NORTHAM Platinum has bought R1.3bn in Zambezi Platinum preference shares from the Public Investment Corporation (PIC), the South African government asset manager.
In addition to the PIC shares, Northam also bought a separate R300m tranche of Zambezi shares taking its stake in the platinum group metals (PGMs) investment company it helped create to about 80.4%.
About 13.8 million Zambezi preference shares were bought from the PIC at a price of R95.37 per Zambezi preference share, Northam said today.
The buy-back strategy, underway over the last two years, has the effect of reducing the preference share expense and liability of Zambezi Platinum in Northam Platinum’s books. It also reduces Northam’s financial exposure in terms of the guarantee it provides to Zambezi preference shareholders.
Finally, the repurchases reduce the number of Northam shares in issue, in the event of Zambezi redeeming the Zambezi preference shares through a distribution of Zambezi-held ordinary shares in Northam.
Paul Dunne, CEO of Northam Platinum, said buying Zambezi Platinum preference shares was a viable form of shareholder return.
“Northam’s acquisition of more than 80% of Zambezi preference shares represents a significant step in pursuit of the company’s previously stated intention to accelerate the maturity of the Zambezi transaction,” he said in a statement. “This strategy continues to positively impact future earnings and shareholder value creation.”
Earlier this year, Northam reported record financial numbers and near record PGM production in its 2020 financial year ended-June. Normalised headline earnings were 150% higher year-on-year at R3.4bn. Share earnings increased more than 100% to 676.3 cents.
The stellar improvement was owing to rhodium and palladium prices which increased 170% and 52.4% respectively.