Northam Platinum: Difficult operational environments at its mines

Notwithstanding the array of challenges faced during the year the year ended 30 June 2022, Northam Platinum operations collectively achieved a steady increase in production and its growth projects remain on track.

A key feature during the year under review has been the difficult operational environments at the Zondereinde and Booysendal mines. Booysendal was affected by regional community unrest, which impacted the entire eastern Bushveld region, throughout the financial year. This resulted in lost production shifts.

Booysendal was also affected by the intersection of a lower grade reef package in the upper southern portion of the North UG2 mine, which led to a decrease in concentrator feed grade. These challenges and external events negatively impacted the group’s metal production and unit cash costs during the financial year.

Despite the aforementioned challenges, the group’s equivalent refined metal from own operations increased to 716 488 oz 4E (F2021: 690 867 oz 4E). Zondereinde recorded improved production during the second half of the financial year, whilst production growth from Booysendal was lower than forecast as a result of lower grade mined at Booysendal North.

In respect of our current expansionary projects, development of the Western extension at Zondereinde has progressed well; Booysendal has made good progress on South mine whilst recording 7 million fatality free shifts and remaining fatality free since inception; and Eland continues its ramp-up, with the addition of the recently acquired Maroelabult section adding considerable synergistic benefits.

Group unit cash costs per equivalent refined platinum ounce increased by 18.9% to R34 069/Pt oz (F2021: R28 662/Pt oz) on the back of cost increases at all of the operations. Cash costs per equivalent refined platinum ounce increased by 14.8% at Zondereinde to R34 828/Pt oz (F2021: R30 350/Pt oz), 21.9% at Booysendal to R25 321/Pt oz (F2021: R20 780/Pt oz), and 29.5% at Eland to R55 594/Pt oz (F2021: R42 928/Pt oz).

These increases were primarily driven by (i) above-inflationary increases in chemicals, steel components, emulsion explosives and fuel, (ii) an increase in the number of employees in service as the group continues to grow the labour complement to enable the planned expanded production profile together with the negotiated wage increase for our employees, and (iii) lower concentrator feed grades from the Booysendal North UG2 mine.

Capital expenditure increased to R4.6 billion (F2021: R3.3 billion). This is in line with our capital schedule and is the combined result of increased expansionary capital of R3.1 billion (F2021: R1.8 billion), together with a marginal decrease in sustaining capital expenditure to R1.4 billion (F2021: R1.5 billion).

Expansionary capital expenditure increased as a result of significant development on the Western extension project at Zondereinde, together with the ongoing ramp-up at Eland. Sustaining capital expenditure at Booysendal increased due to a number of extensions to strike belts and the first significant fleet replacements, whilst sustaining capital requirements at its metallurgical operations decreased following the commissioning of the rebuilt smelter furnace 1 at Zondereinde.

Key financial features

• Revenue of R34.1 billion.
• Operating profit of R14.9 billion.
• EBITDA of R16.5 billion (EBITDA margin of 48.3%).
• Normalised headline earnings of R10.2 billion, equating to R25.74 per share.
• Profit after tax of R9.8 billion.
• Earnings per share of R26.15 and headline earnings per share of R26.11.
• Net debt of R16.0 billion (Net Debt to EBITDA of 0.97).