| Mon 25 Aug 2008, 7:24 | | NHM - Northam Platinum - Reviewed preliminary announcement of results and |
|
NHM
NHM
NHM - Northam Platinum - Reviewed preliminary announcement of results and
dividend declaration for the year ended 30 June 2008
NORTHAM PLATINUM LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1977/003282/06)
Share code: NHM ISIN: ZAE000030912
("Northam Platinum" or "the company")
Reviewed preliminary announcement of results and dividend declaration for the
year ended 30 June 2008
KEY FEATURES
* Booysendal transaction implemented
* Record sales revenues
* Earnings per share up 12% to 627 cents
* Dividend of 185 cents per share declared
Consolidated Income Statement
Change Year Year
% ended ended
30 June 30 June
2008 2007
R000 R000
Sales revenue 3.9 3 886 137 3 739 805
Cost of sales (6.9) 1 608 648 1 727 945
Operating costs 19.5 1 626 610 1 360 818
Concentrates purchased - 106 447
Refining and other costs 75 540 91 816
(17.7)
Depreciation 15.7 149 325 129 040
Change in metal inventories (242 827) 39 824
Operating profit 13.2 2 277 489 2 011 860
Investment income 16.6 97 507 83 643
Net sundry income 1 824 5 303
Expenditure on Booysendal (17 969) -
Platinum Project
Profit before tax 12.3 2 358 851 2 100 806
Tax 11.8 866 040 774 562
Profit attributable to 12.6 1 492 811 1 326 244
shareholders
Reconciliation of headline
earnings
Profit attributable to 1 492 811 1 326 244
shareholders
Loss/(profit) on sale of 22 (388)
property, plant and equipment
Tax effect (6) 113
12.6 1 492 827 1 325 969
Earnings per share - cents 12.0 627.2 560.2
Fully diluted earnings per share 12.2 620.7 553.1
- cents
Headline earnings per share - 12.0 627.2 560.1
cents
Fully diluted headline earnings 12.2 620.7 553.0
per share - cents
Dividends per share - cents 330.0 525.0
Weighted average number of shares 238 006 682 236 746 919
in issue
Fully diluted number of shares in 240 522 426 239 771 782
issue
Number of shares in issue at year 238 687 500 237 226 000
end
Consolidated Balance Sheet
Non-current assets
Property, plant and equipment 1 683 910 1 536 289
Township development 36 905 35 198
Available for sale investments 8 6
Investments held by Northam Platinum 21 820 18 920
Restoration Trust Fund
Environmental Guarantee Investment 12 900 10 311
Current assets 2 363 992 1 733 264
Inventories 504 980 254 490
Trade and other accounts receivable 359 264 268 862
Cash and cash equivalents 1 499 748 1 209 912
Total assets 4 119 526 3 333 988
Share capital 2 053 194 2 030 914
Equity compensation reserve 47 179 29 777
Retained earnings 803 498 320 755
Shareholders` equity 2 903 871 2 381 446
Non-current liabilities
Deferred tax 388 055 376 163
Long-term provisions 55 858 21 749
Current liabilities 771 742 554 630
Trade and other accounts payable 322 632 211 439
Tax 449 110 343 191
Total equity and liabilities 4 119 526 3 333 988
Consolidated Cash Flow Statement
Cash flows from operations 1 546 910 1 555 025
Profit before tax 2 358 851 2 100 806
Depreciation 149 325 129 040
Change in working capital (229 697) (98 506)
Tax paid (748 229) (584 301)
Other 16 660 7 986
Cash flows utilised in investing (263 797) (211 636)
activities
Property plant and equipment
Additions to maintain operations (264 976) (187 562)
Disposals 2 888 4 522
Township development (1 707) (28 596)
Investments (2) -
Cash flows utilised in financing (993 277) (964 763)
activities
Proceeds from issue of shares 22 280 12 128
Dividends paid (1 010 068) (970 332)
Increase in investments held by Northam (2 900) (2 527)
Platinum Restoration Trust Fund
Increase in investments held by (2 589) (4 032)
Environmental Guarantee Fund
Net increase in cash and cash 289 836 378 626
equivalents
Cash and cash equivalents at beginning 1 209 912 831 286
of period
Cash and cash equivalents at end of 1 499 748 1 209 912
period
Consolidated Statement of Changes in Equity
Year Year
ended ended
30 June 30 June
2008 2007
R000 R000
Equity at beginning of period as 2 381 446 2 001 632
previously stated
Profit attributable to shareholders 1 492 811 1 326 244
Credit in respect of share based 17 402 11 774
payments
Issue of new shares 22 280 12 128
Dividends distributed (1 010 068) (970 332)
Equity at end of period 2 903 871 2 381 446
Capital Commitments
Authorised but not contracted 248 699 179 380
Contracted 91 466 25 712
340 165 205 092
Other Commitments
Information Technology Outsource Service
Provider
Due in one year 1 889 8 851
Due in two to five years - 1 868
Operating lease rentals - office
equipment
Due in one year 270 114
Due in two to five years 191 31
Operating lease rentals - premises
Due in one year 598 99
Due in two to five years 1 110 -
Employee housing development
Contracted 16 000 1 913
These commitments will be financed out of operating cash flows.
