Padenga angles to reduce borrowing costs
Padenga Holdings says it is on a drive to further reduce borrowings and associated interest charges to sustainable levels at the same time targeting operationalising the Pickstone Peerless project by August this year.
According to the group’s financials for the year ended December 31, 2022, the company recorded a marginal 3 percent reduction on interest expense at US$ 9,95 million largely attributable to restructuring of borrowings by the mining business.
The group revenue for the year increased 68 percent to US$ 127,89 million compared to US$ 76,09 million in 2021 with the mining operations Dallaglio, contributing bulk of the revenue at 82 percent while the Zimbabwe crocodile’s business contributed 18 percent.
“Improved group revenue performance was predominantly propelled by the first full year contribution from Eureka Gold Mine in Guruve, which was commissioned in October 2021,” said group chairman Thembinkosi Sibanda in a statement of the financials.
He said as a result of the revenue growth, cost containment measures and the swing from a loss to a gain in biological asset fair value, the group realised a profit before tax from continuing operations of US$ 13,89 million compared to a loss before tax of US$ 7,26 million recorded in FY21.
According to Sibanda, the company generated cash amounting to US$ 24,60 million from operating activities for the year from US$ 15,50 million in 2021 mainly due to improved revenues and efficiencies.
During the year under review, Dallaglio recorded a profit before tax of US$ 12,93 million compared to a loss of US$ 4,33 million in the prior year. Volumes achieved of 1,961kgs were 101 percent higher than 976 kgs in 2021 and this was attributed to the increased contribution from Eureka Mine, which had not been fully operational during the same period last year coupled with improved gold prices.
“Consequently, cash generated from operations amounted to US$ 15,74 million mainly due to the increased gold sales,” said Sibanda.
Revenue from the Zimbabwean crocodile business reduced by 7 percent in comparison to prior year as a result of the 17 percent decrease in the skin volumes partially offset by an improvement in the average realisation per skin.
The business recorded a biological asset fair valuation gain of US$ 2,69 million, benefiting from higher average skin prices forecast in FY23 and an increased quantity of livestock on hand. “Resultantly, a profit before taxation of
US$ 1,93 million was achieved, improving from a loss before tax of US$ 2,81 million incurred in the prior year,” said Sibanda.
He said the Zimbabwe crocodile operation generated US$ 4,93 million in cash from operating activities for the period under review and this cash flow was reduced owing to the shift in the timing of cash flows following the extended harvest programme into the first quarter of FY23.
On the Alligator business, Sibanda said upon the continued oversupply in the alligator skins market coupled with the quality issues that took a number of years to resolve, the business unit accumulated losses over several years.
The company therefore decided to exit the alligator operations in the United States.
In terms of capital projects, Sibanda said the US$ 18 million project to operationalise underground mining at Pickstone Peerless is advanced with the project targeted for completion by August 2023.
Pickstone Mine is owned by Dallaglio Investments which is 50,1 percent owned by Victoria Falls Stock Exchange ( VFEX) listed Padenga Holdings and owns Breckridge Investments whose assets are Pickstone Peerless Mine, Giant Gold Mining Claims and Blue Rock Claims.
“Completion of the project is expected in August 2023, after which commercial production will begin.
‘‘ This is poised to contribute significantly to the Group’s revenue and profits,” said Sibanda.
The underground mining project at Pickstone aims to replace the open pit mine which approaches its end of life early next year.
At the Crocodile Ranching division, capital projects during the year were focused on ongoing rehabilitation of crocodile pens which is central to the skin quality improvement initiatives.
Sibanda said installation of the phase 3 solar array to bring the solar plant capacity to a total of 1,2 began dur
MW ing the last quarter of the year and will be completed during the first half of the year.