Announcements 2023

Release of annual financial statements of the guarantor – NHMI

Northam bondholders are hereby advised that the annual financial statements of Booysendal Platinum Proprietary Limited for the year ended 30 June 2023, are available on Northam’s website


Northam bondholders are hereby advised that the annual financial statements of Booysendal Platinum Proprietary Limited for the year ended 30 June 2023, which incorporates the independent auditor’s unmodified audit report thereon, are available on Northam’s website at https://www.northam.co.za/downloads/send/173-2023/1536-booysendal-afs-30jun2023 and available for inspection, during office hours, at the registered office of the company.

Johannesburg
29 September 2023

Debt Sponsor
One Capital

Interest payment notification – NHM022

Northam bondholders are advised of the following interest payment due on Tuesday, 26 September 2023


Northam bondholders are advised of the following interest payment due on Tuesday, 26 September 2023:

Bond Code:

NHM022

ISIN:

ZAG000190133

Coupon:

12.242%

Interest Period:

23 June 2023 to 25 September 2023

Interest Amount Due:

R111 519 589.04

Payment Date:

26 September 2023

Date Convention:

Following Business Day

Johannesburg
20 September 2023

Debt Sponsor
One Capital

Interest payment notification – NHM015

Northam bondholders are advised of the following interest payment due on Wednesday, 13 September 2023


Northam bondholders are advised of the following interest payment due on Wednesday, 13 September 2023:

Bond Code:

NHM015

ISIN:

ZAG000164922

Coupon:

11.775%

Interest Period:

13 June 2023 to 12 September 2023

Interest Amount Due:

R14 839 726.03

Payment Date:

13 September 2023

Date Convention:

Following Business Day

 

Johannesburg
8 September 2023

Debt Sponsor
One Capital

Disposal of the remainder of Northam Holdings’ interest in Implats

Unless otherwise defined herein, capitalised words and terms contained in this announcement shall bear the same meanings ascribed thereto in the announcement published by Northam Holdings on SENS on Friday, 25 August 2023


Unless otherwise defined herein, capitalised words and terms contained in this announcement shall bear the same meanings ascribed thereto in the announcement published by Northam Holdings on SENS on Friday, 25 August 2023 (“Announcement”).

Northam Shareholders are referred tothe Announcement wherein it was advised, inter alia, that Northam Holdings had disposed of 27 541 147 of the 30 065 866 Implats Shares received pursuant to the Acceptance (“Share Consideration”).

Northam Shareholders are advised that Northam Holdings has disposed of the remaining 2 524 719 Implats Shares on-market for a total consideration of c. R251.1 million.

Accordingly, the total cash consideration received pursuant to the disposal of the Share Consideration amounts to c. R3.1 billion, representing a volume weighted average price of R103.95 per Implats Share.

The disposal of the remaining 2 524 719 Implats Shares falls below the threshold for categorisation in terms of the JSE Limited Listings Requirements, and therefore this is a voluntary announcement provided for information purposes only.

Johannesburg
28 August 2023

Corporate Advisor and Sponsor to Northam Holdings
One Capital

Corporate Advisor and Debt Sponsor to Northam Platinum
One Capital

Strong operational performance in a weakening price environment …maintaining our position on the cost curve will be our best defence against headwinds

Northam Platinum Holdings Limited issued its results for the financial year ended 30 June 2023 today. The full set of related results and reports may be accessed on the company’s website.


Johannesburg, Friday 25 August 2023. Northam Platinum Holdings Limited issued its results for the financial year ended 30 June 2023 today. The full set of related results and reports may be accessed on the company’s website, www.northam.co.za

Key features

  • Strong operational performance with contributions from all operations
  • Operating profit amounts to R15.4 billion, with an operating margin of 39.1%
  • Organic growth projects are on track
  • Weakening in PGM price environment
  • The sale of the investment in RBPlat subsequent to year-end has significantly strengthened Northam’s balance sheet and liquidity position
  • The board approved a dividend policy based on a minimum of 25% of headline earnings and declared a maiden dividend of R6.00 per share.

Commenting on the disposal of Northam’s holding in RBPlat, chief executive Paul Dunne told the investment community at a briefing in Johannesburg today that accepting the Implats Mandatory Offer was considered to be a prudent response to a potentially protracted downturn in PGM fundaments.  It significantly strengthened the group’s balance sheet and liquidity position, which in turn has enabled the group to declare its first dividend in over 10 years. This dividend constitutes a maiden dividend for Northam Holdings.

Operational performance

The availability, reliability and cost of electrical power remains one of the group’s highest risks. Load curtailment persisted over the year, with 73 curtailment events, with an average duration of 14 hours.

Load curtailment is managed proactively at the operations, in order to ensure a safe working environment, whilst minimising the impact on production.

This is achieved through a combination of switching-off of non-critical machinery, and the use of on-site generators.

In order to secure the operations against level 4 curtailment the diesel generator fleet is being expanded to 57 MW. “Together with our renewable energy initiatives, we hope to ensure provision of power, whilst managing costs, carbon emissions, and a safe underground working environment,” says Dunne.

