Wrap Text
Reviewed interim results report for the six months ended 31 December 2013
NORTHAM PLATINUM LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1977/003282/06)
Share code: NHM Debt issuer code: NHMI ISIN: ZAE000030912
("Northam Platinum" or "the group")
REVIEWED INTERIM RESULTS
Report for the six months ended 31 December 2013
KEY FEATURES
- Strike impacts output at Zondereinde
- First operating loss recorded since 1998
- Booysendal ramp-up on track
- R1 billion raised in successful fund raising
"THE TOTAL COMPREHENSIVE LOSS OF R92.7 MILLION FOR THE REPORTING PERIOD IS LARGELY ATTRIBUTABLE TO
THE PROTRACTED INDUSTRIAL ACTION AT THE ZONDEREINDE MINE"
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2013 2012 2013
% Change R000 R000 R000
INTERIM CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Sales revenue 3.7 2 291 183 2 209 058 4 420 977
Cost of sales 23.0 2 390 727 1 943 035 3 813 301
Operating costs 20.6 1 747 778 1 449 829 2 826 094
Concentrates purchased (8.2) 242 478 264 034 657 540
Refining and other costs 60.1 162 163 101 318 161 591
Depreciation and write-offs 153.6 224 037 88 337 234 690
Change in metal inventories (63.9) 14 271 39 517 (66 614)
Operating (loss)/profit (137.4) (99 544) 266 023 607 676
Share of earnings from associate and joint venture 33.8 3 154 2 357 13 783
Investment revenue 59.4 27 762 17 420 33 434
Finance charges 210.8 (100 639) (32 382) (17 946)
Sundry expenditure (5.5) (10 287) (10 886) (28 254)
Sundry income 198.8 55 035 18 421 88 362
(Loss)/profit before tax (147.7) (124 519) 260 953 697 055
Taxation (32 845) 114 184 169 054
(Loss)/profit for the period (162.5) (91 674) 146 769 528 001
Other comprehensive income
Items that will be reclassified
subsequently to profit and loss (996) (1 558) (4 145)
Share of associate's exchange differences on
translating foreign operations (989) (1 519) (4 105)
Share of associate's fair value adjustment on
available-for-sale financial assets (7) (39) (40)
Total comprehensive income for the period (92 670) 145 211 523 856
(Loss)/profit attributable to:
Owners of the parent (96 252) 136 236 504 907
Non-controlling interests 4 578 10 533 23 094
(Loss)/profit for the period (91 674) 146 769 528 001
Total comprehensive income attributable to:
Owners of the parent (97 248) 134 678 500 762
Non-controlling interests 4 578 10 533 23 094
Total comprehensive income for the period (92 670) 145 211 523 856
Reconciliation of headline (loss)/earnings
and per share information
(Loss)/profit attributable to shareholders (96 252) 136 236 504 907
Loss/(profit) on sale of property, plant
and equipment 349 109 (1 769)
Profit on sale of associate's property, plant
and equipment (13) (2 077) (2 118)
Profit on sale of associate's listed investment – (16) –
Impairment of investment in associate – 6 053 –
Property, plant and equipment written-off – – 33 000
Insurance claim – (2 229) (4 318)
Tax effect on above (94) 731 (7 520)
Headline (loss)/earnings (169.2) (96 010) 138 807 522 182
(Loss)/earnings per share - cents (170.2) (25.0) 35.6 132.0
Fully diluted (loss)/earnings per share - cents (169.9) (24.9) 35.6 132.0
Headline (loss)/earnings per share - cents (168.9) (25.0) 36.3 136.5
Fully diluted headline (loss)/earnings
per share - cents (168.3) (24.8) 36.3 136.5
Dividends per share - cents – – –
Weighted average number of shares in issue 384 461 090 382 536 125 382 560 902
Fully diluted number of shares in issue 387 026 914 382 536 125 382 560 902
Number of shares in issue 397 586 090 382 586 090 382 586 090
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2013 2012 2013
R000 R000 R000
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
