JOHANNESBURG (miningweekly.com) – Platinum major Implats is withholding further expansionary investment in Zimbabwe until the Zimbabwe government resolves "outstanding issues" and clarifies its latest indigenisation statements.

Among the "outstanding issues" is the Reserve Bank of Zimbabwe's holding without acknowledgement of US$34-million due to Implats' Zimbabwe subsidiary, Zimplats.

Implats CEO David Brown said on Thursday that, while the technical feasibility for a second-phase Zimplats expansion was being completed, its implementation was dependent on the resolution of "outstanding issues with the government of Zimbabwe, including the latest indigenisation statements".

"I hasten to add that we are not anti indigenisation and we do have plans in place to address the proposed legislation, however we do seek additional clarity around this matter," Brown said.

Should the Zimplats Phase Two project fail to go ahead, Implats would still have its proposed 18 Shaft project at Impala Platinum in South Africa to fall back on in order to maintain its million-ounce production level going into the future.

"Quite clearly, 18 Shaft would need to come on line to maintain a million-ounce platinum mark, but we also need to guard against a situation of either 18 Shaft or Zimbabwe.

"It might be 18 Shaft and an expansion in Zimbabwe. Both of those decisions have not been taken, and we certainly will be able to come back to the market on this in the next 12 to 24 months," Brown said in response to a question from JP Morgan mining analyst Steve Shepherd.

On Implats attaining a production of 2,1-million ounces a year by 2014, Brown said that it was envisaged that Impala Rustenburg would provide one million of that total and Impala Refining Services, which processes material from other Implats-linked operations as well as third parties, the remaining 1,1-million ounces through both tolling agreements and the purchase of platinum concentrate from others.

That 2,1-million-ounce expectation did not include Zimplats Two's potential contribution, however.

Pressed further by mining analyst Nic Dinham on Zimplats Two's goahead being seemingly delayed, Brown elaborated that the gazetting of Zimbabwe's indigenisation legislation had taken place too recently to have delayed the project and that Implats had always said that it would go to the February board for technical approval.

"There are two elements that are outstanding. The first element is the funding, and the capital estimates were currently between US$400-million and US$500-million that would be spent over a couple of years.

"The additional ounces that it could deliver would be about 85 000 platinum ounces a year. That would move up Zimplats' group production to about 270 000 oz a year.

"As far as the indigenisation legislation is concerned, this is not new. It's been around for some years and we did a release-of-ground agreement in 2006 with this legislation in mind, because we knew that it was pending.

"It's fair to say that the 51% that they have announced is the overarching goal for all companies. There will probably sector Bill for each of the industry segments, in which mining will have a separate set of parameters, which could be different from the overarching 51%.

"Certainly our understanding is that we would probably look at an equity participation of between 15% and 26%, which is more ore less in line with what we anticipated and we're quite comfortable with that level of equity.

"The balance to get to 51% will be made up through other means, one of these means being the release of ground, which we believe could have a fairly significant contribution to the credit to make up that differential. The other would be credits for social expenditure and infrastructural expenditure, and we believe we have a percentage covered by those items as well.

"What we require is some clarity on the issue, and we need to make sure one more time that the release-of-ground agreement that we have with the Zimbabwe government is as envisaged and is included in the legislation. It doesn't say that it's not included, but on the other hand it also doesn't specifically make allowance for it.

"It's our understanding that it will be taken into account, but quite clearly, with the government coming out with the latest statement, we need to go and make sure one more time.

"There are also a number of other issues we would like to get some clarity on, one is obviously on the debt with the Reserve Bank of Zimbabwe. Zimplats is owed about US$34-million and we want to get some kind of view in terms of acknowledgement of debt and some kind of repayment schedule over a period of time.

"But, I hasten to add that that money won't be paid in a short period of time. You've got an economy of Zimbabwe that's battling and you've got a government that is struggling to raise additional funds. But this is something we want to work at, and also obtain clarity on the indigenisation process.

"We have given ourselves until the May board meeting to get those issues resolved. If we get those by May, we are not really delaying the project from our original thought process," Brown added.

Earlier, he had hailed Zimbabwe's Zimplats as one of the world's lowest cost primary producers, contrasting sharply with the continued lamentable performance from the company's "problem child" Marula mine in South Africa's Mpumalanga province.

In the six months to December, Zimplats' platinum production soared by 74% and tons milled by 82%. Its higher volumes resulted in a 25% drop in unit costs.

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