Zimplats posts $97m profit

HARARE - Zimbabwe's largest platinum producer, Zimplats, recorded a $97 million profit after tax in the year to June 2014, up 42 percent from $68 million realised in prior comparable period.

During the period under review, the Australia Stock Exchange-listed miner — 87 percent owned by South Africa-based Impala Platinum Holdings — registered a 22 percent revenue growth from $472 million to $576 million.

Alex Mhembere, Zimplats’ chief executive, said the performance was on the back of improved sales volumes driven by increased production capacity following the commissioning of a Phase II concentrator.

“Metal prices improved marginally resulting in the gross revenue per platinum ounce increasing from $2,432 to $2,457,” he said in an annual report released recently.

Cost of sales stood at $332 million, 34 percent higher than the previous year’s $248 million

Mhembere noted that the increase in cost of sales was driven by sales volume growth and higher cost of power following the full utilisation of the power units prepaid at low tariffs.

This led to the reduction in gross profit margins from 47 percent in prior year to 43 percent in the current year.

“Administrative and other expenses for the year were four percent lower than the previous year mainly due to lower selling expenses as the previous year’s selling expenses were affected by concentrate transported during furnace outages and the effect of the weaker South African Rand on services sourced from that country,” he said.

As a result, Mhembere said, operating cash cost per platinum ounce increased by 2,5 percent to $1 319.

In the period, Zimplats paid $44 million in mining royalties, representing a 13 percent increase from previous year’s $39 million mainly due to higher turnover.

Consequently, profit before income tax for the year amounted to $129 million, 18 percent higher than the $109 million recorded prior year.

Mhembere also noted that at $146 million, cash inflows from operating activities were 18 percent higher.

“At year-end, Zimplats had bank borrowings amounting to $105 million and the cash balance was $39 million,” he added.

During the year under review, Zimplats ramped up production by 17 percent, mining 5,62 million tonnes of ore.

A total 5,94 million tonnes were milled, 27 percent above previous year’s 4,68 million due to increased capacity from the group’s Ngezi Phase II concentrator module, which was commissioned in the final quarter of the previous year.

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