Across the operations safety is a key focus. Maintaining a strong supervisory level is critical to safe mining practices, and we are working hard to recruit and train quality people at this level.

Financial performance

Growth in metal production contributed to the strong financial results for the year:

  • Sales revenue increased by 16.1% to R39.5 billion
  • Operating profit increased to R15.4 billion
  • EBITDA unchanged at R16.5 billion
  • Net debt improved to R9.4 billion, essentially on the back of strong cash flows from operations
  • EPS and HEPS for the year amounted to R6.55 and R24.15 respectively

In reviewing the financial performance, chief financial officer Alet Coetzee pointed to the group strategy of growing production down the sector cost curve: “We have consistently followed this strategy, while at the same time reducing business risk. This has yielded improvements in our operational and financial results, as well as added resilience for market down-turns.”

Coetzee pointed to the current prevailing PGM market conditions and the material decline in the basket price which could signal a potentially protracted cyclical down-turn. She countered this however, with: “The scale, operational and revenue diversity, as well as our improved liquidity position, will be our best defence against these headwinds.”

The record revenue of R39.5 billion is 16.1% up on the previous year. The increase resulted from a 20% increase in sales volumes, which, along with a 16% weakening of the ZAR against the USD helped to offset the lower USD 4E basket price. Further weakening of metal prices post year-end will place further pressure on revenue.

The focus in the coming year will be on cost containment. Adverse market conditions have added renewed significance to liquidity, a key consideration in the sale, for cash, of the RBPlat holding.

“The group generated significant cash during the year under review from operating activities, R5.5 billion of which was invested in capital expenditure, and this resulted in free cash flow of R8.5 billion. This ultimately allowed a reduction in net debt from R16.0 billion to R9.4 billion at the end of the year, which together with our available banking facilities, will assist us in weathering the current challenging price environment.”

The RBPlat sale has strengthened the balance sheet and liquidity position, and this has, in turn, translated into a maiden dividend of R6.00 per share. In addition, the board further approved an earnings-based dividend policy, of a minimum payment of 25% of headline earnings, and a share buy-back programme of up to R1.0 billion, market dependent.

Looking ahead

In line with the company’s growth profile, and taking cognisance of the ongoing Eskom challenges, the guidance for F2024 are as follows:

  • PGM production from own operations to be in the range of 850 000 to 880 000 4E ounces;
  • Group unit costs to be between R40 000 to R42 000 per platinum ounce;
  • Sales will be higher than production, in the range of 950 000 to 990 000 ounces; and
  • Forecast capex for the year of between R4.5 billion and R4.8 billion.

Growth from Booysendal and Zondereinde over the next few years, together with the progressive ramp-up of Eland, will deliver into the medium-term production target of 1 million 4E ounces.

R&A Strategic Communications, Johannesburg, Tel +27 (0)11 880 3924

  • Marion Brower +27 71 493 0387
  • Memory Johnstone +27 82 719 3081

Audited group consolidated annual results for the year ended 30 June 2023, cash dividend declaration, share buyback programme and notice of annual general meeting

Shareholders of Northam Holdings are hereby advised that Northam Holdings published its audited group consolidated annual results for the year ended 30 June 2023 today.


Shareholders of Northam Holdings (“Shareholders”) are hereby advised that Northam Holdings published its audited group consolidated annual results for the year ended 30 June 2023 today.
Financial results overview

 

 

30 June 2023

30 June 2022

Variance

Sales revenue

R000

39 548 159

34 064 270

16.1%

Operating profit

R000

15 446 786

14 885 101

3.8%

Operating margin

%

39.1

43.7

(10.5%)

Earnings per share

cents

654.5

2 614.9

(75.0%)

Headline earnings per share

cents

2 414.9

2 611.1

(7.5%)

Dividends per share

cents

600.0

-

100.0%

EBITDA*

R000

16 501 053

16 462 860

0.2%

EBITDA margin

%

41.7

48.3

(13.7%)

*Earnings before interest, taxation, depreciation, amortisation, and impairments.
Continuing to return meaningful value to our Shareholders

Cash dividend
Northam recognises the importance of returning value to Shareholders, and this has always been one of the key drivers behind, and objectives of, our long-term sustainable growth strategy.
During the previous financial year ended 30 June 2022, Northam returned significant value to Shareholders through the accelerated maturity and unwinding of the Zambezi Platinum (RF) Proprietary Limited black economic empowerment (BEE) transaction and related share buyback, which resulted in a 28.9% reduction in Northam Holdings’ issued share capital.

The sale of Northam's investment in Royal Bafokeng Platinum Limited subsequent to 30 June 2023 has presented an opportunity for Northam to significantly strengthen the group’s balance sheet and liquidity position, which in turn has enabled the group to declare its first dividend in over 10 years. This dividend constitutes a maiden dividend for Northam Holdings.

The company's board of directors (“board”) is pleased to announce that it resolved to declare and pay a final gross cash dividend of 600.00 cents per share which in aggregate amounts to a gross cash dividend of approximately R2.4 billion for the year ended 30 June 2023. The final cash dividend has been declared from income reserves.

