Zimplats, the country’s largest platinum producer, reported a 6% drop in half-year profit due to a drop in metal prices on Monday.
The company’s profit for the half year ended December 31, 2022 was US$159.59 million, down from US$170.68 million in the previous period.
The miner saw its revenue fall by 7% to $545.52 million from $585.21 million in the prior comparable period. It attributed the decline to lower sales volumes, with actual six elements (platinum, palladium, rhodium, gold, ruthenium and iridium) (6E) ounces sold at 291 751 against 322 752 ounces in the prior period.
“The prior period benefitted from the sale of matte produced and stockpiled due to the administrative delay in the export of matte towards the end of the previous financial year,” chief executive officer Alex Mhembere said in a statement accompanying the results.
6E production increased by 6% to 300 738 ounces from 283 829 ounces in the same period last year, mainly due to the introduction of the third concentrator module during the half year.
Cost of sales increased by 7% to US$315.6 million from US$294.9 million.
“Consequently, gross profit margin was 42%, an 8% reduction from 50% achieved in the same period last year mainly due to the impact of higher than budget operating cost per 6E ounce in the current period,” he said.
“The depressed average US dollar metal prices also had an adverse impact in the current period.”
Accordingly, cash operating cost per 6E ounce produced at US$822, increased by 17% from the US$707 in the comparative period.
“This was driven by inflation related price increases on major consumables, 42% power tariff increase with effect from October 2022 and increase in intermediated money transfer tax (IMTT) charges from 2% to 4%,” Mhembere said.
It generated net cash inflows from operating activities amounting to US$122 million compared to US$261.3 million in the prior comparable period. The company paid dividends of US$120 million from US$85 million previously.
On capital projects, Mupani Mine targets 3.6 million tonnes per annum in August 2028. As of December 31, 2022, US$225 million out of the project’s allocated $386 million budget had already been spent.
Mhembere stated that the modernization of the Bimha Mine, which partially replaces the Mupfuti Mine, is progressing well, with a nominal production of 3.1 million metric tons per year.The remaining scope for maintaining capacity is expected to be completed in the first quarter of FY2024. As of December 31, 2022, US$51 million had been spent on this project, which had an approved US$82 million budget.
In October 2022, the third concentrator facility at Ngezi ramped up to nameplate capacity (0.9 million tonnes per year), having been successfully commissioned in September 2022. A total of US$97 million had been spent against an approved budget of US$104 million as at 31 December 2022.
Construction work was done on-site and equipment was manufactured off-site as the smelter expansion and SO2 abatement program continued. The project aims to reduce SO2 emissions and reach an operational capacity of 380 000 tonnes of concentrate (about 538 000 6E ounces) by FY2025. As of December 31, 2022, US$50 million had been spent from a US$521 million approved budget.
The board established a capital budget of US$190 million and set an approved completion date of October 2025 for the restoration of SMC’s idle base metal refinery (BMR).
The Board approved the Solar PV Project Phase 1A in March 2022 with a 35MWac output capacity as the initial stage toward a final aspiration capacity of 185MWac. For Phase 1A of the project, a capital budget of US$37 million has been allowed. The engineering, procurement, and construction contract was given out throughout the six-month period with January 2023 as the intended start date.
“The plant will achieve commercial operation in October 2023,” he said – Harare