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TRADING UPDATE, COMMENCEMENT OF A DOMESTIC MEDIUM TERM NOTE PROGRAMME AND PROPOSED RESTRUCTURING OF BEE SHAREHOLDING
NORTHAM PLATINUM LIMITED
Incorporated in the Republic of South Africa
(Registration number 1977/003282/06)
Share code: NHM
ISIN code: ZAE000030912
(“Northam” or “the Company”)
TRADING UPDATE, COMMENCEMENT OF A DOMESTIC MEDIUM TERM NOTE PROGRAMME AND PROPOSED
RESTRUCTURING OF NORTHAM’S BLACK ECONOMIC EMPOWERMENT SHAREHOLDING
TRADING UPDATE
Northam shareholders (“Shareholders”) are advised that the Company’s earnings per share and headline
earnings per share for the year ended 30 June 2012 (“FY2012”) are both estimated to be between 70 and 85
cents. This compares with earnings per share of 96.2 cents and headline earnings per share of 89.5 cents
reported for the year ended 30 June 2011 (“FY2011”).
The anticipated lower earnings stems primarily from flat sales volumes (year on year) as a consequence of the
smelter shut down in the fourth quarter of the financial year, as referred to in the Company’s announcements
dated 11 May 2012 and 15 May 2012, respectively . This restricted the volume of material available for sale
despite materially higher mine production compared to the previous year.
The weighted average number of shares in issue for FY2012 was 382 426 483, compared with 363 087 830 for
FY2011.
The preliminary results for FY2012 are expected to be released on or about 24 August 2012.
The information provided above has not been reviewed or reported on by the Company’s auditors.
DOMESTIC MEDIUM TERM NOTE PROGRAMME
Northam’s board of directors (“Board”) has resolved to initiate a R2 billion domestic medium term note
programme (“DMTN Programme”), the purpose of which will be to raise additional third party debt funding
to partially fund the approximately R4 billion total capital expenditure programme pertaining to Northam’s
ongoing Booysendal mine development (“Booysendal Development”) and general working capital
expenditure of the Company. Northam has to date funded approximately R2.3 billion (as at 30 June 2012) of
the Booysendal Development with internally generated cash.
The Company expects to announce the outcome of its DMTN Programme’s first placement during August
2012.
RESTRUCTURING OF BROAD BASED BLACK ECONOMIC EMPOWERMENT (“BEE”) SHAREHOLDING
Shareholders are advised that, as a result of the recent significant decreases in the share prices of Platinum
Group Metals producers, including Northam (“Share Price Decline”) certain of Northam’s BEE Shareholders
have been required to dispose of a significant portion of their Northam shareholdings in order to address
current breaches of covenants contained in the BEE financing agreements entered into by these BEE
Shareholders (“BEE Financing Agreements”).
In terms of the BEE Financing Agreements, two of Northam’s BEE Shareholders, namely Afripalm Resources
(Proprietary) Limited (“Afripalm”) and Mvelaphanda Holdings (Proprietary) Limited (“Mvela Holdings”)
pledged the Northam shares held by them as security (“Affected Shares”) for the funds provided to them
(collectively referring to Afripalm and Mvela Holdings as “Affected BEE Shareholders”).
Accordingly, the lenders to the Affected BEE Shareholders have exercised their claims over the Affected
Shares and are likely to dispose of a sufficient number of such Affected Shares so as to restore compliance by
the Affected BEE Shareholders with the terms of the BEE Financing Agreements.
The resultant potential reduction in Northam’s BEE status is still uncertain but could be in the order of 10
percentage points, thereby reducing the total BEE shareholding in Northam from 26% to approximately 16%
(“Potential BEE Decrease”).
In anticipation of the Potential BEE Decrease and in order to pro-actively seek solutions to address this,
Northam has consulted with the Department of Mineral Resources (“DMR”). The DMR requires Northam to
urgently restore its BEE shareholding to a minimum of 26% (“BEE Target”).
PROPOSED BEE TRANSACTIONS TO ACHIEVE THE BEE TARGET
In conformity with Northam’s commitment to transformation, the Board has resolved that Northam should
develop and implement an additional BEE transaction (“BEE Transaction”) to achieve and sustain the BEE
Target and has furthermore established certain key principles around which the BEE Transaction should be
structured and implemented. These are:
• The BEE Transaction should ensure compliance by Northam and the relevant participants with the
provisions and principles of the Mining Charter and the requirements of the Mineral and Petroleum
Resources Development Act.
• The BEE Transaction should be sustainable and be beneficial for all stakeholders, including Northam
and its existing Shareholders.
• The BEE Transaction should ensure that Northam’s BEE shareholding percentage is secured at the BEE
Target for an extended period so as to ensure that Northam’s BEE status is not threatened in the
future.
• The cost of the BEE Transaction to existing Shareholders should be minimised.
• Participation in the BEE Transaction should be broad-based to ensure that historically marginalised
communities and individuals also benefit.
With the above principles in mind, and subject to approval by the DMR, Northam proposes to proceed with
the creation of one or more BEE trusts (“BEE Trusts”), the beneficiaries of which are expected to include
Northam’s existing BEE shareholders, a broad based women’s group and other BEE entities.
Following the establishment of the BEE Trusts, Northam proposes to create a new class of ordinary shares
(““A” Shares”). These “A” Shares will rank pari passu with Northam’s current ordinary shares in issue with
respect to voting rights but will be subject to dividend restrictions, as more fully set out below. A sufficient
number of “A” Shares would then be issued to the BEE Trusts, at a value to be determined by the Board and
to be approved by Northam’s Shareholders, so as to achieve the BEE Target.
It is further proposed that the issue of the “A” Shares to the BEE Trusts will be funded by way of a notional
funding structure which will not require the BEE Trusts to encumber the “A” Shares with third party finance
and furthermore will have no significant short to medium term cash flow implications for Northam.
In terms of the proposed notional funding structure, it is envisaged that the amount notionally owing by the
BEE Trusts to Northam, created through the issuing of the “A” Shares, (“Notional Outstanding Amount”) will
be escalated annually at a rate to be determined by the Board and approved by Shareholders.
The Notional Outstanding Amount will be reduced on the basis of a notional allocation of free cash flows
generated by Northam (“Notional Repayment”). The Notional Repayment will not have a cash flow
implication for Northam or its existing Shareholders.
Once the Notional Outstanding Amount has been reduced to zero, the “A” Shares will rank pari passu with
Northam’s ordinary shares in all respects, including with respect to future dividends. Accordingly, until such
time as the Notional Outstanding Amount is reduced to zero, the economic interest attributable to Northam’s
existing issued shares will not be diluted.
SHAREHOLDER APPROVAL AND CIRCULAR
The BEE Transaction will require the approval of Shareholders in general meeting. A circular, including a
notice convening a general meeting for this purpose and setting out full details of the BEE Transaction will be
sent to Shareholders in due course.
Shareholders are further advised that the BEE Transaction is still in its initial stages and a further
announcement will be made by the Company when the terms and conditions of the BEE Transaction have
been finalised.
Johannesburg
3 August 2012
Corporate Advisor and Sponsor
One Capital
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