| Fri 20 Aug 2010, 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
for the year ended 30 June 2010
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 for the year ended 30 June 2010
* Record metal sales of 396 000 ounces
* Cash funds exceed R1.1 billion
* Earnings maintained
* Go-ahead given for Booysendal
*Year ended **Year ended
Change % 30 June 2010 30 June 2009
R000 R000
Consolidated statement of
comprehensive income
Sales revenue 23.8 3 945 083 3 186 042
Cost of sales 33.4 3 160 108 2 368 129
Operating costs 17.0 2 230 369 1 905 889
Concentrates purchased 735 090 140 192
Refining and other costs 92 972 120 917
Depreciation and impairments 167 346 160 907
Change in metal inventories (65 669) 40 224
Operating profit (4.0) 784 975 817 913
Share of profits from associate 12 440 72 606
Investment revenue 167 655 130 417
Net sundry income/(expenditure) 9 557 (6 430)
Profit before tax (3.9) 974 627 1 014 506
Tax 333 601 384 024
Profit and comprehensive income
for the year attributable to
shareholders 1.7 641 026 630 482
Reconciliation of headline
Earnings and per share information
Profit and comprehensive income
for the year attributable to
shareholders 641 026 630 482
(Profit)/Loss on sale of
property, plant and equipment (822) 41
Income from joint venture in
prior periods/negative goodwill - (67 847)
Impairment loss - 16 711
Tax effect 230 11 370
8.4 640 434 590 757
Earnings per share - cents (3.2) 177.9 183.7
Fully diluted earnings per share
- cents (3.1) 177.8 183.5
Headline earnings per share -
cents 3.3 177.8 172.2
Fully diluted headline earnings
per share - cents 3.4 177.7 171.9
Dividends per share - cents 40.0 78.0
Weighted average number of
shares in issue 360 291 885 343 162 299
Fully diluted number of shares
in issue 360 464 496 343 579 279
Number of shares in issue at
year-end 360 642 000 359 909 500
Consolidated statement of cash flows
Cash flows from operations 862 411 717 838
Profit before tax 974 627 1 014 506
Depreciation 167 346 160 907
Change in working capital (90 675) 357 340
Change in short-term provisions 9 111 (24 361)
Tax paid (281 756) (791 936)
Other 83 758 1 382
Cash flows utilised in investing
activities (395 965) (498 335)
Property, plant and equipment
Additions to maintain operations (231 481) (331 267)
Additions to expand operations (145 510) (36 177)
Disposals proceeds 5 243 1 717
Investment in associate
Acquisition of participation
interest - (65 000)
Cash distribution received 10 205 7 500
Township development (4 460) (22 440)
Available for sale investments - 2
Increase in investments held by
Northam Platinum Restoration
Trust Fund (2 366) (3 073)
Increase in investments held by
Environmental Guarantee Fund (4 868) (2 995)
Increase in investments held by
Toro Employee Empowerment Fund (22 728) (46 602)
Cash flows utilised in financing
activities (200 640) (798 348)
Proceeds from issue of shares 15 518 3 774
Dividends paid (216 158) (802 122)
Net increase/(decrease) in cash
and cash equivalents 265 806 (578 845)
Cash and cash equivalents at
beginning of period 920 903 1 499 748
Cash and cash equivalents at end
of period 1 186 709 920 903
Consolidated statement of financial position
Non-current assets 7 971 624 7 732 343
Property, plant and equipment 1 938 061 1 737 109
Mining properties and mineral
reserves 5 722 659 5 718 387
Investment in associate 129 741 130 106
Available for sale investments 6 6
