smart platinum mining - integrated...
TRANSCRIPT
NOTICE OF ANNUAL GENERAL MEETING AND SUMMARISED ANNUAL REPORT
2017
s m a r t p l a t i n u m m i n i n g
Northam Platinum Limited
CONTENTS
NOTICE OF THE 2017 ANNUAL GENERAL MEETING
1
ANNEXURES
1 Summarised financial statements for the year ended
30 June 2017 and the chief executive’s review
11
2 Details of directors 22
3 Remuneration report of the social, ethics and human
resources (SE&HR) committee25
4 Stated capital, shareholding and directors’ interest 51
5 Financial assistance 54
6 Events after reporting date 61
FORM OF PROXY Insert
ADMINISTRATION AND CONTACT INFORMATION 64
Scan the QR bar code with your smart phone or tablet to download this report
Annual integrated report 2017
Notice of AGM and summarised
annual report 2017
Summarised abridged financial
results for the year ended
30 June 2017
www.northam.co.za
REPORTING SUITE 2017
WE BELIEVE IN OUR COUNTRY, OUR COMPANY, OUR PEOPLE AND OUR PRODUCT
ANNUAL INTEGRATED REPORT
2017
s m a r t p l a t i n u m m i n i n g
NOTICE OF ANNUAL GENERAL MEETING AND SUMMARISED ANNUAL REPORT
2017
s m a r t p l a t i n u m m i n i n g
SUMMARISED ABRIDGED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2017
s m a r t p l a t i n u m m i n i n g
1Notice of Annual General Meeting and Summarised Annual Report 2017
NOTICE OF THE 2017 ANNUAL GENERAL MEETING
NORTHAM PLATINUM LIMITED
(Registration number 1977/003282/06)
JSE share code: NHM ISIN code: ZAE000030912
Debt issuer code: NHMI
Bond code: NHM002 Bond ISIN: ZAG000129024
Bond code: NHM003 Bond ISIN: ZAG000129032
(“Northam” or the “group” or the “company”)
Notice is hereby given in terms of section 62(1) of the Companies Act, No. 71 of 2008 (as amended),
(the Companies Act) that the annual general meeting (AGM) of shareholders of Northam (notice) will
be held at Glenhove Conferencing, 52 Glenhove Road, Melrose Estate, Johannesburg, South Africa
on Tuesday, 7 November 2017 at 10:00 for the following purposes:
Considering and, if deemed fit, adopting, with or without modification, the ordinary and special
resolutions set out below:
ORDINARY RESOLUTIONS
• receiving, considering and adopting the audited group annual financial statements for the year
ended 30 June 2017;
• re-electing and electing directors;
• re-appointing independent external auditors;
• re-electing audit and risk committee members; and
• endorsing the group remuneration policy and implementation report.
SPECIAL RESOLUTIONS
• approval of amendment to the existing memorandum of incorporation (MOI) to increase the
maximum number of directors;
• approval of non-executive directors’ fees for the year ending 30 June 2018;
• approval of financial assistance; and
• approval for general authority to repurchase issued shares.
Transacting any other business as may be conducted at an AGM.
2 Northam Platinum Limited
RECORD DATES
In terms of sections 59(1)(a) and (b) of the Companies Act respectively, the board of directors of the
company (board) has set the record date for the purpose of determining which shareholders are
entitled to:
• receive the notice as Friday, 15 September 2017 (being the date on which a shareholder must be
registered in the company’s securities register); and
• participate in and vote at the AGM as Friday, 27 October 2017 (being the date on which a
shareholder must be registered in the company’s securities register in order to participate in and
vote at the AGM).
ORDINARY RESOLUTIONS
ORDINARY RESOLUTION NUMBER 1: ADOPTION OF THE AUDITED GROUP ANNUAL FINANCIAL STATEMENTS
“Resolved that the audited group annual financial statements of the company for the year ended
30 June 2017, including the reports of the directors, auditors and the audit and risk committee,
be and are hereby adopted.”
Note
The summarised annual financial statements for 2017 are set out in Annexure 1 of this notice.
The complete 2017 annual integrated report, containing the audited annual financial statements
and the relevant reports for the year are available at www.northam.co.za or can be obtained from
the company’s registered office on written request to the company.
ORDINARY RESOLUTION NUMBERS 2.1 TO 2.5: RETIREMENT, RE-ELECTION AND ELECTION OF DIRECTORS
2.1 “ Resolved that Mr R Havenstein, who retires by rotation in terms of clause 33.5.1 of the MOI
and being eligible and offering himself for re-election, be and is hereby re-elected as a director
of the company.”
2.2 “ Resolved that Ms TE Kgosi, who retires by rotation in terms of clause 33.5.1 of the MOI and
being eligible and offering herself for re-election, be and is hereby re-elected as a director of
the company.”
2.3 “ Resolved that Mr KB Mosehla, who retires by rotation in terms of clause 33.5.1 of the MOI and
being eligible and offering himself for re-election, be and is hereby re-elected as a director of
the company.”
2.4 “ Resolved that Mr JG Smithies, who retires in terms of clause 33.5.4 of the MOI and being
eligible and offering himself for re-election, be and is hereby re-elected as a director of
the company.”
NOTICE OF THE 2017 ANNUAL GENERAL MEETING CONTINUED
3Notice of Annual General Meeting and Summarised Annual Report 2017
2.5 “ Resolved that, conditional on special resolution number 1 being approved, Mr DH Brown be
and is hereby elected as a director of the company in terms of clause 33.5.7 of the MOI, with
effect from the date on which the amendment of the MOI envisaged in special resolution
number 1 becomes effective.”
Notes
As envisaged in clause 33.6 of the MOI, the board recommends, after taking into account the directors’
past performance and contribution that the persons referred to in ordinary resolutions 2.1 to 2.4 be
re-elected as directors at the AGM.
As envisaged in clause 33.5.7 of the MOI, the board recommends that, although Mr DH Brown is not
a retiring director as envisaged in the MOI, he be eligible for election at the AGM.
Summaries of the curriculum vitae of each of the persons referred to in ordinary resolutions 2.1 to 2.5
are set out in Annexure 2 of this notice.
ORDINARY RESOLUTION NUMBER 3: RE-APPOINTMENT OF INDEPENDENT EXTERNAL AUDITORS
“ Resolved that Ernst & Young Inc. (with the new designated external auditor partner being
Mr E Dhorat, who has replaced Mr M Herbst for the financial year ending 30 June 2018, pursuant
to section 92(1) of the Companies Act) be and is hereby re-appointed as the independent external
auditors of the group.”
Note
The audit and risk committee has evaluated the performance of Ernst & Young Inc. and recommends
their re-appointment as independent external auditors of the group.
ORDINARY RESOLUTION NUMBERS 4.1, 4.2 AND 4.3: RE-ELECTION OF THE MEMBERS OF THE AUDIT AND RISK COMMITTEE
4.1 “ Resolved that Ms HH Hickey, being eligible and offering herself for re-election, be and is hereby
re-elected a member of the audit and risk committee.”
4.2 “ Resolved that Mr R Havenstein, being eligible and offering himself for re-election, be and is
hereby re-elected a member of the audit and risk committee, subject to his re-election as a
director pursuant to ordinary resolution number 2.1.”
4.3 “ Resolved that Ms TE Kgosi, being eligible and offering herself for re-election, be and is hereby
re-elected a member of the audit and risk committee, subject to her re-election as a director
pursuant to ordinary resolution number 2.2.”
Note
Summaries of the curriculum vitae of each of the persons referred to in ordinary resolutions 4.1 to
4.3 are set out in Annexure 2 of this notice.
4 Northam Platinum Limited
NOTICE OF THE 2017 ANNUAL GENERAL MEETING CONTINUED
ORDINARY RESOLUTION NUMBERS 5.1 AND 5.2: ENDORSEMENT OF THE GROUP REMUNERATION POLICY AND IMPLEMENTATION REPORT
5.1 “ Resolved, as a non-binding resolution, that the group’s remuneration policy as set out in the
remuneration report of the SE&HR committee be and is hereby endorsed.”
5.2 “ Resolved, as a non-binding resolution, that the group’s remuneration implementation report as
set out in the remuneration report of the SE&HR committee be and is hereby endorsed.”
Notes
The remuneration report of the SE&HR committee (which includes the remuneration policy and
implementation report) is set out in Annexure 3 of this notice.
The King Report on Corporate Governance for South Africa, 2016 (King IV) recommends that a
company’s remuneration policy and implementation report be tabled as separate non-binding
advisory votes by shareholders at each AGM. This enables shareholders to express their views
on the remuneration policy and implementation thereof. Ordinary resolutions number 5.1 and
5.2 are of an advisory nature only. However, the board will take the outcome of the votes into
consideration when considering amendments to the group’s remuneration policy. Shareholders are
reminded that in terms of King IV, should 25% or more of the votes cast be against one or both of
these non-binding ordinary resolutions, Northam undertakes to engage with shareholders as to the
reasons therefor and undertakes to make recommendations based on the feedback received.
SPECIAL RESOLUTIONS
SPECIAL RESOLUTION NUMBER 1: APPROVAL OF AMENDMENT TO THE EXISTING MOI TO INCREASE THE MAXIMUM NUMBER OF DIRECTORS
“ Resolved that in terms of sections 16(1)(c) and 16(5)(b) of the Companies Act and clause 3.2.2 of
the MOI, with effect from the date on which the relevant notice of amendment is filed with the
Companies and Intellectual Property Commission in terms of the Companies Act, the MOI be and is
hereby amended by deleting the existing clause 33.1 of the MOI and replacing it with the following
new clause 33.1:
33.1 The board shall comprise not less than 4 (four) but not more than 12 (twelve) directors.”
Note
The reason for and the effect of this special resolution is to amend the MOI in order to increase the
maximum number of directors on the board from 10 (ten) to 12 (twelve). The board currently has
10 (ten) directors. This resolution is in line with the nomination committee’s succession plan for the
appointment and mentorship of new board members.
5Notice of Annual General Meeting and Summarised Annual Report 2017
SPECIAL RESOLUTION NUMBER 2: APPROVAL OF NON-EXECUTIVE DIRECTORS’ FEES FOR THE YEAR
ENDING 30 JUNE 2018
“ Resolved that the non-executive directors’ fees be increased for the year ending 30 June 2018 on
the following basis:
% increase
Proposed 2018 fees per annum
Approved 2017 fees per annum
R R
Board
Board chairperson 10 402 800 366 100
Lead independent director 8 349 700 323 600
Board members 8 307 000 284 100
Audit and risk committee
Committee chairperson 10 189 000 171 800
Committee members 8 148 400 137 300
Health, safety and environmental committee
Committee chairperson 10 133 160 121 000
Committee members 8 100 600 92 900
Social, ethics and human resources committee
Committee chairperson 10 134 640 122 400
Committee members 8 100 600 92 900
Nomination committee
Committee chairperson 10 77 400 70 300
Committee members 10 47 500 43 100
Other board appointed committees
Committee chairperson 10 112 310 102 100
Committee members 8 82 300 76 000
Ad hoc fees – per hour 8 3 630 3 360”
Notes
This special resolution is required by section 66(9) of the Companies Act in order to approve increases
in non-executive directors’ fees for the year ending 30 June 2018.
6 Northam Platinum Limited
NOTICE OF THE 2017 ANNUAL GENERAL MEETING CONTINUED
The SE&HR committee commissioned an independent firm in 2016 to conduct a benchmarking
exercise on non-executive directors’ fees against a peer group of mining companies listed on the JSE
Limited (JSE). The results indicated that the majority of directors are paid within acceptable ranges to
the median, however some of the directors’ fees lag behind the market considerably. In an attempt
to ensure internal parity, it is proposed that non-executive directors’ fees be adjusted in accordance
with the above table. In considering the adjustment, affordability was considered.
Previously, non-executive director’s fees were determined on a per meeting basis. Going forward, fees
will be based on a per annum fee.
SPECIAL RESOLUTION NUMBERS 3.1 AND 3.2: APPROVAL OF FINANCIAL ASSISTANCE IN TERMS OF SECTION 45 OF THE COMPANIES ACT
3.1 “ Resolved that the board be and is hereby authorised in terms of and subject to the provisions
of section 45 of the Companies Act, to authorise the company to provide any financial
assistance in any form or amount to any company or corporation which is related or
interrelated to the company (as defined in the Companies Act), on the terms and conditions
that the board may determine from time to time.”
3.2 “ Resolved that the board be and is hereby authorised in terms of and subject to the provisions
of section 45 of the Companies Act, to authorise the company to provide any financial
assistance in the form of loans pursuant to the Northam 2020 accommodation strategy to
(i) any executive director and/or prescribed officer of the company or of any company or
corporation which is related or interrelated to the company, and/or (ii) to a person which is
related or interrelated to such executive director and/or prescribed officer on the terms and
conditions that the board may determine from time to time.”
NotesThese special resolutions are required in terms of section 45 of the Companies Act in order to
grant the board the authority to authorise the company to provide financial assistance by way
of loans, guarantees, the provision of security or otherwise, to any company which is related or
interrelated to Northam or to any executive director and/or prescribed officer of Northam or of
its related or interrelated companies, or to the related or interrelated persons of such executive
directors and prescribed officers. No individuals other than the executive directors are considered
to be prescribed officers.
The provision of financial assistance to subsidiaries of Northam is necessary for the sustainability of
the business of the group, taking into account that the financial performance of the operations is
dependent on numerous external factors, which include the prices of platinum group metals, and
the rand/US dollar exchange rate.
Further information on the proposed financial assistance, as well as the Northam 2020 accommodation
strategy, is set out in Annexure 5 of this notice.
