Northam posts record dividend payout
Northam Platinum reported higher earnings and declared a record dividend as increased platinum group metals (PGM) prices lifted revenue. The company’s revenue for the year to end-June rose 64% to R54bn, while headline earnings increased to R12bn from R1.5bn.
The increase in revenue was largely driven by higher platinum, rhodium, chrome, and palladium prices. However, the cost of sales increased to R39.9bn from R29.3bn, and operating costs rose to R29bn from R24bn.
Northam produced a record total equivalent refined PGMs from its own operations of 938,754oz, up 4.4%. This takes the group within sight of its goal, which it set in 2015, of growing own production to 1-million ounces.
Chrome concentrate production increased 17.4% to a record 1.69-million tonnes. Total metal sold rose by 8% to 1.087-million ounces.
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The reported profit included several non-operating and one-off items. Northam received a one-off $66m payment from Heraeus Precious Metals relating to historical refining and interest.
Cash generated from operations increased to R17.6bn from R5.3bn, while cash flow from operating activities was R18.5bn, compared with R4.7bn in the previous year.
Northam also increased its minimum dividend payout policy to 40% of headline earnings from 25%. It declared a record final dividend of 1,000c a share, taking the total dividend for the year to 1,700c a share, equivalent to 56.7% of headline earnings.
Capital spending was R5.9bn during the year, comprising expansionary and sustaining capital expenditure. At Zondereinde, near Thabazimbi in Limpopo, the No 3 shaft project came into operation in June.
The mine also began receiving power from an 80MW solar facility during the year. The facility supplies the main shaft and smelter complex under a 20-year power purchase agreement.
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Northam has estimated its renewable energy programme at R2.2bn over the next 24 months. At Eland, near Brits in the North West, a hybrid power plant is being developed under an engineering, procurement, and construction contract.
The company said an increase in PGM prices also resulted in a reversal of an impairment previously recognised against Eland. Northam reversed R2.5bn of the impairment after reassessing the operation using higher long-term commodity price assumptions.
Northam had R15bn available under its domestic medium-term note programme, of which R11.1bn had been used at year-end. Its revolving credit and general banking facilities were undrawn. The revolving credit facility was increased to R15bn after year-end.
They tested whether they could continue operating if commodity prices were 10%-20% lower and if spot prices remained at present levels for a prolonged period. They said they could respond to pressure on their finances by raising additional funding, refinancing debt, reducing or suspending dividends, and cutting expansionary capital spending.
