| Thu 5 Feb 2009, 7:05 | | NHM - Northam Platinum - Reviewed Interim Results And Dividend Declaration For |
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NHM
NHM
NHM - Northam Platinum - Reviewed Interim Results And Dividend Declaration For
The Six Months Ended 31 December 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 interim results and dividend declaration
for the six months ended 31 December 2008
KEY FEATURES
* Metals produced up by 10.7%
* Sales revenue increases by 7.7%
* Increase in cash operating costs held to below inflation
* Smelter refurbishment completed on schedule and within budget
* Booysendal bankable feasibility study on track
Consolidated Income Statement
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 December 31 December 30 June
Change 2008 2007 2008
% R000 R000 R000
Sales revenue 7.7 1 612 257 1 497 084 3 886 137
Cost of sales 42.7 1 010 220 708 090 1 608 648
Operating costs 21.6 970 262 797 819 1 626 610
Concentrates 14 029 - -
purchased
Refining and 77 878 35 085 75 540
other costs
Depreciation 106 897 71 999 149 325
Change in metal (158 846) (196 813) (242 827)
inventories
Operating profit 602 037 788 994 2 277 489
Investment income 72 434 40 868 97 507
Net sundry income 22 758 (1 130) 1 824
Expenditure (41 617) (5 709) (17 969)
incurred on
Booysendal
Platinum Project
Profit before tax (20.3) 655 612 823 023 2 358 851
Tax 284 607 350 432 866 040
Profit (21.5) 371 005 472 591 1 492 811
attributable to
shareholders
Reconciliation of
headline earnings
Profit 371 005 472 591 1 492 811
attributable to
shareholders
Loss on sale of 7 97 22
property, plant
and equipment
Tax effect (2) (28) (6)
Headline earnings (21.5) 371 010 472 660 1 492 827
Earnings per share (43.0) 113.5 199.0 627.2
- cents
Fully diluted (43.5) 113.5 197.8 620.7
earnings per share
- cents
Headline earnings (43.0) 113.5 199.0 627.2
per share - cents
Fully diluted (43.5) 113.5 197.8 620.7
headline earnings
per share - cents
Dividends per 38.0 145.0 330.0
share - cents
Weighted average 326 813 788 237 529 261 238 006 682
number of shares
in issue
Fully diluted 327 017 786 238 961 044 240 522 426
number of shares
in issue
Number of shares 359 715 500 238 146 000 238 687 500
in issue
Consolidated Balance Sheet
Non-current assets
Property, plant and 7 378 556 1 563 103 1 683 901
equipment
Available-for-sale 8 6 8
investments
Township development 52 905 36 903 36 905
Investments held by
Northam Platinum
Restoration Trust Fund 22 820 19 911 21 820
Environmental Guarantee 23 400 13 350 12 900
Investment
Current assets 1 591 188 1 324 248 2 363 992
Inventories 680 944 457 486 504 980
Trade and other 179 553 181 892 359 264
receivables
Cash and cash 730 691 684 870 1 499 748
equivalents
Total assets 9 068 877 2 957 521 4 119 526
Share capital and share 7 619 670 2 043 197 2 053 194
premium
Equity compensation 38 054 38 859 27 584
reserve
Retained earnings 528 676 129 113 823 093
Shareholders` equity 8 186 400 2 211 169 2 903 871
Non-current liabilities
Deferred tax 411 708 385 091 388 055
Long-term provisions 59 068 23 574 55 858
Current liabilities 411 701 337 687 771 742
Trade and other payables 204 408 162 997 229 449
Tax 109 607 114 251 449 110
Short-term provisions 97 686 60 439 93 183
Total equity and 9 068 877 2 957 521 4 119 526
liabilities
Net asset value - cents 2 276 928 1 217
per share
Consolidated Cash Flow Statement
Cash flows from operations 158 948 231 553 1 546 908
Profit before tax 655 612 823 023 2 358 851
Depreciation 106 897 71 999 149 325
Change in working capital (21 294) (106 590) (265 004)
Change in provisions 4 503 2 561 35 305
Tax paid (600 457) (570 444) (748 229)
Other 13 687 11 004 16 660
Cash utilised in investing (251 559) (100 615) (263 795)
activities
Property plant and
equipment
Additions to maintain (235 759) (100 153) (264 976)
operations
Disposal proceeds 200 1 243 2 890
Additions to township (16 000) (1 705) (1 707)
development
Increase in available-for- - - (2)
sale investments
Cash utilised in financing (676 446) (655 980) (993 277)
activities
Proceeds from issue of 476 12 283 22 280
shares
Dividends paid (665 422) (664 233) (1 010 068)
Increase in investments
held by Northam
Platinum Restoration Trust (1 000) (991) (2 900)
Fund
Increase in investments
held by
Environmental Contingency (10 500) (3 039) (2 589)
Fund
Net (decrease)/increase in (769 057) (525 042) 289 836
cash and cash equivalents
Cash and cash equivalents 1 499 748 1 209 912 1 209 912
at beginning of period
Cash and cash equivalents 730 691 684 870 1 499 748
at end of period
Consolidated Statement of Changes in Equity
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2008 2007 2008
R000 R000 R000
Equity at beginning of 2 903 871 2 381 446 2 381 446
period
Credit in respect of share 10 470 9 082 17 402
based payments
Profit attributable to 371 005 472 591 1 492 811
shareholders
Issue of new shares 5 566 476 12 283 22 280
Dividends distributed (665 422) (664 233) (1 010 068)
Equity at end of period 8 186 400 2 211 169 2 903 871
Capital Commitments
Authorised but not 129 862 90 199 248 699
contracted
Contracted 49 617 85 127 91 466
179 479 175 326 340 165
Other Commitments
Information Technology
Outsource Service Provider
Due in one year 10 611 4 549 1 889
Due in two to five years 20 832 - -
Operating lease rentals -
office equipment
Due in one year 194 172 270
Due in two to five years 135 192 191
Operating lease rentals -
premises
Due in one year 624 512 598
Due in two to five years 794 1 417 1 110
Housing development - 407 16 000
These commitments will be financed out of operating cash flows.
