By Business Reporter – Tuesday 10 March 2020
LOCAL – HARARE – (Mining Index) – ZIMPLATS revenue for the half year ended 31 December 2019 grew 29 percent to US$377.7 from US$291 844 million in the comparative period the previous year primarily driven by an increase in metal prices.
Average prices for most metals except ruthenium, copper and cobalt improved compared to the same period the previous year.
“Half year revenue increased by 29% to US$377.7 million compared to the same period last year largely driven by an increase in average metal prices,” said Zimplats.
Gross revenue per 6E ounce for the half year at US$1 494 was 47% higher than the US$1 018 for the same period the previous year.
Zimplats said the future of the group is optimistic with the resurgence of prices of some commodities on the world market to offset the challenging operating environment.
Zimplats produces platinum group metals (PGM) which primarily include platinum, palladium, rhodium, iridium and ruthenium and associated metals such as nickel, gold, copper, cobalt and silver from its mineral resources and ore reserves on Zimbabwe’s Great Dyke.
Cost of sales at US$240.6 million was 7% higher relative to the same period the previous year of US$225.2 million mainly due to increase in depreciation, royalties and share based payments. The increase in depreciation was a result of the higher asset base and a review of estimated useful lives of assets.
Resultantly, gross profit margin at 36% increased by 13% points from 23% achieved in the same period in the prior year.
Foreign exchange losses for the half year were higher than the prior year largely as a result of the significant depreciation of the Zimbabwean dollar against the United States (US) dollar.
Other income for the half year decreased significantly from US$39.2 million reported in the same period the preceding year to US$0.3 million in the current period as the previous period benefited from export incentive of US$29.4 million from the Reserve Bank of Zimbabwe (RBZ) and a US$9.6 million refund due from the Zimbabwe Revenue Authority (ZMIRA) following a court ruling in favour of the operating subsidiary.
Cash operating cost per 6E ounce produced at US$641 was 6% higher than US$607 for the prior period. This was driven by a 7% reduction in 6E production and increase in selling expenses due to higher volume of concentrate sales during the smelter shutdown.
Finance costs at US$1.3 million were below the prior period due to higher capitalised borrowing costs for the current period and a repayment of part of the Standard Bank of South Africa revolving credit facility (SBSA RCF) in the prior financial year.
Resultantly, profit before income tax for the period at US$126.5 million was 28% higher than US$98.5 million recorded in the same period last year. Income tax for the half year at US$45.3 million (2018: US$18.1 million) resulted in profit after tax for the period of US$81.2 million compared to US$80.4 million achieved in the same period last year.
At the end of the half year, the Group had no bank borrowings (30 June 2019: US$42.5 million and 31 December 2018: US$62.5 million) after repaying the US$42.5 million on the SBSA RCF in December 2019.
The miner generated US$83.8 million (2018: US$113.6 million) from operating activities. The Group paid dividends of US$45 million (2018; US$65 million). The cash balance as at 31 December 2019 was US$22.2 million (30 June 2019: US$67 million and 31 December 2018: US$99.5 million).
Tonnes mined during the half year increased by 9% to 3.6 million tonnes compared to the same period last year benefiting from improved fleet productivity and additional tonnage from Mupani Mine which is still under development.
Zimplats maintained its forecast for Mupani mine, targeting full production in August 2025. A total of US$79.4 million had been spent as at 31 December 2019 against an approved project budget of US$264 million.
Tonnes milled increased by 2% to 3.4 million tonnes compared to the same period last year. This was mainly due to an increase in the milling rates and good running time at both concentrators. Selous Metallurgical Complex concentrator benefited from the positive impact of the High Pressure Grinding Rolls (HPGR) project which was commissioned in the second quarter of the year under review. The Ngezi concentrator achieved a higher average milling rate due to a steady ore supply.
Platinum, palladium, rhodium, gold, ruthenium and iridium (6E) mill head grade at 3.48g/t remained largely unchanged from the same period last year reflecting sustained grade control at the Group’s operations.
6E production was held back 7% to 267 366 ounces from 289 010 ounces due to unfavourable furnace inventory movement on start-up (first fill) following the furnace rebuild shutdown.
During the half year, 252 748 ounces of 6E were sold, 12% lower than the 286 760 ounces reported in the same period last the previous year due to lower production. ENDS// www.miningindex.co.zw
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