Black-owned platinum group metals (PGM) producer Northam Platinum plans to use R747 million in capital expenditure in the 2011 financial year for its Booysendal project in Limpopo. This follows disappointing financial results for the six months to December.
Chief executive Glyn Lewis said the main contractor had been appointed and bulk earthworks for surface infrastructure had begun.
All mining licences and environmental permits, with the exception of a water use licence, had been received.
The project was expected to be complete by 2014 and would process 187 500 tons a month to produce 162 000 ounces of PGM a year. About 1 200 jobs would be created at its peak in 2014.
A cash injection of R650m, which would come into Northam after the Mvelaphanda unbundling and Northam’s proposed acquisition of Mvela’s rump, would boost the cash component of the Booysendal funding mix, the finalisation of which was gaining momentum, Lewis said. However, more funding would be required and the company might need to pursue a convertible bond, a revolving credit facility or both.
Northam reported dismal performance as a result of a six-week strike and a 12-day closure due to safety concerns at the Zondereinde mine, where a higher injury rate was recorded during the period under review.
Lewis said there were tough times ahead.
“We lost 31 percent of production shifts due to the six-week long strike and the 12 days due to safety-related stoppages,” Lewis said.
“It is going to be a tough 18 months ahead due to problems linked to the geology of the Zondereinde mine.
“Operationally the problems associated with mining the Merenksy reef at Zondereinde are unlikely to abate in the short term.
“The turnaround should start manifesting, albeit slowly, during the next financial year, as we establish additional stopping areas in the upper and central western portions of the mine and as the decline development starts contributing to production.”
The share price rose 0.2 percent to R49.50 yesterday. - Business Report