Operating Statistics
Change Year Year
% ended ended
30 June 30 June
2008 2007
R000 R000
Merensky
Development metres (16.8) 9 615 11 555
Square metres mined (17.8) 205 251 249 812
Tonnes milled (21.0) 1 059 624 1 341 057
Head grade (g/ton - 3 5.6 5.6
PGEs + Au)
Available ore reserves 18 15
in months
UG2
Development metres (4.6) 3 117 3 267
Square metres mined 7.9 158 294 146 698
Tonnes milled 3.8 963 033 928 149
Head grade (g/ton - 4.4 4.4
3 PGEs + Au)
Available ore reserves 21 24
in months
Combined
Development metres (14.1) 12 732 14 822
Square metres mined (8.3) 363 545 396 510
Tonnes milled (10.9) 2 022 657 2 269 206
Head grade (g/ton - 5.0 5.1
3 PGEs + Au)
Financial Statistics
Precious metals in kg (9.7) 9 113 10 087
concentrates produced *
Precious metals in kg - 404
concentrates purchased *
Precious metals sold * kg (19.8) 8 586 10 703
Average price realised * R/kg 37.6 409 159 297 292
Operating costs * R/kg 29.9 193 409 148 872
Cash operating costs * R/kg 29.5 175 197 135 248
Precious metals in oz (9.7) 292 989 324 296
concentrates produced *
Precious metals sold * oz (19.8) 276 059 344 101
Average price realised * US$/oz 33.7 1 722 1 288
Operating costs * US$/oz 27.7 821 643
Cash operating costs * US$/oz 27.4 744 584
Average exchange rate US$1.00 2.9 7.39 7.18
realised = R
* - 3PGE + Au
Operating cost per tonne R/tonne 31.6 871 662
milled
Cash cost per tonne R/tonne 31.3 789 601
milled
COMMENT ON RESULTS
Introduction
The past year has been a watershed year for Northam with the signing of the
agreements for the acquisition of the Booysendal Platinum Project (Booysendal).
Shareholders voted in favour of the transaction on 6 June 2008.
Booysendal, which is located towards the southern extent of the Eastern Limb of
the Bushveld Complex, is a world class asset containing a resource of 103.4
million ounces of 3PGE + Au. The area covers approximately 150 square kilometres
over a strike length of approximately 14.5km.
The implementation of this transaction, which is discussed in more detail below,
has resulted, inter alia, in Anglo Platinum Limited disposing of its
shareholding in Northam to Mvelaphanda Resources Limited (Mvela Resources). This
disposal, together with the 121 million consideration shares issued by Northam
to Mvela Resources for Booysendal, has resulted in the Mvela Resources`
shareholding in Northam increasing to 62.8%.
Financial results
The average US Dollar price received for Northam`s basket of metals increased by
33.7% to US$1 722 per ounce, which, together with a 2.9% weaker Rand, resulted
in the average Rand basket price received increasing by 37.6% to R409 159 per
kg. As anticipated, production of metals in concentrate during the reporting
period declined by 9.7%. The lower output, together with an increase in metal
inventories, accounted for the 19.8% drop in unit sales to
8 586 kg (276 059 oz), partially offsetting the benefits of the higher rand
metal prices received, and limiting the increase in sales revenue, at R3 886
million, to 3.9%.
Total operating costs increased by 19.5% from R1 361 million to
R1 627 million, reflecting inflationary cost pressures. The lower metal
production adversely impacted unit cash costs, which, year on year, were 29.5%
higher at R175 197/kg.
Refining and other costs decreased by 17.7% to R76 million compared to the
previous year, as a result of a 62.3% decline in nickel refining costs, which
costs are linked to fluctuations in the nickel price.
Cost of sales fell by 6.9% to R1 609 million, primarily as a result of an
increase in metal inventories. The increase in metal inventories is attributable
to the increase in unit operating costs (R70 million) and an increase in reverts
(R173 million) which will be treated once the smelter rebuild, discussed below,
is complete.
