Full Disclosure

Northam Platinum Limited (Northam) discloses information regarding its financial provision for environmental rehabilitation in its annual financial statements.

The information which is publicly available is:

1. The estimated figures for environmental rehabilitation obligations, and the funds and guarantees available to meet those obligations.
2. That “management estimates, with the assistance of independent experts, the expected total spend for the rehabilitation, management and remediation of negative environmental impacts at closure at the end of the lives of the mines and processing operations.”¹
3. The basic assumptions used in the calculation of the environmental rehabilitation provision, and the accounting treatment of the rehabilitation obligations.
4. That financial guarantees and the Northam Platinum Restoration Trust Fund are the financial vehicles used to provide for future rehabilitation obligations.
5. One consolidated figure for financial provision for environmental rehabilitation in the annual financial statements.

While Northam’s disclosures are in line with those of its peers, they do not, however, provide stakeholders with:

• clear, understandable, comparable information about the type and extent of environmental damage covered by these estimated liabilities;
• the methods and experts used to calculate the estimated liabilities;
• sufficient information to enable external verification that the estimated liabilities have been accurately calculated;
• clear, understandable explanations for why the estimates and funds set aside for financial provision for environmental rehabilitation fluctuate from year to year; and
• information about the way in which the funds set aside for rehabilitation are managed and protected.

In its response to the CER’s letter requesting further information and clarity, Northam provided detailed information about the independent experts who calculate rehabilitation costs, including the name of the consultant and the qualifications of the consultant’s team leader.

Northam provided very useful information about the rates used to determine rehabilitation costs, including a table demonstrating that the commercial rates used by Northam are significantly higher than the DMR’s 2005 “Master rates”, which have not been updated.²

Northam stated that it would “have no issue with making the DMR assessments publicly available”. This presumably refers to the assessments of liabilities for rehabilitation costs calculated by independent experts.

In relation to the consolidation of the financial provision figures for all operations, Northam stated that its annual financial statements “are consolidated at group level in terms of IFRS requirements and are signed off as such by the external auditor. Northam could consider more detailed disclosure in future.”

There is no information available about the management of the Northam Platinum Restoration Trust Fund. Information that would assist stakeholders in assessing the level of protection afforded by this trust includes:

• the identity of its trustees and beneficiaries;
• the trust’s annual financial statements;
• how funds in the trust are accessed;
• how funds in the trust are aggregated between operations;
• when funds from the trust have been accessed for rehabilitation and/or closure of any operation; and
• whether the funds are used for concurrent rehabilitation or reserved exclusively for the purposes of closure.