Wrap Text
Reviewed preliminary results for the year ended 30 June 2016
NORTHAM PLATINUM LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1977/003282/06)
Share code: NHM
ISIN: ZAE000030912
Dept issuer code: NHMI
Bond code: NHM002
Bond ISIN: ZAG000129024
Bond code: NHM003
Bond ISIN: ZAG000129032
("Northam" or "the group" or "company")
REVIEWED PRELIMINARY RESULTS for the year ended 30 June 2016
These reviewed preliminary results have been prepared under the supervision of the chief financial
officer, Mr AZ Khumalo CA(SA). The preliminary results of the group will be published on the
company's website on Friday 26 August 2016.
The financial results of the group have been reviewed by Ernst & Young Inc., under the supervision
of Mr M Herbst CA(SA) a registered auditor. A copy of their unmodified review report is available for
inspection at Northam's registered office.
Reviewed Audited
30 June 2016 30 June 2015 %
R'000 R'000 variance
PRELIMINARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Sales revenue 6 097 070 6 035 535 1.0
Cost of sales (5 713 722) (5 439 722) 5.0
Operating costs (5 007 233) (4 342 571) 15.3
Concentrates purchased (350 514) (602 395) (41.8)
Refining and other costs (133 186) (199 470) (33.2)
Depreciation and write-offs (403 545) (339 949) 18.7
Change in metal inventories 180 756 44 663 304.7
Operating profit 383 348 595 813 (35.7)
Share of (losses)/earnings from associate
and joint venture (32 253) 28 769 (212.1)
Investment revenue 265 258 72 043 268.2
Finance charges excluding preference
share dividends (39 634) (145 170) (72.7)
Sundry income 180 928 268 250 (32.6)
Sundry expenditure (92 122) (1 587 264) (94.2)
Profit/(loss) before preference share
dividends 665 525 (767 559) 186.7
Amortisation of liquidity fees paid on
preference shares (18 088) – 100.0
Preference share dividends (918 806) (100 767) 811.8
Loss before tax (271 369) (868 326) (68.7)
Taxation (236 894) (165 619) 43.0
Loss for the year (508 263) (1 033 945) (50.8)
Other comprehensive income
Items that may be subsequently
reclassified to profit or loss 19 822 (4 482) 542.3
Share of associate's exchange differences
on translating foreign operations and
foreign currency translation (3 947) (4 482) (11.9)
Reclassification of other comprehensive
income from associate to profit or loss 23 769 – 100.0
Total comprehensive income for
the year (488 441) (1 038 427) (53.0)
Loss attributable to:
Owners of the parent (508 263) (1 035 649) (50.9)
Non-controlling interest – 1 704 (100.0)
Loss for the year (508 263) (1 033 945) (50.8)
Total comprehensive income
attributable to:
Owners of the parent (488 441) (1 040 131) (53.0)
Non-controlling interest – 1 704 (100.0)
Total comprehensive income for
the year (488 441) (1 038 427) (53.0)
Reconciliation of headline loss per share
information
Loss attributable to shareholders (508 263) (1 035 649) (50.9)
Profit on sale of property, plant and
equipment (57) (892) (93.6)
Profit on sale of associate's investment – (7 105) 100.0
Impairment of associate's assets 11 185 17 493 (36.1)
Negative goodwill on assets acquired by
associate's associate – (26 804) 100.0
Foreign currency differences on
repayment of long-term receivables from
associates foreign operations reclassified
to profit or loss – (922) 100.0
Impairment of property, plant and
equipment – 2 525 (100.0)
Loss on sale of investment in associate 21 024 – 100.0
(Reversal of impairment)/impairment of
non-core assets (13 610) 261 488 (105.2)
Tax effect on above (3 116) (5 097) (38.9)
Headline loss (492 837) (794 963) (38.0)
Loss per share – cents (145.3) (264.3) (45.0)
Fully diluted loss per share – cents (145.3) (264.3) (45.0)