7Notice of Annual General Meeting and Summarised Annual Report 2017
SPECIAL RESOLUTION NUMBER 4: APPROVAL FOR GENERAL AUTHORITY TO REPURCHASE ISSUED SHARES
“Resolved, that the company and each of its wholly-owned subsidiaries be and are hereby
authorised, by way of a general authority, to acquire the company’s issued shares upon such terms
and conditions and in such amounts as the board may from time to time determine, subject to the
MOI, the Companies Act and the JSE Listings Requirements and provided that:
a. any repurchase of shares must be effected through the order book operated by the JSE trading
system and done without any prior understanding or arrangement between the company and
the counterparty;
b. this general authority shall be valid until the company’s next AGM or for 15 months from date
of passing of this special resolution, whichever period is the shorter;
c. repurchases by the company and/or its subsidiaries in aggregate in any one financial year may
not exceed 20% of the company’s issued stated capital of the relevant class of shares as at the
date of passing of this special resolution or 10% of the company’s issued stated capital in the
case of an acquisition of shares in the company by a subsidiary of the company; and
d. repurchases may not be made at a price greater than 10% above the weighted average of the
market value of the shares for the five business days immediately preceding the date on which
the transaction is effected.”
Notes
This special resolution is required in terms of paragraph 5.67(B)(b) of the JSE Listings Requirements in
order to give a general authority to the board to approve the acquisition of shares in the company by
the company or by a wholly-owned subsidiary of the company, subject to the terms and conditions
set out in this special resolution, which authority shall be used by the board at its discretion during
the period for which the authority is given.
In terms of the JSE Listings Requirements, the company’s issued shares may only be acquired by the
company and/or any of its wholly-owned subsidiaries subject to the following:
• At any one time, the company may only appoint one agent to effect any repurchase.
• A resolution by the board that it has authorised the repurchase, that the company and its
subsidiaries have passed the solvency and liquidity test as envisaged in section 4 of the Companies
Act and that, since the test was performed, there have been no material changes to the financial
position of the group.
8 Northam Platinum Limited
NOTICE OF THE 2017 ANNUAL GENERAL MEETING CONTINUED
• Neither the company nor its subsidiaries may repurchase securities during a prohibited period as
defined in the JSE Listings Requirements unless it has in place a repurchase programme where the
dates and quantities of securities to be traded during the relevant period are fixed and full details
of the programme have been submitted to the JSE, in writing, prior to the prohibited period.
Furthermore, an announcement complying with paragraph 11.27 of the JSE Listings Requirements
will be published as soon as the company and/or a wholly-owned subsidiary of the company have
cumulatively repurchased 3% of the initial number shares of the relevant class in issue at the time
that the general authority is granted and for each 3% in aggregate of the initial number of shares of
that class acquired thereafter, containing full details of such acquisitions.
Statement by the board
In accordance with paragraph 11.23 of the JSE Listing Requirements, the board states that:
i) the board as at the date of this notice has stated its intention to examine methods of returning
capital to shareholders in terms of the general authority granted at the last AGM. The board believes
it to be in the best interests of Northam that shareholders pass a special resolution granting the
company and/or its subsidiaries a further general authority to acquire Northam shares. Such general
authority will provide Northam and its subsidiaries with the flexibility, subject to the requirements of
the Companies Act and the JSE Listings Requirements, to purchase shares should it be in the interest
of Northam and/or its subsidiaries at any time while the general authority subsists;
ii) having considered the effect of the maximum number of shares that may be acquired pursuant to
the authority given under special resolution number 4, for a period of at least 12 months following
the date of this notice –
• the company and the group will be able to pay its debts as and when they become due in the
ordinary course of business;
• the assets of the company and group exceed the liabilities of the company and group, the assets
and liabilities being recognised and measured in accordance with the accounting policies used in
the latest audited annual group financial statements;
• the share capital and reserves of the company and group will be adequate for ordinary business
purposes; and
• the working capital for the company and group will be adequate for ordinary business purposes.
In terms of the JSE Listings Requirements, the following additional disclosures are made for purposes
of special resolution 4:
Major shareholders: Refer to Annexure 4.
Stated capital of the company: Refer to Annexure 4.
9Notice of Annual General Meeting and Summarised Annual Report 2017
Directors’ responsibility statement: The directors, whose names are set out in Annexure 2,
collectively and individually accept full responsibility for the accuracy of the information pertaining
to the resolutions set out above and certify that, to the best of their knowledge and belief, there
are no facts that have been omitted which would make any statement in these resolutions false or
misleading, and that all reasonable enquiries to ascertain such facts have been made and that the
notice contains all information required by law and the JSE Listings Requirements.
Material change: Other than the facts and developments reported on in this summarised annual
report, there have been no material changes in the affairs, financial or trading position of the company
and its subsidiaries since the end of the financial period. The company’s products are priced in US dollars
and therefore volatility in the rand/US dollar exchange rate could affect the company’s revenues.
TO TRANSACT ANY OTHER BUSINESS AS MAY BE CONDUCTED AT AN AGM
GENERAL
Approvals required for resolutions
The ordinary resolutions contained in this notice require the approval of more than fifty percent
(50%) of the total voting rights exercised on the resolutions by shareholders present or represented
by proxy at the AGM.
The special resolutions contained in this notice require the approval of at least seventy-five percent
(75%) of the total voting rights exercised on the resolutions by shareholders present or represented
by proxy at the AGM.
Telephonic participation
For the benefit of shareholders who are unable to attend the AGM but wish to participate therein,
a simultaneous audio link will be available at the following numbers:
South Africa: +27 11 535 3600
0800 200 648 (Toll-Free)
UK: 0808 162 4061 (Toll-Free)
Other countries: +27 11 535 3600
The costs for use of the telephonic participation will be borne by the shareholder or proxy so utilising
the telephonic participation.
Please note that whilst it is possible to participate in the AGM through this medium, there is no
facility for electronic voting and, accordingly, shareholders and their proxies are advised to follow the
instructions below in respect of proxies and voting.
10 Northam Platinum Limited
NOTICE OF THE 2017 ANNUAL GENERAL MEETING CONTINUED
PROXIES
Dematerialised shareholders without “own name” registration
You must contact your broker or Central Securities Depository Participant (CSDP) and furnish them
with your voting instructions. If you wish to attend, speak and vote at the AGM in person and/or
appoint a proxy to represent you at the AGM, you will need to obtain a letter of representation from
your broker or CSDP. Shareholders, who are unsure of their status or the action they should take,
are advised to consult their CSDP, broker or financial adviser.
Certificated shareholders and dematerialised shareholders with “own name” registration
You may attend, speak and vote at the AGM in person. Alternatively, you may appoint a proxy to
attend, speak and vote in their stead. A proxy need not be a shareholder of the company.
A proxy form is attached to this notice for use by certificated shareholders and dematerialised
shareholders with “own name” registration only. To be effective, a proxy form must be executed in
terms of the MOI and in accordance with the relevant instructions set out on the form, and must
be lodged with the transfer secretaries in the manner set out in the proxy form by no later than
10:00 on Monday, 6 November 2017. Thereafter, a proxy form must be handed to the chairperson
of the AGM before the appointed proxy may exercise any rights of the shareholder at the AGM.
If required, additional proxy forms may be obtained from the transfer secretaries.
VOTING
On a show of hands, every shareholder of the company present in person or represented by proxy
shall have only one (1) vote. On a poll, every shareholder of the company shall have one (1) vote for
every share held in the company by such shareholder.
PROOF OF IDENTIFICATION REQUIRED
In terms of section 63(1) of the Companies Act, any shareholder or proxy who intends to attend
or participate in the AGM must be able to present reasonably satisfactory identification at the AGM
for such shareholder or proxy to attend and participate in the AGM. A bar coded identification
document issued by the South African Department of Home Affairs, a driver’s licence or a valid
passport will be accepted as sufficient identification.
By order of the board.
PB Beale
Company secretary
22 September 2017
11Notice of Annual General Meeting and Summarised Annual Report 2017
1 SUMMARISED 2017 FINANCIAL STATEMENTSANNEXURE
These year-end results have been prepared under the supervision of the chief financial officer,
Mr AZ Khumalo CA (SA).
This summarised report is extracted from the audited financial statements, but is not itself audited.
The directors take full responsibility for the preparation of the summarised report and the financial
information has been correctly extracted from the underlying annual financial statements. The audited
financial statements and the Ernst & Young Inc. independent auditor’s report are available on our
website at www.northam.co.za or can be obtained from the company’s registered office on request.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Audited12 months
ended30 June 2017
Audited12 months
ended30 June 2016
R000 R000
Sales revenue 6 865 185 6 097 070
Cost of sales (6 251 200) (5 713 722)
Operating costs (5 676 017) (5 007 233)
Concentrates purchased (404 093) (350 514)
Refining and other costs (120 633) (133 186)
Depreciation and write-offs (452 584) (403 545)
Change in metal inventories 402 127 180 756
Operating profit 613 985 383 348
Share of earnings/(losses) from associate and joint venture 4 870 (32 253)
Investment revenue 167 306 265 258
Finance costs excluding preference share dividends (71 185) (39 634)
Net foreign exchange transaction (losses)/gains (46 729) 26 163
Sundry income 73 361 154 765
Sundry expenditure (130 843) (92 122)
Profit before preference share dividends 610 765 665 525
Amortisation of liquidity fees paid on preference shares (16 390) (18 088)
Preference share dividends net of amounts capitalised (1 017 396) (918 806)
Loss on derecognition of preference share liability (901) –
Loss before tax (423 922) (271 369)
Taxation (212 021) (236 894)
Loss for the year (635 943) (508 263)
12 Northam Platinum Limited
1 SUMMARISED 2017 FINANCIAL STATEMENTS CONTINUED
ANNEXURE
Audited12 months
ended30 June 2017
Audited12 months
ended30 June 2016
R000 R000
Other comprehensive income
Items that may be subsequently reclassified to profit or loss – 19 822
Share of associate’s exchange differences on translating foreign
operations and foreign currency translation – (3 947)
Reclassification of other comprehensive income from associate
to profit or loss – 23 769
Total comprehensive income for the year (635 943) (488 441)
Reconciliation of headline loss per share
Loss for the year (635 943) (508 263)
Profit on sale of property, plant and equipment (1 762) (57)
Impairment of associate’s assets – 11 185
Loss on sale of investment in associate – 21 024
IFRS 5 adjustment to fair value less cost to sell 841 –
Impairment/(reversal of impairment) of non-core assets – (13 610)
Tax effect on above 493 (3 116)
Headline loss (636 371) (492 837)
Loss per share – cents (181.8) (145.3)
Fully diluted loss – cents (181.8) (145.3)
Headline loss per share – cents (181.9) (140.9)
Fully diluted headline loss per share – cents (181.9) (140.9)
Dividends per share – –
Weighted average number of shares in issue 349 875 759 349 875 759
Fully diluted number of shares in issue 349 875 759 349 875 759
Number of shares in issue 509 781 212 509 781 212
Treasury shares in issue 159 905 453 159 905 453
Shares in issue adjusted for treasury shares 349 875 759 349 875 759
13Notice of Annual General Meeting and Summarised Annual Report 2017
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited12 months
ended30 June 2017
Audited12 months
ended30 June 2016
R000 R000
Assets
Non-current assets 15 483 553 14 110 084
Property, plant and equipment 9 022 260 7 853 993
Mining properties and mineral resources 5 636 342 5 614 094
Interest in associates and joint ventures 167 214 192 164
Unlisted investment – 6
Land and township development 48 529 51 341
Long-term receivables 83 745 89 717
Investments held by Northam Platinum Restoration Trust Fund 102 233 93 647
Environmental Guarantee Investment 68 104 60 345
Buttonshope Conservancy Trust 11 126 10 445
Long-term prepayments 336 409 –
Other financial assets 7 591 –
Deferred tax assets – 144 332
Current asset 613 985 383 348
Inventories 1 729 102 1 330 270
Trade and other receivables 548 997 375 204
Cash and cash equivalents 1 786 865 3 105 080
Tax receivables 38 373 57 225
Non-current assets held for sale 49 222 –
Total assets 19 636 112 18 977 863
1
14 Northam Platinum Limited
1 SUMMARISED 2017 FINANCIAL STATEMENTS CONTINUED
ANNEXURE
Audited12 months
ended30 June 2017
Audited12 months
ended30 June 2016
R000 R000
Equity and liabilities
Total equity 8 092 041 8 727 984
Stated capital 13 778 114 13 778 114
Treasury shares (6 556 123) (6 556 123)
(Accumulated loss)/retained earnings (4 398) 631 545
Equity settled share-based payment reserve 874 448 874 448
Non-current liabilities 9 929 685 9 072 179
Deferred tax liability 585 883 590 637
Long-term provisions 304 829 272 820
Preference share liability 8 279 825 7 429 549
Long-term loans 249 428 275 513
Long-term share-based payment liability 88 639 84 373
Domestic medium term notes 421 081 419 287
Current liabilities 1 614 386 1 177 700
Current portion of long-term loans 13 434 13 201
Short-term share-based payment liability 75 026 56 704
Tax payable 102 550 104 072
Trade and other payables 1 268 172 877 935
Short-term provisions 155 204 125 788
Total equity and liabilities 19 636 112 18 977 863
15Notice of Annual General Meeting and Summarised Annual Report 2017
Statedcapital
(Accumulated loss)/retained
earnings
Equity settled
share-basedpayment
reserve
Othercompre-hensive
income fromassociate Total
R000 R000 R000 R000 R000
Balance as at 30 June 2015 7 221 991 1 139 808 874 448 (19 822) 9 216 425
Total comprehensive income
for the year – (508 263) – 19 822 (488 441)
Loss for the year – (508 263) – – (508 263)
Other comprehensive income
for the year – – – 19 822 19 822
Balance as at 30 June 2016 7 221 991 631 545 874 448 – 8 727 984
Loss and total comprehensive
income for the year – (635 943) – – (635 943)
Balance as at 30 June 2017 7 221 991 (4 398) 874 448 – 8 092 041
1
16 Northam Platinum Limited
1 SUMMARISED 2017 FINANCIAL STATEMENTS CONTINUED
ANNEXURE
CONSOLIDATED STATEMENT OF CASH FLOWS
Audited12 months
ended30 June 2017
Audited12 months
ended30 June 2016
R000 R000
Cash flows from operating activities 981 497 839 081
Loss before taxation (423 922) (271 369)
Adjusted for the following non-cash items as well as
discloseable items
Depreciation and write-offs 452 584 403 545
Changes in provisions 19 934 50 221
Changes in long-term receivables 5 972 4 786
Investment revenue (167 306) (265 258)
Finance charges excluding preference share dividends 71 185 39 634
Finance charges on preference shares 1 017 396 918 806
Loss on derecognition of preference share liability 901 –
Liquidity fees on the preference shares 16 390 18 088
Movement in share-based payment liability 22 588 10 592
Reversal of impairment of investment in associates – (13 610)
IFRS 5 adjustment to fair value less costs to sell 841 –
Share of (earnings)/losses from associate (4 870) 32 253
Loss on sale of investment in associate – 21 024
Amortisation of participation interest in the Pandora joint
venture – 2 600
Profit on sale of property, plant and equipment (1 762) (57)
Net foreign exchange movement 46 729 –
Other (1 521) 1 395
Change in working capital (182 388) (162 131)
Movement relating to land and township development 2 812 (41 341)
Transaction fees paid (8 594) –
Investment revenue 167 306 265 258
Taxation paid (52 778) (175 355)
17Notice of Annual General Meeting and Summarised Annual Report 2017
Audited12 months
ended30 June 2017
Audited12 months
ended30 June 2016
R000 R000
Cash flows utilised in investing activities (1 990 754) (1 126 793)
Property, plant, equipment, mining properties and
mineral reserves
Additions to maintain operations (299 051) (369 636)
Additions to expand operations (1 321 757) (804 344)
Disposal proceeds 3 732 4 235
Increase in long-term prepayment (336 409) –
Investment in associate – cash distributed – 24
Additional investment made in associate (20 243) (20 601)
Proceeds received on the sale of investment in Trans Hex
Group Limited – 81 815
Increase in investment held by the Northam Platinum
Restoration Trust Fund (8 586) (10 655)
Increase in the investments held by the Environmental
Guarantee investment (7 759) (8 223)
Increase in investments held by the Buttonshope Conservancy
Trust Fund (681) 592
Cash flows utilised from financing activities (250 130) (745 397)
Interest paid (29 694) (39 634)
Repayment of long-term loans (50 756) –
Issue of long-term loans 38 992 244 950
Acquisition of Zambezi Platinum (RF) Limited preference shares (208 672) –
Issue of domestic medium term debt notes – 419 287
Domestic medium term debt notes repaid – (1 370 000)
Decrease in cash and cash equivalent (1 259 387) (1 033 109)
Net foreign exchange difference on cash and cash equivalents (58 828) –
Cash and cash equivalents at the beginning of the year 3 105 080 4 138 189
Cash and cash equivalents at the end of the year 1 786 865 3 105 080
1
18 Northam Platinum Limited
1 SUMMARISED 2017 FINANCIAL STATEMENTS CONTINUED
ANNEXURE
The year under review was a period in
which the people of Northam rose to the
challenge of a difficult platinum market
and contributed positively to the strategic
positioning of the group, ensuring
sustainability into the future.
