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The broadening market consensus is that supply and demand fundamentals will continue to support robust pricing for platinum, and this, together with Northam Platinum's growth profile, places the Johannesburg Stock Exchange-listed platinum group metals (PGM) group in a strategically strong position, Northam CEO Paul Dunne highlighted during his presentation of record dividend interim financial results on Friday, February 27.
Following the display of platinum gauze used to produce cardiac stents has an indication of the widespread use of this very special metal, Dunne reported that all three of Northam's mines had performed well in the six months to December 31.
"Once again we've published record production and record sales volumes and significant appreciation in price for all of our metals led to a 60% increase in revenue to R23.3-billion rand," Dunne reported.
Royalty charges grew by 257% on the back of higher revenue and improved profitability.
Northam has continued to progress its project pipeline, in particular the development of the Eland mine, 3 Shaft project at the Zondereinde mine, further upgrades to metallurgical facilities, the expansion of the Booysendal South tailings facility, and a meaningful carbon footprint reduction.
If all goes to plan, 3 Shaft will be operational in April, and displayed was the picture of a raise bore rig which has begun to ream 4 Shaft, the next component in realising full value from Zondereinde's western extension.
"Incidentally, this is the largest machine of its kind in the world, and 4 Shaft will be a record-breaking raise bore undertaking," said Dunne at the event covered by Mining Weekly.
"We will accelerate all of our projects as far as we are able. The world needs PGMs and primary supply continues to fall.
"The benefit of our counter cyclical investment strategy is becoming very evident, and the board has declared a record interim dividend of R7 per share, indicating confidence in the market and the future of our company," Dunne pointed out, while displaying a picture of the expanded chrome recovery circuit at Eland, which was commissioned in December.
This will improve chrome yields from underground ore to at least 25% and considerably more Eland chrome output is expected.
Northam CFO Alet Coetzee reported that continuing investment in organic growth had led to R2.6-billion.
"The benefits of the full mine-to-market value chain for chrome is clear, as is that of the historically termed minor metals, iridium and ruthenium. These together contributed 18.2% or R4.2 billion rand to our revenue," Coetzee reported.
Sales revenue increased by 60% while cost of sales increased by 29.4% This led to a significant rise in our operating profit to R5.8-billion at an operating margin of 25.1%.
Movements and the individual elements making up cost of sales include mining operating costs increasing by 11%. This is attributable to an 8.9% increase in square meters mined, together with an average wage increase of approximately 6.5%.
Smelting and base metal removal plant costs increased by 19.8% owing to increases in both tons smelting as well as a 15.5% Eskom tariff hike.
Share based payments increased from a low base to over R1.2-billion as a result of share price appreciation, while contributions to the employee empowerment trust and profit share schemes benefited from growth in profits.
The total cost of purchase concentrates and recycling material increased by 130% to R3.5-billion due to metal price appreciation on higher volumes purchased.
Refining cost increased by 28.1% to R267.1million on the back of higher refined six-element volumes.

Consensus is broadening that robust platinum pricing will continue, Northam reports

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