Northam moves into net debt of R1.7bn as drives expansion

THE cash burn platinum firm, Northam Platinum, accelerated in the six months ended December taking the company into a net debt position of some R1.7bn which compares to net cash of R1.1bn in the corresponding period of the previous interim results.

The company’s interim profit numbers were also slightly weaker than expected which contributed to the cash burn. There is also a significant inventory of platinum group metals (PGMs) as the company sets about commissioning a second furnace at Zondereinde. As a result, Northam is likely to improve its debt position by the year-end.

Said Northam in notes to its published figures today: “Operating cash flows were negative to the value of R562.7m (2017: +R216.4m) owing to the high inventory levels and prepayments resulting in higher working capital requirements. The high level of inventory is expected to normalise during H2 F2018 given the recent commissioning of the new furnace as concentrate is processed through the new furnace.”

The furnace, which was formally opened with its partner, Heraeus earlier this month, will improve smelting capacity at Northam to one million oz/year in line with the firm’s expansion strategy. To this end, it was a high-spending six month period for Northam.

Cash used in investment increased to R2.2bn, a lift of 182% compared to the R778m spend (itself high) in the previous period of which R1bn was buying mineral rights from Anglo American Platinum which will extend resources at Northam’s Zondereinde to 103 million oz – a further 30 years of potential mining. In addition to the 20MW furnace at Zondereinde, Northam also bought the Tumela block and the development of Booysendal South mine.


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