UPDATED: Zimplats objects to Mugabe's planned land claim take-over

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Harare – Zimplats, Impala Platinum’s [JSE:IMP] unit in Zimbabwe, has two weeks to launch an objection to President Robert Mugabe’s intentions to take over about 28 000 hectares of land claims, the company said on Tuesday.

Mugabe’s government gave fresh notice of its intention to acquire the land claims on January 13. Zimplats objected to the previous notice in the Administrative Court in Harare, saying it had errors; it has now been repealed by the fresh notice, it added.

“The operating subsidiary has 30 days from January 13 2017 to lodge an objection to the proposed compulsory acquisition. The operating subsidiary is engaging the government of Zimbabwe on the matter,” Zimplats said.

Apart from this, Zimplats is also still discussing its compliance with the country’s indigenisation policy with the government, although President Robert Mugabe has softened his stance.

He said existing foreign mining companies in Zimbabwe can keep majority control as long as they spend 75% local content inside the country through payment of taxes, royalties, salaries and local procurement among other requirements.

Local spend in Zimbabwe (excluding payments to government and related institutions) for the December 2016 quarter increased from $27m recorded in the previous quarter to $61m. Additionally, Zimplats said, total payments to government in direct and indirect taxes rose from $8m in the previous quarter to $11m.

This was after revenues for the period firmed by 41% to $139.1m “largely due to the 70% increase in 4E (platinum group metals - platinum, palladium, gold and rhodium) metal sales volumes which was partly offset by lower metal prices”.

Operating costs for the period also increased by 44% compared to the previous quarter, pushed up by the “higher sales” volumes, while the company lifted operating profits to $20m.

However, this was partly offset by the reversal of impairment on a long-term receivable of $13m while royalty payments to the government were 39% higher at $3.4m.

Milled ore volumes and 4E metals in concentrate produced fell by 6% and 7% respectively. Zimplats explained this was driven by lower concentrator operating time, due to a relining exercise for its mill.

“Production of 4E metal in converter matte increased by 29% from the previous quarter due to higher furnace availability. The furnace operating time for the previous quarter was affected by a periodic matte-end wall rebuild shutdown in July 2016,” it said.

Stockpiled concentrates from the period of the outage of the furnace in July were subsequently sold during the December quarter, resulting in the 70% increase in 4E metal sales volumes compared to the previous quarter.

Forging ahead with investment plans

Zimplats is forging ahead with investment plans despite the threat of government's land claim take-over, and said the redevelopment of Bimha mine remains on schedule to reach full production in April 2018.

“A total of $24m had been spent on the project as at 31 December 2016 against an approved total project budget of $92m,” said Zimplats.

The company’s board also approved the feasibility study for Mupani Mine (replacement mine for Ngwarati and Rukodzi mines), and development of the new mine commenced during the period under review.

“Mupani Mine is scheduled to reach full production in August 2025 at an estimated total project cost of $264m,” said Zimplats.

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