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Zimplats capital expenditure drops

By Oliver Kazunga

Platinum miner, Zimplats, recorded a drop in capital expenditure (Capex) to US$115 million during the financial year ended June 30, 2019 compared to US$135,3 million spent during the corresponding period last year.

FILE - A worker drives a vehicle at Zimplats' Ngwarati Mine in Mhondoro-Ngezi May 30, 2014.
FILE – A worker drives a vehicle at Zimplats’ Ngwarati Mine in Mhondoro-Ngezi May 30, 2014. (Reuters)

In its preliminary final report accompanying financial results for the period under review, Zimplats indicated that despite the decline in capital expenditure, it was focused on redevelopment programmes.

“The group spent a total of US$115 million on capital projects (stay in business, replacement mines and expansion projects) during the year compared to US$135,3 million spent in financial year 2018,” it said.

A total of US$82,4 million was spent on stay-in-business projects during the year. The platinum producer said development of its Mupani Mine, a replacement mine for Rukodzi and Ngwarati mines, which will be complete in the financial year 2021 and 2025 respectively, was progressing well and ahead of schedule. A total of US$28,1 million was spent on the project during the year, bringing the total expenditure to US$67 million.

The mine is scheduled to reach full production of 2,2 million tonnes per annum in August 2025 at an estimated total project cost of US$264 million. Zimplats said the revised Phase II expansion project continued with the completion of mop-up work, focusing mainly on the construction of the Mupfuti Mine’s 13 000 tonnes stockpile cover and some outstanding work on the concentrator plant.

“The Selous Metallurgical Complex Base Metal Refinery refurbishment project remains on hold pending finalisation of the national beneficiation road map.

“The project total expenditure as at 30 June 2019 was US$23.6 million,” it said, adding that pre-feasibility studies were carried out during the year on Portal 10 at a total cost of US$1 million and that preliminary works leading to the commencement of a bankable feasibility study were underway.

On Bimha Mine which was undergoing redevelopment, the platinum producer said the mine achieved design production capacity in April 2018 as planned, ahead of completing the installation of the full ore-handling infrastructure. The underground north crusher and the ore-conveyancing system were commissioned in August 2018 as planned.

The outstanding infrastructure, comprising the south crusher and ore-conveyancing system are scheduled for commissioning in the first quarter next year, which completes the full project scope.

“A total of US$17,4 million was spent on this project during the year, bringing the total project expenditure as at June 30, 2019 to US$83,3 million,” said Zimplats.

Meanwhile, the mining firm during the period under review recorded increased revenue by eight percent to US$631 million from US$582,5 million in the 2018 financial year.

The revenue increase is attributable mainly to the favourable prices of palladium, rhodium, ruthenium and iridium.

“Cost of sales increased by four percent to US$447,7 million from US$431,3 million in FY2018, mainly due to the increase in royalty, insurance premiums and provision for share-based compensation,” said Zimplats.

“Gross profit margin improved to 29 percent from 26 percent in FY2018 mainly due to the improvement in average metal prices achieved. Operating cash cost per platinum ounce increased marginally to US$1 292 in FY2019 from US$1 290 in FY2018 due to the increase in insurance costs and the introduction of a two percent intermediated money transfer tax.” The Chronicle