Zimplats profits drop by 68pc

reduced profitability to depressed platinum group metal prices during the period under review.
During the quarter under review, platinum prices declined by 13 percent to US$1 533 per ounce from US$1 772 per ounce in the prior period. Palladium prices were down 17 percent to US$629 per ounce from US$754 per ounce.
Rhodium also went down 17 percent to US$1 511 per ounce to US$1 823 per ounce as metal prices continued to weaken reflecting market concerns with regards to economic stability in some European countries.
The decline in operating profit was a 74 percent fall compared with the same period in 2010.
The company said its profitability during the period was negatively affected by a faster accrual rate.
“In addition, royalties for the period dating back to January 2010 have accrued at a higher rate than that provided for in the company’s agreement.
“This is the subject of a legal dispute between the company and the tax authorities, which is before the courts,” said Zimplats.
The platinum producer’s financial performance for the quarter was generally poor.
Despite an increase in volume of metals sold, revenue at US$97 million was 27 percent below the previous quarter due to the weaker metal prices.
But Zimplats reported that mining performance was 11 percent above the prior year as all its three underground mines were now operating at full capacity.
Operating costs were 8 percent above the previous quarter in line with the higher sales volume and the increase in power costs, following the 61 percent tariff increase by Zesa Holdings that came into effect in September last year.
In terms of metal production, Zimplats’ milling operations performance was 5 percent and 7 percent above previous quarter and the same period last year respectively due to increased operating hours and no major shutdowns during the period.
4E (Four elements: platinum, palladium, rhodium and gold) metal production was 2 percent above the previous quarter and same period last year reflecting the net effect of 5 percent higher milled tonnage and 2 percent lower head grade.
Zimplats reported a general increase in the base metal content of the ore mined, which resulted in nickel and copper production being 8 percent and 7 percent above previous quarter.
Zimplats’ contribution to the fiscus, in direct and indirect taxes for the quarter, stood at US$22 million, 38 percent higher than the previous quarter.