| Fri 14 Aug 2009, 7:05 | | NHM - Northam Platinum Limited - Reviewed preliminary announcement of results |
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NHM
NHM
NHM - Northam Platinum Limited - Reviewed preliminary announcement of results
and dividend declaration for the year ended 30 June 2009
Northam Platinum Limited
(Registration number 1977/003282/06)
(Incorporated in the Republic of South Africa)
Share code: NHM ISIN: ZAE000030912
("Northam" or "the Company" or "the Group")
Reviewed preliminary announcement of results
and dividend declaration for the year ended 30 June 2009
KEY FEATURES
Sales volumes up by 22% to 333 000 oz
31% decline in rand basket price received
Cash cost increases held to 14%
Strong cash position maintained
Consolidated Income Statement
Change Year Year
% ended ended
30 June 30 June
2009 2008
R000 R000
Reviewed Audited
Sales revenue (18.0) 3 186 042 3 886 137
Cost of sales 47.2 2 368 129 1 608 648
Operating costs 17.2 1 905 889 1 626 610
Concentrates purchased 140 192 -
Refining and other costs 60.1 120 917 75 540
Depreciation 7.8 160 907 149 325
Change in metal inventories 40 224 (242 827)
Operating profit (64.1) 817 913 2 277 489
Share of profits from 72 606 -
associate
Investment income 33.8 130 417 97 507
Net sundry (6 430) 1 824
income/(expenditure)
Expenditure on Booysendal - (17 969)
Platinum Project
Profit before tax (57.0) 1 014 506 2 358 851
Tax (55.7) 384 024 866 040
Profit attributable to (57.8) 630 482 1 492 811
shareholders
Reconciliation of headline
earnings
Profit attributable to 630 482 1 492 811
shareholders
Loss/(profit) on sale of 42 22
property, plant and equipment
Income from joint venture in (67 847) -
prior periods
Tax effect 16 048 (6)
61.2 578 725 1 492 827
Earnings per share - cents (70.7) 183.7 627.2
Fully diluted earnings per (70.4) 183.5 620.7
share - cents
Headline earnings per share - (73.1) 168.6 627.2
cents
Dividends per share - cents 78.0 330.0
Weighted average number of 343 162 299 238 006 682
shares in issue
Fully diluted number of shares 343 579 279 240 522 426
in issue
Number of shares in issue at 359 909 500 238 687 500
year end
Consolidated Balance Sheet
Property, plant and equipment 7 459 883 1 683 901
Investment in associate 130 106 -
Township development 59 345 36 905
Available for sale investments 6 8
Investments held by Northam Platinum 24 893 21 820
Restoration Trust Fund
Environmental Guarantee Investment 15 895 12 900
Toro Employee Empowerment Trust 46 602 -
Current assets 1 616 006 2 363 992
Inventories 468 254 504 980
Trade and other receivables 226 849 359 264
Cash and cash equivalents 920 903 1 499 748
Total assets 9 352 736 4 119 526
Share capital 7 622 968 2 053 194
Equity compensation reserve 55 177 27 584
Retained earnings 654 040 823 093
Shareholders` equity 8 332 185 2 903 871
Deferred tax 428 821 388 055
Long-term provisions 53 838 55 858
Current liabilities 537 892 771 742
Trade and other payables 418 011 229 449
Tax 4 456 449 110
Short-term provisions 115 669 93 183
Total equity and liabilities 9 352 736 4 119 526
Consolidated Cash Flow Statement
Cash flows from operations 606 241 1 546 908
Profit before tax 1 014 506 2 358 851
Depreciation 160 907 149 325
Share of profits from associate (74 773) -
Change in working capital 292 703 (265 004)
Change in provisions (24 361) 35 305
Tax paid (791 936) (748 229)
Other 29 195 16 660
Cash flows utilised in investing (380 666) (263 795)
activities
Property, plant and equipment
Additions to maintain operations (367 445) (264 976)
Disposals proceeds 1 717 2 890
Investment in associate 7 500 -
Township development (22 440) (1 707)
Investments 2 (2)
Cash flows utilised in financing (804 416) (993 277)
activities
Proceeds from issue of shares 3 774 22 280
Dividends paid (802 122) (1 010 068)
Increase in investments held by (3 073) (2 900)
Northam Platinum Restoration Trust Fund
Increase in investments held by (2 995) (2 589)
