Good morning, everybody. Thank you for joining us at our first annual results presentation as Northern Platinum Holdings. Welcome to our new Chairman, David Brown and our new Lead Independent Director, Thembo Buzzi. Welcome to our outgoing Chairman, Brian Musiedla and welcome to Emily Hrossi, also one of the Northern Holdings Directors. Welcome to those on the phone lines, on the webcast and a very, very special welcome under the circumstances to all of you who've been able to join us in the room today.
The presentation is concise as always and the accompanying booklet contains detailed disclosure of the company's operational ESG and financial performance. We've also released the full integrated reporting suite today. This is available on the website. Thanks to Alette and her team, it's a very comprehensive set of documentation. This picture, by the way, is rhodium chloride or can often be referred to as rhodium salt or rhodium sponge.
You can see that deep rose hue, and the word rhodium comes from the Greek word meaning rose. And you can see exactly why it was named as such. It's a beautiful color. We produced about 64,000 ounces of rhodium this year gone. And this year, we plan to produce approximately 75,000 ounces of rhodium, representing about ZAR16 1,000,000,000 of revenue, a very, very important metal to the industry.
Here's the usual disclaimer regarding forward looking statements that we may make today, and it's important to read it when you have a little bit of time. I just want to remove this clip. I will review some of the key features of what has been a groundbreaking year for Northern. I will then touch on some of the ways in which we contribute to the broader economy. I'll give an overview of our operational performance, including progress on our major growth projects.
Aled will then deal with the financials. And finally, I'll provide guidance for the remainder of the year together with a medium term production forecast. Please note that the 5 year outlook has been included in our annual report in some level of detail. Key features of the year have been our ability to post strong operational results, delivering significant progress in respect of our project pipeline and returning substantial value to shareholders. This has been underpinned by a 34% increase in production from own operations despite recovering from lockdown early on in the year.
We generated an operating profit of ZAR16.1 billion at a margin close to 50%. Our growth projects are on track and delivering both scale and optionality benefits. We are well on the way to our medium term production target of 1,000,000 ounces. Our record operational and financial performance has allowed us to reshape the company for the future whilst returning tangible value to our shareholders through the wind up of the Zambezi preference share structure together with a simultaneous share buyback of 29%. Northern Holdings today has 362,000,000 shares in issue, significantly less than before the original Zambezi transaction.
Hopefully, this has come as a very pleasant surprise to our shareholders. This picture shows PGM concentrates in 1 of the flotation cells, this time at Boisendal North Mine, and you can see the primary and secondary mills in the background. The flotation process is the primary mechanism with which we recover the precious metals. Our composite transaction is a pivotal event in the company's development, the company's history, and we announced it on the 23rd March this year, has 2 components: component A being the wind up of the Zambezi structure, which unlocked considerable value for our shareholders with the very significant buyback 29%. Component B is the extended empowerment transaction, which focuses on our Patterson A to C employees together with our host communities.
In addition, the new corporate structure embodied in holdings has the flexibility required for a growing group profile. There's been overwhelming support for this transaction with over 99.9% voting in favor. The recent High Court ruling places Northam in a very strong position with respect to our empowerment credentials, and management now has both the time and flexibility in executing component B within the broad mandate that we've received from our shareholder base. The board and management remain committed to proactively creating and delivering shareholder value. And I think the 29% share buyback is testament to that.
We are immensely grateful for the support that we have received from our shareholders. The transaction has thus far unlocked ZAR10.5 billion of pretax value for the employees, our communities and our strategic empowerment groupings. We will also continue to contribute significantly to both our employees and the communities in which we operate with distributions of ZAR150 1,000,000 each year as a minimum. Nordham has made a tremendous contribution towards empowerment, and we will continue to do so, this time focusing on employees and communities predominantly. Transformation within the South African economy remains a national imperative, and the broad based stakeholders hold the key to a truly sustainable socioeconomic environment, in particular in the areas in which we operate.
We are a mining company, and mining is important. We all know that. The impacts of our business on the broader economy benefits many thousands of people, many tens of thousands of people actually. And to demonstrate this, I'd like to take you through some of the contributions that Northern has made this year. By the way, this picture is not a pizza oven.
We're not going into fast food. Please don't worry about that. It is, in fact, the inside of number 1 furnace. We commenced the rebuild of number 1 in May. The original furnace was the old furnace end of life, and the furnace is being brought back into production as we speak.
And this has resulted in inventory build towards the year end, which will be worked down in around about 18 months' time. Creating jobs is very important for the future stability of our country and Northern has played its part. Since the inception of our growth strategy, we have created more than 8,000 direct, meaningful and sustainable jobs in some of the least economically developed areas of our country. This year alone, we've added over 2,300 jobs and this against the backdrop of the shrinking mining sector and a struggling economy. We believe we are paying a fair and competitive wage.
