ZIMBABWE’S largest platinum producer Zimplats suffered a 24,4% slump in revenue per ounce amid increasing operating and distribution costs, latest results show.
By Taurai Mangudhla
Despite a 53% increase in sales volumes for the four metals (4E) — platinum, palladium, rhodium and gold — from 381 849 ounces to 582 833 ounces in the year-ended June 2016, low metal prices saw revenue increase only by 16% from US$408 million in 2015 to US$472 million in 2016.
“This was due to lower metal prices, which saw gross revenue per platinum ounce decrease from US$2 167 to US$1 638,” Zimplats said in a statement.
Cost of sales increased by 24% from US$316 million in FY2015 to US$391 million, despite the 53% increase in 4E sales volumes, reflecting the benefit of the cost containment initiatives implemented in response to low metal prices that were obtaining on the global market.
Selling and distribution expenses increased by 126%from US$2,3 million in 2015 US$5,2 million in 2016 largely due to the sale of concentrates which attract higher transport charges, said Zimplats.
Zimplats reported a profit after tax for the year of US$7,3 million compared to a US$74 million loss recorded in the previous year.
The company’s 2015 results, said the platinum miner, benefited from the US$95,8 million royalty overpayment refund as a result of the High Court of Zimbabwe judgment in the case involving a dispute between Zimbabwe Platinum Mines (Pvt) Limited (the operating subsidiary) and the Zimbabwe Revenue Authority over which mining royalty provisions are applicable to the operating subsidiary.
“The prior year results were negatively affected by the write-off of assets worth US$38,5 million — US$22,9 million in respect of equipment from Bimha Mine, which was either damaged or rendered irretrievable by the collapse of a section of the underground working area, as well as US$15,6 million costs incurred on the greenfield Phase 3A base metal refinery feasibility studies,” said Zimplats. “As a result of these factors, profit before income tax for the year decreased by 48% from US$56,1 million in the prior year to US$29,4 million.”
The company’s income tax expense for the year improved by 83% to US$22 million from US$130,5 million in the previous year.
“Income tax in the previous year was higher than usual due to a US$55,6 million additional profits tax (APT) adjustment in respect of prior periods arising from the disallowance of assessed income tax losses in computing APT and the US$45,8 million APT on the refund of overpaid royalty,” said Zimplats.
Following the precautionary closure of production operations at Bimha Mine in August 2014, the response plan to mitigate the loss in production, which included the redeployment of fleets, resuscitation of the discontinued open-pit operations and he redevelopment of Bimha Mine, was successfully implemented resulting in record run of mine ore production of 6,6 million tonnes in 2016, up from 5,2 million tonnes prior year.
Zimplats spent US$27 million on expansion projects during the year under review compared to US$38 million in the previous year.