Northam takes Zambezi Platinum stake to 87.5% after buying R1.1bn preference shares

NORTHAM Platinum said it had taken its stake in Zambezi Platinum to 87.5% after buying preference shares in the company totalling R1.1bn in value.

The majority of the 11.4 million shares were bought from the administrator of the government-owned pension, Public Investment Corporation (PIC), Northam said. Northam has bought about R7.83bn in Zambezi preference shares in the last 12 months.

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 latest purchase of Zambezi preference shares from the PIC – about 9.88 million in total – was at a price of R97.84 per share, equal to a total cash amount of R966.3m.

Northam is due to report up to an 88% increase in basic share earnings for the six months ended December, according to a trading statement, issued in February. The company’s results presentation has been scheduled for March 19.

Investors will be keeping a keen eye on clues Northam management may give regarding future returns. So far, Northam CEO, Paul Dunne, has focused on the repurchase of the Zambezi preference share, but he has previously raised a flag on possible cash returns.

There will also be some focus on speculation linking Northam with a bid to buy Bokoni Platinum Mines which was put on care and maintenance by Anglo American Platinum and its empowerment partner, Atlatsa Resources.

According to a report by BusinessLive, Northam has been shortlisted to buy the mines, situated in the northern part of the Bushveld Complex along with Siyanda Resources.