We are mining for a future

Special metals for a greenerworl d

The growth strategy the company began in th e

● Thepast yearhasbeena recordonefor NorthamPlatinum. Thecompanyachieved record sales revenue,operating profit and earnings before interest,taxes, depreciation and amortisation.

These outcomes wereachieved despite production stoppages resulting from the Covid-19 lockdown.

“Wecontinuedto deliveronourstrategy of developing low-cost, long-life assets which are positioning thecompany for furtherstrong financialperformance,as wellas de-risking ouroperations againstpotentially subdued or volatile commodity markets,” says chief financial officer Alet Coetzee.

Akeyelementof itsstrategyisthereturn to shareholders of valuecreated through the execution of the company’s growth projects. “The successof ourgrowth programmeto datehas allowedusto purchaseapproximately 70% of Zambezi Platinum preference shares, which represents a real value return of R9.1bn,”Coetzee says.

CEO Paul Dunne says it’s gratifying to see how thegrowth strategythe companyembarked onduring the market downcycle five years ago is delivering.

Coetzee says the execution of th is strategy andNortham ’s robust finances have affordedthe companyop erational flexibi l ity.In responseto Covid-19,it moved fast to minimise, as far as possible, theimpact ofthe pandemicon operations and employees.

“Socially, the healthand wellb ei ng of ouremployees andhost communities were keyconcerns. Economically, we sell ourproducts intoa globalmarket. Thatmarket wassubject tometal price and demanduncertainty, which had the potential to affect our liquidity.

“In addition, the national lockdown and the subsequentphased restart ofour operations negatively affected production volumes. This flowed through to unit costs,

last market down cycle is delivering, says CEO

profitabilityand ultimatelyour cashposition. Strictcash preservationtosupport the long-termfuture ofthe companywas apriority. Actionstakenincludeda short-term

Chief financial officer Alet Coetzee.

By ANGELIQUE ARDÉ

pu l lback on noncritical capital expenditure, restructuring of the company’s domestic medium-termnote programmeand ensuring we had sufficient banking facilities.”

Coetzee says the companyis now financiallywellpositioned towithstandnegative impacts. “Now and for the future, our greatest defence against challenging economic times is safe, cost-effective production, and achieving this consistently.”

Covid-19remains achallengethat can af fect the business in many ways, Coetzee says. These include thehealth and wellness of employees, the ability to produce, the demand for, andprice of, metals,andthe currency exchange rates.

Unreliable energy supply is a concern and therefore the company’s expansion strategy focuses on energy efficiency and supply management, she says.

The companyfocuses onwhatit cancontrol, alsowithregard tothesafetyandhealth ofemployees, communitydevelopmentand upliftment programmes in the areas in whichitoperates. “We monitor and maintain compliance with all relevant legislation [in thisregard], and this ensuresthat we maintain our social licence to operate.

“In addition, effective cost control, sustainingour positionwithinthelower halfof the sector cost curve, while maintaining

strong relations with our longstanding customer base—which viewsus asa consistent and reliablesupplier of qualityproduct — provides a buffer to economic downturn.”

Lookingtothe future,Coetzeesaysthe metals Northam produces are special and aid theattainment ofacleaner, greenerworld. “It isour considered opinion thatnet de mandfor platinumgroupmetals willremain strong overthe coming decade.This will support pricing.

“Our current growth projects are well progressed and significantlyde-risked. Our balance sheet is strong and it will continue to

strengthenon thebackof growingproduction and improved margins,”she says.

“We have already made significant

progress in returning meaningful value to ourshareholders. Thisis akey strategicimperativeandwewill continuetohonourit.

So Ibelieve thatthe outlookfor Northamis

extremely positive.”

LeadingSAasset managerCoronationis

also backing platinum to deliver future

growth potential.

“We expectplatinum tooffer growthpo-

tential asit islikely tobe subjectto anongo-

ingsupplydeficit, whichwillunderpinthe

10

TOP 100 COMPANIES Northam Platinum N th

Share price, daily (cents)

15,000

September 2015: R10,000 August 2020: R42,442

11,500 8,000 4,500 1,000

201920182017 2016 2020

Graphic: Ruby-Gay Martin precious metal’s valuation,” s ays NeilPadoa, theheadof global developed markets at Coronation, writing for Allan Gray’s Offshore Exchange.

Overthe pastfive years,Northam has invested over R12.9bn in the pursuitofits growthstrategy,doubling productionand creating5,897 new, direct jobs.

BetweenJuly2019 andJuneth is year,the company’sshare priceincreased by 104%.

Over thepast fiveyearsNorth am has hada compoundannual growth rate of 33.5%.