Cash flows from operating activities 271 468 249 414 524 200
(Loss)/profit before taxation (124 519) 260 953 697 055
Depreciation and write-offs 224 037 88 337 234 690
Change in working capital 54 965 (89 078) (281 104)
Change in short-term provisions 14 217 5 848 8 204
Share-based payment expense 65 125 22 464 (2 290)
Taxation paid (59 156) (70 292) (139 303)
Interest paid 100 639 32 382 123 703
Other (3 840) (1 200) (116 755)
Cash flows utilised in investing activities (383 752) (959 097) (1 703 238)
Property, plant, equipment and mining properties
and mineral reserves
Additions to maintain operations (243 563) (220 944) (363 914)
Additions to expand operations (270 100) (761 848) (1 383 200)
Proceeds relating to pre-production expenditure 137 005 – –
Disposal proceeds 1 716 2 884 4 497
Investment in associate - cash distributed 34 16 696 16 740
Land and township development
Additions (1 539) (10 405) (17 683)
Disposals proceeds 5 867 10 281 45 979
Increase in investments held by Northam Platinum
Restoration Trust Fund (1 251) (1 101) (5 259)
Increase in investments held by Environmental
Contingency Fund (1 866) (1 023) (6 687)
Increase in investment held in Buttonshope
Conservancy Trust (179) (176) (351)
Acquisition of non-controlling interest (10 000) – –
Acquisition of subsidiary net of cash acquired – 6 416 6 416
Dividends received 124 123 224
Cash flows generated from financing activities 990 012 1 223 626 1 372 638
Proceeds from issue of shares 579 053 2 007 2 007
Finance charges (100 639) (32 382) (123 703)
Dividends paid (6 501) (13 979) (21 747)
(Decrease)/increase in long-term loans (1 901) 17 980 16 081
Revolving credit facilities utilised 400 000 – 250 000
Domestic medium-term notes issued 120 000 1 250 000 1 250 000
Increase in cash and cash equivalents 877 728 513 943 193 600
Cash and cash equivalents at beginning of period 298 580 104 980 104 980
Cash and cash equivalents at end of period 1 176 308 618 923 298 580
Reviewed Reviewed Audited
31 December 31 December 30 June
2013 2012 2013
R000 R000 R000
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
ASSETS
Non-current assets
Property, plant and equipment 6 084 829 5 511 311 6 222 226
Mining properties and mineral resources 5 704 490 4 532 862 5 708 825
Interest in associate and joint ventures 496 538 488 219 495 498
Unlisted investment 6 6 6
Land and township development 11 225 17 441 15 553
Long-term receivables 93 456 78 486 87 400
Investments held by Northam Platinum
Restoration Trust Fund 42 197 36 790 40 948
Environmental Guarantee Investment 44 273 36 743 42 407
Buttonshope Conservancy Trust 10 305 9 951 10 126
12 487 319 10 711 809 12 622 989
Current assets 2 639 057 1 758 285 1 734 675
Inventories 1 170 897 778 196 878 530
Trade and other receivables 283 992 351 758 547 920
Cash and cash equivalents 1 176 308 618 923 298 580
South African Revenue Service 7 860 9 408 9 645
Mineral resources classified as held for sale – 1 180 300 –
Land and township development classified as held for sale – 26 532 –
Total assets 15 126 376 13 676 926 14 357 664
EQUITY AND LIABILITIES
Equity
Stated capital/Share capital and share premium 9 178 708 8 599 655 8 599 655
Retained earnings 2 117 397 1 759 069 2 220 477
Equity compensation reserve – 225 098 –
Other comprehensive income from associate (15 009) (11 426) (14 013)
Equity attributable to owners of the parent 11 281 096 10 572 396 10 806 119
Non-controlling interests 4 421 4 723 9 516
Total equity 11 285 517 10 577 119 10 815 635
Non-current liabilities 2 060 721 1 963 675 1 997 826
Deferred tax liability 412 749 534 363 476 053
Long-term provisions 137 380 129 848 133 267
Long-term loans 45 663 49 464 47 564
