Depressed metal prices hit Mimosa

HARARE - Mimosa Platinum Mines (Mimosa) revenue in the first quarter of the 2014 financial year slumped by 20 percent to $56 million, due to depressed dollar metal prices.

Cash margins for the Zvishavane-based Mimosa — which is jointly owned by Impala Platinum and Aquarius Platinum (Aquarius) — decreased from 29 percent to 17 percent in the period due to declining revenues.

Although the platinum miner’s production improved by six percent to 625 656 tonnes, quarter-on-quarter head grade deteriorated slightly to 3,63 grams per tonne.

This comes after Mimosa, which recently complied with the indigenisation regulations, indicated that it planned to double its current 600 000 tonnes production by 2016.

Zimbabwe’s Indigenisation and Economic Empowerment Act requires foreign-owned companies with an annual turnover of $500 000 or over to transfer 51 percent of their shares to locals.

However, Mimosa’s current poor performance contributed to its South African-based parent company Aquarius recording a first quarter net after-tax loss of $10,2 million — down from $19,6 million a year ago.

Earnings before interest, tax, depreciation and amortisation rose to $6,3 million from $1,6 million in prior year but down $4 million quarter-on-quarter due to higher costs and lower recoveries at Kroondal.

The group says attributable production increased by nine percent to 84,504 4E ounces compared to the corresponding period last year and remains consistent quarter-on-quarter — 2,6 percent lower.

Jean Nel, the Aquarius chief executive, said the three months to the end of September was a challenging quarter on all fronts.

“Despite the challenges we faced, all operations delivered improved safety performances, and all operations delivered production results in line or above forecast,” he said.

In the period under review Kroondal exceeded forecast production levels, delivering in excess of 100 000 4E ounces for the fourth consecutive quarter, despite both concentrator plants undergoing planned maintenance during the quarter and despite the mine encountering geological and consequential recovery problems throughout the quarter.

“Cost performance at Mimosa and Plat Mile was in line and below forecast respectively, while costs at Kroondal were higher driven by the implementation of the wage increase in July, winter electricity tariffs, which will reverse in the second quarter, as well as lower concentrator plant recoveries,” said Nel.

He noted that the credible operational performance for the quarter, and the significant reduction in the company’s corporate cost base notwithstanding, business remains marginal at prevailing metal prices, where no improvement appears imminent.

“Against this backdrop management will remain resolute in its focus on improved safety, cost and operational performance,” he said.

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