JOHANNESBURG (miningweekly.com) – JSE-listed platinum miner Northam Platinum achieved a 226.7% year-on-year increase in normalised headline earnings of R1.4-billion for the financial year ended June 30

Its equivalent refined metal production for the year increased by 7.4% to 519 954 oz of platinum, palladium, rhodium and gold (4E), with increased contributions from both Booysendal and Zondereinde.

Chrome output was also 17.6% higher year-on-year, at 764 528 t, which Northam says reflects the growth at Booysendal and Zondereinde, along with a maiden contribution from Eland.

Higher platinum group metals (PGMs) volumes and a higher US dollar basket price, in addition to a weak South African currency, pushed revenues for the period to R10.6-billion.

Booysendal’s growing contribution to the group’s improving cost profile was evidenced by the increase in group unit cash costs/equivalent platinum ounces being held to 7.4% at R22 847 per platinum ounce.

Cost of sales were higher at 22.4%, or R8.2-billion, during the period, mainly driven by operating input cost increases, including higher mining costs.

Group capital expenditure (capex) peaked at R3.8-billion in 2018, and decreased to R2.9-billion for the year under review. Capex is likely to taper further in the 2020 financial year as key project milestones are completed, Northam reports.

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At Zondereinde, equivalent refined metal from own operations increased by 3.1% to 308 466 oz of 4E, concurrent with its expansion projects making good progress to improve Merensky ore reserve availability.

Merensky milled tonnages grew by 10.2% during the period.

This, Northam says, underlines the positive impact of reserve build-up in both the deepening and Western extension sections of the mine.

Upper group two (UG2) ore exceeded concentrator milling capacity by 129 383 t, and production at Booysendal North’s UG2 mine improved 2.8% year-on-year to just over two-million tonnes, primarily owing to improved mining productivity. 

The Merensky North mine increased its contribution by 18.3% to 386 476 t, following the addition of a third stoping crew in the latter part of the year.

First production was achieved from the Booysendal Central UG2 mine, adding 181 853 t to the existing stockpile of 71 000 t.

Total tonnes milled increased by 7.5% to 2.8-million tonnes, with the additional tonnes milled essentially coming from Booysendal Central UG2 production, Northam notes.

Meanwhile, work at Eland during the year focused on recommissioning the chrome spirals and secondary PGMs circuit in the concentrator to receive feedstock from the tailings dam for reprocessing.

A total of 12 676 t of chrome concentrate was produced and sold.

This operation will continue in the new financial year, together with the processing of purchased material to recover PGMs.

In parallel with the processing operations, a feasibility study to restart underground mining was completed, together with the refurbishment and recommissioning of fixed and mobile underground equipment in anticipation of the restart.

Development of a revised mining layout will start at the Kukama shaft during the 2020 financial year.

Northam has also initiated its Master Drilling performance validation project at Eland, and the drilling is expected to continue over the course of three months to drill about 100 m.

CEO Paul Dunne tells Mining Weekly Online that the drilling machine is currently underground and “getting ready to go”. Northam intends to check that the mobile tunnel borer (MTB) can accomplish what is claimed.

The rate of development through the use of the MTB, he adds, is “significantly higher” than the conventional method of hand-drilling and blasting.

As previously reported, the machine will be tested at the mining company’s Eland mine, in South Africa, as part of a R93-million ($6.6-million) shared “risk-and-reward contract” with Master Drilling.

The MTB chips away at the rock and makes no use of explosives, which Dunne says does not damage the hanging wall, while simultaneously creating an arch, as opposed to a square, which is “inherently more stable”.

Following conclusion of the validation programme, Northam will advise whether the use of the MTB at Eland will continue.

Commenting on the miner’s results, Dunne also highlights that project execution will remain key to the company’s unfolding strategy.

“A lot of the hard work has been done, [which reduces] the execution risk,” he says, adding that this gives Northam increased confidence that it will be able to deliver its projects within the designed parameters to take advantage of a rising PGMs market.  

Further, Northam has also concluded definitive agreements in terms of which its existing five-year R3.5-billion revolving credit facility (RCF) will be refinanced on more favourable terms, with the maturity date being extended from November 2021 to August 2024.

According to Dunne, the new RCF terms reflect improved lender confidence in Northam, which is underpinned by Northam’s operational performance and project execution.

“Northam’s cost of debt will be reduced and the combination of the new facilities and the increased domestic medium term note programme will provide Northam with increased funding flexibility in support of Northam’s significant and continued growth,” he noted earlier this week.

Turning towards labour and the ongoing negotiations for wage increases for platinum miners, Dunne tells Mining Weekly Online that, while discussions are still in “very early stages”, Northam has received a letter from trade union Association of Mineworkers and Construction Union (AMCU) stipulating its demands.

Discussions are under way, with updates to be announced towards the end of September or early October.

“It’s really about how you behave around the table, more than anything else. It’s not about what to negotiate, but so far we’ve had initial clarification, which means that the union now has to come and tell us what, why and wherefore their demands are being made,” he comments.

In June, AMCU announced that it would seek a monthly basic wage of R17 000 for its members.

The increase is about 48% higher than the R12 500 the union has been demanding since 2012.

The union represents about 60 000 members in the South African platinum sector.