By Nelson Banya
(Reuters) -The CEO of South Africa’s Northam Platinum Holdings said on Thursday its stake in Royal Bafokeng Platinum (RBPlat) gave it a position of strength and was “the silver medal” after losing out to Impala Platinum Holdings in a takeover battle.
Northam, which posted a 60% jump in half-year profit, has built up a 34.68% stake in RBPlat since November 2021, effectively blocking Impala’s bid to take full control of RBPlat.
Impala holds 35.31% of RBPlat and has made a mandatory offer to the mid-tier platinum group metals (PGMs) producer’s shareholders to acquire the remaining shares.
Asked during a results call whether Northam could still achieve its strategic goals as a minority shareholder in RBPlat, Chief Executive Paul Dunne said the RBPlat investment was vital for Northam’s long-term future.
“Our position is already a position of strength, in many ways, some of them not so obvious. The strategic holding at 35%, if I can say it in plain English, is the silver medal,” Dunne said, refusing to give details citing market regulations.
He said RBPlat suited Northam’s quest for high quality, shallow PGM resources.
“The RBPlat ore body contains 68 million ounces (of PGMs), a significant proportion of which resides at shallower than 700 metres, this is very shallow in today’s industry terms and extraction rates are high at 75%,” Dunne said.
Firmer PGM prices helped Northam offset a dip in production that was caused by work stoppages and COVID-19 absenteeism.
Its headline earnings per share (HEPS) – the main profit measure for South African firms – came in at 961.5 South African cents ($0.6629) for the six months ended December 2021, compared with 599.9 cents a year earlier.
Northam’s CEO expects the decarbonisation of the automotive industry to be dominated by hybrid vehicles rather than electric vehicles, buoying PGM demand.
“The constraints and pricing of electrification lead us to believe that hybrid vehicles will dominate the light duty vehicle trends for the next two decades,” Dunne said.
($1 = 14.5051 rand)
(Reporting by Nelson Banya; Editing by Olivia Kumwenda-Mtambo, Subhranshu Sahu and David Evans)
