Dunne hints Northam is yet to play its cards over RBPlat with “other outcomes” pending

Paul Dunne, CEO, Northam Platinum

NORTHAM Platinum CEO Paul Dunne described his firm’s 34.68% stake in Royal Bafokeng Platinum (RBPlat) as “a silver medal”, but implied there could be more to come if the full extent of his company’s plans for the investment were realised.

“We desire to control the asset,” Dunne said of RBPlat at a media conference today following Northam’s interim results presentation. “Whether we are able to is not yet determined. There are a number of potential outcomes other than the obvious.

“You should be aware there is more than one potential outcome.”

He declined to provide more detail saying his hands were tied by the highly regulated nature of the merger and acquisition environment. However, he did have a response for RBPlat CEO Steve Phiri who said earlier this month any potential bidder for his company “should put up or shut up”.

“I won’t respond to that pressure,” said Dunne.

Dunne also said Northam had made no progress on winning RBPlat’s support to conduct a due diligence.┬áRBPlat refused to grant Northam a due diligence last year when it and Impala Platinum (Implats) were kicking the tyres of the firm. Renewed attemps to run the rule over the company have been blocked.

RBPlat has meantime thrown its support behind Implats’ offer for the company which at R90 per share in cash and 0.3 Impala shares per RBPlat share it considered “fair and reasonable” in an announcement on February 14.

“Our strategic holding at 35% represents – if I can say it in plain English – the silver medal. If I can leave it at that,” Dunne told analysts earlier in the day.

Implats announced today that it had edged up its stake in RBPlat to 37.62% after concluding agreements to buy a further 1.01 million shares equal to 0.35% of RBPlat. This was in terms of its mandatory offer which closes on June 17.

Analysts were concerned at the rate of mining inflation in Northam’s results – largely flagged in a detailed trading statement on March 24 – and in its guidance for the remainder of the financial year, issued today.

Northam raised 2022 guidance to R33,000 to R34,000 per platinum ounce which compares to previous guidance of R29,000 to R30,000 per Pt oz which analysts at UBS described as “concerning”. They also said there was increased risk in terms of Northam’s capital allocation, its decision to withhold the interim dividend notwithstanding.

Eskom hijack

Northam reported an 60.3% increase in interim headline share earnings of 961.5 cents per share largely owing to robust platinum group metal (PGM) prices because production, as set down in Northam’s trading statement last week, was heavily down.

Covid-related disruption was a factor in the lower production as well as community disruption – a subject Dunne expanded upon. Dissatisfaction with a lack of employment opportunities and a low standard of living was mostly behind the protests, he said.

“It is very extensive in Mpumalanga and Limpopo [provinces] and it’s an issue of economic deprivation and a lack of employment. Mines are natural centres in such places to look for jobs,” he said.

Disruption was “in the form of road blockading and sabotage of Eskom”, the latter involving in one instance the “hijack” of facilities that deprived mines one area of electricity for about four days. Dunne said protestors were hoping to deliver “a message” to Eskom.

Northam subsequently held a meeting with deputy commissioner of police Fannie Masemola in order to stamp out illegal protests related to local business people seeking to extort mining contracts through intimidation and violence.