Headline loss per share – cents (140.9) (202.9) (30.6)
Fully diluted headline loss per share – cents (140.9) (202.9) (30.6)
Dividends per share – – –
Weighted average number of shares
in issue 349 875 759 391 834 708 (10.7)
Fully diluted number of shares in issue 349 875 759 391 834 708 (10.7)
Number of shares in issue 509 781 212 509 781 212 –
Treasury shares in issue 159 905 453 159 905 453 –
Shares in issue adjusted for treasury
shares 349 875 759 349 875 759 –
Reviewed Audited
30 June 2016 30 June 2015 %
R'000 R'000 variance
PRELIMINARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Assets
Non-current assets 14 110 084 13 367 048 5.6
Property, plant and equipment 7 853 993 7 065 352 11.2
Mining properties and mineral resources 5 614 094 5 636 478 (0.4)
Interest in associates and joint ventures 192 164 275 847 (30.3)
Unlisted investment 6 6 –
Land and township development 51 341 10 000 413.4
Long-term receivables 89 717 94 503 (5.1)
Investments held by Northam Platinum
Restoration Trust Fund 93 647 49 092 90.8
Environmental Conservancy Trust 60 345 52 122 15.8
Buttonshope Conservancy Trust 10 445 11 037 (5.4)
Deferred tax asset 144 332 172 611 (16.4)
Current assets 4 867 779 5 784 288 (15.8)
Inventories 1 330 270 1 126 550 18.1
Trade and other receivables 375 204 498 854 (24.8)
Cash and cash equivalents 3 105 080 4 138 189 (25.0)
Tax receivables 57 225 20 695 176.5
Total assets 18 977 863 19 151 336 (0.9)
Equity and liabilities
Total equity 8 727 984 9 216 425 (5.3)
Stated capital 13 778 114 13 778 114 –
Treasury shares (6 556 123) (6 556 123) –
Retained earnings 631 545 1 139 808 (44.6)
Equity settled share based
payment reserve 874 448 874 448 –
Share of other comprehensive income
from associate – (19 822) 100.0
Non current liabilities 9 072 179 7 310 753 24.1
Deferred tax liability 590 637 521 452 13.3
Long-term provisions 272 820 187 217 45.7
Preference share liability 7 429 549 6 492 655 14.4
Long-term loans 275 513 39 963 589.4
Long-term share based payment liability 84 373 69 466 21.5
Domestic medium-term notes 419 287 – 100.0
Current liabilities 1 177 700 2 624 158 (55.1)
Current portion of long-term loans 13 201 3 801 247.3
Short-term share based payment liability 56 704 61 019 (7.1)
Domestic medium-term notes – 1 370 000 (100.0)
Tax payable 104 072 102 072 2.0
Trade and other payables 877 935 959 996 (8.5)
Short-term provisions 125 788 127 270 (1.2)
Total equity and liabilities 18 977 863 19 151 336 (0.9)
Other
Equity- compre-
settled hensive
share-based income Non-
Stated Retained payment from controlling
capital earnings reserve associates interest Total
R'000 R'000 R'000 R'000 R'000 R'000
PRELIMINARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Balance as at
30 June 2014 9 178 688 2 223 135 – (15 340) 5 389 11 391 872
Acquisition of non-
controlling interest – (46 815) – – (3 185) (50 000)
Total comprehensive
income for the year – (1 033 945) – (4 482) 1 704 (1 036 723)
Loss for the year – (1 033 945) – – 1 704 (1 032 241)
Other comprehensive
income for the year – – – (4 482) – (4 482)
Dividends declared* – (2 567) – – (3 908) (6 475)
Issue of new shares 4 599 426 – – – – 4 599 426
Treasury shares (6 556 123) – – – – (6 556 123)
Share-based
payment reserve – – 874 448 – – 874 448
Balance at
30 June 2015 7 221 991 1 139 808 874 448 (19 822) – 9 216 425
Total comprehensive
income for the
year – (508 263) – 19 822 – (488 441)
Loss for the year – (508 263) – – – (508 263)
Other comprehensive
income for the year – – – 19 822 – 19 822
Balance at
30 June 2016 7 221 991 631 545 874 448 – – 8 727 984
* Non-controlling interest's portion of dividends declared by entities within the Northam group.