And to this end, our salary bill for the year totaled ZAR5 1,000,000,000. In addition, all of our employees under dependents benefit from comprehensive health care care, retirement benefits and meaningful assistance with home ownership. We are very pleased to have recently signed 5 year wage settlements at both Zonda Ende and Ilan Platinum. This follows the 5 year agreement signed at Boisendal last year and provides the company with significant stability during what we expect to be a strong pricing environment. As a result of our increased profitability, our tax contribution has grown significantly.
And this year, we made the largest annual tax payment in the history of the company. The Toro Employee Empowerment Trust has benefited from also from the increase in the bottom line, and the extended empowerment transaction will result in employees and communities benefiting further into the future. Now if I could move on to the operational and projects review. And this picture is a picture of the drive station for the north rob car, which is the 2nd rob car at Boisendal. And as you can see, it's almost complete.
As I mentioned, during the half year results back in March, we have significantly derisked our project pipeline. A key element of our countercyclical approach was to grow production down the cost curve. We've adopted this approach to benefit from production growth during a strong market but also to build a resilient business that is sustainable even during difficult market conditions. We believe in the metals that we produce, and we operate the company and take a strategic view on that basis. Looking to safety.
The safety and health of our employees is at the forefront of everything we do. We've demonstrated continued improvement over the years in our safety performance at all the operations. Boiesendahl passed the milestone of 6,000,000 fatality free shifts in February, and we have continued to operate this mine in the 11 years since inception fatality free. Also in February, Zondaanda recorded 2,000,000 fatality free shifts. However, in March, we suffered 2 fatalities at Zonanda.
In the first incident, Mr. Matuong was involved in a locomotive accident in the Upper West Side of the mine. And in the second, Mr. Gwanbi, a rock drill operator, was involved in a fall of ground in the lower east side of the mine. All accidents have the potential for serious consequences, and the board, together with management, have reviewed the required corrective action, and we take our duty of care extremely seriously.
In addition, we've also lost 24 of our colleagues to COVID-nineteen since the beginning of the outbreak. The 3rd wave in particular was very hard on the northern operational staff. It has been difficult to manage under these circumstances, but the team has pulled through. Our employee turnover has increased notably amongst the older members of the workforce, and this will have to be addressed. The vaccination program is progressing well.
We have vaccination stations at all three of the operations, and the group is now 58% vaccinated. Notably, Zonaenda, which has an older, more vulnerable workforce, has reached 72%. At the Minerals Council, we've set an industry target of 80% vaccination by early November, and I'm sure we'll get there. We'll get there through information, education, encouragement and persuasion in the old fashioned mining way. If I can look at some of the operational highlights at group level, despite the ongoing challenges of at group level, despite the ongoing challenges of COVID-nineteen, we have seen appreciable increases in our production volumes, and we're starting to see the benefits of the growth strategy coming through.
The contribution of our world class asset base, the efforts of our people and the support of our shareholders have afforded us the operational flexibility to make the right capital allocation decisions at the right time. Boisendell sales ramp up is progressing well as Zohnehenda provides solid production base and Eland is beginning to contribute. I'd like you to note that the production of Trougham exceeded 1,000,000 tons for the year. We previously guided that we will reach these levels by 2023, and it's also worth mentioning that base metal production is a precursor to PGM production. The decrease in cash cost is a key benefit of our growth strategy, and we're pleased to report an overall 2% reduction in unit costs.
If we can move into some detail at each of the mines, and firstly, Zonda Enda of all the operations, Zonda Enda was certainly the most affected and the hardest hit by COVID-nineteen. To the extent that we only returned all stoping crews to the working phase during March of this year. In the light of this, production performance was solid. The commitment of mine management and all of our employees through this period has been commendable. Combined mill tonnage has increased and this came preferentially from the Merensky Reef with significant contributions from the Western extension.
The last time we saw Merensky production at these levels at Zondrena was 2,006, and this attests to the value of the Western bulk. Burensky head grade was lower on the back of significant development contributions, and this will normalize once our buildup on the West is complete. Volume growth enabled us to reduce unit costs reduce unit costs by 5.7%, and this number includes the costs of our accelerated development into the Western extension, which we expense. The increased basket further enabled growth in operating profit to nearly ZAR9 1,000,000,000, once again demonstrating the value of Zonde Ende to the Northern Group. Capital expenditure for the year was $1,400,000,000 of which $615,000,000 was spent on project work, including the deepening section, the number 3 shaft and another $400,000,000 was spent on the furnace rebuild, number 1 furnace.
Forecast capital expenditure for the current year is on the end that is $1,800,000,000 and this includes the recently approved number 3 shaft and additional capacity in the base metal refinery. If we look at the Western extension, in turn, we are making headway, both underground where our development and stoping are ahead of schedule and from surface where the development of number 3 shaft is on track. I showed you this picture of 3 shaft at the interim results earlier in the year, and we can now see what the site looks like quite different. Obviously, it's a winter photograph. This picture was taken 2 weeks ago.
