Announcements 2019

Northam shareholders (“shareholders”) are referred to the announcement dated 2 September 2019 (“previous announcement”), pertaining to the acquisition by Northam of preference shares in Zambezi Platinum (RF) Limited (“Zambezi preference shares”), from Coronation Asset Management Proprietary Limited, acting as an investment manager on behalf of its clients, for a total cash consideration of approximately R292.6 million (“acquisition”).

As stated in the previous announcement, the acquisition is not subject to shareholder approval, provided an independent professional expert confirms that the terms of the acquisition are fair to shareholders (“fairness opinion”). Northam has appointed BDO Corporate Finance Proprietary Limited (“BDO”) as the independent professional expert for purposes of providing the fairness opinion.

Northam is pleased to announce that BDO has considered the terms and conditions of the acquisition and is of the opinion that the acquisition is fair to shareholders. Accordingly, the acquisition will be implemented on 30 September 2019.

A copy of the fairness opinion is available for inspection for a period of 28 days from the date of this announcement, at Northam’s registered office being, Building 4, 1st Floor, Maxwell Office Park, Magwa Crescent West, Waterfall City, Jukskei View.

Johannesburg
13 September 2019

Corporate Advisor, Sponsor and Debt Sponsor to Northam
One Capital

Independent Professional Expert to Northam
BDO Corporate Finance Proprietary Limited

Attorneys to Northam
Cliffe Dekker Hofmeyr Inc

Northam is pleased to announce that it has completed a private placement of domestic medium term notes (“Notes”) to the value of R500 million (“New Notes”) under Northam’s R5 billion Domestic Medium Term Note Programme (“Programme”). The New Notes will be issued today on the Interest Rate Market of the JSE Limited and will mature over one year from the date of issue. The New Notes will attract a floating rate coupon of 2.40% per annum above a 3 month ZAR-JIBAR and interest will be payable quarterly.

Following the placement of the New Notes, the total notional value of Notes in issue under the Programme will amount to R2,325 billion.

Johannesburg
9 September 2019

Corporate Advisor, Sponsor and Debt Sponsor to Northam
One Capital

Sole Arranger and Dealer to Northam in respect of the Notes
One Capital

Legal Advisors to Northam, the Arranger and the Dealer in respect of the Notes
Bowman Gilfillan Inc.

The JSE Limited (“JSE”) has granted approval for the listing of NHM013 Senior Unsecured Floating Rate Notes (“Notes”), under the Northam Platinum Limited ZAR5 000 000 000 Domestic Medium Term Note Programme dated 3 August 2012, as amended and/or supplemented from time to time (“Programme”), as guaranteed by Booysendal Platinum Proprietary Limited, with effect from 9 September 2019.

The details pertaining to NHM013 are as follows:

The Notes will be immobilised in the Central Securities Depository (CSD) and settlement will take place electronically in terms of JSE Rules.

Johannesburg
6 September 2019

Sole Arranger, Dealer and Debt Sponsor to Northam in respect of the Notes
One Capital

Attorneys to Northam in respect of the Notes
Bowman Gilfillan Inc.

Johannesburg, 30 August 2019. Northam is pleased to announce the acquisition of 13 700 000 Zambezi preference shares, bringing its holding of preference shares to 19 408 458, representing 12.1% of all Zambezi preference shares in issue.  Northam has acquired these Zambezi preference shares from the PIC for a cash amount of R1.007 billion. The acquisition will be funded by Northam’s cash reserves.

This announcement follows on the previous advisory to shareholders dated 6 August 2019 and will be beneficial to Northam shareholders:

• the transaction will reduce the preference share dividend expense and liability included in Northam’s consolidated financial statements;
• it will also reduce Northam’s potential financial exposure under the guarantee it provided to holders of Zambezi preference shares, should the guarantee be called upon; and
• should Zambezi elect to redeem the Zambezi preference shares through a distribution of ordinary shares in Northam held by Zambezi, then the redemption of the Zambezi preference shares held by Northam will result in reducing the number of Northam shares in issue.

Northam CEO Paul Dunne said today, “Zambezi’s structure presents a very compelling and powerful way for Northam to return value to shareholders through the purchase of the Zambezi preference shares.”

