eBusiness Weekly
Nelson Gahadza
Zimbabwe’s platinum producer, Zimplats, says it instituted a number of survival strategies with stringent measures to contain costs and preserve cash, largely as a result of soft metal prices.
Zimplats is a member of Implats of South Africa, which has already instituted measures to reduce spending across its business units to reflect current low PGM prices.
Reports indicate that Zimplats has since retrenched some employees as part of its stringent survival strategies.
The group’s half-year revenue to December 31, 2023, at US$372,8 million, was 32 percent lower than the prior-year comparative period as average US$ metal prices softened during the period.
This resulted in profit before income tax for the period at US$14,2 million, which was 94 percent lower than US$221,5 million recorded in the same period last year.
Group chief executive, Alex Mhembere, said the operating environment for the period under review was characterised by softening metal prices that affected the financial performance.
“In response, the company has instituted a number of survival strategies with stringent measures to contain costs and preserve cash.
“We remain focused, committed and determined to ensure the overall success of the business,” he said.
In addition, he said, the group’s focus on safety remains unwavering and we will continue to invest in resources and technologies to ensure the achievement of our zero-harm goal.
During the period under review, gross revenue per 6E ounce sold declined by 38 percent to US$1 164 from US$1 870.
Sales volumes of 6E ounces were 10 percent higher at 320 196 ounces compared to 291 751 in the prior period, while the cost of sales at US$342 million was 8 percent higher than the same period last year’s US$315,6 million.
“Consequently, gross profit margin was 8 percent, a 34 percent reduction from 42 percent achieved in the same period last year, mainly due to the impact of a higher than budget operating cost per 6E ounce in the current period,” said Mhembere.
He said the cash operating cost per 6E ounce produced at US$829 increased by 1 percent from the US$822 reported in the same period last year, mainly driven by local inflation and an increase in labour headcount due to the introduction of the third concentrator plant and pillar reclamation.
The group’s income tax for the half-year at US$23 million was below the prior-year comparative period, mainly due to lower profit before tax.
However, Mhembere said this was largely offset by the increase in deferred tax expenses following the change in corporate income tax rate from 24,72 percent to 25,75 percent, which resulted in a loss after tax for the period of US$8,8 million compared to a profit after tax of US$159.6 million achieved in the same period last year.
Mhembere said the group generated net cash inflows from operating activities amounting to US$70,1 million and paid dividends of US$100 million.
He said the group made a drawdown from the Standard Bank of South Africa borrowing base facility of US$35 million during the six months to December 2023.
In terms of operations, ore mined during the half-year increased by 5 percent to 4,0 million metric tonnes from 3,8 million metric tonnes for the same period last year.
Mhembere said this was mainly due to pillar reclamation at Rukodzi Mine in addition to Mupani Mine production output, which has increased from 1,1 million tonnes per annum (Mtpa) to 1,4 Mtpa.
Tonnes milled, at 3,9 million tonnes, increased by 6,4 percent compared to the same period last year, mainly due to Third Concentrator Plant mill volume optimisation.
Six elements (platinum, palladium, rhodium, gold, ruthenium, and iridium) (6E) mill head grade at 3,34 g/t was marginally lower compared to 3,39 g/t achieved in the same period last year due to the increased contribution of ore from lower-grade mines.
6E production increased by 9 percent to 327 810 ounces from 300 738 ounces in the same period last year, mainly due to the increase in the milled tonnage.
Mhembere said the group’s capital projects are ongoing according to plan.