Reviewed Audited
30 June 2016 30 June 2015 %
R'000 R'000 variance
PRELIMINARY CONSOLIDATED STATEMENT OF CASH FLOWS
Cash flows from operating activities 839 081 340 950 146.1
(Loss)/profit before taxation (271 369) (868 326) (68.7)
Adjusted for the following non cash items as well
as discloseable items
Depreciation and write-offs 403 545 339 949 18.7
Changes in provisions 50 221 52 823 (4.9)
Changes in long-term receivables 4 786 (456) 1 149.6
Investment revenue (265 258) (72 043) (268.2)
Finance charges excluding preference share
dividends 39 634 145 170 (72.7)
Finance charges on preference shares 918 806 100 767 811.8
Liquidity fees on the preference shares 18 088 – 100.0
Equity-settled share-based payment expense – 874 448 (100.0)
Movement in share-based payment liability 10 592 (38 350) 127.6
(Reversal of impairment)/impairment of
investment in associates (13 610) 239 054 (105.7)
Share of losses/(profits) from associate 32 253 (28 769) 212.1
Loss on sale of investment in associate 21 024 – 100.0
Amortisation of participation interest in the
Pandora joint venture 2 600 2 600 –
Profit on sale of property, plant and equipment (57) (892) (93.6)
Other 1 395 (788) 277.0
Change in working capital (162 131) (221 248) (26.7)
Additions to land and township development (41 341) – (100.0)
Investment revenue 265 258 72 043 268.2
Taxation paid (175 355) (255 032) (31.2)
Cash flows utilised in investing activities (1 126 793) (1 101 462) 2.3
Property, plant, equipment, mining properties
and mineral reserves
Additions to maintain operations (369 636) (322 980) 14.5
Addition to expand operations (804 344) (779 068) 3.2
Disposal proceeds 4 235 1 551 173.0
Additions to land and township development – (203) 100.0
Investment in associate – cash distributed 24 12 918 (99.8)
Additional investment made in associate (20 601) (9 623) 114.1
Proceed on the sale of investment in Trans Hex
Group Limited 81 815 – 100.0
Increase in investments held by Northam Platinum
Restoration Trust Fund (10 655) (2 624) 306.1
Increase in investments held by Environmental
Contingency Fund (8 223) (1 098) 648.9
Movement in investment held in Buttonshope
Conservancy Trust Fund 592 (335) 276.7
Cash flows (utilised)/generated
from financing activities (745 397) 4 232 645 (117.6)
Proceeds from issue of shares – 4 600 000 (100.0)
Transaction costs – (574) 100.0
Liquidity fees paid – (163 903) 100.0
Acquisition of non-controlling interest – (50 000) 100.0
Interest paid (39 634) (145 170) (72.7)
Dividends paid – (3 908) 100.0
Movement in long-term loans 244 950 (3 800) >100.0
Domestic medium-term notes issued 419 287 – 100.0
Domestic medium-term notes repaid (1 370 000) – (100.0)
(Decrease)/increase in cash and cash equivalents (1 033 109) 3 472 133 (129.8)
Cash and cash equivalents at the beginning
of the year 4 138 189 666 056 521.3
Cash and cash equivalents at the end
of the year 3 105 080 4 138 189 (25.0)
NOTES TO THE REVIEWED PRELIMINARY RESULTS
ACCOUNTING POLICIES AND THE BASIS OF PREPARATION
The financial statements have been prepared on the historical cost basis, except for financial
instruments to the extent required or permitted under International Financial Reporting Standards
(IFRS) and as set out in the relevant accounting policies detailed in our annual financial statements.
The group preliminary financial statements have been prepared in accordance with the framework
concepts and the measurement and recognition requirements of IFRS, its interpretations issued
by the IFRS Interpretations Committee, the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee, presentation and disclosed as required by IAS 34 Interim Financial
Reporting, the JSE Listings Requirements and the requirements of the Companies Act, No. 71 of 2008
(Companies Act).
There have been no amendments, standards or interpretations effective 1 July 2015 which affected
these preliminary financial statements.
RELATED PARTIES
The group enters into various sales, purchase, financing and lease transactions in the ordinary course
of business with a large number of entities, some of whom are related parties.
GOING CONCERN
Mining operations have a finite life and are also dependent amongst other things on geological,
technical as well as economic factors such as commodity prices and exchange rates. The global
economic outlook and low US dollar metal prices are a concern as Northam is an exporter of PGMs
to global markets. Operations continue to be under pressure due to increasing input costs (mainly
power and labour) and lower metal prices.
The ZAR/USD exchange rate, however, cushions the effects of lower metal prices. Management has
implemented thorough cost-cutting initiatives. This effort, along with the group's strong statement of
financial position and current operational cash flows has informed the opinion of management that
the group remains a going concern.
