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NHM - Northam Platinum Limited - Interim report and dividend declaration for the

Release Date: 24/02/2012 08:00
Code(s): NHM
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NHM - Northam Platinum Limited - Interim report and dividend declaration for the six months ended 31 December 2011 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" or "the group") INTERIM REPORT AND DIVIDEND DECLARATION FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 KEY FEATURES: - Improved production at Zondereinde - Two-year wage deal signed - Solid progress at Booysendal - Financing facility in place - Earnings up 161% to R198 million INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Reviewed Reviewed Audited Six months Six months Year ended ended ended 31 December 31 December 30 June
2011 2010 2011 Change % R000 R000 R000 Sales revenue 22.7 1 979 855 1 614 063 3 571 048 Cost of sales 13.7 1 759 343 1 546 932 3 185 754 operating costs 24.2 1 314 358 1 058 466 2 258 548 concentrates purchased (5.9) 343 643 365 148 787 316 refining and other costs 32.3 41 258 31 176 68 804 depreciation and impairments 14.1 88 357 77 407 147 838 change in metal inventories (28 273) 14 735 (76 752) Operating profit 228.5 220 512 67 131 385 294 Share of earnings and distributions from associate 3 405 1 415 7 248 Investment revenue 33 060 50 397 85 520 Sundry income 32 050 11 891 53 148 Profit before tax 289 027 130 834 531 210 Taxation 90 871 54 977 182 001 Profit and total comprehensive income for the period attributable to shareholders 161.2 198 156 75 857 349 209 Reconciliation of headline earnings and per share information Profit and total comprehensive income attributable to shareholders 198 156 75 857 349 209 Loss/(profit) on sale of property, plant and equipment 213 (84) 2 572 Insurance claim - - (36 267) Tax effect (60) 24 9 435 Headline earnings 161.6 198 309 75 797 324 949 Earnings per share - cents 146.7 51.8 21.0 96.2 Fully diluted earnings per share - cents 147.8 51.8 20.9 96.2 Headlines earnings per share - cents 147.1 51.9 21.0 89.5 Fully diluted headline earnings per share - cents 147.8 51.8 20.9 89.5 Dividends declared per share - cents 5.0 5.0 15.0 Weighted average number of shares in issue 382 416 190 360 747 809 363 087 830 Fully diluted number of shares in issue 382 470 380 362 498 431 363 150 282 Number of shares in issue 382 416 190 361 258 500 382 416 190 INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS Reviewed Reviewed Audited
Six months Six months Year ended ended ended 31 December 31 December 30 June 2011 2010# 2011#
R000 R000 R000 Cash flows from operating activities 211 735 176 190 769 422 Profit before taxation 289 027 130 834 531 210 Depreciation and impairment 88 357 77 407 147 838 Change in working capital (107 014) (68 391) 182 380 Change in short-term provisions 5 508 3 555 6 073 Taxation paid (84 674) (99 839) (228 021) Discontinuation of investment in escrow - 91 458 91 458 Other 20 531 41 166 38 484 Cash flows utilised in investing activities (899 252) (343 722) (197 171) Property, plant, equipment, and mining properties and mineral reserves additions to maintain operations (124 060) (125 465) (268 932) additions to expand operations (785 190) (214 544) (688 394) disposal proceeds 2 479 2 742 6 678 Cash distribution received from associate 581 792 792 Township land and development additions (6 572) (2 868) (234) disposals proceeds 15 260 - 8 121 Increase in investments held by Northam Platinum Restoration Trust Fund (923) (1 039) (4 332) Increase in investments held by Environmental Guarantee Fund (827) (3 340) (8 708) Cash and cash equivalents at acquisition of subsidiary - - 757 838 Cash flows utilised in financing activities (38 242) (51 293) (61 107) Proceeds from issue of shares - 20 835 29 095 Dividends paid (38 242) (72 128) (90 202) (Decrease)/increase in cash and cash equivalents (725 759) (218 825) 511 144 Cash and cash equivalents at beginning of period 1 697 853 1 186 709 1 186 709 Cash and cash equivalents at end of period 972 094 967 884 1 697 853 # Restated INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION Reviewed Reviewed Audited Six months Six months Year ended ended ended
