Implats pins hopes on Zimplats

HARARE - Impala Platinum Holdings (Implats) says its Zimbabwean operation, Zimplats, is set to spur the group’s growth forecasts despite economic and political shortcomings.

This comes as the South Africa-based platinum group metals producer — an 87 percent shareholder in Zimplats — has suffered a setback from massive labour unrest at most of its mines.

Some of its mines have either been shut down by the Association of Mineworkers and Construction Union (Amcu)-instigated strike or have been forced to stockpile their concentrate production because its Rustenburg smelter has been closed.

Of late, this has left the Zimbabwe unit as the group’s only operation that is still producing platinum for sale.

“Mine-to-market output increased by 9,2 percent to 677 300 ounces of platinum from the comparative period, primarily due to the build-up of metal in the previous half year ended December 2012 and the higher volumes at Zimplats as the Phase 2 expansion project ramped up,” said Implats’ chief executive Terence Goodlace in group’s financial results for the half year to December 2013.

In recent years, Zimplats has realised the highest profit margins in the Implats group because of its low cost and efficient mechanised mining operations.

Despite lingering uncertainty and escalated pressure from President Robert Mugabe’s administration to for platinum miners to construct a refinery in the country or face a ban on exports of the metal in raw form, Zimplats has committed $460 million for a phase two expansion targeted at ramping up annual platinum production to 270 000 ounces

Meanwhile, Zimplats’ revenue for the same period increased 51 percent to $267 million from $176 million recorded in the same period last year.

The country’s largest platinum producer noted that the increase was spurred by a 62 percent increase in platinum sales volume from 70 225 ounces to 113 876 ounces registered in the period under review.

However, the impact of the increase in sales volume was offset by a seven percent decrease in gross revenue per platinum ounce to $2 342.

“Sales volumes for the period were high due to the commissioning of the second concentrator module at Ngezi in April 2013.

“The results for the same period last year were affected by the planned 42 days furnace reline shutdown from August to September 2012 and the 21 days furnace fire outage in November 2012,” said Zimplats’ chief executive Alex Mhembere.

Total operating costs increased by 52 percent to $221 million from the same period last year mainly due to increased production volumes and higher cost of power.

Cash cost per platinum ounce decreased by 10 percent to $1 346 due to the 62 percent increase in platinum production.

Consequently, profit before tax amounted to $46 million, 189 percent higher than the $16 million for the same period last year.

The net profit attributable to members at $32 million was 604 percent above the same period last year’s $6 million loss mainly due to higher sales volumes.

At the end of the half year, the group had a cash balance of $17 million and long-term bank borrowings of $105 million.

“The bank borrowings have a final maturity of 31 December, 2017 with staged payments commencing in January 2015,” said Mhembere. Tonnes mined increased by 13 percent to 2, 68 million tonnes, compared to same period last year largely due to accelerated production ramp-up at the new underground mine (Mupfuti) and improved production efficiencies at the established mines. “Three production fleets were introduced at Mupfuti Mine during the period, increasing production from the mine by 261 percent to 374 000 tonnes.

“However, Bimha Mine production was lower than the same period last year due to a shear zone in the southern section of the mine, which is affecting ground stability through pillar scaling and footwall heaving,” he said.

Mhembere added that short term contingency plans have been identified and implemented to manage the shear zone while work on the long term stabilisation measures is on-going.

He also noted that “the company’s indigenisation implementation plan is still work in progress and stakeholders will be advised if there is a material development”.

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