NORTHAM OPERATIONS ON THE BUSHVELD COMPLEX
280 000oz OF REFINED PGMs
The Zondereinde mine is an established, long-life operation which produces approximately 280 000oz of refined PGMs annually.
199 000oz PRODUCTION PER ANNUM
Booysendal North mine production exceeded design capacity.
Operations on the Bushveld Complex
AT A GLANCE:
Group structure
* Currently disclosed as held for sale
CHIEF COMPONENTS
- Northam is an independent, fully empowered, mid-tier, integrated PGM producer with two primary operating assets, Zondereinde and Booysendal platinum group metal (PGM) mines in the South African Bushveld Complex
- The Zondereinde lease area is also the location for Northam’s metallurgical operations, which include concentrators, a smelter and base metals recovery plant
ASSETS AND RESOURCES
Zondereinde
The Zondereinde mine is an established, deep-level, conventional, long-life operation which mines UG2 and Merensky ore and produces approximately 280 000oz of refined PGMs annually. The mine is located on the northern end of the western limb of the Bushveld Complex near the town of Thabazimbi.
In October 2016, Northam announced that an agreement was concluded to acquire the Tumela resource from Anglo American Platinum Limited on the north-western boundary of Zondereinde. The acquisition will provide access to additional higher-grade Merensky and UG2 reef and extend the life of mine (LoM) to beyond 30 years. A number of regulatory approvals are required before the transaction becomes unconditional.
Booysendal
The shallower, mechanised, room and pillar Booysendal UG2 North mine is located near the town of Mashishing (formerly Lydenburg) on the eastern limb of the Bushveld Complex.
The mine came into production on 1 July 2013 and has ramped up to full production. It has a LoM of some 25 years.
The 105.3Moz orebody at Booysendal lends itself to brownfields expansion opportunities, which are currently being established on the property. These include a deepening project at the existing UG2 North mine and the development of the Booysendal Merensky North mine on the property.
In June 2015, Northam acquired the Everest UG2 platinum mine (now incorporated into Booysendal South) from Aquarius Platinum (South Africa) Proprietary Limited, contiguous to the Booysendal lease area. The integration process with the existing Booysendal operation has begun, which will allow the group to begin extracting value and developing the new Booysendal South mine.
Eland
In February 2017, Northam announced an agreement concluded with Glencore Operations South Africa Proprietary Limited (Glencore Operations) to acquire Eland Platinum. Eland is located on the south-eastern limit of the western limb of the Bushveld Complex.
The acquisition includes two mining rights with a resource estimated at 21.3Moz 4E and a fully-developed, world-class surface infrastructure. This acquisition is subject to consent being granted by the Minister of Mineral Resources in terms of section 11 of the Mineral and Petroleum Resources Development Act, 28 of 2002 (MPRDA).
Other interests
- 30% interest in SSG Holdings Proprietary Limited, a company providing security and facility services to the group
- 7.5% interest in the Pandora joint venture (JV), in partnership with Anglo American Platinum Limited and Lonmin plc. Northam announced on 15 May 2017 the sale of its 7.5% interest in the Pandora JV, subject to various conditions precedent being obtained
- 50% interest in the Dwaalkop JV (Limpopo)
- 51% initial participatory interest in the Kokerboom JV exploration project (Northern Cape)
Group summary
At 30 June 2017, Northam held a combined resource base of 200.3 million ounces (Moz) and 25.0Moz in the reserve category.
The group milled a total of 4.5Mt (Zondereinde: 2.0Mt, Booysendal North: 2.5Mt) in the year under review to produce 474 007oz of metal, which has been processed to realise sales revenue of R6.9 billion (F2016: R6.1 billion) – an increase of 12.6% year on year.
PROCESSING
Northam’s activities are integrated; from the underground mining function, through to the concentrating, smelting and base metal recovery processes.
Concentrating: Merensky and UG2 plants
- In the crushing/screening circuit, the ore is crushed to reduce its size before it goes to the mill
- Merensky ore feeds into a fully autogenous (FAG) mill. In the UG2 plant, the ore feeds into a high pressure grinding roll crusher and then into a primary ball mill
- The flotation circuit includes rougher cells, scavenger cells and cleaner columns. External sparger column cells act as a cleaner and this helps to produce a final UG2 concentrate with significantly lower chrome content while maintaining PGM recoveries
Smelting
The existing smelter at the Zondereinde metallurgical complex has a 15MW capacity. Key processes include drying and smelting the concentrate and converting the furnace matte. Concentrate brought in is blended and dried concentrate is pulverised and then stored in silos. Concentrate and flue dust is mixed with lime and then fed through to the day bin and into the furnace where electrodes provide heat via resistance to the current through the material in the bath. The lighter oxides float to the top as slag and the more dense sulphides, which contain the PGMs, sink to the hearth as furnace matte.