Issued by R&A Strategic Communications
Tel 011 880 3924
Marion Brower 071 493 0387

focus on project execution, sustainable cost control and creating long-term value for all stakeholders

Johannesburg, 23 August 2019. Northam Platinum has issued its annual results for the year ended 30 June 2019. The following documents, making up the suite of 2019 published reports, are available on the Northam website at www.northam.co.za for review. The suite of reports includes:

KEY FEATURES FOR THE YEAR

• Record operating profit of R2.4 billion
• Normalised headline earnings up 226.7% to R1.4 billion
• Production grows by 7.4% to 519 954 oz 4E
• Net debt of R3.0 billion
• Capex reduced to R2.9 billion as capital investment programme starts to taper
• Focus on returning value to shareholders with purchase of Zambezi pref shares

Performance overview

The group’s equivalent refined metal production rose by 7.4% to 519 954 oz 4E with increased contributions from both Booysendal and Zondereinde. Chrome output was higher by 17.6% at 764 528 tonnes, reflecting the growth at Booysendal and Zondereinde, along with a maiden contribution from Eland.

Revenues hit a record R10.6 billion in the year, attributable to the effect of the higher PGM volumes combined with a higher US dollar basket (4E) price, and, in addition, a weaker South African currency, lower by 10.6% against the US dollar.

The average US dollar sales prices achieved during the year improved for most metals, except platinum which continued its downward trend to USD824/oz (F2018: USD934/oz). Palladium and rhodium both performed well, higher by 25.7% and 60.8% respectively. Given, however, that platinum makes up roughly 60% of the precious metals basket, the increase in the 4E basket price in US dollar terms was held to a modest 8.8%.

Booysendal’s growing contribution to the group’s improving cost profile is evidenced by the increase in group unit cash costs/equivalent Pt oz being held to a commendable 7.4% at R22 847/Pt oz.

The cost of sales was 22.4% higher at R8.2 billion, and was driven mainly by some significant operating input cost increases, including:

• 13.4% higher mining costs, attributable to the higher employee complement and labour cost increases;
• concentrating costs were 25.4% higher, reflecting higher group throughput and the costs associated with the commissioning of the Booysendal South concentrator; and
• smelter and base metal removal plant costs which were impacted by costs associated with the additional power required by the second furnace.

Group capex peaked last year at R3.8 billion mainly on expenditure at Booysendal South, the completion and commissioning of the second furnace at Zondereinde and the purchase of the western extension. This year total capex was significantly lower at R2.9 billion and is likely to taper further next year as key project milestones are completed.

Normalised headline earnings (our main measure of performance), have been calculated taking into account the headline earnings per share adjusted for non-cash items relating to the BEE transaction. When stripping out these non-cash items normalised headline earnings of R1.4 billion resulted, a 226.7% increase year on year, equating to normalised headline earnings per share of 270.1 cps. Earnings per share increased to 17.2 cents, and headline earnings per share to 15.8 cents per share.

Zondereinde

Production of equivalent refined metal from own operations increased by 3.1% to 308 466oz 4E. Merensky milled tonnages grew by 10.2%, underlining the positive impact of reserve build-up in both the deepening and Western extension sections of the mine. UG2 ore exceeded concentrator milling capacity by 129 383 tonnes.

Further good progress was made on the Zondereinde expansion projects in order to improve Merensky ore reserve availability:

• the conveyor decline at the deepening project is reaching 18 level and lateral development has progressed well on 17 level. Stoping is continuing on 16 level and is being serviced by both the material and chairlift declines, which are equipped and commissioned.
• At the Western extension development has progressed well on 3 to 12 levels, with footwall strike drives advancing significantly and stoping having started. This project will add some 50 000 oz to Zondereinde’s production profile.

The new furnace and drying plant at the Zondereinde metallurgical complex are producing and material handling work and logistical infrastructure is being upgraded to deal with the increase in concentrate.

Capital expenditure during the current year fell to R674.0 million (F2018: R1.5 billion). Expansionary project expenditure accounted for R605.6 million, while sustaining expenditure was R68.4 million. This is the result of last year’s once-off payment for the acquisition of the Western extension. Zondereinde capex in 2020 is likely to be about R595 million.

Higher labour and power costs, along with ore reserve development of more than 11 kilometres, contributed to unit operating costs increasing by 9.2% to R24 124/Pt oz.