EVENTS AFTER THE REPORTING PERIOD
Subsequent to year-end, the group renegotiated a five-year R1.5 billion revolving credit facility with
Nedbank Limited to replace the existing R1.0 billion facility which will mature in November 2016.
The group further increased its investment in SSG Holdings Proprietary Limited by 10% and now
holds a total of 30%. Apart from these events there have been no other events subsequent to the
year end which require additional disclosure or adjustment to the financial results.
OPERATING, PRODUCTION AND FINANCIAL STATISTICS
30 June 2016 30 June 2015 %
R000 R000 variance
NORMALISED HEADLINE EARNINGS PER SHARE
Headline loss (492 837) (794 963) (38.0)
Add back:
Net lock in fee – 242 429 (100.0)
IFRS 2 Black Economic Empowerment share-based
payment charge – 874 448 (100.0)
Amortisation of liquidity fees paid on preference shares 18 088 – 100.0
Preference share dividends 918 806 100 767 811.8
Normalised headline earnings 444 057 422 681 5.1
Normalised headline earnings per issued share (cents) 87.1 82.9 5.1
Number of shares in issue including treasury shares 509 781 212 509 781 212 –
30 June 2016 30 June 2015 %
R000 R000 variance
VALUE CREATED AND DISTRIBUTED
Value created and distributed to employees
Salaries and wages 1 583 260 1 441 799 9.8
Contributions to retirement benefit funds 123 964 114 565 8.2
Contributions to healthcare funds 68 831 66 074 4.2
Share based payment payouts 56 222 74 386 (24.4)
1 832 277 1 696 824 8.0
Value created and distributed to government
Mining and non-mining tax 140 825 135 762 3.7
Dividend withholding tax – 12 447 (100.0)
Capital gains tax – 74 592 (100.0)
Royalty taxes 44 283 39 986 10.8
Pay as you earn deducted from employees 294 043 277 861 5.8
479 151 540 648 (11.4)
Total value created and distributed 2 311 428 2 237 472 3.3
RESULTS COMMENTARY
INTRODUCTION
Northam's production of equivalent refined metal from own operations increased by 15.7% to
13 591kg/436 960oz during the year under review. This followed a solid operating performance
at Zondereinde and Booysendal reaching steady-state production. The group's financial results,
however, were negatively impacted by lower ZAR basket prices. In line with the group strategy to
diversify into shallow mechanisable operations the Board approved the development of the initial
phase of the Booysendal South project in June 2016. This project includes the development of two
UG2 mining modules and a Merensky mining module which will contribute an additional 240 000oz
per annum of platinum group metals to the group's production profile.
The construction of the new 20MW furnace at the Zondereinde mining complex is progressing well.
In addition to adding smelter capacity, it will also reduce operational risk. The total cost of the project
is anticipated to be R750.0 million and is expected to be commissioned by the end of the 2017
calendar year. The expansion work follows on the extension of Northam's strategic partnership with
Heraeus Deutschland GmbH & Co. KG (Heraeus) and Heraeus South Africa Proprietary Limited in
terms of which Heraeus has agreed to contribute s20.0 million to the construction of the furnace.
The first s10.0 million was received in June 2016. The agreement also provides for the renewal of
the current refining arrangements and guarantees a supply of refined metal to Heraeus.
FINANCIAL OVERVIEW
Revenue generated from sales increased by 1.0% to R6.1 billion (FY2015: R6.0 billion), reflecting
the lower prices received offset by higher sales volumes. Metal sold increased by 7.0% to
452 393 ounces 3PGE+Au (FY2015: 422 653 ounces), with the ZAR basket price received decreasing
by 6.1%.
The lower basket price achieved of R382 979/kg (FY2015: R407 864/kg) reflects a 25.0% decline
in the USD basket price from USD1 108/oz to USD831/oz offset by a weaker ZAR against the USD,
which fell from R11.45/USD the previous year to an average of R14.33/USD for the financial year.
From 1 June 2015, concentrate produced from Booysendal has been sold to Zondereinde at 88% of
the market value. On a group basis, revenue is generated by Zondereinde as all PGM sales between
Booysendal and Zondereinde are eliminated on consolidation. Previously, Booysendal sold its final
product directly to third party customers.