The board approved capital expenditure for the installation of a new 20MW furnace as part of the smelter expansion and de-risking programme. In October 2015 an agreement was reached with Heraeus Deutschland GmbH & Co KG and Heraeus South Africa Proprietary Limited (Heraeus) – Northam’s refining partner since the start of the mine some 25 years ago – in terms of which they will contribute E20.0 million towards the new furnace construction. Construction began in February 2016 and commissioning is expected by the end of the 2017 calendar year. The additional capacity will add significant mining flexibility allowing for higher volumes of UG2 to be mined and treated. The total cost of the expansion project is estimated at R750.0 million. For more Manufactured and intellectual capital.
Base metal recovery
By-product metals, copper and nickel sulphate, are extracted at the on-site base metals recovery plant and sold in the domestic market.
Chrome
Chrome is produced at both Zondereinde and Booysendal from the UG2 reef. Northam has an exclusive chrome marketing agreement with Glencore International AG to market and sell Northam’s chrome.
Refining
Final precious metal concentrate is transported from the Zondereinde metallurgical complex for refining to the Heraeus facilities in Hanau, Germany and Port Elizabeth.
Heraeus is a registered member of the London Platinum and Palladium Market and has London-Zurich 'Good Delivery' status for metal production. The refinery in Hanau is subject to strict European Union and materials handling protocols. Product transportation is also strictly defined by international aviation regulations.
Recovery services
Subsequent to year-end, the group acquired PGM recycling assets in Pennsylvania, United States, from A1 Specialised Services Inc for USD10.7 million.
PRIMARY PRODUCTS AND END USES
Northam’s primary products are the three main PGMs: platinum, palladium and rhodium. The primary consumers of these PGMs are the motor-manufacturing and jewellery industries. Other industrial uses range from chemical and electrical applications to glass manufacture. In the automotive sector, PGMs are used in exhaust systems, specifically autocatalysts, helping to reduce noxious and greenhouse gases released into the atmosphere. Platinum jewellery is popular in Asia.
PGMs are traded on international markets where the metal prices are determined by global supply and demand, and are US dollardenominated. This means that South African PGMs realise prices in US dollars, which are then converted and reported in South African rands. Northam has no influence on the sales price of its metal and is essentially a price taker. The metal is sold in sponge or ingot form to customers in the US, Europe and the Far East.
Northam’s in-house marketing department is responsible for marketing and sales of products domestically and to major global markets in Asia, Europe and North America.
LISTING
Northam’s shares are listed on the JSE. Its equity share code is NHM and its debt instruments are listed under the symbol NHMI. The company has been admitted to participate in the JSE’s Socially Responsible Investment Index.
Northam’s shareholders are predominantly South African institutional investors who hold 91.7% of the equity. The remainder is held in North America (5.9%), Europe and the United Kingdom (1.1%) and the rest of the world (1.3%).
BEE STRUCTURE
Northam is a fully empowered PGM producer. Historically disadvantaged South African (HDSA) ownership levels in the company are pegged at 31.4% following the conclusion of a R6.6 billion black economic empowerment (BEE) transaction, which included the successful raising of R4.6 billion. The transaction was announced in October 2014 and approved by shareholders in March 2015. In terms of the deal, Northam issued 112 195 122 new shares (equivalent to 22% of Northam’s issued share capital) to a special purpose BEE vehicle known as Zambezi Platinum (RF) Limited (Zambezi or Zambezi Platinum). These shares were supplemented by 47 710 331 shares (equivalent to 9.4% of Northam’s issued share capital), sold to Zambezi Platinum by the Public Investment Corporation SOC Limited (PIC), a long-standing Northam shareholder.
Zambezi Platinum comprises a range of HDSA stakeholders including an employee trust, two community trusts, a women’s group and a core of strategic partners. Together they hold a 31.4% stake in Northam, with a 10-year lock-in period for the participants from May 2015.
Zambezi Platinum financed the acquisition of shares in Northam through a preference share arrangement. Zambezi Platinum’s preference shares were listed on the JSE on 11 May 2015.
Northam’s issued stated capital at 30 June 2017 remained unchanged at 509 781 212 shares (F2016: 509 781 212 shares) and the company’s market capitalisation was R20.6 billion (F2016: R21.9 billion).