31 December 31 December 30 June 2011 2010# 2011# R000 R000 R000 Non-current assets Property, plant and equipment 3 632 874 2 255 554 2 779 519 Mining properties and mineral resources 4 526 178 5 665 110 5 719 416 Interest in associate and joint ventures 506 852 130 365 505 327 Unlisted investment 6 6 6 Township land and development 47 230 66 672 55 918 Long term receivables 50 079 - 27 292 Investments held by Northam Platinum Restoration Trust Fund 32 514 28 298 31 591 Environmental Guarantee Investment 30 298 24 103 29 471 8 826 031 8 170 108 9 148 540
Current assets 2 045 396 1 856 146 2 725 916 Inventories 634 619 504 657 604 647 Trade and other receivables 425 834 365 787 410 621 Cash and cash equivalents 972 094 967 884 1 697 853 Receiver of revenue 12 849 17 818 12 795 Mineral resources classified as held for sale 1 180 300 - - Total assets 12 051 727 10 026 254 11 874 456 Share capital and share premium 8 596 082 7 659 321 8 596 082 Retained earnings 1 523 108 1 085 591 1 363 194 Equity compensation reserve 183 921 146 116 156 076 Shareholders` equity 10 303 111 8 891 028 10 115 352 Non-current liabilities 635 465 528 357 584 480 Deferred tax liability 488 548 454 054 477 145 Long-term provisions 146 917 74 303 107 335 Current liabilities 1 113 151 606 869 1 174 624 Trade and other payables 910 521 525 381 972 350 Receiver of revenue 113 116 - 118 268 Short term provisions 89 514 81 488 84 006 Total equity and liabilities 12 051 727 10 026 254 11 874 456 Net asset value - cents per share 2 694 2 461 2 645 # Restated Interim consolidated statement of changes in equity Equity Share Share compensation Retained Capital premium reserve earnings Total R000 R000 R000 R000 R000
Balance at 1 July 2010 3 606 7 634 880 112 806 1 081 862 8 833 154 Share-based payment expense 33 310 33 310 Profit and total comprehensive income for the period attributable to shareholders 75 857 75 857 Dividends distributed (72 128) (72 128) Issue of new shares 6 20 829 20 835 Balance at 31 December 2010 3 612 7 655 709 146 116 1 085 591 8 891 028 Share-based payment expense 32 285 32 285 Profit and total comprehensive income for the period attributable to shareholders 273 352 273 352 Transfer of equity compensation reserve to retained earnings (22 325) 22 325 - Dividends distributed (18 074) (18 074) Issue of new shares 212 936 549 936 761 Balance at 30 June 2011 3 824 8 592 258 156 076 1 363 194 10 115 352 Share-based payment expense 27 845 27 845 Profit and total comprehensive income for the period attributable to shareholders 198 156 198 156 Dividends distributed (38 242) (38 242) Balance at 31 December 2011 3 824 8 592 258 183 921 1 523 108 10 303 111 Reviewed Reviewed Audited Six months Six months Year ended ended ended
31 December 31 December 30 June 2011 2010 2011 R000 R000 R000 CAPITAL COMMITMENTS Booysendal Authorised but not contracted 1 436 264 2 911 587 3 111 449 Contracted 1 323 710 732 413 762 336 2 759 974 3 644 000 3 873 785
Zondereinde mine Authorised but not contracted 152 627 312 843 325 127 Contracted 107 565 33 974 59 125 260 192 346 817 384 252
OTHER COMMITMENTS Information Technology Outsource Service Provider Due within one year 13 502 11 186 13 432 Due within two to five years 24 263 20 921 31 026 Operating lease rentals - office equipment Due within one year 221 1 016 1 182 Due within two to five years 588 8 575 Operating lease rentals - premises Due within one year 3 749 459 3 872 Due within two to five years 11 434 - 11 504 More than five years 14 399 - 14 855 Bank guarantees issued 72 049 115 239 49 250 These commitments in respect of Zondereinde mine will be financed out of operating cash flows. The Booysendal commitments will be funded from a combination of internal retentions and debt. Reviewed Reviewed Audited Six months Six months Year ended ended ended 31 December 31 December 30 June
