Govt pays Zimplats debt

HARARE - Australia Stock Exchange-listed platinum miner, Zimplats, yesterday said it has finally been paid the $34 million debt it was owed by the central bank.

The money was taken from Zimplats’ bank account years back by the Reserve Bank of Zimbabwe (RBZ) and used for quasi-fiscal activities.

Zimplats chief finance officer Stewart Mangoma said the central bank owned up and paid the debt using Treasury Bills.

“Zimplats wishes to announce that the $34 million has been validated and reconciled by the Government of Zimbabwe’s Finance ministry… and that the government . . . has now issued to the operating subsidiary three Treasury Bills with a total nominal value of $34 million in settlement of the principal amount owed by the RBZ,” he said.

The government paper was issued in three instalments of $11 376 666,67 with an annual interest of five percent. The first batch of Treasury Bills is maturing on October 31, 2019 while the other two mature on the same date in 2020 and 2021.    

The payment of debt follows promulgation of the RBZ (Debt Assumption) Act in August 2015 that paved the way for the government to assume the central bank’s $1,2 billion debt.

Market experts said the latest move will come as good news to Zimplats, which was this week given the nod by its parent company — world number two platinum producer Impala Platinum (Implats) — to develop a new $264 million mine.

The new Mupani Mine that will have a 25-year life of mine period and produce 2,2 million tonnes of ore per year on full design capacity in 2025, replaces production from the Rukodzi and Ngwarati mines, once these have been mined out and closed.

Zimplats will stick to its room and pillar mining method for the underground mine, which will be financed from Zimplats’ “internal resources” and increase its mineral reserves to about  9 million ounces of platinum.

The miner is facing increased pressure from the government to give up nearly 28 000 hectares of land, but is contesting this at the Administrative Court in Harare. 

Miners in Zimbabwe are also pushing for a reduction in royalties and power tariffs to manage their cost base.

The new investment explains why Implats has sought to invest in beneficiation inside Zimbabwe, with ore produced from the new mine set to be beneficiated at the Selous processing facility. Implats has invested in a refurbishment exercise at the Selous Metallurgical Complex.

 “Approval to construct Mupani Mine . . . will ensure we can deliver on our target to mine 6,2 metric tonnes per annum and maintain production of 260 000 ounces of platinum and 220 000 ounces of palladium per annum,” Zimplats chief executive Alex Mhembere said.

He however, conceded that Zimbabwe is undergoing “extremely difficult times” and added that the new mine will  employ about 1 000 people at full production.

He also said investment has been committed at a time when platinum prices are depressed and most mining companies are shedding operations or putting fresh capital investment on the back burner.

“While this project was commissioned against the backdrop of depressed metal prices, the estimated capital investment of $264 million will be deployed over the next nine years with much of the underground development work being done on-reef and the required capital expenditure financed through Zimplats’ own internal resources,” Mhembere added.

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