Zmplats Q3 profit rises 60pct despite revenue fall

Zimplats Chief executive Alex Mhembere

HARARE,– Zimplats reported a 58 percent rise in profit to $64,5 million from in the third quarter to March, from $40,8 million in the previous quarter to December despite lower revenue.

Year on year, the miner’s net profit was up 53 percent on the 442,2 million achieved over the same period last year. Revenue dropped 14 percent to $158.65 million from the previous quarter’s $184.05 million mainly due to lower sales but was up 21 percent year on year.

The miner reported a 16 percent decline in the volume of 4E metal sold, which was partly offset by the improvement in metal prices from $1,078 per ounce to $1,10oz. 4E metal sales for the quarter stood at 137,347oz but benefitted from the export of concentrates stockpiled in the quarter ended 30 September 2017 when the furnace was on planned shutdown.

Net operating costs were down 35 percent at $90,190,000 for the quarter compared to $138,786,000 previously.

The miner also received $9.8 million in respect of treasury bills received in settlement of interest on the $34 million Reserve Bank of Zimbabwe advance. The central bank also issued TBs to settle the principal debt in 2016. Zimplats was among the many corporates and individuals who had their foreign currency accounts raided by the RBZ at the height of Zimbabwe’s hyperinflation period between 2006 and 2008.

During that period the central bank, which was effectively running the country’s budget, says it used the cash to fund government operations, including fuel and power imports as well as the purchase of farm implements doled out to newly resettled farmers.

The purchases were part of the bank’s quasi-fiscal activities which analysts say helped fuel hyperinflation, which peaked at 500 billion percent in December 2008 according to the IMF.

Cash cost per 4E ounce fell16 percent to $592 from the previous quarter cost of $704.  Direct and indirect taxes also dropped to $17 million from $19 million in the previous quarter.

Metal production increased 3 percent to 139.697 ounces compared to the previous quarter’s 136.078 ounces, largely on improved volumes.

“The four element (4E) metal production grew on increased ore milled, a slight improvement in the recovery rate as well as a positive furnace inventory movement,” the miner said in a trading update.

The redevelopment of Bimha Mine was on schedule to reach full production this month after spending $54.2 million was spent on the project while $17.7 million was committed as at March 31, 2018 against budget of $101 million, Zimplats said.

The development of Mupani Mine, the replacement mine for Ngwarati and Rukodzi mines, remains on schedule, targeting ore contact by February 2020 and full production in August 2025 and a total of $24.4 million has been spent and $20.2 million committed on the project as at 31 March 2018 against an approved total project budget of $264 million. – Source