2011 2010 2011 Change % R000 R000 R000 OPERATING STATISTICS * Merensky Development metres 18.3 3 163 2 673 5 899 Square metres mined 25.7 85 771 68 211 140 501 Tonnes milled 21.8 449 117 368 660 793 490 Head grade (g/ton - 3PGEs + Au) 3.5 5.9 5.7 5.6 Available ore reserves - months 18 20 18 UG2 Development metres 175.2 1 907 693 1 720 Square metres mined 68.5 87 992 52 220 125 726 Tonnes milled 69.2 549 481 324 800 797 355 Head grade (g/ton - 3PGEs + Au) (2.2) 4.3 4.4 4.3 Available ore reserves - months 24 24 24 Combined Development metres 50.6 5 070 3 366 7 619 Square metres mined 44.3 173 763 120 431 266 227 Tonnes milled 44.0 998 598 693 460 1 590 845 Head grade (g/ton - 3PGEs + Au) (2.0) 5.0 5.1 4.9 FINANCIAL STATISTICS * Precious metals in concentrates produced kg 26.5 4 592 3 629 7 779 Precious metals in concentrates purchased kg (6.7) 1 010 1 082 2 244 Precious metals sold kg 13.1 5 295 4 682 9 872 Average price realised R/kg 10.6 341 725 308 886 323 899 Operating costs R/kg (3.3) 302 636 313 026 307 203 Cash costs R/kg (2.2) 273 812 279 936 279 118 Precious metals in concentrates produced oz 26.5 147 636 116 665 250 110 Precious metals in concentrates purchased oz (6.7) 32 472 34 797 72 146 Precious metals sold oz 13.1 170 238 150 527 317 392 Average price realised US$/oz 2.9 1 388 1 349 1 439 Operating costs US$/oz (10.0) 1 231 1 367 1 363 Cash costs US$/oz (9.7) 1 114 1 233 1 238 Average exchange rate realised US$1.00 = R 7.6 7.66 7.12 7.01 Operating costs per tonne milled R/tonne (15.0) 1 392 1 638 1 502 Cash costs per tonne milled R/tonne (14.0) 1 259 1 464 1 365 * Not audited or reviewed. FINANCIAL RESULTS The improved financial performance of the group is largely attributable to higher production volumes from the Zondereinde mine in the first half of F2012 compared to the previous comparable period, which was overwhelmingly impacted by the effects of a six-week strike. Revenues increased by 22.7% to R1 979.9 million owing to a combination of a 13.1% increase in precious metals sold of 5 295kg, compared with 4 682kg sold in the previous period, and an increase of 10.6% in the average rand basket price realised of R341 725/kg (F2011 H1: R308 886/kg). The higher prices realised reflect the effect of a slightly higher US dollar basket price of US$1 388/oz, 2.9% up on H1 F2011, along with a weakening in the South African currency against the US dollar, with an average exchange rate of R7.66 prevailing, compared to R7.12 for the previous period. The higher operating costs, which increased by 24.2%, are largely attributable to the increased production volumes as well as increases in mining input costs, notably those of power and labour. Refining costs of R41.3 million, 32.3% higher than H1 F2011, reflect the effect of the increased volumes, as well as the impact of the weakening rand against the euro by 11.6%. A 6.7% drop in the volume of metals in concentrates purchased to 1 010kg accounted for a commensurate decline, of 5.9%, in the cost of concentrates purchased. Depreciation and impairments increased by 14.1% reflecting additional property, plant and equipment assets purchased during the current period. The net result was a 13.7% increase in the cost of sales to R1 759.3 million. Consequently operating profit increased from R67.1 million in H1 F2011 to R220.5 million in the period under review. The decline in investment revenue, comprising mainly interest, reflects the effect of the lower cash balances, as a consequence of the development of the Booysendal mine during the year. The higher sundry income reflects a reduction in foreign exchange losses and an increase in treatment charges on purchased concentrates. The net result is that net profit attributable to shareholders increased to R198.2 million compared to R75.9 million in H1 F2011. With the improved profitability of the group, cash flows from operating activities increased to R211.7 million (H1 F2011: R176.2 million). Cash flows utilised in investing activities rose to R899.3 million (H1 F2011: R343.7 million) reflecting the increased momentum in the construction and development activities at the Booysendal mine. R785.2 million was spent on the development of the Booysendal mine compared to R214.5 million in the previous comparable period. Cash flows utilised in financing activities declined to R38.2 million from R51.3 million, reflecting the reduction in dividends over the previous period. The net effect of these cash flow activities is a closing cash balance of R972.1 million, marginally higher than