Zimplats reports FY $74,3 mln loss after losing tax case

Zimplats reports FY $74,3 mln loss after losing tax case

HARARE, August 31 (The Source) – Zimbabwe’s largest platinum miner Zimplats ‘s reported a $74,3 million loss in the full year to June 30 compared to a $97,1 million profit in the previous year after losing key tax battles earlier in the year, coupled with depressed sales volumes and lower metal prices.

The miner lost two long-running court battles against Zimbabwe’s tax authority and was ordered to pay additional profit tax and a penalty on income tax incurred in the 10 years to 2014.

Zimplats reported on Monday that the two judgements had resulted in a 314 percent increase in tax for the year to $130,5 million compared to the previous year.

Revenue during the year was down 29 percent to $408 million as platinum, palladium, rhodium and gold (4E) sales volumes fell from 477,905 ounces to 381,849 ounces during the year.

“Cost of sales of $316 million was five percent lower than the previous year’s $332 million mainly due to the decrease in sales volumes which was partly offset by higher costs associated with underground roof support in bad ground areas,” said the miner – a local unit of South Africa’s Impala Platinum Holdings (Implats).

Gross profit margins deteriorated from 42 percent in the prior year to 23 percent in the current year due to lower metal prices and the impact of lower production and sales volumes on fixed costs.

Operating cash cost per platinum ounce for the year increased by 18 percent from $1,319 in the prior year to $1,551 mainly due to the impact of the lower production volumes on fixed costs.

Administrative expenses for the year at $44,1 million were marginally higher than the $43,8 million reported in the previous year.

Zimplats reported infrastructure and equipment with a net carrying amount of $22,9 million had been written-off during the year following closure of its Bimha Mine last August. Additionally, costs incurred on the greenfield Phase 3A Base Metal Refinery (BMR) feasibility studies amounting to $15.6 million were written off in the year after the group decided to refurbish the Selous Metallurgical Complex (SMC).

Despite the loss, Zimplats declared a final dividend of $13 million – equating to 12,08 cents per share.

At year-end, the miner had bank borrowings amounting to $82 million and a cash balance of $73,5 million.