Platinum miner Northam Platinum would prioritise trying to secure more resources in the next year to address declining grades in its restricted lease area, CEO Glyn Lewis said on Friday.

Northam is trading under a cautionary notice related to negotiations. The negotiations are believed to relate to the group's long-awaited transaction with Anglo Platinum and black empowerment partners, which would give Northam 100% ownership of the Booysendal project.

Lewis was speaking at a presentation on the group's results for the year to June, which showed an average decline in head grade, or ratio of precious metals to rock, to 5.1 grams per tonne from 5.5 grams per tonne last year.

Northam grew sales revenue 56.7% to R3.7 billion (US$520 million) as a result of high rand prices for platinum group metals, including rises of 283.4% for ruthenium, 125.7% for rhodium, and 117.7% for nickel. Headline earnings rose 85.6% to 560.1 cents a share and the total dividend for the year was increased to 525 cents a share.

Northam chief geologist Damian Smith said the company mined three types of Merensky reef, of which the higher-grade P2 was usually 45% and the lower-grade NP2 at 22%. But in the past year, NP2's ratio had increased, which had affected grades.

New drilling on the southern boundary of the lease area had also shown that the transition zone, containing no ore, was larger than initially projected, which would reduce the size of resources and life of the mine by 2.9 years instead of the 2.3 years originally expected.

The "worst-case scenario" was a loss of 5.4 years from the life of the mine, Smith said. But Northam planned to offset this by making progress on deepening the current mine to 2.35 kilometres, which meant adding another four levels, each of which would add about 2.5 years to the life of mine.

"Taking gains and losses into account, the life of the mine would show no real net loss or gain," Smith said. Lewis said Northam expected difficult conditions in mining the Merensky reef to continue in the coming year. It was difficult to make an accurate forecast of production.

However, market fundamentals remained strong. At current prices, current-year earnings were likely to be in line with the past year's, Lewis said. – Business Day