Northam Platinum said yesterday that it would proceed with its bid to takeover Royal Bafokeng Platinum (RBPlat) as it forecast strong interims ahead.
In a trading update for the six months ended December 31, 2022, the miner said it expects its headline earnings per share to increase between 62.3% and 72.3% per share.
The group also flagged that it was likely to see a 54.5% increase in earnings before interest, tax, depreciation, and amortisation (Ebidta) to R10 billion.
Northam said the period under review saw continued production growth as the group strategy unfolded.
“Challenges remain, particularly in respect of mining inflation, and the potential for further and more severe Eskom load curtailment events, however, our capital growth programs remain on track and demonstrate the power of our counter-cyclical investments,” it said.
Despite this, the group reported a 44.9% increase in sales revenue to R20.1bn, while it achieved a 55.0% increase in operating profit to R9.1bn. It also had an 11.9% increase in equivalent refined 4E metal from its operations, following a strong performance from all mines in the group and a 21.9% increase in 4E concentrate produced by Booysendal.
“The operating margin increased to 45.1%, demonstrating production cost discipline and efficiencies amidst a high inflationary environment,” it said.
Northam said a significant de-gearing resulted in a net debt to Ebitda ratio of 0.62, well within Northam’s self-imposed target ratio of 1 to 1 in pursuance of the group’s growth strategy.
“Increase in group cash cost per equivalent refined platinum ounce limited to 14.0%, despite exposure to a higher inflationary environment and ongoing Eskom load curtailment events,” it said.
Meanwhile, Northam Platinum also announced that it plans to proceed with the finalisation of its offer to take over RBPlat.
The group said this followed its rival Impala Platinum (Implats) withdrawing its complaint laid with the Takeover Regulation Panel (TRP).
Northam Platinum has been involved in a takeover war with Implats over RBPlats. Northam owns almost 35% stake in RBPlats, while its rival Implats is now its biggest shareholder with a 40.71% stake.
The group said in November, it announced its firm intention to make an offer to RBPlat Shareholders to acquire all the Offer Shares for the Offer Consideration.
“In December, Implats had submitted various complaints to the TRP regarding the announcement. As a consequence of the Implats complaints, the TRP withheld its approval of the posting of the Northam Offer circular until the TRP had decided in respect of the Implats complaints,” it said.
Northam said since the acquisition of its initial shareholding in RBPlat in 2021 - its balance sheet, liquidity position and credit outlook had strengthened significantly - enabling Northam to pursue a possible business combination with RBPlat.
Northam said the Offer Consideration would be settled fully in cash, or a combination of cash and Northam Holdings shares, and that it had committed R17bn for purposes of settling the cash component of the Offer Consideration.
The miner said R245.5 million of dividends were received from RBPlat during the period under review, with a further attributable dividend of R536.2m declared by RBPlat to be received by Northam on April 3, 2023.
“Accordingly, as of April 3, 2023, total dividends received from Northam’s investment in RBPlat will amount to R1.3 billion, representing a 13.7% return on cash invested,” the miner said.
Northam’s shares ended the day 1.29% lower at R149. 26.
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