A dividend withholding tax of 20% will be applicable to Shareholders who are not exempt from, or who do not qualify for, a reduced rate of dividend withholding tax. Accordingly, for those Shareholders subject to dividend withholding tax at a rate of 20%, the final net cash dividend amounts to 480.00 cents per share (30 June 2022: Nil cents per share).

The following dates are applicable to the dividend:

Last day to trade (cum dividend), on

Tuesday, 12 September 2023

Trading ex-dividend, on

Wednesday, 13 September 2023

Record date to determine which Shareholders are eligible to receive the dividend, on

Friday, 15 September 2023

Payment date of the dividend, on

Monday, 18 September 2023

Shareholders may not dematerialise or rematerialise their shares between Friday, 15 September 2023, both days inclusive.
The following additional information is disclosed regarding the dividend:

  • Northam Holdings’ issued share capital at the dividend declaration date was 396 615 878 ordinary shares (of which 1 share is held by Northam Platinum, a subsidiary of Northam Holdings).
  • Northam Holdings' registration number is 2020/905346/06.
  • Northam Holdings' income tax reference number is 9586451198.

Share buyback programme

In addition to the dividend, Shareholders are further advised that the board has also approved a share buyback programme of up to R1.0 billion, and limited to a maximum of 5% of Northam Holdings’ issued share capital, in terms of which the company and/or its subsidiaries may buyback Northam Holdings shares in accordance with the authority approved by Shareholders at the company’s annual general meeting (“AGM”) held on Tuesday, 25 October 2022, which authority the company will seek to renew at the upcoming AGM to be held on Monday, 30 October 2023 (“2023 AGM”).

Annual general meeting

The 2023 AGM will be held on Monday, 30 October 2023 at 10:00 South African time to transact the business as stated in the notice of the 2023 AGM (“2023 AGM notice”). 

The 2023 AGM will be held entirely by way of electronic participation. Shareholders are encouraged to read the 2023 AGM notice for information on how to electronically attend, participate in and vote at the 2023 AGM.

Shareholders are advised that the 2023 AGM notice, containing the summarised audited group consolidated annual financial statements for the year ended 30 June 2023, is available on the company’s website at:
https://www.northam.co.za/downloads/send/173-2023/1521-2023-notice-agm and will be distributed to Shareholders on Friday, 1 September 2023.

The salient dates for the 2023 AGM are as follows:

Record date to determine which Shareholders are entitled to receive the 2023 AGM notice, on

Friday, 25 August 2023

2023 AGM notice made available on the company’s website, on

Friday, 25 August 2023

Distribution of the 2023 AGM notice to Shareholders, on

Friday, 1 September 2023

Last date to trade in order to be recorded in the register to be able to electronically attend, participate in and vote at the 2023 AGM, on

Tuesday, 17 October 2023

Record date to determine which Shareholders are entitled to electronically attend, participate in and vote at the 2023 AGM, on

Friday, 20 October 2023

For administration purposes, forms of proxy to be delivered to The Meeting Specialist Proprietary Limited (TMS) by 10:00 (SA time), on*

Thursday, 26 October 2023

2023 AGM to be held at 10:00 (SA time), on

Monday, 30 October 2023

Results of the 2023 AGM expected to be published on SENS, on

Monday, 30 October 2023

* Any forms of proxy not delivered by this date and time must be submitted electronically to the chairperson of the 2023 AGM before the appointed proxy may exercise any rights of the Shareholder at the meeting.

About this announcement

As the information in this announcement does not provide all of the details, any investment decisions should be based on the published audited group consolidated annual financial statements (which incorporates the external auditor’s report in which PricewaterhouseCoopers Incorporated expressed an unqualified audit opinion) which is accessible via the JSE cloudlink at: https://senspdf.jse.co.za/documents/2023/JSE/ISSE/NPHE/AFS_23.pdf and available on the company’s website at: https://www.northam.co.za/downloads/send/167-fy2023/1523-fy2023-afs-30-june-2023.

Shareholders are also referred to the summarised financial results for the year ended 30 June 2023 available on the company’s website at: https://www.northam.co.za/downloads/send/167-fy2023/1524-fy2023-sfr-30-june-2023 for further detailed information pertaining to the group’s business and operations, including detailed results commentary in respect of the financial year ended 30 June 2023.

The group annual integrated report for the year ended 30 June 2023, which contains, inter alia, the additional information required in terms of paragraph 8.62 of the JSE Limited Listings Requirements, the summarised financial results for the year ended 30 June 2023 and the 2023 AGM notice, is available on the company’s website at: https://www.northam.co.za/downloads/send/173-2023/1522-annual-integrated-report-2023.

Johannesburg
25 August 2023

Corporate Advisor and Sponsor to Northam Holdings
One Capital

Corporate Advisor and Debt Sponsor to Northam Platinum
One Capital

Attorneys to Northam Holdings and Northam Platinum
Webber Wentzel

Disposal of the majority of Northam Holdings' interest in Implats

Unless otherwise defined herein, capitalised words and terms contained in this announcement shall bear the same meanings ascribed thereto in the announcement published by Northam Holdings on SENS on Thursday, 20 July 2023.