While I am confident that platinum group
metals (PGMs) will emerge from their current
trough, there is no doubt that the platinum
mining sector is in a precarious position.
Following a promising start for PGMs in F2017,
the situation grew progressively more difficult
as the year continued.
At the start of our financial year, spot platinum
traded at USD1 039/oz and rose to reach a
peak of USD1 182 in early August. This was
followed by a steady decline to USD898/oz on
the last trading day of December. A subsequent
recovery was not sustained, with the result that
the metal’s price was struggling at USD922/oz
by the end of June.
Palladium, which makes a lesser contribution
to Northam’s product mix and revenue,
performed well, with the price of spot metal
opening the financial year at USD598/oz
before reaching an interim high of USD770/oz
at the end of November. The final six months
of our financial year resulted in a steady
advance to USD898/oz in mid-June, followed
by a few weeks of price consolidation.
It is unclear what the immediate future holds:
over the longer term though, demand for
both metals for use in auto catalysts and for
catalysts in many oil and chemicals processes
will increase. The fact remains, however, that
Northam and its PGM-mining counterparts
are price takers, and their future sustainability
remains dependent on an ability to contain the
costs of production. Northam has succeeded in
moving unit costs into the lowest quartile of the
industry cost curve at a group level.
Our success depends on our continuing ability
to contain costs at levels that ensure operations
remain profitable throughout the market
cycle. We are positioning our operations to
take advantage of rising prices when platinum
enters its next upward cycle. We aim to be
“first to market” and capable of delivering up
to an annual one million ounces of PGMs when
demand for newly-mined metal recovers, as we
believe it will.
HEALTH AND SAFETY
It is regrettable that, shortly after Zondereinde
had achieved six million fatality free shifts in
November 2016, we lost our colleague,
Paul Dunne • Chief executive
A WORD FROM THE CHIEF EXECUTIVE
19Notice of Annual General Meeting and Summarised Annual Report 2017
1
Mr Alexandre Macave, a locomotive operator
with many years’ service, in an underground rail
accident on 6 January 2017. I offer my personal
condolences and those of my executives to
Mr Macave’s family, his friends and colleagues.
Soon after the end of the financial year in
July 2017, Booysendal achieved three million
fatality free shifts.
Mechanised technology enhances not only our
people’s safety but also contributes to the cost
effectiveness of mining. Mechanised systems
will continue to be judiciously applied across
group operations where appropriate.
DELIVERING ON OUR STRATEGY
Our strategy is based on growth, operational
diversification and optimisation. Our
growth strategy is to target large, shallow,
mechanisable assets contiguous to existing
operations. Any deviation from this approach
would have to be motivated by a compelling
value proposition for our shareholders.
Recently we have purchased a recycling asset
which will complement Northam’s primary
production in future.
Our growth and diversification from a single
operating asset – Zondereinde – to one that
now includes Booysendal North and South
and the newly-acquired Eland mine means
less operational risk for the group and all
our stakeholders.
Highlights for F2017 include the continued
success of Booysendal North, which has now
been producing at steady state for more
than two years. Booysendal North performed
particularly well producing 199 000oz of PGMs,
well above its 160 000oz nameplate capacity.
The deepening project is progressing, and
remains on schedule for completion by F2019.
The recently-developed Booysendal North
Merensky mine is currently producing at
25 000oz per annum.
Philosophically we believe mine first,
metallurgy second. We have responded to
this natural progression by developing and
constructing the mining operations which
produce the ore ahead of processing. This
has been followed by a significant capital
investment in our smelting capacity at
Zondereinde, where an additional new furnace
will serve to absorb the steadily growing
output from our expanding mining footprint.
Zondereinde produced a solid operational
performance, under testing circumstances,
brought about by the necessity for operational
reorganisation measures in the workplace,
following the discharge of 357 employees after
labour disruptions in June 2016.
Details of our operations and production
during the year under review are provided in
the following pages.
ACQUISITIONS
In F2017 we made two important acquisitions.
In October 2016, we concluded an agreement
to acquire the high-quality resources of the
Tumela block from Anglo American Platinum’s
Amandelbult mine adjacent to our Zondereinde
mine. Not only will the incorporation of
Tumela increase Zondereinde’s life expectancy
to beyond 30 years, it provides significant
operating synergies for Zondereinde, delivering
flexibility and optionality and allows the mine
to continue mining higher-grade Merensky reef
20 Northam Platinum Limited
at little incremental cost. This transaction will
transform Zondereinde, providing it with similar
long-term potential and flexibility enjoyed by
the Booysendal mine.
We followed this up in February 2017 with the
R175 million purchase of Eland Platinum mine
(Eland) from Glencore Operations South Africa
Proprietary Limited. We regard Eland as a low-
cost option for the future. Eland’s resource is
shallow and located on the south-eastern limit
of the western limb of the Bushveld Igneous
Complex. Its two mining rights contain a
resource estimated at 21.3Moz 4E (platinum,
palladium, rhodium and gold) with an average
in situ 4E grade of 4.4 g/t.
In terms of the Eland transaction, Northam
acquires all Eland’s assets: its two mining
rights, surface and underground infrastructure
including a concentrator with a nameplate
capacity of 250 000tpm, two decline
systems equipped to 1.3km, surface support
infrastructure designed for a 250 000tpm
operation and a mining fleet of more than
100 vehicles which includes low-profile
mechanised mining equipment. In addition, we
entered into a long-term marketing agreement
with Glencore International AG for the group’s
chrome ore sales.
Subsequent to year-end, Northam reached an
agreement to purchase a suite of PGM recycling
equipment and the associated premises from
A-1 Specialized Services Inc., a recycler of
PGMs. The business is located in the state of
Pennsylvania, United States of America. The
total value of the transaction amounts to
USD10.7 million in cash. The transaction gives
Northam a low-cost entry into a key segment
of the PGM market. The recyclable material
market from auto catalysts in the US is well-
established, large and continues to expand.
Northam has secured an excellent asset base of
strategic future importance; which is an easily
scalable business to meet growing demand; and
provides exposure to the broader PGM market.
THE FUTURE
Booysendal North and South are evolving to
produce an annual 500 000oz: within three
years Zondereinde will be delivering 350 000oz
and Eland should produce at 150 000oz over a
30-year life. With these numbers we believe we
will have successfully transformed Northam into
a major producer with low unit costs and lower
operational risk. I should emphasise, however,
that we are not driven by size for size’s sake.
Our production will be tailored to meet market
demand, while ensuring that we have the mining
and processing capacity to respond promptly to
changes in market conditions. It is not our policy
to cross-subsidise, and each operation needs to
be profitable through the cycle.
1 SUMMARISED 2017 FINANCIAL STATEMENTS CONTINUED
ANNEXURE
21Notice of Annual General Meeting and Summarised Annual Report 2017
EMPOWERMENT
It is inconceivable that our country’s mining
industry could remain sustainable without
empowerment and transformation. Northam’s
continued development has been made
possible by our black economic empowerment
(BEE) transaction with a consortium
representing a broad selection of historically
disadvantaged South African (HDSA)
individuals and groupings, who, together hold
a 31.4% BEE interest in Northam through
Zambezi Platinum (RF) Limited.
Northam’s response to the many other aspects
of the DMR’s revised charter is aligned with
that of the South African Chamber of Mines,
of which Northam is a member. It is critical
to bring government back to the negotiating
table and to work towards a solution which will
ultimately grow and strengthen our sector.
APPRECIATION
Northam’s progress during F2017 has been a
team effort. I want to thank all the people of
Northam Platinum, including the board and our
management team, for their contributions during
what has been a year of considerable change.
Paul Dunne
Chief executive
22 September 2017
1
22 Northam Platinum Limited
2 DETAILS OF DIRECTORSANNEXURE
PL Zim (57)BCom (Hons); MComNon-executive chairman
Joined the board in April 2007
Mr Zim is the chairman of Zambezi Platinum (RF) Limited (Zambezi Platinum), and a director of Atisa Platinum (RF) Proprietary Limited, Sanlam Limited and Sanlam Life Insurance Limited. He is also a past president of the Chamber of Mines of South Africa. Previously chairman of Telkom SA SOC Limited, he has also held senior executive positions at Anglo American South Africa Limited, M-Net SuperSport and MTN Group Limited. He was voted African Business Leader of the Year in 2005 and in 2017 he received a Meritorious Award from the Association of Mine Managers South Africa for his outstanding contribution and dedication to the South African Mining Industry. Mr Zim is an Honorary Colonel in the South African Army.
Member of the nomination committee.
R Havenstein (61)MSc (Chemical Engineering); BComLead independent director
Joined the board in July 2003
Mr Havenstein currently serves on the board of Murray and Roberts Holdings Limited and Omnia Holdings Limited. He was previously chief executive officer of Anglo American Platinum Limited, prior to which he was an executive director of Sasol Limited responsible for Sasol Chemical Industries.
Member of the audit and risk committee.
Chairman of the health, safety and environmental committee, the investment committee and the nomination committee.
PA Dunne (54) (British)BSc (Hons); MBAChief executive officer
Joined the board in March 2014
Prior to joining Northam, Mr Dunne was employed by Impala Platinum Holdings Limited (Implats) as executive director responsible for all mining, concentrating and smelting operations at Implats’ Rustenburg and Marula mines. Mr Dunne is also a director of Zambezi Platinum.
Member of the health, safety and environmental committee.
23Notice of Annual General Meeting and Summarised Annual Report 2017
2
AZ Khumalo (52)BCompt (Hons); CA (SA)
Chief financial officer
Joined the board in July 2010
Mr Khumalo, a chartered accountant by profession, has extensive mining and corporate finance
experience. From September 2008 he was the group finance executive of Coal of Africa Limited. Prior
to that, from 2004 to 2008, he was director: finance of Aquarius Platinum (South Africa) Proprietary
Limited. Mr Khumalo is also a director of Zambezi Platinum.
