Padenga revenue on upward trend
DIVERSIFIED crocodile breeder, Padenga Holdings is projected to register revenue growth to reach an estimated US$84 million for the financial year 2021 spurred by gold mining operations and the higher foreign currency retentions from following its listing on forex denominated Victoria Falls Exchange (VFEX) listing.
Following an export incentive introduced by the Government in May this year, Padenga’s board made a decision to delist from the Zimbabwe Stock Exchange (ZSE) in order to relist on the VFEX.
Padenga became the second listing on the VFEX on July 9, 2021. The firm was traditionally a crocodile breeder, skin and meat producer, until recently when it diversified into gold mining through the successful acquisition of a 50,01 percent shareholding in Dallaglio Investments (Private) Limited.
Stockbrokers IH Securities see the gold operations at Padenga’s Eureka Mine, held through Dallaglio, and export incentives boosting current full year revenue and in the future .
“Overall revenues for Padenga are expected to remain on an upward trend carried by extension of the gold mining operations, as well as higher forex retention given the VFEX listing. Export facing companies listed on the VFEX are now entitled to higher retention rates on their incremental exports. In addition, the listing on the VFEX enables Padenga to raise capital in foreign currency from a deeper investor base to pursue viable acquisitions in related export sectors.
“The listing also enables shareholders to unlock a ‘real’ USD valuation of the business, with capital gains and dividends realisable in hard currency,” said IH in an earnings review of the group.
Eureka mine recently started production and is expected to reach full production by year end. The mining operations are forecasted to produce 983kg (31 603oz) gold for the financial year 2021.
During the half year to June 30, 2021, mining volumes at its other gold miner, Pickstone, were 22 percent below the comparable period last year due to feed grade ore and flooding of the open pit during the first quarter of the year as well as the consequences of inappropriate mining methods used historically which limit opportunities to cost effectively expand the open pit operation.
According to the group, management has fully reviewed its options and is working on remedial programme.
Dallaglio’s revenue contributed 72 percent to Padenga’s total revenue. The mining segment, however, recorded a loss of US$9,5 million compared to a profit US$2,6 million weighed down by the low ore grade and high strip ratio at Pickstone Peerless mine.
Overall group revenue went down by a marginal 6 percent to US$21,2 million from US$22,5 million during the same period last year while a loss before tax of US$12,7 million was recorded, which was 237 percent below the profit of US$9,3 million recorded in the comparable prior year period.
The loss was largely driven by low ore grade and high strip ratio at Pickston Peerless mine and below target sales volumes for the Zimbabwe crocodile operation.
“Of concern is the narrowing profit margin as finance costs have increased to fund expansion of the mining business. In addition, reduced average prices for skins will likely lead to continued strain on EBITDA (earnings before interest tax depreciation and amortisation) margins in the short term.