Cost of sales increased by 5.0% to R5.7 billion (FY2015: R5.4 billion). The higher cost of sales was as
a result of a 7.0% increase in volumes sold. Group operating costs, were up 15.3% to R5.0 billion
(FY2015: R4.3 billion) on the back of a 15.7% increase in metals produced from own operations.
Depreciation and amortisation increased by 18.7% to R403.5 million (FY2015: R339.9 million) due
to the increased production, as depreciation and amortisation is calculated on a unit of production
basis. The value of concentrates purchased from external parties fell by 41.8% to R350.5 million
(FY2015: R602.4 million) largely due to lower deliveries from the seller.
Operating profit was negatively impacted by the lower basket price and decreased by 35.7% to
R383.3 million (FY2015: R595.8 million). Zondereinde generated an operating profit of R248.1 million
(FY2015: R398.4 million) and Booysendal generated an operating profit of R176.0 million
(FY2015: R195.2 million).
Share of earnings from associates and joint ventures decreased by 212.1% to a loss of R32.3 million
(FY2015: profit of R28.8 million). In the current year, Northam's share in the Pandora joint venture's
losses amounted to R12.6 million (FY2015: loss of R10.7 million) and its share of losses in Trans
Hex Group Limited amounted to R20.0 million (FY2015: profit of R39.5 million). The Pandora joint
venture also required a number of cash injections, with the group's share of cash calls amounting
to R10.6 million (FY2015: R9.7 million) with further cash calls expected in the new financial year.
Management is reviewing its options with regard to Northam's continued participation in the
Pandora joint venture.
During the year, the 20.3% shareholding in Trans Hex Group Limited was sold for R81.8 million
and a loss of R21.0 million was recognised on the sales transaction. In addition, Northam acquired
a 20% share in SSG Holdings Proprietary Limited for R10.0 million effective 29 February 2016.
This investment is recognised as an associate and has consequently been equity accounted for in the
group results. SSG Holdings Proprietary Limited is a company providing security services to both the
Zondereinde and Booysendal mines. Northam's share of SSG Holdings Proprietary Limited's profits for
the four months ended 30 June 2016 amounted to R0.4 million.
Investment revenue increased by 268.2% to R265.3 million (FY2015: R72.0 million) due to interest
earned on higher cash balances as well as interest received on an insurance contingency policy which
generated investment revenue of R50.0 million.
Finance charges decreased by 72.7% to R39.6 million (FY2015: R145.2 million). The Domestic
Medium Term Debt Notes (DMTN) of R1.4 billion were repaid on 3 September 2015, resulting in a
decrease in the finance costs in the current year. The new DMTN were issued during May and June
2016, resulting in an interest accrual of R4.8 million on these new notes plus R23.5 million worth of
interest paid on the old DMTN repaid in September 2015, compared to R132.9 million accrued for in
the prior year.
A 32.6% decrease to R180.9 million (FY2015: R268.3 million) was recorded in sundry income during
the year. An amount of R59.6 million was received as a result of the cancellation of an insurance
contingency policy and the refund of the original cash contribution plus interest. In the corresponding
period, an insurance refund of R183.8 million was received relating to the No. 1 shaft incident which
was then included in sundry income. Sundry income during the current year was also impacted by
the volatility of the ZAR as currency translation variances increased from R6.2 million during 2015 to
R26.2 million for the current year. Also included in sundry income is the write back of the Trans Hex
Group Limited impairment of R34.1 million previously accounted for in sundry expenditure.
Sundry expenditure decreased by 94.2% from R1 587.3 million in the previous year to R92.1 million.
Included in sundry expenditure in the prior year were once-off lock in fees paid to the BEE
participants amounting to R242.4 million, a once-off equity settled share based payment charge
of R874.4 million also relating to the Zambezi BEE transaction as well as corporate action costs of
R172.6 million. Also included in sundry expenditure in the prior year were the write down of non-
core assets of R261.5 million regarding the Pandora joint venture, Trans Hex Group Limited and
the Dwaalkop investment. During the current year, sundry expenditure includes an impairment of
R20.5 million relating to the Pandora Joint venture. Furthermore, in FY2016, care and maintenance
costs of R25.1 million (FY2015: R9.7 million) were incurred on the Everest plant acquired from
Aquarius Platinum (South Africa) Proprietary Limited as well as a R21.0 million loss made on the sale
of the Trans Hex Group Limited shares.