CK Chabedi (49)MSc (Mining Engineering); MDP
Independent non-executive director
Joined the board in June 2009
Mr Chabedi has 22 years’ mining experience and over 12 years’ operational and management
experience. He is currently a Senior Lecturer in the School of Mining Engineering at the University of
the Witwatersrand.
Member of the health, safety and environmental committee, the investment committee and the social, ethics and human resources committee.
HH Hickey (Ms) (63)B Compt (Hons), CA (SA)
Independent non-executive director
Joined the board in January 2016
Ms Hickey currently serves as an independent director on the boards of African Dawn Capital
Limited, Barloworld Limited, Cashbuild Limited, Omnia Holdings Limited and Pan African Resources
Plc. She has 35 years’ experience in auditing, risk management and governance and is a past chair of
the South African Institute of Chartered Accountants.
Chairman of the audit and risk committee.
TE Kgosi (Ms) (63)BCom (Hons)
Independent non-executive director
Joined the board in November 2004
Ms Kgosi is the cluster manager, materials management, responsible for Gauteng and North West
operating units in supply chain operations, Eskom Group Commercial. She has extensive experience
in the banking sector mainly in a treasury operations environment, having held positions at a number
of South Africa’s main banking groups as well as Credit Suisse First Boston (NY).
Member of the audit and risk committee and the nomination committee.
Chairperson of the social, ethics and human resources committee.
24 Northam Platinum Limited
2 DETAILS OF DIRECTORS CONTINUED
ANNEXURE
KB Mosehla (45)
BCompt; CA (SA)
Non-executive director
Joined the board in August 2015
Mr Mosehla is the chief executive of Mosomo Investment Holdings Proprietary Limited, a director of
Zambezi Platinum, Malundi Resources (RF) Proprietary Limited and Coal of Africa Limited. In March
2016 he was appointed as Chairman of Tembisa Provincial Tertiary Hospital.
Member of the investment committee and the social, ethics and human resources committee.
TI Mvusi (62)
BA; ELP; MAP; and PDP
Independent non-executive director
Joined the board in January 2016
Mr Mvusi currently holds the position of chief executive: group market development at Sanlam
Limited (Sanlam). He has served on the board of Sanlam since 2009, and holds a number of Sanlam
group directorships and is also the chairman of Lemas Financial Services (Co-Operative) Limited.
Prior to joining Sanlam, he was the general manager of Gensec Property Services Limited and was a
marketing manager at Franklin Asset Management.
JG Smithies (72) (British)
BSc (Mining Engineering); (Chemistry)
Independent non-executive director
Joined the board in January 2017
Mr Smithies spent the majority of his career at Implats, where he held a number of senior
management positions including that of director of operations and chief executive officer, before
retiring from the company.
DH Brown (55)
CA (SA)
Mr Brown’s appointment as an independent non-executive director is subject to
shareholder approval at the AGM on 7 November 2017.
Mr Brown is the chief executive officer and executive director of Coal of Africa Limited. He is also an
independent non-executive director of Vodacom Group Limited. Mr Brown spent almost 14 years at
Implats, where he held a number of senior management positions including that of financial director
and chief executive officer.
25Notice of Annual General Meeting and Summarised Annual Report 2017
3 REMUNERATION REPORT OF THE SE&HR COMMITTEEANNEXURE
REMUNERATION REPORT
In line with Northam’s intention to comply with the King IV Report on Corporate Governance for
South Africa 2016 by F2018, transition to full compliance begins in the F2017 integrated report
with the adoption of the recommended three-part remuneration report, which comprises the
following sections:
• background statement;
• remuneration policy; and
• implementation report.
PART 1: BACKGROUND STATEMENT
The board, through the social, ethics and human resources committee (SE&HR committee or the
committee) is ultimately responsible for establishing a remuneration policy and for implementing the
remuneration policy. The committee is responsible for appointing competent individuals as senior
managers, and to ensure that the group’s leadership delivers on the group’s strategic targets for
fair remuneration.
Remuneration must align executive management actions with shareholder interests of sustainable
long-term growth in returns, and incentivise the right outcomes for other stakeholders, whilst still
being competitive and linked to performance.
The SE&HR committee is also responsible for mandating management on appropriate wage increase
thresholds for union negotiations and for advice on the scale of fees to be paid to non-executive
directors, which is submitted to shareholders for approval. The committee has overseen its duties
with these in mind throughout the financial year. Most pay increases were as follows for the 30 June
2017 financial year:
• For employees represented in collective bargaining structures an average 9.4% wage increase was
implemented on 1 July 2016. This increase represents the last annual wage adjustment in terms of
a three-year agreement signed with the National Union of Mineworkers (NUM) in 2015.
• Latest salary adjustments to senior management were made on 1 July 2016 with increases of
5.5%. For the 2018 financial year senior management have been offered an increase of 6% per
annum, plus a personal performance element of a maximum of 2%.
26 Northam Platinum Limited
3 REMUNERATION REPORT OF THE SE&HR COMMITTEE CONTINUED
ANNEXURE
EMPLOYEES REPRESENTED IN TERMS OF COLLECTIVE BARGAINING ARRANGEMENTS
There are various unions representing workers at the group’s operating mines. The majority of the
group’s employees, approximately 90.7% at Zondereinde, are contributing members of the NUM –
primarily in the category 2 to 10 bargaining units. Their salary levels, annual increases, allowances
and benefit packages are therefore negotiated on a collective basis.
At Booysendal, approximately 90% of the workforce is covered by collective bargaining agreements
through the contracting companies working at the operation. Approximately 70% of unionised
indirect employees belong to the Amalgamated Mine and Construction Workers Union (AMCU).
Northam also engages with other unions representing smaller groups of employees. The group’s
labour relations policies provide for organisational rights to any union which meets a 15%
representation threshold within a bargaining unit. When a registered union reaches a representative
threshold of 33.3% within a bargaining unit, it acquires the right to bargain for that particular unit.
Northam’s objective is to engage in good faith in order to reach agreement on matters such as
wages, substantive conditions of service and other matters of mutual interest.
In addition to their wages, employees also earn various forms of bonuses to incentivise performance.
EXECUTIVE DIRECTORS, MANAGEMENT AND NON-UNIONISED STAFF
Executive directors (executives) and members of corporate and operational management staff are
employed in terms of their contracts of employment and the remuneration and benefit schemes and
practices applicable to their job grades. Salaries are reviewed once annually, effective 1 July. Salary
increases are determined individually, according to individual performance, retention and market-
matching criteria.
All non-unionised staff, managers and executives have detailed job profiles which stipulate the
key performance areas of their positions. These serve as the basis for performance assessment and
measurement and performance-linked salary increases and bonuses.
27Notice of Annual General Meeting and Summarised Annual Report 2017
3
REMUNERATION
Salary package(BRP)
Various allowances
Various short-term incentive bonuses
Long-term incentive scheme
Key personinsurance
SHORT-TERM INCENTIVES
LONG-TERM INCENTIVES
1
2
3
5
4
Remuneration takes the form of:
1 appropriate salary packages, including those of the executive directors which incorporate basic
remuneration pay including death, disability, medical aid (BRP) and pension contribution benefits;
2 various allowances, which when included with (1) above is the total guaranteed package;
3 various short-term incentive bonus schemes depending on the grade of the employee;
4 a long-term incentive scheme which replaced the prior share option scheme and includes a lock-in
and incentive mechanism;
5 key person insurance cover is available for the executives and the general managers of the group.
28 Northam Platinum Limited
3 REMUNERATION REPORT OF THE SE&HR COMMITTEE CONTINUED
ANNEXURE
CHANGE OF CONTROL CONDITIONS
In the event of a change of control of the business, executive directors will receive certain payouts
due to them within 12 months of the effective date of such change of control. In terms of their
contracts they shall be entitled to the following:
• lump sum compensating payment equal to twice the then total guaranteed package;
• the average of the short-term incentive (STI) bonuses paid by the group during the previous two years;
• a pro rata portion of the bonus incentive earned in respect of the prevailing financial year; and
• any other contractual benefits due.
A change of control is defined in the Companies Act and the Companies Regulations, 2011.
EXTERNAL DIRECTORSHIPS
Directors are required to consult with the chairman of the board and the chief executive should they
wish to hold external directorships.
PART 2: REMUNERATION POLICY
The Northam remuneration policy resolution was approved at the November 2016 AGM with a
majority of 87.5% of votes cast in favour, based on a 95.1% shareholder participation rate.
Wage and salary levels are determined in terms of the group’s remuneration policy. Through fixed
and variable remuneration, the group aims to attract, retain, incentivise and reward top quality staff
at all levels, particularly where scarce or critical skills are involved.
Pay must be linked to the group’s performance generally and the total guaranteed pay is set in line
with the level of the platinum industry companies’ remuneration, benchmarked every two years, with
the last benchmark done during the 2016 financial year. The findings of the assessment indicated
that management was paid in line with the industry except for the chief executive who was being
paid below the market benchmark.
The remuneration policy is designed to support the group’s strategic goals of the group in a way that
aligns the interests of employees, managers and executives with those of stakeholders.
29Notice of Annual General Meeting and Summarised Annual Report 2017
3
The remuneration policy is not intended to be a ‘one size fits all’ set of rules and procedures, but rather to
serve as the basis for a flexible approach to the variable and changing needs of a dynamic and competitive
mining employment environment. The policy is underpinned by the following key principles:
Harmonising
working conditions,
salaries and wages
throughout
the group
Compliance with all
statutory and regulatory
requirements and a
commitment to applying
best practice guidelines in
all aspects of remuneration
and benefits
Attracting and
retaining core skills,
such as artisans,
engineers and
management
Offering
remuneration
packages that are
competitive, fair,
and reasonable in
all respects and at
all levels
FEATURES OF THE REMUNERATION PRACTICES
Employment contracts are concluded on a permanent basis as a general principle (i.e. for an
indefinite period), except where fixed-term or short-term temporary contracts are required for specific
projects. The notice period for the termination of employment contracts is typically one month, but
for critical positions this can be extended by mutual agreement to a maximum of 12 months.
Northam’s objective is to provide a market-competitive basic salary plus compulsory medical aid
and retirement fund membership. Various fixed and variable allowances are paid at certain job/
grade levels or to certain job categories. The job grading system is based on the Paterson model.
Remuneration experts who are considered independent and objective by the committee are
consulted from time to time as circumstances dictate.
Salary scales and employee benefits are benchmarked against mining industry standards and are
reviewed annually. The midpoints of the group’s salary scales are compared with industry percentiles
and adjusted annually, in line with the changing size, structure, financial performance and general
circumstances of the group over time.
The group’s salary scales have a range which allows an overlap on scales which have steps of
15% between grade ranges to allow for the appropriate positioning of individuals according to
qualifications, experience, performance, growth, development and market imperatives. However, in a
competitive market where skills are scarce, market comparisons may result in pay amounts above the
range being considered and paid.
30 Northam Platinum Limited
3 REMUNERATION REPORT OF THE SE&HR COMMITTEE CONTINUED
ANNEXURE
The committee approves salary increases for all categories of staff in advance each year. Any material
changes to allowances, benefits, bonus schemes, or any other aspect of remuneration policy are
approved by the committee prior to implementation.
In the case of retrenchment, the group’s policy at all job levels is to pay the contractual notice period
(if not worked) and severance pay in line with legislation (the Basic Conditions of Employment Act),
being one week’s remuneration per completed year of service with the group. Severance payments
upon termination of service are governed by legislation, agreements with unions, individual contract
and/or group policy and practice.
No provision is made for special retirement benefits for group employees other than the standard
benefits in terms of two of the group’s recognised retirement funds, with the exception of employees
in Category 9 and above who were in service with the group on 31 December 1998. In respect of
these employees, a contribution is made to a post-retirement healthcare fund. These contributions
cease when the employee leaves the service of the group. All components of the group’s
remuneration system are subject to regular internal and external audits, as well as routine monitoring
by the South African Revenue Services. The committee is satisfied that the group is compliant with all
pertinent regulations.
EXECUTIVE DIRECTORS’ AND OTHER KEY MANAGEMENT SERVICE CONTRACTS
The chief executive, Mr PA Dunne has a service contract with the company which is subject to a
notice period of one year. The chief financial officer, Mr AZ Khumalo has a service contract with the
company which is subject to a notice period of three months.
Other key management individuals also have a notice period of three months.
FIXED REMUNERATION: TOTAL GUARANTEED PAY (TGP)
Employees are paid market-related salary packages on a cost to company basis which represents
their guaranteed pay. Increases in pay take account of the global economy and the group’s economic
performance, the prevailing inflation rate and may include a merit component of no more than 2%
over and above the prevailing inflation rate.
SHORT-TERM: VARIABLE REMUNERATION
Employee bonuses
The group has a variety of bonus schemes for employees. Bonuses are not guaranteed and are based
on approved formulae designed to incentivise employees in line with the group’s strategic objectives.
Executive directors and all senior management may earn a bonus based on the extent to which
they have achieved the targets and objectives set for them by the committee and/or the board of
directors. Bonuses are payable half-yearly.
31Notice of Annual General Meeting and Summarised Annual Report 2017
3
Short-term incentive – senior officials’ bonus scheme
The board of directors, through the SE&HR committee, determines the performance targets
and objectives of the chief executive and the chief financial officer, conducts their performance
assessments and decides the quantum of their performance bonuses. The chief executive also has
input into the evaluation of the chief financial officer.