the R967.9 million recorded in the previous comparable period. In keeping with its previously state policy of conserving cash to fund the development of the Booysendal mine, the board has declared a dividend of 5 cents per share (H1 F2011: 5 cents per share). ZONDEREINDE MINE Safety The thoughts of the board and management go to the loved ones of Mr Tlou Komape, a 32-year old South African, who died in a mining related accident on 20 July 2011. Despite a sustained focus on safety and safety related issues by management and the Department of Mineral Resources (DMR), safety indicators such as lost time and reportable injury rates regressed during the period under review. Whilst the total number of injuries recorded has declined over recent years, the severity of injuries remains a concern. The achievement of one million fatality free shifts at Zondereinde on 12 December 2011 is a tribute to the combined efforts of management and employees. Operating performance Predictably, post the strike in the previous comparable period, the Zondereinde mine recorded an improved performance. Total tonnes milled increased by 44.0% to 998 598 tonnes (F2011 H1: 693 460 tonnes) with the Merensky reef contributing 449 117 tonnes milled at a head grade of 5.9g/t and the UG2 reef 549 481 tonnes milled at 4.3g/t. The combined head grade however was 2.0% lower at 5.0g/t reflecting the higher ratio of the lower grade UG2 to the total. Metals in concentrate produced increased by 26.5% to 4 592kg (147 636oz). Concentrates purchased declined by 6.7% to 1 010kg (32 472oz). Total operating costs were 24.2% higher, while unit operating costs declined by 3.3% year on year, reflecting the effect of the higher production volumes. Mining conditions on the Merensky reef continue to be challenging but steady progress is being made in developing 6 and 7 levels to establish connectivity between the upper and lower levels on the western side of the mine in order to improve mining flexibility. The deepening project continues with ore reserve development on 15 level in progress, with volumes forecast to improve from H1 2013. Production lost due to Section 54 notices during the period under review amounted to approximately 489kg (15 700oz). Based on the average price realised during the period, this is equivalent to a value of R167.1 million. Labour relations The annual wage negotiations with the major employee representative bodies at Zondereinde were concluded in November 2011. In terms of the two-year agreement reached with both the National Union of Mineworkers (NUM) and Solidarity, the average salary increases range from 9 to 9.5% for both years. Capital expenditure A total of R124.1 million was spent on capital expenditure during the period of which R68.1 million was on the deepening project and the remainder on routine capital. Capital expenditure is expected to amount to R294.0 million for the 2012 financial year. Township land and development Management is pleased to advise that a further 86 housing units were sold to employees during the period under review, bringing the total to 186 since inception of the housing scheme. The housing scheme was established to facilitate home ownership for employees. BOOYSENDAL MINE Steady progress has been made at the Booysendal mine. Development of the on-reef and reverse declines continues with reef exposures confirming expectations of structure and grade. On surface, the bulk earthworks and civil construction is largely complete with the focus now on mechanical and electrical construction of plant infrastructure and erection of mine buildings. A total of R785.2 million has been spent in the current period for the development of this mine. The estimated capital expenditure for F2012 is expected to be R1.8 billion. Financing agreement Shareholders were advised on 14 November 2011 that Northam had entered into an agreement with Nedbank Limited, acting through its Nedbank Corporate and Nedbank Capital divisions, regarding a R1.0 billion 5-year revolving credit facility. The raising of the facility is in line with the group`s previously stated funding strategy to support its key strategic initiatives, specifically the development of the Booysendal