Northam Platinum declared its first dividend payout after bolstering its cash position by selling a stake in Royal Bafokeng Platinum (RBPlat) to rival Impala Platinum.
The Johannesburg-based platinum group metals producer said it would pay investors R600 cents a share, or R2.4 billion (US$129 million), and has also announced a share buyback program of up to R1 billion of 5% of the company’s shares.
Northam is returning money to investors after selling the RBPlat shares to Impala for about 9 billion rand in a transaction that ended a protracted battle for control of the smaller platinum miner it had sought to buy.
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The platinum miner also said it planned to pay out 25% of its headline earnings in future, a level which UBS analysts called “lacklustre” and below investors’ expectations.
“The 25% minimum payout ratio is below our medium-term expectation of 50% implying a poor market outlook and increased potential for poor capital allocation,” UBS analyst Steve Friedman said.
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The payout and share buyback comes “despite the challenging PGM pricing and operating environment”, CEO Paul Dunne said.
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