Harare - Zimplats, the Zimbabwean unit of world number two platinum producer Impala Platinum (Implats) [JSE:IMP], announced on Monday that softer commodity prices, increased taxation and lower mineral sales volumes dragged the company to a 29% and 56% revenue and pre-tax profit decline for the full-year to June 30.
The miner is now focusing on mineral beneficiation to meet government expectations in Zimbabwe.
Zimbabwean President Robert Mugabe said in his state of the nation address last week that mineral beneficiation will boost the country’s economy. His Zanu-PF party has previous touted job creation and increased economic activity from the mineral beneficiation and value addition policy.
Zimplats said its refurbished refinery facility will produce a platinum group metals cake. The refinery refurbishment will be completed by mid-2016.
However, revenue generation and profitability for the year to June 30 had been subdued, it warned. Implats will release its June 30 year-end financials on Thursday, amid a commodities prices and market outlook analysts say is less bullish.
Zimplats, which is listed in Australia and majority-owned by Implats, said revenues for the period decreased to US$408m mainly due to a 20% drop in four elements (platinum, palladium, rhodium and gold) sales volumes from 477 905 ounces to 381 849 oz, and a 12% fall in gross revenue per platinum ounce to $2 167 arising from declining metal prices.
To offset production losses due to closure of the collapsed Bimha mine, Zimplats resuscitated its Ngezi open pit mine. During the year under review, the open pit mine contributed 105 692 tonnes of ore mined.
This helped to marginalise production losses for the period to 5.23 million tonnes, about 7% lower compared to the previous year. The platinum miner also incurred higher costs associated with underground roof support in bad ground areas, with gross profit margins declining from 42% in the prior year to 23%.
"However, by end of the financial year, the Group had managed to recover mining production volumes back to the installed milling capacity of 6.2 million tonnes per annum," Zimplats said.
Zimplats said taxation for the year stood at $130.5m, about 314% higher than the previous year mainly due to the impact of two court judgments relating to royalties and income tax disputes issued against the company.
“This resulted in loss after tax for the year of US$74.3 million compared to US$97.1 million profit recorded in the previous year,” it said.