Township development 63 805 59 345
Investments held by Northam
Platinum Restoration Trust Fund 27 259 24 893
Environmental Guarantee
Investment 20 763 15 895
Toro Employee Empowerment Trust 69 330 46 602
Current assets 2 117 683 1 616 007
Inventories 521 462 468 254
Trade and other receivables 318 054 226 850
Investment in escrow 91 458 -
Cash and cash equivalents 1 186 709 920 903
Total assets 10 089 307 9 348 350
Share capital and share premium 7 638 486 7 622 968
Retained earnings 1 081 862 654 041
Equity compensation reserve 112 806 55 177
Shareholders` equity 8 833 154 8 332 186
Non-current liabilities 581 490 529 261
Deferred tax 447 212 428 821
Long-term provisions 134 278 100 440
Current liabilities 674 663 486 903
Receiver of Revenue 33 886 432
Trade and other payables 562 844 417 649
Short-term provisions 77 933 68 822
Total equity and liabilities 10 089 307 9 348 350
Share Share Equity compen-
capital premium sation reserve
R000 R000 R000
Consolidated statement of
changes in equity
Balance at 1 July 2008 2 387 2 050 807 27 584
Credit in respect of
share-based payments 30 181
Profit and comprehensive income
for the year attributable
to shareholders
Dividends
Transfer of equity compensation
reserve to retained earnings (2 588)
Issue of new shares 1 212 5 568 562
Balance at 30 June 2009 3 599 7 619 369 55 177
Credit in respect of
share-based payments 60 582
Profit and comprehensive income
for the year attributable
to shareholders
Transfer of equity compensation
reserve to retained earnings (2 953)
Dividends
Issue of new shares 7 15 511
Balance at 30 June 2010 3 606 7 634 880 112 806
Retained
earnings Total
R000 R000
Consolidated statement of changes in equity
Balance at 1 July 2008 823 093 2 903 871
Credit in respect of share-based payments 30 181
Profit and comprehensive income for the year
attributable
to shareholders 630 482 630 482
Dividends (802 122) (802 122)
Transfer of equity compensation reserve to retained
earnings 2 588 -
Issue of new shares 5 569 774
Balance at 30 June 2009 654 041 8 332 186
Credit in respect of share-based payments 60 582
Profit and comprehensive income for the year
attributable
to shareholders 641 026 641 026
Transfer of equity compensation reserve to retained
earnings 2 953 -
Dividends (216 158) (216 158)
Issue of new shares 15 518
Balance at 30 June 2010 1 081 862 8 833 154
*Year ended **Year ended
30 June 2010 30 June 2009
R000 R000
Capital commitments
Booysendal mine
Authorised but not contracted 3 630 960 -
Contracted 13 040 -
Zondereinde mine 3 644 000 -
Authorised but not contracted 220 232 191 504
Contracted 16 318 45 046
236 550 236 550
*Year ended **Year ended
Change % 30 June 2010 30 June 2009
R000 R000
Other commitments
Information technology
outsource service provider
Due in one year 11 241 10 933
Due in two to five years 21 418 29 353
Operating lease rentals -
office equipment
Due in one year 214 300
Due in two to five years 8 176
Operating lease
rentals - premises
Due in one year 459 651
Due in two to five years - 459
Employee housing
development
Contracted 2 395 -
Bank guarantees issued 60 457 33 284
These commitments in respect of the Zonderiende mine and the other
commitments will be financed from operating cash flows. The Booysendal
commitment will be funded from a combination of internal retentions and
debts as more fully described in the commentary.