We've been busy with the earthworks and civil construction for the various surface infrastructure that will support the shaft system. We've managed to achieve the bulk of the earthworks during the winter dry season, which is very pleasing and advantageous. The overlay shows the key elements of the planning. You can clearly see number 3 shaft in the center and number 3A vent shaft to the right. You can also see other elements of infrastructure.
Nelson has informed me this morning that Reaming will be completed towards the end of the financial year and we are currently at the 837 meter level. Following this, the shaft will be equipped and is scheduled to be operational in 2024. We are now establishing the 2nd raiseable rig, which will commence pilot hole drilling of 3A Ventshaft in a few weeks' time. The Ventshaft is scheduled for commissioning in line with 3 shaft. Also in the picture is 4 shaft.
This will be a rock hoist, which will allow future production growth, further enhancing Zonda Enner's prospects. We have earmarked 2028 for the full commissioning of the whole project. Underground development within the extension continues to progress well, as you can see from the plan, on all mining levels. And this is a reflection of the quality of the ground conditions that we experienced there. The plant on the right is color coded for each year's development to give you an idea of the an appreciation of progress.
In the last 4 years, we've developed over 20 kilometers of access tunnels, quite remarkable actually. Strike development has reached the 4th mining line and over 390,000 tons of high quality Merensky reef has been extracted during the past year. We are only stoping on the 11 line, and we've already recouped the purchase price. Mining productivity is benefiting from a combination of very stable reef, good rock conditions and focused logistics, again, boding well for the future of Zonda Enda. The board, in turn, has approved Phase 1 capital expenditure of ZAR4.7 billion for this project, which will carry us through the next 5 years and deliver number 3 and 3A shaft and all associated surface infrastructure.
If I can move on to Boisendal. And once again, Boisendal has recorded an excellent production performance. The North mine is well established and moving from strength to strength. The heavy lifting at Boisendal South is done. The investment has been made.
Mining ramp up continues apace, and we're beginning to generate meaningful tonnages. The total mill feed for Boisendal was 49% higher at 4,900,000 tons 4,500,000 tons on the back of south mine growth. Grade from the Merensky North mine was impacted by increased decline development and this is in preparation for the Phase 2 ramp up to 55,000 tons per month once the North Rope Con is up and running towards the end of this calendar year. UG2 grade increased at North mine, thanks to improved mining control as well as at South Mine where stoping ramp up is beginning to accelerate. Both North and South concentrators are operating well.
We've tested the South concentrator capacity, and we're very confident of being able to treat over 300,000 tons through the circuit. Despite South Mine not yet operating at full capacity, the production growth resulted in unit costs improving by 2.9% to ZAR2780 per platinum ounce. This is a sector leading performance. On mine capital expenditure was ZAR1.4 billion for the year, of which €740,000,000 was spent on sustaining capital, and this is in line with our ongoing expectations for fleet replacement and conveyor extensions. If we look at Boisinel South in a little bit more detail, and this picture is a view of the North Robcon as it discharges now into the South Robcon feed silo.
So it's the interface between the 2 Robcons. It's a very compact footprint with the entire surface infrastructure for the South mine covering less than 9 hectares. Saas mine ramp up is delivering safe, profitable production. It's on time and it's on budget. As you can see on the plan, this is the Boisendal Saas mining plan on your right.
Stoping is ramping up on both declines. 12 stoping sections were operational by the end of June, and this will grow to 14 at steady state by 2023. Production of ore averaged 140,000 tons per month during the year, and this will grow to around 220,000 tons at steady state. Head grade continues to exceed expectations. It's contrary perhaps to historical belief that in some way, the grade declines in the sales of the property.
This is not so. We are very pleased with the gradings that we're seeing out of the ore body. It bodes again very, very well for the future. These modules contributed over 115,000 ounces for the year, and we only broke ground, to remind everybody, in 2017. This shows the benefit of mechanized on reef decline accessed mining.
Here is a picture of the 2nd Merensky mine that is in early development. Shown in the picture is the central Merensky box cut on the top of the photograph with the 3 access portals and the ore feed silo to the North Robcon in the foreground. On the right is a mine plan indicating the actual and planned development and stoping. And as you can see, it's very early days as yet. In the coming 12 months, we'll focus on development with appreciable stoping buildup from 2023.
Rock conditions in the declines, once again, are good, and we expect development to accelerate from here. Commissioning of the North Rockcon towards the end of this year will enable Muransky Mining to deliver its full potential. This is a plan showing the layout of the next UD-two module, which we refer to as BS-four. And as you can see, it's also early days. We are on track to commence stoping later this year with a rapid buildup to a steady state of 35,000 tonnes per month by 2023.
