Announcements 2016

In compliance with paragraph 3.63 of the JSE Limited Listings Requirements (“JSE Listings Requirements”), the dealings in securities by a director of the company and a director of a major subsidiary are as follows:

Johannesburg
23 December 2016

Sponsor and Debt Sponsor
One Capital

Northam shareholders (“shareholders”) are advised that the company has made awards in accordance with the terms of the Northam Share Incentive Plan (“SIP”). These include the award of conditional shares relating to Northam’s BEE transaction (“BEE SIP Awards”), which awards were specifically approved by shareholders at the annual general meeting held on 9 November 2016. The BEE SIP Awards have been carved out of the existing total SIP allocation limit previously approved by shareholders on 5 November 2014, therefore the total SIP allocation limit has not been increased as a result of the BEE SIP Awards.

In compliance with paragraph 3.63 of the JSE Limited Listings Requirements (“JSE Listings Requirements”), the dealings by directors of the company, directors of major subsidiaries and the company secretary are as follows:

Johannesburg

22 November 2016

<>Sponsor and Debt Sponsor - One Capital

In compliance with paragraph 3.59(a) of the JSE Limited Listings Requirements, Northam shareholders are advised that Mr J G (John) Smithies has been appointed as an independent non-executive director to the board of Northam (“board”), with effect from 1 January 2017.

Mr Smithies is a mining engineer and has spent the majority of his career at Impala Platinum Holdings Limited (“Implats”), where he held a number of senior management positions including that of director of operations and chief executive officer, before retiring from Implats.

Mr Lazarus Zim, chairman of the board, commented, “Northam is pleased to welcome John to the board and we look forward to benefit from his extensive technical and hands-on mining experience in the platinum sector, which will further strengthen the company.”

Johannesburg
10 November 2016

Sponsor and Debt Sponsor
One Capital

Johannesburg, 1 November 2016. Northam hereby advises shareholders of the acquisition of 4 043 018 preference shares (preference shares) in Zambezi Platinum (RF) Limited (Zambezi) from Coronation Asset Management Proprietary Limited acting as investment manager on behalf of its clients (Coronation), (acquisition). 

The acquisition was effected on 31 October 2016 at R49.468 per preference share, for a total cash value of R200 million, and constitutes approximately 2.5% of the total preference shares in issue.

The preference shares were issued by Zambezi in 2015 in terms of Northam’s black economic empowerment transaction (Northam BEE transaction), which raised Northam’s empowerment equity levels to 31.4%.

Northam chief executive Paul Dunne said today:

“The preference shares offer an attractive yield whilst acting as a partial hedge against any potential financial liability which could arise in respect of the guarantee that Northam provided to the holders of preference shares in terms of the Northam BEE transaction.”

RATIONALE

Northam considers the preference shares to be a high-yield instrument with a credit risk profile that matches that of Northam. Accordingly, an investment in the preference shares provides the following benefits:

• the preference shares generate a high return without the introduction of significant additional third party risk for Northam;
• Northam may access future liquidity through the disposal of the preference shares in the future;
• should Zambezi elect to redeem the preference shares using Northam ordinary shares, Northam will benefit from the discount that shall be applied to the Northam ordinary shares for purposes of the redemption calculations;
• the acquisition partially hedges Northam against the potential future liability which could become payable pursuant to the guarantee provided by Northam to preference shareholders in respect of the preference shares (guarantee); and
• the net finance charges and liability included in Northam’s consolidated financial statements in relation to the preference shares will be reduced when setting off these preference shares held as an asset.

PURCHASE CONSIDERATION

The price paid of R49.468 per preference share was calculated as the redemption value of a preference share as at 31 October 2016, being an amount equal to the issue price of R41.00 plus the accrued dividends at that date. The aggregate value of the acquisition was R200 million and was funded from Northam’s cash reserves.

DETAILS OF ZAMBEZI AND THE PREFERENCE SHARES

Zambezi was incorporated as a special purpose vehicle for purposes of facilitating the Northam BEE transaction, the primary purpose of which is to (i) hold the Northam ordinary shares it acquired as part of the Northam BEE transaction (BEE shares) for the benefit of historically disadvantaged South African participants and (ii) issue the preference shares. Zambezi is a ring-fenced entity and does not conduct any operational business activities, with its only investment being the BEE shares.

The preference shares, which were issued at R41.00 per share, are cumulative, redeemable preference shares which accrue dividends daily at an effective rate equal to the prime interest rate plus 3.5% compounded annually and are redeemable on 18 May 2025. The preference shares are secured by the BEE shares held by Zambezi and payments to their holders are guaranteed by Northam.

The preference shares may be redeemed, at Zambezi’s election, in cash and / or through the distribution of the BEE shares held by Zambezi in Northam. In the event that the preference shares are redeemed through the distribution of the BEE shares, the settlement value of the BEE shares shall be calculated at the 30 day volume weighted average price of a Northam ordinary share, as at the date preceding the settlement date, less 10%.

