HomeBusiness DigestMimosa expansion gets greenlight

Mimosa expansion gets greenlight

IMPALA Platinum (Implats) and Aquarius Platinum, the joint owners of Mimosa Platinum Mines in Zvishavane, have conditionally approved the expansion of the mine to produce 80 000 ounces of platinum per annum.

face=”Verdana, Arial, Helvetica, sans-serif”>The expansion project requires the approval of government and the Reserve Bank, a move that would allow duty exemption on any of its imported materials.

“The joint owners of Mimosa, Implats and Aquarius Platinum have approved a minor expansion to 80 000 ounces of platinum. However, this expansion is subject to the approval and sourcing of external funding as well as approval of project status,” Implats said in its review statement on Mimosa Mine.

Implats said it would proceed with its application to the Ministry of Mines and the central bank for the project.

“An application for project status will be submitted to the government and the Reserve Bank of Zimbabwe. Project status confers attractive duty exemptions on capital goods,” Implats said.

Mimosa is currently producing 66 700 ounces of platinum per year and plans to increase this by 25% in 2006 after the modification of its concentrator at a cost of R154 million.

“Planned capital expenditure of R154 million in the coming financial year will cover modifications to the concentrator to increase capacity by 25% by June 2006,” Implats said.

The company said factors such as debt financing for the project will determine the expansion programme. “In the shorter term, the expansion of production to 80 000 ounces of platinum will proceed subject to debt financing.”

The company said production levels at Mimosa were likely to double in the next three years subject to favourable conditions.

“Indications remain that current production at Mimosa could, given the right circumstances, double in three years,” said Implats. Total operational costs of the mine increased by 42% to R365 million while the cost of production per ounce increased by 30% from R4 199/ounce in 2004 to R5 772/per ounce for 2005.

“Total costs climbed by 42% to R365 million. The cost per platinum ounce was R5 472, 30% higher than in FY2004. The rise in costs was largely due to the pegged exchange rate, despite the devaluation by 45% of the local dollar against the US dollar at the end of May,” Implats said.

The company however said despite increased production costs, the mine remained a low cost platinum group metals producer (PGM).

“Despite the difficult operating conditions being experienced, including cost pressures and excessive levels of inflation, Mimosa retains its status as an exceptionally low-cost PGM producer,” said Implats.

The South African-based company said Mimosa had benefited from the export incentive introduced by the central bank, a move which saw a growth of 141% in export earnings to close at R79 million.

“The export incentive received from the Reserve Bank of Zimbabwe was 141% up on the year at R79 million. (This incentive was recently withdrawn.)

Another positive factor was the announcement in the first half of the financial year of a decline in the tax rate to 15%, backdated to January 2004,” Implats said.

Mimosa Platinum Mine has an estimated lifespan of 20 years while its reserves have been pegged at 32,3 million tonnes of ore. – Staff Writer.

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