Unless otherwise defined herein, capitalised words and terms contained in this announcement shall bear the same meanings ascribed thereto in the announcement published by Northam Holdings on SENS on Thursday, 20 July 2023 (“Announcement”).

Northam Shareholders are referred to, inter alia, the Announcement, wherein it was advised that Northam Holdings had accepted the Implats Mandatory Offer in respect of all of the 100 219 552 RBPlat Shares (“Disposal Shares”) held by Northam Holdings (“Acceptance”). Pursuant to the Acceptance, Northam Holdings disposed of the Disposal Shares to Implats and received c. R9.0 billion in cash (“Cash Consideration”) and 30 065 866 Implats Shares (“Share Consideration”).

Northam Shareholders are advised that, as at the date of this announcement, Northam Holdings has concluded on-market disposals in respect of 27 541 147 Implats Shares, representing c. 91.6% of the Share Consideration (“Implats Share Disposal”).

The total cash consideration received in respect of the Implats Share Disposal amounts to c. R2.9 billion, representing a volume weighted average price (“VWAP”) of R104.36 per Implats Share (“Share Disposal VWAP”).

The Share Disposal VWAP equates to the following premiums per Implats Share as at close of trade on 24 August 2023:

  • 7.8% to the closing price;
  • 9.6% to the 5-day VWAP; and
  • 6.0% to the 10-day VWAP.

The Implats Share Disposal further strengthens Northam’s balance sheet and liquidity position and provides Northam with increased flexibility and optionality going forward. Retaining the Share Consideration is not aligned with Northam’s growth strategy and Northam Holdings intends to dispose of the remaining Share Consideration, being 2 524 719 Implats Shares, for cash.

The Implats Share Disposal amounts to a category 2 transaction for Northam Holdings in terms of paragraph 9.5(a) of the JSE Limited Listings Requirements. Shareholders are referred to the Announcement for the relevant information pertaining to Implats.

The Cash Consideration and the consideration received pursuant to the Implats Share Disposal form part of Northam’s strategy of returning value to shareholders and reducing third-party debt. Shareholders are referred to the results announcement published by Northam today, 25 August 2023, for details of a dividend payment and the commencement of a share buyback programme. A portion of the aforementioned cash consideration will also be applied for general corporate purposes.

Johannesburg
25 August 2023

Corporate Advisor and Sponsor to
Northam Holdings

One Capital

Corporate Advisor and Debt Sponsor to
Northam Platinum

One Capital

Disclosure of an acquisition of a beneficial interest in Northam Holdings Securities

Northam Holdings shareholders are advised that the company received notification, in the prescribed form, from Old Mutual Limited, advising that it has acquired a beneficial interest in the securities of Northam Holdings.


In accordance with section 122(3)(b) of the Companies Act, No. 71 of 2008, as amended (“Companies Act”), and paragraph 3.83(b) of the JSE Limited Listings Requirements (“JSE Listings Requirements”), Northam Holdings shareholders are advised that the company received notification, in the prescribed form, from Old Mutual Limited (“Old Mutual”), advising that it has acquired a beneficial interest in the securities of Northam Holdings, such that Old Mutual now holds a beneficial interest of 5.00% in the company’s total issued share capital.

The company will file the relevant notification with the Takeover Regulation Panel and the Companies and Intellectual Property Commission, as required in terms of sections 122(3)(a) and 122(3A) of the Companies Act.

The board of directors of Northam Holdings (“Board”) accepts responsibility for the information contained in this announcement and certifies that, to the best of the Board’s knowledge and belief, the information contained in this announcement is true and that there are no facts that have been omitted which would make any statement in this announcement false or misleading and that this announcement contains all information required by law and the JSE Listings Requirements.

Johannesburg
24 August 2023

Corporate Advisor and Sponsor to Northam Holdings
One Capital

Attorneys to Northam Holdings and Northam Platinum
Webber Wentzel

Corporate Advisor and Debt Sponsor to Northam Platinum
One Capital

Interest payment notifications – NHM019, NHM020, NHM021, NHM024, NHM025 and NHM026

Northam bondholders are advised of the following interest payments due on Friday, 25 August 2023 and Monday, 28 August 2023.


