Platinum-group metals (PGMs) miner Zimplats’ financial results for the year ended June 30 were positive, despite the challenging economic environment which has been exacerbated by the Covid-19 pandemic.

The group’s main activity is the production of PGMs from its reserves and resources on the Great Dyke, in Zimbabwe.

Revenue for the period increased by 56% to $1.4-billion, primarily owing to the increase in the prevailing average metal prices during the year.

Revenue per ounce of ruthenium, rhodium, palladium, osmium, iridium and platinum (6E) sold was $2 493, but the volume of 6E ounces sold decreased by 2% to 543 000 oz largely owing to an administrative delay in the export of production towards the end of the financial year.

Despite the 2% decline in volumes sold, cost of sales increased by 14% to $546.7-million, primarily owing to an increase in revenue indexed expenses, resulting from the higher revenue achieved in the year.

Operating cash cost per 6E ounce increased by 8% to $661, which Zimplats said was largely owing to a deterioration in 6E head grade and recovery, as well as an increase in revenue-indexed expenditure and Covid-19-related administration costs.

The gross profit margin increased to 60% as a result of higher metal prices, while the income tax expense increased to $237.4-million on the back of higher profitability.

As a result, profit after tax increased to $563.1-million and net cash generated from operating activities increased to $453.1-million.

OPERATIONS

The Covid-19 pandemic continued to impact the operating environment as the group sustained its role in the management and mitigation of Covid-19, maintaining protocols to protect its employees.

Zimplats enthused, however, that the group had achieved 100% Covid-19 vaccination for its employees and contractors.

The group said it has been spared from operational disruptions, as mining continues to be categorised as an “essential service” in Zimbabwe.

Volumes of mined and milled ore were sustained at similar levels to the previous year at 7.2-million tonnes and 6.8-million tonnes, respectively.

Following the collapse of a section of the highwall western boxcut at the Ngwarati mine in February, production teams had been redeployed to other operations while rehabilitation was under way.

Production at Ngwarati mine restarted on July 1.

Meanwhile, ore production from the Mupani and Bimha mines increased significantly from the previous year, Zimplats said.

The Mupani mine project increased access to stoping panels, while Bimha mine benefitted from the temporary redeployment of Ngwarati production teams.

General ground conditions in the mines remained stable, and 6E production of 579 000 oz was flat owing to a proactive response plan implemented by management in the wake of the Ngwarati mine high wall collapse and subsequent temporary closure of that mine.

CAPITAL PROJECTS

The group spent $159.1-million on capital projects including stay-in-business, replacement and expansion projects.

The redevelopment of the Bimha mine is largely complete, with cumulative spend of $100.3-million, in line with the estimated project budget of $101-million.

The development of the Mupani mine, the replacement production source for the Rukodzi and Ngwarati mines, which will deplete in 2022 and 2025, respectively, is progressing well and remains on schedule, Zimplats said.

The miner reiterated that the project has a design capacity of 2.2-million tonnes a year, which is expected to be achieved in September 2024 at a total estimated cost of $264-million.

Meanwhile, the project to upgrade the Mupani and Bimha mines as replacements for the Mupfuti mine, which depletes in 2027, has been approved.

The upgrade project at Mupani encompasses an upgrade from the current design capacity of between 2.2-million and 3.6-million tonnes a year at a total additional cost of $122.6-million, thereby increasing the estimated total project cost from $264-million to $386-million.

Additionally, $48.4-million was spent during the year on increasing the cumulative total project expenditure to $146.6-million at year-end.

Full production capacity at the upgraded mine is expected to be achieved in August 2028.

The Bimha mine upgrade from the current design capacity of two-million tonnes a year, to 3.1-million tonnes a year, is progressing well and is currently ramping up to achieve full production capacity in 2023.

About $6.9-million was spent during the year from an approved budget of $81.7-million.

During the year, the Zimplats board also approved the Phase 3A concentrator expansion, which will increase  production capacity by 900 000 t/y.

The project comprises a third concentrator plant project at Ngezi, which started in 2021.

The plant will process the additional ore volumes from the early ramp-up at the Mupani and Bimha mines, and is expected to be commissioned in the first quarter of 2023.

During the year, $14.7-million was spent from the project budget of $93.8-million.

Additionally, the acquisition of additional trackless mining machinery fleets to supply the expanded third concentrator plant came at a total project cost of $17.6-million.

During the year, $9.8-million was spent to support the unconstrained ramp-up production profile.

After the reporting date, the board of directors declared a final dividend of $85-million (equating to $0.79 a share) to shareholders on record as at August 20.