JOHANNESBURG (miningweekly.com) – Despite more production disruptions expected in South Africa’s platinum sector this year, JSE-listed Northam Platinum marketing manager Jerry White said Friday that 2013 would be another year of steady, if not stellar, demand for metals.

He indicated at the company’s results presentation for the six months ended December 2012, in Johannesburg, that metals demand in the automotive and jewellery sectors would remain robust, while consumption would be strong in China, despite the country’s slow economic recovery.

White noted that the biggest concern in the year ahead would be the eurozone, where uncertainties and another year of subdued activity were anticipated.

“We see 2013 as a year of metal deficit for platinum and palladium. And this, combined with the current prevalence of uncertainty in respect to primary supply should support prices as the year progresses,” he indicated.

Northam CEO Glyn Lewis said the company anticipated the platinum industry to be dominated by continued uncertainty in the foreseeable future.

“Financial and labour problems, combined with poor economic fundamentals internationally, affected investor sentiment in the metals sector in 2012.

“Our only hope is that the recent peace and stability accord is successful,” Lewis said, referring to a combined initiative, announced this week, between Mineral Resources Minister Susan Shabangu, mining sector stakeholders from the Chamber of Mines, organised labour and the management of miner Anglo American Platinum, to ensure productivity in the South African mining industry going forward.

FINANCIAL PERORMANCE

An overall improvement in performance at JSE-listed Northam Platinum’s operations during the six months ended December 2012, resulted in a 20.6% year-on-year increase in operating profit to R266-million.

Earnings, however, declined to 35.6c a share, down from 51.8c in the six months ended December 2011. This reflected the impact of increased tax, a decline in investment revenues emanating from the drawdown of cash to fund the intensive capital expenditure (capex) programme ahead of the commissioning of the Booysendal mine, on the border of Mpumalanga and Limpopo, as well finance charges associated with the credit facilities secured by Northam.

The platinum miner said in a statement that the construction of the concentrator plant at Booysendal had been completed and that smaller equipment at the plant had already undergone partial cold commissioning.

Good progress had also been made with the tailings dam. However, the company pointed out that key to completing the cold and then hot commissioning of the plant, which was anticipated by the end of the fourth quarter, was the availability of a permanent power supply from State-owned Eskom power, which had been delayed following an invasion of land over which the power line was routed.

Northam and Eskom were working together to resolve the difficulties associated with access to and construction of the power line over an Eskom servitude east of the mine.

By the end of December, the stockpile at Booysendal had grown to 320 000 t containing about 25 000 oz, 6 500 m of development had been completed and a total of 14 000 m² had been stoped. To date, Northern has spent R2.91-billion in capex on the project.

Meanwhile, Northam stated that Aquarius Platinum and its local subsidiary Aquarius Platinum South Africa have indicated their continued intention to honour the agreement to acquire mineral rights attached to the southern portion of Booysendal for R1.2-billion.

The agreement remained subject to conditions precedent, which included approval by the Department of Mineral Resources (DMR). However, the agreement would expire on April 30.

Lewis said Aquarius did not have cash on hand to finance the acquisition, but was considering other funding mechanisms.

Meanwhile, firm operational performance at Northam’s Zondereinde mine, in Limpopo, during the second half resulted in a 6.5% rise in the production of metals in concentrate at the operation to 157 183 oz.

Northam indicated that the absence of safety stoppages during the period under review led to Zondereinde’s improved performance. Tons milled on the Merensky reef improved by 19%, and overall milled tonnages were 15.1% higher at 1.2-million tons. Grades were largely unchanged and production of metal in concentrates was 6.5% higher at 157 183 oz.

The company reported that metal sales were higher at 177 655 oz; this, combined with a marginal uptick in the rand basket price of 3.7% higher year-on-year at R354 385, contributed to the sales revenues of R2.2-billion, 12% higher year-on-year.

Total operating costs at R1.4-billion reflected the higher volumes and the impact of mining inflation, driven up particularly by labour and power costs. Overall, costs were well contained and the increase in unit cash costs was kept to 5.7% at R289 516/kg.

For the first time, Northam was carrying debt on the balance sheet, a function of the company’s expansion. The total debt facilities available to the company amounted to R2.25-billion and at the end of the reporting period Northam’s net debt position was R631.1-million.

BEE

In August, Northam Platinum reported that it continued to review options of restoring its black economic-empowerment (BEE) shareholding to 26%.

The miner’s BEE shareholding fell to 16% earlier this month after two significant shareholders, Afripalm Resources and Mvelaphanda Holdings, were forced to sell a portion of their shares on the back of stumbling share prices.

Northam proposed an A-class share to be held by BEE trusts. This proposal was submitted to the DMR in November and was yet to be finalised, Lewis said.