Northam bondholders are advised of the following interest payments due on Friday, 25 August 2023 and Monday, 28 August 2023, respectively:

Bond Code:

NHM019

ISIN:

ZAG000168105

Coupon:

12.133%

Interest Period:

25 May 2023 to 24 August 2023

Interest Amount Due:

R107 523 649.88

Payment Date:

25 August 2023

Date Convention:

Following Business Day

Bond Code:

NHM020

ISIN:

ZAG000172594

Coupon:

11.883%

Interest Period:

25 May 2023 to 24 August 2023

Interest Amount Due:

R20 427 039.78

Payment Date:

25 August 2023

Date Convention:

Following Business Day

Bond Code:

NHM024

ISIN:

ZAG000195926

Coupon:

10.108%

Interest Period:

25 May 2023 to 24 August 2023

Interest Amount Due:

R2 547 769.86

Payment Date:

25 August 2023

Date Convention:

Following Business Day


 

Bond Code:

NHM025

ISIN:

ZAG000195934

Coupon:

11.108%

Interest Period:

25 May 2023 to 24 August 2023

Interest Amount Due:

R25 198 421.92

Payment Date:

25 August 2023

Date Convention:

Following Business Day

Bond Code:

NHM026

ISIN:

ZAG000195942

Coupon:

11.858%

Interest Period:

25 May 2023 to 24 August 2023

Interest Amount Due:

R38 556 368.22

Payment Date:

25 August 2023

Date Convention:

Following Business Day

Bond Code:

NHM021

ISIN:

ZAG000181496

Coupon:

12.742%

Interest Period:

26 May 2023 to 27 August 2023

Interest Amount Due:

R18 803 002.85

Payment Date:

28 August 2023

Date Convention:

Following Business Day

Johannesburg
22 August 2023

Debt Sponsor
One Capital

Trading statement and trading update for the year ended 30 June 2023

Northam Holdings’ financial results for the year ended 30 June 2023 (“F2023”) are underpinned by a solid performance from all operations within the group. Notwithstanding this, Northam Holdings expects to report a decrease in earnings per share for F2023 compared to the previous financial year ended 30 June 2022 (“F2022”)


Key metrics for the year ended 30 June 2023 and disposal of the Royal Bafokeng Platinum Limited (“RBPlat”) investment:

  • 13.0% increase in equivalent refined 4E metal from own operations to 809 775 oz 4E (F2022: 716 488 oz 4E), following a strong performance from all mines in the group, including a 21.5% increase in 4E concentrate produced by Booysendal and a 47.5% increase in 4E concentrate produced from own operations and surface sources at Eland
  • 16.1% increase in sales revenue to R39.5 billion, notwithstanding a 6.9% decrease in the 4E ZAR basket price to R37 488/oz 4E (F2022: R40 286/oz 4E)
  • 3.8% increase in gross profit to R15.4 billion
  • 39.1% gross profit margin, reflective of increased production against a largely fixed cost base and maintaining cost discipline and efficiencies, notwithstanding a 12.6% increase in group cash cost per equivalent refined 4E ounce, amidst a higher inflationary environment and ongoing Eskom load curtailment events
  • 0.2% increase in EBITDA to R16.5 billion
  • 2.5% - 12.5% expected decrease in headline earnings per share
  • 70.0% - 80.0% expected decrease in basic earnings per share, primarily as a result of a R4.1 billion non-cash impairment cost relating to Northam’s investment in RBPlat and a R2.7 billion non-cash impairment relating to the Eland operation as a result of a substantial deterioration in the pricing of Platinum Group Metals (“PGM”) which will be reversed should market conditions improve in the future
  • Net debt as at 30 June 2023 (prior to the disposal of Northam’s investment in RBPlat) improved to R9.4 billion (F2022: R16.0 billion) with a net debt to EBITDA ratio of 0.57, well within Northam’s self-imposed target ratio of 1 to 1 in pursuance of the group’s growth strategy
  • All organic growth projects are on track
  • Post 30 June 2023, sale of Northam’s investment in RBPlat into the Impala Platinum Holdings Limited (“Implats”) mandatory offer for R9.0 billion in cash and 30 065 866 Implats shares

Introduction
In terms of paragraph 3.4(b) of the JSE Limited Listings Requirements, companies are required to publish a trading statement as soon as they are satisfied, with a reasonable degree of certainty, that the financial results for the current reporting period will differ by at least 20% from the financial results of the previous corresponding period.

Northam Holdings’ financial results for the year ended 30 June 2023 (“F2023”) are underpinned by a solid performance from all operations within the group. Notwithstanding this, Northam Holdings expects to report a decrease in earnings per share for F2023 compared to the previous financial year ended 30 June 2022 (“F2022”), largely as a result of the recognition of two non-cash impairments relating to:

  • Northam’s investment in RBPlat (R4.1 billion), based on the consideration received by Northam from the sale of its investment in RBPlat into the Implats mandatory offer; and
  • the Eland operation (R2.7 billion), owing to a deterioration in the forecast commodity prices.

The table below provides key earnings per share information for F2023, compared to that of F2022:

  F2023 F2022 Variance
Basic earnings per share (cents) 523.0 – 784.4 2 614.9 (80.0%) – (70.0%)
Headline earnings per share (cents) 2 284.6 – 2 545.6 2 611.1 (12.5%) – (2.5%)
Number of shares in issue including treasury shares 396 615 878 396 615 878 0.0%
Weighted average number of shares in issue* 390 237 523 376 533 113 3.6%

*The weighted average number of shares in issue have been used to determine the basic and headline earnings per share.

