Northam Platinum Holdings Limited (NPH) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Northam Platinum media roundtable on the proposed Zambezi transaction. [Operator Instructions] Please note that this call is being recorded. I would now like to turn the conference over to the CEO, Paul Dunne; and the CFO, Alet Coetzee. Please go ahead.

Good morning, everybody, and thank you for joining us on the roundtable media conference post a recent announcement. I would imagine that most people on the line have listened to the presentation, so I'm not going to regurgitate what we've said. But just in summary, it is Northam's firm belief that it is in everybody's best interest that we remain empowered, but at the same time, we have got a lot of value sitting inside the Zambezi transaction. And we have the ability to crystallize that value on behalf of both Zambezi shareholders but, of course, also Northam shareholders. At the same time, we don't want to lose our empowerment's basis. So you will see there's a Part B, which is centered on our employees and communities for the next 15 years. And I think on the whole, it's a very good outcome for all parties. I hope you have appreciated that from the presentation. But I think it's probably easier if we go straight to questions rather than me giving a long spiel. So if I can open up the lines immediately for questions, and then we'll go from there. Let's see where the conversation takes us.

[Operator Instructions] The first question comes from [ Dinel Fagu ] from [ BR ].

How is the transaction received by whole communities, especially the extension for 15?

Today, we will see. Obviously, we've only announced this morning. So you can imagine, we will engage from here. I think what I can say so far is that we have been able only at this stage to engage with a few shareholders. And obviously, you will have seen on the press release this morning that those few shareholders are extremely supportive of the transaction so far. Now we are public, and then we take the transaction to the broader community and interested parties, and that's a job still to be done.

[Operator Instructions] The next question comes from [ Peter Gain ] from [ USAT Trust ].

Could you just summarize the fit on ordinary shareholders?

Hello, Peter, good to talk to you again. It's Paul speaking. So in a nutshell, Peter, at the moment, as we stand, pre-transaction, there are 509 million shares in issue for Northam. As you know, you will probably know the share price is hovering around the ZAR 2.45 per share, and that gives a market capitalization of around ZAR 130 billion. The number of shares in issue will reduce from the 409 million or 410 million shares, down to 378 million shares in issue. So this is effectively a 25% plus/minus share buyback of the company. And as you will also be aware, a share buyback of this size with attractive pricing is extremely beneficial for ordinary shareholders such as yourself.

It's more [ come ] to see a bonus issue, isn't it, than a share buyback of this size?

Well, I mean, obviously, Peter, you can return value to shareholders in multiple of ways. And if we do complete this share buyback, you can expect an uplift -- resultant uplift in the equity value, your equity value. And that is, of course, another method of returning value to shareholders. I do want to point out that the capital allocation decision that we have made today does not preclude dividends. I want to be very specific on that, does not preclude dividends.

The next question comes from [ David ] from Miningmx.

Yes, obviously, a very complex deal. So I guess we're all trying to understand just what is going on. I just -- I want to try to get a handle on what the company's balance sheet looks like post the deal, get an idea of where the cash is, where the net debt situation is. Can you provide any kind of insight into post all of these contortions, if I can call it that, what kind of balance sheet do shareholders get?

Yes. Okay, [ David ], I'm going to answer that question in 2 parts. And maybe the second part, I'll let Alet answer, who is also with me this morning, our CFO. So first of all, you see it as a complex deal. It's a share buyback, [ David ]. It's not particularly unusual. It's a very, very large share buyback, and that is unusual. So 25% share buyback, I would challenge you to go and see if you've seen a bigger one. Secondly, that share buyback is done at very attractive prices. Again, very straightforward. When you do a big share buyback like that at a very attractive price, clearly, it's value accretive to ordinary shareholders. It's a compelling value proposition for ordinary shareholders. I'm going to now hand back to Alet to maybe take you through the final part of your question.

As we mentioned at our results presentation on Slide 8, if you look at the cash generation ability of the group going forward with our increased production base as well as the increase in metal prices, it is very, very favorable. So even with the cash that we'll apply for the wrap-up of the Zambezi transaction, that will be by means of purchasing additional ZPLPs that will amount to about ZAR 2 billion and then also a cash injection into Zambezi to settle their taxes as well as the cash distribution. We quoted around ZAR 5.3 billion this morning. Even if you take all of those cash requirements or the transaction into account, with the increased production profile of the group, Northam Platinum will be in a very, very good position going forward. So if one looks at the net debt-to-EBITDA ratio, it will be more favorable than where we were at 31 December. I don't know if that answers your question or if you've got a follow-up.

I think is that's in context. I get the context. Yes, that's fine.

[Operator Instructions] Mr. Dunne, it seems like there are no further questions in the queue. Can I hand back to you for closing comments?

Yes. Thanks very much, everybody. I appreciate the call. And as always, you do know Northam is a very open company. You're welcome to give us follow-up questions off-line on the e-mail. Thanks very much, everybody. We'll see you soon.