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Johannesburg - The mining ministry has given Northam Platinum [JSE:NHM], South Africa’s second biggest platinum producer, the green light to acquire Anglo American Platinum’s Amandelbult property for R1bn.
This is just the latest acquisition in Northam’s ambitious buying spree, which saw it buy various assets in the last two years as part of its vision to become a 1 million ounce a year platinum group metals (PGM) producer.
Reporting its results for the year to end-June 2017 on Friday, the group said that in the past year it continued on its expansion path of growing production down the cost curve, both organically and through acquisitions.
In line with its external growth ambitions, Northam acquired the Tumela block's mineral resources from Anglo American Platinum. The miner is in the process of acquiring the mothballed Eland Platinum mine from Glencore, and also acquired the Everest South mine and concentrator from Aquarius Platinum for R450m.
In July, Northam announced a R142.7m deal to obtain PGM recycling equipment in the US.
Gaining the necessary permission from the ministry to buy was a key requirement for the transaction to proceed.
Northam chief executive officer Paul Dunne said: “Northam is pleased to have achieved this significant milestone and looks forward to concluding the transaction in due course.”
Increased losses
As a result of its ambitions, Northam reported a headline loss per share for the year to end-June of 181.8c, higher than the previous year's 145.3c. This is despite the two mining operations Zondereinde and Booysendal posting record operating profits, increasing from R508.3m last year to R635.9m for the last period.
“Given the continuing difficult conditions in the mining industry, and taking into consideration the cash requirements to fund the development of the group's project pipeline and growth strategy, the board has resolved not to declare a final dividend for the 2017 financial year,” Northam stated.
Northam said its group sales revenues increased 12.6% to a record R6.9bn on the back of a higher US dollar and an increase in base metal prices.
However, the stronger average exchange rate of the rand to R13.63 to the dollar tempered the increase in total revenue, Northam stated.
Group operating profit rose by 60.2% to R614.0m. Its cash profit per equivalent of an ounce of refined platinum rose by 44% to R5 314/oz.
Operating profit
Both Zondereinde and Booysendal recorded an operating profit. Improved operational performance at Booysendal saw metal in concentrate production increase by 23.6%. Booysendal North recorded a 23.6% production rise, while Zondereinde's year-end output was only marginally lower year-on-year, as it largely overcame the effects of a workforce reorganisation and an 18-day outage of a milling circuit during the first half of the financial year, Northam stated.
Northam’s capital expenditure rose 40.1% to R1.6bn, as the group continued with the development of its expansion projects at both Booysendal and Zondereinde.
With the increased capital expenditure in support of Northam’s production growth strategy, cash balances were lower, which impacted the miner’s revenues. As a result investment fell by 36.9% to R167.3m.
The mining company reported a positive cash balance of R1.8bn at year-end. Its non-cash preference share dividend charge increased from R918.8m to R1bn.
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