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LOCAL platinum producer Zimplats Holdings Ltd posted a loss after tax for the half year to December 31, 2015 of $0,6 million compared to a profit of $3,9 million recorded during the same period last year largely due to a combination of higher taxes and weak metal prices.
Taxation for the half year rose to $1,2 million from $0,8 million in the prior comparable period.
“Net cash inflows from operating activities for the period decreased from $107,8 million recorded during the same period last year to $6,5 million mainly due to the impact of lower metal prices and the furnace breakout which occurred in May 2015 on sales proceeds,” said the platinum producer in a statement accompanying its results.
The firm’s revenue for the period slid 12 percent to $204,4 million from prior comparable period as weak metal prices took their toll. The dip in revenue was despite a growth in sales volumes during the period. According to Zimplats, half-year platinum sales rose from 103,092 ounces (oz) to 128,431 (oz).Mainly as a result of the limp metal prices, the platinum miner’s gross revenue per platinum ounce of $1,591 for the half year was 30 percent lower than $2,265 in the parallel period last year. Cost of sales of $185,7 million were 14 percent higher than the same period last year’s $162,4 million mainly due to the increase in sales volumes. Gross profit margins deteriorated from 30 percent in the prior period to nine percent in the current half year mainly due to lower metal prices.
In terms of production during the half-year, tonnes mined for the half year increased 30 percent to 3,27 million tonnes from the same period in 2014.
Management attributed the rise to ore supply contribution from the Ngezi South open-pit (which started in the quarter ended June 30, 2015) of 423,000 tonnes and increased production from underground mines following the re-deployment of fleets from the collapsed Bimha Mine.
As a result tonnes milled increased by 26 percent to 3,12 million tonnes compared to the same period last year. 4E (platinum, palladium, rhodium and gold) mill head grade at 3.223g/t was 1 percent lower than the previous year’s 3.253g/t.
Meanwhile, royalty and commission expense of $5,1 million reported for the period in question was 72 percent lower than the $17,8 million reported in the prior comparable period.
“The decrease was mainly due to the revenue decline and the High Court of Zimbabwe judgment in the case involving a dispute between Zimbabwe Platinum Mines (Pvt) Ltd and ZIMRA over which mining royalty provisions are applicable to the operating subsidiary.
“The judge ruled that the royalty provisions in the operating subsidiary’s mining agreement take precedence over the royalty provisions set out in the Finance Act (Chapter 23:04) and that accordingly the operating subsidiary is liable to pay royalties at the rate of 2,5 percent of the value of all minerals produced and not at the higher Finance Act rates,” explained Zimplats. Zimplats has not declared a dividend for the period. -BH24.
derick.khumalo