Zimplats narrows down costs

Zimplats narrowed down costs in the quarter to end June although it is still investing in capital projects such as a solar power plant that is due for commissioning and a concentrator project.

The South African platinum group metals (PGM) producer also owns half of Mimosa mine in Zimbabwe, with the other half controlled by Sibanye-Stillwater.

Unlike Zimplats, which is continuing with capital investments that include replacement mines for those depleting, Mimosa has had to abandon an expansion project as it cuts costs.

Zimplats' costs for metal in production in the quarter to June decreased by 5% year on year and 6% quarter on quarter.

This saw its operating cash cost per 6E ounce for the period climb down to $823 (R14 844) per ounce, about 1% lower on a year-on-year and quarter-on-quarter basis "mainly due to the cost-saving initiatives" being implemented.

"Cost-containment initiatives implemented during the quarter resulted in a 4% reduction in total operating cash costs on a year-on-year and quarter-on-quarter basis. Transfers from stocks to operating costs amounted to $0.3 million during the period, due to ore milled from stockpile," said Zimplats.

During the quarter period under review, Zimplats undertook capital investment projects that include mine replacement, concentrator and solar power plant development.

Development and upgrades at the Bimha and Mupani mines run by the company are expected to "replace production" from the Rukodzi and Ngwarati mines that were depleted in 2022 and June this year, respectively. Another mine, Mupfuti, is also set for depletion in 2028.

Zimplats had spent upto $407m on the replacement projects as at the end of June. The total project budget for this stand at $468m.

The company, under pressure alongside other Zimbabwean PGM producers to beneficiate the precious metal locally has also spent $387m on an expansion project of its smelter and SO2 abatement plant project against a total project budget of $544m.

Moreover, about $36m has also been spent on implementation of the company's 35MW solar plant project against a budget of $37m. The solar plant is to be commissioned in the first quarter of its 2025 operating year.

During the quarter period to June, mining volumes for Zimplats increased by 2% year on year, benefiting from pillar reclamation activities at Rukodzi mine and the continued production ramp-up at Mupani mine, which is under development.

Nonetheless, mining volumes declined 1% from the prior quarter due to the higher productivity Ngwarati mine's primary operations ramping down.

Head grades declined by 1% year on year and quarter on quarter due to an increased contribution of lower grades from development ore from the Mupani mine and dilution from mining across geological structures. Year-on-year milled volumes improved by 3% due to the higher milling rates achieved in line with improved mining volumes.

"Milled volumes decreased by 1% from the prior quarter, however, due to a planned mill reline shutdown at the Selous Metallurgical Complex (SMC) concentrator. Concentrator recoveries were 1% lower year on year and quarter on quarter due to lower-mill feed grades achieved," the company said.

During the period under review, Zimplats' "exploration activities remained curtailed in response to depressed metal prices".