In view of the poor mining and ground conditions encountered during the year, management did well in recording output of more than 330 000oz of metals in concentrate - the highest production levels ever recorded at Northam. This was indeed a sterling effort and came at a critical time with the strengthening of the rand against the US dollar having a predictable adverse effect on sales revenue, which nevertheless was contained to a decline of 6% to R1.47 billion. 

Further operational achievements were the successful recommissioning of the smelter in March after the planned shutdown and rebuild at a capital cost of R35 million. During the rebuild, Northam's concentrate was toll treated by Impala Refining Services. 

In terms of our precious metals refining requirements in the medium term, we will continue our partnership with Heraeus, with whom we have established a long and sound relationship. We remain conscious however, of the government's approach to local downstream beneficiation, and we are committed to finding a solution to our long-term precious metals refining requirements which will address the concerns of our stakeholders.

Last year we observed that, in transforming the South African business environment, government needed to take account of the need to maintain a world-class, competitive mining industry, sufficiently stable to continue to attract foreign investment. The Mining Charter Scorecard's empowerment targets have now been set, and are largely achievable, with the legislation reflecting the empowerment initiatives which we have already progressed significantly at Northam, and in which I take a personal interest. 

The draft Minerals and Petroleum Royalty Bill released in March this year, could, in its current form, jeopardise the achievement of many of these empowerment initiatives, and on the face of it, could inhibit future investment in the minerals sector. Of particular concern is the number of resources which will be rendered almost unpayable, with the resultant loss of thousands of potential jobs. Increases in the total taxes payable to the state will also make it extremely difficult to finance empowerment participation other than in high operating margin mines. Based on these considerations Northam has submitted its views to the National Treasury and we look forward to further debate on the matter. 

Now that the entire suite of transforming minerals legislation is close to being finalised, we are better placed to plan for growth, evidenced in the recent announcement of our intention to acquire a substantial PGE resource on the Eastern Limb of the Bushveld Complex, along with the finalisation of our participation in the Pandora JV earlier in the year. Further news on these developments will be communicated to shareholders in due course.

In terms of our primary objective of delivering value for shareholders, we believe that we continue to fulfil our promises, with total shareholder returns of 49% compounded over the past five years. 

Turning to the markets, the past year has been characterised by widespread economic gloom and depressed global markets. Platinum has nevertheless enjoyed a period of buoyant demand and rising prices. During calendar year 2002, the price climbed impressively from its lowest London fix of $449 on 1 February to a high of $607 in mid December. More recently the uncertainties associated with the SARS virus and the Iraq war have dissipated, and platinum has been trading around the $700 level, fuelled by brisk demand for the metal. The on-going push for ever more stringent exhaust emission standards continues to sustain growth in the autocatalyst sector. In the jewellery sector the promotional efforts of the Platinum Guild International (PGI) continue to foster sustained platinum demand despite higher manufacturing and retail prices and the competition presented by sales of white gold. 

Palladium, by contrast, has fared less spectacularly. For a metal that rose to unprecedented price highs during 2001, hindsight makes clear that such levels were unsustainable in the wake of extreme price volatility and erratic supplies. The average palladium price during 2002 was $337 and has since declined steadily to its current level of around $200/oz as the market remains dogged by diminished demand and ample supplies. Looking ahead therefore, whilst the fundamental demand for platinum remains solid, the outlook for palladium is less certain. Our hedging programmes have provided some protection from the vagaries of metal prices, and we continue to watch both the market and currency movements closely to avoid any potential erosion of value.

In December 2002 we bade farewell to Ian Watson, managing director of Northam since 1998 and intimately involved with the company for the past 14 years. I would like to extend my appreciation to Ian for his indefatigable efforts and for the role he played in turning around the fortunes of the company. Glyn Lewis, who has already made his mark in the company, was appointed general manager in December 2002 and reports directly to the board. 

In June this year, Barry Davison retired from the board and was replaced by Ralph Havenstein, reflecting their changing roles at Anglo Platinum. I would like to pay tribute to the enormous experience and knowledge that he brought to the company. In Ralph Havenstein we have a worthy successor. Northam has much to gain from his fresh insights. 

Looking to the year ahead, we will be hard pressed to maintain earnings if the rand basket price for our metals remains at current levels. With the strong management and operational team in place I remain confident that production will be maintained at current levels, while safety improvements and cost containment will continue to be core areas of focus. 

In conclusion I would like to extend my appreciation, and that of the board, to the management team and staff, without whom Northam would not be the thriving company that it is today. 
 

Tokyo Sexwale
Chairman	12 September 2003