In terms of the May 2015 BEE transaction, the Zambezi preference shares accrue a cumulative
variable dividend at the South African prime interest rate plus 3.5% per annum. The accrued
dividend is recognised as a finance charge in profit or loss. The finance costs associated with the
preference shares for the current year amounted to R918.8 million (FY2015: R100.8 million) and are
consolidated into the accounts of Northam in terms of IFRS, together with the amortisation fees paid
over the 10 year lock in period.
The rise in the taxation charge compared to the previous year largely consists of non-mining tax of
R140.8 million accrued mainly on interest earned from third parties. Deferred tax was raised on all
temporary differences resulting in a tax charge of R96.1 million.
Cash flow movements
Cash flows generated from operating activities increased to R839.1 million (FY2015 R341.0 million),
largely as a result of the improved production results in comparison to the previous year.
Cash flows utilised in investing activities increased from R1 101.5 million in FY2015 to R1 126.8 million
during the current year. The movement relates primarily to the increase in expansionary capital,
relating largely to the R291.6 million incurred on the new 20MW furnace at Zondereinde,
R35.6 million spent on the furnace refractory lining for the existing furnace, R31.7 million spent on
co-processing (converting the Merensky concentrator to accommodate UG2 ore at Zondereinde),
R132.7 million spent on the deepening project at Zondereinde, R157.1 million on the Merensky
project at Booysendal, R55.2 million on the acquisition of the Everest mineral resource and costs
relating to Booysendal South and finally R178.0 million spent on the UG2 phase 1 mine and deepening
project at Booysendal.
Cash flows utilised from financing expenditure amounted to R745.4 million compared to an inflow of
R4 232.6 million in the prior year. The change relates to the repayment of the DMTN of R1.4 billion
during September 2015 as well as R4.6 billion generated from the issue of shares relating to the BEE
transaction in the prior year.
Excluding the repayment and issue of the new DMTN, the Northam group utilised cash to the value
of R82.4 million for the year.
OPERATIONS
Zondereinde
Zondereinde recorded five million fatality free shifts during the year, a commendable performance by
both employees and management at any operation, and particularly at a deep-level mine. The lost
time injury incidence rate (LTIIR) increased to 1.92 (FY2015: 1.31).
Merensky reef tonnes milled were 815 167 tonnes (FY2015: 795 884 tonnes) at a head grade of
5.9g/t, whilst the UG2 reef contributed 1 205 258 tonnes (FY2015: 1 064 499 tonnes) at a head
grade of 4.2g/t. The combined head grade for the year was 4.9g/t (FY2015 4.9g/t) illustrating the
impact of the higher UG2 contribution.
The overall operational performance of the Zondereinde mine was good. Mining flexibility on
the Merensky reef remains constrained owing to challenging geological conditions. With the
modifications to the processing plant, higher proportions of UG2 reef can be mined and processed
and therefore the targeted UG2:Merensky mining ratio has been adjusted to 60:40.
Production of equivalent refined metal from own operations increased by 10.6% to 8 795kg/
282 765oz (FY2015: 7 950kg/255 598oz). The quantities of purchased concentrates from external
parties decreased by 41.7% from 1 474kg received during 2015 to only 859kg received in the
current year.
Zondereinde's total operating costs were R3 464.4 million (FY2015: R3 147.0 million) representing
an increase of 10.1% based on higher total production of equivalent refined metal from own
operations. This resulted in an overall 1.0% decrease in the unit cash cost per equivalent refined
3PGE + Au/kg from R378 737/kg to R374 846/kg in the current year, demonstrating tight cost
control.
During the year, capital expenditure to the value of R554.1 million (FY2015: R303.2 million)
was incurred, relating mainly to the construction of the new 20MW furnace (R291.6 million),
R132.7 million spent on the deepening project and R127.2 million spent on other sustaining capital
expenditure. Management estimates that expansionary and sustaining capital expenditure will be
R379.1 million and R303.6 million respectively in FY2017.
Zondereinde's total resource estimate has increased to 84.1Moz (FY2015: 81.1Moz) with 11.7Moz
(FY2015: 10.6Moz) in the reserve category giving a life of mine of in excess of 20 years.
Booysendal
The Booysendal mine recorded two million fatality free shifts during the year. The LTIIR was
0.44 (FY2015: 0.54).
The mechanised mining method continues to be a significant safety differentiator. This is one of the
reasons why management believes the growth of the group should favour shallower, mechanisable
operations.
During the year the Booysendal North UG2 mine achieved its steady state run rate of 160 000oz
per annum. A total of 2 072 958 tonnes were milled at a head grade of 2.7g/t compared to
1 786 375 tonnes at a head grade of 2.6g/t in 2015.
The development of the Merensky North mine produced 92 645 tonnes during the year at a head
grade of 1.9g/t, with capital expenditure of R157.1 million spent during the current year on this project.
The total operating costs at Booysendal increased from R1 192.2 million to R1 541.0 million. The
increase of 29.3% can be attributable to the increase in metals in concentrate produced which
increased by 31.7% to 5 017kg/161 300oz (FY2015: 3 809kg/122 462oz).
The cash cost per equivalent 3PGE + Au kg in concentrate was R298 500/kg, a 1.4% decrease from the
prior year's unit cost of R302 695/kg.
Capital expenditure incurred amounted to R616.4 million (FY2015: R798.8 million) which related to
R55.2 million on the acquisition of the Everest mineral resource, R178.0 million spent on the UG2
phase 1 mine and deepening project, employee accommodation of R14.3 million, R89.1 million on sustaining
capital expenditure at the UG2 North mine and R63.5 million on the Booysendal South feasibility study.
Management estimates that expansionary and sustaining capital expenditure will be R527.0 million
and R86.9 million respectively in FY2017.
MINERAL RESOURCES AND RESERVES
Resources and reserves reflected below are reported on a Northam attributable basis.
Mineral resources are reported inclusive of mineral reserves.
Northam group reserve estimate (combined proven and probable)
as at 30 June 2016 as at 30 June 2015
4E PGE 4E PGE
Reef Mine Mt g/t Moz Mt g/t Moz
Merensky Booysendal North
mine 14.51 2.92 1.36 14.57 2.92 1.37
Booysendal South
mine 9.36 2.58 0.78 – – –
Dwaalkop* – – – 13.66 2.61 1.15
Zondereinde 21.01 5.51 3.72 25.45 5.35 4.38
Total 44.88 4.06 5.86 53.68 3.99 6.90
UG2 Booysendal North
mine 41.53 3.00 4.00 43.14 3.00 4.16
Booysendal South
mine 75.86 2.65 6.48 – – –
Dwaalkop* – – – 16.10 3.30 1.71
Pandora* 1.21 4.10 0.16 1.29 4.11 0.17
Zondereinde 58.64 4.24 7.99 47.67 4.06 6.22
Total 177.24 3.27 18.63 108.20 3.52 12.26
Combined Booysendal North
mine 56.04 2.98 5.36 57.71 2.98 5.53
Booysendal South
mine 85.22 2.65 7.25 – – –
Dwaalkop* – – – 29.76 2.98 2.85
Pandora* 1.21 4.10 0.16 1.29 4.11 0.17
Zondereinde 79.65 4.58 11.72 73.13 4.51 10.60
Total 222.12 3.43 24.49 161.89 3.68 19.15
* Current resources and reserves of Pandora and Dwaalkop are quoted as at 30 September 2015 while those of
the previous year are at 30 September 2014.
Northam group resource estimate (combined measured, indicated and inferred)
as at 30 June 2016 as at 30 June 2015
4E PGE 4E PGE
Reef Mine Mt g/t Moz Mt g/t Moz
Merensky Booysendal North 87.82 5.06 14.29 87.82 5.06 14.29
Booysendal South 187.55 3.55 21.41 199.53 3.50 22.48
Booysendal North
mine 16.97 3.23 1.76 17.05 3.23 1.77
Booysendal South
mine 11.98 2.77 1.07 – – –
Dwaalkop* 38.05 2.98 3.64 38.05 2.98 3.64
Zondereinde 164.44 7.38 39.00 167.26 7.35 39.52
Total 506.81 4.98 81.17 509.70 4.99 81.70
UG2 Booysendal North 152.65 4.86 23.87 152.65 4.86 23.87
Booysendal South 235.67 3.20 24.26 320.41 3.27 33.65
Booysendal North
mine 41.41 4.52 6.02 43.12 4.52 6.27
Booysendal South
mine 126.76 3.07 12.51 – – –
Dwaalkop* 37.56 4.35 5.25 37.56 4.35 5.25
Pandora* 14.14 4.65 2.11 14.14 4.65 2.11
Zondereinde 276.41 5.08 45.14 254.32 5.08 41.55
Total 884.60 4.19 119.16 822.20 4.26 112.70
Combined Booysendal North 240.47 4.94 38.16 240.47 4.94 38.16
Booysendal South 423.22 3.36 45.67 519.94 3.36 56.13
Booysendal North
mine 58.38 4.15 7.78 60.16 4.16 8.04
Booysendal South
mine 138.74 3.04 13.57 – – –
Dwaalkop* 75.61 3.66 8.90 75.61 3.66 8.90
Pandora* 14.14 4.65 2.11 14.14 4.65 2.11
Zondereinde 440.85 5.94 84.14 421.58 5.98 81.07
Total 1 391.41 4.48 200.33 1 331.89 4.54 194.41
* Current resources and reserves of Pandora and Dwaalkop are quoted as at 30 September 2015 while those of
the previous year are at 30 September 2014.
Notes to the mineral resource and reserve statement
There has been a reassignment of UG2 and Merensky resources at the Booysendal South mine. A Merensky and
UG2 reserve has been estimated for the Booysendal South mine. This follows the completion of a mining feasibility
study of both UG2 and Merensky reefs in portions of the Booysendal South area.
The UG2 resource and reserve contained within the Everest mining right has been incorporated, into the
Booysendal estimate. This follows the transfer of the Everest mining right to Booysendal Platinum Proprietary
Limited in October 2015.
The UG2 resource and reserve estimate at Zondereinde mine has increased. This is due to a decrease in geological
loss ascribed to potholing, and follows an extensive re-assessment of historical pothole losses and exploration data.
CHANGES TO THE BOARD OF DIRECTORS
Mr R Havenstein replaced Mr AR Martin as lead independent director on 18 August 2015.
Mr KB Mosehla was appointed a non-executive director on 19 August 2015.
Mr ME Beckett retired as an independent director on 11 November 2015.
Ms HH Hickey and Mr TI Mvusi's appointments as independent directors, effective 1 January
2016, were announced on 11 December 2015. Ms Hickey is also a member of the audit and risk
committee.
PROSPECTS*
The global economic outlook remains uncertain resulting in volatile metal markets and exchange
rates. The group's financial performance will depend on achieving higher metal sales prices and
a stable operating performance. Cost saving and productivity improvement initiatives are in place
at both Zondereinde and Booysendal. Management is confident that the group's strong financial
position, prudent financial controls and the development of shallow, mechanisable operations at
Booysendal will place the group in a position to take advantage of improved market conditions
going forward.
* Information in this section has not been reviewed by the group's auditors.
DIVIDENDS
In view of the current challenging economic environment facing the platinum mining sector and
taking into consideration the cash requirements for the development of the group's project pipeline,
the board has resolved not to declare a dividend for FY2016.
On behalf of the board
PL Zim PA Dunne
Chairman Chief executive
Johannesburg
26 August 2016
PL Zim (non-executive chairman), R Havenstein (lead independent), PA Dunne
(chief executive officer) (British), AZ Khumalo(chief financial officer), CK Chabedi, HH Hickey, TE Kgosi,
AR Martin, KB Mosehla and TI Mvusi
Registered office
Building 4, 1st Floor, Maxwell Office Park, Magwa Crescent West, Waterfall City, Jukskei View, 2090, South Africa
PO Box 412694, Craighall, 2024, South Africa
Company secretary
Ms PB Beale
Transfer secretaries
Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg, 2001, South Africa
PO Box 61051, Marshalltown, 2107, South Africa
Sponsor and debt sponsor
One Capital
17 Fricker Road, Illovo, 2196, South Africa
PO Box 784573, Sandton, 2146, South Africa
These results are disclosed in greater detail than has been disclosed in the
past, including segmental analyses, breakdown of sales and costs, amongst other metrics.
These appear in the reviewed interim results booklet, which is available on the
Northam website at www.northam.co.za and at Northam's registered office.
Johannesburg
26 August 2016
Sponsor and debt sponsor
One Capital
Date: 26/08/2016 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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