JOHANNESBURG (miningweekly.com) − JSE-listed Northam Platinum reported a sharp drop in earnings for its 2011 financial year on Thursday, mainly owing to strike- and safety-related stoppages impacting on production at the Zondereinde mine in Limpopo.

Earnings were down 46% year-on-year to R0.96 a share. The platinum miner saw a decline of 19.8% in metal sales to 317 392 oz, resulting in a 9.5% drop in revenue to R3.6-billion, compared with revenue of almost R4-billion in 2010.

CEO Glyn Lewis said that the six-week strike at Zondereinde during the first half of the financial year had a major negative impact on the results, which were further compounded by safety-related stoppages continuing into the second half of the year, exacerbating the already compromised production position.

Out of 301 working days, 65 days were lost to strike action and safety-related incidents at the mine. This, along with the constraints on the Merensky reef horizon contributed to the decline in tonnages, from just over two-million tons to about 1.6-million tons for the year under review.

Lower head grades further exacerbated the situation, leaving metal in concentrate production 22.2% lower year-on-year.

“The key to recovery at Zondereinde lies in the availability of Merensky reef, the lack of which is likely to persist for the next 18 months until the additional stoping areas and the decline section come on stream,” said Lewis.

He added that Northam was unable to take advantage of the stronger rand basket price of R323 899/kg, owing to the lower production.

In addition, costs continued to rise as labour and power costs increased above the rate of inflation, resulting in the company reporting lower operating profit of R385.3-million.

Meanwhile, Northam said that good progress had been made at its Booysendal operation and that construction and development of the project in Mpumalanga had now been fast tracked.

The company is in the process of securing additional funding to supplement its internal financial resources for the development of the Booysendal mine, which remains on track for first production in early 2013.

A dividend of R0.10c a share was declared.
 

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