The potential for further growth at Boisendal is both considerable and tangible. If we can move on to Iland. Whilst we've been focusing our attention on the mine buildup, we have been processing surface sources of PGM and chromat bearing material. And this year, we produced over 32,040 ounces 44,000 tons of chrome in concentrates. The cost of this third party material is linked to commodity prices of the day, and this led to the unit cash cost increasing to just below ZAR43,000 per flat amounts.
Despite this, we posted a respectable operating profit for the 2nd year of ZAR238,000,000 and the purchase price has also now been recouped. It remains our intention for this mine to pay its own way with limited assistance from the group's balance sheet over the period. We did delay stoping buildup as we communicated earlier in the year as part of our capital trimming during the original lockdown periods. However, we did continue to open up reserves through development of the declines and strike drives as you can see on the plan. The full capital program was reinstated in September, and our estimated total CapEx for this mine build includes a steepened ramp up and an expanded steady state profile.
Ilan effectively will be bigger and quicker. To date, we've advanced the decline by 5 24 meters, and this has opened up 7 strike drives, as you can see on the plan. We require 11 strike drives for steady state production of 180,000 ounces per year. The 2 Western strike drives at the bottom of the picture, 1 West and 2 West, as you can see on the plan, will connect to the neighboring Marula Belt, which we expect to take ownership of before December. I'll keep you updated on this development.
I'll now hand you over to Alette to take you through the financials. Thank you, Alette.
Thank you, Paul. Good morning, everybody. This picture shows Firders 1 adds on the reindeer. You saw Paul's picture earlier of the rebuild. We are now in the commissioning phase.
Diesel burners placed around the furnace will provide the initial energy required to heat up the refractories and bake the electrodes. The burners are running, and we expect power to be switched on next week, which will allow us to start working through our excess concentrate stock. Looking at the key financial features for the year under review. Northam has had a solid year. Our growth strategy is adding scale and resilience to our business.
This enabled increased production in what was a appreciating price environment. This led to sales revenue of ZAR32.6 billion, which translated to an operating profit of DKK16.1 billion and EBITDA of DKK16.7 billion. As a result, free cash flow amounted to DKK8.9 billion after cash capital expenditure of ZAR3.2 billion. This allowed us to continue to return value through our composite transaction. We have done all of this whilst maintaining our net debt to EBITDA ratio well within our own guideline of 1:one.
I will unpack these highlights, but firstly, let's look at earnings. The graphs on this slide shows annual earnings per share for financial years from 2018 to present. I've done this to illustrate how earnings growth has continued to accelerate. Earnings and headline earnings per share were both almost ZAR27. Normalized headline earnings per share was ZAR21.32 It is important to note that following the composite transaction, we now have significantly reduced the number of shares in issue to 3 62,000,000 shares.
This will favorably impact future earning calculations. Moving on to revenue. Our revenue for the year was ZAR32.6 billion. This was a ZAR14.8 billion or an 83.2% increase on the previous year. The main contributors to this growth were a 72.8% increase in the average U.
S. Basket price, together with a 12.2% increase in sales volumes, offset by a 4.6% strengthening of the rand. Whilst our production of metal increased by 34.1%, the combination of logistical handling issues associated with COVID-nineteen during the first half, together with the decision to reduce power settings on furnace 1 in the months prior to its scheduled prebuilt, resulted in an inventory buildup, which has not yet normalized. The buildup is what I referred to in my first slide. Looking now at cost of sales.
Moving straight to the bottom line. Our operating profit increased by more than 200% to ZAR16.1 billion. This equates to an operating profit margin of almost 50%. Cost of sales increased by 32%. Line items, which I would like to flag include: number 1, royalty charges increased by 5.45 percent to ZAR1.5 billion.
Royalty charges are based on a number of inputs, including the ratio between revenue generated from own operations and custom material, EBITDA and capital expenditure incurred. Sonner Einde now pays royalties at the maximum rate of 5%, whilst Boysen Doll is moving to the maximum rate of 7% for unrefined metal. Number 2, share based payment expenses relate to the expenses incurred in respect of the group's employee share plan, which increased in line with the increase in our share price. Number 3, the Toro employee empowerment trust expense relates to contributions made to the trust, which is a profit share scheme for Zondreinde employees based on 4% of after tax profits. Contributions to the value of Zondreinde million accrued to the trust.
And finally, the change in metal inventory increased in line with the increase in ounces at year end. Let's look at the income statement. Our bottom line for the current year was an IFRS profit of ZAR9.4 billion. Key items impacting this included: preference share dividends of ZAR378 1,000,000 as well as the loss on derecognition of the preference share liability, both relating to our Zambezi scheme. The ZAR1.1 billion loss on derecognition of preference share liability relates to the difference between the face value of the Zambezi preference shares and the price we paid together with all transaction costs.
