Base Metal Refinery project still a priority — Zimplats

PLATINUM mining giant, Zimplats’ $134 million SMC Base Metal Refinery (BMR) refurbishments project remains a priority for the group but continued cash flow constrains arising from depressed metal prices has left the project in limbo.

Zimplats in 2014 indicated plans to start the rehabilitation and commissioning of its mothballed Selous Metallurgical Complex Base Metal Refinery. The project total expenditure as at June 30, 2017 was $23,4 million.

Resuscitation of the BMR is in line with Government’s thrust to add value to locally produced minerals as highlighted in the Zimbabwe Agenda for Sustainable Socio-Economic Transformation.

Zimplats chief executive Mr Alex Mhembere, told the company’s analyst briefing on Wednesday that the issue of metal prices has had an effect on the company’s capital and expansion projects but the BMR refurbishment remains a priority.

“The SMC Base Metal Refinery (BMR) refurbishment project remains constrained by cash flow challenges arising from the depressed metal prices. The project total expenditure as at June 30, 2017 was $23,4 million,” said Mr Mhembere.

He said the group spent a total of $63,3 million on capital projects during the year to June 30,2017 ($59,3 million stay in business projects and $4 million expansion projects) compared to $68,1 million spent in the full year 2016 ($41,6 million stay in business projects and $26,5 million expansion projects).

Mr Mhembere said the Ngezi Phase 2 expansion project is now substantially complete with a total project to date expenditure plus commitments of $458 million as at June 30, 2017.

The project will be officially closed in the full year 2018.

Development of Mupani Mine, which is expected to replace some mines owned by the platinum miner ,is said to be going on well with $264 million going to be spent. A total of $4 million was spent on expansion projects during the year under review compared to $27 million in the previous period.

On financial performance, Zimplats profit after tax for the year under review was 522 percent up at 45 million from $7 million of the previous comparative period. Profit before tax was up at $100 million from $29 million aided by $20,8 million proceeds from the disposal of Treasury Bills issued in settlement of the $34 million Reserve Bank of Zimbabwe advance. The surge in PBT was also driven by $14 million export incentive received from the RBZ.

The company had to sell its TBs at a 38 percent discount, a situation which saw the platinum miner getting $21 million.

Mr Mhembere said since inception the company has generated cash in excess of $5,3 billion with majority of the funds going towards funding operations.

Of the cash generated $1.4 billion went towards capital and expansion projects.

Revenue for the year under review increased nine percent to $512.5 million from $471.8 million despite a five percent decrease in 4E sales volumes to 555 892 ounces from 582 833 ounces.

Revenue was supported by an increase in average metal prices as gross revenue per platinum ounce improved to $1 868 from $1 638.

Cost of sales decreased by six percent to $367,1 million from $390.7 million in the full year 2016 largely due to the five percent decrease in sales volumes.

Gross profit margins for the platinum miner improved to 28 percent from 17 percent of the previous due to the improvement in average metal prices.

Zimplats had a record 6.7 million tonnes milled in the year compared to 6.4 million tonnes milled in the previous year. This was largely due to good plant running time achieved and improved ore supply from the mine.