Zimplats commits $10m to community schemes

HARARE - Zimbabwe's largest platinum producer Zimplats has set aside $10 million for the Community Share Ownership Trust (CSOT), with government yet to approve the miner’s indigenisation plan.

In January last year, the Australia Stock Exchange-listed miner — 87 percent owned by South Africa-based Impala Platinum Holdings — agreed to sell a stake to locals, in a $971 million deal, as part of compliance with Zimbabwe’s indigenisation policy, which compels foreigners to give up 51 percent shareholding.

However, the Zanu PF-led government later indicated that it was reviewing all empowerment deals with foreign-owned companies, including Zimplats.

Alex Mhembere, the group’s chief executive said various development projects which will help improve the communities surrounding the company’s operations have been implemented by the Trust and $3,4 million has been spent to date.

“In addition to funding the CSOT, the Group continues to fulfil its long-term commitment to social development projects such as the building of schools and clinics,” he said. Mhembere noted that during the year, a further $15 million was spent on employee housing.

“The company continued with its support programme for local suppliers in line with the government ZimAsset programme. To this end, local suppliers accounted for 66 percent of the company’s annual expenditure on goods and services during the year under review,” he said.

This comes as the platinum producer has recorded $97 million profit after tax in the full year to June 2014, an increase of 42 percent on the $68 million recorded in the previous year.

Mhembere said revenue for the year increased by 22 percent from $472 million to $576 million as a result of improved sales volumes due to increased production capacity following the commissioning of the Phase II concentrator.

“Metal prices improved marginally resulting in the gross revenue per platinum ounce increasing from $2,432 to $2,457. Cost of sales amounted to $332 million, 34 percent higher than the previous year’s $248 million,” he said in an annual report released recently.

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.

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

Zimbabwe’s largest platinum producer paid $44 million in mining royalties in the period under review, representing a 13 percent increase from the previous year’s figure pf $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 realised  the previous year.

Mhembere also noted that cash inflows from operating activities at $146 million were 18 percent higher than the $124 million realised in the previous year due to higher sales volumes and a marginal increase in metal prices.

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

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