Share

Northam gets going with developing Tumela

Johannesburg - Northam Platinum [JSE:NHM] has hired 357 extra people to exploit the Tumela block that it paid Anglo American Platinum for in December, and last month started work on developing the asset.

Developing this block is part of the company’s plan to double its platinum group metals (PGMs) production within five years, at a time when its major rivals have been cutting back on production, selling assets and cutting jobs.

“We kicked off the development in January. We paid for the asset in December. We have development teams at 10 levels and they are already through the boundary,” Paul Dunne, Northam Platinum CEO, said during an interview on the sidelines of the Mining Indaba that took place in Cape Town this week.

The Tumela block is adjacent to Northam’s Zondereinde mine in Limpopo.

The new asset gives Northam 16.7 million ounces of platinum, palladium, rhodium and gold resources.

The inclusion of the extra resource is expected to reduce Zondereinde’s unit cost and extend its life of mine from 15 to 30 years.

The extra jobs created to develop Tumela have increased the number of people employed at Zondereinde to 6 283, from 5 926 in June, Dunne said.

“We are one of the few companies recruiting at the moment at all of our mines.

“We are going to create a good couple of thousand jobs.

“We will develop into that ground from Zondereinde. The development programme is two years. Post the two-year period, we will be able to lift the production output of Zondereinde to 350 000 ounces of platinum, palladium, rhodium and gold, up from 290 000 ounces.”

To achieve its plan to double its PGM production, Northam bought three assets.

It bought the Tumela block for R1 billion plus interest; acquired the Eland mine from Glencore, which is near Brits, for R175 million; and the Everest mine from Aquarius Platinum for R450 million.

“Effectively we are doubling the size of the company in a relatively short space of time (in five years) in relatively capital-efficient way. We still need to execute. The mergers and acquisition phase is complete. All our acquisitions have been completed and paid for. The next period will be of project execution,” Dunne said.

The company is looking to increase its output from 474 000 ounces of platinum, palladium, rhodium and gold in the year ended June 2017 to 1 million ounces by the year ending June 2022 or the year ending June 2023.

As part of the expansion in Northam’s production, the company is planning to spend R8.4 billion from its 2018 financial year to its 2022 financial year.

The Eland mine is currently on care and maintenance.

“We will go to our board in June this year with an eye on the market and we will see if we will restart.

“That transaction was concluded. We paid Glencore last week.”

Eland has the potential to produce a total of 150 000 ounces of platinum, palladium, rhodium and gold for 30 years.

“Everest is complementary to our Booysendal South ore body. We are currently developing the Booysendal South ore body for commissioning in April 2019.”

Northam is spending R4.2 billion in real terms on the development of Booysendal South.

In Northam’s past two financial years, the company has made a net loss.

In the company’s 2016 year it made a loss of R635 million and in its 2017 year it sustained a loss of R508 million.

Dunne said that Northam’s mines were making an operating profit.

“As the production grows, the profitability is expected to improve dependant on the US dollar metal prices and the rand exchange rate,” he added.

* SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.
We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.94
-0.0%
Rand - Pound
23.90
-0.0%
Rand - Euro
20.41
+0.1%
Rand - Aus dollar
12.32
+0.1%
Rand - Yen
0.13
-0.0%
Platinum
908.05
+1.2%
Palladium
1,014.94
+1.3%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders