NORTHAM: 5,914 -56 (-0.94%)
Northam Platinum plans to buy back preference shares
By Zandi Shabalala
LONDON, May 15 (Reuters) - Northam Platinum plans
to buy back about 15 million preference shares out of 159
million currently in issue in the financial year ending June
2020, its chief executive said on Wednesday.
The miner, one of the top platinum producers globally, wants
to reward shareholders following a boost to profits from higher
"In the coming period we would be looking to target about 15
million shares," Northam's Paul Dunne told Reuters in London.
"This would be a good start and we believe the most
efficient way of returning value to shareholders."
It issued the preference shares in 2014 to a consortium of
black investors in exchange for a cash injection of $600 million
into its balance sheet at that time.
As palladium prices reached a record in March, rhodium
prices firmed and the rand weakened, Northam's profits have
allowed it to pay down debt.
Based on Wednesday's fair value price of 70 rand ($4.92) the
15 million preference share buy back equates to approximately 1
billion rand, according to a Reuters calculation.
Northam plans to reduce net debt from 2.9 billion rand at
the end of December 2018 to a target of about 1 times EBITDA
(earnings before interest, tax, depreciation and amortisation)
at the end of its June financial year, Dunne said.
The target debt-to-EBIDTA ratio would be achieved with help
from an anticipated increase in profits due to higher prices and
output growth, and a lift from a weaker local currency.
Proceeds gained from the black empowerment deal gave Northam
enough firepower to expand its flagship Booysendal mine and to
buy assets including the Everest and Eland mines and a recycling
business in the United States.
South African mining companies are required to reach at
least 30% black ownership under the government's policy of black
economic empowerment designed to address the inequalities of the
apartheid system that ended in 1994.
($1 = 14.2408 rand)
(Reporting by Zandi Shabalala; Editing by Elaine Hardcastle)
First Published: 2019-05-15 18:24:09
Updated 2019-05-15 18:24:41
© 2019 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.