CAPE TOWN – Northam Platinum has increased its revolving credit facilities (RCF) by R500million to R3.5billion as the platinum mining group continues to build up a money chest so it can begin returning value to shareholders.
In addition, a new R500m general banking facility (GBF) had been secured, a statement said on Friday.
The announcement was positively received by investors and the share price rose by 6.09percent to R56.31at the close of the JSE on Friday – the platinum mining index was up 2.47percent at the same time.
The maturity date of Northam’s existing R1bn RCF had also been extended to match that of its existing R2bn RCF and both of these facilities, as well as the R500m increase, have been combined into a single R3.5bn RCF maturing on November 29, 2021. The interest rate on the total RCF remains unchanged and the GBF will accrue interest at a variable rate of prime less 1.5percent.
Northam’s chief executive PA Dunne announced on April 16 R1.65bn of domestic medium-term notes, and this further strengthened Northam’s balance sheet.
This additional funding flexibility would enable Northam to further return value to shareholders, in due course, through a repurchase of ordinary shares and/or a purchase of Zambezi preference shares, he said,
Chief financial officer Alet Coetzee said returning value to shareholders was a big focus of the group going forward, and a repurchase of Zambezi preference over three years, or repurchase of ordinary shares, was likely to start in the new financial year.
She said Northam had originally stood in to guarantee its Zambezi empowerment group that the share price would reach R170 per share by May 2025, so by repurchasing Zambezi shares, it was possible to reduce the risk of earnings dilution in the future.
She said the company was comfortable with a net debt to earnings before interest tax and amortisation of 1:1, and any cash generated outside that would likely go to share buybacks.
The mining group, although still in the midst of three large capital expenditure programmes, was ramping-up production, and any increased cash flow from this would also be allocated towards creating value for shareholders, she said.
She said some R2.8bn was still needed to be spent out of a R5.6bn expansion at Booysendal South, but the mine was in place and production would be ramped up there in the next couple of years.
At the Western Extension, production at Zondereinde would move from a 300000-ounce 4E production to 350000-ounce 4E PGM over three to four years. At Eland Mine “we are getting ready to get started”.
Northam Platinum increased normalised headline earnings to R553m, or 108.5cents per share, up by 192.6percent, in the six months to December 31 2018.
Sales revenues increased by 48.5percent to R5bn, mainly due to higher volumes.