mine. Together with Northam`s existing cash resources of approximately R1.0 billion at 31 December 2011 and R1.2 billion from the proposed sale of the southern portion of Booysendal, the facility provides Northam additional financial flexibility in the medium term. Other assets As part of the acquisition of Mvelaphanda Resources Limited in June 2011, Northam acquired a 50% interest in the Dwaalkop platinum project, a 20.3% interest in the issued share capital of Trans Hex Group Limited, a diamond producing and marketing company listed on the JSE Limited and a 51.0% initial participatory interest in the Kokerboom joint venture, a greenfields iron oxide / gold / copper and massive sulphide exploration project. The company continues to investigate the best way to realise value from these assets. Following the agreement with Aquarius Platinum Limited and Aquarius Platinum (South Africa) (Proprietary) Limited to dispose of the mineral rights attached to the southern portion of Booysendal for an amount of R1.2 billion, the mineral resources have been classified as held for sale. The agreement remains subject to a number of conditions precedent. AUDITOR`S REVIEW The financial results of the group have been reviewed by Mr C Maongera CA (SA) of 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 interim financial statement has been prepared on the historical cost basis, except for financial instruments that are stated at fair value. The group financial statements for the half year ended 31 December 2011 have been prepared in accordance with IAS 34 - Interim Financial Reporting as well as AC500 Standards, as issued by the Accounting Practices Board or its successor and incorporate the accounting policies which are consistent with those adopted in the Financial year ended 30 June 2011, with the exception of the adoption of the following amendments, standards or interpretations with effect from 1 July 2011: Standard - Subject IFRS 1 - IFRS 1 First time adoption of International Financial Reporting Standards - Accounting policy changes in the year of adoption (Annual improvements project 2010) IFRS 1 - First time adoption of International Financial Reporting Standards - Severe Hyperinflation and Removal of Fixed Dates for First time Adopters (amendment) IFRS 1 - First time adoption of International Financial Reporting Standards - Revaluation basis as deemed cost (Annual improvements project 2010) IFRS 1 - First time adoption of International Financial Reporting Standards - Replacement of fixed dates for certain exceptions with the date of transition to IFRS`s (amendment) IFRS 1 - First time adoption of International Financial Reporting Standards - Use of deemed cost for operations subject to rate regulation (Annual improvements project 2010) IFRS 7 Financial Instruments: Disclosures - Clarification of disclosures (Annual improvements project 2010) IAS 1 - Presentation of Financial Statements - Clarification of statement of changes in equity (Annual improvements project 2010) IAS 24 - Related Party Disclosure (revised) IAS 34 - Interim Financial Reporting - Significant events and transactions (Annual improvements project 2010) IFRIC 13 - Customer Loyalty Programmes - Fair value of award credit (Annual improvements project 2010) IFRIC 14 - IAS 19 - The limit on a Defined Benefit Asset, Minimum Funding Requirements and their interactions - Prepayment of a minimum funding requirement (Amendment) Through the annual improvements project, changes have been made to various standards, without the standards being issued as "Revised". The adoption of these amendments, standards and interpretations resulted in changes only in the way in which the interim financial results statements are presented as well as additional disclosures in the annual financial statements. They did not impact any amounts disclosed in the Interim Consolidated Statement of Comprehensive Income or Interim Consolidated Statement of Financial Position. Restatement of comparatives The group reclassified its comparatives with regard to the Toro Employee Empowerment Trust. The underlying plan assets and plan liabilities, which were previously shown on a gross basis which were equal and opposite, are now recognised on a net basis; the values previously disclosed were equal and opposite. This reclassification had no impact on net assets, net cash flows or performance of the group. 