Padenga Holdings Limited, a Zimbabwean company with interests in gold mining and crocodile farming, reported mixed results for the fiscal year 2023 (FY23).
While revenue grew 22% to US$155.58 million, profit margins were squeezed by rising costs and mandatory government surrender requirements.
“The operating environment remained challenging,” the company stated, highlighting “unprecedented cost pressures” that pushed operating costs upwards in US dollar terms.
Padenga’s gold mining unit, Dallaglio, however, managed to remain one of the top three producers in the country.
Gold sales climbed 8% to 2,120 kilograms, driven by increased production at both the Eureka Mine and Pickstone Peerless Mine, where an underground mine opened in September 2023.
The company also benefited from a 9% rise in the average gold price to US$1,945 per ounce.
The positive trend was offset by a decline in profitability. Earnings before interest, tax, depreciation, and amortization (EBITDA) fell from US$32.28 million in FY22 to US$26.69 million in FY23.
The drop was attributed to factors including mandatory gold sales to the central bank at below-market rates, rising operational costs, and the sale of older crocodile skins at discounted prices.
Padenga’s crocodile farming business also faced challenges. While the company reported a 49% increase in harvested crocodile skins, margins were impacted by the delayed sale of some skins after the fiscal year ended.
The costs associated with these sales were incurred in FY23, further pressuring profitability.
Looking ahead, Padenga acknowledged that profitability may remain under pressure in FY24 due to the inflationary environment.
The company is undertaking cost-cutting measures, aiming to reduce all-in sustaining costs for mining operations to US$1,300 per ounce by FY25. Padenga is also investing in solar power projects to offset rising energy costs.
Padenga, however, expressed optimism about the future. The company expects to benefit from continued growth in gold production and favorable gold prices.
Additionally, crocodile skin prices are forecast to remain stable, and Padenga has already contracted 60% of its expected FY24 skin sales with an established buyer.
The completion of the Pickstone Peerless underground mine expansion project by the end of 2024 is also anticipated to boost gold production volumes.
The lingering condition precedent for the full acquisition of Dallaglio, however, remains a hurdle. Once finalised, this deal is expected to improve Padenga’s bottom line by allowing the company to retain all mining profits.