Operating profit was 13.2% higher at R2 277 million, with the operating margin
increasing to 58.6% from 53.8% in the financial year ended 30 June 2007.
Improved cash flows and higher interest rates had a positive impact on
investment income which was 16.6% higher at R98 million. Net sundry income
reduced by some R3.5 million to R1.8 million compared to the previous year.
Costs associated with the Booysendal Platinum Project, which included
transaction costs of R8.3 million, amounted to R18 million.
As a consequence of the above, profit attributable to shareholders increased by
12.6% to R1 493 million, with headline earnings per share increasing from 560.1
cents per share to 627.2 cents per share.
The major items contributing to the capital expenditure of R265 million were:
development expenditure (R89 million); access infrastructure to 1 and 14 levels
(R24 million); upgrading of the backfill reticulation system (R12 million);
extensions to the hydropower infrastructure (R6 million); critical spares and an
additional crusher in the concentrator plant (R21 million); upgrading of IT
systems (R7 million); additional accommodation for employees (R19 million). The
balance comprised routine capital expenditure.
Employee participation scheme
The company has entered into an agreement with the representative unions at the
Northam mine in terms of which the company has undertaken to contribute 4% of
its after-tax profits to a specially registered trust (the Toro Employee
Empowerment Fund), providing the Northam mine`s unskilled and semi-skilled
employees an opportunity to participate in the profits of the company. Eligible
employees will receive payment at the end of each five year cycle, starting with
effect from 2013. This development, a requirement of the Booysendal Transaction
agreements, will provide employees with a vested interest in the operating
performance of the company, without being exposed to potential volatility in the
market price of Northam.
The participation in the scheme of employees at the future Booysendal mine will
be addressed in due course.
Safety and health
The board deeply regrets that three employees lost their lives in mining related
accidents during the year and conveys their sincere condolences to their
families and colleagues.
Other safety indicators, such as lost time and reportable injury rates, showed a
marginal improvement on the previous financial year. The board is totally
committed to the reduction of mine accidents and is fully supportive of the
combined efforts of management, the Department of Minerals and Energy (DME), and
organised labour in promoting a culture which seeks to empower employees in
taking responsibility for their health and safety, and to protect employees from
the inherent risks of mining operations.
Northam mine - operating performance
Safety related closures in the first half of the year, together with operational
difficulties arising from intermittent power supply from Eskom and industrial
action, impacted on production from South African PGM producers in general. As
anticipated, the Northam mine`s performance was exacerbated also by the ongoing
difficult geological and mining conditions on the Merensky pothole facies. As a
result, tonnages mined from this horizon declined by 17.8%.
Continued improvements in the metallurgical operations however, allowed for an
increase in the proportion of UG2 treated and a corresponding 3.8% increase in
UG2 production, thereby containing the decline in total tonnage mined and milled
to 8.3% and 10.9% respectively. As anticipated, the greater proportion of lower
grade UG2 tonnage being milled resulted in the average head grade declining by
some 2% to 5.0 g/t (3PGE+Au).
As a result of the lower tonnage and head grade, production of metal in
concentrates declined by 9.7% from 10 087 kg (324 296 oz) to 9 113 kg (292 989
oz).
While the metallurgical operations performed satisfactorily during the year, the
increased proportion of UG2 tonnage milled also impacted on recoveries, with
overall recoveries declining marginally from 84.3% in 2007 to 83.0%. As part of
the planned metallurgical maintenance programme, the smelter will be shut down
for a scheduled re-build at an estimated cost of R45 million. The re-build will
commence in October 2008 and is planned to be completed at the beginning of
December 2008, with recommissioning due towards the end of December 2008. During
this period the concentrates will be processed in terms of a toll treatment
agreement.
Booysendal Transaction update
In a joint announcement dated 19 August 2008, shareholders were advised that
implementation of the Booysendal Transaction had commenced. Consequently the 121
million Northam consideration shares for Booysendal have been allotted and
issued to Mvelaphanda Equity (Proprietary) Limited, a wholly-owned subsidiary of
Mvela Resources, resulting in the issued share capital of Northam increasing to
359 687 500 ordinary shares of 1 cent each. The first 50% of the Booysendal
Platinum Project ("Booysendal") has been transferred to Northam, and the
remaining 50% has been pledged and held in escrow by Northam pending conversion
of the old order mining title over Booysendal.
