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NORTHAM PLATINUM LIMITED - UNAUDITED INTERIM REPORT AND DIVIDEND DECLARATION FOR
THE SIX MONTHS ENDED 31 DECEMBER 2003
NORTHAM PLATINUM LIMITED
(Registration number 1977/003282/06)
(Incorporated in the Republic of South Africa)
JSE Share Code: NHM
ISIN: ZAE000030912
("the company")
UNAUDITED INTERIM REPORT AND DIVIDEND DECLARATION FOR THE SIX MONTHS ENDED
31 DECEMBER 2003
KEY FEATURES
Metal production up 9.4%
Increase in unit cash costs contained at 2.5%
Metal sales volumes up 32.4%
Dividend of 45 cents declared
Income statement
Six months Six months Year
ended ended ended
31 December 31 December 30 June
Change 2003 2002 2003
% R000 R000 R000
Sales revenue 3.2 882 077 854 382 1 471 999
Cost of sales 29.4 714 862 552 544 1 086 571
Operating costs 12.1 553 463 493 611 1 004 327
Refining and other
costs 32 741 35 627 68 549
Metal leasing costs (14 149) 14 149
Depreciation 50 676 47 100 89 059
Change in metal
stocks 92 131 (23 794) (89 513)
Operating profit (44.6) 167 215 301 838 385 428
Investment income 18 998 35 343 64 140
Net sundry
revenue/(expenditure) (37 753) 285 23 946
Profit before tax (56.0) 148 460 337 466 473 514
Tax 44 385 129 999 198 601
Net income (49.8) 104 075 207 467 274 913
Reconciliation of
headline earnings
Net income 104 075 207 467 274 913
Profit on sale of
fixed assets (198) (13) (505)
Tax effect 59 4 152
103 936 207 458 274 560
Earnings per
share - cents (50.0) 44.9 89.8 118.8
Fully diluted
earnings per
share - cents (50.4) 44.0 88.7 116.9
Headline earnings
per share - cents (50.0) 44.9 89.8 118.7
Dividends per share
- cents (50.0) 45.0 90.0 90.0
Capital repayments
per share cents 55.0
Weighted average
number of shares in
issue 231 538 500 231 097 549 231 313 068
Fully diluted number
of shares in issue 236 717 739 233 808 500 235 108 275
Number of shares in
issue 231 538 500 231 516 000 231 538 500
Cash flow statement
Cash flow from
operations 262 357 308 168 390 040
Profit before tax 148 460 337 466 473 514
Depreciation 50 676 47 100 89 059
Change in working
capital 125 071 (48 175) (97 701)
Tax paid (62 450) (28 883) (75 554)
Other 600 660 722
Cash utilised in
investing activities (57 964) (49 210) (172 171)
Property, plant and
equipment
Additions to
maintain operations (60 362) (49 210) (175 758)
Disposals 2 398 3 597
Investments net (10)
Cash utilised in
financing activities (81 549) (398 167) (654 207)
Proceeds from issue
of shares 6 608 6 742
Reduction of share
premium (81 038) (173 298) (219 606)
Dividends paid (231 064) (439 449)
Increase in
Restoration Trust
Fund (511) (413) (1 894)
Net cash flow 122 844 (139 209) (436 338)
Cash at beginning of
period 294 975 731 313 731 313
Cash at end of period 417 819 592 104 294 975
Statement of changes in equity
Equity at beginning
of period 1 515 508 1 892 908 1 892 908
Net income for period 104 075 207 467 274 913
Issue of new shares 6 608 6 742
Reduction of share
premium (81 038) (173 298) (219 606)
Dividends distributed (231 064) (439 449)
Equity at end of
period 1 538 545 1 702 621 1 515 508
Balance sheet
Fixed assets 1 341 689 1 251 870 1 334 203
Unlisted investments 183 187 183
Northam Platinum
Restoration Trust
Fund 10 973 8 981 10 462
Current assets 781 563 960 078 747 907
Inventories 250 564 272 529 339 156
Accounts receivable 113 180 95 445 113 776
Cash and cash
equivalents 417 819 592 104 294 975
2 134 408 2 221 116 2 092 755
Share capital 1 997 091 2 124 303 2 078 129
Accumulated loss (458 546) (421 682) (562 621)
