Northam Platinum’s PGMs Production Climbs in 2018

Northam Platinum (JSE:NHM) produced 571,843 ounces of equivalent refined six-element (6E) platinum-group metals (PGMs) for the period ended June 30, the company announced.

Northam stated on Monday (August 27) that its PGMs production rose 4.5 percent year-on-year, largely due to strong operational performance at its Zondereinde mine in Limpopo, which produced 348,888 ounces of equivalent refined 6E, an increase of 7 percent from this time last year.

“Owing to the group’s mining capacity exceeding its processing capacity before and during the current financial period, there has been an inventory build-up,” Northam said.

“The bulk of the excess inventory, which is estimated at 170,000 ounces, is expected to be processed through the expanded smelter complex in F2019. The value of excess inventory at year-end amounted to R2.1 billion, with an estimated sales value of R2.5 billion,” the company added.

Hitting a slight snag during the 2018 financial year, the company reported that its Booysendal mine, also in Limpopo, was negatively affected by a work stoppage in May, when it changed from a contract-mining model to an owner-mining model, slowing output levels.

Northam reported that Booysendal produced metal in concentrate of 229,275 6E ounces, compared to the 239,643 6E ounces in the 2017 financial year — a 4.5-percent decrease in production for the mine.

Despite minor mine woes, Northam noted that its growth, diversification and optimization strategy remains on track. Progress has been made in the development of the Booysendal South mine and at Zondereinde, with the successful commissioning of a second 20-megawatt furnace.

The company has also been expanding with the acquisition of growth assets, including the Western Block resource adjacent to the Zondereinde mine for R1 billion, the Eland mine for R175 million and US-based recycling assets at R3.8 billion.

In terms of the company’s financial standing, Northam reported that both Zondereinde and Booysendal produced healthy cash margins in the face of harsh market conditions and higher operating costs.

Earnings are expected to increase from R967 million this time last year to about R1.1 billion, with normalized headline earnings expected to be approximately R420 million compared to R398 million in the prior comparable period.

The miner will post its full financial results on or around September 7. As of 11:24 a.m. EST on Monday, Northam was trading at ZAC 3,838.00.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.