JOHANNESBURG (miningweekly.com) – The normalised headline earnings of platinum group metals (PGMs) mining company Northam Platinum soared by more than 215% to R10.9-billion in what was a record operational and financial performance in the 12 months to June 30.

The JSE-listed company stated on Thursday that its earnings before interest, taxes, depreciation and amortisation (Ebitda) were 176% higher, at R16.7-billion, and revenue 83%-higher revenue at R32.6-billion. The Ebitda margin rose to 51% from 33.8% in the previous 2020 financial year

Operating profit of the company headed by CEO Paul Dunne was 203% higher at R16.1-billion and profit after tax hit the R9.4-billion mark. Net debt is at R3.7-billion.

Reduction of 28.9% of the total issued share capital would positively impact future earnings calculations, Northam stated in a stock exchange news service (SENS) announcement covered by Mining Weekly.

In light of this substantial share repurchase, the board has resolved not to declare a final dividend for the year.

Equivalent refined metal from own operations grew by 34.1% to 690 867 four element (4E) ounces, compared with the 515 370 4E ounces refined in the previous financial year. This was despite the ongoing phased restart of operations, particularly impacting the conventional Zondereinde mine, where all mining crews had only fully returned to work by the end of March.

Group chrome concentrate production also increased, breaching one-million tonnes for the first time, owing to higher concentrator throughput and improved yields at Northam’s Booysendal and Zondereinde mines.

Group unit cash costs per equivalent refined platinum ounce fell by 2.1% to R28 662 per platinum ounce (Pt oz).

The unit cash cost improvement at Zondereinde mine improved by 5.7% to R30 350/Pt oz, with a corresponding improvement of 2.9% at Booysendal mine to R20 780/Pt oz.

However, unit cash costs at Eland mine increased by 46% to R42 928/Pt oz. Eland mine’s PGMs production is currently derived from surface sources, and purchased at prevailing market prices, which led to this increase in unit cash costs, the company explained in the SENS announcement.

Capital expenditure (capex) increased to R3.3-billion from R2.4-billion in the previous financial year, reflecting the restart of capital projects curtailed at the onset of Covid-19, together with capital projects having either been completed, or nearing completion at Booysendal mine. Expansionary capex totalled R1.8-billion and sustaining capex was R1.5-billion.

In citing the number of non-dividend ways that value can be returned to shareholders, Northam included share buy-backs and, as it had done previously, the purchase of Zambezi preference shares, a strategy which enabled the acceleration of the maturity and wind-up of the Zambezi black economic empowerment (BEE) transaction.

It explained that the objective of accelerating the maturity and wind-up of the Zambezi BEE transaction was permanently to secure, unlock and transfer unencumbered value created within Zambezi and in so doing, remove maturation risk for both Northam and Zambezi shareholders.

This had led to a meaningful return of value to shareholders, in a planned and responsible manner, through the reduction of 28.9% of the total issued share capital compared with the situation prior to the implementation of the transaction.

Production growth across the group and favourable rand-denominated PGM prices were, the company added, expected to positively impact free cash flow generation, which the group committed itself to returning to shareholders in the future.

“We remain single-minded in our commitment to creating sustainable value for all of the group’s stakeholders and will continue to be bold, proactive and transparent in pursuing this,” Northam stated.

Despite Covid and the tragic loss of two employees at Zondereinde in separate incidents in March, the health and safety of employees had been improved and solid performances from all of the operations had been achieved, with the group producing equivalent refined metal in line with the pre-Covid growth profile and at levels higher than last year.