Long-term share-based payment liability 94 929 – 90 942
Domestic medium term notes 1 370 000 1 250 000 1 250 000
Current liabilities 1 780 138 1 136 132 1 544 203
Current portion of long-term loans 3 801 3 801 3 801
Short-term share-based payment liability 77 803 – 16 665
Revolving credit facilities 650 000 – 250 000
South African Revenue Service 126 480 116 626 156 963
Trade and other payables 803 167 913 374 1 012 104
Short-term provisions 118 887 102 331 104 670
Total equity and liabilities 15 126 376 13 676 926 14 357 664
Net asset value - cents per share 2 837 2 763 2 824
Other
compre-
Equity hensive
compen- income Non-
Share Share Stated sation Retained from controlling
capital premium capital reserve earnings associate interests Total
R000 R000 R000 R000 R000 R000 R000 R000
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Balance at 1 July 2012 3 825 8 593 823 – 202 634 1 622 833 (9 868) – 10 413 247
Share based payment expense – – – 22 464 – – – 22 464
Non-controlling interest arising
on a business combination – – – – – – 8 169 8 169
Total comprehensive income
for the period – – – – 136 236 (1 558) 10 533 145 211
Profit for the period – – – – 136 236 – 10 533 146 769
Other comprehensive income
for the period – – – – – (1 558) – (1 558)
Dividends declared * – – – – – – (13 979) (13 979)
Issue of new shares 1 2 006 – – – – – 2 007
Balance at 31 December 2012 ** 3 826 8 595 829 – 225 098 1 759 069 (11 426) 4 723 10 577 119
Share based payment expense – – – (8 657) – – – (8 657)
Transfer of equity compensation
reserve to share-based payment
liability – – – (123 704) – – – (123 704)
Transfer of equity
compensation reserve to
retained earnings – – – (92 737) 92 737 – – –
Total comprehensive income
for the period – – – – 368 671 (2 587) 12 561 378 645
Profit for the period – – – – 368 671 – 12 561 381 232
Other comprehensive income
for the period – – – – – (2 587) – (2 587)
Transfer of share capital and
share premium to stated capital (3 826) (8 595 829) 8 599 655 – – – – –
Dividends declared * – – – – – – (7 768) (7 768)
Balance at 30 June 2013 – – 8 599 655 – 2 220 477 (14 013) 9 516 10 815 635
Acquisition of non-controlling
interest – – – – (6 828) – (3 172) (10 000)
Total comprehensive income
for the period – – – – (96 252) (996) 4 578 (92 670)
(Loss)/profit for the period – – – – (96 252) – 4 578 (91 674)
Other comprehensive income
for the period – – – – – (996) – (996)
Dividends declared * – – – – – – (6 501) (6 501)
Issue of new shares – – 579 053 – – – – 579 053
Balance at 31 December 2013 ** – – 9 178 708 – 2 117 397 (15 009) 4 421 11 285 517
* Non-controlling interest's portion of dividends declared by entities Within the Northam group.
** Reviewed
Reviewed Reviewed Audited
31 December 31 December 30 June
2013 2012 2013
R000 R000 R000
CAPITAL COMMITMENTS*
Booysendal Mine
Authorised but not contracted 80 488 576 605 54 801
Contracted 234 132 361 240 477 281
Total 314 620 937 845 532 082
Zondereinde Mine
Authorised but not contracted 107 765 178 517 223 071
Contracted 87 711 76 476 127 085
Total 195 476 254 993 350 156
OTHER COMMITMENTS
Information Technology - outsource service provider
Due within one year 10 000 9 434 9 710
Due within two to five years 26 632 36 632 31 753
Operating lease rentals - office equipment
Due within one year 514 1 489 1 117
Due within two to five years 915 1 575 915
Operating lease rentals - premises
Due within one year 3 209 2 862 3 116
Due within two to five years 13 972 12 990 11 098
More than five years 4 293 8 472 11 900
Employee housing development
Authorised – – 4 000
Bank guarantees issued 78 680 133 685 73 210
* These commitments will be funded from a combination of internal retentions and debt.