Operating Statistics
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 December 31 December 30 June
Change 2008 2007 2008
% R000 R000 R000
Merensky
Development metres 4 007 5 112 9 615
(21.6)
Square metres mined 3.7 107 752 103 920 205 251
Tonnes milled 6.9 582 740 544 981 1 059 624
Head grade (g/ton - 3 5.8 5.6 5.6
PGEs + Au)
Available ore reserves 22 19 18
- months
UG2
Development metres 72.4 2 265 1 314 3 117
Square metres mined 18.2 88 248 74 644 158 294
Tonnes milled 21.0 579 751 479 261 963 033
Head grade (g/ton - 3 4.4 4.4 4.4
PGEs + Au)
Available ore reserves 22 24 21
- months
Combined
Development metres (2.4) 6 272 6 426 12 732
Square metres mined 9.8 196 000 178 564 363 545
Tonnes milled 13.5 1 162 491 1 024 242 2 022 657
Head grade (g/ton - 3 5.1 5.0 5.0
PGEs + Au)
Financial Statistics
Precious metals in kg 10.7 5 193 4 689 9 113
concentrates produced *
Precious metals in kg 15 - -
concentrates purchased *
Precious metals sold * kg 10.2 4 599 4 173 8 586
Average price realised * R/kg 3.7 322 814 311 369 409 159
Operating costs * R/kg 11.8 207 433 185 510 193 409
Cash operating costs * R/kg 9.8 184 213 167 828 175 197
Precious metals in oz 10.7 166 952 150 755 292 989
concentrates produced *
Precious metals in oz 482 - -
concentrates purchased *
Precious metals sold * oz 10.2 147 864 134 165 276 059
Average price realised * US$/oz (14.3) 1 197 1 396 1 722
Operating costs * US$/oz (12.6) 727 832 821
Cash operating costs * US$/oz (14.1) 646 752 744
Average exchange rate US$1.00 21.0 8.40 6.94 7.39
realised = R
* - 3PGE + Au
Operating cost per tonne R/tonne 9.5 930 849 871
milled
Cash costs per tonne R/tonne 7.0 822 768 789
milled
COMMENT ON RESULTS
Financial results
Sales revenues for the reporting period increased by 7.7% to R1 612 million on
the back of an improved operating performance at the Northam mine, which
reported increased production in concentrate and sales of metal, together with
a modestly better average rand basket price received over the period. The 21%
weakening of the rand against the US dollar was instrumental in offsetting the
14.3% decline in the average US dollar price received for Northam`s basket of
metals at US$1 197 per ounce.
Total operating costs at R970 million were impacted by inflationary increases
in the cost of labour, consumables and services, and the 10.7% increase in
production. Unit cash costs, however, were held to R184 213/kg, an increase of
9.8% while unit costs per tonne milled increased by only 7.0% to R822.
Costs associated with refining increased by R42 million, largely as a result
of the toll treatment charges incurred during the rebuild of the smelter,
which was commissioned on schedule and within budget in December 2008. Costs
relating to a change in metal inventories were R38 million lower than in the
previous comparable period, and concentrates to the value of R14 million were
purchased. As a result of these additional costs, the operating profit for the
period declined by 24% to R602 million with an operating margin of 37% being
achieved.
Investment income increased by 77.2% as a result of higher interest rates,
while net sundry income of R23 million comprised primarily currency
translation gains (R24 million) and royalties from the chrome recovery plant
(R12 million). This was partially offset by costs of R16 million incurred in
respect of the unsolicited proposed bid by Impala Platinum Holdings Limited
(Implats) to acquire Northam, whilst costs attributable to the Booysendal
platinum project amounted to R42 million. This amount included transaction
costs and costs associated with the bankable feasibility study.
Profit attributable to shareholders decreased by 21.5% to R371 million
compared with that for the six months ended 31 December 2007.