Operating statistics ***
Merensky
Development metres 9.8 8 864 8 071
Square metres mined 0.3 201 569 201 014
Tonnes milled (4.6) 1 002 208 1 050 404
Head grade
(g/tonne - 3PGEs + Au) 1.7 5.9 5.8
Available ore reserves in
months 20 20
UG2
Development metres (28.5) 2 694 3 770
Square metres mined 3.5 166 129 160 555
Tonnes milled (1.8) 1 036 017 1 054 687
Head grade
(g/tonne - 3PGEs + Au) 2.3 4.5 4.4
Available ore reserves
in months 24 19
Combined
Development metres (2.4) 11 558 11 841
Square metres mined 1.7 367 698 361 569
Tonnes milled (3.2) 2 038 225 2 105 091
Head grade
(g/tonne - 3PGEs + Au) 2.0 5.2 5.1
Financial statistics ***
Precious metals
in concentrates
produced+ kg 6.3 9 999 9 408
Precious metals
in concentrates
purchased+ kg 2 106 487
Precious metals
sold+ kg 18.8 12 313 10 362
Average price
realised+ R/kg 2.7 288 255 280 609
Operating costs+ R/kg 9.1 239 769 219 691
Cash operating
costs+ R/kg 8.1 215 900 199 680
Precious metals
in concentrates
produced+ oz 6.3 321 475 302 474
Precious metals
in concentrates
purchased+ oz 67 709 15 657
Precious metals
sold+ oz 18.8 395 879 333 159
Average price
realised+ US$/oz 18.4 1 185 1 001
Operating costs+ US$/oz 28.3 983 766
Cash operating
costs+ US$/oz 27.2 885 696
Average exchange
rate realised US$1.00 = R (13.2) 7.57 8.72
Operating cost
per tonne milled R/tonne 19.8 1 176 982
Cash cost per
tonne milled R/tonne 18.7 1 059 892
*Reviewed **Audited ***Not reviewed or audited +(3PGE+Au)
Introduction
In line with the company`s intent to be a premier platinum group metal (PGM)
investment opportunity, Northam has progressed its evolution from a single mine
operating business to one with a geographically diversified asset base. The
Zondereinde mine continued to produce platinum group metals at steady state
levels throughout the year. At Booysendal the feasibility study was completed in
October 2009, followed by an optimisation exercise which indicated a more robust
project than what was initially envisaged. An early works programme has started
on the Booysendal project property following the approval by the board of
directors for the development of the mine.
Shareholders will have noted the announcement on 26 April 2010, indicating the
disposal by Mvelaphanda Resources Limited (Mvela Resources) of 12.2% of its
holding in the company to Eurasian Natural Resources Corporation plc (ENRC).
This transaction provides some diversification of the company`s shareholder
base prior to the Mvela Resources unbundling.
Financial results
Sales revenue increased by 23.8% year on year mainly as a result of an 18.8%
increase in volumes sold. The average US dollar basket price increased by 18.4%
during the year to US$1 185/oz, but this was largely negated by an average rand
exchange rate decrease of 13.2% to R7.57/US$, resulting in an average Rand
price of R288 255/kg (3PGE+Au), which is 2.7% higher than the previous year`s
average Rand price.
The higher sales volumes were achieved on the back of higher production and
higher purchases of metals in concentrate. Production of metals in concentrate
during the year increased by 6.3% to 9 999 kg (321 475 oz), with the volume of
concentrate purchased amounting to 2 106 kg (67 709 oz) compared to 487 kg for
the 2009 year.
Operating costs increased by 17.0% driven by higher mining input costs,
particularly labour, power, steel and explosives and the processing costs in
respect of the concentrates purchased. In addition, the new royalty, payable by
mining companies from March 2010 in terms of the Mineral and Petroleum Resources
Royalty Act, which amounted to some R21 million, has been included in
operating costs.
Cost of sales increased by 33.4% compared to the previous year, reflecting not
only the increased operating costs as stated above, but also the higher cost of
concentrates purchased. During the year, metal concentrate to the value of
R735.1 million was purchased compared to that of R140.2 million in the previous
year, reflecting progress in the company`s stated strategy of building up
capacity for enhanced downstream beneficiation. The effect of higher inflation
on production costs and on purchased metal concentrate is a lower operating
margin, down from 25.7% in the previous year to 20.0% for the current financial
year.
As anticipated, following the rebuild of the smelter during the previous year,
refining and other costs were 23.1% lower at R93.0 million in the current year.
The depreciation charge increased by 4.0% to R167.3 million, whilst metal
inventories increased by R65.7 million as a result of the temporary closure of
the precipitator towards the end of the year and the higher purchases of
concentrate metal.
The net result of the above is an operating profit which is 4.0% lower at
R785.0 million compared to last year`s R817.9 million.
