ZIMPLATS expects to spend about US$170 million in capital expenditure to complete its phase two expansion project, CEO Alex Mhembere said this week.
Report by Staff Writer
The group had budgeted for US$500 million and has committed US$332 million to date. Of that amount, US$223 million had been spent so far, he said.
Mhembere said the focus of the expansion would be on the development of the Mupfuti underground mine, with full production expected by March 2015.
The group will also commission a concentrator and related infrastructure in April next year, with the tailings dam scheduled for completion next month.
The project was due for overall completion in FY15 but would be delayed due to cash constraints and if the current weaker base metal commodity prices regime persisted.
“Zimplats has not been spared from the difficulties affecting the mining industry as a whole. We are operating in a depressed market characterised by depressed metal prices and surplus in supply,” said Mhembere.
As a result the group reported a 39% decline in after tax profit to US$122 million, after lower revenue, higher power tariffs and a weaker rand affected performance.
Revenue was down 10% to US$473 million while the pretax line fell 36% to US$151 million.
The group had advanced Zesa US$25 million to settle its debt with Mozambique’s Cahorra Basa Hydro, which would cover their tariffs for the next three years. Cost of sales incurred in the period went up due to a 60% power tariff increase effected in September last year.
“In addition, increased royalties based on the Finance Act as opposed to the security market line rate resulted in further margin compression,” said Mhembere.
Cash costs per ounce of platinum were only 5% marginally higher at US$1 226 per ounce from US$1 171. The average platinum price in the period was at US$1 606 per ounce. Borrowings increased by US$26 million to US$66 million.
In terms of operations, platinum ounces produced are up 3% to 187 100 in FY11, with mined ore increasing by 8% to 4,59 million tonnes.
In the quarter to June, Zimplats recorded a 52% drop in operating profit to US$24,884 million from the March amount of US$51,855 million. The amount is also a 62% fall from the comparable June quarter in 2011.
Revenue in the quarter was at US$114,428 million, a decrease of 11% from US$128,21 million in March and 22% lower than US$146,849 million in the corresponding quarter last year.
The group said it produced 102,098oz from 1,172 million tonnes of ore.
Mining production was 4% above previous quarter.
Head grade was, however, 2% lower than prior quarter owing to poor ground conditions encountered in some sections of the mines.