Environmental Guarantee Fund
Net increase in cash and cash (578 841) 289 836
equivalents
Cash and cash equivalents of subsidiary (4) -
at date of acquisition
Cash and cash equivalents at beginning 1 499 748 1 209 912
of period
Cash and cash equivalents at end of 920 903 1 499 748
period
Consolidated Statement of Changes in Equity
Year Year
ended ended
30 June 30 June
2009 2008
R000 R000
Reviewed Audited
Equity at beginning of period as 2 903 871 2 381 446
previously stated
Profit attributable to shareholders 630 482 1 492 811
Credit in respect of share based 30 180 17 402
payments
Issue of new shares 5 569 774 22 280
Dividends distributed (802 122) (1 010 068)
Equity at end of period 8 332 185 2 903 871
Capital Commitments
Authorised but not contracted 191 504 248 699
Contracted 45 046 91 466
236 550 340 165
Other Commitments
Information Technology Outsource Service
Provider
Due in one year 10 933 1 889
Due in two to five years 29 353 -
Operating lease rentals - office
equipment
Due in one year 300 270
Due in two to five years 176 191
Operating lease rentals - premises
Due in one year 651 598
Due in two to five years 459 1 110
Employee housing development
Contracted - 16 000
These commitments will be financed out
of operating cash flows.
Operating Statistics
Change Year Year
% ended ended
30 June 30 June
2009 2008
R000 R000
Merensky
Development metres (16.1) 8 071 9 615
Square metres mined (2.1) 201 014 205 251
Tonnes milled (0.9) 1 050 404 1 059 624
Head grade (g/ton - 3 PGEs + 2.8 5.8 5.6
Au)
Available ore reserves in 20 18
months
UG2
Development metres 20.9 3 770 3 117
Square metres mined 1.4 160 555 158 294
Tonnes milled 9.5 1 054 687 963 033
Head grade (g/ton - 3 PGEs + - 4.4 4.4
Au)
Available ore reserves in 19 21
months
Combined
Development metres (7.0) 11 841 12 732
Square metres mined (0.5) 361 569 363 545
Tonnes milled 4.1 2 105 091 2 022 657
Head grade (g/ton - 3 PGEs + 1.2 5.1 5.0
Au)
Financial Statistics
Precious metals in kg 3.2 9 408 9 113
concentrates produced *
Precious metals in kg 487 -
concentrates purchased *
Precious metals sold * kg 20.7 10 362 8 586
Average price realised * R/kg (31.4) 280 609 409 161
Operating costs * R/kg 13.6 219 691 193 409
Cash operating costs * R/kg 14.0 199 680 175 197
Precious metals in oz 3.2 302 474 292 989
concentrates produced *
Precious metals sold * oz 20.7 333 159 276 059
Average price realised * US$/oz (41.9) 1 001 1 722
Operating costs * US$/oz (6.7) 766 821
Cash operating costs * US$/oz (6.5) 696 744
Average exchange rate US$1.00 = R 18.0 8.72 7.39
realised
* - 3PGE + Au
Operating cost per tonne R/tonne 12.7 982 871
milled
Cash cost per tonne R/tonne 13.1 892 789
milled
COMMENT ON RESULTS
Introduction
The singular most important development in the past year was the finalisation of
the Booysendal transaction and the implementation of the agreements associated
with the acquisition of the Booysendal platinum asset from Mvelaphanda Resources
Limited (Mvela Resources).
This transaction has resulted in Northam`s empowerment status being cemented at
the equity level, which in turn has led to the inclusion of revenues from the
company`s 7.5% stake in the Pandora Joint Venture ("Pandora"), which, prior to
the Booysendal transaction, had been warehoused in Mvela Resources.
These developments signal the transformation of Northam, as it begins to make
progress in reducing the risk attached to a single operating asset, diversifying
its income streams and starts to benefit from lower cost volume growth.
Financial results
Over the reporting year, the average US dollar price received for Northam`s
basket of metals decreased by 42% to US$1 001 per ounce. This decline was,
however, partly offset by the 18% decline in the value of the South African rand
against the US dollar over the year, which resulted in the average rand basket
price over the year being 31% lower at R280 609 per kilogram.