Six months Six months Year
ended ended ended
31 December 31 December 30 June
% Change 2013 2012 2013
ZONDEREINDE MINE
OPERATING STATISTICS*
Merensky
Development metres (8.3) 3 219 3 510 6 604
Tonnes mined (23.6) 477 137 624 438 1 130 683
Tonnes milled (27.5) 387 597 534 316 958 211
Head grade - g/ton (3 PGEs + Au) 1.7 5.9 5.8 5.8
Available ore reserves - months 20 20 20
UG2
Development metres (54.5) 459 1 009 1 596
Tonnes mined (29.5) 442 513 627 467 1 144 545
Tonnes milled (29.1) 435 637 614 742 1 157 501
Head grade - g/ton (3 PGEs + Au) (4.7) 4.1 4.3 4.2
Available ore reserves - months 24 24 24
Combined
Development metres (18.6) 3 678 4 519 8 200
Tonnes mined (26.5) 919 650 1 251 905 2 275 228
Tonnes milled (28.4) 823 234 1 149 058 2 115 712
Head grade - g/ton (3 PGEs + Au) – 5.0 5.0 4.9
FINANCIAL STATISTICS*
Precious metals in concentrates produced kg (28.9) 3 477 4 889 9 041
Precious metals in concentrates purchased kg (17.4) 589 713 1 633
Precious metals sold kg (16.4) 4 620 5 526 10 704
Average price realised R/kg 8.1 383 258 354 385 365 217
Operating costs R/kg 28.6 404 674 314 622 334 899
Cash costs R/kg 28.9 373 266 289 516 309 421
Precious metals in concentrates produced oz (28.9) 111 789 157 183 290 675
Precious metals in concentrates purchased oz (17.3) 18 946 22 923 52 502
Precious metals sold oz (16.4) 148 551 177 655 344 128
Average price realised US$/oz (8.0) 1 179 1 281 1 276
Operating costs US$/oz 8.5 1 255 1 157 1 181
Cash costs US$/oz 8.8 1 158 1 064 1 091
Average exchange rate realised US$1.00 = R 18.6 10.03 8.46 8.82
Operating costs per tonne milled R/tonne 27.6 1 709 1 339 1 447
Cash costs per tonne milled R/tonne 28.0 1 577 1 232 1 322
* Not audited or reviewed
BOOYSENDAL MINE
OPERATING STATISTICS**
UG2
Tonnes mined – 615 676 – –
Tonnes milled – 870 072 – –
Head grade - g/ton (3 PGEs + Au) – 2.6 – –
Available ore reserves - months* – – – –
FINANCIAL STATISTICS**
Precious metals in concentrates produced kg – 1 763 – –
Precious metals sold kg – 1 138 – –
Average price realised R/kg – 379 118 – –
Operating costs R/kg – 298 684 – –
Cash costs R/kg – 230 911 – –
Precious metals in concentrates produced oz – 56 696 – –
Precious metals sold oz – 36 589 – –
Average price realised US$/oz – 1 165 – –
Operating costs US$/oz – 926 – –
Cash costs US$/oz – 716 – –
Average exchange rate realised US$1.00 = R – 10.03 – –
Operating costs per tonne milled R/tonne – 605 – –
Cash costs per tonne milled R/tonne – 468 – –
* Booysendal mine still in build-up phase
** Not audited or reviewed
COMMENTARY ON RESULTS
FINANCIAL RESULTS
The total comprehensive loss of R92.7 million for the reporting period is largely attributable to the protracted
industrial action at the Zondereinde mine which started on 3 November 2013 and continued beyond the
end of the six month reporting period, and to the fact that the Booysendal mine, currently still in ramp-up
phase, is not yet in a position to contribute positively to the group's earnings.
The industrial action at Zondereinde mine, which continued to 21 January 2014, will have cost the group
an estimated R750 million in unearned revenue for F2014.
Platinum group metal sales from Zondereinde mine declined by 16.4% to 4 620kg (H1 F2013: 5 526kg);
this was partially offset by the contribution of metal sales of 1 138kg from the Booysendal mine, and
in combination with a higher average basket price of R383 258/kg compared to the previous period's
R354 385/kg (attributable to a weakening of 18.6% in the average rate of exchange to R10.03/US$)
contributed to a marginal increase of 3.7% in group revenues to R2.3 billion.
A combination of higher operating costs, increases in refining and related costs associated with third party
toll treatment, and an increase in the group's amortisation and depreciation charge owing to the inclusion of
Booysendal for the first time, led to the 23.0% increase in cost of sales to R2.4 billion (H1 F2013: R1.9 billion).
The significant increase in refining and related costs is a result of the temporary outsourcing of smelting and
refining services to a third party during the smelter rebuild from June to October 2013. A total of 4 533kg
(3PGE+Au) were treated by the third party during the period under review. With the smelter shutdown, the
value of concentrate purchases fell by 8.2% to R242.5 million (H1 F2013: R264.0 million). The smelter was
re-commissioned in October 2013 and is now fully operational.
The substantial increase in amortisation and depreciation charges to R224.0 million (H1 F2013: R88.3 million)
reflects the effects of starting to depreciate the Booysendal assets, given the mine's coming into production
on 1 July 2013.
