Strike-hit Northam Platinum slumps to first operating loss since 1998
JOHANNESBURG (miningweekly.com) – JSE-listed platinum mining company Northam has recorded its first operating loss since 1998 after its Zondereinde mine was hit by an 11-week strike.
The traditionally solid performer, headed by retiring CEO Glyn Lewis, slumped to a total comprehensive loss of R92.7-million for the six months to December 31, largely because of the protracted industrial action at the Western Bushveld flagship, which endured from November 3 to January 21 and cost the company a whopping R750-million in unearned revenue.
On the Eastern Bushveld, the ramp-up of Northam’s developing Booysendal mine, which suffered no industrial action in the period, is on track and has an extra R1-billion in the kitty, but is not yet in a position to contribute to earnings.
Platinum group metal sales from Zondereinde fell 16.4% to 4 620 kg with partial 1 138 kg offset from Booysendal.
Because of the weakening currency position, the average rand basket price was higher at R383 258/kg and contributed to a marginal increase of 3.7% in revenue to R2.3-billion.
The cost of sales rose 23% to R2.4-billion owing to higher operating costs, increases in third-party toll-treated refining costs and Booysendal’s R224-million amortisation and depreciation charge.
The significant increase in refining and related costs is a result of the temporary outsourcing of smelting and refining services to a third party during the smelter rebuild.
Of the R1-billion raised for Booysendal, R600-million was in cash from shareholders and R120-million through a tap issue on the domestic medium term notes programme.
Some R243.6-million was spent to maintain operations, including R54-million for the smelter rebuild.
Forecast capital expenditure for the remainder of the 2014 financial year is R195.5-million.
A further 28 housing units were sold to employees, bringing the total number of housing units sold since inception of the Zondereinde employee housing scheme to 364.
The group is continuing to consult with the Department of Mineral Resources on the restructuring of its black economic empowerment.
Being studied are ways to realise value from Northam’s 50% interest in the Dwaalkop platinum project, 20.3% of Trans Hex diamond company and 51% in the Kokerboom joint venture, a greenfield iron oxide, gold, copper and massive sulphide exploration project.
A further 10% has been acquired of Northam Chrome Producers (NCP) for R10-million, bringing the total holding to 80%.
NCP, which produces chrome from Zondereinde's upper group two tailings, contributed an after-tax profit of R24-million in the current period.
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