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NORTHAM PLATINUM LIMITED - Northam approves Kukama Project at Eland mine

Release Date: 26/06/2019 07:45
Code(s): NHM NHM002 NHM006 NHM007 NHM008 NHM009 NHM010 NHM011 NHM012     PDF:  
Wrap Text
Northam approves Kukama Project at Eland mine

Incorporated in the Republic of South Africa
(Registration number 1977/003282/06)
JSE share code: NHM ISIN code: ZAE000030912
Debt issuer code: NHMI
Bond code: NHM002 Bond ISIN: ZAG000129024
Bond code: NHM006 Bond ISIN: ZAG000158577
Bond code: NHM007 Bond ISIN: ZAG000158593
Bond code: NHM008 Bond ISIN: ZAG000158858
Bond code: NHM009 Bond ISIN: ZAG000158866
Bond code: NHM010 Bond ISIN: ZAG000159229
Bond code: NHM011 Bond ISIN: ZAG000159237
Bond code: NHM012 Bond ISIN: ZAG000160136
(“Northam” or the “company” or the “group”)


Northam is pleased to advise its shareholders that mining operations at the Kukama shaft situated at
its Eland mine complex will recommence in the new financial year (F2020).

This significant development comes after the successful conclusion of a feasibility study for the
Kukama project.


Northam purchased a 100% interest in the Eland mine from Glencore Operations South Africa
Proprietary Limited in February 2017 for a cash consideration of R175 million. Eland mine was placed
on care and maintenance in 2015 and Northam continued to manage it as such whilst undertaking
the feasibility study for the Kukama shaft.

In terms of the transaction, Northam acquired all of Eland mine’s assets which included:

   •   Eland’s two mining rights with a resource currently estimated at 19.3 Moz 4E at an average in
       situ grade of 3.95 g/t;

   •   surface and underground infrastructure including a concentrator with a nameplate capacity of
       250 ktpm; a chrome spiral recovery plant; a tailings storage facility; two decline systems; and
       surface support infrastructure;

   •   immovable property; and

   •   a mining fleet in excess of 100 vehicles, which includes low profile mechanised mining
Key conclusions from the Kukama shaft feasibility study

   •   Steady state production of 150 Koz pa 4E, at unit costs in the lower half of the industry cost

   •   Forecast investment returns comfortably in excess of Northam’s current weighted average
       cost of capital.

   •   Forecast positive free cash flow generated from year 4 onwards.

   •   Creation of 2 800 permanent jobs.

   •   Life of mine in excess of 30 years.

Current status of Eland mine

To date, Northam has continued to manage the Eland mine on care and maintenance whilst
undertaking the feasibility study for the Kukama shaft.

Whilst completing the feasibility study for Kukama shaft and following positive feedback from the
study, Northam commenced early work in preparation for its recommissioning. This includes
refurbishing underground fixed and mobile equipment, as well as certain sections of the concentrator.
Processing of the tailings storage facility at Eland mine has also commenced, which facilitated
recommissioning of the surface plant and associated infrastructure.

The next steps

Conversion of the Kukama decline shaft into a footwall array will start in F2020, along with limited
early stoping. Strike development and stoping build-up is scheduled to commence in F2021.
Production is forecast to reach 100 Koz pa 4E by 2025 and steady state production of 150 Koz pa 4E
is forecast from 2029.

Capital expenditure

Total developmental capital expenditure is estimated at R2.2 billion over a five year period, in nominal
terms (F2019 terms: R1.9 billion), which includes a provision for working capital requirements during
the development phase. The project will be fully funded from Northam’s own resources.

Northam chief executive Paul Dunne points to the positive investment return demonstrated by the
Kukama project, which comfortably exceeds the company’s weighted average cost of capital. “In
addition,” says Dunne, “the project further diversifies the group’s operations and production capacity
and does so efficiently by utilising an extensive existing capital footprint. Kukama is a project that
lends itself to scaling up or down and will form the production base for the broader Eland complex.
The mining method to be implemented at Kukama is well-known and well proven. Our focus will be
on safe, quality, long-life production, whilst creating sustainable long-term employment in the platinum


The information contained in this announcement does not constitute an earnings forecast. The
financial information provided is the responsibility of the directors of Northam, and such information
has not been reviewed or reported on by the company’s auditors.


Paul Dunne and the Northam team will be presenting to members of the investment community today,
Wednesday 26 June in Johannesburg on latest growth developments in the group. The presentation
will be webcast at 11:00 and will be accessible on the Northam website at

26 June 2019

Corporate Advisor, Sponsor and Debt Sponsor
One Capital


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