As a consequence of the marginal increase (3.7%) in revenue and a 23.0% increase in cost of sales, the
operating loss of the group for the period is R99.5 million. Investment revenues were higher on the back
of the R1 billion raised in terms of the group's fund raising programme, of which R600 million was raised
in cash from shareholders before taking costs of R21.0 million into account. A further R120 million was
raised through a tap issue on the Domestic Medium Term Notes Programme. Finance charges increased
substantially to R100.6 million (H1 F2013: R32.4 million) owing to the increased borrowings of the group as
well as the fact that finance charges were previously capitalised as borrowing costs during the construction
of Booysendal mine prior to the mine coming into production on 1 July 2013. The increase in sundry
revenue is largely reflective of the increased foreign exchange gains occasioned by the rand weakening
against the US dollar during the current period.
The tax credit of R32.8 million stems from deferred tax benefits that are likely to accrue in future as
a consequence of capital expenditure incurred during the development of the Booysendal mine. Consequently, a
net comprehensive loss of R92.7 million was incurred for the current period (H1 F2013: profit of R145.2 million).
Despite the adverse effects of the industrial action at Zondereinde mine, cash flows from operating
activities amounted to R271.5 million compared to R249.4 million in the previous comparable period,
owing primarily to the inclusion of sales from Booysendal and a decrease in working capital.
Cash flows utilised in investing activities fell from R959.1 million in H1 F2013 to R383.8 million for the
current period largely owing to reducing capital expenditure at Booysendal mine in the current period.
Production at Booysendal commenced on 1 July 2013.
Cash flow generated from financing activities fell by 19.1% to R990.0 million (H1 F2013: R1.2 billion) due
to the relatively lower quantum of finance raised in the current period compared to the previous one.
OPERATIONS REVIEW
Zondereinde mine
Safety
Management and employees continue to apply considerable efforts to reduce the number and severity of
injuries on the mine. The total number of injuries was lower year on year owing to the effect of the strike.
Injury rates however, deteriorated slightly because fewer man hours were worked during the strike. There
were no safety related production stoppages during the period under review.
The lost time injury incidence rate (LTIIR) for the period was 1.75 and the reportable injury incidence rate
(RIIR) 0.76.
Operating performance
The smelter rebuild, prompted by the unexpected erosion of the refractory bricks comprising the walls of
the smelter in proximity to the slag level interface, was completed as planned by the end of October 2013,
using a different brick specification.
Zondereinde's operating performance was severely impacted by the 11 week strike, with employees only
returning to work in the new calendar year.
The combined tonnes milled fell by 28.4% to 823 234 tonnes (H1 F2013: 1 149 058 tonnes). Merensky
reef contributed 387 597 (H1 F2013: 534 316 tonnes) at a head grade of 5.9g/t (3PGE+Au) and the UG2
reef 435 637 (H1 F2013: 614 742 tonnes) at 4.1g/t. The combined head grade remained constant at
5.0g/t. Ore reserves currently available are unchanged at 20 months for Merensky and 24 months for UG2.
Production of metals in concentrate fell by 28.9% to 3 477kg (H1 F2013: 4 889kg), whilst volume of metals
in concentrate purchased declined by 17.4% from 713kg to 589kg owing to the smelter disruptions. Unit
operating and cash costs of R1 709 and R1 577 per tonne milled respectively were skewed by the lower
production volumes.
Mining conditions at Zondereinde continue to be impacted by poor ground conditions particularly on the
Merensky reef. This has been exacerbated by the downtime occasioned by the strike and has necessitated
slow and careful mining start-up activities. Steady progress has been made with the decline project including
initial stoping from 15 level.
Labour relations
Wage negotiations at Zondereinde started on 31 July 2013. From the outset the negotiations were
challenging, and marked by disputes. Following the intervention of third party facilitators and extensive
talks, the NUM was granted a certificate of non-resolution and proceeded with strike action with effect
from 3 November 2013. The strike continued beyond the end of the reporting period until 21 January 2014.
The board and management of Northam have extended their appreciation to the efforts of the CCMA in
assisting to bring the strike to a conclusion. In terms of the settlement reached wage increases granted
ranged between 7.5% and 9.5% along with a once-off ex gratia payment of R3 000 per employee.
Capital expenditure
A total of R243.6 million (H1 F2013: R221.0 million) was spent to maintain operations during the current
period. This included R54.0 million for the smelter rebuild. Forecast capital expenditure for the remainder of
F2014 is expected to be R195.5 million.
Township and land development
A further 28 housing units were sold during the current period, bringing the total number of housing units
sold since inception of the Zondereinde employee housing scheme to 364.
Booysendal mine
Safety
A total of three lost time injuries were recorded in the current reporting period and the LTIIR and RIIR were
measured at 0.35 and 0.23 respectively. There were no safety-related work stoppages during the period.