The chief executive and the SE& HR committee determine the performance targets and objectives
of other senior managers, conduct their performance assessments and determine the quantum of
performance bonuses for approval by the board of directors.
Bonuses are paid subject to the achievement of targets, and an individual performance rating. Bonus
amounts vary per grade as they are based on the relative BRPs of executive directors and senior officials.
Short-term incentives – Details of the executive directors’ and senior officials’ bonus scheme
Committee approved formula
Achievement (excess or shortfall of actual over target), rated in terms of
achievement factors (i.e. below 90% achievement = zero achievement
factor and above 110% = 125% achievement factor) by (x) weighting of
key performance area (scoring) x BRP x weighting of the two mines (on
production) – this is calculated half yearly and per annum – all annualised
= bonus of executive directors and senior management.
Payment frequency Bonuses are paid twice annually based on the actual results achieved for
each of the six months ending December and June. 75% of the calculated
bonus is paid for each six-month period with the final 25% being calculated
on the results for the full year.
Performance conditions Set during the financial year by the committee and the board.
Corporate office bonuses are paid on an average based on the performance of
the two operating mines, Zondereinde and Booysendal.
Minimum and maximum possible bonus opportunity
Minimum can be zero and maximum 125% of BRP.
Proposed changes for F2018
For the Booysendal mine only the weighting of targets may change in line
with the steady state production levels anticipated in F2018.
SE&HR committee discretion
In consultation with the chief executive, the committee may vary both the
formula, targets and/or the amounts payable.
Based on the cost to company, being the basic remuneration package plus pension contribution,
the average group bonus paid under this scheme was 75.6% of group remuneration cost in F2017
(F2016: 58.4%).
32 Northam Platinum Limited
3 REMUNERATION REPORT OF THE SE&HR COMMITTEE CONTINUED
ANNEXURE
Short-term incentives: retention bonus scheme
The bonus is designed to retain skills within the company. Accordingly, any employee who is
discharged or resigns before such bonus becomes payable forfeits the total amount accumulated.
An amount equal to 20% of the annual BRP is accumulated monthly over 24 months and paid after
two years’ service in terms of this scheme. On retirement or retrenchment all accumulated bonuses
are payable to employees. Employees taking early retirement will receive this bonus on a proportional
basis in line with the same percentages as the share incentive plan rules.
All officials within the D3 Paterson grading and higher, including executive directors, are eligible to
participate in the scheme. In F2017 the average group retention bonus paid was 9.4% (F2016: 11.1%)
of the group cost to company remuneration.
LONG-TERM INCENTIVES: DETAILS OF SHARE OPTION SCHEME, SHARE INCENTIVE PLAN AND LOCK-IN AND INCENTIVE MECHANISM
The group currently operates the Northam share incentive plan (SIP or plan), which plan incorporates
a long-term BEE transaction incentive plan (BIP), further details of which are set out in the “lock-
in and incentive mechanism” section of this report. The Northam share option scheme has been
discontinued owing to its dilutive nature. The share options issued before its discontinuance will be
allowed to run their course until October 2017. Details of the options issued under the scheme are
more fully disclosed in the directors’ report which forms part of the 2017 annual integrated report
available at www.northam.co.za.
Remuneration of executive directors in terms of both basic pay and the Northam SIP payouts are
disclosed on page 39 of this remuneration report.
The SIP was introduced in 2011 in order to attract, incentivise and retain skilled senior managers.
The target group for the SIP includes all senior officials and executives in job grades D1 and above.
The SE&HR committee is responsible for the approval of the annual allocation of shares based on an
approved formula, as well as any changes to the SIP rules. Details of the shares issued under the SIP
are more fully disclosed in the directors’ report.
33Notice of Annual General Meeting and Summarised Annual Report 2017
3
Instruments used • Retention shares (without performance conditions) – no more than 25%
of the total award with a three-year vesting period.
• Conditional shares with performance conditions – at least 75% of the
total award with a three-year vesting period.
• Forfeitable shares.
• Participants do not have to pay for any awards received under the SIP.
Eligibility levels Executive directors and all senior officials in Paterson D grade and above.
Performance conditions and performance measurement
See table below for typical combination of performance conditions, each
factor weighted accordingly. From F2015 onwards these include a rate of
return performance target/factors with a weighting of at least 30%. These
shares will vest during F2018.
Vesting period Three years for all shares.
Company and individual limits
Total company limit of approximately 19.9 million shares (which includes the
5 million shares available in terms of the BIP) and approximately 2.0 million
shares per cycle for individuals.
Minimum and maximum possible share payout
Minimum is the value of retention shares (as they have no performance
conditions attached) and maximum largely depends on operational
performance of the company when targets are measured against actual
performance for conditional shares. This determines the number of shares
eventually allocated, (which are normally lower than those awarded because
of the performance conditions test) as well as the share price when shares vest.
On measurement of the achievement of these targets/factors, each factor’s
achievement rank depends on the extent of achievement for each factor over the
three-year period, ranging from a ranking of 1 (which represents a 90 to 100%
achievement of target). This means, up to 100% award of the conditional shares.
This rises up to a ranking of 4, an achievement of over 105%, which may
equate to a share number allocation of up to 135% of the original award.
The awarding of shares is determined by means of a share option formula, approved by the SE&HR
committee, which was provided to Northam by external experts after a review of industry share
schemes in 2011. The formula takes into account factors such as the share price on award or grant
date and the vesting period of the shares to be awarded. Both retention shares (without performance
conditions) and performance shares (with performance conditions) are awarded.
Usually the awarded shares are not the number of shares that eventually vest, but the allocated
shares (that is, the awarded shares after measurement against the performance conditions, three
years later) are the number that vest and are paid out.
34 Northam Platinum Limited
3 REMUNERATION REPORT OF THE SE&HR COMMITTEE CONTINUED
ANNEXURE
LOCK-IN AND INCENTIVE MECHANISM (LIM)
The implementation of the BEE transaction with Zambezi Platinum has resulted in a variety of
benefits for the group. The guarantee provided by Northam however, to the holders of preference
shares issued by Zambezi Platinum may result in a decline in shareholder value. A number of
shareholders expressed concerns with regard to the risk that the guarantee holds for Northam and its
shareholders, and recommended that the company appropriately incentivise management to mitigate
this specific risk.
In response to the above, shareholders approved and the SE&HR committee implemented the
LIM in 2016. The LIM appropriately addresses the long-term and short-term incentivisation of key
management to consistently maintain the Northam share price above the related preference share
liability value over the term of the BEE transaction. The performance conditions attached to benefits
under the LIM are directly related to the terms of the BEE transaction and are intended to align the
interest of the LIM participants directly with those of the company’s shareholders.
SALIENT FEATURES OF THE LIM
The LIM comprises two separate mechanisms structured with specific reference to the terms of the
BEE transaction and, more specifically, the potential guarantee liability:
Long-term BEE transaction incentive plan (BIP)
The BIP addresses the long-term incentivisation and retention of its participants by aligning their
interests with shareholders through equity participation. The BIP is implemented through the SIP
which was amended to incorporate the specific elements of the BIP. The BIP is implemented in
addition to the SIP and does not replace or affect the SIP.
Short-term cash incentive bonus in respect of the BEE transaction (CIBB)
In view of the exceptionally long term of the BIP incentive (i.e. 10 years) and the benefit of
compounded growth in the share price over this period, the CIBB considers the short-term
incentivisation of management to continuously maintain the long-term objectives introduced by the
BIP. Importantly, the CIBB also acts as a strong retention tool by financially penalising CIBB recipients
that leave the employ of the group.
The combination of the BIP and CIBB provide the company with an effective mechanism for
addressing the guarantee liability risk, motivating shareholder value creation over the long term and
retaining essential skills in a competitive market.
35Notice of Annual General Meeting and Summarised Annual Report 2017
3
DETAILS OF THE BIP INCORPORATED INTO THE SIP
Terms and conditions
The BIP is effected through the SIP. Subject to certain exceptions, shares awarded in terms of the BIP
(BEE conditional performance shares (BEE CPS)) are subject to the same terms and conditions as the
‘conditional shares’ under the current SIP rules.
Participants
The company limits participants in the BIP to the key members of Northam’s current and future
key executive management team including the chief executive officer, chief financial officer, chief
commercial officer, chief geologist (CG), chief technical officer (CTO), executive officer HR and the
senior general managers of Booysendal and Zondereinde mines (participants). The positions of the
CG and CTO have not been filled and remain subject to the employment of suitable candidates by
the group and the BEE CPS allocated to these positions will not be issued in the event that they are
not filled.
Number of shares to be allocated
In terms of the BIP an aggregate of 3.6 million BEE CPS were conditionally awarded to the
following participants:
Shares awarded to:
Number of BEE
CPS awarded
Chief executive officer 1 500 000
Chief financial officer 700 000
Chief commercial officer 500 000
HR executive 500 000
General manager: Zondereinde 200 000
General manager: Booysendal 200 000
Total 3 600 000
Number of issued Northam Platinum Limited shares 509 781 212
% representation 0.71
The aggregate number of BEE CPS to be issued represents less than 1% of Northam’s current issued
stated capital and may be settled in cash or shares at the election of the independent committee of
the board responsible for administering the SIP at that time.
36 Northam Platinum Limited
3 REMUNERATION REPORT OF THE SE&HR COMMITTEE CONTINUED
ANNEXURE
Vesting
Vesting will be subject to the satisfaction of the performance condition that Zambezi Platinum:
• fully settles the redemption amount; and
• fully settles or makes adequate provision for all its tax liabilities arising from settlement of the
redemption amount
on the basis that no guarantee liability will arise and no member of the group will be required to give
any direct or indirect financial assistance for the purposes of or in connection with the settlement of
the redemption amount (BIP performance condition).
Vesting of BEE CPS will occur 30 business days after the date on which the BIP performance
condition is fulfilled (which is expected to be 18 May 2025) or, in the event that vesting of the
BEE CPS is accelerated in certain exceptional instances, as set out in the current rules in relation
to conditional shares, including a change of control of Northam or an earlier date determined in
accordance with the rules.
In the event that the BIP performance condition is not satisfied, the BEE CPS will, subject to
certain exceptions, not vest. If BEE CPS do not vest, they will not be settled and no value will
accrue to participants.
Upon vesting, BEE CPS may be settled either through the issue of no more than the 5 million new
shares or in cash at the election of the committee. If cash settlement is elected the settlement
amount will be established using the 60-day volume weighted average price (VWAP) of a share
calculated on the day preceding settlement.
In the event that the preference shares are redeemed before the expected redemption date
(i.e. 18 May 2025) and if the BIP performance condition is satisfied at that time, the BEE CPS will
vest on a pro rata basis relative to the number of years of the performance period that has been
completed at that time. Those BEE CPS that do not vest in such circumstances will lapse.
In the event that Northam undergoes a change of control, all the BEE CPS that have not vested will
be treated in the same manner as other conditional shares and vest in full at that time irrespective of
whether the BIP performance condition has been met or not. This is consistent with the existing rules.
Termination of employment
In order to retain key management, BEE CPS will lapse if a participant leaves the employ of the group
before the vesting date unless his/her employment is terminated by reason of a no fault termination
or early retirement.
37Notice of Annual General Meeting and Summarised Annual Report 2017
3
No fault termination includes, inter alia, termination of employment by reason of a participant’s
death, retrenchment, retirement, ill health, injury, disability or any reason that is not a fault
termination. A fault termination comprises termination of employment by reason of, inter alia,
resignation or dismissal.
In the event that a participant leaves the employ of the group by reason of no fault termination or
early retirement before the vesting date, and such date is:
• Prior to 18 May 2020, then the BEE CPS which have not vested will lapse immediately; or
• After 18 May 2020, the participant will retain a proportionate amount of their BEE CPS which
have not vested, calculated by reference to what proportion of the period from 18 May 2020 to
18 May 2025 has elapsed prior to the termination of employment.
This provision is further illustrated in the table below:
Termination of employment between years:
% of BEE
CPS retained
0 – 6 0
6 – 7 20
7 – 8 40
8 – 9 60
9 -10 80
BEE CPS retained in these instances will remain subject to the BIP performance condition and will
only vest and be settled on the vesting date, together with BEE CPS held by other participants. In
the event that a participant’s employment is terminated as a result of death, injury or ill-health,
and the committee is of the reasonable opinion that the BIP performance condition is likely to be
fulfilled, it may, in exceptional circumstances, allow that participant’s BEE CPS to vest and be settled
immediately.
The rationale for retention by a participant of a portion of their BEE CPS after year 6 is that the key
strategic decisions and actions affecting the value of a share over the BIP performance period are likely to
be made during the first 5 years of this period. Thereafter, value delivery will depend upon, amongst other
factors, the successful execution of such decisions as planned. Accordingly, it is deemed appropriate to
allow for continued participation post year 5 notwithstanding termination of employment.
In the event that a participant leaves the employ of the group before the vesting date by reason of
fault termination, that participant’s BEE CPS that have not vested will lapse.
38 Northam Platinum Limited
3 REMUNERATION REPORT OF THE SE&HR COMMITTEE CONTINUED
ANNEXURE
DETAILS OF THE CIBB
The CIBB is intended to comprise an incentive mechanism and a retention mechanism and further
aligns management with the interests of Northam’s shareholders.
Participants in the CIBB will include the participants in the BIP and may include, from time to time,
other employees of the group deemed to be critical to the group’s operations and strategy from time
to time. Management will be required to recommend additional participants, whose participation will
be subject to approval by the SE&HR committee.
Payments in terms of the CIBB will be made annually, subject to the fulfilment of the CIBB
performance conditions, as set out below, as at the 31st trading day following the publication of the
company’s financial results for each financial year (condition date).
