JOHANNESBURG (miningweekly.com) – The earnings of JSE-listed Northam Platinum nosedived 98.2% in the 12 months to June 30 when the company’s increased borrowings drove up financing costs.

A marginal profit of R19.6-million was realised and earnings per share collapsed to 2.4c compared with 132c a share in 2013 financial year (FY).

Operating profit slumped 93.4% to R61.5-million and increased borrowings put R1-billion on the strengthened balance sheet.

Taxation plummeted from R169.1-million to R45.8-million.

A fourth-quarter recovery is reported at Northam’s Zondereinde platinum mine, where the smelter has been rebuilt for R54-million and where revenue of R750-million was lost before the company reached a 7.5%-to-9.5% wage agreement with the National Union of Mineworkers-dominant workforce, whose 11-week strike ended on January 29.

A dividend has not been declared to financially optimise the ramp-up at the Booysendal platinum-mine project, where declining capital expenditure (capex) reflects the end of its construction and development phases.

Incoming CEO Paul Dunne credited his predecessor Glyn Lewis with the ramp-up state of Booysendal, the company’s second platinum group metal (PGM) mine.

Supplemented by Booysendal’s contribution and inventory, Zondereinde sales volumes rose to R5.3-billion, compared with R4.4-billion in the previous financial year, which compensated marginally for the lower dollar PGM prices.

The cost of sales rose 38.4% on higher operating costs, increased refining costs and a far higher depreciation charge owing to the first-time inclusion of Booysendal mine costs.

The net group taxation charge fell 84.5% to R26.2-million (FY 2013: R169.1-million).

The additional R1-billion arose from a R600-million clawback rights offer underwritten by Coronation Asset Management and R400-million extra revolving credit.

Some R120-million was also raised through a tap issue on the company’s domestic medium term notes programme.

Zondereinde capex was R351-million for the smelter rebuild, deepening project and hostel conversion and capex in the coming year is forecast at R331-million, with the deepening project absorbing R105-million, autoclave replacement R28-million and hostel conversion R42-million.

Full ramp-up of the mechanised Booysendal mine, which posted an operating loss for the year, is expected by the end of 2015.

Booysendal’s capex was R539.6-million and capex in FY 2015 is forecast at R483.4-million, of which R78.4-million will be allocated to routine capital and, of the R405-million project capital, R50-million will be spent to investigate the feasibility of mining Merensky ore at Booysendal.

Dunne reported progress with the company’s black economic-empowerment transaction.

“Once this transaction is successfully put to bed, we’ll be well positioned to pursue our strategic ambitions,” Dunne said.

At Zondereinde, increasing the current 15-year life-of-mine through the deepening project, further exploitation of the upper group two (UG2) orebody and improving the process plant to deal with a higher UG2 ratio would be prioritized.

At Booysendal, growth opportunities would be studied.