Booysendal

The good safety performance at Booysendal continues, with the mine exceeding 4.5 million fatality free shifts during the year and improving the LTIIR to 0.18.

Production from Booysendal North UG2 mine improved 2.8% year-on-year to 2 243 924 tonnes primarily owing to improved mining productivity following the bedding down of the owner mining model and the application of an amended shift regime. The Merensky North mine increased its contribution by 18.3% to 386 476 tonnes, following the addition of a third stoping crew in the latter part of the year.

First production was achieved from the Booysendal Central UG2 mine, adding 181 853 tonnes to the existing stockpile of 71 000 tonnes.

Total tonnes milled increased by 7.5% to 2 868 282 tonnes. Additional tonnes milled essentially came from Booysendal Central UG2 production. The dense media separation plant at the North concentrator is operating well within design parameters. The total operating costs at Booysendal were R2.5 billion, a 20.7% increase. Volume increases, together with stores and power costs, led to this increase. Higher production volumes resulted in a cash cost per platinum ounce in concentrate produced increasing by 4.8% to R17 904/Pt oz.

North mine capital expenditure of R341.8 million (F2018: R462.3 million), included R188.5 million expansionary and R153.3 million sustaining capital. This year-on-year reduction reflects the close out of the phase 1 Merensky North and UG2 North deepening projects. South mine capital expenditure totalled R1.5 billion (F2018: R1.5 million) and reflects surface infrastructure construction ahead of schedule, together with North aerial rope conveyor pre-payments which partially de-risk the overall project work and cash flows.

The F2020 capital expenditure for North mine will be entirely sustaining and is estimated at R220.0 million. The South mine capital expenditure is estimated at R1.0 billion. Main workflows comprise ongoing surface infrastructure construction and underground mining and equipping at the Central UG2 complex, completion of the Central Merensky box cut, together with the start of underground development, and the construction of the North aerial rope conveyor system.

Negotiations for a new wage agreement have started with the majority union, AMCU at Booysendal.

Eland

Eland’s existing infrastructure comprises a 250 000 tonne per month capacity concentrator with both PGM and chrome circuits, a large TSF and surface infrastructure. Two decline systems, Kukama and Nyala, have been pre-developed to lengths of 1 300 metres and 850 metres from surface access. These are equipped with underground dip and strike conveyors for ore transport, chairlifts for people transport, as well as electricity and water reticulation systems.

The decline systems comprise two on-reef barrels and one approximately 25 metres below reef housing the dip conveyors. The mine has been on care and maintenance since 2015. Hydro-mining and reprocessing of tailings from the TSF has commenced. Underground mining will restart in F2020.

Work at Eland during the year focused on recommissioning the chrome spirals and secondary PGM circuit in the concentrator to receive feedstock from the tailings dam for re-processing. A total of 12 676 tonnes of chrome concentrate was produced and sold. This operation will continue in the new financial year, together with the processing of purchased material to recover PGMs.

In parallel with the processing operations, a feasibility study to restart underground mining was completed, together with the refurbishment and recommissioning of fixed and mobile underground equipment in anticipation of the restart. Development of a revised mining layout will start at the Kukama shaft in F2020. In addition, preparation for a mobile tunnel borer (MTB) trial, to test its suitability for advancing the decline system, was undertaken. This, together with pre-production costs resulted in capital expenditure for the year of R371.2 million. Capital expenditure is expected to reach R400 million in F2020.

Looking to the future chief executive Paul Dunne commented that project execution remains key to the company’s unfolding strategy. “A lot of the hard work has been done,” he said, “reducing the execution risk. This gives us increased confidence that we’ll be able to deliver our projects within the designed parameters to take advantage of a rising PGM market.

“Now that we’re over the peak funding requirements for our project pipeline, we’re turning our attention to returning value to shareholders, either by repurchasing our own ordinary shares or the Zambezi preference shares or a combination of the two. Any free cash over and above our targeted net debt level will be used for this purpose.

“Our operations are performing well and we expect to deliver further production growth in the new year. We’ll continue to focus on costs in order to grow our margins and maintain our relative cost position,” Dunne concluded.

Issued by R&A Strategic Communications,
Johannesburg,
Tel +27 (0)11 880 3924;
Marion Brower +27 71 493 0387;
Edith Leeson 079 527 6882