Zimplats Q1 revenue slides 6% on lower sales volume
HARARE – Zimplats revenue in the first quarter of 2017 was 6% down on prior quarter at $131.26 mln from $139.18 mln in Q4 2016. In its quarterly update, the platinum mining group said the 4E (platinum, palladium, gold and rhodium) sales volumes declined 22% but its impact on revenue was partly offset by the increase in metal prices.
Metal sales volumes for the previous quarter benefitted from the sale of concentrates stockpiled during a planned furnace shutdown in the first quarter.
During the quarter under review, net operating costs decreased 26% to $85.78 mln from $115.17 mln in prior quarter largely due to the reduction in 4E sales volumes.
“The previous quarter’s net operating costs were impacted by the sale of concentrates which attract higher transport charges”, said Zimplats.
Zimplats said net operating expenses for the quarter benefited from an export incentive ofS$5.3 mln compared to $2.2 mln in the previous quarterand a reversal of impairment of $8 mln compared to $13 in Q4 2016 on the previously written off Reserve Bank of Zimbabwe (RBZ) debt.
The group added that, as previously reported, government issued treasury bills with a total nominal value of $34 mln in settlement of the principal amount owed by the central bank. The treasury bills were however disposed during the quarter for a consideration of $21 mln which was received in the quarter.
The TBs had been discounted using a rate of 27.5% to arrive at a fair value of $13 mln which was recognized in the income statement for the previous quarter.
Royalties were 4% lower at $3.26 mln compared to $3.40 mln previous quarter, in line with the decrease in revenue. The company’s local spend in Zimbabwe excluding payments to government and related institutions for the quarter decreased from $61 mln recorded in the previous quarter to $51 mln. Total payments to government in direct and indirect taxes decreased to $10 mln from $11 mln during prior quarter.
In terms of production, 4E production in final product increased 1% to 135 831 ounces from the previous quarter’s 133 877 ounces. This was largely as a result of reduced tonnes mined which were 3% lower at 1.68 mln tonnes compared to 1,73 mln tonnes in prior quarter as a result of the redeployment of a production team from ore to waste development at Mupani Mine. The quarter also had slightly less operating days compared to the previous quarter.
The group said due to a sustained focus on grade control, the 4E head grade at 3.25g/t improved marginally from the previous quarter’s 3.24g/t in Q4 2016.
Ore milled and 4E metal in concentrate produced decreased 2% to 1,56 mln tonnes and 1% to 132 117 ounces respectively from the previous quarter due to the seven-day shutdown of the Ngezi concentrator for a periodic mill reline.
“This was partly offset by higher operating time at the SMC concentrator which in the previous quarter was down for a periodic reline of the semi-autogenously grinding (SAG) mill.”
Cash costs per 4E ounce increased 2% to $612 from $600 in prior quarter mainly due to the salary increase for the national employment council (NEC) graded employees and maintenance work done during concentrator reline shutdown.
In addition, the strengthening of the South African Rand against the United States Dollar had a negative impact on the cost of goods and services procured from South Africa.
Total revenue per 4E ounce was 21% higher at $993 than the previous quarter’s $817 as a result of higher metal prices.
On the redevelopment of Bimha Mine, Zimplats said it remains on schedule to reach full production in April 2018 and a total of $32 mln had been spent on the project as at 31 March 2017 against an approved total project budget of $92 mln.
In addition, the development of Mupani Mine (replacement mine for Ngwarati and Rukodzi mines) is on schedule targeting to reach the ore contact by May 2020 and full production in August 2025.
A total of $8 mln had been spent on the project as at 31 March 2017 against an approved total project budget of$264 mln.