NORTHAM Platinum Holdings said on Friday it would pay an interim dividend despite a heavy decline in earnings and tripling in net debt to R6.1bn.
The platinum group metals (PGM) miner declared 15 South African cents a share payout to shareholders for the six months ended December. This is in line with its dividend policy of 25% of headline earnings which came in 49.7% lower year-on-year at 61.1c/share (2024: 121.4c/share and dividend of R1/share).
As previously guided Northam produced 3.7% more equivalent refined metal for the six months which came out at 451,213 ounces. However revenue was lower owing to a 3.3% decrease in the 4E rand basket price of R23,457/oz 4E. Unit costs increased 7.7% to average R25,381/oz.
Northam forged on with its capital projects during the six months. Unlike its peer group, the miner is aiming for more low cost production so to offset cost inflation.
These capital projects – totalling 2.4bn for the period – included R674.1m for 3 shaft and the Western extension, and a further R704.2m reopening Eland mine which yielded higher output of chrome, the metal-of-the-moment.
Cash generation, which before capex was a positive R419m, was negatively affected by lower sales following the rebuild of furnace 2 at its processing facilities.
The rebuild also contributed towards an increase in metal inventory which stood at 529,825 oz as of December 31. The inventory is carried on Northam’s books at R9.2bn against a market value as of December 31 spot prices and rand/dollar exchange rate of R15.1bn.
Northam said total metal output for the year of between 980,000 to 1,02 million oz would be skewed towards the second half.
Northam’s dividend declaration is clearly a vote of confidence in its strategy and contrasts with the absence of dividends at Impala Platinum (Implats) and Sibanye-Stillwater where lower PGM prices are heaping pressure on the companies.
Impala Platinum CEO Nico Muller said at his firm’s interim presentation on Thursday (February 27), South Africa’s PGM industry should restraint when production is lossmaking – a possible dig at Sibanye-Stillwater which is still lossmaking at its Stillwater mine despite having announced a halving in output.
