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Platinum remains in fundamental deficit – Northam

Northam Platinum half-year presentation covered by Mining Weekly's Martin Creamer. Video: Darlene Creamer

1st March 2024

By: Martin Creamer

Creamer Media Editor

     

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JOHANNESBURG (miningweekly.com) – Platinum remains in fundamental deficit, Northam CEO Paul Dunne emphasised at the company’s presentation on Friday, which reported a strong performance from all group operations in the six months to December 31.

“In mining terms, it’s a slow-burning fuse. Ultimately, we will see a price response to this picture,” said Dunne, as he displayed a visual diagram indicating the downward outlook for platinum supply. (Also watch attached Creamer Media video.)

He outlined how palladium-dominant mines are often combined with significant nickel production and the weakening nickel price is further eroding profitability.

Previously forecast increases in palladium supply were dependent on projects that are now unlikely to be pursued and flat-to-waning supply is expected over the medium term.

Rhodium is expected to follow the depletion profile of South Africa’s upper group two (UG2) mines, leading potentially to significant undersupply of what is a critical metal that is poised to return to deficit “quite quickly”.

The current price environment may last for some time and this combined with general higher inflation will pressurise the sector and it is clear that the current market conditions cannot sustain supply, Dunne said as he displayed a margin chart during the presentation covered by Mining Weekly.

“Not all orebodies are created equal and, in this market, we would suggest that South African UG2, with its higher loading of platinum, iridium, ruthenium, rhodium and chrome, is strategically well-positioned for a future-facing market.

“At Northam, we have a UG2-dominant resource base, which is very well capitalised, and this places us in a strong position.

“Once again, safe production, efficient project execution, efficient mining, and a very firm grip on the cheque book, will ensure that we mine at the best possible cost,” said the CEO of the Johannesburg Stock Exchange-listed Northam, which declared R1-a-share interim dividend on the back of its cash and cash equivalents of R11.8-billion and available undrawn banking facilities of R11-billion collectively amounting to R22.8-billion.

At the outset, Dunne drew attention to the picture of iridium chloride that featured in its presentation. Iridium chloride is critical to the production of green hydrogen.

“Iridium is one of the rarest elements on the planet and because of the many colours of its various compounds, was named after Iris, the Greek goddess of the rainbow.

“Iridium and ruthenium were historically considered the minor metals but their importance is growing and together these contributed over 11% of Northam’s R15-billion revenue for this six-month reporting period," Dunne pointed out.

NEW SHAFT

The equipping of the new Zondereinde 3 Shaft has been completed to 500 m. Full equipping at 1 400 m and commissioning of the shaft, along with the 3A ventilation shaft, is scheduled for May 2025, at which time a combination of greatly reduced travel time for employees and improved hydropower and backfill pressure on the face, will significantly derisk mining.

“The pace at which we’ve been able to progress the 3 Shaft project we believe is impressive, given that we only started piloting in September 2029 and we expect commissioning four-and-a-half years later than that at a fraction of the cost of a conventionally developed shaft.

“The addition of 3 Shaft will allow us to mine this exceptional orebody well into the future,” Dunne highlighted.

Cost control measures in the period kept the increase in group unit cash cost per equivalent refined four element (4E) ounce at 6.7% amid a 10.6% increase in equivalent refined 4E ounce metal from its own operations to 434 977 oz in the six-month period, when production reached record levels.

Edited by Creamer Media Reporter

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