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 transaction covered in this set of results are concluded on an arm`s length basis. Segmental report The group has two distinct segments, Zondereinde mine and Booysendal mine. In the current six month period, R785.2 million has been incurred for the development of Booysendal mine (H1 F2011: R214.5 million). All the profit in the period has been earned by Zondereinde mine. Total assets in respect of the Booysendal Mine amount to R7 448.6 million (H1 F2011: R5 999.6 million). These have been allocated to property, plant and equipment, mining properties, mineral reserves and receivables of Booysendal. All the other assets relate to Zondereinde mine. Going concern The nature of all mining operations is finite, and their operations are dependent on, inter alia, geological and technical factors, as well as other economic factors, such as commodity prices and exchanges rates. There has been a recovery in metal prices since the 2008 financial crisis and the outlook for commodity prices and exchange rates, as well as the latest forecast of the geology of the group`s mineral reserves are still favourable. The directors therefore believe that the group is a going concern, and accordingly the group`s consolidated results have been prepared on this basis. Subsequent events There have been no significant events subsequent to 31 December 2011 which required adjustment or additional disclosure to the interim results. PROSPECTS Production in the second half of the year is likely to be slightly less than that of H1 owing to more public holidays in the period, and will also be dependent on geological conditions going forward. Costs are anticipated to be reasonably contained. In the absence of any untoward disruptions to production, and if the rand basket price were to remain at current levels (R335 000/kg) (F2011: R323 899/kg) earnings for the year are anticipated to increase. The information contained in this paragraph has not been reviewed by the group`s auditors. DIRECTORS Mr JAK Cochrane has been appointed as a non-executive director of Northam with effect from 10 November 2011. COMPANY SECRETARY Shareholders were advised of the resignation of Mr DL Swanepoel as company secretary with effect from 24 October 2011 and the immediate appointment of Ms PB Beale, effective on the same date. Dividend Dividend number 26 of 5 cents per share has been declared as an interim dividend in South African currency, in respect of the half year ended 31 December 2011 (H1 F2011: 5 cents). In compliance with the requirements of Strate the following dates are applicable: Last day to trade "cum div" Thursday 15 March 2012 Trading will commence "ex div" Friday 16 March 2012 Record date Friday 23 March 2012 Payment date Monday 26 March 2012 No share certificates may be de-materialised or re-materialised between Friday, 16 March 2012 and Friday, 23 March 2012, both dates inclusive. On behalf of the board PL Zim GT Lewis Chairman Chief executive officer Johannesburg 22 February 2012 Directors: PL Zim (non-executive chairman), (Alternate: AK Gupta), GT Lewis (chief executive officer) (British), AZ Khumalo (financial director), ME Beckett (British), CK Chabedi, JAK Cochrane (British), Ms NJ Dlamini (Dr), R Havenstein, Ms ET Kgosi, AR Martin, BR van Rooyen (executive director-business development), MSMM Xayiya (Alternate: MJ Willcox) Company secretary: Ms PB Beale NORTHAM PLATINUM LIMITED (Incorporated in the Republic of South Africa) (Registration number 1977/003282/06) Share code: NHM ISIN: ZAE 000030912 ("Northam Platinum" or "the company" or "the group") Registered office: Block 1A, Albury Park Magalieszicht Avenue, Dunkeld West, Johannesburg P O Box 412694, Craighall, 2024, Republic of South Africa Sponsor: One Capital These results are available on the Northam website at www.northam.co.za Date: 24/02/2012 08:00:01 Supplied by www.sharenet.co.za 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.

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