NORTHAM Platinum dropped into an interim loss despite increased metal sales during the period and the company warned the platinum group metals market remained "challenging".

Northam reported a loss of R273m for the six months to end-December compared with a profit of R354m a year ago. It recorded a headline loss per share of 66.3c versus earnings of 89.4c before.

Normalised earnings fell to 38.7c per share from 89.2c before. Northam described this metric as elimination of unusual items from the R273m loss figure, such as the R40m impairment of noncore assets and the noncash preference share dividends of R430m related to the Zambezi empowerment group.

Northam impaired its investment in the Pandora platinum joint venture by R34.7m and its investment in Trans Hex, the listed diamond miner, by R5.3m.

Northam had cash of R2.9bn at the end of December compared with R4.1bn at the end of June last year. It did not pay an interim dividend.

Northam boosted its metal sales by 19% to 248,075oz of platinum group metals, but lifted revenue by just 5.4% to R3.2bn because of weak metal prices.

The price Northam received for the basket of metals it produced fell to R415,196/kg compared with R469,740/kg a year ago, with the decline in the dollar price of platinum group metals partially offset by the 23.6% weakening of the rand against the dollar.

The new Booysendal mine reached steady-state production levels during the six-month period and will contribute 160,000oz of platinum group metals for the full financial year to end-June.

The Zondereinde mine boosted production by 15% to 155,063oz.

The increased level of production from both Northam’s mines pushed the cost of sales up to nearly 18% to R3.1bn.

"The outlook for the platinum group metals industry remains challenging, with persistent weak metal prices and poor economic fundamentals in developed economies," Northam said.

"The group’s financial performance will depend on achieving higher metal prices and a stable operating performance.

"Despite the adverse market conditions, Northam’s strong balance sheet and prudent financial controls will enable the company to continue with strategic project development, which will position the company to benefit from improving market conditions in the future," it said.