Northam's profit rises as robust metal prices counter falling production
August 26, 2008
By Ron Derby
Johannesburg - Northam Platinum's full-year profit rose 13 percent as higher metal prices countered falling output, the firm, which operates the world's deepest platinum mine, said yesterday.
Net income increased to R1.49 billion in the year to June, compared with R1.33 billion a year earlier, it said.
Northam was confident of the outlook for fundamental demand for metals remaining sound, said Glyn Lewis, the chief executive of Northam.
The price of platinum, set in dollars, rose 62 percent in the year to June, while the rand weakened 12 percent against the US currency, widening profit margins. Platinum group metal production fell 9.7 percent in the period to 292 989 ounces, the company said.
Platinum was unchanged yesterday at $1 427 (R10 988) an ounce in London afternoon trade. The metal has declined 31 percent Since June.
Platinum group metal prices were likely to rebound because of power shortages and safety stoppages in South Africa, Lewis said.
Electricity curbs would probably stay in place until at least 2012, Northam said.
Demand from the motor vehicle industry was the "principle driver" of platinum group metal prices, he said.
Production in this financial year was likely to be marginally higher, Northam said.
A final dividend of R1.85 a share would be paid.
Lewis said Northam would consider acquisitions and joint ventures. "We will see what avails itself," he said.
The company had entered into an agreement to contribute 4 percent of its after-tax profit to its employees, Northam said.
"Employees will receive payment at the end of each five- year cycle," it said.
Northam shares yesterday rose 1.06 percent to R47.50, while the mining index fell 2.72 percent.
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