Zimplats gets royalty fillip, bounces back to profitability

Zimplats gets royalty fillip, bounces back to profitability

HARARE, April 30 (The Source) – Zimbabwe’s largest mining firm, Zimplats, bounced back to profitability in the quarter to March 31, reporting net operating income of $6,8 million compared to a $21 million loss in the previous quarter.

With average PGM prices remaining flat over the last two quarters, Zimplats’ improved bottom line is attributable to payments to government – direct and indirect taxes – which came in 31 percent lower at $9 million due to a reduction in the royalty rate.

The company’s operating profit in the quarter, after royalty payments, was still 81 percent lower than the $36 million recorded in the same quarter of 2014, reflecting forfeited production from Bimha mine, Zimplats’ biggest operation, which suffered a ground collapse last year.

In a quarterly update released on Thursday, Zimplats said its revenue for the quarter ended March 31 rose 10 percent compared to the previous quarter due to increased sales.

The $110 million quarterly revenue is, however, 20 percent lower than sales recorded during the same quarter of 2014, Zimplats figures showed on Thursday.

Zimplats said it had recorded a four percent increase in head grade sales volume and a five percent improvement in the gross revenue per ounce sold.

Ore mined increased eight percent during the period under review due to the 43,000 tonnes of ore from the Bimha Mine redevelopment and a 14 percent production increase at Mupfuti Mine.

“The stripping of bulk waste at the Open Pit Mine progressed well with the first ore expected early in the fourth quarter,” said the company.

Head grade decreased by one from 3.25g/t to 3.23g/t due to dilution from mining access drives at Bimha Mine and two major faults with reef displacement which were intersected at Mupfuti Mine, according to the statement.

Tonnes milled increased by nine percent from the previous quarter due to improved ore supply resulting in an eight percent increase in metal in concentrate produced.

The metal recovery rate remained largely unchanged from the previous quarter while metal sales increased by four percent to 104,608 ounces.

Direct operating costs increased by 11 percent in line with the higher production.

“Cash cost per ounce increased by eight percent from the previous quarter largely due to increased support costs at Mupfuti Mine as a result of mining across a major fault, as well as higher cost of production for ore mined during reef development at Bimha Mine,” the company said.

In the last quarter it recorded low cash cost due to the release of metal locked up in the system, which resulted in “metal in converter matte produced” being higher than the metal in concentrate produced.

During the quarter, local spend in Zimbabwe (excluding payments to government and related institutions) decreased by 10 percent  to $46 million and total payments to government in direct and indirect taxes decreased by 31 percent  to $9 million compared to the previous quarter mainly due to a reduction in royalties.

Development of Mupfuti Mine (phase II expansion) is expected to be completed this year.