Participants will receive, on an annual basis, 15% of their cost to company remuneration excluding
performance bonuses, if the value of a share at the condition date (calculated as the 60 day VWAP
of a share) is equal to or greater than the redemption amount per preference share.
Furthermore, participants will receive, on an annual basis, an additional 15% of their cost to
company remuneration excluding performance bonuses, if the aggregate value of the shares held
by Zambezi Platinum at the condition date (using the 60 day VWAP of a share) is sufficient to
• fully settle the redemption amount; and
• fully settle or make adequate provision for all Zambezi Platinum’s tax liabilities arising from
settlement of the redemption amount, on the basis that no guarantee liability will arise and no
member of the group will be required to provide any direct or indirect financial assistance for the
purposes of or in connection with the settlement of the redemption amount.
This will effectively incentivise achievement of the CIBB performance conditions on an annual basis.
For the avoidance of doubt, no CIBB payment will be made unless the CIBB performance conditions
are achieved in that year.
The CIBB will also act as a robust employee retention mechanism. In the event that a CIBB recipient
leaves the employ of the group within 12 months of receiving a CIBB (restraint period) for reason
of a fault termination, that person will be required to repay to the company, before the deduction
of PAYE, the pro rata amount of the CIBB received (calculated according to the number of months
remaining in the restraint period) (CIBB refund). The CIBB refund penalty intends to dissuade CIBB
participants from leaving the employ of the group by financially penalising them if they leave.
The CIBB will be terminated upon settlement or lapse of the BEE CPS.
39Notice of Annual General Meeting and Summarised Annual Report 2017
3
EMPLOYEE PARTICIPATION SCHEMES
Toro Employee Empowerment Trust
The group operates an employee profit share scheme for eligible employees at the Zondereinde mine
in terms of which 4% of the Zondereinde after-tax profits are contributed to a registered trust fund
(The Toro Employee Empowerment Fund). Eligible employees receive payment at the end of each
five-year cycle, with the first payments having been made in F2013.
BEE shareholding in Northam
Employees and communities are participants in the BEE transaction approved in F2015 in terms
of which communities hold 5% of Northam shares and eligible group employees (excluding
management) own 3% of Northam (this is in addition to the 4% share of Zondereinde after-tax
profits through the Toro Trust).
PART 3: IMPLEMENTATION REPORT – DETAILS OF F2017 PAY AND PROPOSAL FOR F2018
DIRECTORS’ REMUNERATION
The directors’ remuneration for the year ended 30 June 2017 is as follows:
Fees
Re-munera-
tion package
Per-formance
bonus Benefits
Gain on share-based
payments Total
Tax paid by
employeesNet pay
R000 R000 R000 R000 R000 R000 R000 R000
Executive
PA Dunne – 7 291 6 217 191 – 13 699 (5 607) 8 092
AZ Khumalo – 3 555 3 018 168 3 158 9 899 (3 911) 5 988
Non-executive
PL Zim 409 – – – – 409 (151) 258
R Havenstein 825 – – – – 825 (275) 550
CK Chabedi 624 – – – – 624 (245) 379
HH Hickey 418 – – – – 418 (166) 252
TE Kgosi 732 – – – – 732 (281) 451
AR Martin* 245 – – – – 245 (121) 124
KB Mosehla 515 – – – – 515 (212) 303
TI Mvusi 284 – – – – 284 (131) 153
JG Smithies** 164 – – – – 164 (49) 115
4 216 10 846 9 235 359 3 158 27 814 (11 149) 16 665
* Mr Martin retired from the board of directors at the conclusion of the AGM on 9 November 2016.
** Mr Smithies was appointed as an independent non-executive director on 1 January 2017.
40 Northam Platinum Limited
3 REMUNERATION REPORT OF THE SE&HR COMMITTEE CONTINUED
ANNEXURE
The directors’ remuneration for the year ended 30 June 2016 is as follows:
Fees
Re-
muneration
package
Per-
formance
bonus Benefits
Gain on
share-
based
payments Total
Tax
paid by
employees
Net
pay
R000 R000 R000 R000 R000 R000 R000 R000
Executive
PA Dunne – 6 165 4 353 834 – 11 352 (4 122) 7 230
AZ Khumalo – 3 006 2 436 441 3 707 9 590 (3 431) 6 159
Non-executive
PL Zim 412 – – – – 412 (145) 267
R Havenstein 717 – – – – 717 (264) 453
CK Chabedi 496 – – – – 496 (169) 327
HH Hickey*** 209 – – – – 209 (69) 140
TE Kgosi 609 – – – – 609 (221) 388
AR Martin 565 – – – – 565 (203) 362
KB Mosehla 357 – – – – 357 (96) 261
TI Mvusi*** 154 – – – – 154 (50) 104
ME Beckett**** 247 – – – – 247 (98) 149
3 766 9 171 6 789 1 275 3 707 24 708 (8 868) 15 840
*** Mrs Hickey and Mr Mvusi were appointed as independent non-executive directors on 1 January 2016.
**** Mr Beckett retired from the board of directors on 11 November 2015.
41Notice of Annual General Meeting and Summarised Annual Report 2017
3
Below is an analysis of non-executive fees in respect of board and board committee services for the
2017 financial year. Fees are determined based on meetings attended.
Board
Audit and risk
committee
Health, safety and
environ-mental
committee
Invest-ment
committee
Social, ethics and
human resources
committee
Nomi-nations
committeeAd hoc
fees Total
R000 R000 R000 R000 R000 R000 R000 R000
PL Zim 366 – – – – 43 – 409
R Havenstein 367 137 121 86 – 87 27 825
CK Chabedi 327 – 93 76 128 – – 624
HH Hickey 284 134 – – – – – 418
TE Kgosi 327 138 – – 157 60 50 732
AR Martin 115 91 – 11 – 28 – 245
KB Mosehla 327 – – 60 128 – – 515
TI Mvusi 284 – – – – – – 284
JG Smithies 164 – – – – – – 164
2 561 500 214 233 413 218 77 4 216
Below is an analysis of non-executive fees in respect of board and board committee services for the
2016 financial year. Fees are determined based on meetings attended.
Board
Audit and risk
committee
Health, safety and
environ-mental
committee
Invest-ment
committee
Social, ethics and
human resources
committee
Nomi-nations
committeeAd hoc
fees Total
R000 R000 R000 R000 R000 R000 R000 R000
PL Zim 340 – – – – 72 – 412
R Havenstein 300 129 112 80 3 93 – 717
CK Chabedi 268 – 87 56 85 – – 496
HH Hickey 154 55 – – – – – 209
TE Kgosi 268 129 – – 113 72 27 609
AR Martin 273 160 – 56 – 76 – 565
KB Mosehla 219 – – 53 85 – – 357
TI Mvusi 154 – – – – – – 154
ME Beckett 108 72 42 – 25 – – 247
2 084 545 241 245 311 313 27 3 766
42 Northam Platinum Limited
3 REMUNERATION REPORT OF THE SE&HR COMMITTEE CONTINUED
ANNEXURE
No individuals other than executive directors are considered to be prescribed officers. Details of the
non-executive fees are disclosed on page 41 of this remuneration report.
Mr Dunne did not have any retention or performance shares vesting as his tenure at the company
remains below the three-year vesting period.
Details on the determination of existing and future short- and long-term incentives are included in
the following pages.
Short-term incentives: senior management bonuses including executive directors
The elements used to determine the bonus paid out to senior management including executive
directors were as follows for the year ended 30 June 2017:
Zondereinde Unit Weighting Achievement
actual vs target Scoring of
achievementWeighted
score
% % % %
Safety TIIR 30 103.4 115.0 34.5
Linear metres m 10 93.3 30.0 3.0
Square metres m2 10 95.2 50.0 5.0
Total tonnes milled tonnes 10 95.5 50.0 5.0
Recoverable metals kg 15 93.3 30.0 4.5
Total cash costs R000 15 100.8 105.0 16.0
Personal performance rating 10 – – 0.0
Net weighting percentage 68.0
Booysendal Unit Weighting Achievement
actual vs target Scoring of
achievementWeighted
score
% % % %
Safety LTIIR 20 117.0 125.0 25.0
Square metres m2 30 102.2 110.0 33.0
Total tonnes milled tonnes 15 108.2 123.0 18.5
Total concentrator
metals produced tonnes 15 102.8 110.0 16.5
Total cash costs R000 10 94.6 40.0 4.0
Personal performance rating 10 – – 0.0
Net weighting percentage 97.0
43Notice of Annual General Meeting and Summarised Annual Report 2017
3
Corporate office and shared service staff %
Net weighting percentage 83.0
The annual bonuses actually paid as a percentage of the basic remuneration plus benefits to
executive directors were as follows for 30 June 2017:
BonusBasic pay
plus benefits
Bonus as % of basic pay
plus benefits
R000 R000 %
PA Dunne 6 217 7 482 83.1
AZ Khumalo 3 018 3 723 81.1
Typically, the bonus scheme is based on a weighted combination of key performance areas and
targets which are largely under the control of management. By providing bonuses, the committee
intends to incentivise management in areas/targets that they are able to influence. In this way,
management is encouraged to manage the group to achieve best performance for the benefit of
stakeholders. These targets are usually a weighted combination of safety performance, linear metres
achieved, square metres achieved, total tonnes milled, recoverable metals produced, cash or total
costs, and personal performance which includes transformation (referring to social employment
quotas/criteria that must be met in terms of employment legislation in South Africa).
The following key performance targets have been set for the F2018 year:
Zondereinde Unit
F2017 weighting
%
F2018 weighting
%
Safety LTIIR 30 30
Linear metres m 10 10
Square metres m2 10 10
Total tonnes milled tonnes 10 10
Recoverable metals kg 15 15
Total cash costs R000 15 15
Personal performance rating 10 10
Net weighting percentage 100 100
44 Northam Platinum Limited
3 REMUNERATION REPORT OF THE SE&HR COMMITTEE CONTINUED
ANNEXURE
Booysendal Unit
F2017 weighting
%
F2018 weighting
%
Safety LTIIR 20 20
Square metres m2 30 30
Capital development: Booysendal South m – 10
Total tonnes milled tonnes 15 10
Total concentrator metals produced tonnes 15 10
Total cash costs R000 10 10
Personal performance rating 10 10
The reason for the change in the Booysendal key performance targets relate to the development of
Booysendal South. Project execution will be key and it is therefore important that management is
assessed based on the development at Booysendal South.
Long-term incentives: November 2013 allocation, vesting November 2016
The elements used to determine the long-term incentive payout were as follows for the year ended
30 June 2017:
Zondereinde
Factor Target/criteria
Weighting
%
Safety An improvement of 10% on the previous financial
years safety record
30
Estimated recoverable metals Achieving the budgeted metal production 40
Unit cash costs Achieving the budgeted unit cost 30
100
Booysendal
Factor Target/criteria
Weighting
%
Safety An improvement of 10% on the previous financial
years safety record
35
Estimated recoverable metals Achieving the budgeted metal production 30
Unit cash costs Achieving the budgeted unit cost 25
Capital development Achieving the budgeted development metres 20
100
45Notice of Annual General Meeting and Summarised Annual Report 2017
3
Actual achievements for the financial year are indicated below for both Zondereinde and Booysendal:
Zondereinde
Factor and weighting and year Safety
Recoverable
metals
Unit cash
cost Total
30% 40% 30% 100%
F2014 Score 79.0 93.0
F2015 Score 88.0 94.0
F2016 Score 97.0 109.0
Achievement per factor F2017 0.0 0.0 100.0
Percentage shares to be paid 0.0 0.0 30.0 30.0
Booysendal
Factor and weighting and year Safety
Recoverable
metals
Unit cash
cost
Capital
development Total
25% 30% 25% 20% 100%
F2014 Score 97.0 121.0 100.0
F2015 Score 91.0 109.0 87.0
F2016 Score 103.0 107.0 119.0
Achievement per factor F2017 135.0 100.0 135.0 100.0
Percentage shares to be paid 33.8 30.0 33.8 20 117.5
Corporate office and group services staff are incentivised based on the combined performance of
Zondereinde and Booysendal. The percentage of shares paid was therefore 73.8%.
46 Northam Platinum Limited
3 REMUNERATION REPORT OF THE SE&HR COMMITTEE CONTINUED
ANNEXURE
For the 2018 financial year, the proposal is that the following targets and weightings should apply, as
set out below:
Zondereinde
Factor Target/criteria
Weighting
%
Safety An improvement of 10% on the previous financial
years safety record
30
Estimated recoverable metals Achieving the budgeted metal production 30
Unit cash costs Achieving the budgeted unit costs 20
Absolute total
shareholder return
Total shareholder return must be more than the
weighted average cost of capital plus 1%
10
Relative shareholder return Exceeding the platinum index return on the JSE on
an absolute basis
10
100
Booysendal
Factor Target/criteria
Weighting
%
Safety An improvement of 10% on the previous financial
year’s safety record
25
Estimated recoverable metals Achieving the budgeted metal production 35
Unit cash costs Achieving the budgeted unit costs 20
Absolute total shareholder
return
Total shareholder return must be more than the
weighted average cost of capital plus 1%
10
Relative shareholder return Exceeding the platinum index return on the JSE on
an absolute basis
10
100
Meeting or exceeding the proposed performance criteria requires considerable effort, and has a
direct impact on the profitability of the group.