After taking into account the Zambezi charges, the group generated a profit before tax of ZAR13.7 billion. With the increased profitability of the group, tax paid increased to ZAR3.7 billion. The difference between this and the number you see on the screen relates to deferred tax. A contributor to this was the full utilization of the unredeemed capital balance for both Sonderreinde as well as Boyce and Doll. Looking at working capital management.
I have alluded to an increase in the inventory associated with COVID-nineteen related logistical hurdles as well as our furnace 1 rebuild. Metal volumes increased by 42% to ZAR312,000 and 11,000 and 4 ounces. This rolled up into a metal inventory balance at the end of ZAR6.1 billion. The bulk of purchased material, together with some of the inventory at Yaland, will only be processed in coming years and is therefore classified as noncurrent. Over the coming 2 years, our inventory levels are forecasted to stabilize at around 260,040 ounces, allowing for the growth profile of the group.
Moving on to the group's cash flow. We generated ZAR12.1 billion from our operations during the year. Just over ZAR3.2 billion was invested in capital expenditure, and this resulted in free cash flow of ZAR8.9 billion. We have continually stated that we will return all free cash to shareholders, And we have once again delivered. This slide indicates the cash distributions related to our composite transaction together with the remaining tax liability due in F 'twenty five.
During the 'twenty one financial year, we distributed ZAR8.5 billion with a further ZAR8.7 billion during this current year. In total, we have paid out ZAR21.1 billion thus far. As I mentioned upfront, this was done whilst maintaining debt levels well within our target range. This slide shows our net debt position at the end of June 'twenty one. Our RCF, together with our GBF, affords us credit facilities of ZAR5 1,000,000,000 and were both undrawn at year end, our only debt related to the DM10 program.
Accounting for cash and cash equivalents, net debt to EBITDA at year end was 0.22. Let's look at the various funding facilities available. The group has increased its RCF to ZAR4 1,000,000,000 and its GBF to ZAR1 1,000,000,000. We have also increased our DM10 program to ZAR15 1,000,000,000. Notes of value of ZAR7.8 billion had been placed by the end of June.
In addition, during the 'twenty one financial year, Northam's credit rating was upgraded with our outlook classified as stable. The combination of our ability to generate cash, together with our credit facilities, affords us the opportunity to make the right capital allocation decisions. We believe this to be the most critical consideration for any company. The long term success of the business depends on achieving an optimal balance between growth, sustaining operations and returning value to the providers of capital. Management carefully considers the appropriate allocation of capital in these areas to achieve the group's strategic objectives.
Mining is a capital intensive business with relatively long time horizons whilst commodity prices follow shorter period cyclical patterns. Therefore, capital allocation planning requires consideration of both short- and long term technical planning as well as a global economic outlook together with commodity price variance. This manifests in conservative long term price estimates and the incorporation of sensitivity analysis to increase confidence in financial viability even during depressed market conditions as well as to moderate increasing uncertainty and estimates over time. Northam has pursued a unique strategy, investing during the market down cycle and reaping the benefits of its project execution through growth in metal production. In this regard, we have invested ZAR16.3 billion in capital expenditure since 2015, doubling our production base and significantly derisking our operations.
We have sufficient working capital available through our retained earnings and various debt facilities to fund our ongoing operations. And this has allowed us to return meaningful value to our shareholders to the tune of over ZAR22 1,000,000,000. I will now hand you back to Paul to take you through the operational guidance.
This is a picture of copper plate being extracted from the electro winning circuit at the base metal refinery. The base metal refinery for Northern is also situated at Zohranda mine. I'd like to take you through operational guidance for this current year. Firstly, BGM production from own operations will be in the range of 750,000 ounces to 780,000 ounces, and this is unchanged from the pre COVID targets that we set for ourselves. Our cost base is predominantly fixed.
And as a result, we expect the group unit cost to be towards the lower end of ZAR 29,000 to ZAR 30,000 per platinum ounce. We should be able to hold this cost range for the next 2 years given the growth profile of the group. Sales will benefit from inventory drawdown towards the higher end of 790,000 ounces to 810,000 ounces following the successful rebuild of our number 1 furnace, which, as Alette pointed out, is busy being commissioned as we speak. Our capital forecast is ZAR4 1,000,000,000 which allows for the full growth optionality of the asset base. Despite the recent softening of metal prices associated with the semiconductor shortage, our basket price for the Q1 is around ZAR70,000 per platinum ounce.
That's approximately where we are today, by the way. Based on these prices, the company's growing production profile and our largely fixed cost base will give us a strong ability to generate free cash into the future. I think that graph is a very interesting way of showing price moves because it's very easy to get caught up in the day to day spot prices, but that's sort of a smooth appreciation of how prices have developed over the course of the last few years. The capital investments we've made will deliver a medium term annual mine production target of 1,000,000 ounces over the forecast period. Recycle and 3rd party production is, as they say, on top, not inside.
