Aquarius engages Zim on taxes

HARARE - Aquarius Platinum — 50 percent shareholder in Mimosa Mining Company (Mimosa) — has engaged the Zimbabwean government over proposed tax hikes.

This comes as the hard pressed President Robert Mugabe-led government has proposed and implemented various tax measures aimed at boosting its revenue inflows.

Jean Nel, chief executive of the Johannesburg Stock Exchange-listed Aquarius, said the group noted amendments in Zimbabwe’s 2014 national budget as well as to the Finance Act, which could negatively impact the company.

“Mimosa management in consultation with the Zimbabwe Chamber of Mines will continue to engage with the government of Zimbabwe to clarify the proposed changes to the fiscal regime, acknowledging that Aquarius and Mimosa share the vision of a growing platinum mining sector with the government of Zimbabwe,” he said.

Proposals made by government include a 15 percent royalty on the export of unrefined platinum group metals (PGM) and rendering mining royalties non-deductible for income tax purposes.

However, Nel said the financial impact of the amendments is yet to be determined and “will only be known if the legislation is passed in its current form, since only then can the impact be estimated with a level of certainty”.

Impala Platinum Holdings holds the other 50 percent stake in Mimosa.

Meanwhile, subdued global platinum prices dented the platinum miner’s full-year income, narrowing revenue by two percent to $233 million for the 12 months ended June 30.

The group reported a net loss of $13 million, or 1,38 cents a share, while profitability at mine level, or on-mine earnings before interest, tax, depreciation and amortisation, was $30 million.

This was down 14 percent compared with the $35 million posted in the prior year and was largely owing to the impact of strikes at the Platinum Mile (PlatMile) operation, on Rustenburg’s platinum belt, as well as the inclusion of the development shaft at the nearby Kroondal mine for the first time.

“The result reflects continued improvement of operational performance at all operating mines in a difficult and lower platinum-group metals (PGM) price environment,” Nel noted.

The PGM basket price achieved for the year of $1 164 per ounce was down five percent from the 2013 fiscal period and, while gross margins improved at Kroondal on higher production and a weaker rand, the lower prices narrowed margins at its 50 percent-owned Mimosa mine, in Zimbabwe.

In the period under review, the total cash cost of production of $202 million was down $7 million despite a two percent increase in production at Kroondal and PlatMile.

“Significantly, Kroondal recorded its seventh consecutive above

100 000 ounces production quarter — a record for the mine. This is particularly pleasing given the ongoing difficulties prevailing in the sector,” said Nel.

Dollar unit costs in South Africa decreased seven percent to $870 per ounce  but increased nine percent in rand terms owing to the inclusion of Kroondal’s K6 development shaft — in operation for the first time — while the unit cost for the mature Kroondal shafts increased by only three percent.

In Zimbabwe, the cash costs came in at $878 per ounce, a one percent increase, inclusive of the completion of a voluntary labour rationalisation programme at a one-off cost of $5,5 million.

“Operating costs were well within inflationary targets and will continue to be a point of focus, particularly in the ongoing low metal price environment,” added Nel.

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