Shareholders" equity 1 538 545 1 702 621 1 515 508
Deferred tax 329 207 303 873 330 323
Long-term provisions 12 240 10 053 11 442
Current liabilities 254 416 204 569 235 482
Accounts payable 208 915 137 600 173 032
Tax 45 501 66 969 62 450
2 134 408 2 221 116 2 092 755
Operating statistics
Six months Six months Year
ended ended ended
Change 31 December 31 December 30 June
% 2003 2002 2003
Merensky:
Development metres (10.6) 6 464 7 230 13 596
Square metres mined 8.9 185 672 170 487 317 677
Tons milled 7.1 854 089 797 422 1 582 421
Head grade (g/ton - 3
PGEs + Au) 6.1 6.0 5.9
Available ore reserves
months 18 18 20
UG2:
Development metres 61.9 986 609 1 147
Square metres mined (9.6) 59 688 66 018 114 373
Tons milled 7.7 358 417 332 655 636 717
Head grade (g/ton - 3
PGEs + Au) 4.3 4.0 4.0
Available ore reserves
- months 31 37 38
Combined:
Development metres (5.0) 7 450 7 839 14 743
Square metres mined 3.7 245 360 236 505 432 050
Tons milled 7.3 1 212 506 1 130 077 2 219 138
Head grade (g/ton - 3
PGEs + Au) 5.5 5.4 5.3
Financial statistics
Precious metals in
concentrates
produced* kg 9.4 5 694 5 205 10 354
Precious metals sold* kg 32.4 6 486 4 898 9 174
Average price
realised* R/kg (22.2) 123 121 158 289 145 273
Average exchange
rate realised US$/ZAR (30.4) 6.97 10.01 9.05
Operating costs* R/kg 2.1 106 091 103 881 105 600
Cash costs* R/kg 2.5 97 051 94 705 96 880
Precious metals in
concentrates
produced* oz 9.4 183 063 167 348 332 888
Precious metals sold* oz 32.4 208 523 157 461 294 947
Average price
realised* $/oz 8.1 549 508 498
Operating costs* $/oz 2.2 327 320 363
Cash costs* $/oz 2.4 299 292 333
Operating costs per
tonne milled R/tonne 4.2 498 478 493
Cash costs per tonne
milled R/tonne 4.3 456 437 453
Outstanding hedging instruments at period-end
Platinum
Period January 2004 to Not July 2003 to
May 2004 applicable September 2003
Average quantity
hedged per month oz 5 500 5 000
Average contract
price US$/oz 682.31 661.45
Fair value price
at period-end US$/oz 811.00 660.92
Unrealised gain/
(loss) recognised US$000 (3 412) 8
R000 (22 813) 60
Palladium
Period January 2004 to January 2003 to July 2003 to
March 2004 December 2003 February 2004
Average quantity
hedged per month oz 3 500 2 125 4 250
Average contract
price US$/oz 246.04 246.75 244.43
Fair value price
at period end US$/oz 191.00 234.00 179.74
Unrealised gain
recognised US$000 692 315 2 199
R000 3 628 2 729 16 640
Currency
Period January 2004 to Not Not
June 2004 applicable applicable
Average volumes
hedged per month US$000 6 000
Average contract
rate US$1.00 = R6.56
Fair value rate
at period-end US$1.00 = R6.68
Unrealised loss
recognised R000 (6 777)
Capital commitments
Authorised but
not contracted 54 734 114 790 106 387
Contracted 17 008 73 304 23 644
71 742 188 094 130 031
Other commitments
Information Technology
Outsource Service Provider
Due in one year 7 054 6 566 7 314
Due in two to five years 25 478 25 452 26 993
Thereafter 5 022 1 388
Operating lease rentals
office equipment
Due in one year 164 139 167
Due in two to five years 354 425 438
Operating lease
rentals premises
Due in one year 408 371 390
Due in two to five years 408 204
These commitments will be
financed out of
operating cash flows.
* 3PGEs + Au
Accounting Policies
The financial statements have been prepared on the historical cost basis in
accordance with International Financial Reporting Standards and South African
Statements of Generally Accepted Accounting Practice and incorporate the
accounting policies which are consistent with those adopted in the previous
year.