Production of metals in concentrate during the reporting year increased by 3% to
9 408 kg (302 474 oz). The increased output, together with the purchase of 487
kg (15 657 oz) of custom material, and a decrease in metal inventories,
accounted for the 21% increase in unit sales to 10 382 kg (333 159 oz). The
increased sales volumes partially offset the effects of the lower rand metal
prices received, and limited the drop in sales revenue, at R3 186 million, to
18%.
Total operating costs increased by 17% from R1 627 million to R1 906 million,
reflecting the increased production, along with the effects of inflationary cost
pressures. The higher metal production helped to contain the increase in unit
cash costs to 14%, however, or to R199 680 per kilogram.
During the year, concentrates to the value of R140 million were purchased.
Refining and other costs increased by 60% to R121 million compared to the
previous year. This increase was largely attributable to toll treatment charges
of R42 million which were incurred during the rebuild of the smelter.
The depreciation charge increased by 8% to R161 million, whilst metal
inventories decreased by R40 million. The net effect was that cost of sales
increased by 47% to R2 368 million.
Operating profit was 64% lower at R818 million. Nevertheless the operating
margin was kept to 25.7%.
Following the implementation of the various agreements relating to the
acquisition of Booysendal, the Group achieved recognition as an Historically
Disadvantaged South African ("HDSA") entity. Consequently it became entitled to
acquire the 7.5% interest in Pandora that had been warehoused by Mvela
Resources. As a consequence, Northam brought to account an investment of R130
million and income of R72 million, R68 million of which related to the periods
prior to the Group being entitled to account for Pandora. The investment of R130
million includes R65 million in respect of the cost of acquiring the interest.
The higher interest rates earlier in the year had a positive impact on
investment income which was 35% higher at R130 million. Net sundry expenditure
was R6 million compared to net sundry revenue of R2 million the previous year.
As a consequence of the above, profit attributable to shareholders decreased by
58% to R630 million, with headline earnings per share decreasing from 627 cents
per share to 169 cents per share.
Cash flows reflect a net decrease of R578 million. Cash flows from operations of
R606 million included a decrease in working capital of R293 million and taxes
paid of R792 million. Investing cash flows absorbed R381 million, the principal
contributors to which were capital expenditure of R367 million and the R8
million cash received from Pandora. Major items of capital expenditure included
R14 million on development, R78 million on access infrastructure to 1 and 18
levels, R74 million on the once-off smelter rebuild, R23 million on additional
accommodation and R36 million on the Booysendal project. Expenditure on the
employee housing project absorbed a further R22 million. The main component of
the financing cash flows were the dividends of R802 million paid during the year
under review.
Changes in share capital
During the year under review, 121.0 million shares were allotted and issued to
Mvelaphanda Resources Limited pursuant to the acquisition of Booysendal. These
shares, together with 222 000 shares allotted and issued in terms of the rules
of the Northam Share Option Scheme, resulted in the issued share capital
increasing to 359 909 500 shares of 1 cent each.
Safety and health
Management and the board acknowledge the sad loss of life of four employees who
died in separate mining related accidents over the year and extend their
condolences to the families of the deceased.
The year under review has seen a particularly stringent focus on safety and
safety related issues on the operations which resulted in an improvement in the
safety indicators, such as lost time and reportable injury rates. The challenge
for management and the employees is to sustain this positive safety trend and
continuously improve on safety. The board remains fully supportive of the
combined efforts of management, organised labour and the Department of Mineral
Resources (DMR) 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.
Northam mine - operating performance
Production of metals in concentrates from the Zondereinde mine during the year
increased by 3.2% to 9 408 kg (302 474 oz) and metal purchases totalled 487 kg
(15 657 oz). Unit sales increased by 20.7% to 10 362 kg (333 159 oz). Tonnages
milled from both the Merensky and UG2 reefs were 4.1% higher at 2 105 091 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.
Merensky ore reserve availability increased from 18 months to 20 months. The UG2
ore reserve availability remained satisfactory at 20 months.
