Northam lifts stake in Zambezi Platinum to 40% after buying R960m worth of stock

Northam Platinum CEO, Paul Dunne

NORTHAM Platinum has increased its stake in Zambezi Platinum to just over 40% after buying additional shares worth R959.7m.

The platinum firm said in an announcement today it had bought 11.7 million preference shares taking its overall stake in Zambezi Platinum to 40.71%, equal to some 65.1 million shares. The transaction represented a milestone, said Northam CEO, Paul Dunne.

“Northam had set itself an ambitious internal target of acquiring at least 40% of all Zambezi preference shares in issue in order to de-risk the company’s position,” said Dunne. This had been achieved approximately halfway through the 10-year structure, he said. Northam was in a solid financial position despite lockdowns precipitated by COVID-19.

Zambezi Platinum was created and listed in 2015 after Northam Platinum was required to develop a new empowerment structure. In so doing, it raised R4bn selling a stake in itself which was used to back convertible preference shares in Zambezi Platinum.

The Zambezi preference shares fall due in 2025.

By buying preference shares in Zambezi, Northam limits its financial exposure when the preference shares mature and are converted. The number of Northam shares in issue will also be reduced because as a shareholder in Zambezi, Northam will receive back its own shares when the preference shares are redeemed.

The cash raised from the sale of Northam shares to Zambezi some five years ago has been used to expand Northam Platinum’s production. This has been achieved by embarking on the expansion of organic reserves in Booysendal and buying others such as the firm’s R1bn mineral rights swap with Anglo American Platinum.

In March, the company was admitted to the Johannesburg Stock Exchange’s Top 40 index after seeing its market value scale R60bn (it is currently trading at just over R58bn). From a single, lease-bound company, Northam is now on target to produce about 600,000 ounces of 6E platinum group metals in the current financial year.

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