Northam Platinum is an independent, integrated mid-tier producer of Platinum Group Metals (PGM) with two primary operating assets – the Zondereinde and Booysendal mines – in the Bushveld Complex of South Africa. Zondereinde is a mature mine located near Thabazimbi, which produces around 280 000oz of in-concentrate PGM annually and has a 21-year life-of-mine. Booysendal is a shallow mechanised mine near Mashishing that came into production in 2013 and has been forecast to produce 160 000oz annually once at full production.

Notham’s asset portfolio also includes a base metals removal plant and smelter at Zondereinde. Metal is refined through Haraeus in Port Elizabeth and Germany. The in-house marketing department is responsible for sale of product both locally and to export markets in Europe, North America and Asia. Wholly-owned subsidiary Northam Chrome Producers produces chrome from the Zondereinde mines tailings.

The group also holds a 7.5% interest in the Pandora joint venture with Anglo American and Lonmin, as well as a 50% interest in the Dwaalkop PGM joint venture and a 51% interest in the Kokerbom joint venture in the Northern Cape

Northam shares are available to buy on the Johannesburg Stock Exchange (JSE) with a market cap of around R25 billion.

Northam’s strategic objectives involve diversifying production into shallow, mechanisable ore bodies. Despite difficult trade conditions for the mining industry in South Africa, the group has maintained the strength of Northam share price andremained profitable, although data in the 2016 interim results indicated a 35% drop in operating profit from R595 million to R383 million. Production and sales were up by 14% and 7% respectively, but extremely low commodity prices impacted on overall profitability.

The group completed a restructuring process for the year and the cash position was boosted to R3.1 billion through the buy in of Zambezi Platinum, which purchased a 31.4% shareholding in the company. Financial strength was further bolstered by the introduction of the Industrial Development Corporation as a strategic funding partner, providing the basis for expansion projects that will take annual PGM production to 800 000oz. Operations at Booysendal North have been fully ramped-up, and deepening projects are taking place here and at Zondereinde. Meanwhile, development of further mining complexes has been approved.

Northam has managed some commendable performance during a difficult time for mining companies and has secured a healthy cash position which allows it to invest significant capital in expansions. Investors have responded positively to the moves made by the company, and confidence to buy Northam shares is higher than for the majority of mining stocks. The live online JSE chart shows that Northam share price has rocketed from a low of R19.63 at the beginning of 2016 to R48.34 by September 2016, indicating a company that is on the up-and-up. When the fundamentals of the PGM markets recover, Northam is likely to deliver healthy returns and dividends for investors who buy the shares.

Materials

Metals & Mining

Precious Metal Mining

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