Aerial view of the
Merensky and UG2
concentrator plants
at Northam
 
Johannesburg, South Africa — MININGREVIEW.COM — February 13, 2008 – Northam Platinum Limited – a mid-tier platinum company listed on the JSE – has posted its results for the first half of the 2008 financial year, reporting lower earnings per share of 199 cents compared to 280 cents in the first half of the 2007 financial year.
 
Its latest results released here late yesterday showed a first-half profit decline of 29 percent after safety-related stoppages. The company emphasised that the results for the six months to 31 December 2007 had been adversely affected by the loss of 23 production days owing to safety-related stoppages and intensive retraining programmes for employees.

CEO Glyn Lewis added: “As expected, the difficulties associated with mining the Merensky reef have persisted. Our emphasis on exploiting the more conformable UG2 reef has borne some success, and has helped us to contain the drop in tonnages mined from both reefs to 17.1%, despite the 24.3% decline in Merensky tonnages.”

As a result of the lower tonnages, and a drop in head grade to 5.0 g/t, (associated mainly with the higher UG2 volumes mined), production of metals in concentrate was lower by 16.5% at 4 689 kg (150 755 oz) compared with H1 in F2007.

Sales revenue at R1.5bn was 17% lower year on year, declining from the R1.8bn level reported in the previous comparable period. Net income fell to R472.6 million from R662 million a year earlier.

Although the average US dollar basket price received for metals rose by 16.3% to US$1 396/oz, the relatively strong rand in the period offset the potential gains from the higher prices, and resulted in a ZAR basket price received of R311 369/kg – 11.8% up year on year.

Reflecting the overall decline in production and general inflationary increases, total operating costs were higher by 14.8%.

Lewis commented that innovative metallurgical developments at Northam have facilitated increased volumes mined from the UG2 reef. “We have made good progress in increasing the proportion of UG2 concentrate in the smelter, and with the introduction of a high pressure roll crusher in the UG2 circuit within the next couple of months, it may be possible to further increase the throughput of the UG2 concentrator, which has a design capacity of 75 000 tonnes per month.”

Referring to the power issue and its possible effect on second half-year results, Lewis noted that production and metal sales should approximate those of H1 if Eskom was able to continue to supply the company with 90% of its consumption requirements.

On this basis earnings will be determined largely by the average Rand basket price received in the second half, currently at significantly higher levels than the R311 369 per kg received in the first half of the 2008 financial year.