Production
The group’s equivalent refined metal from own operations increased by 13.0% to 809 775 oz 4E (F2022: 716 488 oz 4E) as a result of focused execution of the group’s growth strategy, which continues to deliver against set targets. A key feature for F2023 has been the strong production performance from both the Zondereinde and Booysendal mines, and a significant step forward by Eland. Challenges remain, particularly in respect of high mining inflation and the potential for further and possibly more severe Eskom load curtailment events. However, our growth and operational diversification programmes remain on track and continue to demonstrate the value of our counter-cyclical investments and execution capacity across the group, as well as our flexibility in dealing with these challenges.

Development of the Western extension at Zondereinde has progressed well. Despite Zondereinde tragically suffering three fatalities, the benefits of focused Merensky stoping in the Western extension, together with logistical decongestion resulting from the ongoing shift of UG2 stoping from the western to the eastern portions of the mine, are starting to show in mining productivity.

Booysendal is delivering strong growth on the back of solid production from North mine, as well as the ongoing ramp-up of South mine. Booysendal achieved a record 8 million fatality free shifts, remaining fatality free since inception.

Eland surpassed a maiden 1 million fatality free shifts during November 2022, and continues to ramp-up mineable reserves

All operations have been subject to numerous Eskom load curtailment events. However, the combination of our comprehensive load management protocols, as well as on-demand self-generation capacity, have limited consequential production losses. A programme to increase self-generation capacity is well advanced and this will further mitigate potential production losses arising from load curtailment events.

Key production metrics for F2023, compared to F2022, are as follows (in oz 4E):

  F2023 F2022 Variance
Equivalent refined production from own operations at Zondereinde 321 901 321 962 (0.0%)
Concentrate produced from own operations at Booysendal 452 903 372 623 21.5% 
Concentrate produced from own operations and surface sources at Eland 48 800 33 086 47.5% 
Total equivalent refined metal production from own operations 809 775 716 488 13.0% 
Equivalent refined metal purchased from third parties 119 820 61 961 93.4% 
Total equivalent refined metal production from own operations including metal purchased from third parties 929 595 778 449 19.4%

Unit cash costs
Unit cash costs were negatively impacted by higher mining inflation, as well as slightly depressed concentrator feed grades at Zondereinde (due to the Western extension expansion) and at Booysendal (due to an area of lower grade reef at the North UG2 mine, together with elevated development in the newer modules of the South mine). Grades at Zondereinde and Booysendal will improve over the coming two years as these growth projects reach maturity.
Unit cash costs per 4E ounce for the group, and per operation, for F2023 compared to F2022, are as follows (in R/4E oz):

  F2023 F2022 Variance

Zondereinde cash cost per equivalent refined 4E ounce

23 620 20 766 (13.7%)

Booysendal cash cost per 4E ounce in concentrate produced

16 789 14 765 (13.7%)

Eland cash cost per 4E ounce in concentrate produced

36 319 36 962 1.7% 

Group cash cost per equivalent refined 4E ounce

22 824 20 278 (12.6%)

The total cost of purchased concentrates and recycling material increased by 51.5% to R4.0 billion (F2022: R2.6 billion), with 4E ounce volumes purchased increasing by 93.4%. The cost of purchased material is based on ruling commodity prices as well as the prill split of the purchased material.

Sales revenue

Sales revenue for F2023 amounted to R39.5 billion, an increase of 16.1% (F2022: R34.1 billion).

The increase in sales revenue was the combined result of a 20.0% increase in 4E sales volumes to 885 347 oz 4E (F2022: 737 923 oz 4E) and a 6.9% decrease in the 4E ZAR basket price to R37 488/oz 4E (F2022: R40 286/oz 4E). The lower ZAR basket price is the combined result of a lower 4E US dollar (“USD”) basket price of USD 2 112/oz 4E (F2022: USD 2 640/oz 4E) and an increase in the average ZAR/USD exchange rate achieved (i.e. a weaker Rand) being R17.75/USD (F2022: R15.26/USD).

Total revenue per equivalent refined 4E ounce sold decreased by 3.2% to R44 670/4E oz (F2022: R46 162/4E oz). This, combined with the unit cash cost increasing by 12.6% from R20 278/4E oz to R22 824/4E oz in F2023, led to a decrease in the cash profit margin per 4E ounce to 48.9% (F2022: 56.1%).

The table below summarises dispatched metal volumes to the group’s precious metal refiners, compared to metal volumes refined and sold together with the average USD sales prices achieved per metal.

  Dispatched Total refined metal produced Total equivalent refined metal sold (including the sale of concentrate) Average sales prices achieved
  oz oz oz USD/oz
Platinum 507 008 515 379 537 341 973
Palladium 241 238 246 753 257 542 1 737
Rhodium 76 092 74 626 80 176 10 988
Gold 9 867 9 732 10 288 1 850
Total 4E 834 205 846 490 885 347 2 112

Included in the third figures column in the table above is concentrate sold to a third party to honour legacy offtake agreements relating to the Everest and Maroelabult operations, which contained 54 220 oz 4E in concentrate (F2022: 37 334 oz 4E). Refined metal sold to the group’s customers totalled 832 602 oz 4E (F2022: 701 618 oz 4E).