And the combination of a strong margin with sector leading growth will deliver superior returns for shareholders. If I can move on to the peculiar market condition that we're currently experiencing. As we all know, the automotive sector is very important to the PGM market. We only have to look at the percentage of metals employed in auto catalysis to appreciate this. Around 85 percent of palladium and 90% of rhodium is used in this single application.
The graph on the slide shows the quarterly global light duty vehicle production for calendar years 2019 to present together with quarterly projections out to 2024. What we are witnessing here is a very unusual set of circumstances brought about by COVID-nineteen and the resultant logistical constraints across the global supply chain. It is very important to realize that the underlying demand for cars by the general public, together with an aging commercial fleet, is creating substantial and as yet unsatisfied demand into the future. What we are seeing is that the semiconductor chip bottleneck is slowly moving downstream, in fact, to the testing facilities now as opposed to the production facilities situated mainly in Southeast Asia and that region is currently experiencing lockdowns associated also with COVID-nineteen. We would expect metal price recovery to follow a similar trend to the recovery in automotive production and this should be led by palladium and rhodium.
Our longer term view for our major metals remains largely unchanged. Palladium will remain the metal of choice for gasoline engines, whilst rhodium will continue as the only viable solution for the control of nitrous oxides. Demand for these metals will remain strong throughout the decade. Platinum is viewed as an investment case for the moment, offering good relative value. We may expect platinum and palladium to reach parity over time as platinum benefits from the hydrogen economy towards the end of this decade and into the '30s.
The emerging energy crisis in China and to a lesser extent Europe should convey to all investors that electrification of mobility will face very substantial headwinds. Ruthenium and Iridium continue to grow in prominence as do our base metal byproducts and there's a growing shift towards renewable energy sources, and this will continue to support prices for all the minor metals. The listing in conclusion, the listing of Northern Platinum Holdings represents a very significant pivotal point in the company's development. It's the culmination of 7 years of work and is positioning the company extremely well within the PGM sector. Management, together with the Board, will continue to drive growth, which will continue to return value to all stakeholders.
Ladies and gentlemen, that concludes our presentation, and we can take some presentations firstly, perhaps from the floor, and then we'll take from the phone lines and the webcast. And if I could ask, as you receive the microphone, if you could just introduce yourself.
Sorry, I'll stand so you can see me, Paul. It's Yurim Goony from HSBC. My first question is if you look at the longer term growth profile that you're guiding and you compare that to what you presented at your interim results, there seems to be a slight I know it's marginal, but there's a slight increase for every year in production, about 10000 to 15000 ounces. It does seem like Boyseendal South is tracking ahead of what you previously expected in terms of hitting steady state. So what would be the reason for the decline in the production profile?
And then just on the accounting treatment around the new BEE deal, I understand that it eliminates on consolidation. But obviously, as the BEE shareholders gradually repay their debt, there should be a minority's interest that starts to kick in. Does that build up gradually as they repay it? Or will that only kick in once they've fully repaid the loan?
Thanks, Leroy. I'm going to allow Alette to think about the second question whilst I answer the first question. The I think the profile you see on the screen is effectively our business plan, Leroy. We are reasonably conservative, and we do expect to at least match business plan. And I think, as you say, those differences from the last presentation is very, very marginal.
You're talking 10000, 15000 ounces on 1,000,000 ounces. It is probably just a reflection of the latest planning and our careful putting forward of the business plan. We don't show different numbers to the business plan. That is the business plan, and I think you can accept it as very good guidance from here. And I hope I've used enough time to give a little chance to think about the segment.
No, that's 100%. Hi Leroy. Thanks for your question. One of the things that one needs to remember is now with the new High Court judgment, it does provide Northern with flexibility around RBE structure. If you'll recall from the presentation that Paul did on the 23rd March, most of the BEE vehicles will sit in Northern Platinum Limited, which is now a subsidiary of Holdings, which will eliminate on consolidation.
There's only a very small portion that was scheduled to be owned by public entities that would have been listed on the BEE exchange. And now with the High Court ruling, it does give us flexibility around it. So the BE accounting entries will be minimal except for on day 1 of the transaction, you will see a significant BE charge that will go through the income statement, which will be a noncash once off item that will go through. I think if I remember correctly, in the circular, we quoted a number around ZAR10 1,000,000,000. But that is noncash, and it's a once off.
I do want to just add, Leroy, that we're talking on the technicalities of the empowerment just now. I want to make it very, very clear from Northern's point of view and Northern's Board point of view and its shareholders, transformation of the economy remains a national imperative.
Okay. Thanks for that. Maybe just last question. Your net debt to EBITDA target is 1x. At 0.2x, you're well below.
Your shares have like already reduced. I guess it begs the question, why not start the dividends now?
