Northam Platinum: Revenue down despite increase in PGM sales volumes

Northam Platinum’s Sales revenue for the period amounted to R15.0 billion, representing a decrease of 25.5% (H1 F2023: R20.1 billion).

The decrease in sales revenue, despite an increase in 4E sales volumes of 10.4% to 457 357 oz 4E (H1 F2023: 414 170 oz 4E), is attributable to a significantly lower 4E ZAR basket price of R24 269/oz 4E (H1 F2023: R42 046/oz 4E), representing a decrease of 42.3%.

The lower ZAR basket price is the combined result of a lower 4E US dollar (“USD”) basket price of USD 1 302/oz 4E (H1 F2023: USD 2 422/oz 4E) and an increase in the average ZAR/USD exchange rate achieved i.e. a weaker Rand, being R18.64/USD (H1 F2023: R17.36/USD).

Total revenue per equivalent refined 4E ounce sold decreased by 32.5% to R32 785/oz 4E (H1 F2023: R48 577/oz 4E). This, combined with unit cash costs increasing by 6.7% from R22 088/oz 4E in H1 F2023 to R23 562/oz 4E in H1 F2024, led to a decrease in the cash profit margin per 4E ounce to 28.1% (H1 F2023: 54.5%).

Financial results

Sales revenue decreased by 25.5% compared to an increase in cost of sales of 13.8%. This resulted in a gross profit of R2.4 billion (H1 F2023: R9.1 billion), and a gross profit margin of 16.1% (H1 F2023: 45.1%).

Northam Platinum operate a largely fixed cost business and consider increasing production, and doing so efficiently, to be Northam Platinum best defence against current global inflationary pressures. Our capital allocation and treasury decisions have been guided by Northam Platinum growth strategy and Northam Platinum results have benefitted from its consistent approach to growing its production base down the industry cost curve.

Earnings before interest, taxation, depreciation and amortisation, and excluding losses on the sale of the Implats Shares, (“EBITDA”) amounted to R3.2 billion (H1 F2023: R10.0 billion).

As at 31 December 2023, inventory on hand amounted to 458 113 oz 4E, valued at R13.7 billion when applying the 4E price and exchange rate at 31 December 2023.

Capital expenditure
Capital expenditure amounted to R2.4 billion (H1 F2023: R2.6 billion). This is in line with Northam Platinum trimmed capital schedule, and the combinedresult of lower expansionary capital of R1.6 billion (H1 F2023: R1.8 billion), slightly offset by a marginal increase in sustaining capitalexpenditure to R846.0 million (H1 F2023: R813.3 million).
The majority of expansionary capital expenditure related to significant activity on the Western extension project at Zondereinde, together with the ongoing ramp-up at Eland. Sustaining capital expenditure at Booysendal increased in line with production levels, whilst sustaining capital requirements at Northam Platinum metallurgical operations increased as a result of the upgrade to the furnace slag concentrator at Zondereinde.

Northam Platinum plans significant development activity at the Western extension of Zondereinde, as well as at Eland, over the coming 18 months.

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