The share of profits from associates of R12.4 million represents Northam`s 7.5%
share in the Pandora project`s profits. In the prior year, the associate`s
share of profits amounting to R72.6 million, represented several years` worth
of profits which Northam became entitled to as a result of its updated
empowerment status. The comparative figure for the 2009 year was R4.8 million.
Investment revenue increased by 28.6% as a result of the interest earned on
the investment in escrow. The investment in escrow is payable to Anglo
Platinum Limited (Anglo Platinum) upon the transfer of certain new order
mining licences in respect of the Booysendal extension to Northam.
The combined result of the above factors plus higher sundry revenue and lower
tax payable is that the group profit attributable to shareholders is 1.7% above
the previous year`s at R641.3 million. Headline earnings have increased from
172.2 cents per share to 177.8 cents.
Operating cash flows of R862.4 million are higher by R144.6 million compared to
the previous year. Working capital increased by R90.7 million whilst tax
payments amounted to R281.8 million.
The lower tax payments are as a result of the lower tax charge for the year as
well as the lower tax liability at the end of 2009, which was paid in 2010.
Investing cash flows are lower than the previous year and they consist of
capital expenditure for the Zondereinde mine of R231.5 million, R132.4 million
for the Booysendal mine and R4.0 million for the employee housing project.
Financing cash flows are lower than the previous year as a result of dividends
absorbing R216.2 million in the year under review compared to R802.1 million in
the previous financial year.
The combination of these cash flow factors resulted in a net cash flow of
R265.8 million, increasing the group`s cash balance at year-end to R1 186
million.
Zondereinde mine
Safety and health
The sustained focus on safety and safety-related issues continued to yield
positive results in the year under review with further improvements in the
safety indicators such as lost time and reportable injury frequency rates.
Two million fatality free shifts were achieved on 2 February 2010. Sadly this
achievement was overshadowed by the death of an employee during the year, Mr
Sibenzile Ketile, in a drilling-related accident on 13 May 2010. Subsequent to
the year-end, Messrs Avelino Cossa and Samussone Chithango died in a fall of
ground accident on 20 July 2010. The board and management extend their
condolences to the family and colleagues of the deceased.
The board remains supportive of the combined efforts of management, organised
labour and the Department of Mineral Resources (DMR) in prioritising and
promoting a work ethic that seeks to eliminate mining-related injuries.
Operating performance
Zondereinde mine`s metal concentrate production increased by 6.3% to 9 999 kg
(321 475 oz) and metal purchases were 2 106 kg (67 709 oz), up from 487 kg in
the previous year. Sales volumes increased by 18.8% to 12 313 kg (395 879 oz).
Combined tonnage milled from both the Merensky and UG2 reefs was 3.2% lower at
2 038 225 tonnes while the combined average head grade increased by some 2.0%
to 5.2 g/t (3PGE+Au), reflecting the improved grades of 5.9 g/t from the
Merensky reef and 4.5 g/t from the UG2 reef. The improvement in the Merensky
head grade is the consequence of minor variations in the relative proportions
of the Merensky pothole facies mined whilst the slightly higher UG2 head grade
is the result of improved stoping width control and mining focused on the
marginally higher grade western portion of the mine.
Cash operating costs per tonne milled increased by 18.7% as a result of the
17.0% increase in total operating costs and a 3.2% decrease in tonnes milled.
Cash operating costs per kilogram produced however increased by a slightly more
modest 8.1% owing to the marginally higher grades achieved, improved recoveries
in the UG2 concentrator and the 480 kg gain from the treatment of secondary
material as reported in H1 of the year under review.
The Merensky ore reserve remained constant year on year at a satisfactory
20 months` availability. The UG2 ore reserve availability increased to a
healthy 24 months.
Metallurgical operations
The concentrators, smelter and base metals removal plant have operated
satisfactorily within their design parameters.
