Zimplats to miss project deadlines

HARARE - Zimbabwe Platinum Mines (Zimplats) says it will miss all its set project deadlines due to funding constraints.

This comes after the platinum miner announced last week that its decision to comply with a $33,8 million government tax bill will put pressure on its cash flows while impacting on its planned expansion.

The company said the completion of its $85 million Turf Village (Turf) housing project will take longer than initially planned.

The housing development commissioned in June 2011, had been forecasted for completion in December 2013 as part of Zimplats $470 million Phase 11 development plan.

Busi Chindove, Zimplats head corporate affairs said the developments will not result in the suspension or cancellation of contractors at its Ngezi mining operations.

“The contractors are still on site, but have merely scaled down the number of construction teams to match the expected deliverables and delayed expansion plans,” she said.

“The company has stated publicly that its Phase II project will be delayed due to cash flow constraints triggered by the fall in metal prices and difficult borrowing conditions. This has necessitated a revision in the scheduled delivery of houses that fall under this expansion project.”

The company said it did not plan to appeal the tax demand and has “agreed to the re-calculation” while holding discussions with Zimbabwe Revenue Authority (Zimra) on the payment of interest and penalties on the principal amount.

The Australian-listed miner had argued that payment of additional profits tax by special mining lease holders had been provided for in the original long-term agreement it entered into with the Government of Zimbabwe in 1994.

Zimplats said prior to it commencing operations in 2001, government had given a written undertaking that it would not be liable for this tax but no legislative changes were effected to give legal effect to undertaking.

The miner currently operates three underground mines, a concentrator at Ngezi and planned to increase its production capacity to 270 000 ounces of platinum per annum from the current 180 000 ounces under its development program.

The project also involved the construction of a 30 000-megalitre dam and a concentrator. Zimplats has invested $955 million since it started operations in 2001, making it one of the biggest foreign investments to date. In its annual results, low metal prices demand saw its revenues declining by 10 percent to $473 from $527 million in 2011.

While cash costs rose marginally to $1 226/oz from $1 171/oz during the period, capital expenditure jumped 115,2 percent from $122 million in the 2011 financial year, to $26 million as the group continued the development of the Ngezi Phase 2 expansion project.

Zimplats produced 187 100 oz of platinum during 2012, compared with 182 100 ounces in the prior year.

Platinum and palladium prices are expected to struggle in 2012, with analysts drastically scaling back expectations for both metals as the euro zone debt crisis threatens global economic growth.

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