Northam keeps shareholders waiting on dividend as books 74% lift in interim earnings

Northam Platinum CEO, Paul Dunne

NORTHAM Platinum shareholders must content themselves with the future benefits of the firm’s repurchase of Zambezi Platinum preference shares – at least for now – after the company passed the dividend for the six months ended December 31.

Paul Dunne, Northam CEO, said today in notes to Northam’s interim results – in which it booked a 73.6% increase in normalised earnings of R3.3bn – that the company had taken its stake in Zambezi Platinum to 80.4% by end-period (87.5% to date).

In so doing, the company removes the liability associated with underwriting the preference shares and has effectively locked in a buy-back of its shares if Zambezi Platinum elects to redeem the preference shares with an issue of ordinary shares.

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.

There has been some speculation, partly fuelled by Dunne, regarding the possible payment of a cash dividend. Last year, Dunne said his board was investigating paying other forms of returns to shareholders.

It may be that Northam gives more serious thought to the dividend at the year-end point, especially as the company unwinds a metal inventory. The company was prevented from selling some production to its refining partner, Heraeus, in Germany as a result of Covid-19 logistical problems.

The inventory includes rhodium which has gained 80% in price year-on-year, and 53% alone quarter-on-quarter. The platinum group metal (PGM) is currently trading at $25,500 per ounce and will comprise about 7.5% of a projected 670,000 oz in sales this year.

As a result of the logistical logjam, sales volumes declined 4.4% to 315,320 ounces during the six months but revenue was R11.9bn, an increase of 51.9% year-on-year owing to an increase in the average 4E basket price in dollars to $2,160/oz – up nearly 50%. The rand weakened 9% against the dollar during the period.

The outcome was an operating profit of R5.2bn for the interim period, a year-on-year increase of 75.4%.

Headline share earnings were 599.9 cents, 82.7% higher.

Northam generated cash from operating activities of R3.1bn during the period. The company had spent approximately R6.8bn as of December 31 buying up Zambezi preference shares.


  1. Wonderful results and a bright future for shareholders.
    Given the release of the results this morning, it would be reasonable to expect a positive reaction in the share price.
    Today is the third Friday of the month and as with every month, it is options expiry.
    Mining share prices, including Northam, are substantially down today as once again, the tail wags the dog.
    As with last month, watch for a recovery on Monday.

    • Possibly the most optimistic I have ever seen Paul Dunne. As a northern Englander, upbeat enthusiasm may not be to the manor born, but today he really punted the PGM market as the place to be for the next 10 years.

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