News / Local
Zimplats sinks US$200m in Zimbabwe
12 Oct 2020 at 01:14hrs | Views
AUSTRALIAN Stock Exchange-listed resources giant Zimplats is scouring Zimbabwean landscapes to unlock fresh opportunities, possibly bolstered by fresh policies giving foreign investors the right to hold controlling stakes in mines.
The firm said last week that it had deployed a further US$200 million at its Ngezi-based platinum operation to develop a new mine and redevelop an existing underground operation.
Zimplats chairman Fholisani Mufamadi did not disclose the nature of new opportunities being pursued by the country's largest platinum producer.
But his remarks represent the calming of jitters at the platinum operation after nearly two decades of uncertainty stemming from harsh empowerment laws that were in force under the late former President Robert Mugabe's administration.
The tough laws have been relaxed, and foreign investors can now hold majority control in local assets.
"The group continues to scan the environment for investment opportunities in Zimbabwe," Mufamadi said in a commentary to the firm's financial results for the year to June 30, 2020.
"The future of the company remains bright despite the pressures from the operating environment and the threats from COVID-19," he said.
Zimplats scaled up its investments during the period under review, pouring US$198,3 million on the development and redevelopment of Mupani and Bimha mines.
Mupani gobbled US$99,5 million, while US$98,8 million was deployed to Bimha Mine, Mufamadi said.
Mupani Mine is being developed at a cost of US$264 million, and will replace two current assets Rukodzi and Ngwarati mines once they are mined out.
On completion, Mupani will add impetus to Zimplats' ambition to scale up output in Zimbabwe's Great Dyke mining belt.
"The (Mupani Mine development) project is expected to be completed on time and within the approved budget. The Bimha Mine redevelopment project is substantially complete save for the underground workshops whose progress was affected by the COVID-19 pandemic. We expect to commission the workshops in the first half of FY2021," he said
The Zimplats boss said the group remained committed to extracting and processing the mineral resource in Zimbabwe in a manner that created value for all stakeholders.
During the review period, revenue increased by 38% to US$868,9 million, bolstered by skyrocketing rhodium, palladium, gold and nickel prices on the international markets.
Six elements (6E) ounces sold decreased by 3% to 554 944 ounces, mainly due to the force majeure notice issued by Zimplats' parent company, Impala Platinum which resulted in the suspension of sales for more than a month in the final quarter of the year.
The force majeure notice was in response to the COVID-19-induced lockdown in South Africa.
Cost of sales increased by 8% from US$443,6 million, driven by increases in share-based compensation and depreciation expense.
The increase in depreciation expense was due to the change in the estimation method of depreciation for surface and metallurgical assets from units of production to straight line and an increase in the asset base, said chief executive officer Alex Mhembere.
Gross profit margin improved to 45% from 30% as a result of the improvement in metal prices.
Operating cash cost per 6E ounce increased by 2% to US$613 due to inflation while profit before income tax increased to US$374,2 million from US$205,3 million.
Zimplats' ore output increased by 7% to 7,2 million tonnes.
Matte and concentrate sold to Implats amounted to 554 944 6E oz.
The group paid dividends of US$45 million and repaid borrowings of US$42,5 million.
At year end, the group had bank borrowings amounting to US$7,2 million and a cash balance of US$135,8 million.
The firm said last week that it had deployed a further US$200 million at its Ngezi-based platinum operation to develop a new mine and redevelop an existing underground operation.
Zimplats chairman Fholisani Mufamadi did not disclose the nature of new opportunities being pursued by the country's largest platinum producer.
But his remarks represent the calming of jitters at the platinum operation after nearly two decades of uncertainty stemming from harsh empowerment laws that were in force under the late former President Robert Mugabe's administration.
The tough laws have been relaxed, and foreign investors can now hold majority control in local assets.
"The group continues to scan the environment for investment opportunities in Zimbabwe," Mufamadi said in a commentary to the firm's financial results for the year to June 30, 2020.
"The future of the company remains bright despite the pressures from the operating environment and the threats from COVID-19," he said.
Zimplats scaled up its investments during the period under review, pouring US$198,3 million on the development and redevelopment of Mupani and Bimha mines.
Mupani gobbled US$99,5 million, while US$98,8 million was deployed to Bimha Mine, Mufamadi said.
Mupani Mine is being developed at a cost of US$264 million, and will replace two current assets Rukodzi and Ngwarati mines once they are mined out.
On completion, Mupani will add impetus to Zimplats' ambition to scale up output in Zimbabwe's Great Dyke mining belt.
"The (Mupani Mine development) project is expected to be completed on time and within the approved budget. The Bimha Mine redevelopment project is substantially complete save for the underground workshops whose progress was affected by the COVID-19 pandemic. We expect to commission the workshops in the first half of FY2021," he said
The Zimplats boss said the group remained committed to extracting and processing the mineral resource in Zimbabwe in a manner that created value for all stakeholders.
During the review period, revenue increased by 38% to US$868,9 million, bolstered by skyrocketing rhodium, palladium, gold and nickel prices on the international markets.
Six elements (6E) ounces sold decreased by 3% to 554 944 ounces, mainly due to the force majeure notice issued by Zimplats' parent company, Impala Platinum which resulted in the suspension of sales for more than a month in the final quarter of the year.
The force majeure notice was in response to the COVID-19-induced lockdown in South Africa.
Cost of sales increased by 8% from US$443,6 million, driven by increases in share-based compensation and depreciation expense.
The increase in depreciation expense was due to the change in the estimation method of depreciation for surface and metallurgical assets from units of production to straight line and an increase in the asset base, said chief executive officer Alex Mhembere.
Gross profit margin improved to 45% from 30% as a result of the improvement in metal prices.
Operating cash cost per 6E ounce increased by 2% to US$613 due to inflation while profit before income tax increased to US$374,2 million from US$205,3 million.
Zimplats' ore output increased by 7% to 7,2 million tonnes.
Matte and concentrate sold to Implats amounted to 554 944 6E oz.
The group paid dividends of US$45 million and repaid borrowings of US$42,5 million.
At year end, the group had bank borrowings amounting to US$7,2 million and a cash balance of US$135,8 million.
Source - newsday