Booysendal transaction update
As announced on 19 August 2008, the implementation of the Booysendal transaction
commenced with the 121 000 000 ordinary shares being allotted and issued to
Mvelaphanda Equity (Proprietary) Limited, a wholly-owned subsidiary of Mvela
Resources Limited on 20 August 2008, and Northam acquiring the entire issued
share capital of Khumama Platinum (Proprietary) Limited (Khumama). The first 50%
of the issued share capital of Micawber 278 (Proprietary) Limited (Micawber),
which holds the Booysendal mining titles, was transferred to Khumama in August
2008, with the remaining 50% being acquired in June 2009, following the approval
by the department of Mineral Resources of the change in control of Booysendal.
The DMR has given notice that the conversion of Booysendal`s old order mining
title covering nine of the 11 Booysendal farms has been approved. The process of
formalising the conversion has commenced. The application for mining rights over
the remaining two farms presently held under new order prospecting rights is
currently being processed.
Booysendal project - progress report
The Booysendal feasibility study has progressed according to plan and remains
scheduled for completion during the second half of this calendar year after
which a value engineering exercise will be undertaken to optimise designs,
layouts and schedules. Specialist consulting teams are close to finalising the
metallurgical and mine design as well as the 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 flexibility in implementation, as
it is dependent on additional power and water as well as the prevailing market
conditions.
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 in line with
inflation, earnings will be determined largely by the average Rand basket price
received in F2010. This is currently at a lower level than the R280 609 per
kilogram received during this reporting period.
Impairment
Management has performed an impairment test on the Northam mine and the
Booysendal project, and is satisfied that no impairment is necessary.
Audit review
Ernst & Young Inc., the Group`s auditors, have reviewed the financial results. A
copy of their unmodified 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 2009, with the exception of the adoption of the
following changes in International Financial Reporting Standards (IFRS):
IAS 39 - Financial Instruments: Recognition and Measurement (amendment)
IFRS 7 - Financial Instruments: Disclosure (amendment);
IFRIC 12 - Service Concession Arrangements;
IFRIC 13 - Customer Loyalty Programmes; and
IFRIC 14 - IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction.
The adoption of IAS 31, the adoption of these amendments, standards and
interpretations did not have any impact on the 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
year the group derived its sales revenue from customers in Europe, Japan, North
America and South Africa, with accounts receivable at the end of the year
comprising amounts receivable from entities in the abovementioned countries.
Directorate
The following changes occurred during the period under review:
Mr N B Mbazima resigned as a director on 20 August 2008;
Mr A K Gupta was appointed alternate director to P L Zim on 27 February 2009;
and
Messrs C K Chabedi, A R Martin and M S M M Xayiya were appointed directors on
22 June 2009, with Mr M J Willcox being appointed alternate director to Mr M S M
M Xayiya on the same date.
Dividend
Dividend number 21 of 40 cents per share has been declared in South African
currency, in respect of the year ended 30 June 2009. In compliance with the
requirements of Strate, the following dates are applicable:
Last day to trade (cum div) Friday, 4 September 2009
Last day to trade (ex div) Monday, 7 September 2009
Record date Friday, 11 September 2009
Payment date Monday, 14 September 2009
No share certificates may be dematerialised or rematerialised between Monday, 7
September 2009 and Friday, 11 September 2009, both days inclusive.
On behalf of the board
P L Zim G T Lewis
Chairman Chief Executive Officer
Johannesburg
12 August 2009
Registered Office
1st Floor, Block 1A PO Box 412694
Albury Park, Magalieszicht Avenue Craighall, 2024
Dunkeld West Republic of South Africa
Johannesburg
JSE code: NHM
ISIN code: ZAE000030912
Directors: P L Zim (Chairman), (Alternate: A K Gupta), G T Lewis (Chief
Executive Officer) (British), C K Chabedi, M E Beckett (British), Ms N J Dlamini
(Dr), R Havenstein, Ms E T Kgosi, A R Martin, B R van Rooyen, M S M M Xayiya,
(Alternate: M J Willcox).
Company Secretary: B Ngwenya
Sponsor: Barnard Jacobs Mellet Corporate Finance
These results are available on our website at www.northam.co.za
Date: 14/08/2009 07:05:08 Produced by the JSE SENS Department.
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