Smelting operations, which were temporarily suspended on 17 May 2010 following
an incident in which the electrostatic precipitator was damaged, were restarted
on 9 June 2010 following the installation of a temporary bypass around the
precipitator. The permanent repair is expected to be completed by the end of
October 2010.
Expansion mine
Progress on the development of the service decline and associated
infrastructure has been somewhat slower than anticipated. However, development
to reef on 14 and 15 levels has continued as planned.
Booysendal mine
Progress report
The board has given its approval for the development of the mine to proceed.
This follows the conclusion of the optimisation study on the project which
concluded that the project could support a production rate of 187 500 tonnes
per month (162 000 oz p.a.) and that the capital requirement for this size of
mine would be approximately R3.6 billion.
In February the board approved capital expenditure of R340 million to fund the
early works programme to establish infrastructural facilities, which is
currently in progress.
Activities planned for the early works programme, namely detailed engineering,
procurement of long lead items, construction of the on reef boxcut, off site
establishment of employee recruitment, training and accommodation facilities,
safe road access to site and the establishment of construction power and water
facilities are progressing according to plan. Capital expenditure on the
project to date is R132.4 million. The primary construction activities will
start as soon as certain outstanding regulatory approvals are obtained.
Funding options
The board has given approval for the funding of the Booysendal project using a
combination of internal resources in the short term, with convertible bonds and
senior bank debt in the longer term.
Further details will be disclosed in due course.
Memorandum of Understanding (MoU) with Jubilee
Platinum plc (Jubilee)
On 15 July 2010, the company announced that it had entered into an MoU with
Jubilee to evaluate the viability of constructing a new DC arc furnace facility
using ConRoast technology to treat a portion of the company`s platinum group
metal concentrate. Such a facility, close to the eastern limb, would provide
smelting optionality, while reducing the operations` reliance on Eskom power.
Auditors` review report
The financial results of the group have been reviewed by Ernst & Young Inc.,
the group`s auditors. A copy of their unmodified review 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 Financial 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 amendments, standards or interpretations with
effect from 1 July 2009:
IFRS 1 - First-time Adoption of International Financial Reporting Standards and
IAS 27: Consolidated and Separate Financial Statements - Cost of an Investment
in a Subsidiary, Jointly Controlled Entity or Associate (amendment)
This amendment provides guidance on the measurement of the cost of investments
in subsidiaries, jointly controlled entities and associates when adopting IFRS
for the first time and removes the obligation to distinguish between pre- and
post-acquisition dividends. In Northam`s separate financial statements,
dividends received from subsidiaries are now recognised in profit or loss. The
payment of such dividends requires the entity to consider whether this
indicates an impairment. If such an indicator is present, an impairment test
will be required.
The adoption of this amendment had no material effect on the entity`s financial
statements, as there are no dividends received from subsidiaries.
IFRS 2 - Share-based Payments - Vesting Conditions and Cancellation (amendment)
The amendment clarifies that cancellation of an equity-settled share-based
payment award results in accelerated vesting regardless of which party cancels
the award. The only exception to this rule is when the award is cancelled by
forfeiture. Northam`s policy is to regard such transactions as forfeitures
unless circumstances clearly indicate otherwise. The amendment also clarifies
the accounting for non-vesting conditions. As Northam has not granted any
share-based payment awards that are subject to non-vesting conditions, Northam
will not be impacted by this aspect of the amendment.
IFRS 3 - Business Combinations (revised) and IAS 27 - Consolidated and Separate
Financial Statements (revised)
Due to the transition rules of IFRS 3(R) and IAS 27(R), there will be limited
effects of the revisions to business combinations that occurred prior to the
adoption of the revised standards. The main changes apply to the accounting for
loss-making subsidiaries, acquisitions/disposals of non- controlling interests
and deferred tax assets linked to unrecognised tax benefits.
As Northam does not have any non-controlling interests, there will be no
revisions to prior business combinations as a result of the adoption of the
revised standards.
