ZIMBABWE’S largest platinum miner, Zimplats became one of the earliest beneficiaries of the forex auction system introduced by the central bank last year after reducing exchange losses by US$5,5 million during the half year ended December 31, 2020.
Zimplats’ financial statements showed the group recorded net foreign currency exchange losses of US$0,1 million compared to US$5,6 million during the same period in 2019.
It attributed the improvement to the cooling off of currency volatilities after the introduction of the forex auction system by the Reserve Bank of Zimbabwe (RBZ) in June.
“The group recorded net foreign currency exchange losses of US$0,1 million compared to US$5,6 million in the same period last year owing to the rate movements of the Zimbabwean dollar observed on the foreign currency auction system that was introduced in June 2020 by the Reserve Bank of Zimbabwe,” said Zimplats, a unit of Impala Platinum Holdings.
Zimplats is among several other corporates which have hailed the auction system for taming exchange rate volatilities.
Last month, Fitch Solutions said the RBZ’s move to introduce the foreign currency auction system eased a liquidity crisis that swept through small-to-medium enterprises.
Fitch’s Southern Africa Monitor also said the foreign currency auction system helped Zimbabwe calm down exchange rate volatilities.
Corporates, including OK Zimbabwe and Telecel, said access to foreign currency on the auction platform had improved, reducing the need to pay exorbitant premiums that obtained on the black market.
Early last year, listed mining firm RioZim reported that gross margin had declined to 2% compared to 18% recorded during the prior year due to heavy premiums borne by the company as a result of the disparity between the local component of the group’s revenue which is received at interbank rate against prices of local inputs which are pegged at alternative market rates.
Zimplats said after-tax profit closed the period at US$250,6 million compared to US$81,2 million achieved during the same period last year after a 79% growth in revenues.
Revenues grew to US$674,9 million largely driven by increases in average metal prices and volumes of metal sold.
Ore mined during the half year increased by 2% to 3,7 million tonnes while tonnes milled remained flat at 3,4 million.
“The gross revenue per 6E ounce for the half year at US$2 241 was 50% higher than the US$1 494 for the same period last year,” Zimplats said.
6E refers to platinum, palladium, rhodium, gold, ruthenium and iridium. There are contained in the ore that also bear platinum.
Cost of sales at US$297,4 million was 24% higher than the same period last year, mainly due to an increase in sales volumes, and the resultant increase in royalty and commission costs, the miner said.
“Additionally, share-based payments were higher due to the improvement in the Impala Platinum Holdings Limited share price which forms the basis for Zimplats share-based compensation scheme. Resultantly, gross profit margin at 56% increased by 20 percentage points from 36% achieved in the same period last year,” Zimplats said.
Zimplats said administrative expenses for the half year at US$4,2 million increased 14% from the US$3,7 million incurred during the same period last year mainly due to higher corporate social responsibility costs while cash operating cost per 6E ounce produced at US$642 was marginally above US$641 for the same period last year, driven by an 8% increase in 6E ounces produced and savings on procurement costs.
Finance costs at US$1,7 million were 31% higher than the same period last year as there were no borrowing costs eligible for capitalisation during the period under review. Newsday