Operating performance
The mine came into production on 1 July 2013. Mined tonnage during the reporting period totalled
615 676 tonnes whilst a total of 870 072 tonnes were milled at a head grade of 2.6g/t (3 PGE+Au) to produce
1 763kg of metals in concentrate. At 31 December 2013 the surface stockpile contained 197 878 tonnes of
run of mine ore.
Unit operating and cash costs at Booysendal were R605 and R468 per milled tonne respectively. This is not
a true reflection of the performance at Booysendal as the unit costs have been positively influenced by the
addition of tonnage from the pre-production stockpile. A more realistic assessment of unit costs will be
obtained as the mine ramps up to steady state production and the initial stockpile is depleted.
Labour relations
There was no industrial action at Booysendal during the current period.
Capital expenditure
A total of R270.1 million (H1 F2013: R761.8 million) was spent in the current period on the development of
Booysendal mine. A further R314.6 million is forecast to be spent in the remainder of F2014.
The total capital expenditure for the development of Booysendal mine since inception is R4.3 billion against
a projected total expenditure of R4.6 billion. The original capital budget for Booysendal was R3.9 billion in
June 2010 terms.
FINANCING ARRANGEMENTS
The group announced on 20 September 2013 that it had successfully raised a total of R1 billion in additional
cash and financing facilities through a R600 million claw back rights offer underwritten by Coronation
Asset Management Proprietary Limited and a R400 million additional revolving credit facility from Nedbank
Limited. In addition, certain covenant conditions have been relaxed until December 2014. R120 million was
also raised through a tap issue on the Domestic Medium Term Notes Programme during the period.
CORPORATE ACTIVITY
Shareholders are referred to the announcement dated Friday, 3 August 2012 wherein they were advised of
a restructuring of the group's BEE shareholding. The group has continued to consult with the Department of
Mineral Resources in this regard and shareholders will be advised of developments as they occur.
OTHER ASSETS
The group continues to consider optimal ways of realising value from assets that were acquired through
the acquisition of Mvelaphanda Resources Proprietary Limited (formerly Mvelaphanda Resources Limited) in
June 2011. These assets comprised 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 Johannesburg Stock Exchange and a 51% initial participatory interest in the Kokerboom Joint Venture
which is a greenfields iron oxide/gold/copper and massive sulphide exploration project.
The group has acquired a further 10% of Northam Chrome Producers Proprietary Limited (NCP) for
R10 million with effect from 1 July 2013 bringing its total holding in that subsidiary to 80%. NCP produces
chrome from Zondereinde's UG2 tailings, and has contributed an after tax profit of R24.0 million in the
current period.
MINERAL RESOURCES AND RESERVES
The mineral resource and reserve estimation is an annual process. Management is not aware of any material
changes to the inputs to the resource and reserve estimation process.
PROSPECTS
Social and economic uncertainty coupled with labour turbulence is likely to continue to influence the long
term sustainability of the platinum industry in the foreseable future. Barring any disruptions to Northam's
operations in the second half of the financial year, the Zondereinde mine is expected to recover to a steady
state of production and the Booysendal mine to continue its production build-up. The financial performance
of the company for the full year however, will be negatively impacted by the 11 week strike which ended
on 21 January 2014.
AUDITOR'S REVIEW
The financial results of the group have been reviewed under the supervision of Mr M Herbst CA (SA),
registered auditor 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 2013 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 2013, with the exception of the adoption of the following amendments, standards or interpretations
with effect from 1 July 2013:
Standard Subject
IFRS 1 First time adoption of International Financial Reporting Standards – Government Loans (Amendment)
IFRS 1 First time adoption of International Financial Reporting Standards – Application of IFRS 1 for previous
IFRS reporters (Annual Improvements Project 2012)
IFRS 1 First time adoption of International Financial Reporting Standards – Borrowing costs capitalised under
previous GAAP (Annual Improvements Project 2012)
IFRS 10 Consolidated Financial Statements
IFRS 10 Consolidated Financial Statements – Transition guidance amendments (Amendment)
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 11 and 12 Joint Arrangements and Disclosure of Interests in Other Entities – Transition guidance amendments
(Amendment)
IFRS 13 Fair Value Measurement
IAS 16 Property, Plant and Equipment – Classification of servicing equipment (Annual Improvements Project 2012)
IAS 19 Employee Benefits (Revised)
IAS 27 Consolidated and Separate Financial Statements – Reissued as IAS 27 Separate Financial Statements (as
amended in 2011)
IAS 28 Investments in Associates and Joint Ventures (Amendment)
IAS 32 Financial Instruments: Presentation – Tax effect of distributions (Annual Improvements Project 2012)
IFRS 7 Financial Instruments: Disclosures – Offsetting Financial Assets and Financial Liabilities (Amendment)
IAS 34 Interim Financial Reporting – Interim Financial Reporting and segment information for total assets and
liabilities (Annual Improvements Project 2012)
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
The adoption of these amendments 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
preliminary consolidated statement of financial position.
