Northam Platinum Holdings Limited has announced a decrease in earnings for the six-month period ending 31 December 2023. The company attributed this decline primarily to a significant decrease in commodity prices and a loss incurred on the disposal of shares.
Key Financial Metrics
Despite a 10.6% increase in equivalent refined 4E ounce metal production from own operations, reaching 434,977 oz 4E, Northam witnessed a 25.5% decrease in sales revenue, amounting to R15.0 billion. This was driven by a notable 42.3% decrease in the 4E ZAR basket price, dropping to R24,269/oz 4E. Consequently, the company reported a 73.3% decrease in gross profit, totaling R2.4 billion, and a 68.1% decrease in EBITDA, amounting to R3.2 billion.
Impact of Commodity Prices
The decline in earnings is largely attributed to the significant decrease in commodity prices, which adversely affected the company’s profitability. The 4E ZAR basket price saw a substantial drop, affecting the total revenue despite an increase in sales volumes.
Loss on Disposal of Shares
Northam Holdings incurred a loss of R799.7 million on the disposal of Impala Platinum Holdings Limited (Implats) ordinary shares received as part of the disposal consideration following the acceptance of the mandatory offer made by Implats to shareholders of Royal Bafokeng Platinum Limited (RBPlat).
Production Performance
Despite the challenging market conditions, Northam’s production performance remained robust. The company recorded a 10.6% increase in equivalent refined metal production from own operations, with all mines across the group performing well. Booysendal and Eland mines notably saw significant increases in 4E concentrate production.
Cost Management
Northam managed to limit the increase in group unit cash costs to 6.7%, despite the ongoing trend of higher mining inflation. This was achieved through effective cost control measures and disciplined operations.
Capital Expenditure and Liquidity
The company’s capital expenditure amounted to R2.4 billion, with a focus on sustaining and expanding operations. Despite the challenging market conditions, Northam maintained a healthy liquidity position, with net debt improving to R2.4 billion and cash and cash equivalents of R11.8 billion as of 31 December 2023.
Conclusion
Despite facing headwinds from declining commodity prices, Northam Platinum remains committed to its growth strategy. The company aims to optimize existing operations while prudently managing its liquidity and capital expenditure. Northam Platinum’s financial results for the six-month period ending 31 December 2023 are expected to be published on or about Friday, 1 March 2024.
