Announcements 2019

Northam posts record operating profit for the half-year

Johannesburg, Friday 22 February 2019. Northam Platinum has posted results for the first half-year of the 2019 financial year. The strategy which was launched in 2015 with the Zambezi Platinum (RF) Limited Black Economic Empowerment transaction, has for the first time unfolded in the numbers. Normalised headline earnings, the primary measure of performance, amounted to R553 million, or 108.5 cents per share, up by 192.6%.


  • Sales revenues increased by 48.5% to R5.0 billion, mainly on the back of higher volumes
  • Operating profit of R1.0 billion, an all-time record for an interim period
  • Operating profit margin of 20.7%, which has more than doubled
  • An 111.1% increase in EBITA to R1.1 billion
  • Normalised headline earnings 192.6% higher at 108.5 cents per share
  • R1.5 billion spent on capital expenditure, mainly in the execution of the group growth strategy
  • Cash cost increases/Pt oz respectably contained to 5.5%


At a presentation to the investment community in Johannesburg today, Northam chief executive Paul Dunne commented: “Our growth strategy remains on track, and projects are generally ahead of schedule:

  • good progress is being made at Booysendal South with the successful commissioning of the rope conveyor and the re-commissioning of the PGM circuit at the South concentrator;
  • At Zondereinde, excellent progress is being made with the ore reserve development in the western extension.

“We believe that these projects will position the group favourably to benefit from a stronger price environment in the next few years.”

Both Zondereinde and Booysendal delivered solid operating performances and maintained good cost control, limiting group unit cost increases to 5.5%. The transition from contract mining to owner mining at Booysendal has proved to be the correct decision with overall improved performances at the operation.

Good progress was made with the de-stocking of excess inventory. During the period 30 000 ounces were released, resulting in significantly higher sales volumes of almost 300 000 4E ounces, and boosting sales revenues to R5.0 billion. Excess inventory currently sits at approximately 140 000 4E ounces with a market value of around R2.3 billion, using December 2018 prices.

The chrome tailings retreatment project at Booysendal South made a material contribution to the group’s total chrome concentrate, which increased by 18% to 368 000 tonnes. Chrome remains a material contributor to Northam’s revenue.

A combination of higher sales volumes (up by 41%), a 4.2% uptick in the basket price to USD1 013/4E oz, and a 5.7% weakening of the ZAR against the USD, boosted revenues by 49% to R5 billion. Costs of sales were 31% higher, lagging the increase in revenues, and resulting in an operating profit of R1.0 million, and an operating profit margin of 20.7% (2018 H1: 10.1%).

Incoming chief financial officer Alet Coetzee added, “In the current price environment, our main focus remains on cost control and growing our production base down the cost curve, and hereby creating long term value for all out stakeholders.”

Capex of R1.5 billion was spent in the execution of the groups growth strategy as project delivery was accelerated.


PGM demand in the autocatalyst sector is expected to increase as tighter emissions legislation is introduced in China and India. Real driving emissions (RDE) legislation will become more onerous for the car manufacturers as emission limits will need to be maintained over the lifecycle of a vehicle. This will lead to increased loadings per vehicle. Industrial demand is also expected to grow in the petrochemicals sector and support for fuel cell development has increased. On the supply side, underinvestment in the South African industry over the past decade will lead to lower production in the future.

Palladium autocat demand is expected to increase particularly in China with the introduciotn of China VI legislation. In Western Europe loadings in gasoline vehicles are expected to increase significantly owing to the strict application of RDE standards.

An increased rhodium deficit is expected as demand in the autocatalyst sector follows a similar trajectory to palladium and supplies contract. Rhodium is the most effective metal for the control of nitrogen oxides and cannot easily be substituted.


“Project execution remains key to our unfolding strategy. We’ve done most of the heavy lifting from both a technical and balance sheet point of view,” said Dunne. “This gives us increased confidence in our ability to deliver our projects on time and within budget in order to take advantage of a rising PGM market.

“Our operations are performing well, and we expect to deliver a solid production performance for the full year. We’ll continue to focus on costs in order to maintain a competitive cost position on the industry cost curve. This is the only parameter on which the company can protect itself during difficult market conditions.

“De-stocking of excess inventory will continue until normal inventory levels are reached. The current rate of processing is greater than the rate of mining. The destocking campaign should be completed by mid-year and should release significant working capital.

“Zondereinde’s most recent wage negotiations in 2018 resulted in a three-year agreement and augurs well for relatively stable labour relations going forward. Booysendal will come to the end of a one-year agreement in June at which time a new wage agreement will be negotiated.”

Dunne concluded, “Our operations are performing well, our growth strategy is on track and we look forward to a good set of full year results when we report again.”

Issued by
R&A Strategic Communications
Tel +27 (0)11 880 3924
Marion Brower
+27 71 493 0387
Jan Walker
+27 71 493 0429