VICTORIA Falls Stock Exchange-listed crocodile breeder Padenga Holdings Limited says it is actively pursuing plans to retire a debt overhang that has stifled expansion plans.
Padenga picked a significant part of the US$63,3 million debt through borrowings for funding the rehabilitation of Eureka, a gold asset taken over by Dallaglio about two years ago.
Dallaglio presides over Padenga’s mining interests.
While sharing financial statements for the year ended December 31, 2021, Padenga chief finance officer (CFO) Oliver Kamundimu said the debt had become an albatross around Padenga’s ambition to diversify into plantation agriculture, which was shelved in 2021.
Padenga’s debt to equity ratio rose to 80% during the review period, from 49% during the year ended December 31, 2020.
“Moving into the future, immediate focus is on mitigation of cost increments, maintenance of positive liquidity and retirement of group debt,” the Padenga CFO said.
“(Padenga is) intensively lobbying for the reduction of the surrender requirements that erode 20% of the value of export earnings and materially impacts on debt resolution.
“US dollar inflation is rising globally and this will put pressure on costs. Prices for fuel and energy products are expected to remain high. We anticipate further opening up of economies across the globe post-pandemic,” Kamundimu said.
Padenga restructured its debt during the financial year, with 47% becoming long term.
This figure was 12% in 2020.
Kamundimu said expansion into plantation agriculture would be revisited once the current debt position has been addressed and would be restarted with a view to sinking major investment from 2023.
The loss of purchasing power from the surrender of 40% of United States dollar revenue materially impacted on profitability.
During this period, the group’s revenue marginally increased 10% to US$78,4 million from US$71,6 million during the comparable period in 2020.
The firm reported a loss before tax of US$ 6,4 million.
Revenue increase was largely driven by the contribution from mining operations following the commissioning of the Eureka gold mine in October 2021.
Meanwhile the group has set aside US$29 million for capital expenditure for this year.
Padenga chief executive officer Gary Sharp said US$18 million would be directed for expansion capital expenditure on the Pickstone gold mine underground project.
“Gold prices are forecast to remain high for the foreseeable future. Dallaglio expects to realise higher average export retention in 2022 compared to 2021,” he said.
“Gold production volume is expected to nearly double in 2022 from the production achieved in 2021. The significant contributor being Eureka Mine, which will contribute production for a full year at nameplate.
“In Quarter 4 2021, the Dallaglio board approved the investment into underground mining operations at Pickstone Peerless Mine. The underground operation is expected to start feeding ore with attractive grades to the plant in second quarter 2023,” he said.
Sharp added that trial initiatives on the crocodile farms directed at improving skin quality in response to the recent market evolution had produced positive results and were being implemented across the board in FY22.