Northam Platinum says interim sales, operating profit and profit will surge thanks to an improved performance at all its operations and higher platinum group metals (PGMs) prices.
Sales for the six months to end-December are expected to increase by 44.9% year on year to R20.1bn, the mining company said in a trading statement on Thursday. That will see operating profit jump 55% to R9.1bn and headline earnings per share (HEPS) soaring 62.3%-72.3% to between 1,560.4c and 1,656.6c. Cost of sales are also seen rising, by 37.6%.
A higher basket price for platinum, palladium, rhodium and gold (known as 4E metals) and the weaker rand combined to push the total revenue per equivalent refined platinum ounce 14.7% higher to R80,422/Pt oz, Northam said.
Production of refined 4E metals from the group’s its own operations improved more than one-tenth to 393,309 oz thanks to a strong performance from all its mines, including a 21.9% rise from the Booysendal mine near Mashishing in Mpumalanga.
Capital expenditure in the period was R2.6bn with a total spend of R5.4bn expected for the full year. Some of that will be allocated to expanding the Zondereinde mine near Thabazimbi and ramping up the Eland operations near Brits, Northam said. About R300m will be spent on electricity generation capacity to offset the effect of ongoing power cuts by Eskom.
Northam’s operations have been subjected to several Eskom load curtailment events, though the company does have some self-generation capacity.
“We operate a largely fixed-cost business and consider increasing production, and doing so efficiently, to be our best defence against current global inflationary pressures,” Northam said.
“Challenges remain, particularly in respect of mining inflation and the potential for further and more severe Eskom load-curtailment events. However, however our capital growth programmes remain on-track and demonstrate the power of our counter cyclical investments,” it added.
“A raft of global geopolitical issues hold the potential for further disruption to the PGM markets, whilst the potential for further and more severe Eskom load curtailment events could lead to operational disruption,” it added.
The company will publish its half-year results on March 24.
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