After successfully increasing the ore mined across its operations by 19% quarter-on-quarter to 1.48-million tons for the three months ended June 30, platinum miner Zimplats has lifted the production of platinum, palladium, gold and rhodium (4E) metal-in-concentrate by 12%, delivering 119 427 oz in the quarter under review.

Boosted ore volumes were largely the result of an increase in tons mined from the openpit operation, as well as a general increase in production from the underground mines.

The openpit operation, which started producing ore in April, operated at its design capacity of 830 000 t/y over the quarter, while redevelopment work at the Bimha mine continued to progress, with 87 000 t mined from the access drives and access points in the quarter under review.

The project was on schedule to reach full production in April 2018, the Zimbabwean unit of JSE-listed Impala Platinum said in a results statement.

Looking to its other capital projects, the development of the Mupfuti mine to full production after implementation of the new pillar design was progressing “well” and was targeted for completion next year, while the project to refurbish the mothballed Stillwater Mining Company’s base metals refinery was in progress and scheduled for hot commissioning by July next year.

Zimplats added that the overall 4E headgrade, at 3.22 g/t, remained unchanged from the previous quarter, despite lower grades from the opencast mining area.

It noted further that the 4E metal recovery rate deteriorated marginally by 1% from the previous quarter owing to the reduction in mass-pull to align the concentrate volumes produced with the existing smelter capacity.

Meanwhile, a furnace shell break-out in May, which resulted in the furnace being offline for 5 days, drove a 32% decrease in 4E metal-in-converter matte produced to 71 084 oz and a 35% decrease in product sold to 68 255 oz.

Looking to its bottom line, Zimplats’ revenue narrowed by a hefty 41% to $64.64- million over the three months, swinging the miner to a loss from operations, after royalties, of $32.58-million.

This came despite a 20% reduction in operating costs as a result of the decrease in overall sales volumes.

Cash costs per 4E ounce increased by 12% from the previous quarter largely owing to the 32% decrease in 4E metal-in-converter matte production and the provision for retrenchment costs.

Moreover, during the quarter, local spend in Zimbabwe, excluding payments to government and related institutions, increased by 24% to $46-million, while total payments to government in direct and indirect taxes decreased by 18% to $7-million, compared with the previous quarter, mainly owing to a reduction in royalties in line with lower sales revenue.

Zimplats also saw across-the-board declines in the average prices achieved for its products over the quarter, with the realised platinum price dropping 6% to $1 127/oz, the palladium price narrowing 3% to $760/oz and the achieved rhodium price slipping 10% to $1 030/oz.

Legal Resolutions
The company, meanwhile, reported that discussions were ongoing with the Zimbabwe Revenue Authority (Zimra) on the respective amounts due by both Zimplats’ operating subsidiary Zimbabwe Platinum Mines (ZPM) and Zimra in relation to a dispute over the payment of royalties and the payment of additional profits tax (APT).

As was reported previously, the High Court of Zimbabwe issued its judgment in the case involving a dispute between ZPM and Zimra over which mining royalty provisions were applicable to the operating subsidiary.

The judge ruled that the Finance Act and that the royalty provisions in ZPM’s mining agreement took precedence over the royalty provisions of the Finance Act and, accordingly, the operating subsidiary was liable to pay royalties at the rate of 2.5% of the value of all minerals produced and not at the higher Finance Act rates.

The effect of the judgment was that ZPM overpaid royalties by $108-million in respect of the period from January 2004 to December 2014.

As was also reported previously, the Special Court for Income Tax Appeals delivered its judgment in the case involving a dispute between the ZPM and Zimra on the issue of whether income tax assessed losses were allowable deductions for the purposes of calculating APT.

Zimplats reported that the judge found that an assessed income tax loss carried forward from a previous year of assessment was not allowable as a deduction in computing APT.

The effect of this judgment is that the operating subsidiary had an additional liability of $61-million for APT for the period from July 2004 to June 2014.

“The reversal of overpaid royalties will result in corporate income tax and APT of about $17-million and $46-million respectively for the financial year ended June 30.

“Zimra agreed with the operating subsidiary to set-off the amount that the operating subsidiary may owe to Zimra, pursuant to the judgment in the APT case against the amount that Zimra may owe to the operating subsidiary, pursuant to the judgment in the royalties case,” the miner said.

Zimplats added that it continued to engage with the government of Zimbabwe over ZPM’s indigenisation implementation plan.