If payment under the guarantee is required, Northam may, at its election, settle the associated liability using cash and / or new Northam ordinary shares.

SMALL RELATED PARTY TRANSACTION AND FAIRNESS OPINION

Coronation is deemed to be a material shareholder of Northam in that it is able to exercise voting control on behalf of its clients over shares constituting an approximate 29.68% interest in Northam, and is therefore considered a related party in terms of paragraph 10.1(b)(i) of the JSE Limited Listings Requirements (Listings Requirements). Accordingly, the acquisition is classified as a small related party transaction in terms of paragraph 10.7 of the Listings Requirements.

The acquisition is not subject to shareholder approval, provided an independent professional expert has confirmed that the terms of the acquisition are fair as far as Northam’s shareholders are concerned. Northam appointed KPMG Services Proprietary Limited as an independent expert to provide an opinion on the fairness of the acquisition

In accordance with paragraph 10.7(b) of the Listings Requirements, and the fairness opinion, the board hereby confirms its opinion on the fairness of the acquisition for Northam shareholders. A copy of the fairness opinion is available for inspection at Northam’s registered office, being Building 4, 1st Floor, Maxwell Office Park, Magwa Crescent West, Waterfall City, Jukskei View, for a period of 28 days from the date of this announcement.

Issued by

Russell & Associates
Johannesburg
Tel +27 (0)11 880 3924

Marion Brower +27 71 493 0387
Jan Walker +27 71 493 0429
Janet Whitaker: +27 11 880 3924

1. INTRODUCTION

   Northam is pleased to announce that it has entered into agreements with Rustenburg Platinum Mines Limited (“RPM”), a wholly owned subsidiary of Anglo American Platinum Limited, on 10 October 2016, whereby Northam will:

   • acquire a portion of the Amandelbult mining right contiguous with the north western boundary of Northam’s Zondereinde mine, including all of RPM’s rights and obligations thereto (“Acquired Resource”), for a cash consideration of R1 billion;
   • acquire a portion of the Elandsfontein 386 KQ farm overlying part of the Acquired Resource, in exchange for a portion of the Zondereinde mining right, located on the north western corner of the Zondereinde mining right including all of Northam’s rights and obligations thereto (“Sold Resource”), (collectively the “Transaction”).

   Paul Dunne, Northam’s Chief Executive Officer, said “the Transaction adds flexibility and optionality to the mining operations at Zondereinde. The Acquired Resource is of high quality, is well understood by Northam and allows us to better leverage the existing Zondereinde infrastructure. The additional resource also enables Northam to continue mining higher grade Merensky ore for a longer period, with relatively low incremental capital expenditure. Northam is confident that the Transaction will add sustainable shareholder value, unlocking a large resource in a capital efficient manner. The Transaction positions Zondereinde on a similar long-term footing as our Booysendal operation.”

2. BACKGROUND INFORMATION

   Acquired Resource

   The Acquired Resource is contiguous with the north western boundary of Zondereinde. Its resource characteristics and properties are similar to those of the Zondereinde orebody lying to the west of Zondereinde mine shaft. A short lead time and limited capital expenditure is required to access the Acquired Resource from Zondereinde’s existing infrastructure.

   It extends on dip from approximately 1 400 metres below surface, corresponding to the Zondereinde 3 level, to the deepest extent of planned mining on 18 level. Laterally, it extends for approximately 3.6 kilometres.

   Sold Resource

   The Sold Resource is located in the north western corner of the Zondereinde mining right. This area has never been mined and did not form part of the Zondereinde life of mine (LOM) plan, as it is above the minimum depth required for effective use of hydro-powered mining equipment.

3. RATIONALE

   The acquisition of the Acquired Resource provides Northam with numerous benefits, such as it:

   • Extends the Zondereinde economic LOM to beyond 30 years.
   • Provides extensive mining flexibility associated with a high quality resource that is well understood by Northam.
   • Provides early access to additional higher grade Merensky and UG2 reef on 10 and ultimately 16 mining levels.
   • Reduces the overall average mining depth of the Zondereinde mine, with associated potential savings.
   • Provides long-term optionality and reduces Zondereinde’s operational risk profile.

4. CONDITIONS PRECEDENT

   The Transaction is subject to, inter alia, the consent by the Minister of Mineral Resources in terms of section 102 of the Mineral and Petroleum Resources Development Act, No. 28 of 2002.

5. CATEGORISATION

   The Transaction falls below the threshold for categorisation in terms of the JSE Limited Listings Requirements and is provided for information purposes only.

Johannesburg
11 October 2016

Corporate Advisor, Sponsor and Debt Sponsor
One Capital

Attorneys
Cliffe Dekker Hofmeyr Inc.