47Notice of Annual General Meeting and Summarised Annual Report 2017
3
Measurement of performance criteria will be calculated at the end of each three-year financial period
over which the shares vest, by applying the achievement percentages in respect of the individual
criteria against the performance shares awarded:
Achievement% shares to be awarded
Achieve an aggregate score of less than 90% Nil
Achieve between 90% – 100% of target 100
Achieve between 100% – 105% 125
Achieve in excess of 105% 135
An achievement of less than 90% of target results in no shares being allocated at all. Every year
the committee, with the assistance of management, assesses the allocation of both retention and
conditional performance shares per employee.
Full details of the shares granted to the executive directors during the financial year are set out below:
Details of share incentives granted to executive directors
Analysis of share incentives held as at 30 June 2017:
4 Nov 2014Share award
11 Nov 2015Share award
8 Nov 2016Share award Total
Retention shares and performance shares
PA Dunne
Balance at 1 July 2016 150 300 193 200 – 343 500
Retention shares awarded during the year – – 42 900 42 900
Performance shares awarded during
the year
– – 127 200 127 200
Shares cash settled during the year – – – –
Balance at 30 June 2017 150 300 193 200 170 100 513 600
Balance at 1 July 2015 150 300 – – 150 300
Retention shares awarded during the year – 48 700 – 48 700
Performance shares awarded during
the year
– 144 500 – 144 500
Shares cash settled during the year – – – –
Balance at 30 June 2016 150 300 193 200 – 343 500
48 Northam Platinum Limited
3 REMUNERATION REPORT OF THE SE&HR COMMITTEE CONTINUED
ANNEXURE
Analysis of share incentives held as at 30 June 2017:
6 Nov2012
Shareaward
15 Nov2013
Shareaward
4 Nov2014
Shareaward
11 Nov2015
Shareaward
8 Nov2016
Shareaward Total
Retention shares and
performance shares
AZ Khumalo
Balance at 1 July 2016 – 78 000 150 300 193 200 – 421 500
Retention shares
awarded during the year
– – – – 20 900 20 900
Performance shares
awarded during the year
– – – – 62 000 62 000
Shares adjusted for
performance conditions
met during the year
– (20 280) – – – (20 280)
Shares cash settled
during the year
– (57 720) – – – (57 720)
Balance at 30 June 2017 – – 150 300 193 200 82 900 426 400
Balance at 1 July 2015 98 000 122 000 150 300 – – 370 300
Retention shares
awarded during the year
– – – 48 700 – 48 700
Performance shares
awarded during the year
– – – 144 500 – 144 500
Shares adjusted for
performance conditions
met during the year
(28 420) – – – – (28 420)
Shares cash settled
during the year
(69 580) (44 000) – – – (113 580)
Balance at 30 June 2016 – 78 000 150 300 193 200 – 421 500
49Notice of Annual General Meeting and Summarised Annual Report 2017
3
Details of share options to executive directors
A summary of the options held by executive directors at 30 June 2017 is as follows:
Earliest and latest exercise date
Price per
share in R
Total number
of options
PA Dunne – –
AZ Khumalo
12 October 2012 and 11 October 2017 46.57 62 500
Claw back rights options 40.00 2 450
Number of options held at 30 June 2017 64 950
During the year under review, Mr Khumalo received a payout of R0.6 million on the exercising of
62 500 options during the course of the year.
Subsequent to year end, Mr Khumalo received a payout of R0.3 million from exercising the balance
of his options at 30 June 2017.
A summary of the options held by executive directors at 30 June 2016 is as follows:
Earliest and latest exercise date
Price per
share in R
Total number
of options
PA Dunne – –
AZ Khumalo
12 October 2012 and 11 October 2017 46.57 125 000
Claw back rights options 40.00 4 901
Number of options held at 30 June 2016 129 901
50 Northam Platinum Limited
3 REMUNERATION REPORT OF THE SE&HR COMMITTEE CONTINUED
ANNEXURE
Long-term incentives: details of lock in and incentive mechanism (LIM) shares granted to executive directors
Reward under the LIM is contingent on success. Failure to achieve the performance conditions within
the required period may result in complete loss of potential benefits. Given the long-term nature
of the Northam BEE transaction (10 years, subject to early closure in certain instances), the LIM is
designed to cater for continued incentivisation of management during the term with the majority of
benefits only being realised upon the successful conclusion of the BEE transaction which is expected
to be 18 May 2025.
In addition to being an incentive, the LIM has also been designed to act as a retention tool for
purposes of assisting the group in retaining the skills and expertise of its key management team
throughout the duration of the LIM. The LIM comprises two parts:
• the BEE transaction incentive plan (BIP); and
• the cash incentive bonus in respect of the BEE transaction (CIBB).
Summary of the BEE CPS shares held by executive directors at 30 June 2017:
PA Dunne AZ Khumalo
Balance at 1 July 2016 – –
Shares awarded during the year 1 500 000 700 000
Balance at 30 June 2017 1 500 000 700 000
No payouts or additional amounts were received in terms of the BIP or the CIBB granted to directors
or any other employees during the course of the 2017 financial year.
Ms TE Kgosi
Chairperson
22 September 2017
51Notice of Annual General Meeting and Summarised Annual Report 2017
4 STATED CAPITAL, SHAREHOLDING AND DIRECTORS’ INTEREST
ANNEXURE
STATED CAPITAL
There were no changes during the current financial year, to the authorised or issued stated capital
of the company. The authorised stated capital of the company as at 30 June 2017 amounted to
2 000 000 000 ordinary shares at no par value. The issued stated capital of the company remained
unchanged at 509 781 212 shares.
In terms of the Northam black economic empowerment transaction (BEE transaction) 112 195 122 shares,
equivalent to 22.0% of Northam’s issued stated capital, were allotted and issued to Zambezi Platinum
in May 2015. Zambezi Platinum holds 159 905 453 Northam shares in total. These shares are treated as
treasury shares for accounting purposes.
REPURCHASE OF ISSUED SHARES
At the AGM held on 9 November 2016, shareholders approved a special resolution granting a general
authority for the repurchase of ordinary shares by the company (or any one of its wholly-owned
subsidiaries), subject to the JSE Listings Requirements and the provisions of the Companies Act. No
shares were repurchased in the current or prior year. This general authority is valid until the AGM or for
15 months from the date of the aforementioned resolution whichever period is the shorter. Approval to
renew this general authority will be sought at the AGM to be held on Tuesday, 7 November 2017.
The text of the necessary special resolution, as well as the reasons therefor and the effects thereof,
appear in the notice to which this document is annexed.
52 Northam Platinum Limited
DIRECTORS’ INTEREST
According to the information available to the company after reasonable enquiry, the interests of the
directors and their families in the shares of the company at 30 June 2017 were as follows:
Direct beneficial
holding
Indirect beneficial
holdingTotal 2017
Total 2016
PA Dunne 26 050 – 26 050 –
AZ Khumalo** 12 500 – 12 500 7 500
KB Mosehla – 64 000 64 000 64 000
KB Mosehla* – 5 116 974 5 116 974 5 116 974
CK Chabedi* – 204 000 204 000 204 000
TE Kgosi* – 635 000 635 000 635 000
PL Zim* – 17 547 097 17 547 097 17 547 097
38 550 23 567 071 23 605 621 23 574 571
* Pursuant to the Northam BEE transaction, Ms Kgosi, Messrs Chabedi, Mosehla and Zim acquired beneficial interests in the ordinary stated capital of Zambezi Platinum. This resulted in them and their associates acquiring effective interests in Northam shares.
** Mr Khumalo also owned 500 Zambezi Platinum preference shares at 30 June 2017 (2016: 500 Zambezi Platinum preference shares).
Analysis of shareholders at 30 June 2017
Shareholding range
Number of shareholders
2017
Total of shareholding
2017
Percentage holding (%)
2017
1 – 5 000 4 293 3 298 030 0.65
5 001 – 10 100 228 1 692 532 0.33
10 001 – 50 000 331 7 755 452 1.52
50 001 – 100 000 104 7 689 199 1.51
100 001 – 1 000 000 248 78 404 892 15.38
1 000 001 and more 66 410 941 107 80.61
5 270 509 781 212 100.00
4 STATED CAPITAL, SHAREHOLDING AND DIRECTORS’ INTEREST CONTINUED
ANNEXURE
53Notice of Annual General Meeting and Summarised Annual Report 2017
4
Geographical analysis of shareholders
Total shareholding
2017
Percentage holding (%)
2017
Australasia 96 927 0.02
Europe and United Kingdom 5 640 752 1.11
North America 29 971 495 5.88
Far East 61 676 0.01
South Africa 467 262 948 91.66
Other 6 747 414 1.32
509 781 212 100.00
Major shareholders
Number of shares
2017
Percentage holding (%)
2017
Owner
Zambezi Platinum (RF) Limited 159 905 453 31.37
Fund manager
Coronation Asset Management 144 189 262 28.28
Public Investment Corporation 51 392 191 10.08
Foord Asset Management 22 912 956 4.49
Kagiso Asset Management 21 123 736 4.14
Clients of Allan Gray 16 868 031 3.31
Shareholder spread
Number of shareholders
2017
Percentage holding (%)
2017
Public 5 263 68.61
Zambezi Platinum (RF) Limited 1 31.37
Directors 6 0.02
5 270 100.0
54 Northam Platinum Limited
5 FINANCIAL ASSISTANCEANNEXURE
Under the Companies Act, inter-group loans; guarantees and other financial assistance require
approval of shareholders by a special resolution.
According to section 45 of the Companies Act, the board may not authorise a company to provide
any financial assistance to a related or interrelated company (which includes a loan by a holding
company to a subsidiary or to a director or prescribed officer of the company) unless the particular
provision of financial assistance is pursuant to a special resolution of the shareholders, adopted
within the previous two years, which approved such assistance either for a specific recipient, or
generally for a category of potential recipients, and the specific recipient falls within that category.
In addition, before authorising any such financial assistance, the board must be satisfied that:
immediately after providing the financial assistance, the company would satisfy the solvency and
liquidity test; and the terms upon which the financial assistance is proposed to be given are fair and
reasonable to the company.
FINANCIAL ASSISTANCE TO SUBSIDIARY COMPANIES
At the date of this report Northam had granted the following financial assistance to its subsidiaries:
Approvedfacility
2017
Changes inthe coming
year 2018
New loanfacility to be
granted 2018Balance
2017
R000 R000 R000 R000
Booysendal Platinum Proprietary Limited* 3 470 000 (3 470 000) – 1 720 088
Booysendal Platinum Proprietary Limited
loan advanced by Khumama Platinum
Proprietary Limited* 3 400 000 (3 400 000) – –
Norplats Properties Proprietary Limited 88 300 50 000 138 300 81 893
Windfall 38 Properties Proprietary Limited* 15 800 (15 800) – 9 689
Mvelaphanda Resources Proprietary Limited 42 000 24 680 66 680 –
Mining Technical Services Proprietary Limited 20 000 50 000 70 000 26 543
Khumama Platinum Proprietary Limited* 1 (1) – –
Total loan facilities 7 036 101 (6 761 121) 274 980 1 838 213
* These loans will no longer be required, as these loans have either been capitalised or are in the process of being capitalised as part of the restructuring of the group.
55Notice of Annual General Meeting and Summarised Annual Report 2017
Approvedfacility
2017
Changes inthe coming
year 2018
New loanfacility to be
granted 2018Balance
2017
R000 R000 R000 R000
Northam Platinum Investments (US) Inc.
and subsidiaries – 25 000 25 000 –
Total loan facilities – 25 000 25 000 –
With the acquisition of the assets and properties of A-1 Specialized Services Inc, announced on
28 July 2017, located in the state of Pennsylvania, United States of America, a number of foreign
subsidiaries are in the process of being incorporated and funding will be required for the operational
requirements during the start-up phase.
Approvedfacility
2016
Changes inthe coming
year 2017
New loanfacility to be
granted 2017Balance
2016
R000 R000 R000 R000
Booysendal Platinum Proprietary Limited 4 970 000 (1 500 000) 3 470 000 2 262 163
Booysendal Platinum Proprietary Limited
loan advanced by Khumama Platinum
Proprietary Limited 3 400 000 – 3 400 000 2 355 843
Norplats Properties Proprietary Limited –
fixed term loan 34 300 – 34 300 24 456
Norplats Properties Proprietary Limited –
general loan 44 000 10 000 54 000 37 724
Windfall 38 Properties Proprietary Limited 15 800 – 15 800 14 590
Mvelaphanda Resources Proprietary Limited 42 000 – 42 000 1 047
Mining Technical Services Proprietary Limited 20 000 – 20 000 15 002
Khumama Platinum Proprietary Limited 1 – 1 1
Total loan facilities 8 526 101 (1 490 000) 7 036 101 4 710 826
5
56 Northam Platinum Limited
5 FINANCIAL ASSISTANCE CONTINUED
ANNEXURE
Below are the various guarantees issued together with the additional guarantees which will be tabled
at the forthcoming AGM:
Currentguarantee
2017
Additionalamount to beguaranteed
in the comingyear 2018
Totalguarantee to
be granted2017
R000 R000 R000
Northam Platinum Limited guarantee to Zambezi
Platinum (RF) Limited 7 535 944 – 7 535 944
Booysendal Platinum Proprietary Limited guarantee
to Northam Platinum Limited 3 500 000 – 3 500 000
Khumama Platinum Proprietary Limited guarantee
to Northam Platinum Limited 3 500 000 (3 500 000) –
Northam Platinum Limited subordination agreement
to Mvelaphanda Resources Proprietary Limited 56 680 15 000 71 680
Total guarantee 14 592 624 (3 485 000) 11 107 624
Currentguarantee
2016
Additionalamount to beguaranteed
in the comingyear 2017
Totalguarantee to
be granted2016
R000 R000 R000
Northam Platinum Limited guarantee to Zambezi
Platinum (RF) Limited 7 535 944 – 7 535 944
Booysendal Platinum Proprietary Limited guarantee
to Northam Platinum Limited 3 000 000 500 000 3 500 000
Khumama Platinum Proprietary Limited guarantee
to Northam Platinum Limited 3 000 000 500 000 3 500 000
Northam Platinum Limited subordination agreement
to Mvelaphanda Resources Proprietary Limited 41 680 15 000 56 680
Total guarantee 13 577 624 1 015 000 14 592 624
Northam guaranteed the preference shareholders in Zambezi Platinum that in the event that Zambezi
Platinum does not have the means to settle the liability in 2025, after realising their investment in
Northam. At year end the liability was R8.6 billion and the fair value of the investment in Northam was
R6.4 billion, leaving an exposure under this guarantee at year end of R2.2 billion (2016: R771.0 million).