Financial results

Sales revenue increased by 16.1% compared to an increase in cost of sales of 25.7%. This resulted in a gross profit of R15.4 billion (F2022: R14.9 billion), and a gross profit margin of 39.1% (F2022: 43.7%).

We operate a largely fixed cost business and consider increasing production, and doing so efficiently, to be our best defence against current global inflationary pressures. Our capital allocation and treasury decisions have been guided by our growth strategy and our financial results have benefited from our consistent approach to growing our production base down the industry cost curve.

Earnings before interest, taxation, depreciation and amortisation, and also excluding impairments, (“EBITDA”) amounted to R16.5 billion (F2022: R16.5 billion).

As at 30 June 2023, inventory on hand amounted to 397 387 oz 4E, valued at R13.7 billion when applying the 4E basket price and exchange rate at 30 June 2023.

For F2023, our operations generated cash to the value of R14.0 billion (before capital expenditure) and free cash flow of R8.5 billion (after capital expenditure). During F2023, Northam settled the last instalment of the Deferred Acquisition Consideration (as defined in the SENS announcement published by Northam on 9 November 2021) to the Royal Bafokeng Holdings Proprietary Limited group, of R1.8 billion (including escalation at the Escalation Rate (as defined in the SENS announcement published by Northam on 9 November 2021)), relating to Northam’s initial investment in RBPlat. Northam received R781.7 million in dividends from RBPlat during F2023.

During F2023, Northam successfully concluded and implemented an agreement to restructure the group’s existing banking facilities, whereby (i) the R2.4 billion term loan facility (“Term Loan”) has been fully settled and cancelled, and (ii) the existing R7.2 billion five-year revolving credit facility (“RCF”) has been increased by R2.8 billion to R10.0 billion (“Facility Restructure”). As a result of the Facility Restructure, Northam’s total available banking facilities now amount to R11.0 billion, comprising the increased RCF of R10.0 billion and existing general banking facilities of R1.0 billion.

At year end, and prior to the disposal of Northam’s investment in RBPlat (the proceeds of which were received on 24 July 2023), net debt improved to R9.4 billion (F2022: R16.0 billion), with the net debt to EBITDA ratio at 0.57.

Subsequent to year end, Northam disposed of its investment in RBPlat into the Implats mandatory offer (details of which are contained in the offer circular issued by Implats dated 17 January 2022). The offer consideration receivable per RBPlat share tendered into the Implats mandatory offer amounted to R90.00 in cash and 0.3 new ordinary shares in Implats. Northam Holdings therefore received, in aggregate, R9.0 billion in cash and 30 065 866 Implats shares (JSE share code: IMP), (collectively, the “Aggregate Offer Consideration”). The Aggregate Offer

Consideration was used to determine the recoverable amount relating to Northam’s investment in RBPlat as at 30 June 2023 and resulted in a non-cash impairment being recognised amounting to R4.1 billion.

Recent adverse market developments have also resulted in a material contraction in profit margins and cash generation capacity across the PGM industry. As a consequence, the forecast commodity price assumptions have been adjusted downward from those used in F2022. Based on the impairment assessments performed by management, the recoverable values for all cash generating units within the group were higher than their respective carrying values, except for assets under construction relating to the Eland operation. Consequently, the assets included in Eland were impaired by R2.7 billion, which impairment is a non-cash adjustment and will be reversed should market conditions improve in the future.

Acceptance of the Implats mandatory offer

On 9 November 2021, Northam Holdings announced its initial acquisition of a 32.8% interest in RBPlat (“Announcement Date”). Subsequent to the Announcement Date, the PGM market strengthened significantly. The ZAR 4E basket price, based on the average prill split across RBPlat's operations (“Basket Price”), remained strong throughout 2022, with a net increase of approximately 10% from the Announcement Date to the date of Northam Holdings announcing its firm intention to make a voluntary, conditional offer to RBPlat shareholders to acquire the remaining RBPlat shares not already held by Northam Holdings (“Northam Offer”) on 9 November 2022 (“Northam FIA”).

However, subsequent to the Northam FIA, PGM prices declined substantially, signalling a possible protracted cyclical downturn in the PGM market. The Basket Price declined by approximately 35.0% from the Northam FIA date to 18 July 2023, resulting in a decrease of almost 30% between the Announcement Date and 18 July 2023. These adverse market developments resulted in a material contraction in profit margins and cash generation capacity across the entire PGM industry (including at RBPlat). As a consequence, equity valuations across the entire PGM sector have declined substantially.

Against this backdrop, Northam’s wholly-owned operations continued to perform well, as reflected in the production performance detailed above.

Following the occurrence of the material adverse changes in PGM prices, Northam Holdings terminated the Northam Offer, further details of which are set out in the SENS announcement published by Northam Holdings on 5 April 2023 (“Termination Announcement”). From the date of the Termination Announcement to 18 July 2023, the Basket Price deteriorated further by almost 18%.

