Northam Platinum raised production by more than 10% for the year to June despite higher mining inflation and subdued platinum group metals (PGMs) prices, which it predicts will persist for longer.
This comes as the Minerals Council South Africa last week warned that SA mining output for the second quarter will likely be lower owing to persistent non-energy constraints.
In May, PGMs production fell by 11% in SA, with the Minerals Council expecting output of the precious metal aligning with restructuring of the PGMs sector in the country.
However, for Northam Platinum, production refined PGMs production for the year to end June was higher by about 10% compared to the previous year at about 1 million ounces, including feed from third parties.
Northam’s own production for the period was also up by an almost similar margin.
Shares in Northam traded 2.67% higher on the JSE to about R132.37 in midday trade on the JSE yesterday.
Total metal sold for the year was also higher by about 7.3% at 950 251 ounces, exceeding the company’s expectations. This would have bode well for the company considering the low PGMs price environment.
“In light of the prevailing pricing weakness and uncertainty surrounding the platinum group metals market, Northam remains fully internally focused and management continues to pursue innovation and operational excellence, particularly regarding safe production, aimed at delivering efficient mining at the right cost,” the company said.
Moreover, cash conversion and cash preservation remained key focus areas for the company as it bids to notch up a strong balance sheet to further enhance investor confidence.
Northam now expects that the current weak price environment for PGM “may endure for some time. Higher inflation is also projected to remain a major source of concern for the company.
“Combined with higher general inflation, (the lower PGM prices) continues to exert pressure on the entire PGM sector,” it said.
Nonetheless, the company said it “remains well-positioned and fully prepared to face these industry headwinds, while continuing to deliver long-term sustainable value” to investors given its resource base, well-capitalised mining assets and proactive balance sheet management.
Northam’s investment programme also remained on track through the year under review despite temporary pauses to project modules. However, these delays had been without significant consequence to its progress.
Northam’s focus on cash conservation during the current pricing-cycle had helped it stay on course with its investment programmes.
The company’s ongoing and consistent growth in production volumes and increased operational diversification had also continued to underpin its defensive position and resilience in the face of the current soft metal price environment.
“This affirms the long-term contribution of our counter cyclical investments made over the past decade in pursuit of establishing a very competitive production base which is able to withstand potential medium to long-term cyclical downturns,” it said.
BUSINESS REPORT