Weaker gold and platinum prices in the fourth quarter to December (Q4) saw the country’s largest platinum producer Zimplats’ suffer a 17% drop in gross revenue per four elements (4E) — platinum, palladium, gold and rhodium — despite a 70% increase in 4E metal sales volumes.
In its 2016 Q4 production report, Zimplats said platinum and gold prices decreased by 13% and 9% respectively from the previous quarter, resulting in the decline in gross revenue for 4E.
Platinum prices went down by 13% in the quarter to US$945 per ounce while gold prices also slid 9% to US$1 219 per ounce. Although platinum and gold prices tumbled compared to the previous quarter, they were 4% and 10% higher respectively on the same period prior year.
“Four elements (platinum, palladium, gold and rhodium) (4E) production in final product (converter matte and concentrate sold) decreased by 2% from the previous quarter,” Zimplats said in the report.
Revenue increased by 41% from the previous quarter to US$139,2 million largely due to the 70% increase in 4E metal sales volumes, which was partly offset by lower metal prices which saw revenue per 4E ounce decreased by 17% from the previous quarter. Ore mined remained flat on prior quarter at 1,735 million tonnes compared to 1,732 million tonnes the previous quarter while ore milled slid 6% to 1 603 tones.
“Tonnes mined were marginally higher than the previous quarter owing to sustained good operational performances across all the mines,” Zimplats said.
Recovery of 4E went down by 1% to 80% compared to the previous quarter while the metal in concentrate and metal in final product also went down by 7% to 133 414 ounces and 2% to 135 236 ounces respectively.
Head grade (4E) at 3,24g/t was maintained at the previous quarter levels, reflecting sustained focus on grade control while milled ore volumes and 4E metal in concentrate produced decreased by 6% and 7% respectively from the previous quarter driven by the lower concentrator operating time due to the full reline of the semi-autogenous grinding (SAG) mill which was carried out during the quarter.
“Production of 4E metal in converter matte increased by 29% from the previous quarter due to higher furnace availability. The furnace operating time for the previous quarter was affected by a periodic matte-end wall rebuild shutdown in July 2016,” the company said, adding the effect was a 17% increase in operating time from the previous quarter.
Overall metal production (including metal in concentrates sold) was, however, 2% lower than the previous quarter.
Concentrates stockpiled during the furnace shutdown were sold during the quarter, resulting in a 70% increase in 4E metal sales volumes compared to the previous quarter.
“Operating costs increased by 44% in comparison to the previous quarter due largely to the higher sales volumes. This was partly offset by the reversal of impairment on a long-term receivable of US$13 million,” Zimplats said.
Royalties were 39% higher than the previous quarter, in line with the increase in revenue. Profit from operations after royalties of US$20,6 million was realised during the quarter compared to US$16,2 million recorded in the previous quarter.
Zimplats said cash cost per 4E ounce was 2% higher than the previous quarter largely due to the lower 4E production.
Local spend in Zimbabwe excluding payments to government and related institutions for the quarter increased from US$27 million recorded in the previous quarter to US$61 million while total payments to government in direct and indirect taxes increased from US$8 million reported in the previous quarter to US$11 million.