Low metal prices hit Zimplats

HARARE - Low international prices saw Zimbabwe’s largest platinum producer, Zimplats, reporting a 12 percent decrease in revenue for the half year to December 2015 despite a surge in sales volumes.

In its interim results published yesterday, the platinum miner said its revenue decreased to $20,4 million in the six months to December last year compared to $234 million recorded in the 2014 corresponding.

“The gross revenue per platinum ounce of $1 591 for the half year was 30 percent lower than $2 265 reported during the same period last year,” Zimplats chief executive Alex Mhembere said.

In the period under review, the group’s cost of sales increased by 14 percent to $185,7 million mainly due to the increase in sales volumes, where platinum sales increased from 103 092 ounces to 128 431 ounces.

Mhembere, however, noted that gross profit margins deteriorated from 30 percent in the prior period to 9 percent in the current half year mainly due to lower metal prices.

“This was however partly offset by the impact of price reductions achieved on consumables and procurement contracts,” he said.

The Ngezi-based miner’s cash operating cost per platinum ounce produced decreased by 17 percent to $1 235 compared to the same period in the prior year due to stringent cost management measures adopted following the collapse in metal prices.

Consequently, Mhembere said, profit before income tax for the period amounted to $0,6 million, 88 percent lower than $4,7 million achieved in the same period last year, largely due to the drop in metal prices.

“Taxation for the half year at $1,2 million) resulted in a loss after tax for the period of $0,6 million compared to a profit of $3,9 million recorded in the same period last year. Net cash inflows from operating activities for the period decreased from $107,8 million recorded during the same period last year to $6.5 million mainly due to the impact of lower metal prices and the furnace breakout which occurred in May 2015 on sales proceeds,” he added.

Despite the depressed performance, Zimplats is continuing with its Ngezi Phase 11 expansion project with a total of $447 million of the project budget having been spent as at 31 December 2015.

Mhembere noted that implementation of the outstanding components of the expansion project remains on schedule for overall project completion in 2016.

“A total of $12,2 million was spent on the refurbishment of the Selous Metallurgical Complex base metal refinery project and $9,9 million was committed as at 31 December 2015. Bimha Mine re-development is on schedule to reach full production in April 2018 as planned,” he said.

The Australia Stock Exchange-listed platinum producer said it spent a total of $27,2 million on capital expenditure during the half year under review compared to $49,4 million in the same period last year.

“The impact of the declining metal prices on cash flows has resulted in the reprioritisation of capital projects with some projects being deferred to future periods,” Mhembere said.

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