Yes. Thanks, Leroy. I think given the substantial share buyback that we've just executed, to repeat again, a 29% share buyback, reducing shares in issue from nearly 510,000,000 shares down to today's 3 62,000,000 shares. That has been our chosen method of returning value to shareholders. Given that for this year, the board has passed on a dividend.
And during the course of this financial year, the board will opine on a suitable dividend policy going forward. Paul,
thank you very much. Two quick ones. The first one is on the extended BE deal. I think you've already alluded to that you've got more time, but do you have some sort of idea on the timing of when you want to conclude this? And then the other question around the dividend policy.
Obviously, Paul, as you said, you are looking at that, but could we potentially get an interim divvy when you report next? And then I'll let another question for you. What is your net debt targets? Obviously, net debt to EBITDA keeps on moving up and down depending on EBITDA. So that EUR 7,500,000,000 debt that you have, how do we see that evolving?
Do you actually take that to 0? Or what level will you maintain? That's it for me. Thanks.
Arnold, let me take the middle question once again. The board will opine in due course during the course of this year, and I think we must leave it at that for now with respect to dividend policy. And hopefully, Gillette will pick up on the other.
And then with regards to our extended B transaction, what we've said to shareholders is give us some time, any time between sort of 12 to 24 months. We are negotiating with our employees and communities. And to use Paul's words, we don't want to have a precooked solution. This must be an engagement between us and our employees and communities to get the best outcome for all. So it will take some time.
And then the question around net debt to EBITDA, we have previously stated that we're very comfortable to grow the business using debt facilities on a target ratio of 1:one. And sort of it will depend on what the future holds for commodity prices as well as what we want to do under the company. So yes, but comfortable with a net debt to EBITDA ratio of 1:one to grow the business.
Brendan Ryan, Paydirt Media. Paul, you keep stressing how you're returning value to shareholders, but your share price is down 40% since March, and that's despite this 30% share buyback. That's value destruction to me. How do you account for you say you're returning share shareholders' value, but it's not apparent in the share price?
Well, I must beg to disagree with you there, Brendan. I mean the share price across the sector is down because of the metal price movement. This is a direct reflection of what's going on in the metals market. If you want to sort of prove the point, go back from the inception of the Zambezi transaction, I think we issued shares of ZAR41 on at the time in May 15, which was a premium, by the way, at the time. Very unusual to embark upon an impairment transaction at a premium.
And today's share price is about €170,000,000 or so. I haven't looked this morning, but you've had a 4 fold return in share price. I just challenge you to take any other of the main councils and do the same calculation. I think you'll be very surprised.
And then a follow-up. 6 months ago, you gave one of the most bullish presentations I think I've ever heard a CEO give on prospects for the company and for the industry. You said the platinum sector was looking at its best decade ever. So my first question is, do you stick with that prediction?
Yes, I do.
Okay. And then you made some specific predictions on metal prices. I think on rhodium, you said, I think it was I don't see the price falling particularly far from where it is. It's down 50%. On palladium, you said it's in deficit.
Price has to go up. It's down 20%. What went wrong? Is it simply a case of what you pointed out with the semiconductors? Or were you being maybe a little bit too optimistic?
Well, I have to be optimistic, Brendan. We're mining people, and generally, we are optimistic. But to be fair to ourselves and me in particular, the price moves you've seen here are directly related to this very peculiar market condition we are seeing in automotive specifically. If automotive production falls, demand for palladium and rhodium is immediately affected. It's very much a just in time purchasing mechanism across the world.
If we don't build cars, we don't use PDMs and unfortunately, that's what we see.
Chris Nicholson at R&B Morgan Stanley. I think well, the big new news this morning is the approval of 3 shaft. It's on the end. Just two questions on that. So the first one is, could you take me through maybe some of the benefits from building 3 shaft?
I appreciate you're already moving quite far from infrastructure. Are there efficiency benefits, time benefits? Does it improve flexibility or reliability of the ops? And then the second one, that CapEx number of SEK 4,700,000,000, I guess that's an all in CapEx number, looks quite low versus other shafts. Is that because this is a you raise boring, it's reaming rather than a blind sink?
Or yes, maybe just take me through why that's actually lower, I guess, in other shafts, deep level shafts?
Yes. So first of all, Chris, the reason we bought the block of ground to the west a couple of years ago is that it has a strike length of, if I remember rightly and Damon will correct me, of about 4.5 kilometers additional strike that Damon is nodding his head beyond what was the original western limit of the Zondre and the mine. Now that means from the current shaft infrastructure, the far distance is close to 8 kilometers. That's a very long distance and that will inhibit man material and stuff or ore quite considerably in the future. So if you extend on strike, which we are doing, and by the way, strike is king in mining, then you need additional access points for those very reasons you mentioned, efficiency issues.