The Implats mandatory offer provided Northam with full investment and strategic optionality since December 2021. On 20 July 2023, Northam Holdings submitted its acceptance of the Implats mandatory offer in respect of all 100 219 552 RBPlat shares held by Northam Holdings (representing 34.5% of RBPlat shares in issue).

In light of the prevailing market conditions and negative medium‑term outlook, the Implats mandatory offer presented a unique and attractive opportunity for Northam to lock in substantial value in relation to the RBPlat shares held by Northam, with a strong cash underpin that was not adversely affected by the steep decline in PGM equity valuations across the sector. This also presented Northam with an opportunity to significantly strengthen our balance sheet and liquidity position, which in turn provides additional flexibility and optionality for Northam Holdings to, subject to the relevant regulatory requirements and approvals necessary, inter alia, potentially (i) consider the declaration of a maiden dividend; (ii) introduce a formal dividend policy; (iii) implement share buy-backs; and/or (iv) reduce Northam’s third party debt.

Capital expenditure

Capital expenditure for F2023 amounted to R5.6 billion (F2022: R4.6 billion), which includes an investment of R86.6 million to mitigate the effects of load curtailment events and to further our renewable energy strategy. Capital expenditure increased as a result of significant activity relating to the Western extension project at Zondereinde, together with the ongoing ramp-up at Eland. Capital expenditure at Booysendal related to a number of extensions to strike belts and the first significant fleet replacements.

A raft of global geopolitical issues holds the potential for further disruption to PGM markets, whilst the risk for further and more severe Eskom load curtailment events could lead to operational disruption. We continue to monitor the market and are investing in additional on-demand self-generation capacity at all of our operations, which will result in additional capital expenditure for the coming financial year. We will adjust our capital programme when and where prudent, taking into account the changing landscape.

At Zondereinde mine, stoping is ramping-up within the Western extension section and further progress has been made on the deepening project. Equipping of Number 3 shaft is in progress. Pilot drilling of 3a ventilation shaft was completed and reaming has commenced. Both shafts are scheduled to be commissioned during the 2024 calendar year. We have also commenced pilot drilling of the 3b rock hoisting shaft, which has a scheduled commissioning date in the 2028 calendar year. The construction of the headgear and winder for Number 3 shaft was also completed with shaft equipping commencing.

At the group’s metallurgical facilities, upgrades to the base metal removal plant are progressing well, and we have commenced the expansion and upgrade of our furnace slag concentrator, which will be commissioned during the first half of the 2024 financial year (“F2024”).

The development of Booysendal South mine is on track. The full complement of stoping crews is in place at the Central UG2 modules and production will reach steady-state during the course of the coming financial year. Decline development is continuing in order to increase mineable reserves and operational flexibility. Progress of the South Merensky module is on target, with focus remaining on development of the decline system, with limited stoping in the upper mining levels. Stoping is continuing at the BS4 UG2 module and will ramp-up during the remainder of F2024. Commissioning of the North aerial rope conveyor during F2022 has enabled the ramp-up of the North Merensky module to its phase two steady-state production rate.

At Eland mine, processing of ore from surface sources continues, whilst underground and open pit feed are being batch treated. Development of the Kukama and Maroelabult decline systems is progressing well, as has strike and raise development. This is increasing mineable reserves. Strike development has connected the two mining sections, which is enhancing the provision of underground services. Underground stoping ramp-up is in progress.

Conclusion

The group has delivered a strong set of results for F2023, whilst achieving significant strategic advancements, including:

  • continued progress in respect of the group’s organic growth projects, which remain on track;
  • strengthening our balance sheet and liquidity position; and
  • positioning Northam to withstand a possible protracted cyclical downturn in the PGM market.

The global economic outlook remains uncertain, resulting in volatile metal markets and exchange rates. Prevailing PGM market conditions and the material decline in the ZAR 4E basket price may signal a potentially protracted cyclical downturn. The group’s financial performance is influenced by the exchange rate and commodity prices together with the stability of Northam’s broader operating environment.

The Implats mandatory offer, with a substantial cash underpin, presented a well-timed opportunity in the prevailing PGM market for Northam to secure a very significant cash injection that materially strengthens Northam’s balance sheet and liquidity position. The Facility Restructure further strengthened our liquidity position.

Relative positioning on the industry cost curve, and the ability to retain operational flexibility and balance sheet strength, will become increasingly important over time.

We will continue to assess the PGM market, as well as our operational and cash flow requirements, and will evaluate our options in relation to the application of the consideration received pursuant to the disposal of our investment in RBPlat, in due course.

Northam has always maintained inherent optionality and flexibility in executing its growth strategy and these considerations remain key drivers to all our decisions.

The financial information contained in this announcement is the responsibility of the board of directors of Northam Holdings and has not been reviewed or reported on by Northam Holdings’ auditors, PricewaterhouseCoopers Incorporated. The audited results for Northam Holdings for F2023 are expected to be published on or about 25 August 2023.

Johannesburg
14 August 2023

Corporate Advisor and Sponsor to Northam Holdings
One Capital

Corporate Advisor and Debt Sponsor to Northam Platinum
One Capital