Surging platinum group metals (PGM) prices have given a lifeline to SA miner Northam Platinum.
The company’s value has more than doubled in the past six months, ending its three-year decline.
The turnaround comes as the price of platinum continues to rally, gaining around 55% this year. PGM prices have been boosted by the shift from pure battery electric vehicles to hybrid electrics, lifting PGM demand while mined supply remains constrained by SA's energy and logistics challenges.
A trading update released by Northam this week shows that the company is well-placed to ride the wave of rising commodity prices. The group, which operates three PGM mines in SA, reported a solid operational performance, with production well within full-year guidance.
In the year to end-June, total refined metal production was up 5.2% from the previous financial year, while sales improved by 3.8%.
Rising PGM prices have given the group a chance to recover from a challenging first half, in which low prices and SA's unstable water and power supplies weighed on its balance sheet.
Earlier this year, the miner reported year on year reductions in interim sales, operating profit and earnings before interest, tax, depreciation and amortisation. Headline earnings were cut nearly in half in the six months to end-December.
The significant drop in earnings meant some pain for Northam shareholders, with the group declaring an interim dividend of 15c per share, compared to 100c a year earlier.
There is hope that Northam has since turned a corner. Recent reports by the World Platinum Investment Council suggest that the metal’s forecast market deficits, projected at 966,000 ounces this year, are here to stay.
However, Northam CEO Paul Dunne struck a cautious tone in the group's latest trading update, warning that PGM markets remain uncertain, and that the group remained "internally focused".
"Despite recent improvements in metal prices being realised, the global economic outlook remains uncertain, with potentially volatile metal markets and exchange rates," said Dunne.
On Thursday, Northam shares peaked at a three-year high of R230.57. Shares in the miner have skyrocketed by over 130% this year, adding more than R50bn to its market value.
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