LONDON - Northam Platinum plans to buy back about 15-million preference shares out of 159-million currently in issue in the financial year ending June 2020, its chief executive said on Wednesday.
The miner, one of the top platinum producers globally, wants to reward shareholders following a boost to profits from higher metals prices.
"In the coming period we would be looking to target about 15-million shares," Northam's Paul Dunne told Reuters in London.
"This would be a good start and we believe the most efficient way of returning value to shareholders."
It issued the preference shares in 2014 to a consortium of black investors in exchange for a cash injection of $600-million into its balance sheet at that time.
As palladium prices reached a record in March, rhodium prices firmed and the rand weakened, Northam's profits have allowed it to pay down debt.
Based on Wednesday's fair value price of R70 the 15-million preference share buy back equates to approximately R1-billion, according to a Reuters calculation.
Northam plans to reduce net debt from R2.9-billion at the end of December 2018 to a target of about one times EBITDA (earnings before interest, tax, depreciation and amortisation) at the end of its June financial year, Dunne said.
The target debt-to-EBIDTA ratio would be achieved with help from an anticipated increase in profits due to higher prices and output growth, and a lift from a weaker local currency.
Proceeds gained from the black empowerment deal gave Northam enough firepower to expand its flagship Booysendal mine and to buy assets including the Everest and Eland mines and a recycling business in the United States.
South African mining companies are required to reach at least 30% black ownership under the government's policy of black economic empowerment designed to address the inequalities of the apartheid system that ended in 1994.