57Notice of Annual General Meeting and Summarised Annual Report 2017
5
FINANCIAL ASSISTANCE TO SUBSIDIARY COMPANIES CONTINUED
The Booysendal Platinum guarantee, as well as the Khumama Platinum guarantee to Northam, relate
to both the Revolving Credit facility as well as the domestic medium term debt note facility. With the
collapse of Khumama Platinum from the group structure, these guarantees will no longer be required.
ZAMBEZI PLATINUM (RF) LIMITED
Zambezi Platinum is not a subsidiary company but was established as a special purpose vehicle by
Northam, with the principal objective of ensuring BEE compliance.
Zambezi Platinum was incorporated on 2 June 2014. The company was created for the purpose of
assisting Northam to comply with the historically disadvantaged South African (HDSA) ownership
requirements set by the Mining Charter.
Zambezi Platinum holds 159 905 453 Northam shares which amounts to approximately 31.4% of
the total issued ordinary stated capital of Northam.
Zambezi Platinum is a ring-fenced entity created for the specific purpose of raising funds and to
hold Northam shares. As such, Zambezi Platinum will not be conducting any other business activities
until the expiry of the lock-in period (which is 10 years from May 2015). At the end of the 10-year
period, Zambezi Platinum is required to redeem the preference shares with cash or Northam shares.
All amounts payable to the holders of the preference shares are guaranteed by Northam in terms
of the transactional agreements. Further, Northam is required to settle the operational expenses of
Zambezi Platinum, subject to certain limitations.
Zambezi Platinum’s prospects are therefore limited in nature in that they are dependent on the
prospects of Northam and the returns attributable to the preference shares are constant and
fluctuate only in accordance with prevailing interest rates. Various characteristics of the preference
shares, such as the Northam guarantee and redemption payment structure, provide the holders with
additional certainty regarding the recoverability of their dividends and capital.
However, the preference shares retain equity risk as a result of their redemption being ultimately
supported by the value of Northam shares and/or Northam’s ability to continue as a going concern.
The preference shares therefore present their holders with a combination of the risks and rewards
associated with equity and debt instruments.
Northam’s prospects for growth and continued profitability are subject to various external and
internal factors which cannot be accurately predicted, forecasted or controlled by Zambezi Platinum
as an investor in Northam.
The redemption of the preference shares is planned to occur through cash accumulation from
dividends received from Northam, and after the lock-in, the possible sell-off of Northam shares into
the market to realise the capital value, to redeem the preference shares. In the event that this is
58 Northam Platinum Limited
5 FINANCIAL ASSISTANCE CONTINUED
ANNEXURE
not sufficient to settle the liability, it will be secured by Northam in terms of a financial guarantee
(Northam guarantee).
Should a liability arise under the Northam guarantee, Northam may settle this liability by
capitalising Zambezi Platinum with cash and/or Northam shares before the redemption amount
becomes due or making payment directly to the preference shareholders. The manner of
settlement is not contractually specified. Therefore, should the Northam share price not increase in
value from the 10-year lock-in period there could be a significant dilution in value for all Northam
shareholders, should additional shares be issued to the preference shareholders.
Included in the financial statements of Northam is a guarantee of R7.5 billion, based on the initial
recognition fair value that was issued based on the above.
During the year, Northam acquired 4 202 454 Zambezi Platinum preference shares in the open market.
BOOYSENDAL PLATINUM PROPRIETARY LIMITED
Northam currently has finance facilities available in the form of a revolving credit facility of R1.0 billion
with Nedbank Limited, and has issued R425.0 million on the debt capital market. Booysendal Platinum
has signed a letter of guarantee with regards to both these facilities.
There is currently also an interest free loan between Northam and Booysendal Platinum, which is
being settled as and when cash is available. Northam is in the process of streamlining the group
structure and will eliminate the intermediate holding company, Khumama Platinum Proprietary
Limited (Khumama Platinum) between Northam and Booysendal Platinum. This process was not
completed by year-end. Subsequent to year-end, Khumama Platinum will be liquidated and the loan
between Northam and Booysendal Platinum will be capitalised.
KHUMAMA PLATINUM PROPRIETARY LIMITED
With the acquisition of the Booysendal mineral rights, the statutory entity Booysendal Platinum
together with its holding company Khumama Platinum were also acquired. A loan was issued to
Booysendal Platinum by Khumama Platinum amounting to R2.4 billion. This loan was interest free
and had no fixed terms of repayment and has remained unchanged for several years. During the
current year, this loan was capitalised in full as part of the clean-up of the group structure.
Khumama Platinum was also a party to the guarantees that have been issued in terms of the
DMTN facility.
The noteholders’ consent to remove Khumama Platinum as a guarantor was obtained.
Khumama Platinum is to all intents and purposes a dormant private company. Khumama Platinum
will be placed in voluntary winding-up in accordance with section 80 of the Companies Act following
the unbundling by Khumama Platinum of its shares in Booysendal Platinum to Northam. Booysendal
59Notice of Annual General Meeting and Summarised Annual Report 2017
5
Platinum will continue as a wholly-owned subsidiary of Northam and a guarantor pursuant to the
amended and restated applicable pricing supplements relating to the issued notes. The amendment
will simplify Northam’s group structure and remove administration costs associated with Khumama
Platinum going forward.
NORPLATS PROPERTIES PROPRIETARY LIMITED – FIXED TERM LOAN
In terms of the agreement with the Nederlandse Financierings Maatschappij voor
Ontwikkelingslanden NV (NFMO), Northam was previously required to fund 30% of house sales
values and debt consolidation amounts, and as such the fixed-term intercompany loan could not
be repaid until such time as the loan from the NFMO was repaid in full. Accordingly, a fixed term
loan facility of R34.3 million, of which R24.4 million was utilised, repayable in September 2026,
was previously granted by Northam to Norplats Properties, at an interest rate of 2.0% below prime.
During the year, the loan outstanding to the NFMO was settled in full and the fixed term loan is
therefore no longer required. The fixed term loan was consolidated with the general loan facility.
NORPLATS PROPERTIES PROPRIETARY LIMITED – GENERAL LOAN (CONSOLIDATED LOAN IN THE CURRENT YEAR)
Norplats Properties is a company which holds and operates one of Zondereinde mine’s employee
home ownership projects (Mojuteng project) in the town of Northam, approximately 22 kilometres
from Zondereinde, assisting Northam to comply with its homeowner strategy.
The general loan accrues no interest and is repayable on demand.
WINDFALL 38 PROPERTIES PROPRIETARY LIMITED
Northam acquired Windfall 38 Properties during the 2010 financial year. In the same year, Windfall
38 Properties purchased certain freehold property for the purposes of the Booysendal mine, at a cost
of R12.9 million. The consideration was funded by a loan from Northam. During the 2012 financial
year further freehold land was purchased at an additional cost of R2.1 million.
The fixed-term loan agreement with Northam incurred an interest rate of 2.0% below prime.
A long-term lease agreement with Booysendal Platinum over the agricultural land was also entered
into. All amounts received in terms of the long-term lease agreement were used as repayments on
the outstanding loan balance. The lease commenced on 1 July 2012 and was planned to terminate
on 30 June 2037. The lease was, however, cancelled during the current year.
Windfall 38 Properties will be liquidated in terms of section 45 of the Income Tax Act, whereby a
company distributes all of its assets to another company that is part of the same group of companies
for tax purposes, in anticipation of its liquidation, winding up or deregistration. Both the properties
and outstanding loan balances will be transferred to Booysendal Platinum. The property transfers
were all concluded subsequent to year-end.
60 Northam Platinum Limited
5 FINANCIAL ASSISTANCE CONTINUED
ANNEXURE
MVELAPHANDA RESOURCES PROPRIETARY LIMITED
On 25 September 2014, Northam provided a guarantee to ensure that Mvelaphanda Resources
would meet its financial obligations as and when they fall due as the company’s liabilities exceeded
its assets. The guarantee will remain in full force and effect as long as the liabilities (including
contingent liabilities) exceed its assets, fairly valued, and will lapse forthwith upon the date that the
assets, so valued, exceed its liabilities.
MINING TECHNICAL SERVICES PROPRIETARY LIMITED
Mining Technical Services provides services to the group. These services are charged out to both
Zondereinde and Booysendal operations in December and June of every year. Northam previously
provided a loan to Mining Technical Services for the investment in SSG Holdings Proprietary Limited.
The loan is interest free and has no fixed terms of repayment. However, during the year, repayments
were made on the outstanding balance.
FINANCIAL ASSISTANCE TO EXECUTIVE DIRECTORS AND/OR PRESCRIBED OFFICERS OF THE COMPANY
At the board meeting held in February 2015, the board approved the Northam 2020 accommodation
strategy (accommodation strategy).
One of the funding mechanisms of the accommodation strategy is the provision of a 10-year
interest free loan repayable over a maximum period of 20 years. The loan value is linked to
seniority and is expressed as a percentage of a permissible bonded amount. Repayments are made
through payroll deductions.
Going forward, in order to enable the executive directors and/or prescribed officers to benefit from
the accommodation strategy, it will be necessary to comply with the financial assistance provisions
of the Companies Act. Approval will therefore be sought at the upcoming AGM, to authorise the
company to make loans to executive directors and/or prescribed officers and persons related or
interrelated to them in terms of the accommodation strategy, up to a maximum of R600 000 per
executive director and/or prescribed officer. No individuals other than the executive directors are
considered to be prescribed officers.
SOLVENCY AND LIQUIDITY TEST
Taking into account, the twelve-month cash flow forecasts (including the letter of support/guarantees
issued), the board has assessed that the various statutory entities will continue as going concerns for
the foreseeable future.
The company therefore believes that it has satisfied the solvency and liquidity test, as contemplated
in section 45 of the Companies Act and detailed in section 4 of the Companies Act, and determined
that post such assistance the company was solvent and liquid and the terms under which this
assistance was provided were fair and reasonable to the company.
61Notice of Annual General Meeting and Summarised Annual Report 2017
6 EVENTS AFTER REPORTING DATEANNEXURE
Subsequent to year-end, an agreement was entered into to purchase a suite of PGM recycling
equipment and the associated premises from A-1 Specialized Services Inc., a recycler of PGMs.
The business is located in the state of Pennsylvania, United States of America. The total value of the
transaction amounts to USD10.7 million in cash.
In addition to the above, the section 102 Ministerial Consent relating to the approval for the
purchase of the Tumela block mineral resources from Anglo American Platinum Limited for
R1.0 billion was obtained.
Apart from these transactions, there have been no other events subsequent to the year-end, which
require additional disclosure or adjustment to the financial statements.
62 Northam Platinum Limited
NOTES
63Notice of Annual General Meeting and Summarised Annual Report 2017
NOTES
64 Northam Platinum Limited
ADMINISTRATION AND CONTACT INFORMATION
NORTHAM PLATINUM LIMITED(Registration number
1977/003282/06)
JSE share code: NHM ISIN
code: ZAE000030912
Debt issuer code: NHMI
Bond code: NHM002
Bond ISIN: ZAG000129024
Bond code: NHM003
Bond ISIN: ZAG000129032
REGISTERED OFFICEBuilding 4, 1st Floor
Maxwell Office Park
Magwa Crescent West
Waterfall City
Jukskei View, 2090
South Africa
PO Box 412694
Craighall, 2024
South Africa
Telephone: +27 11 759 6000
Facsimile: +27 11 325 4795
WEBSITEwww.northam.co.za
COMPANY SECRETARYPB Beale
Building 4, 1st Floor
Maxwell Office Park
Magwa Crescent West
Waterfall City
Jukskei View, 2090
South Africa
e-mail:
BANKERSStandard Bank of
South Africa Limited
30 Baker Street
Rosebank, 2196
South Africa
PO Box 61029
Marshalltown, 2107
South Africa
AUDITORSErnst and Young Inc.
102 Rivonia Road
Sandton, 2146
South Africa
Private Bag X14
Sandton, 2146
South Africa
TRANSFER SECRETARIESComputershare Investor Services
Proprietary Limited
Rosebank Towers
15 Biermann Avenue
Rosebank, 2196
South Africa
PO Box 61051
Marshalltown, 2107
South Africa
Telephone: +27 11 370 5000
Fax: +27 11 688 5238
e-mail:
SPONSOR AND DEBT SPONSOROne Capital
17 Fricker Road
Illovo, 2196
South Africa
PO Box 784573
Sandton, 2146
South Africa
INVESTOR RELATIONSLC van Schalkwyk
Telephone: +27 11 759 6000
e-mail:
R&A Strategic Communications
PO Box 1457
Parklands, 2121
South Africa
Telephone: +27 11 880 3924
e-mail: [email protected]
www.northam.co.za