Cash flows reflect a net decrease of R769 million. This decrease is
attributable to, inter alia, R665 million paid in respect of the final
dividend for the year ended 30 June 2008 and capital expenditure of R236
million. Major items include R71 million on the once-off smelter rebuild, R41
million on access infrastructure to 18 level, R11 million on development and
R26 million on additional employee accommodation.
Changes in share capital
During the period under review, 121.0 million shares were allotted and issued
to Mvelaphanda Resources Limited pursuant to the acquisition of Booysendal.
These shares, together with 28 000 shares allotted and issued in terms of the
rules of the Northam Share Option Scheme, resulted in the issued share capital
increasing to 359 715 500 shares of 1 cent each.
Safety
Safety indicators, such as lost time and reportable injury rates, showed a
good improvement on the previous financial year. The board remains fully
supportive of the combined efforts of management, organised labour and the
Department of Minerals and Energy (DME) in promoting a culture which seeks to
empower employees to take responsibility for their health and safety, and so
protect them from the inherent risks of mining operations.
The board deeply regrets that two employees lost their lives in separate
mining related accidents during the period and conveys its sincere condolences
to their families and colleagues
Northam mine - operating performance
Production of metals in concentrates during the period increased by 10.7% to 5
193 kg (166 952 oz) and unit sales increased by 10.2% to 4 599 kg (147 864
oz). Tonnages milled from both the Merensky and UG2 reefs were 13.5% higher at
1 162 491 tonnes while the combined average head grade rose by some 2.0% to
5.1 g/t (3PGE+Au), reflecting the improved grade of 5.8g/t from the Merensky
reef.
Despite a decrease of 2.4% in total development metres, Merensky ore reserve
availability increased from 19 months to 22 months. The UG2 ore reserve
availability remained satisfactory at 22 months.
Booysendal project - progress report
The Booysendal bankable feasibility study has progressed according to plan and
remains scheduled for completion during the second half of this calendar year.
Trade-off studies for alternative mining designs have been completed with the
conclusion that a mechanised mining approach would be the preferred option.
Work by specialist consulting teams is progressing well on the metallurgical
design, infrastructure and environmental components of the project.
As indicated at the end of the 2008 financial year, a modular design and
incremental production build-up remains the preferred method of developing the
Booysendal mine. This approach should provide maximum flexibility in
implementation, with the initial emphasis of the study focusing on a single
120 000 tonne per month UG2 production unit that will be replicated as the
availability of power and market conditions allow.
Termination of discussions with Implats
In a joint cautionary announcement dated 2 October 2008, shareholders were
advised that Implats had expressed an interest, through a series of inter-
conditional transactions, in acquiring the entire issued capital of Northam.
Due to the deteriorating global economic climate and the resultant volatility
in commodity and share prices the parties were unable to agree on an equitable
exchange ratio reflecting the intrinsic value of Northam. Discussions were
therefore terminated and shareholders were so advised on 14 January 2009.
Prospects
Production of metals in concentrate is expected to be marginally lower in the
second half of the year, whilst sales of PGMs are expected to be in line with
those of the first half. Given the prevailing uncertainty in the global
economic climate, and its dampening effect on commodity prices, the rand
basket price is likely to remain at current levels in the medium term. This
should result in earnings in the second half of the financial year being
commensurately lower than the first half.
At current spot metal prices, the company is cash positive at an operating
level, has no debt and should be able to develop Booysendal from a combination
of internal retentions and medium-term loan finance.
Impairment
Management has performed an impairment test on the Northam mine and the
Booysendal project which has been reviewed by the group`s auditors. Both
management and the auditors are satisfied that no impairment is necessary.
Audit review opinion
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 interim 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 2008, with the
exception of the adoption of the following policies in response to changes in
International Financial Reporting Standards (IFRS):
* IAS 39 & IFRS 7 - Reclassification of Financial Assets - Amendments to IAS
39 - Financial Instruments: Recognition and Measurement and IFRS 7 - Financial
Instruments: Disclosure,
* IFRIC 12 - Service Concession Agreements.
* IFRIC 13 - Customer Loyalty Programmes.
* IFRIC 14 - IAS 19 - The limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction.
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 interim 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.
Dividend
Dividend number 20 of 38 cents per share has been declared in South African
currency, in respect of the six months ended 31 December 2008. In compliance
with the requirements of Strate Limited, the following dates are applicable:
Last day to trade (cum div) 27 February 2009
Last day to trade (ex div) 2 March 2009
Record date 6 March 2009
Payment date 9 March 2009
No share certificates may be de-materialised or re-materialised between
Monday, 2 March 2009 and Friday, 6 March 2009, both days inclusive.
On behalf of the Board
P L Zim G T Lewis
Chairman Chief Executive Officer
Johannesburg
4 February 2009
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: ZAE 000030912
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: B Ngwenya
These results are available on our website at www.northam.co.za
Date: 05/02/2009 07:05:02 Produced by the JSE SENS Department.
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