Shares of Northam Platinum fell almost 2% on Thursday morning, despite it flagging earnings growth of almost three quarters for its half-year to end-December.
The company expects annual headline earnings per share to increase by as much as 72% per share on the back of a strong operational performance, higher rand metal prices and strong cost control.
But, it also said it may now proceed with an offer for Royal Bafokeng Platinum, after Impala Platinum withdrew a complaint against it.
In morning trade, Northam's shares were down 1.9% to R148.33, having lost about 40% over the past year. Click here for details on Northam's shares and other info.
In light of a strong operational performance, which saw Northam produce 11.9% more in equivalent refined 4E metal (platinum, palladium, rhodium and gold) from its own operations, the group expects headline earning per share to increase by between 62.3% and 72.3% when it reports its annual results later this month.
Sales revenue increased 45% to R20 billion, and operating profit jumped 55% to top R9 billion, Northam said.
The operating margin also increased to 45%, "demonstrating production cost discipline and efficiencies amid a high inflationary environment," the company said.
Notably, Northam's net debt to ebitda (earnings before interest, taxes, depreciation and amortisation) ratio of 0.62 times is "well within Northam's self-imposed target ratio of 1 to 1 in pursuance of the group's growth strategy", it said.
Northam said its strong balance sheet, liquidity position, and credit outlook had enabled it to pursue a possible business combination with Royal Bafokeng Platinum. Northam already held a near 35% stake in the business when, in November last year, it announced its firm intention to make an offer to all RBPlat shareholders to acquire the remaining ordinary shares in the company.
The offer consideration represents an amount of R172.70 per RBPlat share. Northam has committed R17 billion for the cash component of the deal. Northam said this had been fully funded through an appropriate bank guarantee and cash confirmation in favour of the Takeover Regulation Panel (TRP).
Impala Platinum, a competing bidder for a majority stake in RBPLat, had submitted various complaints to the TRP last year regarding Northam's offer to shareholders, which had prevented the Northam Offer Circular from being posted.
"Northam hereby advises shareholders that Implats has summarily withdrawn [its complaints]," Northam said on Thursday. In light of this, "the TRP has advised Northam that it considers the announcement to be legally valid and that Northam may proceed with the offer."