The revisions will mainly impact future business combinations and should
therefore be considered in negotiating and structuring those transactions. The
main changes include the expensing of transaction costs, accounting for
contingent consideration and step acquisitions, the re-assessment of assets and
liabilities and additional extensive disclosure requirements.
IFRS 7 - Financial Instruments: Disclosures - Improving Disclosures about
Financial Instruments (amendment)
This amendment deals with improving disclosures about financial instruments as
well as enhancing the disclosures about fair value measurement and liquidity
risk. The enhanced disclosures require financial instruments measured at fair
value to be disclosed according to a three-level hierarchy. It also revises the
minimum liquidity risk disclosures such as the maturity analysis of financial
liabilities - in particular relating to issued financial guarantee contracts
and derivative assets and liabilities.
These revised disclosures are incorporated into the financial statements.
IFRS 8 - Operating Segments
IFRS 8 introduces a management reporting approach to identifying and measuring
the results of reportable operating segments. The characteristics of the
reportable segments are no longer strictly linked to geography or product
lines. Furthermore, the measurement of the results is no longer prescribed by
the measurement and recognition criteria of IFRS. Although IFRS 8 requires
entities to separately assess vertically integrated segments, the availability
of discrete financial information resulted in the assessment of the Northam
mine and Booysendal project being classified as the only two operating and
reportable segments under IFRS 8.
Certain disclosures, including new "Entity-wide disclosures" are required by
IFRS 8. Overall IFRS 8 therefore impacted disclosures provided in the financial
statements and did not impact the financial position, performance or cash flows
of the entity.
IAS 1 - Presentation of Financial Statements (revision)
This revision requires owner and non-owner changes in equity to be reported
separately and introduces a statement of comprehensive income which presents
all items of income and expense together with all other items of recognised
income and expense in one single statement. The revision also amended the
titles of the components of a complete set of financial statements to the
Statement of Financial Position, Statement of Comprehensive Income, Statement
of Changes in Equity and Statement of Cash Flows. These amended titles are used
in the financial statements. Dividends recognised as distributions to owners
and related amounts per share are presented either in the Statement of Changes
in Equity or in the notes. An additional comparative period will in future have
to be presented for the Statement of Financial Performance if Northam
encounters a retrospective application of a new accounting policy, the
correction of an error or a reclassification.
IAS 1 - Presentation of Financial Statements - Current/non-current
classification of derivatives (amendment)
This amendment stipulates that assets and liabilities classified as held for
trading in accordance with IAS 39 are not automatically classified as current
assets or liabilities.
The adoption of this amendment had no effect on the group`s financial
statements, as Northam did not have any derivatives with maturity dates beyond
12 months at year-end.
IAS 19 - Employee Benefits - Curtailments and negative past service
costs (amendment)
Northam operates another long-term employee benefit in the form of the Toro
Employee Trust. Therefore, the improvement to IAS 19 on curtailments and
negative past service costs has an impact on all amendments to the plan that
change benefits and occur in annual periods beginning on or after the effective
date.
Amendments to the plan are however not anticipated and, given the nature of the
plan, are unlikely to occur.
IAS 19 - Employee Benefits - Plan administration costs (amendment)
The previous version of IAS 19 required that plan administration costs be
considered when calculating the return on plan assets. At the same time, it did
not rule out that they are (partly) reflected in the measurement of the defined
benefit obligation.
As plan administration costs are insignificant, this amendment should not have
an impact on Northam.
IAS 23 - Borrowing Costs (revised)
The revised IAS 23 now requires that all borrowing costs are capitalised if
they are directly attributable to the acquisition, capitalisation or production
of a qualifying asset. In addition, qualifying assets measured at fair value
are exempt from the application of IAS 23.
Northam previously adopted an accounting policy requiring the capitalisation of
borrowing costs, and the standard therefore had no impact on the entity.
IAS 38 - Intangible Assets - Unit of production method of amortisation
(amendment)
This amendment clarifies that the unit of production method may be
used in amortising intangible assets.
The adoption of this amendment had no effect on the group`s financial
statements, as the entity already applied these principles in amortising
mineral rights.
