Zimplats reduces capex

HARARE - Zimbabwe's largest platinum producer, Zimplats, said it has reduced its expenditure on capital projects in the country due to deteriorating economic conditions compounded by a biting liquidity and cash crisis. 

The group’s chief executive, Alex Mhembere, said Zimplats has postponed the commissioning of its Selous Metallurgical Complex base metal refinery project from July this year to a later date as a result of the liquidity situation.

“I regret to report that the rate of implementation of this project was affected by the availability of cash following the low metal price environment which has persisted since the 2015 financial year. As a result, $22 million has been spent to date against a budget of $131 million,” he said.

The furnace is currently operating at full Phase 2 capacity of 6,2Mtpa and the facility has been derisked through operating it at reduced power.

Mhembere noted that a bankable feasibility study for a second 15 megawatts rectangular furnace to manage risks associated with the existing circular furnace was carried out and completed in July 2016.

“Once approved, it is anticipated that the second furnace could be ready for commissioning by the first quarter of the 2019 financial year. A total of $27 million was spent on expansion projects in the period compared to $38 million in the previous period,” he added.

The Zimplats boss, however, said implementation of the Ngezi Phase 2 Expansion Project was progressing well and project completion is targeted for 2017.

“A total of $453 million has been spent to date on this project against a budget of $492 million,” he said.

This comes as the Australia Stock Exchange-listed miner last week reported a 110 percent increase in full year profits on the back of improved production and reduced tax contributions.

In the 12 months to June 2016, Zimplats registered a $7,3 million profit compared to a $74 million loss recorded in the previous year.

“Income tax expense for the year improved by 83 percent to $22 million from $130,5 million in the previous year,” the company said.

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