NORTHAM Platinum reported a 3.7% increase in refined platinum for the six months ended December as production ramped up at Eland and there was a strong performance at the firm’s other two mines Zondereinde and Booysendal.
Refined production totalled 467,818 ounces for the period. Including 83,448 oz from third party sources – a 39.7% increase year-on-year – total refined production was on track to exceed one million ounces by the firm’s June year end.
Shares in the company gained just over 5% in early Johannesburg trade, taking Northam’s gains over the last six months to nearly 100%. This comes amid a significant re-rate in the platinum group metal (PGM) sector, driven by metal prices. Platinum has gained about $1,400 per ounce since June. Rhodium at $10,000/oz has nearly doubled in value from $5,450/oz over the same period, according to Johnson Matthey data.
Analysts say the recovery in PGM prices is not a short-lived phenomenon. “We upgrade earnings for PGM stocks across the board with NPH/IMP (Northam and Impala Platinum) seeing the highest upgrades,” said UBS in a recent note.
“PGM Shares’ eps forecasts are likely to be much higher than consensus as PGM price forecasts are rapidly raised across the board,” said René Hochrieter, an analyst for Noah Capital. Shares in Impala Platinum and Valterra Platinum are 81% and 86% higher respectively over six months. Sibanye-Stillwater, a PGM miner which also produces gold and so benefits from the continued appreciation in the metal’s price, is some 93% higher over the same period.
Northam said in its production update there had been important strides made in the development of the Eland orebody. The mine’s ventilation shaft had been reconfigured to allow for multi blasts and accelerated decline development rates.
The mine also reported further enhancements to the concentrator circuits are yielding additional benefits to PGM and chrome production. Eland’s orebody is relatively rich in chrome: total production of that metal increased 44.7% to 167,016 tons for the period. Northam’s total chrome output increased 14.8% to 822,759 tons.
RMB Morgan Stanley said in a report today Northam’s production had slightly exceeded its estimate. Zondereinde has benefited from logistics decongestion and an increase in productivity. Booysendal continues to deliver ahead of 500,000 oz a year nameplate, the bank said.