You don't want to be double tramming. You would rather take the ore at a more suitable position. And the other reason, of course, is a very wonderful quality block of ground. It's very large. There are over 20,000,000 ounces in this block.
It's not a small piece of ground, and it will support its own infrastructure into the future. It's not a short dated project. As you heard me say, it will go all the way to 2028 before foreshaft is commissioned. So it's quite a longer project. And the reason the CapEx is low is exactly as you pointed out.
It's not a blind sink. It's quick. We raise boarding a series of shafts instead of 1 big shaft, which would be the traditional approach, which does take time. And because of time, it is very expensive, whereas the raise bore, as you heard us say, 3 shafts will be effectively complete as a whole by the end of this financial year. It's very, very quick.
That shaft is 13 68 meters in-depth to create a hole in the ground at that depth at this speed is a game changer for extension on strike if you have lateral access. I mean that is a condition for applying this method. You must have lateral access at the bottom of the hole. If you're in a greenfields, a complete greenfields block, you haven't got lateral access and therefore you will blind sink. So the secret here, if I can say it like that, is the ability today to drill a straight hole because it also must be straight.
It cannot be a banana because it's a hoisting shaft, so it has to be perfectly straight. And the ability to directionally control in the first phase, the pilot hole to hit that target that's 13 68 meters below surface is the key to the whole thing. And then the distance, this is when we finished it, will be a world record raiseable by some margin. So the two things of directional control, which comes from the oil industry, together with the ability to re map at that distance, which is in the hands of master drilling, our partners on this job, is in fact the sort of the great benefit, if I can say it that way. So instead of putting ventilation, man winding material and rock winding in 1 shaft, we just make 3 holes.
The holes, of course, are a smaller diameter. So that approach is very beneficial to Zolanda and is very beneficial to the capital amount that we're allocating. Thank
you.
I think we must go to the lines and just check if there are any further questions that haven't been covered.
We have a question from Adrian Hammond of SBG Securities.
A couple of questions if you may. Just firstly, a bit more about the strategy for this company. You've done well to deliver on the strategy that you gave to the market some years ago. And you I would say you have to last below that in terms of returning what you call returning value to shareholders. So how do you see the company for the next 5 years in terms of what you would want to communicate to investors?
And have you approached the Board with a new strategy in mind? And also what do you think are the key risks in the ramp up to achieving that 1,000,000 ounce target?
Thanks, Adrian. I think the strategy is not yet done. I think that's the first point to make. As you heard me say, we've guided around 800 production ounces or sales ounces, excuse me, for the coming year and production ounces just slightly below that. So we're not at €1,000,000 yet.
And to get to build a mine from scratch and produce these ounces is a very full plate. So management has its hands full with the current strategy, and it still has some legs in it for the coming years. And no, we haven't took an alternative strategy to the board.
So just more on your targets, 1,000,000 ounces and potential upside beyond that, as I understand with these new furnaces and new furniture you build, you've got additional capacity and potential to process well above 1,000,000 ounces. Does that open up opportunities for you as a business that you'd like to explore? And so I understand your thinking how you would approach to fill that gap if you were to. Would you want to fill it from your own minds? Or would you potentially see opportunities from 3rd parties?
And then lastly, I was just curious on your quarterly sales projects for autos, massive recovery in Q4. Are you saying that the ship shortage is over? Thanks.
Okay. In the first instance, Adrian, we will above the 1,000,000 ounces, we will grow organically. All three operations have that ability. So Boisendal can be higher than 500, Eland can be higher than what we stated 180, and Zondrenner, of course, with the new shaft development can be higher than 350. However, I do want to stress it's not step change.
It's organic, getting the best out of the assets in a squeeze the best out of the assets that one possibly can do given the capital equipment that we have. So that will be our primary approach beyond the 1,000,000 ounces. I also want to stress that, that 1,000,000 ounces is own mined production. There are other ounces on top of that, which I mentioned, recycling, which is important to us. We are developing that segment.
And also, as you mentioned, 3rd party ounces, we would have additional capacity within which to treat 3rd party ounces in the future if we can secure 3rd party ounces at the right business margin. In terms of risks to this ramp up, we do keep making the point that we have significantly derisked what you see on the curve there. But mining is mining. And what I would apply to that is normal mining risk. I certainly wouldn't put any additional mining risk to that growth profile than you normally would do for pretty much a steady state mining effort.
These are known ore bodies. We are already mining in these ore bodies and it's a question of more of the same rather than something that's completely different and unknown to the company. Thanks, Paul. Thank you. I think we're nearly done.
Yes, I think from myself and Oled from Oled and I, thank you very much for coming today. Again, once again, the guys and ladies who came to the room, I think it's very important to begin slowly but surely to normalize in difficult circumstances. And we'd like to ask you to join us for a cup of tea and a sandwich and hopefully there's some pizza as well maybe. Let's see. Thank you very much, everybody.