Platinum producer, Zimbabwe Platinum Holdings (Zimplats) has completed its phase 2 expansion project without exhausting the targeted budget for the project.
The project is expected to boost the company’s PGMs (platinum group metals) output going forward.
“The revised Phase 2 expansion project is now substantially complete. A total of US$1 million was spent on the Mupfuti Mine stockpile cover during the year bringing the project total expenditure to US$463 million against an authorised budget of US$492 million,” said the group.
For the year to June 30, 2020 Zimplats’ mining and milling operations produced 7.2 million tonnes (FY2019: 6.7 million tonnes) and 6.8 million tonnes (FY2019: 6.5 million tonnes), respectively.
“The Group’s 6E head grade at 3.48g/t, was the same as the previous year.
Ore mined and milled increased by 7% and 5% respectively from the previous year benefiting from ore from Mupani Mine and fleet productivity enhancement initiatives that began towards the end of FY2019 which have now been rolled out to all the underground mines,” reported management.
“The concentrator plants throughput was better than the previous year due to higher running time and milling rate.
“The Group’s operations were not affected by the COVID-19 pandemic as all the mines and the processing plants continued operating throughout the year with no confirmed cases within the workforce.”
Total 6E metal produced for the year (including metal sold as concentrate) increased marginally from 579 591 ounces in FY2019 to 580 178 ounces in FY2020.
Zimplats spent a total of US$104.2 million on capital projects (stay in business, replacement mines and expansion projects) compared to US$115 million spent in FY2019.
In terms of financial performance for the year under review, the group’s revenue increased by 38% to US$868.9 million from US$631 million in FY2019 mainly due to the increase in average prices of rhodium, palladium, gold and nickel.
Zimplats largely skated the effects of the COVID-19 pandemic, whose impact would have been felt from the second half of the financial year, but particularly in the last quarter.
“6E ounces sold decreased by 3% from 573 009 ounces in FY2019 to 554 944 ounces in FY2020.
“This was mainly due to the force majeure notice issued by Impala Platinum Limited which resulted in the suspension of sales for more than a month in the final quarter of the year,” said Zimplats.
“The force majeure notice was in response to the COVID-19 pandemic induced lockdown in South Africa.
Cost of sales increased by 8% from US$443.8 million in FY2019 to US$480.4 million mainly due to the increase in share-based compensation and depreciation expense.
“The increase in depreciation expense was due to the change in the
estimation method of depreciation for surface and metallurgical assets from units of production to straight line as well as an increase in the asset base during the year.”
Gross profit margin improved to 45% from 30% in FY2019 mainly due to the improvement in metal prices.
Operating cash cost per 6E ounce increased by 2% from US$602 in FY2019 to US$613 in FY2020 mainly due to inflation.
Profit before income tax for the year increased to US$374.2 million from US$205.3 million in FY2019.
Income tax expense for the year increased to US$112.4 million from US$60.5 million in FY2019 mainly driven by the increase in taxable profit.
Resultantly, profit after tax for the year increased to US$261.8 million from US$144.9 million in FY2019.
Net cash inflow from operating activities increased to US$258.4 million from US$241.5 million in FY2019.
The Group paid dividends of US$45 million (FY2019: US$85 million) and repaid bank borrowings of US$42.5 million (FY2019: US$42.5 million).
At year end, the Group had bank borrowings amounting to US$7.2 million (FY2019: US$42.5 million) and a cash balance of US$135.8 million (FY2019: US$67 million).