, we lost a colleague, Mr Alexandre Macave, early in January this year, after Zondereinde had achieved a milestone six million fatality free shifts. I join my Northam colleagues in expressing my sincere regret and condolences.

While at the operational level we have shown our mining mettle, Northam also remains well positioned at a social level in today’s South Africa. Zambezi Platinum, Northam’s principal empowerment shareholder, remains a committed stakeholder.

It is appropriate to explain that the empowerment shareholding structure means that Northam is more than fully compliant with present requirements on empowerment ownership of mining firms. With regard to the remaining proposals of the new mining charter, I echo Paul Dunne’s concerns: Northam is fully aligned with the Chamber of Mines in its resistance to so many unsustainable revisions currently being proposed.

As I intimated at the outset of this review, our achievements throughout F2017 would not have been possible without the unstinting contributions of all of the group’s people. I extend my thanks and congratulations to our chief executive, Paul Dunne, for his visionary and exemplary leadership, and to the executive team and workforce for their vital contribution. I also thank my board colleagues for the dedicated manner in which they exercise their oversight role. I am confident that through collaborative efforts, we will together, take our company to fresh heights as we nurture our established assets and develop new ones.

Lazarus Zim
Chairman
22 September 2017