Comment On Results
Safety
It is with deep regret that the Board reports that two employees lost their
lives in mining accidents during the period under review. Management remains
firmly committed to providing a safe working environment for its employees and
has therefore introduced a comprehensive programme directed at improving
behavioural standards and teamwork.
Operating Performance
Compared with the six months ended 31 December 2002, production of metal in
concentrates (3PGE + Au) was 9.4% higher at 5 694 kg (183 063oz). Merensky
tonnage milled increased by 7.1% whilst UG2 tonnage increased by 7.7%.
The development metres to establish Merensky ore reserves were achieved,
however, reduced extraction ratios flowing from poor ground conditions and
potholing has resulted in the immediately available ore reserve remaining
constant at 18 months. UG2 ore reserve availability is as planned at 31 months.
Financial Results
Unit sales increased by 32.4% to 6 486 kg (208 523 oz). Despite an 8.1%
improvement in the US Dollar basket price to US$549 per ounce, the sustained
strength of the Rand resulted in the average price received declining by 22.2%
to R123 121 per kg. The net result was that sales revenue increased marginally
to R882 million.
The focus on cost control was maintained with a marginal increase of 2.5% in
unit cash costs, despite an 11.0% increase in labour costs from 1 July 2003.
Total operating costs increased by 12.1% largely as a result of the higher
production. The decrease in metal inventory resulted in the cost of sales for
the period increasing by 29.4% in line with the higher sales volumes.
Hedging losses, offset partially by currency gains, were largely responsible
for the increase in net sundry expenditure.
The profit attributable to shareholders decreased by 49.8% compared with that
for the six months ended 31 December 2002.
Hedging
In order to place a floor under the operating margin, the company sold forward
US$66 million for the period ending 30 June 2004 at an average rate of US$1.00
= R6.87. Minor volumes of platinum were hedged to secure prices in excess of
US$700 per ounce. The programme was suspended following the subsequent surge in
the price of platinum. Details of the aggregate outstanding contracts are set
out in the accompanying financial report.
In terms of AC 133 Financial Instruments: Recognition and Measurement, the
hedging instruments have been recognised at fair value at the end of the
period, with a loss of R31.2 million being included in net income.
Capital Expenditure
Capital expenditure during the period under review totalled R60.3 million and
includes the following major items: Accelerated development programme (R21.8
million), additional refrigeration plants (R10.1 million), access
infrastructure to 1 level (R8.3 million) and safety improvements to shaft
hoisting arrangements (R1.7 million). Expenditure for the full financial year
is estimated at R130 million.
Expansion
Opportunities to acquire growth assets are being actively pursued in
conjunction with Mvelaphanda Resources Limited which has a 22.3% equity
interest in Northam. Shareholders will be advised of developments as they
occur.
Discussions in respect of Pandora are continuing. The Department of Minerals
and Energy has not yet processed the mining licence application.
Prospects
Production in the second half of the financial year is geared to the number of
working shifts available. Consequently, metals in concentrate produced are
expected in slightly lower than that reported for the first half. Sales will be
in line with metals produced. Should the Rand basket price received remain at
current levels, earnings for the second half of the financial year should be
slightly lower than that achieved in the first half.
Dividend
Dividend number 10 of 45 cents per share has been declared in South African
currency, in respect of the six months ended 31 December 2003.
The dividend will be paid on Monday, 1 March 2004 to shareholders recorded in
the books of the company at the close of business on Friday, 27 February 2004
(the record date). The last day to trade cum dividend is Friday, 20 February
2004. The shares will commence trading ex dividend on Monday, 23 February 2004
and the record date is Friday, 27 February 2004.
No share certificates may be de-materialised or re-materialised between Monday,
23 February 2004 and Friday, 27 February 2004, both days inclusive.
On behalf of the Board
T M G Sexwale B R van Rooyen
Chairman Director
Johannesburg
4 February 2004
Registered Office
Kenilworth House PO Box 37160
Rutherford Estate Birnam
1 Scott Street 2015
Waverley 2090 Republic of South Africa
Johannesburg
Directors:
T M G Sexwale (Chairman), M E Beckett (British),
D T G Emmett, R Havenstein, A S Malone, E Molobi,
R H H van Kerckhoven (Belgian), B R van Rooyen, M J Willcox
Company Secretary:
S J van der Spuy
These results are available on our website at www.northam.co.za
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