IFRIC 15 - Agreements for the construction of real estate
Determining whether an agreement for construction is within scope of IAS 11 or
IAS 18 depends on the terms of the agreement and all the surrounding facts and
circumstances. Such a determination requires judgement with respect to each
agreement and IAS 11 is applied when the definition of a construction contract
is met. IFRIC 15 impacts Norplats Properties (Pty) Limited whereby Northam
constructs houses in the town of Northam as part of an initiative to assist
Northam employees in acquiring their own affordable houses. These agreements
are within the scope of IAS 18 as Northam transfers to the buyer control and
significant risks and rewards of ownership of the real estate in its entirety
at a single point in time.
The adoption of this interpretation had no effect on the group`s financial
statements, as these principles were previously applied.
Impairment
Management has assessed whether there are any indicators of impairment in the
market and believes that the increase in the average price realised, the firmer
outlook of the platinum price, as well as the recovery in the automotive
industry indicates that no impairment testing is required for the operating
mine.
Management has assessed the valuation of the Booysendal project as required in
terms of IAS 36 - Impairments of Assets, and has concluded that the project is
not impaired. The assessment was based on previous independent valuations
taking into account the current available future outlook of commodity prices
and exchange rates.
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.
Segmental reporting
The group`s distinguishes between two segments, the Zondereinde mine and the
Booysendal mine. Capital expenditure to the value of R132.4 million has been
incurred for the Booysendal project, interest to the value of R91.5 million has
been accrued in respect of the investment in escrow and the rest of the
transactions are for the Zondereinde mine.
Total assets in respect of the Booysendal mine amount to R6 157 million which
are allocated between property, plant and equipment and mining properties and
mineral reserves of Booysendal. All other assets relate to the Zondereinde
mine.
Going concern
Mining entities have a finite life that depends on geological and technical
factors as well as commodity prices and other economic factors. Taking into
account the outlook for these factors as well as the group`s present financial
resources, the directors believe that the group is a going concern. The group`s
preliminary results have accordingly been prepared on this basis.
Subsequent events
No material changes have taken place in the affairs of the group between the
end of the financial year and the date of this report.
Prospects
The challenges of mining Merensky reef at the Zondereinde mine continue, and
production at the mine is likely to be lower than that achieved in the past
year.
Unit cash operating costs are expected to increase at a higher rate than
inflation, reflecting the effects of higher wage demands and other input costs
such as, power, chemicals and explosives. Group earnings will be largely
determined
by these costs and by the average Rand basket price received in F2011. This is
currently at a higher level than the average price of R288 255 per kilogram
received during this financial year.
Directorate
Shareholders were advised of the appointment of Mr Ayanda Khumalo as financial
director of the company with effect from 1 July 2010. The board extends its
thanks to Mr Derek Wolstenholme who served in this position in an interim
capacity.
Dividend
Dividend number 23 of 20 cents per share has been declared in South African
currency, in respect of the year ended 30 June 2010. In compliance with the
requirements of Strate, the following dates are applicable:
Last day to trade (cum div) 10 September 2010
Last day to trade (ex div) 13 September 2010
Record date 17 September 2010
Payment date 20 September 2010
No share certificates may be de-materialised or re-materialised between Monday,
13 September 2010 and Friday, 17 September 2010, both days inclusive.
On behalf of the board
P L Zim G T Lewis
Chairman Chief Executive Officer
Johannesburg
20 August 2010
Directors
P L Zim (Chairman), (Alternate: A K Gupta), G T Lewis (Chief executive officer)
(British), A Z Khumalo (Financial director), M E Beckett (British),
C K Chabedi, 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
Registered office
1st Floor, Block 1A
Albury Park
Magalieszicht Avenue
Dunkeld West
Johannesburg
PO Box 412694
Craighall
2024
Republic of South Africa
These results are available on our website at www.northam.co.za
Date: 20/08/2010 07:05:02 Produced by the JSE SENS Department.
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