JOHANNESBURG (miningweekly.com) – Impala Platinum subsidiary Zimbabwe Platinum Mines (Zimplats) said Wednesday that depressed metal prices had put severe pressure on cash flows and the company would consequently have to secure higher levels of bank borrowings than originally envisaged.

ASX-listed Zimplats recorded a 52% fall in operating profit for the quarter ended June, dropping to $25-million, from $51.86-million in the previous quarter.

The company also saw an 11% decrease in revenue to $114.43-million from $128. 21-million achieved in the March quarter.

Despite the 13% increase in the metals sales volumes during the latest quarter, which increased to 102 098 oz from 89 979 oz, gross revenue per platinum, palladium, rhodium and gold (4E) ounces were 21% lower than the previous quarter.

In line with the higher sales volumes, operating costs for the reporting period amounted to $89.54-million, 17% above the previous quarter’s $76.36-million.

Further, adding to weaker financial performance was the payment of the first tranche of $3.3-million to the Community Share Ownership Trust to make $10-million available to the trust over a three-year period.

Zimplats was currently awaiting court resolution of the dispute regarding it having been ordered to transfer 31% of its shares to a State-run fund to comply with local empowerment laws.

A joint technical committee comprising representatives from the government of Zimbabwe and Zimplats’ management has been set up to work through material issues pertaining to the agreement. Discussions were ongoing.

Meanwhile, Zimplats stated that its local spend, at $65-million or 54% of total payments, was satisfactory.

PRODUCTION

Mining production for the June quarter was 1.17-million tons, 4% above the 1.13-million tons achieved the previous quarter. Head grade was 3.28 4E g/t, 2% lower than 3.33 4E g/t in the prior quarter, owing to poor ground conditions in some sections of the mines.

Tonnage milled during the period was 1.15-million tons, 8% higher than the previous quarter’s 1.07-million tons, owing to improved plant availabilities in comparison with the previous quarter.

Metal in matte production was 100 798 4E oz, marking growth of 11% from the previous quarter’s 90 557 4E oz. This was in line with the higher milled tonnage and the smelting of concentrates stockpiled in the previous quarter when the smelter was down for scheduled periodic maintenance.

Implementation of the Phase 2 expansion project of Zimplats’ Ngezi mine progressed well in the quarter. The project remained on schedule for the commissioning of the concentrator plant in April 2013. However, constrained cash flows have resulted in parts of the infrastructure component of the project having been rescheduled to subsequent years.

During the quarter, Zimplats advanced a $25-million loan to the Zimbabwe Electricity Supply Authority, which was used to reduce the utility's overdue indebtedness to Mozambique’s Hidroelectrica de Cahora Bassa electricity firm in respect of power imports.

This enabled Zimbabwe to resume power imports from Mozambique to augment the country's constrained power generation.

“The loan principal and interest were converted into power units, which would be redeemed over three years. In return, Zimplats is guaranteed uninterrupted power supplies for its operations for five years,” the platinum miner stated.

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