Application for the conversion of the Old Order Mining Title covering nine of
the eleven Booysendal farms, and for the grant of Mining Title over the
remaining two farms presently held under New Order Prospecting Rights, has been
lodged with the DME and is currently being processed.
On the grant of the new order mining rights, the implementation will be
complete.
Booysendal project - progress report
A review of the pre-feasibility study on the Booysendal project has been
concluded, with significant additional work having been done on producing
geological models on both reef horizons. A number of possible extraction
scenarios/options have been considered, with initial projections confirming the
economic viability of the Booysendal project.
These options will be tested and refined and a final decision made on the
Booysendal project following a bankable feasibility, which is due to start in
September 2008, at a planned cost of
R50 million.
Prospects
In the absence of any unforeseen production interruptions, metal production at
the Northam mine in the year ahead is likely to be marginally higher than that
achieved in the past year. Management at Northam continues to work closely with
Eskom to ensure optimal operations, in line with Eskom`s guidelines.
Whilst unit cash operating costs are expected to increase, earnings will be
determined largely by the average Rand basket price received in F2009. The
supply-demand position in the market for platinum group metals remains
fundamentally sound and prices are expected to improve from their current
levels.
Expansion prospects
Pandora
Upon the successful conclusion of the Booysendal transaction, the 7.5% interest
in the Pandora Joint Venture, currently warehoused by Mvela Resources, will be
assigned to the company. Pandora is expected to contribute approximately R1.5
million per month to Northam`s profit before tax.
Platmin Limited off-take agreement
Northam has recently signed an off-take agreement with Pilanesberg Platinum
Mines (Proprietary) Limited (Pilanesberg) (TSX-listed Platmin Limited`s new PGM
mine in the western Bushveld Complex), purchasing the PGM concentrates from the
Pilanesberg mine. The mine is due to commence production in the first quarter of
the 2009 calendar year. There will be no significant effect on earnings in
F2009.
Audit review
Ernst & Young Inc., the group`s auditors, have reviewed the financial results. A
copy of their unqualified report is available for inspection at the company`s
registered office.
Accounting policies - basis of preparation
The financial statements have been prepared on the historical cost basis, except
for financial instruments that are fairly valued, in accordance with IAS 34 -
Interim Reporting, issued by the International Accounting Standards Board and
incorporate the accounting policies which are consistent with those adopted in
the financial year ended 30 June 2007, with the exception of the adoption of the
following policies in response to changes in International Financial Reporting
Standards (IFRS):
* IFRS 4 - Insurance contracts
* IFRS 7 - Financial instruments - disclosure
* IAS 1 - Presentation of financial statements
* IFRIC 11/IFRS 2 - Group and treasury share transactions.
The adoption of these amendments, standards and interpretations will result in
additional disclosures in the financial statements, but did not have any impact
on the preliminary results.
Related parties
The group, in the ordinary course of business, enters into various sale,
purchase and lease transactions with a large number of entities, some of whom
are related parties. All transactions were concluded on an arm`s length basis.
Segmental reporting
The group`s primary segment reporting format is by business segment. During the
reporting period the group derived its sales revenue from customers in Europe,
Japan, North America and South Africa, with accounts receivable at the end of
the reporting period comprising amounts receivable from entities in the
abovementioned countries.
Directorate
The following changes occurred during the period under review:
* Mr Norman Mbazima resigned as a director on 20 August 2008.
Dividend
Dividend number 19 of 185 cents per share has been declared in South African
currency, in respect of the year ended 30 June 2008. In compliance with the
requirements of Strate Limited, the following dates are applicable:
Last day to trade (cum div) Friday, 12 September 2008
Last day to trade (ex div) Monday, 15 September 2008
Record date Friday, 19 September 2008
Payment date Monday, 22 September 2008
No share certificates may be dematerialised or rematerialised between Monday, 15
September 2008 and Friday, 19 September 2008, both days inclusive.
On behalf of the board
P L Zim G T Lewis
Chairman Chief Executive Officer
Johannesburg
22 August 2008
Registered Office
1st Floor, Block 1A PO Box 412694
Albury Park Craighall
Magalieszicht Avenue 2024
Dunkeld West Republic of South Africa
Johannesburg
JSE code: NHM ISIN code: ZAE000030912
Directors: P L Zim (Chairman), G T Lewis (Chief Executive Officer) (British), M
E Beckett (British), Ms N J Dlamini (Dr),
R Havenstein, Ms E T Kgosi, P C Pienaar, B R van Rooyen
Company Secretary: S J van der Spuy
These results are available on our website at www.northam.co.za
Date: 25/08/2008 07:24:23 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