RELATED PARTIES
In the ordinary course of business, the group enters into various sale, purchase and lease transactions with
a large number of entities, some of whom are related parties. All transactions covered in this set of results
were concluded on an arm's length basis, except for the waste ore processed into chrome by the subsidiary
NCP, which is disposed of by Northam at no cost.
SEGMENTAL REVIEW
The group's most significant segments are Booysendal mine and Zondereinde mine. In the current year, capital
expenditure of R270.1 million was incurred on the development of Booysendal mine (H1 F2013: R761.8 million).
The loss for the current period incurred by Booysendal mine amounts to R168.3 million (H1 F2013: profit of
R1.6 million) with profits earned by Zondereinde mine resulting in a loss of R91.7 million for the group. Revenue
relates to external customers of the group's metal production of which R337.1 million was earned by Booysendal
mine and R1 954.1 million by Zondereinde mine.
Total assets in respect of the Booysendal mine amount to R9.4 billion (H1 F2013: R9.1 billion). These are
allocated to property, plant and equipment, mining properties, mineral reserves, inventories and receivables
of Booysendal. The other assets relate to Zondereinde mine.
GOING CONCERN
Mining operations have a finite life by nature and their operations are dependent on, amongst other things,
geological, technical as well as economic factors such as commodity prices and exchange rates. The outlook
for the local as well as the global economy remains uncertain. Although there are signs that the United States
and Europe are emerging out of recession, the Chinese economy seems to be slowing. The mining sector in
South Africa remains subject to social and labour instability which could pose a threat to operations.
The rate of exchange of the South African rand against the US dollar has weakened significantly recently. In
addition average PGM prices in US dollar terms have also fallen.
Nevertheless, management believes that, assuming uninterrupted production and the availability of
operational cash flows and borrowing facilities, the group remains a going concern.
PREPARATION
These reviewed interim results have been prepared under the supervision of the financial director,
Mr AZ Khumalo CA (SA). The interim results of the group will be published on the company's website
on Friday, 21 February 2014.
EVENTS AFTER THE REPORTING PERIOD
Save for the strike that ended on 21 January 2014, there have been no significant events subsequent to
31 December 2013 which require adjustment or additional disclosure to these interim financial results.
DIRECTORS
Ms NJ Dlamini (Dr) resigned as an independent non-executive director on 30 September 2013.
Mr PA Dunne has been appointed a director, and chief executive officer, with effect from 1 March 2014
in the place of Mr GT Lewis who has resigned as a director with effect from the same date.
DIVIDEND
Owing to the continued uncertainty prevailing in the mining industry and the continuing cash requirements
at the Booysendal mine to complete the capital footprint, the board has resolved not to declare an interim
dividend for F2014 (F2013: nil cents per share).
ON BEHALF OF THE BOARD
PL Zim GT Lewis
Chairman Chief executive officer
Johannesburg
19 February 2014
Directors
PL Zim (Non-executive chairman), GT Lewis (Chief executive officer) (British),
AZ Khumalo (Financial director), ME Beckett (British), CK Chabedi, JAK Cochrane
(British), R Havenstein, Ms ET Kgosi, and AR Martin.
Registered office
Block 1A, Albury Park, Magalieszicht Avenue, Dunkeld West, Johannesburg, 2196.
PO Box 412694, Craighall, 2024, Republic of South Africa
Company secretary
Ms PB Beale
Transfer secretaries
Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg, 2001.
P O Box 61051, Marshalltown, 2107, South Africa.
Sponsor and debt sponsor
One Capital
17 Fricker Road, Illovo, 2196.
P O Box 784573, Sandton, 2146, South Africa.
These results are available on Northam's website at www.northam.co.za and at Northam's registered office.
21 February 2014
Date: 21/02/2014 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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